Draft Regulation to amend Regulation 52-112 respecting Non-GAAP and Other Financial Measures Disclosure

REGULATION AMENDING REGULATION 52-112 RESPECTING NON-GAAP AND OTHER FINANCIAL MEASURES DISCLOSURE Securities Act (chapter V-1.1, s. 331.1, par. (1), (8), (11) and (34))

1. Section 1 of Regulation 52-112 respecting Non-GAAP and Other Financial Measures Diclosure (chapter V-1.1, r. 28.1) is amended: (1) by inserting “(1)” before “In this Regulation”; (2) by inserting, before the definition of “capital management measure”, the following: ““accounting principles” has the meaning ascribed to it in Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards (chapter V-1.1, r. 25)”; “additional subtotal” means a subtotal that: (a) is disclosed in the primary financial statements of an entity; (b) is not a financial measure that is defined or listed in the accounting principles applied to the preparation of the entity’s financial statements, or the composition of which is set out in those accounting principles, and (c) is not a specified financial measure;”; (3) by inserting, after the definition of “forward-looking information”, the following: ““management-defined performance measure” has the meaning ascribed to it in the accounting principles applied to the preparation of an entity’s financial statements;”; (4) by replacing the definition of “non-GAAP financial measure” by the following: ““non-GAAP financial measure” means a financial measure disclosed by an issuer, other than a total of segments measure or a capital management measure, that is either of the following: (a) a management-defined performance measure; (b) a financial measure that:

• 2 - (i) depicts the historical or expected future financial performance, financial position or cash flow of an entity; (ii) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity; (iii) is not disclosed in the financial statements of the entity, and; (iv) is not a ratio, fraction, percentage or similar representation;”; (5) by adding, after paragraph (1), the following: “(2) Terms used in this Regulation but not defined in this Regulation, Regulation 14-101 respecting Definitions (chapter V-1.1, r. 3) or other securities legislation, and defined or used in the accounting principles applied to the preparation of the entity’s financial statements, have the meaning ascribed to those terms in such accounting principles.”.

2. Sections 2 and 3 of the Regulation are amended by inserting, after “a specified financial measure”, “or an additional subtotal” .
3. Section 4 of the Regulation is amended: (1) in the paragraph (1): (a) by replacing “the specified financial measure”, in subparagraph (i) of paragraph (d), by “a specified financial measure or an additional subtotal”; (b) in subparagraph (e): (i) by inserting, in the text preceding subparagraph (i) and after “a specified financial measure”, “or an additional subtotal”; (ii) by replacing “and the measure”, in subparagraph (i), by “or subtotal and the measure or subtotal”; (iii) by replacing subparagraph (ii) with the following: “(iii) “in proximity to the first instance of the measure or subtotal, the issuer discloses the law or the SRO’s requirement under which the measure or subtotal is disclosed”; (c) by replacing “specified financial measure if the calculation of the specified financial measure is derived from”, in subparagraph (f), by “specified financial

• 3 - measure or an additional subtotal if the calculation of the measure or subtotal is derived from”; (d) in subparagraph (g): (i) by inserting, in the text preceding subparagraph (i) and after “specified financial measure”, “or an additional subtotal”; (ii) by inserting, in the French text of subparagraph (i) and after “mesure”, “ou ce sous-total”; (iii) by inserting, in subparagraph (ii) and after “the measure”, “or subtotal”; (2) by adding the following after paragraph (2): “(3) (a) This subsection does not apply in British Columbia. (b) In this subsection, “Authority” means the Autorité des marchés financiers established by the Act respecting the regulation of the financial sector (chapter E-6.1); “eligible issuer” means a reporting issuer that is, or that has a subsidiary or an affiliate that is, a financial institution subject to financial institution guidelines; “financial institution” means a federal financial institution within the meaning of the Bank Act (S.C., 1991, c. 46) or a financial institution that is authorized to carry on business in the Province of Québec under one of the following acts: (a) Insurers Act (chapter A-32.1); (b) Act respecting financial services cooperatives (chapter C-67.3); (c) Deposit Institutions and Deposit Protection Act (chapter I-13.2.2); and (d) Trust Companies and Savings Companies Act (chapter S-29.02); “financial institution guideline” means any guideline or advisory guidance of OSFI or the Authority applicable to a financial institution that specifies the composition of a specified financial measure;

