CSA NI 51-102 Business Acquisition Report Requirements

October 18, 2019

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CSA NI 51-102 Business Acquisition Report Requirements

Letter Summary:

Reporting issuers must file a BAR subsequent to an acquisition if the transaction constitutes a “significant acquisition” that is determined by one of the specified tests; an asset test, an investment test or a profit or loss test.  If the result from any one of these tests exceeds 20%, then a report is required (the threshold is 100% for a venture issuer).  The report is intended to provide investors with historical financial information on a significant purchase.  If it is not a venture issuer, the reporting issuer must also prepare pro forma financial statements.  The proposed changes aim to reduce some of the burden relating to the preparation of these reports.  The amendments would change the determination of significance for non-venture issuers such that an acquisition would only be a significant acquisition if at least two of the tests are triggered, and also increase the threshold to 30%.

Overview of the Council’s Comments:

The CAC support efforts that result in high quality information flowing to the investing public, in a manner that reflects today’s technological realities. We agree that the Proposed Amendments may not have a negative impact on the ability of investors to review relevant information in their decision-making process.  Although we note the estimated drop in the number of BARs filed is substantial, if the purchased asset(s) are viewed as material by market participants, the acquisition will in our view most likely trigger two (if not all three) of the tests. 

The increased threshold further appears reasonable given the large number of smaller reporting issuers. 

Given the expected reduction in BAR filings, as with other burden reduction

initiatives, the CSA should focus on improving the quality of other disclosure obligations. If an acquisition is not described in a BAR because it does not meet the significance thresholds, then the information provided in the next MD&A disclosure should be supplemented with additional descriptive information about the acquisition in plain language to assist investors.

We agree that no further changes are required to the BAR requirements as they

relate to venture issuers at this time.