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Expert Panel on Securities Regulation

Creating an Advantage in Global Capital Markets

Draft Securities Act

TABLE OF PROVISIONS

SHORT TITLE

Short title

  • 1. This Act may be cited as the Securities Act .

INTERPRETATION

Definitions

  • 2. The following definitions apply in this Act.

“adviser”

« conseiller »

“adviser” means a person engaging in, or holding himself or herself out as engaging in, the business of advising others with respect to investing in, or buying or selling, securities or exchange contracts.

“associate”

« personne liée »

“associate” , when used to indicate a relationship with a person, means

  • ( a ) an issuer of which the person beneficially owns or controls, directly or indirectly, voting securities entitling the person to more than 10% of the voting rights attached to outstanding securities of the issuer;

  • ( b ) a partner of the person;

  • ( c ) a trust or estate in which the person has a substantial beneficial interest or in respect of which the person serves as trustee or in any other similar capacity; and

  • ( d ) in the case of an individual, a relative of that individual, including each of the following:

  • (i) the spouse or common-law partner of the individual, and

  • (ii) a relative of the individual’s spouse or common-law partner if he or she has the same home as the individual.

“Canadian securities law”

« droit canadien des valeurs mobilières »

“Canadian securities law” means

  • ( a ) this Act, the regulations and the rules; and

  • ( b ) in respect of a particular person, any decisions made by the Commission, the Tribunal or the Executive Director to which the person is subject.

“clearing agency”

« agence de compensation »

“clearing agency” means a person that

  • ( a ) with respect to trades or other transactions in securities, acts as an intermediary in paying funds or delivering securities, or both;

  • ( b ) provides centralized facilities through which trades or other transactions in securities or exchange contracts are cleared, including facilities for comparing data respecting the terms of settlement of a trade or transaction; or

  • ( c ) provides centralized facilities as a depository of securities.

It does not include an exchange, a quotation and trade reporting system, a registered dealer, the Canadian Payments Association or its successors, a bank, trust company, loan corporation, insurance company, treasury branch, credit union or caisse populaire that, in the normal course of its authorized business in Canada, engages in an activity described in paragraph ( a ), but does not also engage in an activity described in paragraph ( b ) or ( c ).

“Commission”

« Commission »

“Commission” means the Canadian Securities Commission established under Part 1.

“commodity”

« marchandise »

“commodity” means

  • ( a ) any good, article, service, right or interest of which any unit is, from its nature or by mercantile custom, treated as the equivalent of any other unit;

  • ( b ) the currency of any jurisdiction;

  • ( c ) any gem, gemstone or other precious stone; and

  • ( d ) any other good, article, service, right or interest, or a class of any of those things, designated as a commodity pursuant to an order made under section 10 .

“common-law partner”

« conjoint de fait »

“common-law partner” , in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year.

“company”

« société »

“company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization.

“contract”

« contrat »

“contract” includes a trust agreement, declaration of trust or other similar instrument.

“contractual plan”

« plan à versements périodiques »

“contractual plan” means any contract or other arrangement for the purchase of shares or units of a mutual fund by payments over a specified period or by a specified number of payments where the amount deducted from any one of the payments as sales charges is larger than the amount that would have been deducted from the payment for sales charges had the deduction been made from each payment at a constant rate for the duration of the plan.

“control person”

« personne de contrôle »

“control person” means

  • ( a ) a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and if a person holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer; or

  • ( b ) each person in a combination of persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, who holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and if a combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer.

“dealer”

« courtier »

“dealer” means a person engaging in or holding himself or herself out as engaging in the business of dealing in securities or exchange contracts.

“dealing”

« négocier »

“dealing” , in respect of securities or exchange contracts, includes

  • ( a ) trading a security or exchange contract as principal or agent;

  • ( b ) acquiring a security or exchange contract as principal or agent or any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of such an activity; and

  • ( c ) acting as an underwriter.

“decision”

« décision »

“decision” , when used in relation to the Commission, the Executive Director or the Tribunal, means a direction, decision, order, ruling or other requirement made by the Commission, the Executive Director or the Tribunal, as the case may be, under a power or right conferred by this Act or the regulations.

“director”

« administrateur »

“director” means a director of a company or an individual performing a similar function or occupying a similar position for a company or for any other person.

“distribution”

« placement »

“distribution” , when used in relation to trading in securities, means

  • ( a ) a trade in securities of an issuer that have not been previously issued;

  • ( b ) a trade by or on behalf of an issuer in previously issued securities of that issuer that have been redeemed or purchased by or donated to that issuer;

  • ( c ) a trade in previously issued securities of an issuer from the holdings of a control person;

  • ( d ) a prescribed distribution;

  • ( e ) a trade or an intended trade deemed to be a distribution under subsection 82 (2); or

  • ( f ) a transaction or series of transactions involving a purchase and sale or a repurchase and resale in the course of or incidental to a distribution referred to in paragraphs ( a ) to ( d ).

“distribution company”

« société de placement »

“distribution company” means a person distributing securities under a distribution contract.

“distribution contract”

« contrat de placement »

“distribution contract” means a contract between a mutual fund or its trustees or other legal representative and a person under which the person is granted the right

  • ( a ) to purchase the shares or units of the mutual fund for distribution; or

  • ( b ) to distribute the shares or units of the mutual fund on behalf of the mutual fund.

“economic interest in a security”

« intérêt financier dans une valeur mobilière »

“economic interest in a security” means

  • ( a ) a right to receive or the opportunity to participate in a reward, benefit or return from a security; or

  • ( b ) an exposure to a loss or a risk of loss in respect of a security.

“exchange contract”

« contrat de bourse »

“exchange contract” means a futures contract or an option where

  • ( a ) its performance is guaranteed by a clearing agency; and

  • ( b ) it is traded on an exchange pursuant to standardized terms and conditions set out in the bylaws, rules or regulations of that exchange at a price agreed on when the futures contract or option is entered into on the exchange.

It includes any instrument or class of instruments that meets the requirements of paragraphs ( a ) and ( b ) that is designated as an exchange contract by an order of the Commission.

“Executive Director”

« Directeur général »

“Executive Director” means the Executive Director of the Commission appointed under Part 1.

“form of proxy”

« formulaire de procuration »

“form of proxy” means a written or printed form that, on completion and execution by or on behalf of a security holder, becomes a proxy.

“forward‑looking information”

« information prospective »

“forward‑looking information” means disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action, and includes future‑oriented financial information with respect to prospective results of operations, financial position or cash flows that is presented either as a forecast or a projection.

“futures contract”

« contrat à terme »

“futures contract” means any obligation to make or take future delivery of a commodity, a security or cash, if the amount of cash is derived from, or by reference to, a variable, including a price or quote for a commodity or security, an interest rate, a currency exchange rate or an index or benchmark. It does not include an obligation or a class of obligations that is designated not to be a futures contract pursuant to an order made under section 10 .

“hearing”

« audience »

“hearing” means a hearing of a matter before the Commission, the Executive Director or the Tribunal and includes a review of a matter by the Commission, the Executive Director or the Tribunal.

“insider”

« initié »

“insider” means

  • ( a ) a director or officer of an issuer;

  • ( b ) a director or officer of a person that is itself an insider or subsidiary of an issuer;

  • ( c ) a person that has beneficial ownership of, or control or direction over, directly or indirectly, or a combination of beneficial ownership of and control or direction over, directly or indirectly, securities of an issuer carrying more than 10% of the voting rights attached to all the issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person as underwriter in the course of a distribution;

  • ( d ) an issuer that has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security;

  • ( e ) a person designated as an insider in an order made under section 10 ; and

  • ( f ) a person within a prescribed class of persons.

“investment fund”

« fonds d’investissement »

“investment fund” means a mutual fund or a non‑redeemable investment fund.

“investment fund manager”

« gestionnaire de fonds d’investissement »

“investment fund manager” means a person that directs the business, operations or affairs of an investment fund.

“issuer”

« émetteur »

“issuer” means a person that has outstanding securities, is issuing securities or proposes to issue securities.

“management company”

« société de gestion »

“management company” means a person that provides investment advice under a management contract.

“management contract”

« contrat de gestion »

“management contract” means a contract under which, for valuable consideration, a mutual fund is provided with investment advice, alone or together with administrative or management services.

“market participant”

« participant du marché »

“market participant” means a registrant, a person exempted from the requirement to be registered under this Act by a ruling of the Commission, a reporting issuer, a director, officer or promoter of a reporting issuer, a manager or custodian of assets, shares or units of a mutual fund, a recognized entity, a transfer agent or registrar for securities of a reporting issuer, the Canadian Investor Protection Fund, the general partner of a market participant or any other person or member of a class of persons designated by the regulations.

“material change”

« changement important »

“material change” means

  • ( a ) in relation to an issuer other than an investment fund

  • (i) a change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of a security of the issuer, or

  • (ii) a decision to implement a change referred to in subparagraph (i) made by the directors of the issuer, or by senior management of the issuer who believe that confirmation of the decision by the directors is probable; and

  • ( b ) in relation to an issuer that is an investment fund

  • (i) a change in the business, operations or affairs of the issuer that would be considered important by a reasonable investor in determining whether to purchase or to continue to hold a security of the issuer, or

  • (ii) a decision to implement a change referred to in subparagraph (i) made

  • (A) by the directors of the issuer or the directors of the investment fund manager of the issuer,

  • (B) by senior management of the issuer who believe that confirmation of the decision by the directors is probable, or

  • (C) by senior management of the investment fund manager of the issuer who believe that confirmation of the decision by the directors of the investment fund manager of the issuer is probable.

“material fact”

« fait important »

“material fact” , in relation to securities issued or proposed to be issued, means a fact that would reasonably be expected to have a significant effect on the market price or value of the securities.

“Minister”

« ministre »

“Minister” means the Minister of Finance.

“misrepresentation”

« présentation inexacte des faits »

“misrepresentation” means

  • ( a ) an untrue statement of a material fact;

  • ( b ) an omission to state a material fact that is required to be stated; or

  • ( c ) an omission to state a material fact that is necessary to be stated in order for a statement not to be misleading in the light of the circumstances in which it is made.

“mutual fund”

« fonds mutuel »

“mutual fund” means

  • ( a ) an issuer whose primary purpose is to invest money provided by its security holders and whose securities entitle the holder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets, including a separate fund or trust account, of the issuer; or

  • ( b ) an issuer that is designated as a mutual fund under section 10 or in accordance with the regulations.

It does not include an issuer, or class of issuers, that is designated under section 10 not to be a mutual fund.

“non-redeemable investment fund”

« fonds d’investissement à capital fixe »

“non-redeemable investment fund” means

  • ( a ) an issuer, other than a mutual fund, whose primary purpose is to invest money provided by its security holders and which does not invest

  • (i) for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non‑redeemable investment fund, or

  • (ii) for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non‑redeemable investment fund; or

  • ( b ) an issuer that is designated as a non‑redeemable investment fund under section 10 or in accordance with the regulations.

It does not include an issuer, or class of issuers, that is designated under section 10 not to be a non‑redeemable investment fund.

“offering memorandum”

« notice d’offre »

“offering memorandum” means a document, together with any amendments to that document, purporting to describe the business and affairs of an issuer that has been prepared primarily for delivery to and review by a prospective purchaser so as to assist the prospective purchaser to make an investment decision in respect of securities being sold in a distribution to which section 72 would apply but for the availability of one or more of the exemptions contained in Canadian securities law, but does not include a document setting out current information about an issuer for the benefit of a prospective purchaser familiar with the issuer through prior investment or business contacts.

