A significant portion of issuers are not complying with certification rules, according to a recent review by the Canadian Securities Administrators.

“Although most of the issuers in our sample appeared to comply with the certification requirements, there was a significant percentage of issuers that did not comply,” the CSA said in its report. “This shows that many issuers need to pay greater attention to their obligations.”

Staff of the regulators in British Columbia, Alberta, Manitoba, Ontario and Quebec conducted the review, which looked at a sample of 286 issuers from across the country. The sample included: 229 issuers listed on the Toronto Stock Exchange; 52 issuers listed on the TSX Venture Exchange; and five issuers listed on the Canadian Trading and Quotation System Inc.

CSA staff reviewed the annual certificates of the issuers in the sample for the most recently completed financial year, focusing on whether the issuer filed the correct form of certificate, and whether the issuer’s annual MD&A contained disclosure regarding the certifying officers’ conclusions about the effectiveness of disclosure controls and procedures.

Overall, 96% of issuers in the sample filed the correct form of certificate. However, 4% of issuers filed bare annual certificates when modified annual certificates or full annual certificates were required. Most of the issuers that filed the incorrect form of certificate were either venture issuers, of which 87% filed the correct form of certificate, or CNQ issuers, of which 80% filed the correct form of certificate. In contrast, 98% of the TSX Issuers filed the correct form of certificate.

Also, 72% of issuers included the required disclosure in their annual MD&A. This included 80% of the TSX issuers, 38% of the venture issuers and 40% of the CNQ issuers.

“This widespread non-compliance with such a clear and basic requirement shows that many issuers are not paying adequate attention to their disclosure obligations,” the CSA said. “We are particularly concerned by the failure to include the disclosure regarding disclosure controls and procedures in the annual MD&A given that, in most cases, the certifying officers specifically represented in their certificates that they had caused the issuer to include this disclosure in the annual MD&A.”

The CSA added that it will conduct additional reviews of compliance by issuers with the certification rules as part of its disclosure review program.