Streamlining Disclosure for Venture Issuers: Proposed Amendments to National Instrument 51-102; Continuous Disclosure Obligations, National Instrument 41-101; General Prospectus Requirements and National Instrument 52-110; and Audit Committees

by Bennett Jones LLP

On May 22, 2014, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 41-101 General Prospectus Requirements (NI 41-101), National Instrument 52-110 Audit Committees (NI 52-110) and related companion policies. The proposed amendments, if adopted, would streamline and tailor disclosure for venture issuers and make the disclosure requirements for venture issuers more manageable for issuers at their stage of development.

The proposed amendments are designed to focus disclosure of venture issuers on information that reflects the expectations and needs of venture issuer investors and eliminates disclosure obligations that may be less valuable to those investors, in addition to allowing management of venture issuers to focus on the growth of their business by streamlining the disclosure requirements for venture issuers.


In July 2011 and September 2012, the CSA published for comment proposed National Instrument 51-103 Ongoing Governance and Disclosure Requirements for Venture Issuers and related rule amendments. These previous proposals were designed to streamline and tailor venture issuer disclosure while also improving requirements for corporate governance. While the previous proposals were more comprehensive than the proposed amendments, they contained many of the same key elements, including streamlined quarterly financial reporting, executive compensation disclosure and business acquisition reporting. While initial support for the previous proposals was strong, support for the September 2012 publication fell significantly as feedback from the venture issuer community indicated that the benefits from streamlining and tailoring venture issuer disclosure would be outweighed by the burden of a transition to a substantially new regime. The lack of support from the venture issuer community culminated in the CSA withdrawing the previous proposals in July 2013.

The Proposed Amendments

The proposed amendments have retained many significant elements from the previous proposals. Rather than implementing them as part of a new, stand-alone reporting regime for venture issuers, the CSA proposes to introduce them on a targeted basis by amending certain of the existing rules.

Proposed Amendments to NI 51-102

Quarterly Highlights

Currently, all issuers (venture and non-venture) are required to file quarterly interim management's discussion and analysis (MD&A) using Form 51-102F1 Management's Discussion & Analysis. The CSA proposes to permit venture issuers without significant revenue to fulfill this requirement by preparing and filing a streamlined and highly focused report, referred to as "quarterly highlights", in each of the first three quarters, which may be limited to a short discussion about the venture issuer's operations and liquidity. Venture issuers could alternatively choose to comply with the existing interim MD&A requirement.

Business Acquisition Reports

Currently, all issuers (venture and non-venture) are required to file a business acquisition report (BAR) using Form 51-102F4 Business Acquisition Report within 75 days of a significant acquisition, which must include audited financial statements for the acquired business or assets for the most recent financial year in addition to pro forma financial statements. For venture issuers, an acquisition is deemed significant if the asset or investment test specified in Part 8 of NI 51-102 is satisfied at the 40-percent level. The CSA proposes to: (i) increase this threshold from 40 percent to 100 percent, thereby reducing the circumstances in which BARs will be required for venture issuers; and (ii) eliminate the requirement that BARs filed by venture issuers include pro forma financial statements.

Executive Compensation Disclosure

Currently, all issuers (venture and non-venture) are required to file executive compensation disclosure using Form 51-102F6 Statement of Executive Compensation. The CSA proposes a new, streamlined executive compensation disclosure form for venture issuers (Proposed Form 51-102F6V) that would, among other things:

  • reduce the number of individuals for whom disclosure is required from a maximum of five to a maximum of three (the CEO, CFO, and one additional highest-paid executive officer);
  • reduce the number of years of disclosure from three to two; and
  • eliminate the requirement for venture issuers to calculate and disclose the grant date fair value of stock options and other share-based awards in the summary compensation table by allowing them instead to provide detailed information about stock options and other equity-based awards issued, held and exercised.

Alternatively, venture issuers could choose to comply with the existing Form 51-102F6.

Proposed Amendments to NI 52-110

The CSA proposes to require venture issuers to have an audit committee of at least three members, the majority of whom must be independent. This proposal should not impact TSX Venture Exchange listed issuers, as the policies of the exchange currently impose a nearly identical requirement.

Proposed Amendments to NI 41-101

Audited Financial Statements

The proposed amendments would reduce the number of years of audited financial statements required in an initial public offering (IPO) prospectus from three to two for an issuer that will become a venture issuer upon completion of its IPO.

Description of the Business and History

The proposed amendments would permit venture issuers to provide two instead of three years of disclosure of the issuer's business and history in an IPO prospectus.

Conforming to Proposed Continuous Disclosure Changes

The proposed amendments would also conform the prospectus disclosure requirements to the corresponding changes to NI 51-102 described above by:

  • allowing venture issuers to provide quarterly highlights instead of more fulsome quarterly MD&A disclosure in an IPO prospectus;
  • allowing venture issuers to satisfy executive compensation disclosure requirements in an IPO prospectus using the Proposed Form 51-102F6V; and
  • only requiring BAR disclosure in an IPO prospectus of a venture issuer where the acquisition is or will be significant at the 100-percent level.

Next Steps

The CSA’s comment period closes on August 20, 2014.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.