“officer”

« dirigeant »

“officer” , with respect to an issuer or registrant, means

  • ( a ) a chair or vice-chair of the board of directors, a chief executive officer, chief operating officer, chief financial officer, president, vice-president, secretary, assistant secretary, treasurer, assistant treasurer and general manager;

  • ( b ) an individual who is designated as an officer under a bylaw or similar authority of the issuer or registrant; and

  • ( c ) an individual who performs functions similar to those normally performed by an individual referred to in paragraph ( a ) or ( b ).

“person”

« personne »

“person” means an individual, company, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative.

“portfolio manager”

« portefeuilliste »

“portfolio manager” means an advisor registered for the purpose of managing the investment portfolios of the advisor’s clients through discretionary authority granted by the clients.

“portfolio securities”

« valeurs de portefeuille »

“portfolio securities” means securities held or proposed to be purchased by a mutual fund.

“prescribed”

« Version anglaise seulement »

“prescribed” means prescribed by regulation.

“promoter”

« promoteur »

“promoter” means

  • ( a ) a person, acting alone or in conjunction with one or more other persons or a combination of them, that, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of an issuer; or

  • ( b ) a person that, directly or indirectly, receives in consideration of services or property, or both, in connection with the founding, organizing or substantial reorganizing of the business of an issuer, 10% or more of any class of securities of an issuer or 10% or more of the proceeds from the sale of any class of securities of a particular issue.

It does not include a person that receives securities or proceeds solely as underwriting commissions or in consideration of property transferred to the issuer if that person does not otherwise take part in founding, organizing or substantially reorganizing the business of the issuer.

“proxy”

« procuration »

“proxy” means a completed and executed form of proxy by which a security holder has appointed a person as the security holder’s nominee to attend and act on the security holder’s behalf at a meeting of security holders.

“quotation and trade reporting system”

« système de cotation et de déclaration des opérations »

“quotation and trade reporting system” means a person that operates facilities that permit the dissemination of price quotations for the purchase and sale of securities and reports of completed transactions in securities for the exclusive use of registered dealers. It does not include an exchange or a registered dealer.

“recognized clearing agency”

« agence de compensation reconnue »

“recognized clearing agency” means a clearing agency recognized by the Commission under section 41 .

“recognized entity”

« entité reconnue »

“recognized entity” means an exchange, self-regulatory organization, clearing agency or quotation and trade reporting system recognized under Part 3.

“recognized exchange”

« bourse reconnue »

“recognized exchange” means an exchange recognized by the Commission under section 34 .

“recognized quotation and trade reporting system”

« système reconnu de cotation et de déclaration des opérations »

“recognized quotation and trade reporting system” means a quotation and trade reporting system recognized by the Commission under section 43 .

“recognized self‑regulatory organization”

« organisme d’autoréglementation reconnu »

“recognized self‑regulatory organization” means a self‑regulatory organization recognized by the Commission under section 36 .

“records”

« dossier »

“records” includes

  • ( a ) an account, book, return, statement, report, financial document or other memorandum of financial or non‑financial information whether in writing or in electronic form or represented or reproduced by any other means; and

  • ( b ) the results of the recording of details of electronic data processing systems and programs to illustrate what the systems and programs do and how they operate.

“registrant”

« inscrit »

“registrant” means a person registered or required to be registered under this Act or the rules.

“regulations”

« règlements »

“regulations” means the regulations made under this Act.

“related financial instrument”

« instrument financier connexe »

“related financial instrument” means an agreement, arrangement or understanding to which an insider of a reporting issuer is a party, the effect of which is to alter, directly or indirectly, the insider’s economic interest in a security of the reporting issuer.

“reporting issuer”

« émetteur assujetti »

“reporting issuer” means an issuer

  • ( a ) that has issued securities in respect of which a prospectus was filed and a receipt for it obtained under a predecessor of this Act or in respect of which a securities exchange take‑over bid circular was filed under a predecessor of this Act;

  • ( b ) that has filed a prospectus for which the Executive Director has issued a receipt under this Act;

  • ( c ) any of whose securities have been listed and posted for trading on an exchange recognized under section 34 or under a predecessor of this Act regardless of when the listing and posting for trading commenced;

  • ( d ) that has exchanged its securities with another issuer or with the holders of the securities of that other issuer in connection with an amalgamation, merger, reorganization, arrangement or similar transaction if one of the parties to the amalgamation, merger, reorganization, arrangement or similar transaction was a reporting issuer at the time of the amalgamation, merger, reorganization, arrangement or similar transaction; and

  • ( e ) that the Commission has declared to be a reporting issuer under section 83 .

“rules”

« règles »

“rules” means the rules made by the Commission under section 26 .

“salesperson”

« représentant »

“salesperson” means an individual who is employed by a dealer for the purpose of making trades in securities or exchange contracts on behalf of that dealer.

“Secretary”

« secrétaire »

“Secretary” means the Secretary of the Commission appointed under Part 1 and includes any person appointed by the Commission to act in the place of the Secretary.

“security”

« valeur mobilière »

“security” includes each of the following whether or not it relates to an issuer or proposed issuer:

  • ( a ) a document, instrument or writing commonly known as a security;

  • ( b ) a document constituting evidence of title to or interest in the capital, assets, property, profits, earnings or royalties of any person;

  • ( c ) a document constituting evidence of an interest in an association of legatees or heirs;

  • ( d ) a document constituting evidence of an option, subscription or other interest in or to a security;

  • ( e ) a bond, debenture, note or other evidence of indebtedness, share, stock, unit, unit certificate, participation certificate, certificate of share or interest, preorganization certificate or subscription other than a contract of insurance issued by an insurance company or any evidence of deposit issued by a deposit-taking Canadian financial institution, as defined in section 2 of the Bank Act ;

  • ( f ) an agreement under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets other than a contract issued by an insurance company that provides for payment at maturity of an amount of not less than 3/4 of the premiums paid by the purchaser for a benefit payable at maturity;

  • ( g ) an agreement under which money received will be repaid or treated as a subscription to shares, stock, units or interests at the option of the recipient or of any person;

  • ( h ) a certificate of share or interest in a trust, estate or association;

  • ( i ) a profit‑sharing agreement or certificate;

  • ( j ) a certificate of interest in an oil, natural gas or mining lease, claim or royalty voting trust certificate;

  • ( k ) oil or natural gas royalties or leases or a fractional or other interest in them;

  • ( l ) a collateral trust certificate;

  • ( m ) an income or annuity contract not issued by an insurance company;

  • ( n ) an investment contract;

  • ( o ) a document constituting evidence of an interest in a scholarship or educational plan or trust; or

  • ( p ) any item or thing that is a futures contract or option but is not an exchange contract.

It does not include an exchange contract.

“self-regulatory organization”

« organisme d’autoréglementation »

“self-regulatory organization” means a person that is organized for the purpose of regulating the operations and the standards of practice and business conduct, in capital markets, of its members and their representatives with a view to promoting the protection of investors and the public interest.

“trade”

« opération »

“trade” includes

  • ( a ) any sale or disposition of a security for valuable consideration, whether the terms of payment are on margin, instalment or otherwise, other than a purchase of a security and, except as provided in paragraph ( e ), a transfer, pledge or encumbrance of securities for the purpose of giving collateral for a genuine debt;

  • ( b ) any entering into a futures contract or an option that is an exchange contract;

  • ( c ) any participation as a trader in any transaction in a security or an exchange contract through the facilities of an exchange or a quotation and trade reporting system;

  • ( d ) any receipt by a registrant of an order to buy or sell a security or an exchange contract;

  • ( e ) any transfer, pledge or encumbrancing of securities of an issuer from the holdings of a control person for the purpose of giving collateral for a genuine debt; and

  • ( f ) any act, advertisement, solicitation, conduct or negotiation made directly or indirectly in furtherance of anything referred to in paragraphs ( a ) to ( e ).

“Tribunal”

« Tribunal »

“Tribunal” means the Canadian Securities Tribunal established by Part 2.

“underwriter”

« souscripteur à forfait »

“underwriter” means a person that, as principal, agrees to purchase securities with a view to distribution or that, as agent, offers for sale or sells securities in connection with a distribution and includes a person that has a direct or indirect participation in the distribution. It does not include any of the following:

  • ( a ) a person whose interest in the transaction is limited to receiving the usual and customary distributor’s or seller’s commission payable by an underwriter or issuer;

  • ( b ) a mutual fund that, under the laws of the jurisdiction to which it is subject, accepts its shares or units for surrender and resells them;

  • ( c ) a company that, under the laws of the jurisdiction to which it is subject, purchases its shares and resells them; or

  • ( d ) a bank listed in Schedule I, II or III to the Bank Act with respect to the securities described in the regulations and to those banking transactions designated by the regulations.

“voting security”

« valeur mobilière avec droit de vote »

“voting security” means any security, other than a debt security, of an issuer carrying a voting right under all circumstances or under some circumstances that have occurred and are continuing.

Affiliation

  • 3. An issuer is affiliated with another issuer if one of them is the subsidiary of the other or if each of them is controlled by the same person.

Control

  • 4. A person is considered to control another person if the person, directly or indirectly, has the power to direct the management and policies of the other person by virtue of any of the following:

  • ( a ) the ownership or direction of voting securities of the other person;

  • ( b ) a written agreement or trust instrument;

  • ( c ) the person being the general partner or controlling the general partner of the other person; or

  • ( d ) the person being the trustee of the other person.

Subsidiary

  • 5. A subsidiary is an issuer that is controlled by another issuer.

Beneficial ownership

  • 6. A person is deemed to beneficially own securities that are beneficially owned

  • ( a ) by an issuer controlled by that person or by an affiliate of that issuer;

  • ( b ) by an affiliate of that person; or

  • ( c ) through a trustee, legal representative, agent or other intermediary of that person.

Deemed insiders of a mutual fund

  • 7. Each of the following is deemed to be an insider of a mutual fund that is a reporting issuer:

  • ( a ) a management company of the mutual fund;

  • ( b ) a distribution company of the mutual fund; and

  • ( c ) an insider of a management company or distribution company referred to in paragraph ( a ) or ( b ).

Deemed insiders of reporting issuer

  • 8. (1) If an issuer becomes an insider of a reporting issuer, every director or officer of the issuer is deemed to have been an insider of the reporting issuer for the previous six months or for any shorter period during which the director or officer was a director or officer of the issuer.

Directors and officers

  • (2) If a reporting issuer becomes an insider of any other reporting issuer, every director or officer of the other reporting issuer is deemed to have been an insider of the reporting issuer for the previous six months or for any shorter period during which the director or officer was a director or officer of the other reporting issuer.

Special relationships

  • 9. A person is in a special relationship with a reporting issuer if

  • ( a ) the person is an insider, affiliate or associate of any of the following:

  • (i) the reporting issuer,

  • (ii) a person that is proposing to make a take‑over bid, as defined in section 93 , for the securities of the reporting issuer, or

  • (iii) a person that is proposing to become a party to a reorganization, amalgamation, merger or arrangement or a similar business combination with the reporting issuer or to acquire a substantial portion of the property of the reporting issuer;

  • ( b ) the person has engaged, is engaging or proposes to engage in any business or professional activity with or on behalf of the reporting issuer or a person described in subparagraph ( a )(ii) or (iii);

  • ( c ) the person is a director, officer or employee of the reporting issuer or a person described in subparagraph ( a )(ii) or (iii) or paragraph ( b );

  • ( d ) the person learned of a material fact or material change with respect to the reporting issuer while the person was a person described in paragraph ( a ), ( b ) or ( c ); or

  • ( e ) the person learns of a material fact or material change with respect to the reporting issuer from any other person described in this section, including a person described in this paragraph, and knows or ought reasonably to know that the other person is a person in a special relationship with the reporting issuer.

