CSA proposes rule regarding non-GAAP and other financial measures
Sep 06, 2018
On September 6, 2018, the Canadian Securities Administrators (CSA) published for comment Proposed National Instrument 52-112 "Non-GAAP and Other Financial Measures Disclosure" (the Proposed Instrument), which establishes disclosure requirements for issuers that disclose non-GAAP and other financial measures. These measures often lack standardized meanings, resulting in potentially misleading or confusing disclosure.
When implemented, the Proposed Instrument will provide authoritative Canadian securities legislative requirements for issuers when they disclose non-GAAP and other financial measures. The Proposed Instrument would replace Staff Notice 52-306 (Revised) Non-GAAP Financial Measures, which provided guidance to help ensure such disclosure is not misleading. Staff Notice 52-306 was issued in 2003 and updated several times subsequently to respond to changing circumstances.
Additionally, the Proposed Instrument:
- relates to the disclosure of financial measures (including ratios) that are non-GAAP financial measures, segment measures, capital management measures and supplementary financial measures, as defined in the Proposed Instrument;
- refers to all documents (e.g., Management’s Discussion and Analysis, news releases, the Annual Information Form, prospectuses etc.) including other written communications in websites or social media; and
- includes an updated definition of a non-GAAP financial measure which builds upon and incorporates the disclosure guidance in Staff Notice 52-306.
Review the press release on the CSA's website and the Proposed National Instrument on the CSA members’ website.
