OSC Releases Results of Related Party Transaction Disclosure Review

For Immediate Release OSC

TORONTO – The Ontario Securities Commission today published OSC Staff Notice 51-723 Report on Staff’s Review of Related Party Transaction Disclosure and Guidance on Best Practices, following a review of reporting by 100 Ontario-based issuers. The Notice provides guidance into areas where issuers should focus to improve their related party disclosure.

A Related Party Transaction (RPT) is a normal feature of business, and occurs between an issuer and a related party of the issuer at the time the transaction. In Canada, there are disclosure requirements relating to RPTs to ensure the fair treatment of all security holders. Almost all of the issuers in the review had some form of RPT disclosed in their financial statements or their Management’s Discussion and Analysis (MD&A).

In conducting the review, OSC staff assessed the RPT disclosure of 100 Ontario-based issuers selected at random across all industries. Nearly half of the issuers reviewed received comments from staff requesting prospective changes to the MD&A in order to improve clarity. In addition 20% of the issuers referred to having a code of conduct but the code was not accessible to investors. At staff's request the code was filed on the System for Electronic Document Analysis and Retrieval (SEDAR).

“Investors are entitled to clear and meaningful disclosure of RPTs to help inform their investment decisions,” said Huston Loke, Director of Corporate Finance. “The disclosure should highlight the purpose of the RPT, the parties involved and the corporate governance practices surrounding the approval of RPTs. We encourage issuers and their advisers to refer to our guidance as they prepare their annual and interim filings.”

OSC Staff Notice 51-723 can be found on the OSC’s website at www.osc.ca.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in the capital markets. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at www.osc.ca

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