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CSA Provides Further Guidance on COVID-19 Disclosures by Issuers

March 4, 2021

On February 25, 2021, the Canadian Securities Administrators (CSA) released CSA Staff Notice 51-362 - Staff Review of COVID-19 Disclosures and Guide for Disclosure Improvements (Notice). The Notice summarizes key findings from the CSA’s review of continuous disclosure documents and provides guidance for issuers when disclosing the business impact of COVID-19.


Despite the ongoing uncertainties concerning COVID-19, the CSA are clear that meaningful disclosures by issuers are necessary for investors to make informed decisions, emphasizing that there is no “one size fits all” model. Issuers must have transparent and balanced disclosure that provides investors with an entity-specific level of insight to understand the operational challenges, financial impacts, risk profile and operational responses related to COVID-19. Areas of focus by the CSA include the nature and extent of credit risks and liquidity uncertainties, concerns around unbalanced or overly promotional disclosure and potentially noncompliant non-GAAP financial measures, and forward-looking information disclosure. The Notice provides examples of both deficient disclosure and corresponding, improved disclosure covering many of the matters discussed below.


The Notice highlights key issues found within COVID-19 disclosure in management’s discussion and analysis (MD&A). Generally, the CSA observed a lack of specificity with respect to impacts of COVID-19 on issuers. For instance, some issuers disclose lists of qualitative measures taken to manage operational and liquidity risks, but fail to provide adequate discussion of their anticipated impacts. In addition, most issuers that disclose quantitative variances as being attributable to COVID-19 fail to provide a sufficient explanation of the methodology employed to determine that such fluctuations actually arose from COVID-19, rather than some other cause.

The Notice also provides further observations and considerations for issuers regarding MD&A disclosure deficiencies concerning COVID-19, including the following:

  • Discussion of Operational Status: Given the impact of COVID-19 on issuers’ operations, detailed and transparent discussion should be provided regarding operating status and operational challenges that management is monitoring. Material operational updates should provide additional context for financial results and a separate “COVID-19” section preceding the discussion of financial results may aid in providing the necessary context for analysis by investors. Issuers should consider discussing the impact of health and safety guidelines on operations and the impact on demand for, or the ability to provide, any relevant products and services (both adversely and positively), among other considerations.

  • Discussion of Operational Responses: Issuers should disclose sufficient detail on cost saving measures, restructuring initiatives or realignments of operational and financial resources in response to COVID-19 to help investors understand operational measures that have materially impacted operations and may affect future performance. Issuers should also consider discussing the impact of operational measures taken that may increase costs and describe how operational responses and costs will change as the context evolves.

  • Analysis of Overall Performance and Operations: Issuers should not simply attribute negative results to COVID-19; rather, they should include a meaningful discussion of the material impacts of COVID-19 on operations, including issuer-specific impacts on revenues and expenses by reportable operating segment, with reasons for material variances unrelated to COVID-19 being disclosed with equal prominence. Recognizing the difficulty in determining an accurate quantitative impact, the Notice provides that the methodology in the calculation, judgments and estimations made by management should be explained. When material, issuers should also explain the government assistance received and where the funding has been recorded in the financial statements. Issuers should consider discussing how changes in demand affect financial results and the impact of operational closures and how costs and prices influenced results, among other considerations, with an appropriate balance of positive and adverse impacts, where applicable.

  • Known Trends and Events that are Reasonably Likely to Affect Future Performance: Given the uncertainty caused by COVID-19, a shift in focus from historical information to trends and uncertainties that are likely to affect future performance will be helpful to investors. Issuers should consider discussing how future periods may be impacted differently in comparison to the current period, including anticipating restructuring charges and operational plans for recovery from COVID-19, as well as trends that may continue post-pandemic.

  • Liquidity and Capital Resources: It is important for issuers to provide a comprehensive discussion of their plans and ability to manage current and expected liquidity and funding risks in the context of the pandemic, including their ability to meet working capital requirements or planned growth initiatives, or to fund developmental activities and capital expenditures. The CSA suggest that issuers with material liquidity risks consider disclosing their most current working capital amount, significant obligations maturing in the short term, cash burn rate on a monthly or quarterly basis, the period of time for which they expect to be able to fund operations and how they intend to prioritize expenditures in the short term. Issuers should also discuss whether their cost or access to capital has changed.