Designation orders

  • 10. (1) If the Commission considers that it would not be prejudicial to the public interest to do so, the Commission may make an order designating

  • ( a ) a good, article, service, right or interest, or a class of any of those things, as a commodity;

  • ( b ) a futures contract, or a class of futures contracts, not to be a futures contract;

  • ( c ) a person, or a class or persons, as an insider;

  • ( d ) an issuer or a class of issuers to be, or not to be, a mutual fund;

  • ( e ) an issuer or a class of issuers to be, or not to be, a non‑redeemable investment fund; and

  • ( f ) an issuer or a class of issuers to be, or not to be, a reporting issuer.

Own initiative or on application

  • (2) An order under subsection (1) may be made by the Commission on its own initiative or on the application of an interested person.

PURPOSES

Purposes of Act

  • 11. The purposes of this Act are

  • ( a ) to provide protection to investors from unfair, improper or fraudulent practices; and

  • ( b ) to foster fair and efficient capital markets and confidence in those markets.

COUNCIL OF MINISTERS

Establishment

  • 12. (1) A Council of Ministers is established consisting of the Minister and a minister designated by the Lieutenant Governor in Council of each province.

Mandate

  • (2) The Council of Ministers shall provide input to the Commission with respect to the formulation of securities law policy and the ongoing administration of this Act.

Meeting

  • (3) The Council of Ministers shall meet at least once each calendar year in order to carry out its duties under this Act.

NOMINATING COMMITTEE

Establishment

  • 13. (1) A nominating committee is established consisting of one representative from each province appointed by the applicable minister designated under subsection 12 (1) and one representative appointed by the Minister.

Mandate

  • (2) The nominating committee is responsible for establishing a list of candidates for proposed appointment as members of the Commission and the Tribunal.

Experience and qualifications

  • (3) Each candidate proposed for appointment as a member of the Commission must have demonstrated capital markets experience and other relevant qualifications.

Regional representation

  • (4) In proposing candidates, the nominating committee must have regard to the desirability of having members of the Commission that are representative of the various regions of Canada.

PART 1

COMMISSION

Principles

  • 14. In pursuing the purposes of this Act, the Commission shall have regard to the following fundamental principles:

  • ( a ) there is a need to balance the importance to be given to each of the purposes of this Act;

  • ( b ) the primary means for achieving the purposes of this Act are

  • (i) requirements for timely, accurate and efficient disclosure of information,

  • (ii) restrictions on fraudulent and unfair market practices and procedures, and

  • (iii) requirements for the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants;

  • ( c ) there is a need to ensure investor access to dispute resolution mechanisms and means of redress and compensation;

  • ( d ) effective and responsive securities regulation requires timely, open and efficient administration and enforcement of this Act by the Commission;

  • ( e ) the Commission should, subject to an appropriate system of supervision, use the enforcement capability and regulatory expertise of recognized self-regulatory organizations;

  • ( f ) the integration of capital markets is supported and promoted by the sound and responsible international coordination of securities regulation regimes;

  • ( g ) business and regulatory costs and other restrictions on the business and investment activities of market participants should be proportionate to the benefits sought to be realized;

  • ( h ) effective and responsive securities regulation should promote the informed participation of investors in the capital markets;

  • ( i ) capital markets are international in character and it is desirable to maintain the competitive position of Canada’s capital markets;

  • ( j ) innovation in Canada’s capital markets should be facilitated;

  • ( k ) the Commission should facilitate the reduction of systemic risk, including through monitoring of systemic events or developments and cooperation and coordination with other financial authorities; and

  • ( l ) there is a need to take into account regional markets and sectors.

Establishment

  • 15. (1) The Canadian Securities Commission is established as a corporation without share capital consisting of not fewer than [•] and not more than [•] members appointed under section 16 .

Non-application

  • (2) The Canada Business Corporations Act and the Corporations Returns Act do not apply to the Commission.

Agent of Crown

  • (3) The Commission is, for the purposes of this Act an agent of Her Majesty and the powers of the Commission provided for under this Act may be exercised by the Commission only as an agent of Her Majesty.

Legal proceedings

  • (4) An action or other legal proceedings in respect of a right or obligation acquired or incurred by the Commission on behalf of Her Majesty, whether in the name of the Commission or in the name of Her Majesty, may be brought by or taken against the Commission in the name of the Commission in any court that would have jurisdiction if the Commission were not an agent of Her Majesty.

Appointment of members

  • 16. (1) Members of the Commission are to be appointed by the Governor in Council, on the recommendation of the Minister, to hold office during good behaviour for a term not exceeding five years.

Recommendation based on list

  • (2) The recommendation of the Minister under subsection (1) is to be made from the list of candidates proposed by the nominating committee.

Chair and Vice-chairs

  • (3) The Governor in Council, on the recommendation of the Minister developed after consultation with the nominating committee, shall designate one of the members of the Commission as its Chair and one or more members of the Commission as Vice-chair of the Commission.

Role of Chair

  • (4) The Chair shall preside over the Commission and serve as its chief executive officer and principal spokesperson.

Vacancy

  • (5) If the office of Chair is vacant or if the Chair is absent or unable to act for any reason, the Vice-chair designated by the Governor in Council shall act as Chair.

Continuation in office

  • (6) If a member of the Commission resigns or his or her appointment expires, the Chair may authorize that individual to continue to exercise powers as a member in any proceeding over which he or she had jurisdiction immediately before the end of their term until a final decision in that proceeding is made.

Remuneration

  • 17. The remuneration payable to the Chair, Vice-chair and other members of the Commission is to be set by the Governor in Council.

Mandate

  • 18. The Commission is responsible for the administration of Canadian securities law and for carrying out the functions assigned to it under this or any other Act.

Capacity of natural person

  • 19. The Commission has, for the purpose of carrying out its mandate, the capacity and the rights, powers and privileges of a natural person.

Head office

  • 20. (1) The head office of the Commission shall be located at [•].

Regional and district offices

  • (2) The Commission shall maintain regional offices and any district offices across Canada that the Commission considers appropriate.

Bylaws

  • 21. (1) The Commission may make bylaws governing the administration and management of the business and affairs of the Commission.

Non-application

  • (2) The Statutory Instruments Act does not apply to bylaws made under subsection (1).

Executive Director

  • 22. (1) The Commission shall appoint an Executive Director to serve as the chief administrative officer of the Commission and to carry out the functions assigned to the Executive Director under this Act or any other Act.

Delegation

  • (2) The Executive Director may authorize an employee of the Commission to do any act or thing required or permitted to be done by the Executive Director under this or any other Act.

Nature of delegation

  • (3) An authorization under subsection (2) may be general or applicable to a particular case and may be conditional or unconditional.

Executive Director may still act

  • (4) Despite any authorization given under this section, the Executive Director may do the act or thing in respect of which the authorization was given.

Secretary

  • 23. (1) The Commission shall appoint a Secretary to carry out the functions assigned to the Secretary under this Act or otherwise assigned by the Commission.

Specific powers

  • (2) The Secretary may

  • ( a ) accept service of all notices and other documents on behalf of the Commission;

  • ( b ) when required, provide to a court the record of any hearing or other proceedings held before the Commission or the Executive Director; and

  • ( c ) certify any decision made by the Commission or the Executive Director or any document, record or thing used in connection with a hearing or other proceedings.

Certificate

  • (3) A certificate purporting to be signed by the Secretary is admissible in evidence in any civil or criminal proceeding and, in the absence of evidence to the contrary, is proof of the statements contained in the certificate without proof of the signature or official character of the person appearing to have signed the certificate.

Staff and experts

  • 24. The Commission may

  • ( a ) appoint any other employees that it considers necessary for the conduct of its business; and

  • ( b ) obtain the services of persons having technical or professional knowledge required by the Commission in connection with its business.

Advisory panels

  • 25. (1) The Commission must establish and maintain an advisory panel to represent the interests of small reporting issuers and an advisory panel to represent the interests of investors.

Members

  • (2) Persons with knowledge of securities regulation, including issues relevant to small reporting issuers and investors, are to be appointed to the panels by the Commission.

Functions

  • (3) Each panel is to provide advise to the Commission with respect to both the existing and proposed regulatory policies and practices of the Commission.

Duty to consider

  • (4) The Commission shall take into account the representations made by the advisory panels. If the Commission disagrees with a view expressed, or a proposal made, in the representation, it must give the panel a statement in writing of its reasons for disagreeing.

Annual report

  • (5) Each advisory panel must provide the Minister with an annual report of its activities in the preceding fiscal year.

Rules

  • 26. The Commission may make rules as follows:

  • ( a ) governing exchanges, self‑regulatory organizations, clearing agencies and quotation and trade reporting systems including rules,

  • (i) respecting the recognition of exchanges, self‑regulatory organizations, clearing agencies and quotation and trade reporting systems,

  • (ii) establishing requirements in respect of the review or approval by the Commission of any bylaw, rule, regulation, policy, procedure, interpretation or practice of recognized entities,

  • (iii) establishing processes, including self-certification processes, to be followed by recognized entities in making amendments to any bylaw, rule, regulation, policy, procedure, interpretation or practice of recognized entities,

  • (iv) providing for the collection and remission by recognized entities of fees payable to the Commission, and

  • (v) establishing requirements in respect of the books and records to be maintained by recognized entities;

  • ( b ) governing registration including rules

  • (i) establishing requirements in respect of applications for registration and the renewal, amendment, expiration or surrender of registration,

  • (ii) establishing the duration of registration,

  • (iii) respecting the suspension, cancellation and reinstatement of registration,

  • (iv) respecting the voluntary surrender of registration,

  • (v) establishing categories or sub‑categories of registrants,

  • (vi) classifying registrants into categories or sub‑categories,

  • (vii) establishing the conditions of registration or other requirements for registrants or any category or sub‑category of registrants, including

  • (A) standards of practice and business conduct of registrants,

  • (B) requirements governing ownership or control of the registrants, and

  • (C) requirements in respect of membership in a self‑regulatory organization

  • (viii) respecting the circumstances in which a person is required to disclose or provide information to the public or the Commission by registrants,

  • (ix) providing for exemptions from or varying the requirements under this Act in respect of the disclosure or furnishing of information by registrants to the public or the Commission,

  • (x) establishing requirements in respect of the books, records and other documents required to be kept by registrants,

  • (xi) respecting conflicts of interest,

  • (xii) respecting bonds and bonding,

  • (xiii) respecting compensation funds or contingency trust funds,

  • (xiv) establishing securities or exchange contracts or classes of securities or exchange contracts in which a category or sub‑category of registrant may trade,

  • (xv) establishing securities or exchange contracts or classes of securities or exchange contracts in which a category or sub‑category of registrant may not trade, and

  • (xvi) respecting the circumstances in which a person or class of persons is not required to be registered under section 52 or a person or class of persons is deemed to be registered for the purposes of this Act or the regulations;

  • ( c ) establishing the conditions and circumstances under which a company may undertake the duties, responsibilities and activities that a person who is a registrant and a shareholder of the company is authorized to undertake by virtue of being a registrant, including the establishment of a scheme for the registration of the company and the category of that registration;

