TORONTO, Dec. 14 /CNW/ - The OSC today published Staff Notice 52-719 Going Concern Disclosure Review, which provides results of a review on the adequacy and timeliness of
disclosure to investors of an issuer's ability to continue business
operations in the face of significant risks.
OSC Staff reviewed going concern disclosure within regulatory filings of
105 reporting issuers, most of which were junior issuers. The review is
a result of the OSC's response to developments in the markets in
2008-09. Among the issuers reviewed for going concern disclosure, 76
were operating with an elevated risk of financial difficulty, while 29
issuers had recently ceased operations.
Of the operating issuers, the OSC found:
In their notes to financial statements, operating issuers disclosed
material uncertainties. However, 41 per cent did not state these
uncertainties may cast significant doubt upon their ability to continue
as a going concern;
In their management's discussion and analysis (MD&A), 17 per cent of
operating issuers did not discuss going concern risk. Another 61 per
cent provided generic or incomplete disclosure;
Of the issuers which had recently ceased operations, the OSC found:
In financial statements, 28 per cent had not disclosed any going concern
risk, while another 20 per cent had provided incomplete disclosure;
Within the MD&A, 21 per cent had not discussed going concern risk, while
another 52 per cent provided incomplete disclosure.
"Issuers must provide transparency of the uncertainties which may affect
their ability to continue as a going concern," said Leslie Byberg,
Director, Corporate Finance at the OSC. "By providing timely and robust
disclosure on going concern matters such as operations, liquidity and
capital, issuers can help investors make decisions that potentially
avoid or minimize negative consequences."
The OSC notice provides additional guidance and examples to help issuers
improve going concern disclosure in future filings. The OSC will
continue to monitor continuous disclosure and prospectus filings for
disclosure of going concern risks. If disclosure is deficient, issuers
should expect requests for prospective enhancements or requests for
refilings. The notice is available on the OSC Website.
SOURCE Ontario Securities Commission
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