On October 29, the Canadian Securities Administrators (CSA) published their biennial report (Report) on staff reviews of reporting issuers’ continuous disclosure (CD). Although the Report focuses mainly on staff’s findings for the fiscal years ended March 31, 2019 and March 31, 2020, CSA staff also have included guidance on how issuers should consider reporting the impact of COVID-19 on their operating performance, financial position, liquidity and future earnings. Staff’s recommendations in this area address the following topics among others:
- Financial statements: CSA staff note that given the rapidly changing environment, it may no longer be appropriate for issuers to condense or omit certain disclosures in their interim financial statements because the information disclosed in the latest annual financial statements may be less relevant. Issuers also must consider, as new information becomes available, whether their judgments and estimates must be updated and prospectively reflected in their interim financial reports.
- Forward-looking information (FLI): Due to the uncertainty arising from COVID-19, issuers may need to revise or withdraw previously announced FLI or outlooks.
- Don’t blame COVID-19 for everything: Staff emphasize that issuers’ MD&A should be entity-specific and transparent and provide a detailed explanation and breakdown of the impact not just of COVID-19 but of any other factors contributing to variances.
- Liquidity and capital resources: Issuers whose liquidity or capital resources are significantly affected by COVID-19 should provide a comprehensive assessment of the pandemic’s current and expected impacts and quantify that impact where possible.
- Material change reports: Staff reminded issuers to consider whether COVID-19 or resulting government or regulatory policies are having unique or more significant impacts on them compared with others in their industry and listed examples of developments that might require a material change report.
If you have questions about the Report or would like to discuss a potential disclosure issue, please do not hesitate to contact us.
October 30, 2020