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Canadian securities regulators publish continuous disclosure review report and provide guidance on COVID-19 disclosure

Canada Publication November 4, 2020

The Canadian Securities Administrators (CSA) have published their latest continuous disclosure review report, which includes guidance on reporting the impacts of COVID-19. 

The CD review report identifies key observations from the CSA’s review for the fiscal years ended March 31, 2020, and March 31, 2019, including with respect to a number of financial statement, MD&A and other regulatory disclosure deficiencies that resulted in issuers needing to enhance their disclosure or refile their CD documents. The report describes common deficiencies and provides some specific disclosure examples to help issuers understand the CSA’s expectations and to correct these deficiencies. In many ways, the report represents a continuation of the regulators’ comments and themes provided in prior years’ reports.

As it relates to the impact of the COVID-19 pandemic on issuers, the central theme of the CSA guidance is the need to provide meaningful, detailed, transparent and issuer-specific information about how the pandemic is impacting the issuer’s operating performance, financial position, liquidity and future prospects.

Guidance includes the following:


  • Be specific: COVID-19 has impacted issuers in different ways. Avoid boilerplate disclosure and provide information that relates specifically to the issuer’s particular situation.
  • Review previous forward-looking information (FLI): Issuers have an obligation under securities regulations to include an update in their MD&A of previous material FLI where actual results are likely to differ materially. Issuers should review previous FLI and consider whether any updates are required or whether the assumptions underlying the information are no longer valid and therefore previous guidance or financial outlooks should be withdrawn.
  • Carefully consider any new FLI: Issuers are prohibited from disclosing FLI unless there is a “reasonable basis” for it. Likewise, any financial outlooks must be based on assumptions that are “reasonable in the circumstances.” Given the uncertainties resulting from COVID-19, issuers should carefully consider the FLI they include in their upcoming filings.

Financial statements

  • Update judgements and estimates: Given the changes and uncertainties wrought by COVID-19, issuers may need to update their judgements or estimates in their interim financial reports (and not simply rely on information disclosed in the latest annual financial statements) including for:
    • going concern assessments
    • impairment assessments
    • fair value calculations
    • government assistance
    • revenue recognition
    • deferred tax recoverability
  • Consider whether triggers for impairment are present for non-financial assets: Issuers should consider whether any triggers for impairment are present for non-financial assets at the end of each reporting period (and not just annually). Examples of impairment indicators include:
    • market value declines
    • volatile markets with negative trends
    • poor economic conditions
    • adverse changes to laws
    • net assets of the company higher than market capitalization
    • assets becoming idle
    • poorer than expected performance


  • Accurately describe factors contributing to changes in operations and financial position: Issuers should not only provide a detailed explanation of the impact of COVID-19, but should also be clear about any other factors that may have contributed to period-over-period variances. 
  • Explain the methodology used: Issuers should explain the methodology used to calculate the quantitative impact of COVID-19 on their financial performance, including the judgements and estimations made by management in determining those impacts.
  • Quantify the impact on liquidity and capital resources: It is important for issuers to provide a comprehensive discussion on the pandemic’s current and expected effects, including quantifying the impact wherever possible. Examples of items requiring disclosure may include: 
    • any material subsidies and/or funding received from government programs
    • increased counterparty risk (A/R collection)
    • reduced cash flow from operations as a result of decreased demand
    • delays in capital project plans
    • impact of any cost-cutting initiatives (employee layoffs, reduced hours)
    • changes in the issuer’s dividend policy
  • Be careful with non-GAAP financial measures: The CSA maintain their focus on ensuring issuers do not provide misleading non-GAAP financial measures and disclosures and that the presentation of such measures complies with existing regulatory guidance, and they caution issuers about defining certain adjustments or measures as COVID-19 related. Not all COVID-19 effects are non-recurring and there may be a limited basis for management to conclude that a loss or expense is non-recurring, infrequent or unusual. 

Material change reports 

  • Consider whether a material change has occurred: Where the direct impacts of COVID-19 or resulting governmental or regulatory policies have resulted in a change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of the issuer’s securities, a material change report should be filed. Examples of potentially material information that may result in a material change due to COVID-19 include:
    • significant disruptions to an issuer’s workforce or operations
    • negative changes in markets, economy or laws
    • supply chain delays or disruptions that are critical to an issuer’s business
    • changes in credit arrangements 
    • Increased cost of goods or services
    • suspension of exports, etc.

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