OSC Notice of General Order – Ontario Instrument 52-502 Exemption from National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure

Order

The Ontario Securities Commission, considering that to do so would not be prejudicial to the public interest, orders that effective December 2, 2021, Ontario Instrument 52-502 entitled "Exemption from National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (Interim Class Order)" is made.

December 2, 2021

"Grant Vingoe"
Chair
Ontario Securities Commission
 
"Timothy Moseley"
Vice-Chair
Ontario Securities Commission

Authority under which the order is made:

Act and section: Securities Act, subsection 143.11(2)

 

Ontario Securities Commission

Ontario Instrument 52-502 Exemption from National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (Interim Class Order) (the Order)

Interpretation

1. In this Order:

"Act" means the Securities Act, RSO 1990, c S.5;

"Bank Act" means the Bank Act, SC 1991, c 46;

"eligible issuer" means a reporting issuer that is, or that has a subsidiary or an affiliate that is, a federal financial institution subject to OSFI Guidelines;

"federal financial institution" has the same meaning as in the Bank Act;

"OSFI" means the Office of the Superintendent of Financial Institutions of the Government of Canada;

"OSFI Guideline" means any guideline or advisory guidance of OSFI that includes "best" or "prudent" practices that OSFI expects a federal financial institution to follow, clarifies OSFI's position regarding certain policy issues applicable to the federal financial institution or describes how OSFI administers and interprets provisions of the Bank Act or other applicable federal financial institution legislation;

2. Terms defined in the Act, National Instrument 14-101 Definitions and National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the Instrument) have the same meaning if used in this Order, unless otherwise defined.

Background

3. Under paragraph 4(1)(e) of the Instrument, an exception to the application of the Instrument is provided to issuers, in respect of disclosure of a specified financial measure that is required under law, or by an SRO of which the issuer is a member, if

(i) the law or the SRO's requirement specifies the composition of the measure and the measure was determined in compliance with that law or requirement, and

(ii) in proximity to the measure, the issuer discloses the law or the SRO's requirement under which the measure is disclosed.

4. The OSFI Guidelines are used to set expectations to govern industry activities and behaviour. Although OSFI supervises their implementation and expects compliance, the OSFI Guidelines are not laws and as such, an issuer that is, or that has a subsidiary or an affiliate that is, subject to and complies with the OSFI Guidelines is unable to rely on the exception in paragraph 4(1)(e) of the Instrument.

5. The Commission is satisfied that because the OSFI Guidelines include specifications on the composition of certain financial measures that would include certain specified financial measures and contain specific disclosure requirements related to those measures, eligible issuers already provide sufficient disclosure. Providing an exemption from the Instrument to eligible issuers will minimize the regulatory burden on those issuers while maintaining market integrity and without impacting investor protection.

Class Orders under the Securities Act

6. Under subsection 143.11(2) of the Act, if the Commission considers that it would not be prejudicial to the public interest to do so, the Commission may, on application by an interested person or company or on its own initiative, make an order exempting a class of persons or companies, trades, intended trades, securities or derivatives from any requirement of Ontario securities law on such terms or conditions as may be set out in the order, effective for a period of no longer than 18 months after the day on which it comes into force unless extended pursuant to paragraph (b) of subsection 143.11(3) of the Act.

7. The Commission is satisfied that it would not be prejudicial to the public interest to provide, on an interim basis, the exemption set out below.

Exemption from the Instrument

8. Consequently, this Order provides for the temporary exemption listed below.

9. The Instrument does not apply to an eligible issuer in respect of disclosure of a specified financial measure pursuant to an OSFI Guideline, if

(a) the OSFI Guideline specifies the composition of the measure and the measure was determined in compliance with that OSFI Guideline, and

(b) in proximity to the measure, the eligible issuer discloses the OSFI Guideline under which the measure is disclosed.

Effective Date and Term

10. This Order comes into effect on December 2, 2021, and will cease to be effective on the earlier of the following:

(a) June 2, 2023

(b) the effective date of any amendment to the Instrument that includes the addition of an exception to the application of the Instrument based on disclosure of a specified financial measure pursuant to an OSFI Guideline.