Forward-looking information or a forward-looking statement is any disclosure that an issuer makes about possible future events, conditions or financial performance. This disclosure is based on assumptions related to future economic conditions and/or courses of action.
Companies are encouraged to provide forward-looking information when there is a reasonable basis for doing so. Forward-looking information often forms part of the continuous disclosure in Ontario required from issuers under securities legislation.
Forward-looking information generally forms part of the Management’s Discussion & Analysis (MD&A), which must accompany an issuer’s financial statements. The MD&A is an explanation of how the company’s management views the company’s performance, financial condition and future prospects during the time period covered by a financial statement. Preparing the MD&A necessarily involves some degree of prediction or projection, including possible discussion of known trends or uncertainties that are reasonably likely to affect the company’s business.
When a company makes forward-looking information available as part of its financial statements, the company must:
- make a statement declaring that the information is a projection;
- describe factors that may cause actual results to differ materially from the forward-looking information;
- provide the material assumptions used to develop the forward-looking information; and
- include appropriate risk disclosure and cautionary language.
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