Canada’s securities regulators were busier in fiscal 2010 with members reporting a 23% increase in the number of continuous disclosure reviews completed.

The Canadian Securities Administrators (CSA) Friday published Staff Notice 51-332 Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2010, which summarizes the results of the CSA’s continuous disclosure (CD) review program.

CSA members completed 1,351 CD reviews (527 full reviews and 824 issue-oriented reviews) of public companies that are reporting issuers.

To assist reporting issuers in avoiding pitfalls that the CSA continues to see in disclosure documents, Staff Notice 51-332 includes detailed examples of the common deficiencies found during the reviews in financial statements, Management’s Discussion and Analysis (MD&A) and oil and gas disclosure.

“The continuous disclosure review notice is a key part of the outreach by CSA members to public companies to help them enhance their disclosure filings,” says Jean St-Gelais, chairman of the CSA and president and CEO of Quebec’s Autorité des marchés financiers. “Providing reliable and accurate disclosure is critical to fostering both investor confidence and efficient capital markets.”

The total number of reviews represents a 23% increase from fiscal 2009 when CSA members conducted 1,094 reviews. A main reason for this increase was the completion of International Financial Reporting Standards (IFRS) transition disclosure reviews, the CSA says.

Breakdown of continuous disclosure review outcomes

Once a CD review is completed, CSA members classify the results into one or more of five categories of outcome, which reflect the seriousness of the matters noted. The outcomes of this year’s reviews are as follows:

– 43% resulted in “prospective changes”, requiring reporting issuers to make enhancements to their disclosure in future filings;

– 9% resulted in reporting issuers being alerted to specific areas where disclosure enhancements should be considered, as part of the CSA’s effort to educate issuers;

– 16% of reporting issuers were required to amend or refile certain CD documents;

– 4% were cease traded, placed on a default list or referred to Enforcement; and

– 28% did not need to make any changes or additional filings.

IE