Venture companies have begun embracing the option for semi-annual financial reporting under a pilot program announced by the Canadian Securities Administrators (CSA) last month, in an effort to explore the benefits, and potential drawbacks, of less frequent reporting.
In mid-March, the CSA announced the launch of a pilot program to allow certain listed venture issuers — companies with less than $10 million in annual revenues, with clean continuous disclosure records that are listed on the TSX Venture Exchange Inc. and the Canadian Securities Exchange (CSE) — to voluntarily drop their first- and third-quarter reports, and to only file six-month and annual financial statements.
In recent days, a growing list of venture issuers — including TSXV-listed Avrupa Minerals Ltd., Bow Lake Capital Corp., Buzz Capital 2 Inc., Fairchild Gold Corp., Granada Gold Mine Inc., Metalero Mining Corp., PreveCeutical Medical Inc. and CSE-listed Sixty Six Capital Inc. — have begun taking the regulators up on the opportunity to adopt semi-annual reporting.
The companies have all issued news releases declaring their move to semi-annual reporting, confirming their eligibility under the CSA’s pilot program and detailing their new reporting schedules.
The regulators’ pilot program is intended to test the theory that less frequent reporting will ease compliance costs on issuers, particularly smaller issuers, without sacrificing investor protection.
And, early adopters are proving eager to test that idea.
In its release, Sixty Six Capital said that “the company aims to reduce the administrative and financial burden associated with quarterly reporting” by shifting to semi-annual reporting.
However, critics of the concept have argued that reduced reporting will increase the risk of selective disclosure and could harm market quality and investor confidence.
When it introduced the multi-year pilot, the CSA indicated that it’ll be monitoring the experience of semi-annual reporting, which may lead to broader reform.
“The CSA intends to engage in a formal rule-making project to consider whether the SAR Pilot should be adjusted in terms of scope, eligibility and conditions,” the regulators said last month.