The amendments aim to reduce regulatory burden and address certain concerns expressed by stakeholders.

For reporting issuers that are not venture issuers, the amendments will change the criteria for determining whether a completed acquisition is significant, based on three tests set out in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). The amendments:

• require that at least two of the three existing significance tests in NI 51-102 are triggered (previously, only one test had to be triggered)
• increase the significance threshold in those tests from 20 per cent to 30 per cent.

The amendments are being adopted following an extensive consultation process, including comment letters and other stakeholder feedback, as well as consideration of historical data on past BAR filings and exemptive relief granted to assess the impact of the amendments.

Provided all necessary ministerial approvals are obtained, the amendments are effective on November 18, 2020.

Review the press release on the CSA's website and the amendments on the CSA members’ websites.

The Interim Order, which takes effect in Ontario on July 30, 2020, provides registration and prospectus exemptions for start-up crowdfunding that are substantially similar to the local exemptions in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia.

On February 27, 2020, the CSA published for comment National Instrument 45-110 Start-Up Crowdfunding Registration and Prospectus Exemptions (the Proposed National Instrument), which will replace and harmonize the local start-up crowdfunding exemptions in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia (as well as those in Ontario adopted through the Interim Order). The comment period on the Proposed National Instrument ended on July 13, 2020.

The Interim Order can be found on the OSC’s website and remains in effect until the Proposed National Instrument is adopted or until 18 months from the effective date of the order. Other jurisdictions will make corresponding updates to their local guidance documents to include Ontario.

Review the press release on the CSA's website and the interim order on the OSC's website.

The review analyzed a sample of March 2020 interim and annual reports and accounts and found that although companies provided suf­fi­cient in­for­ma­tion to enable a user to un­der­stand the impact COVID-19 had on their per­for­mance, position and future prospects, some - par­tic­u­larly interim reports - would have benefited from more extensive dis­clo­sure.

The FRC reminds companies that they should: 
 

• explain the sig­nif­i­cant judge­ments and estimates made in preparing their accounts and provide mean­ing­ful sen­si­tiv­ity analysis or details of a range of possible outcomes to support any disclosed es­ti­ma­tion un­cer­tainty;
• describe any sig­nif­i­cant judge­ments made in de­ter­min­ing whether there is a material un­cer­tainty about their ability to continue as a going concern;
• ensure that as­sump­tions used in de­ter­min­ing whether the company is a going concern are com­pat­i­ble with as­sump­tions used in other areas of the financial state­ments;
• apply the re­quire­ments of IAS 1 to any ex­cep­tional or similar items, with income statement sub-to­tals com­pris­ing only items recog­nized and measured in ac­cor­dance with IFRS;
• apply existing accounting policies for ex­cep­tional and other similar items to COVID-19 related income and ex­pen­di­ture con­sis­tently and should not split income and expenses between COVID-19 and non-COVID-19 financial statement captions ar­bi­trar­ily; and
• prepare interim reports that provide suf­fi­cient in­for­ma­tion to explain the impact that COVID-19 has had on their per­for­mance, position and future prospects.

For further details, refer to the FRC press release and the Review Report.

Overall, the AcSB commends the CSA for taking into consideration the comments received on the first version of the Proposed National Instrument to improve the application of these proposals. The response letter also highlights the AcSB’s support for the CSA’s objective of ensuring investors receive appropriate disclosure without unduly increasing regulatory burden on issuers. In particular, the letter encourages the CSA to consider the interaction of the CSA’s Proposed National Instrument and the IASB’s Primary Financial Statement project proposals. It also highlights the AcSB’s willingness to stand ready to work with stakeholders and the CSA to help clarify application challenges that may arise.

Re­view the response letter dated June 29, 2020 on the AcSB's web­site.

Over the last few months, the Taskforce listened to over 110 stakeholders about the challenges they face, including financial institutions, small and large publicly-listed companies, independent investment dealers, industry associations, law firms and investor advocacy groups. The Capital Markets Modernization Taskforce consultation report outlines their findings and more than 47 policy proposals to modernize the province's capital markets.

The Capital Markets Modernization Taskforce will provide recommendations to the Minister of Finance on how to transform the regulatory landscape for capital markets. Following this consultation, a final report will be submitted to the Minister before the end of the year. The consultation will end on September 7, 2020.

Review the press release on the Ontario government's website.

Ms Tarca began her speech by talking about what XBRL is and who uses it. She explained about tagging financial statements, the different versions of XBRL, and gave examples of different uses in the US, in the EU, in the UK, in Japan, in Denmark and in Australia.

This led her to four questions: Why have we been slow to embrace digital financial reporting, when the benefits of technological innovation have been profound in other areas of accounting and finance? What does research tell us about the US experience from a company preparer/auditor perspective? Do investors want digital reporting? Are there benefits for capital markets?

On the first question, Ms Tarca explained that when lodging annual reports in XBRL format is not mandatory, listed companies need a compelling case to take on an activity that consumes resources as tagging financial statements will involve software, systems, expertise, staff and consultants.

On the second question, Ms Tarca mentioned experiences at the SEC pointing to some significant problems relating to the accuracy of tagging and excessive or erroneous use of extensions. However, later errors became less prevalent and some ‘learning’ took place.

