CSA Reviews Corporate Governance Disclosure


On December 2, 2010, the Canadian Securities Administrators (“CSA”) published CSA Staff Notice 58-306 2010 Corporate Governance Disclosure Compliance Review, which sets out results of their review of random reporting issuers and provides further guidance on complying with existing corporate disclosure requirements.

The CSA reviewed 72 reporting issuers for compliance with National Instrument 58-101 Disclosure of Corporate Governance Practices and the related policy. The notice summarizes the results of the review of reporting issuers’ corporate governance disclosure filed in their most recent management information circular. The review found, among other things, that 55 per cent of reporting issuers reviewed were required to make prospective enhancements to their corporate governance disclosure, from 36 per cent in a similar review in 2007.

There are two sets of disclosure requirements:

TSX-listed issuers. TSX-listed issuers must comply with the disclosure requirements in Form 58-101F1 Corporate Governance Disclosure (“Form 58-101F1”). Under Form 58-101F1, they must provide disclosure about their corporate governance practices with reference to the guidelines set out in the Corporate Governance Policy.

Venture issuers. The Corporate Governance Instrument’s disclosure requirements for venture issuers are less extensive than those applicable to TSX-listed issuers. The requirements for venture issuers are set out in Form 58-101F2 Corporate Governance Disclosure (Venture Issuers) (“Form 58-101F2”). They must provide disclosure regarding their practices in the areas addressed by the guidelines set out in the Corporate Governance Policy, but they are not required to compare their practices against the guidelines.

The results of the review identified areas for improvement of disclosure related to reporting issuers’ boards of directors, position descriptions, orientation and continuing education, ethical business conduct, nomination of directors, and assessments. The notice provides guidance on compliance with the disclosure requirements in each of these areas as well as disclosure regarding risk oversight and management.

Where deficiencies were found, reporting issuers agreed to make changes in future filings. The CSA will continue to monitor corporate governance disclosure, and reporting issuers should anticipate staff requests for additional disclosure or re-filings, if required.

Copies of the notice are available on the websites of CSA members. The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

If you have questions about your corporate governance requirements, please contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.