CSA Releases a Revised Proposed National Instrument Governing Disclosure of Non-GAAP and Other Financial Measures

In the fall of 2018, the Canadian Securities Administrators (the “CSA”) requested comments from stakeholders on a proposed National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (the “Original Proposed Instrument”), which was aimed at prescribing disclosure requirements for non-GAAP and other financial measures to replace CSA Staff Notice 52-306 – Non-GAAP Financial Measures (the “Current Staff Notice”). For background and overview of the Original Proposed Instrument and the Current Staff Notice, please see our September 2018 blog post.

Following its review of feedback from various stakeholders on the Original Proposed Instrument, the CSA has published a second notice and request for comment on a proposed revised version of the Original Proposed Instrument (the “Amended Proposed Instrument”). The Amended Proposed Instrument addresses initial comments from stakeholders relating to the Original Proposed Instrument, narrowing its scope and simplifying some of its requirements. Certain meaningful changes from the Original Proposed Instrument are outlined below.


The CSA has revised the definition of “non-GAAP financial measure” to mean “a financial measure presented by an issuer that (a) depicts the historical or expected future financial performance, financial position or cash flow of an entity, (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most comparable financial measure presented in the primary financial statements of the entity, (c) is not presented in the financial statements of the entity, and (d) is not a ratio.”

This amended definition is less targeted than what was proposed in the Original Proposed Instrument and is more consistent with the Current Staff Notice and the rules and guidance of other securities regulators.

Further, the scope of a “non-GAAP ratio” (which previously fell within the term “non-GAAP financial measure” under the Original Proposed Instrument) has also been separated and substantially reduced. Only ratios where a non-GAAP financial measure is used in the numerator or the denominator, or both, are now captured.

Additionally, the Amended Proposed Instrument replaces the term “segment measure” with “total of segments measure,” with the revised definition capturing only a subtotal or total of two or more reportable segments. The term would not capture, for example, measures relating to a discrete reportable segment that are not non-GAAP measures in and of themselves.


In addition to excluding SEC foreign issuers, the Amended Proposed Instrument now also excludes investment funds (as defined in National Instrument 81-106 - Investment Fund Continuous Disclosure) and designated foreign issuers (as defined in National Instrument 71-102 - Continuous Disclosure and Other Exemptions Relating to Foreign Issuers).

Also, the Amended Proposed Instrument now excludes, among others, disclosure by non-reporting issuers, other than in certain securities offering documents, as well as disclosures required under National Instrument 43-101 – Standards of Disclosure for Mineral Projects or National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (other than certain voluntary disclosures).

Disclosure Requirements

Finally, the Amended Proposed Instrument simplifies various disclosure requirements, including those in respect of:

  • non-GAAP financial measures that are forward-looking information by eliminating the quantitative reconciliation requirement and replacing it with a requirement to describe each reconciling item between the non-GAAP financial measure that is forward-looking information and the historical non-GAAP financial measure;
  • non-GAAP ratios, which are now subject to a separate section in the Amended Proposed Instrument with reduced disclosure requirements;
  • capital management measures, by allowing issuers to rely on disclosures related to such measures within their financial statements instead providing new disclosure in each document that uses the measure; and
  • supplementary financial measures, by removing the requirement for issuers to present the comparative period and explain the reason for a change (if any) from the comparative period.

In addition, the Amended Proposed Instrument permits cross-referencing back to the issuer’s MD&A in certain documents, though not in press releases.

To discuss the implications of the Amended Proposed Instrument or current best practices regarding disclosure of non-GAAP financial measures, please contact any member of our Corporate Finance and Securities Group.


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