A review of Canadian issuers' disclosure practices uncovered some problems but the majority of were either in compliance or were fairly close. Nevertheless, 5% of uncovered problems were substantial enough to require disciplinary action.
“Maintaining high quality continuous disclosure records is essential to assist investors in making informed and confident investment decisions”, said Bill Rice, chair of the CSA and chair and chief executive of the Alberta Securities Commission.
The Canadian Securities Administrators' continuous disclosure (CD) review program for the year ended March 31, looked for common deficiencies in financial statements, management’s discussion and analysis (MD&A) and other regulatory disclosure. For most issuers, there were no significant problems and in incidences where there were issues, most were correctable.
The CSA found that 53% were in compliance with regulations and were not required to make any changes or additional filings. Still, disclosure problems in 5% of inspections were significant enough that issuers were either cease-traded, placed on a default list or referred to enforcement.
The review covered approximately 4,200 active reporting issuers, excluding investment funds. The CSA completed 1,336 reviews in fiscal 2013 a 7% increase over fiscal 2012. There were 368 full reviews and 968 issue-oriented reviews, often involving rules for specific sectors such as mining.
Among the areas where the CSA found problems: 26% of the reviews resulted in “prospective changes,” requiring reporting issuers to make enhancements to their disclosure in future filings; 14% of the reviews resulted in reporting issuers having to amend or re-file certain documents; and 2% resulted in issuers being alerted to specific areas where disclosure enhancements should be considered.