  • ( d ) imposing liability on a registrant who is a dealer or adviser for the acts or omissions established under paragraph ( h ) of a company that is a registrant pursuant to a scheme established pursuant to the authority in paragraph ( c ) where the dealer or adviser has a prescribed contractual relationship with the company;

  • ( e ) imposing liability on a person who is a registrant and a shareholder of a company for acts or omissions of the company where the company that performs the acts or fails to perform the acts is a registrant pursuant to a scheme established pursuant to the authority in paragraph ( c );

  • ( f ) establishing the terms and conditions under which a person who is in a contractual relationship with a dealer is deemed to be an employee of the dealer for the purpose of Canadian securities law and deemed to be qualified for registration as a salesperson of the dealer;

  • ( g ) imposing liability on a registrant who is a dealer for the acts and omissions prescribed under paragraph ( i ) of a person deemed to be an employee of the dealer under a regulation made pursuant to paragraph ( f );

  • ( h ) establishing the acts or omissions of a company for which a registrant who is a dealer or adviser is liable;

  • ( i ) establishing the acts or omissions of a person deemed to be an employee of a dealer for which a registrant who is a dealer is liable;

  • ( j ) governing trades including rules

  • (i) respecting the listing and trading of securities,

  • (ii) respecting the trading in exchange contracts,

  • (iii) respecting advertising relating to trading in securities and exchange contracts,

  • (iv) establishing the principles for determining the market value, the market price or the closing price of a security and authorizing the Commission to make that determination, and

  • (v) establishing which distributions and trading in relation to the distributions are distributions and trading outside Canada;

  • ( k ) respecting the preparation of a written confirmation of transaction for the purposes of subsection 60 (1);

  • ( l ) establishing requirements for persons in respect of calling at or telephoning to residences for the purposes of trading in securities;

  • ( m ) respecting the documents and information required to be provided to customers of registered dealers for the purposes of subsection 63 (1);

  • ( n ) establishing disclosure requirements for registered dealers and advisers for the purposes of subsection 63 (2);

  • ( o ) requiring registered dealers or advisers to provide a risk disclosure statement for the purposes of section 64 ;

  • ( p ) governing annual information forms, annual reports, preliminary prospectuses, prospectuses, pro forma prospectuses, short form prospectuses, pro forma short form prospectuses, exchange offering prospectuses, simplified prospectuses, risk disclosure statements, offering memoranda or any other disclosure documents, including rules establishing procedures and requirements with respect to and providing for exemptions from

  • (i) the use, form and content of those documents,

  • (ii) the preparation, filing, delivery or dissemination of those documents,

  • (iii) the issuance of receipts for preliminary prospectuses and prospectuses, including the issuance of receipts after an expedited or selective review, and respecting when receipts are not required or will not be issued, and the circumstances under which a receipt may be refused,

  • (iv) the incorporation of other documents by reference,

  • (v) the distribution of securities by means of a prospectus incorporating other documents by reference,

  • (vi) the distribution of securities by means of a simplified or summary prospectus or other means of disclosure document,

  • (vii) the distribution of securities on a continuous or delayed basis,

  • (viii) the pricing of a distribution of securities after the issuance of a receipt for the prospectus filed in relation to the distribution,

  • (ix) the issuance of receipts for prospectuses after selective review,

  • (x) the incorporation by reference of certain documents in a prospectus and the effect, including from a liability and evidentiary perspective, of modifying or superseding statements,

  • (xi) the form of certificates relating to a preliminary prospectus, prospectus and amendments to a prospectus and the persons required to sign the certificates,

  • (xii) eligibility, and the loss of eligibility, to obtain a receipt for, or to distribute, securities under a particular form of prospectus,

  • (xiii) the variance of rights to withdraw from or not be bound by an agreement to purchase securities,

  • (xiv) the lapse date for a prospectus, restricting the period of time to the lapse date, the terms and conditions for continuing to distribute securities after the lapse date, and the circumstances under which the purchaser may cancel a trade that occurs after the lapse date,

  • (xv) the circumstances in which section 72 does not apply to a person or class of persons or a receipt is deemed to have been issued for the purposes of this Act,

  • (xvi) requirements in respect of amendments to a preliminary prospectus or prospectus and establishing circumstances under which an amendment to a preliminary prospectus or prospectus must be filed,

  • (xvii) requirements for dealers for delivery of a preliminary prospectus between the issuance of a receipt for a preliminary prospectus and the issuance of a receipt for a prospectus, including any record‑keeping requirements, and

  • (xviii) the requirements of Parts 5 and 6 or the modification or variation of requirements under those Parts;

  • ( q ) governing the solicitation of proxies including rules

  • (i) establishing requirements for the solicitation and voting of proxies, and

  • (ii) establishing requirements relating to communication with registered and beneficial owners of securities and relating to other persons, including depositories and registrants, that hold securities on behalf of beneficial owners;

  • ( r ) establishing categories of issuers for the purposes of the prospectus requirements and classifying issuers into categories;

  • ( s ) designating issuers or a class of issuers as a reporting issuer;

  • ( t ) respecting any matter necessary or advisable to facilitate distributions and compliance with Canadian securities law by foreign issuers;

  • ( u ) establishing circumstances in which a person that purchases a security under a distribution may cancel the purchase, including rules

  • (i) setting the period in which a purchaser may cancel the purchase,

  • (ii) establishing the principles for determining the amount of the refund if the purchaser cancels the purchase,

  • (iii) specifying the person responsible for making and administering the payment of the refund and setting the period in which the refund must be paid, and

  • (iv) establishing or setting different circumstances, periods, principles or persons for different classes of securities, issuers or purchasers;

  • ( v ) establishing the trading activities that may be undertaken relating to a proposed distribution for the purposes of section 76 ;

  • ( w ) designating an offering memorandum, or any class of offering memoranda, not to be an offering memorandum;

  • ( x ) designating a document or any class of documents that describes the business and affairs of an issuer to be an offering memorandum;

  • ( y ) specifying offering memorandum for the purposes of section 163 ;

  • ( z ) establishing, with respect to a trade or a type of trade that would not otherwise be a distribution, the conditions under which that trade or type of trade is deemed to be a distribution,

  • ( z.01 ) providing for and governing exemptions from the registration or prospectus requirements including rules

  • (i) establishing trades, activities, distributions, securities and exchange contracts in respect of which registration is not required,

  • (ii) establishing trades, activities, distributions and securities in respect of which the filing of a prospectus is not required,

  • (iii) respecting the modification or variation of exemptions referred to in subparagraphs (i) and (ii),

  • (iv) respecting the restriction or removal of exemptions referred to in subparagraphs (i) and (ii), and

  • (v) designating a person or class or classes of persons as an accredited investor;

  • ( z.02 ) regulating take-over bids, take-overs and issuer bids including rules

  • (i) establishing requirements for different classes of bids or take-overs,

  • (ii) establishing requirements relating to the conduct or management of the affairs of the issuer that is the subject of a take-over bid, and its directors and officers, during or in anticipation of the take-over bid,

  • (iii) prohibiting a person from purchasing or selling a security before, during or after the effective period of a take-over bid,

  • (iv) establishing the disclosure, certification, delivery or dissemination of any circular, notice, report or other document required to be filed or delivered to a person,

  • (v) establishing percentages and requirements respecting early warning for the purposes of section 101, and

  • (vi) establishing exemptions from the requirements of Part 8 or the regulations;

  • ( z.03 ) establishing requirements in respect of reverse take‑overs and investment contracts;

  • ( z.04 ) governing insider trading, early warning and self-dealing including rules

  • (i) requiring any issuer, class of issuer or other person to comply with any of the requirements of Part 9 or the regulations,

  • (ii) establishing how a security or class of security or a related financial instrument or class of related financial instruments must be reported in an insider report filed under section 100 ,

  • (iii) establishing disclosure, delivery, dissemination and filing requirements, including the use of particular forms or particular types of documents,

  • (iv) respecting self-dealing and conflicts of interest,

  • (v) establishing exemptions from the requirements of Part 9 or the regulations, and

  • (vi) designating a person or a class of persons as an insider;

  • ( z.05 ) governing mutual funds, non‑redeemable investment funds and private investment funds and the advertising, distribution and trading of the securities of the funds including rules

  • (i) designating issuers or a class or classes of issuers as mutual funds,

  • (ii) designating issuers or a class or classes of issuers as non‑redeemable investment funds,

  • (iii) designating funds or a class or classes of funds as private investment funds,

  • (iv) respecting sales charges imposed by a distribution company or contractual plan service company under a contractual plan on purchasers of shares or units of a fund,

  • (v) establishing a penalty for the early redemption of shares or units of a fund,

  • (vi) establishing the form and contents of reports to be filed by the management company or distributors of a fund,

  • (vii) respecting

  • (A) the custodianship of assets of any fund,

  • (B) the minimum initial capital requirements for any fund making a distribution and prohibiting or restricting the reimbursement of costs associated with the organization of a fund,

  • (C) any matters affecting any fund that require the approval of security holders of the fund, the Commission or the Executive Director, and

  • (D) the contents and use of sales literature, sales communications and advertising relating to any fund or securities of any fund,

  • (viii) permitting or restricting investment policy and practices in connection with any fund;

  • (ix) establishing requirements in respect of, or in relation to, promoters, advisors or persons that administer or participate in the administration of the affairs of mutual funds or non‑redeemable investment funds,

  • (x) requiring investment funds to establish and maintain a body for the purposes described in section 109 , establishing its powers and duties and establishing requirements relating to

  • (A) the mandate and functioning of the body,

  • (B) the composition of the body and qualifications for membership on the body, including matters respecting the independence of members and the process for selecting the members,

  • (C) the standard of care that applies to members of the body when exercising their powers, performing their duties and carrying out their responsibilities,

  • (D) the disclosure of information to security holders of the investment fund, to the investment fund manager and to the Commission, and

  • (E) matters affecting the investment fund that require review by the body or approval of the body;

  • ( z.06 ) regulating scholarship plans and the distribution and trading of the securities of scholarship plans;

  • ( z.07 ) governing the preparation and the filing of reports of trades;

  • ( z.08 ) respecting any matter necessary or advisable to regulate auditors of reporting issuers;

  • ( z.09 ) governing disclosure obligations under Part 7 and the regulations including rules

  • (i) requiring any person or class of persons to comply with Part 7 and the regulations, and

  • (ii) establishing disclosure requirements, including the form, content, preparation, review, audit, approval, certification, filing, delivery and use of disclosure documents;

  • ( z.1 ) with respect to disclosures to be made, or that are otherwise provided for, under Parts 6 and 7,

  • (i) establishing procedures for the integration of disclosures required in relation to those Parts, including modifying or varying the application of Canadian securities law as may be necessary for the purpose of permitting integrated disclosure, and

  • (ii) establishing disclosure requirements, including the form, content, preparation, review, audit, approval, certification, filing, delivery and use of disclosure documents;

  • ( z.11 ) respecting the preparation, form and content requirements applicable to the public dissemination of forward-looking information by reporting issuers where the dissemination is not part of a required filing;

  • ( z.12 ) requiring any information, documents, records or other materials to be filed, furnished or delivered;

  • ( z.13 ) requiring the inclusion or permitting the exclusion of any information, documents, records or other materials that may be required to be filed, furnished or delivered;

  • ( z.14 ) establishing terms and conditions of an escrow or pooling agreement;

  • ( z.15 ) governing the format, preparation, form, contents, execution, certification, dissemination and other use, filing, review and public inspection of all information, documents, records or other materials required under or governed by this Act and the regulations including rules

