One key goal of securities laws is to protect investors and the public from fraudulent and manipulative practices by issuers. As such, reporting issuers do not get to simply fly under the law's radar, since markets watch, regulators listen, and investors keep score.
In this guide, we will discuss what reporting issuers need to know to stay compliant and up to date with Canadian securities laws. For more detailed advice, consider speaking with a Lexpert-ranked corporate finance lawyer.
What is a reporting issuer in Canada?
Under Canadian securities laws, a reporting issuer is an entity (such as a business, corporation, trust, etc.) that has issued, or plans to issue, securities to the public. Reporting issuers must meet several requirements so that their securities distributions comply with the law and to avoid regulatory penalties.
These rules can apply to issuers of many sizes. From small and medium enterprises (SMEs) to large public companies, issuers must follow the requirements set out in each province's securities legislation.
Watch how the rules on prospectus filings and exemptions apply to SMEs with this video from the Ontario Securities Commission (OSC):
Learn more about the rules that govern reporting issuers in Canada by consulting the best corporate finance lawyers in Canada as ranked by Lexpert.
How does an entity become a reporting issuer?
Each province and territory has its own securities laws, which set out the conditions under which an entity becomes a reporting issuer. For instance, Ontario's Securities Act defines a reporting issuer as an entity:
- which has filed a prospectus with the securities commission, and for which a receipt was issued
- whose securities are listed and posted for trading on any exchange in the province
- that is offering its securities to the public
- which merged with a reporting issuer for at least 12 months
Similar standards apply in most provinces and territories. Another way a company can become a reporting issuer is through a reverse takeover. This is when a private company becomes publicly listed by acquiring an existing publicly listed company.
If you're unsure whether your organization is a reporting issuer, you may want to consult a corporate finance lawyer.
What are the rules for reporting issuers?
Knowing whether your company is a reporting issuer is important because reporting issuers have many obligations under Canadian law on securities. Two main obligations for reporting issuers are:
- corporate governance expectations
- disclosures and reporting duties
It is also important to consider the National Instruments (NIs) and other instruments issued by the Canadian Securities Administrators (CSA). Although each province and territory is responsible for securities regulation in their own jurisdiction, the CSA works to harmonize these rules on reporting issuers, including through National Instruments.
We'll discuss these rules below. While most rules are similar across Canada, this guide highlights examples from specific provincial securities commissions.
Corporate governance expectations
Canada's laws on securities govern not just how reporting issuers disclose information to the public, but also aspects of how they manage their businesses. To meet these expectations, issuers should be familiar with several NIs that set out corporate governance requirements:
- Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109): requires the reporting issuer's CEO and CFO to certify the accuracy and completeness of its disclosures and financial filings
- Audit Committees (NI 52-110): provides for the standards of a reporting issuer's audit committee, its responsibilities, composition, authority, and reporting obligations
- Disclosure of Corporate Governance Practices (NI 58-101): requires reporting issuers to comply with the ongoing and timely disclosure requirements, unless exempted (such as investment funds)
Continuous disclosure duties
One core duty of reporting issuers is to keep investors, shareholders and the public informed through continuous disclosure. The relevant CSA issuance for this is National Instrument 51-102 (NI 51-102).
According to the British Columbia Securities Commission (BCSC), reporting issuers must have a corporate or fund profile, which must be updated, accurate, and available publicly. The goal is to inform the public about developments at the issuer that may affect how investors deal with its securities.
Here are the instances where a reporting issuer must file a disclosure with its securities commission:
When there's a "material change" in the issuer
When a material change occurs in the reporting issuer, it has the duty to do a disclosure according to the standards of the law. NI 51-102 states that a material change means that there's a:
- change in the reporting issuer's business, operations, or capital that would reasonably be expected to have a significant effect on the market price or value of the issuer's securities; or
- decision to implement a change referred to in first instance, which was made by the reporting issuer board of directors, or other persons acting in a similar capacity, or by its senior management
If a material change occurs, the reporting issuer must:
- immediately issue and file a news release, which must be authorized by an executive officer, disclosing the material change
- within 10 days when the change occurs, file a Material Change Report (Form 51-102F3) with their securities commission
Know more about the rules on material change reporting with this video from the Alberta Securities Commission (ASC):
Check out Lexpert's Special Edition on Finance Law, which also includes a directory of the leading lawyers and law firms in finance law who can help reporting issuers with these duties.
If an entity is a non-venture issuer
Non-venture issuers are required to file an Annual Information Form (AIF), according to NI 51-102. The AIF must be filed on or before the 90th day after the end of the reporting issuer's financial year.
A reporting issuer is considered a non-venture issuer if its securities are listed on major exchanges, (for example, TSX or Cboe Canada), or on a major US marketplace.
Disclosure of financial statements, MD&As, and other reports
NI 51‑102 also sets continuous disclosure requirements for reporting issuers' financial statements, management's discussion and analysis (MD&A) and other reports.
While a financial statement shows the numbers, the MD&A is a separate narrative that explains the issuer's performance, financial condition and outlook. The MD&A shows the issuer's performance during the covered period, its financial condition, and its future prospects.
Certain rules govern these financial statements and MD&As, such as:
- delivery to securityholders: a copy of financial statements and MD&As must be sent to the reporting issuer's registered holders and beneficial owners of its securities; when requested by securityholders, they must be sent to them within 10 calendar days
- form of MD&As: requires the use of Form 51-102F1 to comply with the form of MD&As; for example, changes in the issuer's performance must be explained in the MD&A, or that only material information must be reported in the MD&A
Annual Financial Statements (AFS)
The filing of Annual Financial Statements (AFS) are required for both venture and non-venture issuers, but filing deadlines differ:
- venture issuers: on or before 120 days after the end of its financial year
- non-venture issuers: on or before 90 days after the end of its financial year
Interim Financial Report (IFR)
Aside from the AFS, reporting issuers must also file an Interim Financial Report (IFR). Again, the filing deadline differs for venture and non-venture issuers:
- venture issuers: on or before the 60th day after the end of interim period
- non-venture issuers: on or before the 45th day after the end of interim period
Business Acquisition Report (BAR)
NI 51-102 states that if the reporting issuer completes a significant acquisition, it must file a Form 51-102F4 or the Business Acquisition Report (BAR) with its securities commission. The BAR must be filed within 75 days after the date of the acquisition.
Filing of material contracts
Unless exempted, NI 51-102 provides that a reporting issuer must file any material contract it has entered into during the last financial year. However, it does not include contracts that are entered into in the ordinary course of the issuer's business.
Reporting issuers: Back to the basics of securities laws
Compliance is not a one‑time hurdle when a company goes public. For reporting issuers, it is an ongoing duty that applies to every material change and other information the public needs to assess the issuer's securities. As expectations around transparency and governance evolve, issuers can rely on Lexpert‑ranked corporate finance and securities lawyers for practical guidance.
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