43 Reporting, continuous disclosure, and other ongoing responsibilities for public companies in Canada Going public in Canada may mean big changes for your company. It may mean being subject to increased regulation, which can change the way business is conducted and result in enhanced responsibility for the board of directors. In Canada, public companies must provide timely, continuous reporting of information such as: • financial results of the company’s operations; • executive compensation; • share transactions of insiders; and • material corporate changes. Continuous and timely disclosure is the cornerstone of the Canadian capital markets. Public companies listed on the Exchanges are subject to continuous and timely disclosure obligations imposed by both their Exchange and the relevant provincial securities authorities. As a listed company, you’ll be required to make prompt disclosure of any material change, positive and negative, in your affairs that might reasonably be expected to expect to have a significant effect on the value of your securities. In addition, you’ll be expected to make timely disclosure with regard to financial statements, annual information forms, management discussion and analysis, information circulars and certain other continuous disclosure related materials. However, since your company is a non-Canadian company, you may be exempt from certain Canadian continuous disclosure obligations, as long as you comply with securities regulatory requirements in your home jurisdiction, and with the rules of the Exchange you’re listing on (Please note that the following information generally does not apply to investment funds, which are a special case). How to tell if your company is exempt To qualify as exempt, your company must both be a foreign reporting issuer and fall under one of the two additional categories defined at the beginning of this chapter: SEC Foreign Issuer or Designated Foreign Issuer. If you qualify as exempt, you are specifically exempt from the Canadian requirements relating to: a. the disclosure of material changes; b. the preparation, approval, delivery and filing of interim financial statements, annual financial statements and auditor’s report, MD&A and annual information forms; c. the preparation and filing of business acquisition reports; d. the disclosure of voting results; e. the filing of news releases disclosing information regarding your results of operations or financial condition; f. early warning and insider reporting; g. the filing of documents affecting the rights of securityholders and material contracts entered into other than in the ordinary course of business (this exemption applies even if you are not required to file this information with your home country regulator); h. a change in year-end; i. a change of auditor; and j. the disclosure about, and minority approval of, restricted securities. (Please note that the above is only an overview of the rules regarding exemptions for non-Canadian companies. Whether you are exempt and from what requirements should be reviewed carefully with your securities lawyer. See also National Instrument 71-102.)
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