  • (i) respecting applications for registration and other purposes;

  • (ii) respecting preliminary prospectuses and prospectuses;

  • (iii) respecting interim financial statements and financial statements;

  • (iv) respecting proxies and information circulars;

  • (v) respecting take‑over bid circulars, issuer bid circulars, directors’ circulars and offering memorandums;

  • (vi) establishing procedures and requirements in respect of the use of any electronic or computer‑based system for the filing, delivery or deposit of information, documents, records or materials;

  • (vii) varying or modifying the application of this Act to facilitate the use of an electronic or computer‑based system for the filing, delivery or deposit of information, documents, records or materials; and

  • (viii) establishing the circumstances in which persons will be deemed to have signed or certified information, documents, records or materials on an electronic or computer‑based system for any purposes of this Act;

  • ( z.16 ) governing the requirements, practice and procedure for investigations, hearings, reviews and appeals including rules providing for

  • (i) costs in respect of matters heard before the Commission or the Executive Director;

  • (ii) costs in respect of investigations; and

  • (iii) costs in respect of services provided by persons appointed or engaged and the appearance of witnesses;

  • ( z.17 ) governing derivatives including rules providing exemptions and establishing requirements in respect of derivatives;

  • ( z.18 ) governing undertakings and agreements between the Commission or the Executive Director and any person;

  • ( z.19 ) providing for and governing the payment of money by a person pursuant to an undertaking or agreement with the Commission or the Executive Director;

  • ( z.2 ) governing the administration and disposition of money received pursuant to an undertaking or an agreement;

  • ( z.21 ) determining what constitutes a false or misleading appearance of trading activity in a security or an exchange contract or an artificial price for a security or an exchange contract;

  • ( z.22 ) respecting any matter necessary or advisable to carry out effectively the intent and purpose of any of sections 87 to 90 and 169 and subsections 170 (1) to (3), including rules

  • (i) providing for exemptions, and

  • (ii) establishing standards or criteria for determining when a material fact or material change has been generally disclosed;

  • ( z.23 ) establishing circumstances in which a person or class of persons is prohibited from trading or purchasing securities or exchange contracts, or a particular security or exchange contract, including the circumstances in which a body empowered by the laws of another jurisdiction to regulate trading in securities or exchange contracts or to administer or enforce securities or exchange contract laws in that jurisdiction, has ordered that

  • (i) a person is prohibited from trading or purchasing securities or exchange contracts, or a particular security or exchange contract, or

  • (ii) trades or purchases of a particular security or exchange contract cease;

  • ( z.24 ) providing for and governing fees payable to the Commission and the provision of any service or function performed in respect of those fees;

  • ( z.25 ) defining for the purposes of this Act terms used in this Act that are not defined in this Act;

  • ( z.26 ) governing minimum requirements respecting corporate governance and internal controls of reporting issuers;

  • ( z.27 ) exempting a class of persons, trades or securities from one or more of the provisions of Canadian securities law; and

  • ( z.28 ) generally for carrying out the purposes and provisions of this Act.

Notice of proposed rule

  • 27. (1) The Commission shall publish notice of every rule that it proposes to make under section 26 .

Content of notice

  • (2) A notice published under subsection (1) must include the following:

  • ( a ) the proposed rule;

  • ( b ) a statement of the substance and purpose of the proposed rule;

  • ( c ) a summary of the proposed rule;

  • ( d ) a description of the anticipated costs and benefits of the proposed rule; and

  • ( e ) any other prescribed information.

Exception to inclusion

  • (3) The Commission is not required to make reference to written material that, in the opinion of the Commission, should be held in confidence because it discloses intimate financial, personal or other information and the desirability of avoiding disclosure of the substance of it or its existence in the interests of any person affected outweighs the desirability of making it or knowledge of its existence available to the public.

Representations

  • (4) On publication of a notice under subsection (1), the Commission shall invite, and shall give a reasonable opportunity to, interested persons to make written representations with respect to the proposed rule within a period of at least 90 days after the publication.

Exception to publication

  • (5) Publication of a notice is not required under subsection (1) in the following circumstances:

  • ( a ) all persons who would be subject to the proposed rule are named, the information set out in subsection (2) is sent to each of them and they and any other person whose interests are likely to be substantially affected by the proposed rule are given an opportunity to make written representations with respect to it;

  • ( b ) the proposed rule grants an exemption or removes a restriction and is not likely to have a substantial effect on the interests of persons other than those who benefit under it;

  • ( c ) what is proposed is only an amendment that does not materially change an existing rule; or

  • ( d ) the Commission believes that there is an urgent need for the proposed rule and that, without it, there is a substantial risk of material harm to investors or to the integrity of the capital markets and has the approval of the Minister to make the rule without publication of notice.

Publication of statement

  • (6) When a rule to which paragraph (5)( d ) applies comes into force, the Commission shall publish a statement setting out the substance and purpose of the rule and the nature of the urgency and the risk.

Changes to proposal

  • (7) If, following publication of the notice and consideration of the submissions, the Commission proposes material changes to the proposed rule, the Commission shall publish a notice that contains the following:

  • ( a ) the proposed rule with the changes incorporated;

  • ( b ) a concise statement of the purpose of the changes; and

  • ( c ) the reasons for the changes.

Representations regarding changes

  • (8) On publication of a notice of changes, the Commission shall invite, and shall give a reasonable opportunity to, interested persons and companies to make written representations with respect to the changes within any period that the Commission considers appropriate.

Making rule

  • (9) In cases where a notice and comment process is required, the Commission may make the rule only at the end of the notice and comment process and after considering all representations made as a result of that process.

Delivery of rules to Minister

  • 28. (1) The Commission must deliver to the Minister a copy of every rule made by it together with the following:

  • ( a ) copy of the notices published under section 27 , unless publication of notice was not required, and copies of all documents referred to in the notices;

  • ( b ) a summary of the representations made and other documents submitted in respect of the rule as proposed; and

  • ( c ) all other material information that was considered by the Commission in connection with the making of the rule.

Publication

  • (2) The Commission shall publish every rule made by it as soon after the rule is made as practicable together with the following:

  • ( a ) the date on which a rule and the material required under subsection (1) were delivered to the Minister;

  • ( b ) the date the rule is to come into force if an action is not taken by the Minister under subsection (3);

  • ( c ) a statement of the substance and purpose of the rule;

  • ( d ) a summary of the written comments received during the comment periods if notice and comment were required; and

  • ( e ) a statement of the Commission setting out its response to the significant issues and concerns brought to the attention of the Commission during the comment periods.

Action by Minister

  • (3) Within 60 days after a rule is delivered to the Minister, the Minister may

  • ( a ) approve the rule;

  • ( b ) reject the rule; or

  • ( c ) return the rule to the Commission for further consideration.

Effective date

  • 29. (1) A rule that is approved by the Minister comes into force 15 days after it is approved unless there is a later day specified in the rule in which case it comes into force on that later day.

Effective date — no action by Minister

  • (2) If the Minister does not approve a rule, reject it or return it to the Commission for further consideration, then the rule comes into force as follows:

  • ( a ) if the rule specifies a coming into force date that is at least 75 days after the rule is delivered to the Minister, the rule comes into force on the specified day;

  • ( b ) if no coming into force date is specified in the rule, the rule comes into force on the 75th day after the rule is delivered to the Minister; or

  • ( c ) if the rule specifies a coming into force date that is within 75 days after the rule is delivered to the Minister, the rule comes into force on the 75th day after the rule is delivered to the Minister.

Effective date — returned rule

  • (3) A rule that is returned to the Commission for further consideration cannot come into force until it is returned by the Commission to the Minister at which time this section applies as if the rule were delivered for the first time.

No effective date for rejected rule

  • (4) A rule that is rejected by the Minister does not come into force.

Effective date — urgent rule

  • (5) A rule to which paragraph 27 (5)( d ) applies that is approved by the Minister comes into force on the day it is published by the Commission.

Revocation of urgent rule

  • (6) Every rule referred to in subsection (5) is revoked on the 275th day after it comes into force.

Publication in Gazette

  • (7) The Commission shall publish every rule that comes into force in the [ Canada Gazette ].

Deemed notice

  • (8) Every person affected by a rule is deemed to have notice of it when it is published [in the Commission’s Bulletin].

Interim orders

  • 30. (1) The Commission may make an interim order containing any provision that could be contained in regulations or in a rule made under section 26 if the Commission is of the opinion that immediate action is required to deal with

  • ( a ) a major market disturbance characterized by or constituting

  • (i) sudden and excessive fluctuations of securities prices generally, or a substantial threat of such fluctuations, that threaten fair and orderly markets, or

  • (ii) a substantial disruption of the safe or efficient operation of the national system for clearance and settlement of transactions in securities, or a substantial threat of such disruption; or

  • ( b ) a major disturbance that substantially disrupts, or threatens to substantially disrupt

  • (i) the functioning of securities markets, investment companies, or any other significant portion or segment of the securities markets, or

  • (ii) the transmission or processing of securities transactions.

Cessation of effect

  • (2) The interim order has effect from the time that it is made but ceases to have effect on the earliest of

  • ( a ) 10 days after the day on which it is made, unless it is approved by the Minister,

  • ( b ) the day on which it is repealed,

  • ( c ) the day on which a rule made under section 26 that has the same effect as the interim order comes into force; and

  • ( d ) 90 days after the day on which it is made or any shorter period that it specifies.

Deeming

  • (3) For the purpose of any provision of this Act other than this section, any reference to rules made under this Act is deemed to include interim orders, and any reference to a rule made under a specified provision of this Act is deemed to include a reference to any portion of an interim order containing a provision that may be contained in a rule made under the specified provision.

Exemption from Statutory Instruments Act

  • 31. (1) An order made under section 30

  • ( a ) is exempt from the application of sections 3, 5 and 11 of the Statutory Instruments Act ; and

  • ( b ) shall be published in the Canada Gazette within 23 days after the day on which it is made.

[Tabling of order

  • (2) A copy of the order shall be tabled in each House of Parliament within 15 days after the day on which it is made.]

House not sitting

  • (3) In order to comply with subsection (2), the order may be sent to the Clerk of the House if the House is not sitting.

Contravention of unpublished order

  • (4) No person shall be convicted of an offence consisting of a contravention of the order if, at the time of the alleged contravention, the order had not been published in the Canada Gazette , unless it is proved that, at the time of the alleged contravention, the person had been notified of the order or reasonable steps had been taken to bring the purport of the order to the notice of persons likely to be affected by it.

Annual report

  • 32. (1) The Chair of the Commission shall, within six months after the end of each fiscal year, submit a report to the Council of Ministers with respect to the operations and activities of the Commission during the preceding fiscal year.

Required assessment

  • (2) The annual report must contain an assessment of the extent to which the purposes of this Act have been fulfilled by the Commission during the preceding fiscal year and any other prescribed information.

Tabling in Parliament

  • (3) The Minister shall cause the report to be laid before each House of Parliament on any of the first 15 days on which that House is sitting after the Minister receives the report.

GOVERNANCE BOARD

[See Commentary for further information on Additional Provisions regarding the Commission and Proposed Governance Board]

PART 2

CANADIAN SECURITIES TRIBUNAL

[See Commentary for further information]

PART 3

RECOGNIZED ENTITIES

Definitions

  • 33. The following definitions apply in this Part.

“member of an exchange”

« membre d’un bourse »

“member of an exchange” includes

  • ( a ) any holder of a security in an organization that carries on business as an exchange; and

  • ( b ) any person that agrees to comply with the bylaws, rules, regulations, policies, procedures, interpretations and practices of the exchange and is granted trading access on or through the facilities of the exchange.

