A recent review of investment entities, an expanding group of public issuers, revealed many areas in which disclosure practices could be improved, according to a notice the Canadian Securities Administrators (CSA) released on Thursday.
The CSA notice summarizes key findings from an Ontario Securities Commission (OSC) review of the continuous disclosure record of 12 investment entities. The review dealt with reporting issuers that meet the definition of an investment entity under IFRS 10 Consolidated Financial Statements, which the International Accounting Standards Board issued in 2011 and subsequently made applicable to Canadian issuers as of January 2014.
The review related to the compliance of the 12 investment entities that represent more than 90% of the market capitalization of this subsector in Ontario. One of the purposes of the review was to improve disclosure in what the release calls "material areas."
The notice, entitled CSA Multilateral Staff Notice 51-349: Report on the review of Investment Entities and Guide for Disclosure Improvements, states: "The Review identified several areas where disclosure could be improved and resulted in many disclosure changes to provide more fulsome information to investors. Overall, OSC staff observed a wide range in the quality of disclosures provided by investment entities to comply with securities requirements."
As a result of the review, the issuers under scrutiny made "a number of significant disclosure changes" the release says. The notice notes that the collective market cap of this sector has increased by 140% since IFRS 10 came into effect, to $6.5 billion in 2016 from $2.7 billion in 2013. Most of these firms are listed on the Toronto Stock Exchange.