SEC Memorandum Circular No. 13: Guidelines on Annex C of Rule 12 of Securities Regulation Code Interpreting the Comparative Periods Required in the Management’s Discussion and Analysis

On 12 September 2023, the Securities and Exchange Commission (“SEC”) issued SEC Memorandum Circular No. 13 (the “Memorandum”), clarifying the number of fiscal years required to be disclosed in the Management’s Discussion and Analysis portion of a prospectus (“MD&A”).

Part III (A)(2)(a) of Annex C of Rule 12 of the Securities Regulations Code mandates registrants to “discuss the registrant’s financial condition, changes in financial condition and results of operations for each of the last three fiscal years” in the MD&A portion of its prospectus. This provision created conflicting views and varying interpretations as to the number of fiscal years required to be disclosed in the MD&A. 

The SEC, through the Memorandum, provided guidelines on the interpretation of such provision. Thus, the aforementioned provision shall mean that registrants are required to disclose 2 comparative periods for its last 3 fiscal years.  

To illustrate, a registrant shall provide the following disclosure for the year ended 31 December 2022 comprising of 2 comparative periods for the last 3 fiscal years in the MD&A portion of its prospectus: 

Changes in Financial Condition and/or Results of Operations

(Comparative balances for 31 December 2022 and 31 December 2021)

Changes in Financial Condition and/or Results of Operations
(Comparative balances for 31 December 2021 and 31 December 2020)

Finally, the Memorandum provides that the foregoing interpretation shall apply prospectively to registrants required to file registration statement and/or other reportorial documents which include a disclosure of an MD&A.