“member of a self‑regulatory organization”

« membre d’un organisme d’autoréglementation »

“member of a self‑regulatory organization” includes any person that agrees to be regulated by that self‑regulatory organization.

“representative of a member of an exchange”

« représentant du membre d’un bourse »

“representative of a member of an exchange” includes

  • ( a ) any person approved by the exchange as a partner, officer, director, salesperson, trader or assistant trader of the member; and

  • ( b ) any employee of the member not otherwise referred to in paragraph ( a ).

“representative of a member of a self‑regulatory organization”

« représentant du membre d’un organisme d’autoréglementation »

“representative of a member of a self‑regulatory organization” includes

  • ( a ) any person approved by the self‑regulatory organization as a partner, officer, director, salesperson, branch manager, assistant branch manager or co‑branch manager of the member; and

  • ( b ) any employee of the member not otherwise referred to in paragraph ( a ).

Exchange required to be recognized

  • 34. (1) No person shall carry on business as an exchange unless the person is recognized by the Commission as an exchange.

Recognition

  • (2) The Commission may, on the application of a person proposing to carry on business as an exchange, recognize the person as an exchange if the Commission considers that it would be in the public interest to do so.

Terms of recognition

  • (3) The recognition of an exchange under this section is to be made in writing and is subject to any terms and conditions that the Commission may impose.

Suspension and cancellation

  • (4) If the Commission considers that it is in the public interest to do so, the Commission, after giving a recognized exchange an opportunity to be heard, may

  • ( a ) suspend or cancel its recognition; or

  • ( b ) remove, vary or replace any terms or conditions of its recognition.

Operation of recognized exchange

  • 35. (1) A recognized exchange shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with the bylaws, rules, regulations, policies, procedures, interpretations and practices of the exchange.

Former members and representatives

  • (2) The authority of an exchange to regulate the operations and the standards of practice and business conduct of its members and their representatives under subsection (1) extends to any former member, any former representative of a member and any former representative of a former member with respect to that person’s operations and conduct while a member of the exchange or a representative of a member of the exchange.

Decisions of Commission

  • (3) The Commission may, if the Commission considers that it is in the public interest to do so, make any decision

  • ( a ) that the Commission considers is necessary to ensure that issuers whose securities are listed and posted for trading on a recognized exchange comply with Canadian securities law;

  • ( b ) respecting the manner in which a recognized exchange carries on business;

  • ( c ) respecting any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized exchange;

  • ( d ) respecting trading on or through the facilities of a recognized exchange;

  • ( e ) respecting any security that is listed and posted for trading on a recognized exchange; and

  • ( f ) respecting any exchange contract that is trading on a recognized exchange.

Records and particulars

  • (4) Every recognized exchange shall

  • ( a ) keep a record showing the time at which each transaction on the exchange took place; and

  • ( b ) supply to any customer of any member of the exchange, on production of a written confirmation of any transaction with the member, particulars of the time at which the transaction took place and verification or otherwise of the matters set out in the confirmation.

Recognition of self-regulatory organization

  • 36. (1) The Commission may, on the application of a self‑regulatory organization, recognize the self‑regulatory organization if the Commission considers that it would be in the public interest to do so.

Terms of recognition

  • (2) The recognition of a self‑regulatory organization under this section is to be made in writing and is subject to any terms and conditions that the Commission may impose.

Suspension and cancellation

  • (3) If the Commission considers that it is in the public interest to do so, the Commission, after giving a self‑regulatory organization an opportunity to be heard, may

  • ( a ) suspend or cancel its recognition; or

  • ( b ) remove, vary or replace any terms or conditions of its recognition.

Operation of recognized organization

  • 37. (1) A self‑regulatory organization shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with the bylaws, rules, regulations, policies, procedures, interpretations and practices of the self‑regulatory organization.

Former members and representatives

  • (2) The authority of a self-regulatory organization to regulate the operations and the standards of practice and business conduct of its members and their representatives under subsection (1) extends to any former member, any former representative of a member and any former representative of a former member with respect to that person’s operations and conduct while a member of the self-regulatory organization or a representative of a member of the self-regulatory organization.

Decisions of Commission

  • (3) The Commission may, if the Commission considers that it is in the public interest to do so, make any decision with respect to any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized self‑regulatory organization.

Ancillary bodies

  • 38. (1) A recognized exchange or recognized self-regulatory organization may, with the prior approval of the Commission and on any terms and conditions that the Commission determines to be necessary or appropriate in the public interest, establish a council, committee or ancillary body and assign to it regulatory or self-regulatory powers or responsibilities or both.

Authorization to administer

  • (2) A recognized exchange or a recognized self‑regulatory organization may authorize the council, committee or other ancillary body to administer regulatory or self‑regulatory powers or responsibilities or both.

Inclusion in recognition

  • (3) A council, committee or other ancillary body of an exchange or self‑regulatory organization that is established under subsection (1) is included in the recognition of the exchange or self‑regulatory organization and is subject to the same terms or conditions of recognition as the exchange or self‑regulatory organization.

Subject to suspension, etc.

  • (4) The recognition of a council, committee or ancillary body is, unless otherwise directed by the Commission, suspended, restricted or cancelled when the recognition of the recognized exchange or recognized self‑regulatory organization is suspended, restricted or cancelled.

Application of Canadian securities law

  • (5) The provisions of Canadian securities law that apply to a recognized exchange or a recognized self‑regulatory organization also apply with any necessary modifications to a council, committee or ancillary body established under this section by that exchange or self‑regulatory organization.

Assignment of duties — Commission

  • 39. (1) The Commission may, by order and subject to any terms and conditions that the Commission may impose, authorize a recognized exchange or recognized self‑regulatory organization to do any act or thing required or permitted to be done by the Commission under Part 4 or the regulations made in respect of that Part.

Assignment of duties — Executive Director

  • (2) The Executive Director may, by order, with the approval of the Commission and subject to any terms and conditions that the Executive Director may impose, authorize a recognized exchange or recognized self‑regulatory organization to do any act or thing required or permitted to be done by the Executive Director under Part 4 or the regulations made in respect of that Part.

Further delegation

  • (3) A recognized exchange or recognized self-regulatory organization may, with the prior approval of the Commission, delegate any of the powers, duties or functions that the exchange or organization is authorized to carry out under subsections (1) and (2).

Authority retained

  • (4) Despite the fact that the Commission or Executive Director has given an authorization under this section, the Commission or Executive Director may nevertheless do the act or thing in respect of which the authorization was given.

Revocation or variation

  • (5) The Commission or, with the approval of the Commission, the Executive Director may at any time revoke or vary, in whole or in part, an authorization made under this section.

Opportunity to be heard

  • (6) No revocation or variation may be made under subsection (5) without giving the recognized exchange or recognized self‑regulatory organization an opportunity to be heard.

Definition of “personal information”

  • 40. (1) In this section, “personal information” has the same meaning as in subsection 2(1) of the Personal Information Protection and Electronic Documents Act .

Collection, use and disclosure

  • (2) A recognized exchange or recognized self‑regulatory organization may, without the consent of an individual, collect personal information about that individual, whether directly from the individual or from or through a registrant or by any other method and use and disclose that information

  • ( a ) for the purposes of an investigation or the suppression or prevention of fraud, market manipulation or unfair trading practices; or

  • ( b ) for breaches of rules, regulations, policies or bylaws of the recognized exchange or recognized self‑regulatory organization or of any decisions of the Commission or Executive Director relating to either or both of the following:

  • (i) the integrity of securities trading on exchanges, quotation and trade reporting systems or alternative trading systems, or

  • (ii) the business conduct and activities of the members of the recognized exchange or recognized self‑regulatory organization and their representatives.

Recognition of clearing agencies

  • 41. (1) The Commission may, on the application of a clearing agency, recognize the clearing agency if the Commission considers that it would be in the public interest to do so.

Terms of recognition

  • (2) The recognition of a clearing agency under this section is to be made in writing and is subject to any terms and conditions that the Commission may impose.

Suspension and cancellation

  • (3) If the Commission considers that it is in the public interest to do so, the Commission, after giving a clearing agency an opportunity to be heard, may

  • ( a ) suspend or cancel its recognition; or

  • ( b ) remove, vary or replace any terms or conditions of its recognition.

Decisions of the Commission

  • 42. The Commission may, if the Commission considers that it is in the public interest to do so, make any decision with respect to any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized clearing agency.

Recognition of quotation and trade reporting systems

  • 43. (1) The Commission may, on the application of a quotation and trade reporting system, recognize the quotation and trade reporting systems if the Commission considers that it would be in the public interest to do so.

Terms of recognition

  • (2) The recognition of a quotation and trade reporting system under this section is to be made in writing and is subject to any terms and conditions that the Commission may impose.

Suspension and cancellation

  • (3) If the Commission considers that it is in the public interest to do so, the Commission, after giving a quotation and trade reporting system an opportunity to be heard, may

  • ( a ) suspend or cancel its recognition; or

  • ( b ) remove, vary or replace any terms or conditions of its recognition.

Operations similar in nature

  • (4) No person shall carry on business as a quotation and trade reporting system or facilitate transactions of securities or exchange contracts by means of an operation similar in nature to a quotation and trade reporting system unless the person is recognized under this section as a quotation and trade reporting system.

Rules relating to hearings

  • 44. (1) If a recognized exchange, recognized self‑regulatory organization or recognized quotation and trade reporting system is empowered under its bylaws or rules to conduct hearings, the following rules apply:

  • ( a ) the person conducting the hearing has the same power as is vested in a superior court of record for the trial of civil actions to summon and enforce the attendance of witnesses, to compel witnesses to give evidence on oath or otherwise and to compel witnesses to produce documents, records, securities, exchange contracts, contracts and things;

  • ( b ) the failure or refusal of a person summoned as a witness under paragraph ( a ) to attend the hearing, to answer questions or to produce documents, records, securities, exchange contracts, contracts and things that are in that person’s custody or possession makes that person, on application to a superior court of record by the person conducting the hearing, liable to be committed for contempt by that court in the same manner as if that person were in breach of an order or judgment of that court;

  • ( c ) the person conducting the hearing may take evidence under oath;

  • ( d ) the person conducting the hearing or another person authorized by that person may administer oaths for the purpose of taking evidence;

  • ( e ) the exchange, self‑regulatory organization or quotation and trade reporting system may, on behalf of the person conducting the hearing, summon and enforce the attendance of witnesses and make applications to a superior court of record under paragraph ( b ); and

  • ( f ) the provisions of the rules of court of the superior court of record compelling the attendance of witnesses, including provisions relating to the payment of conduct money, apply in respect of the conduct of hearings referred to in this section.

Filing of decision

  • (2) A certified copy of a decision of an exchange, a self‑regulatory organization or a quotation and trade reporting system referred to in subsection (1) made after conducting a hearing may be filed with the clerk of a superior court of record and, on being filed, has the same force and effect as if it were a judgment of that court.

Appointment of receivers, managers, trustees or liquidators

  • 45. (1) A recognized exchange or a recognized self‑regulatory organization may apply to a superior court of record for the appointment of a receiver, receiver and manager, trustee or liquidator for all or part of the undertaking and affairs of a member of that exchange or self‑regulatory organization.

