On July 17, 2014, the Canadian Securities Administrators (CSA) published the results of their continuous disclosure review program (Program) in CSA Staff Notice 51-341 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2014 (Staff Notice).  The purpose of the Program is to monitor the compliance, reliability and accuracy of continuous disclosure documents prepared by reporting issuers (issuers).

Pursuant to the Program, the CSA conducted a total of 991 reviews in fiscal 2014, down from the 1,336 reviews conducted in fiscal 2013.  Of the reviews conducted in fiscal 2014, 221 were full reviews and 770 were issue-oriented reviews.

In fiscal 2014, the CSA applied both qualitative and quantitative criteria in determining the level of review and type of review required, with a goal of obtaining more substantive outcomes from issuers.  As a result, only 24% of the reviews conducted in fiscal 2014 resulted in no action being required, down from 53% in fiscal 2013.

Other highlights of the continuous disclosure reviews in fiscal 2014 are as follows:

  • 9% resulted in enforcement, cease trade orders or issuers being placed on a defaulting issuer list (compared to 5% in fiscal 2013);
  • 14% resulted in amending and refiling the applicable continuous disclosure document (the same percentage as fiscal 2013);
  • 37% resulted in changes or enhancements required in the issuer’s next filing of the applicable continuous disclosure document (compared to 26% in fiscal 2013); and
  • 16% resulted in a letter to the issuer, designed to educate or make the issuer aware of certain disclosure enhancements, best practices and expectations (compared to 2% in fiscal 2013).

To help issuers better understand their continuous disclosure obligations, the Staff Notice also identifies certain areas where deficiencies were commonly found and provides some examples to help issuers address such deficiencies.  These include: (a) deficiencies in financial statements relating to disclosure of interests in other entities, revenue recognition and impairment of assets; (b) deficiencies in management’s discussion and analysis relating to non-GAAP measures, forward looking information and additional disclosure for TSX Venture issuers without significant revenue; and (c) other regulatory disclosure deficiencies relating to mineral projects, executive compensation and the filing of news releases and material change reports.

In addition to the Staff Notice, some local securities regulatory authorities may also publish staff notices and reports summarizing the results of the continuous disclosure reviews conducted in their local jurisdictions.