The Canadian Securities Administrators are publishing for comment proposed amendments to several national instruments to implement requirements for forward-looking information.

The requirements include future-oriented financial information (FOFI) and financial outlooks such as earnings guidance. The proposed requirements for FOFI are similar to certain elements of the existing national policy that deals with the issue.

That policy specifies how FOFI should be prepared, updated and compared to actual results, and specifies when an auditor should be involved. Since it was issued in 1993, there has been confusion in the market as to the applicability of the policy to other types of forward-looking information, such as earnings guidance, the CSA notes.

In 2002, the CSA issued another policy that includes best disclosure practices for earnings guidance and for updating forward-looking information. However, issuers continue to question the applicability of the older policy to earnings guidance and other financial outlooks.

“We have concluded that the provisions for FOFI currently contained in [the existing policy] for comparison to actual, updating and withdrawal should also apply to financial outlooks such as earnings guidance. We also propose to place all requirements for forward-looking information in one location,” it explains. “We believe this approach will result in streamlined regulation that will simplify and clarify our expectations for issuers who prepare forward-looking information.”

Forward-looking information is not currently defined in the securities legislation of all jurisdictions, the CSA notes, although these jurisdictions expect to propose amendments to their legislation to adopt a definition. “Forward-looking information will be defined as ‘disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action and includes future oriented financial information with respect to prospective results of operations, financial position or cash flows that is presented either as a forecast or a projection’, it says.”

“We expect that the proposed amendments will result in improved quality and consistency of forward-looking information regardless of where it is presented and how it is released,” the CSA says. “Issuers will benefit from the fact that the requirements will now be in one location and will apply to all forward-looking information, regardless of where it is presented. The costs of compliance with the proposed amendments relate primarily to the involvement of management in the preparation, review and, where required, updating of forward-looking information.”

“The proposed amendments substantially maintain requirements for FOFI currently in [the policy] except that the proposed amendments do not require an auditor’s report to accompany any FOFI included in a prospectus or circular. The proposed requirements will therefore result in an overall savings for an issuer that discloses FOFI in an offering document,” it adds. “The requirement for an auditor’s report was removed as investors may place inappropriate reliance on an auditor’s report with respect to forward-looking information, and as protection to investors exists through prospectus liability provisions. The focus of the requirements relating to forward-looking information should instead be on appropriate preparation and disclosure.”

The proposed amendments also substantially maintain requirements for forward-looking information included in MD&A, it says, and therefore do not impose any additional costs to issuers providing forward-looking information in MD&A. “The proposed amendments may impose additional cost for issuers releasing forward-looking information outside of MD&A. This additional cost is not, however, expected to be significant, and will relate primarily to the involvement of management in the preparation, review and, where required, updating of forward-looking information,” it says.

Comments are due by Mar. 1, 2007.