Issuers must improve forward-looking information disclosures: OSC

The regulator says that its reviews of reporting issuers’ disclosure identified several common issues across all industries, and that firms need to do better in these areas. Indeed, the OSC review found four common areas where, it says, improvement is needed. They include: properly identifying FLI; disclosing the material factors or assumptions used to develop FLI; updating previously disclosed FLI; and, comparing actual results to previously-disclosed financial outlooks.

Specifically, the review found that only 47% of reporting issuers clearly identify entity-specific FLI. It reports that 24% did not disclose any material factors or assumptions used to develop their FLI, and another 19% only provided generic factors and assumptions. Only 36% of issuers included a quantified discussion of events and circumstances that are reasonably likely to cause actual results to differ materially from previously reported FLI. And, only a third of the firms reviewed provided a comparison of actual results to previously disclosed FLI.

“Despite the fact that more than five years have passed since the most recent changes to the requirements, we note that for many reporting issuers there continues to be a need for improvement relating to the quality of the required FLI disclosure,” it says in the report.

“When prepared properly, FLI can be used to enhance transparency and provide opportunities to increase an investor’s understanding of a reporting issuer’s business and future prospects,” it adds. “Reporting issuers need to address investors’ demands by providing reliable and relevant information. Disclosure must be both useful and understandable. Disclosure should include the most relevant information in a format that investors can understand.”