Securities
The CSA Offers Guidance on Compliance with Forward-Looking Information Requirements
Published: 04/19/2010
The CSA has issued Staff Notice 51-330 emphasizing deficiencies and areas where forward-looking information ("FLI") disclosure can be enhanced, including the following:
Identification of FLI
Issuers who identify material FLI through a cautionary paragraph at the beginning or end of the disclosure document are encouraged to provide an indication of the nature of the material FLI covered in the document, allowing investors to more readily identify material FLI.
Disclosure regarding material risk factors and material factors or assumptions
Issuers that disclose material FLI are reminded to include disclosure that identifies material risk factors that may cause actual results to differ materially from the FLI. This disclosure must also contain material factors or assumptions used to develop material FLI.
Although FLI requirements do not prohibit issuers from referencing material risk factors or assumptions contained in other documents, it is strongly suggested that issuers should consider whether incorporation by reference properly enables a reader to readily inform himself or herself of the material risk factors and material factors or assumptions associated with the material FLI.
Issuers should also avoid using “boilerplate” disclosure, and instead disclose material risk factors and material factors and assumptions that are relevant to the particular FLI.
Finally, issuers are encouraged to develop user-friendly methods of presentation (such as tables) that allow readers to clearly link specific material risk factors and material factors and assumptions to the particular FLI.
Disclosure of purpose of future-oriented financial information ("FOFI")
Issuers that disclose FOFI or a financial outlook are required to disclose the purpose of the information and inform readers that the information may not be useful for other purposes. This requirement is in addition to the material risk factors and material factors or assumptions discussed above and cannot be satisfied in a cautionary paragraph at either the beginning or end of a document.
Disclosure regarding goals or targets
Issuers should disclose a target or a goal only if it is "possible" to achieve, based on assumptions about future economic conditions and courses of action. If the issuer’s management determines that a material target or goal that is disclosed does not constitute material FLI, management should still consider including additional disclosure explaining the purpose of the information.
Transition to International Financial Reporting Standards ("IFRS")
FOFI or a financial outlook must be based on accounting policies that the issuer intends to use to prepare its historical financial statements for the period covered by the FOFI or the financial outlook. Since issuers must transition to IFRS for fiscal years beginning on or after January 1, 2011, issuers should ensure that FOFI or financial outlooks that cover their 2011 fiscal year are based on the proper accounting policies.
FLI updating requirement
Issuers must ensure that their policy for updating FLI is in compliance with the new FLI requirements, compelling issuers to disclose events and circumstances that are reasonably likely to cause actual results to differ materially from material FLI for a period that is not yet complete but has been previously disclosed to the public.
|