Turning to the third question, Ms Tarca pointed at the fact that there seems to be low demand from investors for regulators to make tagged data mandatory as the financial data investors use is already digital in many cases as they get it from database providers. Tagging of data would, therefore, likely help the database providers, who could then focus more on ‘standardizing’ and ‘normalizing’ data and providing their various other value-adding activities for their clients.

Finally, in discussing the fourth question, Ms Tarca noted research that concluded that XBRL has the potential to decrease information risk and information asymmetry through greater transparency and leads to reduced information processing costs. However, she warned that because of limited use of XBRL data by financial statement users research in this area is still in its early stages.

Ms Tarca concluded her speech mentioning some opportunities for further research around comparability, quality, financial statement presentation, and disclosures.

Please click to access the transcript of her speech on the IASB website.

Eumedion is a non-profit organization based in the Netherlands that monitors listed companies in the Nether­lands and in Europe on their ESG-per­for­mance and looks at risk man­age­ment, re­mu­ner­a­tion, trans­parency and reporting. Eumedion operates as a rep­re­sen­ta­tive of the interests of in­sti­tu­tional investors in the field of corporate gov­er­nance and sus­tain­abil­ity.

The position paper published concludes the final views of Eumedion, following the pub­li­ca­tion of Eumedion’s Green paper in October 2019, the feedback received during the Eumedion Con­fer­ence 2019, the formal and informal responses received and the insights shared during the round table that Eumedion organized together with Ac­coun­tancy Europe on March 9, 2020.

Key messages of the position paper are:

• Investors struggle to un­der­stand how a company creates long-term value and how a company lives up to the valid needs of society where non-fi­nan­cial per­for­mance matters.
• There is a need for an International Non-fi­nan­cial reporting Standards Board (‘INSB’) to ensure that en­force­able and con­sis­tent in­vestor-rel­e­vant non-fi­nan­cial in­for­ma­tion is faith­fully reported.
• Eumedion calls on the IFRS Foun­da­tion to establish the INSB, as a second separate board next to the International Accounting Standards Board (IASB).
• External auditors should provide at least limited assurance on the in­for­ma­tion reported; this would enhance the re­li­a­bil­ity of corporate non-fi­nan­cial reporting.

The position paper states that the EU needs to be credited for its important role in ac­cel­er­at­ing the adoption of IFRSs to the current near-global level and expresses the belief that the EU could play a similar role for international non-fi­nan­cial reporting standards. Eumedion also urges the EU to adhere to its lead­er­ship role in the field of non-fi­nan­cial reporting. However, the paper quotes ESMA Chair Steven Maijoor in warning that: “It would not only be short-sighted but also detrimental for investors – who typically operate in global financial markets – to build a set of corporate ESG disclosure standards that is only regional.”

Please click to access the full position paper on the Eumedion website.

The guidance published outlines three CCO models tailored to the needs of small businesses, specialized businesses, and firms with multiple lines of business. CSA staff have provided guidance on arrangements where:

• an individual can apply to be the CCO for more than one firm (the shared CCO model);
• a firm can have multiple CCOs, each responsible for a separate business line or category of registration (the multiple CCO model); and
• a non-traditional or specialized firm, such as a fintech firm, can have an individual acting as a CCO, with the individual’s industry-specific experience being used to assess their proficiency to act as CCO (the specialized CCO model).

Firms interested in implementing one of these arrangements must clearly demonstrate the model is appropriate for their business, as well as ensure individuals applying to be a CCO meet registration requirements.

Firms must first apply for registration or exemptive relief for these models, which will be reviewed by CSA staff on a case-by-case basis, to ensure requirements, including investor protection measures, are met. Registrants are encouraged to reach out to their local regulator for any questions they may have around these CCO models, or other relevant CCO models.

Re­view the press re­lease on the CSA's web­site and details of the guidance on the OSC’s website.

This conclusion is based on a 25-page legal opinion released on June 25, 2020 by Carol Hansell, one of Canada’s leading experts on corporate governance. In her analysis, Hansell states unequivocally that corporate directors have a duty to assess the degree to which climate change will impact a company over the long-term, not just its short-term profits or business plans. They must also ensure that, where risks and opportunities are material to the firm’s business, management must come up with strategies to address them.

The legal opinion was prepared for the Canadian Climate Law Initiative, It is one of the first such in-depth legal analyses of directors’ duties in a corporate governance context with respect to climate change by a senior Canadian lawyer.

For further information, refer to the article and Hansell’s 25-page opinion.

As companies experience unprecedented economic disruption, many are rethinking their fundamental purpose and strategy. To help steer their organizations toward long-term value creation, it is recommended that Chief Financial Officers (CFOs) and finance functions need to ensure that all relevant information around value creation, performance, opportunities, risks and trade-offs is available to internal decision makers, investors and other capital providers.

To support CFOs and their finance teams in this context the IFAC, IIRC, AICPA and CIMA have issued new guidance on accounting for, and reporting on, what matters, namely “The CFO and Finance Function Role in Value Creation”, and its supplementary report, “Understanding Value”. 

These documents contain actionable insights for CFOs, finance teams and other business leaders to sharpen their perspective on value creation beyond the financials. They also include detailed guidance on developing a corporate scorecard that provides an integrated view of value and performance. This involves capturing information across three value perspectives: societal, business, and balance sheet.

For further details, refer to the press release and the related documents on the IFAC web­site.