52-509 - Audit Committees [BCI Proposed - Lapsed]

1. Application - This Instrument applies to all reporting issuers other than

(a) investment funds and issuers of asset-backed securities, as defined in National Instrument 51-102 Continuous Disclosure Obligations,

(b) designated foreign issuers and SEC foreign issuers, as defined in National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers, and

(c) credit support issuers and exchangeable security issuers that are exempt under Part 13 of NI 51-102 Continuous Disclosure Obligations.

2. Meaning of Independence

(1) A director of an issuer is independent unless a reasonable person with knowledge of all the relevant circumstances would conclude that the director is not independent of the issuer’s management or of any significant securityholder.

(2) In this section, “significant securityholder” means, in relation to an issuer, a securityholder that

(a) owns or controls 10% or more of any class of the issuer’s voting securities, or

(b) is able to affect materially the control of the issuer, whether alone or by acting in concert with others.

3. Composition of the audit committee

(1) A reporting issuer must have an audit committee of its board of directors unless its board

(a) has less than five members, and

(b) performs the responsibilities of the audit committee, as set out in section 5.

(2) A majority of the members of the audit committee must be independent.

4. Responsibilities of the issuer

(1) The issuer must take reasonable steps to ensure that its audit committee is independent of the issuer’s management and represents the interests of the issuer’s securityholders.

(2) The issuer must authorize the audit committee to

(a) oversee the process of selecting and appointing the issuer’s external auditor,

(b) oversee the conduct of the audit, and(c) have primary responsibility for the relationship between the issuer and its external auditor.

(3) The board may delegate to its audit committee the approval of the issuer’s interim financial statements and the accompanying management’s discussion and analysis.

5. Responsibilities of the audit committee - The audit committee must:

(a) take reasonable steps, at the time the auditor’s appointment is under consideration, to ensure that the auditor is independent of management of the issuer in accordance with applicable standards,

(b) determine whether the audit fees charged by the auditor appear adequate in relation to the work required to support an audit opinion, without regard to fees that might be paid to the auditor for other services,

(c) meet with the auditor, regularly and when otherwise appropriate, without management present to determine whether there are any contentious issues between the auditor and management relating to the issuer’s financial disclosure and, if so, whether those issues have been resolved to the auditor’s satisfaction,

(d) establish, and monitor compliance with, the issuer’s policies regarding

(i) the auditor’s providing services beyond the scope of the issuer’s audit, and

(ii) the issuer’s hiring individuals formerly employed by the auditor to fill senior officer positions of the issuer, and

(e) prepare annually a report describing the steps it has taken to ensure that the auditor is independent of management of the issuer, including:

(i) the policies and procedures followed so that any contracts for non-audit services to be provided by the auditor do not compromise the auditor’s independence, and

(ii) the nature of any non-audit service contracts entered into and the amount of the related fees.

6. Disclosure and Filing Requirements - Every issuer must include the disclosure required by Form 51-509F in its management information circular or, if an issuer is not required to file a management information circular, in its annual information form.

7. Exemptions

(1) An issuer that complies with Multilateral Instrument 52-110 Audit Committees is exempt from the requirements of this rule.

(2) The securities regulatory authority or regulator may grant an exemption from this rule, in whole or in part, subject to conditions or restrictions imposed in the exemption.

1. Disclose the identity of

(a) each member of the audit committee, or

(b) each director, if the board of directors performs the responsibilities of the audit committee.

2. For each person disclosed above, identify who is independent, the identity of who is not independent, and the circumstances that led to that determination.

3. Include a copy of the report required under section 5(e) of Multilateral Instrument 52-509 Audit Committees.


This form applies to both corporate and non-corporate entities. Where this form refers to a particular corporate characteristic, such as a board of directors, the reference should be read to also include any equivalent characteristic of a non-corporate entity.