Let’s take another look at some items from the Ontario Securities Commission’s refilings and errors list.

This is a chronological record covering the last three years, of companies that refiled or restated some aspect of their continuous disclosure record as a result of an OSC review – the list has the dual purpose, I believe, of providing an extra degree of visibility regarding such companies, and also of setting out identified pitfalls that other preparers can thereby learn from and avoid. The following is from AbraSilver Resource Corp.:

• The Company has made certain corrective disclosures in accounting for the consideration payable under the second amended and restated share purchase agreement among SSR Mining Inc., Huayra Minerals Corporation, AbraSilver and Fitzcarraldo Ventures Inc…(the “Diablillos SPA”) which previously resulted in an understatement of mineral property interests, consideration payable, accumulated deficit and accumulated other comprehensive loss as at January 1, 2021, and December 31, 2021. The Company previously disclosed the unpaid remaining consideration of US$7,000,000 as a commitment. The Company has now remedied this by recognizing the remaining consideration payable as at January 1, 2021 of US$7,000,000, discounted at 15% discount rate per annum, with an estimated payment date of July 31, 2025. The Company has also recognized a corresponding addition to mineral property interests since the date of the Diablillos SPA, considering the hyperinflation impact in the Company’s subsidiary. The consideration payable has been accreted. 

As in many of these cases, one would be curious to know more, but the big picture is clear enough, that once in a while the regulators dig into whether something they observed in the disclosures should have been directly reflected in the financial statements: items disclosed as commitments arising from purchase agreements would probably be a prime example of such potential omissions. Excluding the item above, the company only had some $600K in liabilities, so the adjustment was certainly a material one.

But most of the items on the list relate to disclosure rather than to recognition and measurement. Here’s a completely different example of regulatory intervention:

• The website of Connor, Clark & Lunn Funds Inc. included a statement that Connor, Clark & Lunn Funds Inc. seeks to make investments that have a positive impact on the society, environment, and markets in which they operate. This statement had the effect of suggesting that the funds managed by Connor, Clark & Lunn Funds Inc. aim to generate a positive ESG impact. This statement was removed from the website in order to clarify that the consideration of ESG factors is not a component of the investment objectives for any of its publicly offered mutual funds  , nor does it form a material element of the investment strategies of those funds.

It’s not uncommon for some entries on the list to seem inadvertently funny, in a deadpan kind of way, and such a backfiring attempt to jump on the ESG virtue train certainly conforms to that. Oh well, never mind.  The list contains others along the same lines:

• The website of Purpose Investments Inc. included statements about the incorporation of ESG considerations into the investment process by the funds that it manages. The statements had the effect of suggesting that the issuers incorporate ESG considerations into their investment process. Revisions to the website were made to clarify that the issuers  do not incorporate ESG considerations and to provide more clarity on the funds that do.

Of course, we’ll see many far more serious ESG-related refilings in the future, following Canada’s eventual adoption of the ISSB standards (or some version of them).

Those findings also make the point that regulators may review corporate websites as well as the formal filings. Here’s one more example of that:

• The Issuer has removed from its website reference to the material resource estimate for the Albany graphite deposit (the “Albany Graphite Deposit”) because the technical report entitled “Technical Report on the Preliminary Economic Assessment of the Albany Graphite Project, Northern Ontario, Canada” dated July 9, 2015 contains an economic analysis that is no longer reliable and can no longer be classified as current. Additionally, the Issuer has revised a corporate presentation on its website to: (i) remove statements related to the Albany Graphite Deposit that can no longer be supported; (ii) remove disclosure of potential international partnerships unless and until any such partnerships are publicly announced; and (iii) address certain material factors and assumptions used to develop forward-looking information.

When the list was established, some twenty years ago, there was some concern that the reputational harm to the entities named on there might outweigh any policy-related benefits. Well, that didn’t particularly transpire, and even better news for those companies – the list nowadays is hidden deep in the OSC website, where no one will ever stumble on it, maybe not even if they’re actively looking (hint – go to Industry, then to Companies, and keep scrolling down). So no problem there!

The opinions expressed are solely those of the author.