Criteria for appointment

  • (2) The court may, on application under subsection (1), appoint a receiver, receiver and manager, trustee or liquidator of all or any part of the property of the member if the court is satisfied that it is in the best interests of

  • ( a ) the recognized exchange or recognized self‑regulatory organization;

  • ( b ) the public;

  • ( c ) those persons whose property is in the possession or under the control of the member;

  • ( d ) the security holders or partners of the member; or

  • ( e ) the creditors of the member.

Ex parte application

  • (3) An application under subsection (1) may be made ex parte if the court considers it proper to do so in the circumstances, but the court may only make an order appointing a receiver, receiver and manager, trustee or liquidator for a period not exceeding 15 days.

Property

  • (4) A receiver, receiver and manager, trustee or liquidator of the property of a member appointed under this section is the receiver, receiver and manager, trustee or liquidator of all or part of the property

  • ( a ) owned by the member; or

  • ( b ) held by the member on behalf of or in trust for any other person.

Winding-up

  • (5) If so directed by the Court, the receiver, receiver and manager, trustee or liquidator may

  • ( a ) wind up or manage the business and affairs of the member; and

  • ( b ) exercise any powers necessary or incidental to the winding‑up or management of the business and affairs of the member.

Application of provisions

  • (6) Sections 125 to 131 apply, with any necessary modifications, in respect of a receiver, receiver and manager, trustee or liquidator appointed under this section.

Acting as an exchange when not so recognized

  • 46. (1) If a person is not carrying on business as an exchange but is carrying on business as a quotation and trade reporting system or is otherwise facilitating transactions of securities or exchange contracts, the Commission may, if it considers it to be in the public interest to do so, make an order

  • ( a ) declaring that the person is carrying on the business of an exchange; and

  • ( b ) directing the person

  • (i) to cease carrying on business as a quotation and trade reporting system or otherwise facilitating transactions of securities or exchange contracts,

  • (ii) not to carry on business as a quotation and trade reporting system unless the person is recognized under section 43 as a quotation and trade reporting system, and

  • (iii) not to carry on business as an exchange unless the person is recognized under section 34 as an exchange.

On own motion or application

  • (2) The Commission may make an order under this section on its own motion or on the application of an interested person.

Compliance with order

  • (3) A person subject to an order under subsection (1) shall comply with the order.

Auditor — recognized exchange

  • 47. (1) Every recognized exchange shall appoint an auditor for the exchange.

Auditor for recognized self-regulatory organization

  • (2) If the Executive Director considers it appropriate, the Executive Director may, by order, require a recognized self‑regulatory organization to appoint an auditor for the self‑regulatory organization.

Auditing firms for members

  • (3) Every recognized exchange and recognized self‑regulatory organization shall select a panel of auditing firms for their members.

Appointment of auditor for members

  • (4) Every recognized exchange and recognized self‑regulatory organization shall require each of its members to appoint an auditor chosen from the panel of auditing firms selected under subsection (3).

Examination

  • (5) The auditor of a member shall, in accordance with generally accepted auditing standards, make an examination of the annual financial statements and regulatory filings of the member as provided for by the bylaws, rules, regulations, policies, procedures, interpretations or practices applicable to the member.

Report

  • (6) The auditor of a member shall report on the financial affairs of the member to the recognized exchange or recognized self‑regulatory organization in accordance with professional reporting standards.

Maintaining books and records

  • 48. (1) Every recognized entity shall maintain the books and records that are necessary to properly record its business transactions and financial affairs and the transactions that it executes on behalf of others and any other books and records that may be required under Canadian securities law.

Delivering books and records

  • (2) Every recognized entity shall deliver to the Commission or the Executive Director any books and records or other information that the Commission or the Executive Director may require.

Voluntary surrender of recognition

  • 49. On application by a recognized entity, the Commission may accept, subject to any terms and conditions that the Commission may impose, the voluntary surrender of the recognition of the entity if the Commission considers that it would be in the public interest to do so.

Contravention of Canadian securities law

  • 50. No bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized entity shall contravene Canadian securities law, but a recognized entity may impose additional requirements within its jurisdiction.

Appeal

  • 51. (1) A person directly affected by, or by the administration of, a direction, decision, order or ruling made under a bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized entity may appeal that direction, decision, order or ruling to the Tribunal.

Right to make representations

  • (2) Where there is an appeal to the Tribunal of a direction, decision, order or ruling made by a recognized entity, that entity may be present and make representations at the appeal.

PART 4

REGISTRATION

Requirement to be registered

  • 52. (1) Unless they are registered in accordance with Canadian securities law, a person shall not act as a dealer, an adviser or an investment fund manager.

Requirement for individuals to be registered

  • (2) Unless he or she is registered in accordance with Canadian securities law, an individual shall not, directly or indirectly

  • ( a ) deal in securities or exchange contracts on behalf of a person that is required to be registered under subsection (1);

  • ( b ) advise in securities or exchange contracts on behalf of a person that is required to be registered under subsection (1); or

  • ( c ) perform a prescribed function or duty for a person that is required to be registered under subsection (1).

Compliance with terms

  • (3) A registrant shall comply with any terms, conditions, restrictions or requirements of the registration.

Responsible person

  • (4) A person required to be registered under subsection (1) shall appoint an individual to perform a prescribed function or duty on the person’s behalf.

Duty of care — general

  • 53. (1) Subject to subsections (2) and (3), a registrant shall deal fairly, honestly and in good faith with their clients.

Duty of care — management of investment portfolios

  • (2) A registrant that manages the investment portfolio of a client through discretionary authority granted by the client shall act fairly, honestly and in good faith toward the client and in the client’s best interests.

Duty of care — investment fund managers

  • (3) Every investment fund manager shall

  • ( a ) exercise the powers and discharge the duties of their office honestly, in good faith and in the best interests of the investment fund; and

  • ( b ) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

Registration by Executive Director

  • 54. (1) The Executive Director shall grant registration, reinstatement of registration or amendment of registration to an applicant unless it appears to the Executive Director that

  • ( a ) the applicant is not suitable for the registration, reinstatement or amendment applied for; or

  • ( b ) the registration, reinstatement or amendment applied for is objectionable.

Imposition of terms

  • (2) The Executive Director may, at any time, impose terms, conditions, restrictions or requirements on a registration.

Opportunity to be heard

  • (3) The Executive Director shall not impose terms, conditions, restrictions or requirements on a registration, or refuse to grant, reinstate or amend a registration, without giving the registrant or applicant an opportunity to be heard.

Suspension or termination

  • 55. (1) The Executive Director may suspend or terminate a registration if the Executive Director considers that it is in the public interest to do so.

Opportunity to be heard

  • (2) The Executive Director shall not suspend or terminate a registration without giving the registrant an opportunity to be heard.

Surrender of registration

  • 56. (1) If a registrant applies to surrender their registration, the Executive Director may accept the surrender if he or she is satisfied that

  • ( a ) the registrant’s financial obligations to their clients have been discharged; and

  • ( b ) the surrender of the registration would be in the public interest.

No opportunity to be heard

  • (2) On receiving an application under subsection (1), the Executive Director may, without providing an opportunity to be heard, suspend the registration or impose terms, conditions, restrictions or requirements on the registration.

Requirement for further information

  • 57. The Executive Director may require

  • ( a ) that further information or material be submitted by an applicant or a registrant within a specified time;

  • ( b ) that there be verification by affidavit or otherwise of any information or material submitted; or

  • ( c ) that any of the following persons submit to examination under oath by a person designated by the Executive Director:

  • (i) the applicant or registrant, or

  • (ii) any partner, officer, director, governor or trustee of the applicant or registrant or any person performing a similar function for them, or any employee of the applicant or registrant.

Designation of complaints body

  • 58. (1) The Minister may, for the purposes of this section, designate a body corporate incorporated under Part II of the Canada Corporations Act , chapter 32 of the Revised Statutes of Canada, 1970, whose purpose, in the view of the Minister, under its letters patent is dealing with complaints made by persons having requested or received products or services from registrants.

Obligation to be member

  • (2) If required by the regulations, every registrant shall be a member of a body corporate designated under subsection (1).

Directors

  • (3) The Minister may, in accordance with the letters patent and bylaws of the body corporate designated under subsection (1), appoint the majority of its directors.

Not an agent

  • (4) A body corporate designated under subsection (1) is not an agent of Her Majesty.

Designation to be published

  • (5) A designation under subsection (1) must be published in the Canada Gazette .

Registrant to keep records

  • 59. (1) Every registrant whose financial affairs are not subject to examination under section 47 shall keep those books and records that are necessary for the proper recording of the registrant’s business transactions and financial affairs.

Registrant to appoint auditor

  • (2) A registrant shall appoint an auditor who satisfies any requirements that may be established by the Executive Director.

Audit and report

  • (3) The auditor of a registrant shall, in accordance with generally accepted auditing standards, make an examination of the annual financial statements and other regulatory filings of the registrant and prepare a report on the financial affairs of the registrant in accordance with professional reporting standards.

Filing report

  • (4) Subject to the regulations, a registrant shall file the report referred to in subsection (3) with the Executive Director together with the registrant’s annual financial statements prepared in accordance with generally accepted accounting principles and the registrant’s other regulatory filings.

Financial statements to be certified

  • (5) The annual financial statements and regulatory filings referred to in subsection (4) shall be certified by the registrant or an officer or partner of the registrant.

Filing other information

  • (6) A registrant shall file with the Executive Director any other information that the Executive Director may require in a form that is acceptable to the Executive Director.

PART 5

TRADING IN SECURITIES AND EXCHANGE CONTRACTS

Confirmation of trade

  • 60. (1) Every registered dealer who has acted as principal or agent in connection with any trade in a security or an exchange contract shall promptly send to the customer a written confirmation of the transaction prepared in accordance with the rules.

Particulars to Executive Director

  • (2) At the request of the Executive Director, every dealer who has acted as agent in connection with a trade in a security or an exchange contract shall promptly

  • ( a ) make a reasonable inquiry in order to provide to the Executive Director particulars that are sufficient to identify the person from, to or through whom the security or exchange contract was bought or sold; and

  • ( b ) provide those particulars along with the name of that person to the Executive Director.

Attendance on or calls to residences

  • 61. (1) The Executive Director may, by order, suspend, cancel, restrict or impose terms and conditions on the right of any person or class of persons named or described in the order to attend at a residence, or to call to a residence by telephone, for the purpose of trading in any security or exchange contract or any class of securities or exchange contracts.

Opportunity to be heard

  • (2) The Executive Director shall not make an order under subsection (1) without giving the person or class of persons affected an opportunity to be heard.

Prohibitions respecting representations

  • 62. (1) Unless otherwise permitted by the Executive Director, no person shall represent that the person or any other person will

  • ( a ) resell or repurchase a security;

  • ( b ) refund any purchase price of a security;

  • ( c ) refund all or any margin or premium paid in respect of an exchange contract; or

  • ( d ) assume all or part of an obligation under an exchange contract.

Exceptions

  • (2) Subsection (1) does not apply to a security that carries or is accompanied with

  • ( a ) an obligation of the issuer to redeem or repurchase the security; or

  • ( b ) a right of the owner of the security to require the issuer to redeem or repurchase the security.

Prohibited undertakings and representations

  • (3) Subject to the regulations, no person, with the intention of effecting a trade in a security or exchange contract, shall

  • ( a ) give any undertaking relating to the future value or price of the security or exchange contract; or

  • ( b ) except with the written permission of the Executive Director, make any representation

  • (i) that the security will be listed on any exchange or quoted on any quotation and trade reporting system, unless the exchange or quotation and trade reporting system has granted approval to the listing or quoting of the security, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation,

  • (ii) that application has been made to list the security on any exchange or to quote the security on any quotation and trade reporting system, unless

  • (A) application has been made to list or quote the security on that exchange or quotation and trade reporting system and securities of the same issuer are currently listed on that exchange or quoted on that quotation and trade reporting system, as the case may be, or

  • (B) that exchange or quotation and trade reporting system has granted approval to the listing or quoting of the security, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation, or

  • (iii) that application will be made to list the security on any exchange or to quote the security on any quotation and trade reporting system.

