In an effort to ease costs for publicly-traded venture companies, certain issuers will be able to switch from quarterly financial reporting to semi-annual reporting, under a pilot program proposed by the Canadian Securities Administrators (CSA) on Thursday.
The regulators are proposing to allow issuers that are listed on either the TSX Venture Exchange (TSXV) or the Canadian Securities Exchange (CSE) and meet certain other criteria — including annual revenues of less than $10 million, a minimum 12-month continuous disclosure record, with regulatory filings that are up-to-date — to take advantage of an exemption from the quarterly reporting requirements by voluntarily skipping reports for the first and third quarters.
The proposal to enable semi-annual financial reporting for certain venture issuers (known as the SAR Pilot) is designed to allow companies to avoid the burden and costs of preparing financial disclosures for those quarters, while also enabling the regulators to test the impact of moving to semi-annual reporting.
The CSA noted that it also intends to “engage in a broader rule-making project related to voluntary semi-annual reporting.”
The CSA has previously explored (with consultations in 2011, 2017 and 2021) the idea of scaling back quarterly reporting requirements to lower the costs for companies of being public — although the idea has also faced concerns about the impact on investors and markets generally from reducing the availability of timely financial information.
“We note the existing continuous disclosure regime and the ongoing requirement to report material changes, as well as exchange listing requirements can help to mitigate this risk,” the CSA said in a notice detailing the proposed pilot program, adding that it believes the relative benefit for smaller issuers will outweigh the investor protection concerns.
“The semi-annual financial reporting pilot is the result of work and consultations by the CSA that go back several years, as well as our ongoing efforts to support the competitiveness of Canadian capital markets by making financial reporting more efficient and cost-effective for eligible issuers,” said Stan Magidson, chair of the CSA and chair and CEO of the Alberta Securities Commission (ASC), in a release.
“We are committed to a Canadian regulatory environment that is right-sized for our market and responsive to the changing needs of market participants,” he added.
The proposal is now out for a 60-day comment period, ending Dec. 22. The CSA said it expects to adopt the pilot program before the end of March 2026.