As two veteran regulators—one retired—we have found that a prolific source of myth-making around mineral project reporting was the confusion about which organization held the responsibility (and the authority) to make the rules in the first place. Was it the securities regulators, the stock exchanges or CIM?
Can you guess who’s striding up once again? It’s our straw man, and he has questions about that very subject.
Who’s in charge here? The CSA, the stock exchanges or CIM?
Canada’s mineral reporting framework is built on three distinct but complementary organizations:
• The Canadian Securities Administrators (CSA), the coordinating body of the 13 provincial and territorial securities regulators, which oversees NI 43-101 public disclosure requirements;
• The Canadian Institute of Mining, Metallurgy and Petroleum (CIM), the industry’s technical society, which provides definition standards and leading practice guidelines; and
• Stock exchanges, including the three largest—the Toronto Stock Exchange (TSX), TSX Venture Exchange and the Canadian Securities Exchange—which establish listing requirements, ongoing compliance and market oversight.
Each organization has a separate mandate and role, much like “the separation of Church and State” model; the principle that each organization keeps to its own area of expertise, but together they support Canada’s robust mineral project disclosure regime.
There are a lot of rules. Why is there so much bureaucracy?
You might be surprised how few actual rules there are. To explain how these organizations’ distinct roles work together, it helps to understand the division of powers.
NI 43-101 is a legal disclosure rule of the CSA made under the authority of provincial Securities Acts. It mandates how companies’ technical information is reported, establishes triggers for technical reports, provides the form and content (Form 43-101F1) and prescribes the timing. NI 43-101 also incorporates by reference the CIM definition standards directly into securities law. Most importantly, NI 43-101 requires a qualified person (QP) to prepare or approve all technical disclosure including technical reports. Geoscience and engineering professional associations in Canada and internationally play a critical competency and accountability role for individuals acting as a QP under NI 43-101.
CIM is not a regulator; it doesn’t enforce compliance or regulate professionals. Instead, it establishes the technical foundation that NI 43-101 relies on by providing two sets of documents: 1) Definition standards mandated under NI 43-101 even though they are developed externally by industry; 2) Leading practice guidelines, while not legally binding, reflect accepted industry practice. NI 43-101 also uses CIM to stay technically current. When CIM updates definition standards and industry practices, these updates are automatically adopted by NI 43-101, which allows the rule to stay relevant and adaptable.
Stock exchanges don’t create their own disclosure standard, although they have policies that companies must agree to follow. Instead, they require mineral companies to comply with NI 43-101, which is embedded into listing requirements and ongoing listing obligations. In effect, NI 43-101 becomes a condition of accessing and remaining on public markets.
Basically, the CSA, through NI 43-101, ensures disclosure consistency; CIM ensures technical consistency; and stock exchanges ensure market integrity.
CIM is the organization that decides which foreign organizations’ members can act as QPs, like JORC or PERC, right?
The QP definition is in NI 43-101; it’s a securities regulation concept solely for the purpose of disclosure, so it belongs to the CSA, not CIM. QPs must apply the CIM definitions and are expected to follow the current CIM practice guidelines but are allowed to exercise professional judgment. Professional associations, as recognized under NI 43-101, make sure individuals doing the work are trained, competent, ethical and accountable. CIM has a role like JORC or PERC on the international stage through the Committee for Mineral Reserves International Reporting Standards, which promotes alignment of reporting codes. But CIM’s voice there doesn’t make it the arbiter of disclosure; that is the CSA’s responsibility.
Isn’t the purpose of NI 43-101 to prevent the scandals that plagued the industry in the past? They are still happening today!
It’s a misconception that NI 43-101 prevents errors and poor professional judgment. NI 43-101 is just about disclosure, period. Companies employ geoscience and engineering professionals to conduct work, evaluate data and provide advice. But sometimes errors occur, or poor choices are made, and these show up in the disclosure. But NI 43-101 can’t fix these problems—these need to be addressed by companies and professionals before the disclosure is made. A possible solution to improve disclosure and reduce scandals is for companies to establish a system of internal peer review and technical oversight.
I was told that NI 43-101 mandates how many duplicates, blanks and standards companies need to include with their samples. Where is this in the rule?
How work is conducted, what steps should be taken and what is good industry practice are the purview of CIM, not the CSA. This is the principle of separation of powers. CIM develops technical standards and leading practices; CSA establishes the legal disclosure requirements. The Companion Policy to NI 43-101, while not legally enforceable, points to the CIM leading practices as guidance that the QP should follow and provides a useful measuring stick for regulators to assess whether a company has disclosed potentially misleading information. Misleading disclosure is a Securities Act offence and every province’s legislature expects its securities commission to enforce that.
Craig Waldie is a senior geologist at the Ontario Securities Commission. James Whyte, P.Geo., retired in 2023 from his role as senior geologist at the Ontario Securities Commission. Both authors are writing in their private capacity.