• 4 - “OSFI” means the Office of the Superintendent of Financial Institutions of the Government of Canada; (c) Despite sections 2 and 3, this Regulation does not apply to an eligible issuer in respect of disclosure of a specified financial measure pursuant to a financial institution guideline if (i) the measure was determined in accordance with a financial institution guideline, and (ii) in proximity to the first instance of the measure, the eligible issuer discloses the financial institution guideline under which the measure is disclosed.”.

4. Section 5 of the Regulation is amended: (1) by replacing “Subject to subsections (3) and (4), an”, in paragraph (1), by “An”; (2) by inserting the following after paragraph (1): « (1.1) Despite paragraph (1)(a), an issuer may incorporate by reference the information referred to in subparagraph 6(1)(e)(ii) in respect of a management-defined performance measure if the reference is to the notes to the financial statements of the entity to which the measure relates.”; (3) in paragraph (2): (a) by inserting ,in the text preceding subparagraph (a) and after “subsection (1)” “or (1.1)”; (b) by inserting, in subparagraph (b) and after “MD&A”, “or in the notes to the financial statements”; (c) by replacing “MD&A is available”, in subparagraph (c), by “MD&A and the financial statements are available”; (4) by replacing “Despite subsection (1)”, in paragraph (4), by “Despite subsections (1) and (1.1)”.
5. Section 6 of the Regulation is amended: (1) in paragraph (1):

• 5 - (a) by replacing “in a document unless”, in the text preceding subparagraph (a), by “in a document, other than in financial statements about the entity to which the measure relates, unless”; (b) by replacing “the most directly comparable financial measure that is disclosed in the primary financial statements of the entity to which the measure relates”, in subparagraph (c), by “the most directly comparable financial measure disclosed in the primary financial statements of the entity to which the financial measure relates that is not a management-defined performance measure”; (c) by adding, in subparagraph (C) of subparagraph (ii) of subparagraph (e) and after “format”, “referred to in subsection (2)”.

6. Section 9 of the Regulation is amended by adding, in paragraph (a) and after “entity”, “to which the financial measure relates that is not a management-defined performance measure”.
7. Section 10 of the Regulation is amended: (1) in paragraph (1): (a) by inserting, in the text preceding subparagraph (a) and after “other than”, “in”; (b) by adding, in subparagraph (a) and after “entity”, “to which the financial measure relates that is not a management-defined performance measure”; (c) by replacing “primary financial statements of the issuer”, in subparagraph (C) of subparagraph (ii) of subparagraph (b), by “primary financial statements of the entity to which the financial measure relates that is not a management-defined financial measure”.
8. Section 11 of the Regulation is amended by replacing “issuer”, in subparagraph (ii) of paragraph (a), by “entity”.
9. The Regulation is amended by inserting the following after section 11: “PART 3.1 ADDITIONAL SUBTOTAL DISCLOSURE 11.1. An issuer must not disclose an additional subtotal in a document, other than in the financial statements about the entity to which the subtotal relates, unless both of the following apply:

• 6 - (a) the document discloses the most directly comparable financial measure disclosed in the primary financial statements of the entity to which the subtotal relates that is not a management-defined performance measure; (b) the subtotal is presented with no more prominence in the document than that of the most directly comparable financial measure referred to in paragraph (a).”. Effective date

10. (1) This Regulation comes into force on (indicate here the date of coming into force of this Regulation). (2) In Saskatchewan, despite subsection 1, if this Regulation is filed with the Registrar of Regulations after (indicate here the date of coming into force of this Regulation), this Regulation comes into force on the day it is filed with the Registrar of Regulations.