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Notice 2020-005 - Guidance – COVID-19 and Financial Statement Disclosure

April 6, 2020

The Canadian Securities Exchange (CSE, or Exchange) is issuing this notice to provide guidance and clarify its expectations for upcoming periodic financial disclosures of CSE listed companies.

On March 20, 2020, the Exchange issued Notice 2020-004 - CSE Clarifies Filing Requirements in Support of CSA Announcement. In that notice, the Exchange confirmed that temporary relief granted by the Canadian Securities Administrators (CSA) with respect to financial statements, management’s discussion and analysis and other periodic filings will apply to CSE issuers.  As of the date of this notice, the CSA has provided a temporary 45-day extension for regulatory filings required to be made on or before June 1, 2020, subject to certain conditions.

In Notice 2020-004, the Exchange also reminded all CSE issuers of their ongoing obligations under Exchange Policy 5 to make timely public disclosure of all material information resulting from the COVID-19 outbreak, and to file a Monthly Progress Report (Form 7) to keep investors and the market informed of the Issuer’s ongoing business and management activities that occurred during the preceding month.

As the Exchange conducts its regular reviews of disclosure we will focus on the next filings of annual and interim MD&A. For many issuers, the COVID-19 outbreak will affect all or most of the objectives of an MD&A as set out in Form 51-102F1, and we offer the following as guidance:

• help current and prospective investors understand what the financial statements show and do not show

For example, for December 31, 2019 annual statements in which the impacts of COVID-19 constitute an event that occurred after the end of the reporting period, readers should be clearly informed about any asset carrying values that have subsequently been impaired.

discuss material information that may not be fully reflected in the financial statements, such as contingent liabilities, defaults under debt, off-balance sheet financing arrangements, or other contractual obligations

For example, even if the recoverable amounts of loan receivables or other financial assets remain unchanged by COVID-19, we expect disclosure of any renegotiations, extensions or other matters relevant to understanding their terms and related exposures.

discuss important trends and risks that have affected the financial statements, and trends and risks that are reasonably likely to affect them in the future

For example, where an upward revenue trend shown in the December 31, 2019 financial statements will be broken because of the impact of COVID-19, this should be clearly stated in discussing operations and in setting out the company’s outlook.

• provide information about the quality, and potential variability, of your company’s profit or loss and cash flow, to assist investors in determining if past performance is indicative of future performance

For example, where the company’s operations were temporarily suspended or curtailed subsequent to the end of the reporting period, information about the impact of those events is as important to investors as the analysis of the amounts contained in the financial statements.


Overall, the MD&A should provide a balanced discussion that allows a clear understanding of how the unusual circumstances created by COVID-19 has affected the company’s strategy, its ability to implement that strategy, and related risks.

As always, CSE Listings Staff are available to answer questions about completing or posting CSE Forms, at [email protected].

For questions about content of this CSE Notice, please contact:

John Hughes, Manager Financial Disclosure & Compliance

[email protected], or 647-729-8326

For questions about CSE Listings Policies or procedures, please contact:

[email protected], or 416-367-7340.

Mark Faulkner, Vice President Listings & Regulation

[email protected]