Canadian reporting issuers will be required to begin reporting in International Financial Reporting Standards (“IFRS”), rather than Canadian GAAP, by the first quarter of 2011 with comparative data for the prior periods also reported in IFRS.
The Ontario Securities Commission (“OSC”) has issued Staff Notice 52-718 regarding an IFRS Transition Disclosure Review.
We recommend that all Canadian reporting issuers review the document carefully and consider your company’s transition disclosures and implementation plan. Although prepared by the OSC, the British Columbia Securities Commission (“BCSC”) has issued BC Notice 2010/07 Transition Disclosure which states that the results found by the BCSC are similar to those found by the OSC with respect to reporting issuers.
The Notice states that many reporting issuers have not addressed or disclosed their transition plan to IFRS in their MD&A. To date, the OSC has issued warning letters to many issuers who have not discussed the IFRS issues in their MD&A, but they have alluded that they may now require reporting issuers to re-file their MD&A if such documents contain no or inadequate disclosure. The BCSC has indicated they may do the same.
Accordingly, if you have not done so, please ensure that each quarterly and annual MD&A from this point forward discloses the company’s implementation plan and corresponding updates to such plan in subsequent filings. This should ensure a smooth process to IFRS and avoid comment letters from the securities regulators. The Notice contains disclosure examples that reporting issuers may want to use as a starting point.
As set out in the OSC Notice, reporting issuer’s should avoid boilerplate language and tailor the disclosure to reflect each company’s particular circumstances.
If you have questions about the transition to IFRS or disclosure of your company’s plans for the transition, contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.