2009-01-08 Canadian Securities Regulators Emphasize Disclosure Obligations for Current Market Conditions

This Newsletter introduces the Canadian Securities Administrators Staff Notice 51-328, Continuous Disclosure Considerations Related to Current Economic Conditions.

On January 8, 2009, the Canadian Securities Administrators ("CSA") published Staff Notice 51-328 to assist reporting issuers in preparing financial statements and Management’s Discussion and Analysis (MD&A) in the current market environment.

The notice highlights some specific areas for which clear disclosure will be important to help investors understand the risks and circumstances facing issuers. It outlines areas for consideration, including the following topics:

• MD&A, including:
  • general considerations
  • liquidity and capital resources
  • distributed cash
  • critical accounting estimates
  • forward-looking information
• going concern
• impairment of goodwill, intangible assets and long-lived assets
• financial instruments
• capital disclosures
• defined benefit pension plans
• non-GAAP financial measures
• additional considerations for junior resource companies

The current economic uncertainty and financial market volatility make it especially important for an issuer to clearly disclose the present and anticipated impacts of market conditions on its operations, financial condition, liquidity and future prospects.

Receiving information necessary to understand an issuer’s current and prospective financial position and its operating results is critical for investors. Therefore, MD&A disclosure should be sufficiently detailed and avoid boilerplate statements. The areas discussed in the notice are not new requirements and should not be considered an exhaustive list. Rather, they are intended to provide guidance to issuers.

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