  • Debt Covenants: The Notice encourages issuers to discuss the terms and conditions of debt covenants, especially when a breach of the covenant could trigger a material funding requirement or early repayment. Further, if an issuer is close to a breach or is at a risk of default in future periods, the CSA considers such matters to be material information that should be clearly disclosed. Disclosure should also be provided where the terms of lending agreements may restrict an issuer’s business or restrict access to other financing.

  • Risk Factor Disclosure: Issuers should provide detailed disclosure of entity-specific risk factors relating to COVID-19 to help investors understand current and potential impacts. Boilerplate risk factor disclosure should be avoided. Risks should be disclosed in the order of seriousness, from the most serious to the least serious, to help investors understand the importance with which management views each risk.


  • Financial Statements: The Notice also provides commentary and guidelines for disclosures in financial statements which are impacted by COVID-19, including with respect to disclosure of government assistance, impairment of non-financial assets (including concerning investments in associates or joint ventures accounted for using the equity method), significant judgments and measurement uncertainties, estimating expected credit losses, going concern issues, measuring changes in fair value of investment properties, financial instrument risk disclosure and COVID-19 related amendments to IFRS 16 Leases.

  • Non-GAAP Financial Measures (NGM) Adjusted for Impacts Related to COVID-19: The Notice advises issuers to disclose how NGMs adjusted for COVID-19 impacts assist investors, how management uses such measures and why management believes such measures to be useful and meaningful alternatives for explaining the impact of COVID-19. Any adjustments should include specific descriptions of their components, be balanced by including both negative (e.g., reduced revenue) and positive (e.g., government subsidies) components and not be categorized as unusual or non-recurring where that is inappropriate as the pandemic continues. Further, NGMs should be based on actual results, instead of estimates or forecasts, and should not attempt to “normalize” revenue or expenses for a period based on more positive results for one quarter.  

  • Forward-Looking Information (FLI) in Effect During COVID-19: Issuers must have a reasonable basis for providing FLI, which may be difficult in the current environment.  As always, if material FLI has been provided by an issuer, it should be accompanied by disclosure of the material assumptions used to develop the FLI, as well as disclosure of the risks that could cause actual results for future periods to differ materially from those disclosed in the FLI. With rapidly changing circumstances in the context of COVID-19, the Notice reminds issuers to have in place processes to revisit and update their disclosures to discuss events or circumstances that are reasonably likely to cause actual results to differ from previously disclosed FLI.

  • Annual Information Form: The CSA note that some of the observations and considerations contained in the Notice may also be relevant for issuers that prepare an annual information form, including in particular, Item 4 - General Development of the Business and Item 5 - Describe the Business of Form 51-102F2 Annual Information Form. Also see “Risk Factor Disclosure” above.

  • Material Change Reporting: Issuers are required to file material change reports in relation to changes to their business, operations or capital as a result of COVID-19 that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer. However, if COVID-19 has an equal effect throughout an issuer’s industry, a material change report may not be required. The Notice provides that issuers should be aware of the impact of COVID-19, or resulting governmental or regulatory policies, that may be unique or more significant to them than to others in their industry as the pandemic evolves.

  • Promotional Disclosure: The CSA has observed that certain issuers, particularly in the biotech/pharma industries, have provided COVID-19 related disclosure that is overly promotional and lacks the specificity required to explain the issuer’s business intentions and expected milestones. Since issuers cannot make false or misleading statements or omit facts which would be misleading, issuers should provide complete, balanced disclosure focused on material information, giving equal prominence to both positive and negative news. The CSA refers to Part 6 of National Policy 51-201 Disclosure Standards to assist in setting up practices for good disclosure.

For further information, please contact:

Jeff Bakker                    403-260-9682
Howard Levine             514-982-4005
Matthew Merkley         416-863-3328
Susan Tomaine             604-631-3384

or any other member of our Capital Markets group.

Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.