Notice

New Requirements for Issuers  Effective March 30, 2004

This notice outlines new continuous disclosure requirements that will come into force on March 30, 2004.  It also outlines the new corporate governance requirements that will apply to issuers on March 30, 2004. 

New Continuous Disclosure Requirements 

National Instrument 51-102 Continuous Disclosure Obligations will come into force on March 30, 2004.  It contains a comprehensive set of rules that replace the continuous disclosure provisions found in Parts XIV and XV of The Securities Act, 1988 for issuers other than mutual funds.  The brochure "Canada's Continuous Disclosure Rules are Changing" summarizes its provisions. 

The following documents also relate to NI 51-102:   

Companion Policy 51-102CP
Form F1 - Management's Discussion and Analysis
Form F2 - Annual Information Form
Form F3 - Material Change Report
Form F4 - Business Acquisition Report
Form F5 - Information Circular
Form F6 - Statement of Executive Compensation 

CSA Staff Notice 51-308 Filing of Management's Discussion and Analysis and National Instrument 51-102 Continuous Disclosure Obligations provides guidance on complying with MD&A requirements upon implementation of NI 51-102.

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency sets out the accounting principles and auditing standards that must be used by reporting issuers in preparing financial statements included in a prospectus or filed in connection with continuous disclosure obligations.   NI 52-107 requires financial statements to be prepared in accordance with Canadian GAAP and audited in accordance with Canadian GAAS.  Companion Policy 52-107CP provides guidance. 

National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers contains exemptions for foreign issuers.  Companion Policy 71-102CP provides guidance.     

Consequential Amendments

Multilateral Instrument 45-102 Resale of Securities will be repealed and replaced with a new instrument on March 30, 2004.  The new instrument contains a simple four-month hold/seasoning regime for all reporting issuers.  Current MI 45-102 provides that securities acquired in a private placement are subject to a 4 month hold period if the issuer is a qualifying issuer (its securities are listed on a specified exchange and it has filed a current AIF).  If the issuer is not a qualifying issuer, resale is restricted for 12 months.   

Qualifying issuers were entitled to the shorter hold period because the information contained in their AIF ensured that more comprehensive information was available to the markets before resale.  Under the enhanced continuous disclosure rules in NI 51-102, the qualifying issuer concept has been eliminated.  A simple four-month hold/seasoning regime now applies to all reporting issuers.

The definition of “qualifying issuer” in Multilateral Instrument 45-103 Capital Raising Exemptions is amended to refer to continuous disclosure documents filed under NI 51-102.  MI 45-103 permits qualifying issuers to use a shorter form of offering memorandum and to incorporate by reference an AIF.   

New Corporate Governance Requirements

The following new corporate governance requirements will come into force on March 30, 2004: 

Multilateral Instrument 52-108 Auditor Oversight requires that an auditor’s report that accompanies a reporting issuer’s financial statements be signed by a public accounting firm that is a member of the Canadian Public Accountability Board.  The CPAB was established in July 2002 and is responsible for an oversight program that includes inspections of the auditors of Canada’s public companies. 

Multilateral Instrument 52-109 Certification of Disclosure in Companies’ Annual and Interim Filings requires an issuer’s chief executive officer and chief financial officer to personally certify that the issuer’s interim and annual financial statements, MD&A and AIFs do not contain any misrepresentations and fairly present the issuer’s financial condition.   They must also certify that they have implemented systems to ensure that material information about the issuer is made know to them and to provide reasonable assurances of the reliability of financial reporting.  Companion Policy 52-109CP provides guidance. 

Multilateral Instrument 52-110 Audit Committees requires reporting issuers to have an audit committee.  Audit committees are responsible for overseeing the work of the issuer’s external auditor.  MI 52-110 contains requirements for the composition of audit committees.  Companion Policy 52-110CP provides guidance.  

 March 1, 2004

Contact:

Barbara Shourounis
Director, Securities Division
(306) 787-5842
bshourounis@sfsc.gov.sk.ca