The Canadian Securities Administrators (the “CSA”) have recently introduced a proposal that could streamline financial reporting requirements for certain small public companies listed on the TSX Venture Exchange (the “TSXV”) and the Canadian Securities Exchange (the “CSE”).
The Semi-Annual Reporting (“SAR”) Pilot would permit eligible venture issuers with annual revenue of less than $10 million to voluntarily shift from mandatory quarterly financial reporting to a semi-annual schedule, opting out of first and third quarter interim filings.
This marks a significant change to continuous disclosure obligations for small public companies that is designed to alleviate the regulatory burden and reduce compliance costs.
The Proposed Exemption
Under the current disclosure regime, public companies, or reporting issuers, are required to file interim financial statements and a related management’s discussion & analysis (“MD&A”) for the first three quarters of their fiscal year, plus audited financial statements and a related MD&A for the completed fiscal year.
The SAR Pilot, outlined in Proposed Coordinated Blanket Order 51-933, would create an exemption for participating reporting issuers from filing and delivering the financial reports and MD&A for their first and third fiscal quarters.
This is the latest initiative from the CSA to enhance the competitiveness of the Canadian junior capital markets by making financial reporting more efficient and cost-effective for smaller companies, freeing up resources that can be redirected toward growth and operations.
Companies relying on the exemption would, however, still be required to file:
- Complete six-month interim financial reports and related MD&A (for the second fiscal quarter).
- Annual financial statements and related MD&A.
- Timely disclosure of all material changes and compliance with relevant exchange listing requirements.
Eligibility and Conditions
Participation in the SAR Pilot is strictly voluntary and is limited to a distinct subset of compliant venture issuers. To qualify, a company must meet several strict criteria, including:
- Exchange Listing: The company’s securities must be listed on the TSXV or the CSE.
- Revenue Cap: The company must have annual revenue not exceeding C$10 million in its most recently filed audited financial statements.
- Timely Disclosure: The company must have filed all periodic and timely disclosures required under applicable securities laws, or any order or undertaking by or to a securities regulatory authority.
- Compliance History: The company must have been a reporting issuer in at least one Canadian jurisdiction for at least 12 months and must be in good standing, meaning they were not subject to significant penalties, sanctions, or unrevoked cease-trade orders during the preceding 12-month period.
- Press Release: A company electing to opt into the SAR Pilot must file a press release on SEDAR+ specifying the first reporting period for which they will rely on the exemption.
The exemption is generally non-reversible in the short term, and importantly, it does not apply to financial disclosure requirements that arise in the context of capital-raising activities, such as a prospectus offering, take-over bid circulars, or information circulars. Should a company wish to file any of the foregoing documents, it must include the most recent interim financial disclosure required by National Instrument 51-102.
Finally, a company must cease its participation in the SAR Pilot if it files a shelf prospectus or if it changes its fiscal year-end.
Next Steps
The CSA has opened the proposal for a public comment period, which will conclude on December 22, 2025. The regulators anticipate the Coordinated Blanket Order will be in force before the end of March 2026. The results and insights from the multi-year pilot will be used to inform a broader, permanent rule-making project concerning voluntary semi-annual reporting for eligible venture issuers.
