OSC disclosure rules come under scrutiny

The Ontario Securities Commission (OSC) is reviewing its disclosure policy after a professional organization concluded that valuation reports and fairness opinions relied on by shareholders are “inadequate and generally useless.”

The reports issued by various sources are an integral part of an OSC policy, which seeks to help investors assess the fairness of takeover bids, companies going private and business transactions involving major asset shuffles and related-party deals, Canadian Press reports.

The policy, which aims to provide disclosure guidelines, was extensively overhauled by Robert Wright, the former chairman of the OSC. It has been in effect since mid-1991.

The Canadian Institute of Chartered Business Valuators described the statistical presentations as “generally very poor, while disclosure about the underlying reasons and judgments was better but still inadequate in most of the opinions.” The review committee found that, generally, “the usefulness of the disclosure was quite lacking,” the report said.

The institute is developing guidelines concerning disclosure requirements and valuations reports prepared for regulatory purposes, the OSC said.