On February 25, 2021, the Canadian Securities Administrators (CSA) published key findings of recently completed reviews of issuers’ COVID-19 disclosure to explain the impact of COVID-19 on their industry, operations, customers and suppliers (notice). CSA staff identified some areas where disclosure could be improved, including issuers needing to provide more discussion of entity-specific measures taken to reduce the COVID-19 impact on their business. The review also revealed instances where issuers provided unbalanced or overly promotional disclosure, as well as isolated instances of non-compliance of non GAAP measures and forward-looking information.

The notice reports that there is no “one size fits all” model for issuers to follow when assessing the disclosure implications of COVID-19 and emphasized that, in addition to continuous disclosure on COVID-19 being transparent and balanced, it should provide an understanding of:

  • The current and expected impact of COVID-19 on the issuer’s operations and financial condition, including liquidity and capital resources.
  • The key risks that the COVID-19 pandemic presents to the issuer.
  • Known trends, demands, events or uncertainties related to COVID-19 that management reasonably believes will materially affect the issuer’s  future revenues, expenses or projects.
  • The operational changes and other measures taken by management in response to COVID19.
  • How COVID-19 has impacted the issuer’s capacity to meet working capital requirements, debt covenants, planned growth or funding of future development activities and capital expenditures.
  • How the COVID-19 pandemic has impacted areas of financial reporting subject to significant judgement and measurement uncertainty in the current environment.
  • How the issuer has assessed impairment of non-financial assets given the extended impact of the COVID-19 pandemic.
  • Where applicable, sensitivity analysis and disclosures relating to key assumptions will be especially important and should be both realistic and supportable.

For a full copy of the notice: https://www.osc.ca/sites/default/files/2021-02/csa_20210225_51-362_staff-review-covid19.pdf

For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.

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