The securities regulatory authorities in Ontario, Alberta and Saskatchewan have released CSA Multilateral Staff Notice 51-349, which summarizes key findings from an Ontario Securities Commission (OSC) staff review of the continuous disclosure of reporting issuers that meet the definition of an investment entity under International Financial Reporting Standards 10.
These issuers are an emerging subsector of the financial services industry and are mainly concentrated in Ontario.
One key difference between an investment fund and an investment entity is that the latter, in the corporate finance regime, can hold a significant or controlling interest in an investee, which is generally precluded under the investment fund regime.
OSC staff reviewed the compliance of 12 investment entities, representing more than 90% of the subsector’s market capitalization in Ontario. The purpose: to improve disclosure in material areas, assess accounting areas that require the exercise of significant judgment and inform policy-related issues.
The notice emphasizes the importance of fair-value measurements and entity-specific fair-value disclosures to help investors better understand the performance of an investment entity.
Additionally, there may be instances where further financial information and operational disclosure is needed so investors can make informed decisions.
As a result of the review, investment entities made a number of significant disclosure changes in these and other areas.
Some of the notice’s observations are also applicable in the participating jurisdictions for non-investment entities that record investments at fair value, and staff expect these reporting issuers to also consider the findings.
Read the full staff notice here.