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AMF Report Highlights Deficiencies in Disclosure Documents of Quebec Issuers

By Howard Levine and Catherine Côté
October 17, 2017

The Corporate Finance Division of Quebec’s Autorité des marchés financiers (AMF) recently released its first Summary of Oversight and Regulatory Activities (Report), which provides general information and reminders about securities regulatory issues and initiatives and identifies gaps in continuous disclosure and financing documents of Quebec issuers. The Report also provides a snapshot of the Quebec capital markets, including a profile of Quebec-based issuers, and signals the AMF’s focus for 2017–2018.


The Report provides the following key takeaways:

  • As of June 30, 2017, 751 companies (out of a total of 2,034 reporting issuers in Quebec) had Quebec as their principal regulator, and of those, 59 per cent were venture issuers (principally consisting of issuers listed on the TSX Venture Exchange) and 41 per cent were other issuers
  • Quebec companies listed on the Toronto Stock Exchange (TSX) and the TSX Venture Exchange have a diversified sectorial distribution, including mining, diversified industries, technology, life sciences and communications and media
  • Quebec companies raised a total of C$16.3-billion during the past year: C$3.2-billion on the public market and C$13.1-billion on the exempt market
  • In total, 345 prospectuses were filed in Canada in the last year, 181 of which were filed in every Canadian province (52 per cent) and 109 were filed in every Canadian province excluding Quebec (32 per cent)
  • Of the boards of directors of Quebec companies listed on the TSX, 19 per cent have no women representatives, 28 per cent have one woman, 27 per cent have two women and 26 per cent have three or more women sitting on the board.


Non-GAAP Financial Measures

The Report notes that financial measures that are not compliant with general accepted accounting principles (GAAP) have proliferated in recent years. These non-GAAP financial measures (NGFMs) are found in: annual reports including management’s discussion and analysis (MD&A); press releases and prospectuses and on company websites. The AMF raised concerns that:

  • The content of company websites (such as corporate presentations, investor fact sheets or activity reports) often omits the financial measures presented in the company’s financial statements, particularly when disclosing profit or loss
  • NGFMs form the key message to investors in annual reports and thereby are given undue prominence
  • Press releases present NGFMs with similar or identical names to measures used in financial statements compliant with International Financial Reporting Standards (IFRS)
  • Discussion of NGFMs in MD&A is emphasized to the detriment of discussion about the most directly comparable financial measures determined in accordance with IFRS presented in the financial statements.

Operating Segments

The AMF noted the following deficiencies related to the quality of disclosure of operating segments in financial statements and MD&A:

  • Failure to disclose the aggregation of operating segments
  • Absence of criteria and economic indicators for aggregation in the description of the judgments made by management
  • Presentation of a single segment when there are multiple operating segments and no information about aggregation
  • Inconsistent disclosure between segment results discussed in MD&A and results presented in notes to the financial statements
  • Lack of discussion on reportable segments in accordance with GAAP
  • Failure to comply with the guidance in CSA Staff Notice 52-306 regarding adjusted segment results.

Mineral Projects

The AMF also noted the following deficiencies regarding the disclosure of mineral resources made by issuers in their technical reports:

  • The use of overly aggressive or unreasonable assumptions
  • Inadequate presentation of a reasonable prospect for eventual economic extraction.


The Report identifies the following deficiencies found in prospectuses:

  • Inadequate disclosure of the use of proceeds
  • Insufficient funds to continue operations during a reasonable period of time and meet short-term liquidity requirements
  • Attempting to limit liability with respect to third-party information contained in the prospectus
  • Incorporation by reference of interim financial reports that have not been reviewed.

FOCUS FOR 2017-1018

Looking forward, the Report states that the AMF’s focus is to:

  • Examine the disclosure of the risks and financial repercussions associated with climate change
  • Review MD&A to ensure compliance with disclosure requirements and proper description of the potential material repercussions of the new IFRS pertaining to revenue, financial instruments and leases
  • Re-examine annual reports, press releases and company websites to ensure that NGFMs are not misleading and are compliant with the guidance provided in CSA Staff Notice 52-306 (revised)
  • Re-examine information circulars to ensure transparency of disclosure with respect to the representation of women on boards and in executive officer positions.

For further information, please contact:

Howard Levine                           514-982-4005

or any other member of our Capital Markets group.