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Securities Law

NIN 98/38 - Regulatory Review of Continuous Disclosure Filings [NIN - Rescinded]

Published Date: 1998-07-10
Effective Date: 1998-07-09
Timely and accurate disclosure by reporting issuers is the cornerstone of a fair and efficient capital market. Historically, securities commissions have focused their regulatory review of disclosure on prospectuses and other offering documents, with a view to protecting investors who purchase securities in primary distributions by issuers. However, securities markets have now evolved to the point where the vast majority of investment activity is in the secondary market, and investors rely heavily (either directly or indirectly) on issuers’ continuous disclosure records rather than offering documents. In this environment, the Commission recognizes the need to focus more effort on reviewing continuous disclosure information.

In recent years, the Statutory Filings branch of Corporate Finance and the Chief Accountant have reviewed reporting issuers’ continuous disclosure filings focusing primarily on financial statements and Form 61 quarterly reports. The Commission has now taken steps to significantly increase the scope of its review of the continuous disclosure record of reporting issuers.

On June 1, 1998, Commission staff implemented a more formal and comprehensive Continuous Disclosure Review Program. The principal purposes of the program are to:
  1. identify material non-compliance by reporting issuers with their statutory obligations to provide complete, accurate and timely disclosure to the market, 
  2. increase awareness among reporting issuers that disclosure is monitored, thereby creating an additional incentive to provide proper disclosure, and
  3. take appropriate compliance and enforcement action, as required.

For selected reporting issuers, staff will review financial statements, Form 61 - quarterly reports, recent news releases, information circulars, annual reports, annual information forms, take over bid circulars, offering memoranda, material change reports, insider reports and other similar public disclosure documents. In circumstances where a reporting issuer has not filed a required record or has filed a record that is not in the required form, any of a wide range of compliance action may be taken, from requiring the next similar record to be filed correctly, to more serious actions such as issuing a cease trading order against the issuer’s securities, or initiating appropriate enforcement proceedings against the issuer or its directors and officers.

The accuracy and completeness of an issuer’s continuous disclosure record may become increasingly important in view of a proposal currently being considered by the members of the Canadian Securities Administrators to implement a disclosure system that will integrate prospectus and continuous disclosure requirements. An integrated disclosure system would allow qualified issuers to issue securities at any time, unrestricted by hold periods, on the basis of the issuer’s existing public disclosure record and a simplified form of prospectus detailing the offering and incorporating by reference the issuer’s continuous disclosure record. Inherent in such a system is the integrity of an issuer’s continuous disclosure record.

The Commission is committed to ensuring that reporting issuers file with the Commission and provide to the market accurate and timely disclosure. The program represents a significant increase in the regulatory review of continuous disclosure and is a critical first step towards an integrated disclosure system. Results of the Continuous Disclosure Review Program will be published annually with the first report to be published in the fall of 1999.

DATED at Vancouver, British Columbia, on July 9, 1998

Joyce C. Maykut, Q.C.
Vice Chair