Staff of the Canadian Securities Administrators have published a notice to summarize some of the deficiencies they see most frequently when reviewing the continuous disclosure record of smaller issuers.

The CSA says that by alerting issuers to some of these problems, it hopes they will avoid some common disclosure deficiencies. The notice focuses on issuers with assets under $5 million; however, the CSA suggests the guidance may be useful to larger issuers.

The notice addresses common deficiencies it found within in four areas: the most common financial statement deficiencies arising from a failure to comply with the GAAP; the MD&A of smaller issuers often contains superficial analyses that merely repeat the information in the accompanying financial statements; the most common non-technical disclosure deficiencies made by issuers in the extractive industries; and other issues such as insider filing requirements, timely disclosure, the role of audit committees, and CEO and CFO certifications of their issuer’s annual and interim filings.

The CSA says it expects issuers to consider the guidance in this notice when reviewing their continuous disclosure records to ensure their disclosure documents comply with securities regulations. “Issuers should be aware that some securities legislation provides a statutory right of action for damages for misrepresentation in CD documents,” it notes. “A misrepresentation can arise by providing erroneous information or failing to provide complete information in a timely manner.”

“Obligations aside, issuers should see timely disclosure as an opportunity to reach investors. Ongoing communication can remove perceived uncertainties relating to an issuer’s operations, lowering its cost of capital and increasing its access to capital markets,” it concludes.