Regulators Propose Significant Changes to Public Company AIF and MD&A Filings

The Canadian Securities Administrators (CSA) published for comment proposed amendments (Proposed Amendments) that would streamline annual and interim reporting rules for public companies. The changes will apply to reporting issuers other than investment funds. Public companies are currently required to prepare and file annual and interim financial statements, an annual information form (AIF) in prescribed form and annual and interim “Management’s Discussion and Analysis” (MD&A) in prescribed form[1].

The Proposed Amendments would:

  • streamline the disclosure requirements set out in the current MD&A and AIF forms,
  • combine the financial statements, MD&A and, where applicable, AIF into one new reporting document, and
  • address current gaps in disclosure.

Public comments on the Proposed Amendments may be submitted until September 17, 2021.

The final amendments are expected to be published in September 2023 and be effective on December 15, 2023.

Streamlined disclosure requirements to eliminate duplication and redundant information

  • eliminate the current MD&A requirement to disclose information regarding critical accounting estimates, which is already required to be included in the financial statements under Canadian GAAP applicable public companies
  • eliminate the current AIF requirement to disclose cash dividends or distributions declared, as well as any restrictions on payment of dividends or distributions, which is duplicative of requirements under Canadian GAAP applicable to public companies,
  • eliminate the current MD&A requirement to disclose summary information for the 8 most recently completed quarters given that this information can be easily located in previous continuous disclosure filings, and
  • eliminate the current AIF requirement to disclose security price ranges and volumes traded on a Canadian marketplace given that this information can be easily obtained from the marketplaces.

Consolidation and Clarification of disclosure requirements

  • consolidate the current MD&A requirements to discuss liquidity and capital resources of the reporting issuer,
  • consolidate the current AIF requirement to disclose research and development elements with the current MD&A requirement to discuss operations,
  • clarify that the discussion of a reporting issuer’s financial condition, financial performance and cash flows in the MD&A must include an analysis of the most recently completed financial year as compared to the prior year, and
  • clarify that a summary from a technical report can be used to satisfy the AIF requirement applicable to reporting issuers with mineral projects, and the entire technical report is not required to be incorporated by reference into the AIF.

Combine disclosure documents

  • Annual filings:
    • For a reporting issuer that is not a venture issuer – combine in one filing the annual financial statements, MD&A and AIF. The current MD&A and AIF forms would be repealed and replaced by a new combined form called an “Annual Disclosure Statement”.
    • For a venture issuer – combine in one filing the annual financial statements and MD&A.[2]
       
  • Interim filings:
    • For all reporting issuers – combine in one filing the interim financial report and MD&A (or where appropriate, quarterly highlights).

Address gaps in disclosure

The Proposed Amendments would also introduce a number of new requirements, including:

  • disclosure requirements for investment entities and non-investment entities recording investments at fair value, and
  • a requirement for venture issuers to provide a description of their business in their MD&A.

Other proposed changes

  • Delivery requirements and “access equals delivery”. The Proposed Amendments modify the delivery requirement such that a public company will be required to deliver the annual disclosure statement to its investors. If the CSA adopts the “access equals delivery” model that it is currently considering, the delivery could be made by providing electronic “access” to an annual disclosure statement and publishing a related notice that the annual disclosure statement is available.
     
  • Materiality qualifiers. Issuers are required to focus on material information in the MD&A and AIF forms, yet certain provisions of the current forms reference other materiality qualifiers such as “significant”, “critical”, “major” or “fundamental”. The Proposed Amendments would remove all these other materiality qualifiers and keep only the general form instruction that issuers are to focus on material information.

We invite you to contact a member of our Securities Regulation and Investment Products Group should you have any questions regarding how the Proposed Amendments may affect your business.

 

[1] See National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102)

[2] If a venture issuer intends to be short form prospectus eligible under section 2.2 of National Instrument 44-101 Short Form Prospectus Distributions, it has the option to file a standalone AIF (in addition to the combined annual financial statements and MD&A) or combine in one filing the annual financial statements, MD&A and AIF.

AIFs MD&As continuous disclosure NI 51-102 access equals delivery

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