Written By Nicholas P. Fader and Jane M. Brindle

As 2007 drew to a close, the Canadian Securities Administrators (CSA): (i) implemented amendments to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102); (ii) provided an update on the status of previously proposed amendments to the CEO/CFO certification requirements in Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109); and (iii) announced the implementation dates for the new takeover bid regime and the new long form prospectus rule.

Future Oriented Financial Information Amendments

The CSA's long-awaited overhaul of the treatment of future oriented financial information (FOFI) took effect on December 31, 2007. National Policy 48 was rescinded and much of its guidance was recast in mandatory terms through amendments to NI 51-102. The NI 51- 102 amendments include requirements that apply to all forward-looking information generally as well as particular requirements for FOFI and “financial outlooks” (both of which are defined in NI 51-102 and discussed below).

Requirements Applicable to Forward Looking Information Generally

The NI 51-102 amendments establish two baseline requirements for all disclosure of forward-looking information. First, issuers cannot disclose forward-looking information unless they have a reasonable basis for it. Second, issuers disclosing material forward-looking information must include disclosure that (i) identifies the forward-looking information as such, (ii) cautions readers that actual results may vary, (iii) identifies the material risk factors that could cause material differences, (iv) states the material factors or assumptions used to develop the forward-looking information and (vi) describes the issuer's policy for updating forward-looking information if it includes procedures in addition to those noted in NI 51-102.

Requirements Applicable to FOFI and Financial Outlooks

The NI 51-102 amendments set out specific requirements for FOFI and financial outlooks. FOFI is defined as forward-looking information about prospective results of operations, financial position or cash flows that is based on assumptions about future economic conditions and courses of action and presented in the format of a historical balance sheet, income statement or cash flow statement. (Emphasis added.) A “financial outlook” is similar information that is not presented in financial statement format. Forward guidance with respect to individual financial statement line items, such as revenue, will constitute a financial outlook. The NI 51-102 requirements for FOFI and financial outlooks do not apply to disclosure contained in an oral statement or to disclosure that is subject to NI 51-101 Standards of Disclosure for Oil and Gas Activities or National Instrument 43-101 Standards of Disclosure for Mineral Projects. In the amended Companion Policy to NI 51-102, the CSA provide some guidance with respect to the dividing line between forward-looking information and financial outlooks, noting that an estimate of future store openings by an issuer in the retail industry would represent forward-looking information, but not a financial outlook. As well, it would appear that the disclosure by an oil and gas issuer of average and exit production for future periods or dates would not be considered a financial outlook for purposes of NI 51-102, but would constitute forward-looking information.

Issuers disclosing FOFI or a financial outlook must use assumptions that are reasonable in the circumstances and that are limited to a period for which the information can be reasonably estimated. The Companion Policy suggests that, in many cases, that time period will not go beyond the end of the issuer's next fiscal year. In addition, the disclosure must (i) use the accounting policies the issuer expects to use for the period covered by the FOFI or the financial outlook, (ii) state the date that the information was approved and (iii) include an explanation of the purpose of the information as well as a caution that the information may not be appropriate for other purposes. We note that the requirement to use the accounting policies that the issuer expects to use for the period covered by any FOFI or financial outlook may be complicated by the proposed transition to International Financial Reporting Standards.

Requirements Relating to Previously Disclosed Forward-Looking Information

The NI 51-102 amendments set out requirements respecting the updating and withdrawal of material forward-looking information.

NI 51-102 provides that, once disclosure of material forward-looking information has been made, issuers must disclose and discuss in their MD&A any material differences between actual results and previously disclosed FOFI or financial outlooks for that period. NI 51-102 also requires issuers to discuss in their MD&A any events and circumstances that occurred during the MD&A period that are reasonably likely to cause actual results to differ materially from the results implied by any outstanding material forward-looking information, as well as the expected differences. Finally, NI 51-102 provides that withdrawal of material forward-looking information must be disclosed in the issuer's MD&A together with a discussion of the events and circumstances that led to the decision to withdraw the information, including a discussion of any assumptions that are no longer valid.

Status of proposed amendments to Multilateral Instrument 52-109

On March 30, 2007, the CSA published for comment a proposed replacement instrument to MI 52-109. The new version of MI 52-109 was to take effect on June 30, 2008.

On November 23, 2007, the CSA published a notice indicating that significant amendments will be made to the replacement instrument, which will be published for a further comment period in the future.

One of the anticipated amendments to the replacement instrument is the elimination of the requirement for the CEO and CFO of a venture issuer to certify that they have designed and evaluated the effectiveness of disclosure controls and procedures and internal control over financial reporting. Although the current version of MI 52-109 will remain in effect until a replacement instrument is adopted, each jurisdiction that has adopted MI 52-109 has issued a local order or notice indicating that venture issuers will be permitted to file annual and interim certificates for periods ending on or after December 31, 2007 in a form that reflects the proposed change. The forms of alternative annual and interim certificates that venture issuers are permitted to file are available on the websites of the various securities commissions in Canada.

New take-over bid regime in effect

A harmonized take-over bid regime took effect on February 1, 2008. Except in Ontario, the new regime is contained in Multilateral Instrument 62-104 Take- Over Bids and Issuer Bids. Ontario adopted substantially the same provisions through amendments to Part XX of the Securities Act (Ontario) and the adoption of Ontario Securities Commission Rule 62-504 Take-Over Bids and Issuer Bids (OSC Rule 62-504). All jurisdictions that regulate take-over bids adopted National Policy 62-303, which provides interpretative guidance on the Multilateral Instrument, Ontario's legislative provisions and OSC Rule 62-504.

New long form prospectus rule to take effect in March 2008

On March 17, 2008, National Instrument 41-101 General Prospectus Requirements (NI 41-101), which harmonizes long form prospectus requirements across Canada, will take effect. NI 41-101 was initially published for comment on December 21, 2006. The CSA made a number of changes to NI 41- 101 as a result of the public comment process, including removal of the proposal to require a “substantial beneficiary of the offering” to certify the prospectus. The changes are summarized in the CSA Notice announcing implementation of NI 41-101, which is dated December 21, 2007. The Notice also provides details of the consequential amendments to, and repeals of, other regulatory instruments affected by the implementation of NI 41-101.