2 | Time to Reconcile: Non-GAAP and Other Financial Measures Disclosure
Nearly three years after the CSA first published National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (NI 52-112) for comment, it came into force on August 25, 2021. Whereas the CSA has historically provided guidance about appropriate and inappropriate disclosure of financial measures, the new requirements in NI 52-112 are prescriptive. With few exceptions, the rules apply where a Canadian reporting issuer discloses a “specified financial measure,” of which there are five distinct categories, in a public document (including on its website and social media). Depending on the category into which the specified financial measure falls, issuers need to comply with strict and often complex disclosure requirements. For non-GAAP measures, these include presenting the most directly comparable GAAP measure with equal or more prominence, explaining the measure’s composition and providing a quantitative reconciliation to the most comparable GAAP measure. For a breakdown of the different specified financial measures and corresponding disclosure, read our bulletin Mind the GAAP: Don’t Get Tripped Up by the New Financial Measure Disclosure Requirements.
KEY TAKEAWAY
Enhanced consistency, reduced flexibility. Although the new rules may provide clarity for investors that want to understand the “how” and the “why” behind the numbers, the trade-off is a fairly rigid regime of prescribed disclosure that requires issuers to dedicate additional time and resources to ensure compliance.
3 | Major(ity) Changes:
Recent CBCA Amendments
A suite of amendments to the Canada Business Corporations Act (CBCA) enacted under Bill C-25 came into force on August 31, 2022, including the long-awaited implementation of true majority voting for uncontested director elections for public companies (also referred to as “mandatory,” “compulsory” or “binding” majority voting). In prior editions of Davies Governance Insights , we discuss the full scope of the amendments contemplated in Bill C-25, with a deep dive into the diversity disclosure requirements (which are already in force) and our preliminary thoughts on the majority voting regime. Here, we provide an overview of the changes that came into force on August 31, 2022, and in Chapter 4, we provide key considerations for CBCA public company boards to prepare for true majority voting in advance of their next director election.
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Governance Insights 2022
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