National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure [Completed]
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Effective date: |
The final rule will come into effect on August 25, 2021 |
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Last updated: |
May 2021 |
Overview
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.
The Proposed Instrument would 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 has been updated several times subsequently to respond to changing circumstances.
On May 27, 2021, the CSA published disclosure requirements for issuers that disclose non-GAAP (generally accepted accounting principles) and other financial measures on a voluntary basis. The rule improves the quality of information provided to investors for various financial measures that commonly lack standardized meaning.
National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure will:
- Apply to all reporting issuers, except investment funds and certain foreign issuers;
- Apply to non-reporting issuers for certain offering documents and transactions;
- Require specified disclosure for certain financial measures presented outside the financial statements, such as non-GAAP financial measures and supplementary financial measures, (as defined in the final rule); and
- Apply to disclosures for a financial year ending on or after October 15, 2021 (for reporting issuers) and for certain offering documents or transactions filed after December 31, 2021 (for non-reporting issuers).
The final rule incorporates feedback to clarify and streamline the application and disclosure requirements. Prior to adopting the final rule, issuers should continue to refer to Staff Notice 52-306 (Revised) Non-GAAP Financial Measures, which will be withdrawn when transition to the final rule is complete. The final rule will come into effect on August 25, 2021.
Recent activities
May 2021
On May 27, 2021, the CSA published disclosure requirements for issuers that disclose non-GAAP (generally accepted accounting principles) and other financial measures on a voluntary basis. The rule improves the quality of information provided to investors for various financial measures that commonly lack standardized meaning.
March 2020
On March 18, 2020, the CSA announced that all CSA proposals currently out for comment will have their comment periods extended by 45 days.
February 2020
On February 13, 2020, the CSA published a second notice and request for comment on revisions to a proposed rule for Non-GAAP and Other Financial Measures. The rule would establish disclosure requirements for issuers that disclose non-GAAP and other financial measures, which often lack standardized meanings, resulting in potentially misleading disclosure. Comments are requested by May 13, 2020.
September 2018
On September 6, 2018, the CSA published for comment Proposed National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure, which establishes disclosure requirements for issuers that disclose non-GAAP and other financial measures.
