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Expansion into the Chinese retail market is a key strategy for apparel-maker Canada Goose Holdings Inc., which noted in a filing that the outbreak 'developed ahead of a peak travelling and shopping season around the Lunar New Year on Jan. 25.'MARTIN POLLARD/Reuters

Dozens of Canadian businesses have included new disclosures in their financial reports that outline the impact coronavirus could have on their operations, offering early insights into the growing risks that could affect profits if the outbreak worsens.

Lawyers who advise businesses on corporate governance say publicly traded companies are seeking advice on how to disclose risks related to the global outbreak of COVID-19, the disease the coronavirus causes. Fears have intensified in recent weeks, just as many companies report their financial results for the fourth quarter of the 2019 calendar year.

“Some have already issued their annual filings and others are in the process of doing so as we speak," said Kathleen Ritchie, co-head of Gowling WLG LLP’s business law practice in Toronto. “They will be looking at this type of issue for both their MD&A and annual information form disclosures.” (MD&A refers to the management discussion and analysis section in quarterly and annual filings.)

Ms. Ritchie said that since the beginning of the year, 161 companies have filed a total of 271 documents with Canadian securities authorities that include the words “coronavirus” or “COVID-19.” Some contain general references to the effect of the outbreak on the global economy, while others are more specific.

“A number of issuers have connections to China [where the outbreak began],” Ms. Ritchie said, pointing to different ways the crisis is affecting three Canadian companies.

Auto-parts maker Magna International Inc., which has manufacturing clients in China, warned of the risk, but said in its quarterly disclosure on Feb. 21 that it has not updated its financial outlook with specific numbers at this time, because it is difficult to forecast when customers’ facilities in China will be fully operational.

Meanwhile, expansion into the Chinese retail market is a key strategy for apparel-maker Canada Goose Holdings Inc., which noted in a filing that the outbreak "developed ahead of a peak travelling and shopping season around the Lunar New Year on Jan. 25.″ Canada Goose said in early February that it would revise its outlook for fiscal 2020, stating: "The health crisis has resulted in a sharp decline in customer traffic and purchasing activity.”

In a filing last week, Teck Resources Ltd., Canada’s biggest base metals company, pointed to China as a major source of global demand for commodities, and said a significant slowdown in growth there "could have an adverse effect on the price and/or demand for our products.”

Terence Dobbin, managing partner of Norton Rose Fulbright Canada LLP, said his firm is very busy advising its clients on disclosure obligations. “One of the most important things that you can say about risk factors is it’s not one-size-fits all," he said. "We’ve had companies really looking at their operations and it’s very particular to each company.”

The answer on what, if anything, to disclose is also changing rapidly.

“The situation is so dynamic and moving so quickly," said John Valley, a partner at Osler, Hoskin & Harcourt LLP. "If you put out your MD&A six weeks ago, for example, you might not even have mentioned this because it just legitimately was not on your radar. Increasingly, it’s hard to look at coronavirus and think, ‘Well, how can I say nothing at all?’ ” However, he noted the specific impact is difficult to predict. “People aren’t putting numbers to it yet at this point, from what I’m seeing.”

Businesses are also wondering how to handle annual meetings this spring, when large gatherings may not be advisable, said Matthew Merkley, a partner at Blake, Cassels & Graydon LLP, adding that it may be possible to have some people tune in remotely.

Stikeman Elliott LLP partner Kathleen Chevalier has been advising businesses on how to handle their employees, including work-from-home plans and addressing the concerns of retail workers. "Once it started progressing significantly into Europe – into Italy – there was kind of a tipping point in terms of client interest. I think then it just felt a little closer to home or more viable.”

Still, Mr. Dobbin says Canadian companies have been “very measured” in their response. “We went through SARS, and I think there’s considerable confidence that the Canadian infrastructure is quite robust and will be prepared to deal with this situation as it evolves. Most companies that we’ve spoken with are quite confident in their own abilities to deal with it.”

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