The Ontario Securities Commission has amended its policy on reporting issuer defaults and issued an updated notice regarding how issuers correct errors in disclosure.

The purpose of the amended policy is to outline guidelines the regulator follows and the factors it considers in determining if a reporting issuer is in default. The changes also deal with maintaining a list of defaulting reporting issuers and issuing certificates of no default under the Act. The OSC says the changes to the original policy are not material and has therefore not published them for comment.

One of the most notable changes is an expansion of the default list to indicate a greater number of reasons why reporting issuers may be in default. The amendments also describe how staff determines that a reporting issuer is in default, particularly when the issuer does not agree with staff’s determination.

The amended policy clarifies that when an issuer does not agree with staff that it is in default, the issuer will generally not be included on the default list at that time. “In these cases, staff must determine whether to accept the issuer’s position, or else to request an order from the commission that the issuer’s continuous disclosure record be amended in whatever manner is necessary to address the issues identified. In such a case, the issuer will be included on the default list only if the commission determines that the continuous disclosure record is deficient,” the OSC says.

Also, the OSC has issued an amended version of its staff notice discussing its expectations for disclosure by issuers that have failed to comply with periodic and timely disclosure requirements, including issuers that identify errors in documents that they have filed.

It notes that when an issuer must correct an error in how it has complied with disclosure requirements, “it is our view that these are significant events that should be clearly and broadly disclosed to the market in a timely manner. This responsibility is the same whether the correction is made in the context of a staff review or at any other time.”

“Specifically, when an issuer identifies a material error in a document that it has filed with the commission, this will generally represent a material change that should be immediately communicated to the marketplace by way of a news release and report of the material change,” the OSC says. “Even where the correction may not represent a material change, we take the view that investors should be informed immediately by way of a news release.

“In our view, it is not appropriate to withhold disclosure of the error until the next required filing or the next earnings press release, even if the issuer requires more time to investigate and quantify all aspects of the error.”