On February 13, 2020, the Canadian Securities Administrators (the CSA) published revised versions of proposed National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (Proposed Instrument), Companion Policy 52-112 Non-GAAP and Other Financial Measures Disclosure (Proposed Companion Policy) and the related proposed consequential amendments or changes to other instruments and policies that would be affected by the proposed changes (collectively, the Proposed Materials).  The original versions of the Proposed Materials (the Original Materials) were first published on September 6, 2018  The current disclosure requirements are set out in CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures (SN 52-306).

The CSA notice and request for comments includes the following summary of the substantive changes to the Original Materials made in the Proposed Instrument:


  • The defined term “non-GAAP financial measure” was changed to be more consistent with SN 52-306 and with rules and guidance of other securities regulators, including the U.S. Securities and Exchange Commission (SEC). This revised definition reduces the scope of financial measures captured compared to the Original Materials. Ratios are specifically excluded from the defined term. The scope of what is captured as a “non-GAAP ratio” has also been substantially reduced. Only ratios where a non-GAAP financial measure is used in the numerator or the denominator, or both, are captured. This is dealt with in a separate section within the Proposed Instrument.
  • The defined term “segment measure” has been changed to “total of segments measure”, and the definition has the revised term captures only a subtotal or total of two or more reportable segments.
  • The defined term “supplementary financial measure” has been changed to reflect the changes in the defined term “non-GAAP financial measure”.
  • Transcripts of an oral statement are specifically excluded. Only oral statements were excluded in the Original Materials.

 Reduced Scope

  • In addition to excluding SEC foreign issuers, the CSA reduced the scope of application of the Proposed Instrument by:
  • only capturing disclosures by reporting issuers (for example, press releases and MD&A) and non-reporting issuers in a document that is subject to prospectus requirements, filed in connection with reliance on the offering memorandum exemption, and other similar documents submitted to a recognized exchange
  • excluding issuers that are investment funds and designated foreign issuers, and
  • excluding disclosures that are required under National Instrument 43-101 Standards of Disclosure for Mineral Projects and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (except for voluntary disclosures using oil and gas metrics under section 5.14).
  • The CSA expanded the list of specific documents and financial measures that the Proposed Instrument does not apply to including valuations reports and pro forma financial statements.
  • The CSA also excluded financial measures disclosed in compliance with a requirement under law or by a self-regulatory organization to which the issuer is a member. This includes any system of regulation of a government or governmental authority or self-regulatory organization that is applicable to the issuer, not just limited to the laws of a jurisdiction of Canada as originally included in the Original Materials.

 Incorporating Information by Reference

  • The CSA introduced a form of cross-referencing in certain discrete documents back to an issuer’s MD&A through incorporating information by reference.

 Disclosure Requirements

  • A section on disclosure requirements for non-GAAP financial measures that are historical information, has been added to clarify that disclosure of a non-GAAP financial measure must be accompanied by the disclosure of the most comparable financial measure presented in the primary financial statements.
  • A section on disclosure requirements for non-GAAP financial measures that are historical information, has been added to clarify that disclosure of a non-GAAP financial measure must provide an explanation of the composition of the measure.
  • The section on disclosure requirements for non-GAAP financial measures that are forward-looking information has been substantially revised to reduce the disclosure requirements and enhance readability. The requirement for a quantitative reconciliation has been removed and replaced with a requirement to describe each reconciling item between the non-GAAP financial measure that is forward-looking information and the historical non-GAAP financial measure. SEC Issuers, as defined in National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, may instead comply with Regulation G under the 1934 Act to comply with this disclosure requirement.
  • Disclosures of non-GAAP financial measures used in ratios has been separated, with reduced disclosure requirements from the Original Materials.
  • A section was added to allow issuers to make certain disclosures related to capital management measures within their financial statements to comply with the Proposed Instrument instead of directly within documents outside the financial statements.
  • The section on disclosure for supplementary financial measures has been revised to remove requirements to present the comparative period and explain the reason for a change, if any, from the comparative period.

 The comment period is open until May 13, 2020.

For further information, please contact:

Neil Kravitz – 514 397 7551
Andrea Kruyne – 416 865 4537
or any of our Corporate Finance team.