Representation regarding market price

  • (4) No person shall represent that the person is offering to trade in a security at the market price, or at a price related to the market price, unless the person reasonably believes that a market for the security exists that is not made, created or controlled by the person, the person’s employer or affiliate or a person for whom the person is acting in the transaction.

Disclosure to customer

  • 63. (1) A registered dealer shall, on the request of any of its customers, provide to the customer the documents and information required by the rules within 30 days after receiving the request.

Other disclosure

  • (2) Every registered dealer or adviser shall comply with any other disclosure requirements of the rules.

Risk disclosure statement

  • 64. If required by the rules, a registered dealer or adviser shall provide a risk disclosure statement to a customer before opening an account for trading in exchange contracts in respect of that customer.

Using name of another registrant

  • 65. No registrant shall use the name of another registrant unless the registrant is a partner, officer or agent of the other registrant or is authorized to do so in writing by the other registrant.

Representation of registration

  • 66. (1) A person shall not represent that the person is registered under this Act unless

  • ( a ) the representation is true; and

  • ( b ) the person specifies, in making the representation, the person’s category of registration under this Act and the regulations.

False or misleading statements

  • (2) A person shall not make a statement about something that a reasonable investor would consider important in deciding whether to enter into, or maintain, a trading or advising relationship with the person if the statement is untrue or omits information necessary to prevent it from being false or misleading in the circumstances in which it is made.

Approval of Commission

  • 67. No person shall make any representation that the Commission, a member of the Commission, the Executive Director, the Secretary or any person employed by the Commission has in any manner expressed an opinion or passed judgment on any of the following:

  • ( a ) the financial standing, fitness or conduct of a registrant;

  • ( b ) the merits of a security, exchange contract or issuer; or

  • ( c ) an issuer’s disclosure.

Margin contracts

  • 68. (1) If a person has contracted as a registered dealer with a customer to buy, and carry on margin, any securities of an issuer either in Canada or elsewhere and, while the contract remains in force, the person sells or causes to be sold securities of the same issuer for any account in which the person has a direct or indirect interest and the effect of the sale would be, otherwise than unintentionally, to reduce the amount of the securities in the hands of the dealer or under its control in the ordinary course of business to below the amount of the securities that the dealer should be carrying for all its customers, the dealer shall disclose that fact to the customer and the contract is, at the option of the customer, voidable.

Application where partnership or company

  • (2) Subsection (1) applies to the following persons as if they were persons contracting as registered dealers:

  • ( a ) a partner or employee of a registered dealer that is a partnership; and

  • ( b ) a director, officer or employee of a registered dealer that is a company.

Notice to exercise option

  • (3) A customer may exercise the option referred to in subsection (1) within 30 days from the day on which disclosure was made under that subsection by sending a notice to that effect to the registered dealer.

Recovery from registered dealer

  • (4) If a customer exercises the option to void a contract in accordance with subsection (3), the customer may recover from the dealer, in respect of that contract, all the money paid by the customer, along with interest, as well as any securities deposited by that customer.

Declaration of short position

  • 69. (1) A person that places an order for the sale of a security through a registered dealer that is acting as agent for the person shall, at the time of placing the order, declare to the registered dealer that, if such is the case, the person does not own the security.

Placement through agent

  • (2) Subsection (1) applies to a person acting as agent for a person referred to in that subsection if the person acting as agent knows the principal does not own the security.

Trading on recognized exchange

  • 70. No person shall trade in an exchange contract on an exchange unless

  • ( a ) the exchange is recognized by the Commission under section 34 ; and

  • ( b ) the form of the exchange contract has been accepted by the Commission.

Form of exchange contract

  • 71. (1) On application by an exchange, the Commission may by order accept the form of an exchange contract for the purposes of paragraph 70 ( b ).

Opportunity to be heard

  • (2) The Commission shall not refuse to accept the form of an exchange contract without giving the applicant an opportunity to be heard.

PART 6

PROSPECTUS REQUIREMENTS

Duty to file prospectus

  • 72. (1) No person shall trade in a security on the person’s own account or on behalf of any other person if the trade would be a distribution of the security unless a prospectus has been filed with the Executive Director in accordance with the rules and a receipt issued for it or the person or distribution is, under Canadian securities law, exempt from the requirement to file a prospectus.

Preliminary prospectus

  • (2) If required by the rules, a person referred to in subsection (1) shall also file a preliminary prospectus with the Executive Director in accordance with the rules and obtain a receipt for it before trading in the securities referred to in that subsection.

Receipt for preliminary prospectus

  • (3) The Executive Director shall promptly issue a receipt for a preliminary prospectus on the filing of the preliminary prospectus.

Voluntary filing

  • (4) A preliminary prospectus and a prospectus may be filed in accordance with this Part to enable the issuer to become a reporting issuer, despite the fact that no distribution is contemplated.

Form and content

  • 73. (1) A prospectus must

  • ( a ) provide full, true and plain disclosure of all material facts relating to the securities proposed to be issued or distributed; and

  • ( b ) comply with the requirements of Canadian securities law regarding its form and content.

Supplemental information

  • (2) A prospectus must contain or be accompanied by financial statements, reports or other documents in accordance with Canadian securities law.

Distribution of previously issued securities

  • (3) If a person proposing to make a distribution of previously issued securities of an issuer is unable to obtain from the issuer information or material that is necessary for the purpose of the distribution or for enabling that person to comply with this Part, the Executive Director may order the issuer to give to that person any information and material that the Executive Director considers necessary for the purposes of the distribution or for enabling that person to comply with this Part.

Waiver of provisions

  • (4) If a person referred to in subsection (3) is unable to obtain the signatures to the certificates required by this Part or otherwise to comply with this Part, the Executive Director may make an order waiving any of the provisions of this Part that the Executive Director considers advisable to facilitate the distribution, if the Executive Director is satisfied that

  • ( a ) all reasonable efforts have been made to comply with this Part; and

  • ( b ) no person is likely to be prejudicially affected by the failure to comply with this Part.

Other forms of prospectus

  • 74. (1) If a person meets the requirements of the rules, that person may file any form of prospectus that is permitted by the rules.

Receipt constitutes compliance

  • (2) The issuance of a receipt for a prospectus filed in accordance with subsection (1) constitutes compliance with this Part.

Receipt for prospectus

  • 75. (1) The Executive Director shall issue a receipt for a prospectus filed under this Part unless

  • ( a ) the Executive Director considers that it is not in the public interest to do so; or

  • ( b ) the rules prevent the Executive Director from issuing the receipt in the circumstances.

Opportunity to be heard

  • (2) No person filing a prospectus shall be refused a receipt for that prospectus without being given an opportunity to be heard.

Permitted activities

  • 76. Despite section 72 , during the period between the issuance of a receipt for a preliminary prospectus and the issuance of a receipt for a prospectus, the person proposing the distribution of securities may undertake the trading activities relating to the proposed distribution that are permitted by the rules.

Defective preliminary prospectus

  • 77. (1) If it appears to the Executive Director that a preliminary prospectus does not substantially comply with the requirements of Canadian securities law regarding its form and content, the Executive Director may, without giving notice, order that the trading permitted under section 76 in the security to which the preliminary prospectus relates cease.

Duration of order

  • (2) An order made under subsection (1) remains in force until a revised preliminary prospectus satisfactory to the Executive Director is filed and forwarded to each recipient of the defective preliminary prospectus who was shown on the record maintained in accordance with the rules to have received the defective preliminary prospectus.

Material given on distribution

  • 78. After a receipt has been issued for a prospectus, a person trading in the security in a distribution pursuant to the prospectus shall not distribute any material respecting the security that is prohibited by the rules.

Order to cease trading

  • 79. (1) If it appears to the Commission, after a receipt is issued for a prospectus, that the rules prevent the Executive Director from issuing the receipt in the circumstances, the Commission may order that the distribution of the securities under the prospectus cease.

Service

  • (2) An order made under subsection (1) shall be served on the issuer of the securities to which the prospectus relates and any other person that the Commission directs.

Duty to comply

  • (3) On service of the order, the person named in it shall cease distribution of the securities pursuant to the prospectus and any receipt issued by the Executive Director for the prospectus is revoked.

Opportunity to be heard

  • (4) An order shall not be made under subsection (1) without the issuer being given an opportunity to be heard.

Obligation to deliver prospectus

  • 80. A dealer, not acting as an agent of the purchaser, who receives an order or subscription for a security offered in a distribution to which subsection 72 (1) or subsections 73 (3) and (4) apply shall, unless the dealer has previously done so, send to a purchaser of the security the latest prospectus and any amendment to the prospectus filed either

  • ( a ) before entering into an agreement of purchase resulting from the order or subscription; or

  • ( b ) not later than midnight on the 2nd day, exclusive of Saturdays and holidays, after entering into the agreement.

Revocation of purchase

  • 81. (1) An agreement to purchase securities offered in a distribution to which subsection 72 (1) applies is not binding on the purchaser if the dealer receives, not later than midnight on the 2nd day exclusive of Saturdays and holidays, after receipt by the purchaser of the latest prospectus or any amendment to the prospectus, notice in writing that the purchaser does not intend to be bound by the agreement of purchase.

Beneficial owner

  • (2) A beneficial owner who is not the purchaser under this section may exercise the same rights under subsection (1) as may be exercised by a purchaser.

Duty to advise

  • (3) A purchaser referred to in subsection (1) who is not the beneficial owner of the securities shall advise the person that is the beneficial owner of the securities of the provisions of subsections (1) and (2).

Restriction

  • (4) Subsection (3) only applies if the purchaser knows the name and address of the beneficial owner of the securities.

Non-application if registrant

  • (5) Subsections (1) to (3) do not apply if the beneficial owner of the securities is a registrant.

Deemed notice

  • (6) The receipt of the notice referred to in subsection (1) by a dealer is deemed to be receipt of the notice by the vendor of the security.

Onus

  • (7) The onus of proving that the time for giving notice under subsection (1) has expired is on the dealer from whom the purchaser has agreed to purchase the security.

Discretionary exemptions

  • 82. (1) The Commission may, if the Commission considers that it would not be prejudicial to the public interest to do so, make an order granting an exemption from section 52 or 72 .

Deemed distributions

  • (2) The Commission may, if the Commission considers that it would not be prejudicial to the public interest to do so, make an order that a trade, an intended trade or a class of trades or intended trades is deemed to be a distribution.

When distribution concluded

  • (3) The Commission may make an order declaring whether a distribution has been concluded or is still in progress.

Own motion or application

  • (4) An order under this section may be made by the Commission on its own motion or on an application of a person directly affected by the trade in respect of which the application is made.

Retroactivity

  • (5) An order under this section may, at the direction of the Commission, come into force on a date before the date on which the order is made.

Order is final

  • (6) A decision of the Commission under this section is final.

Reporting issuer by declaration

  • 83. (1) On the application of an issuer or the motion of the Executive Director, the Commission may, if the Commission considers that it would not be prejudicial to the public interest to do so, make an order declaring that a person is a reporting issuer for the purposes of this Act and the regulations.

Opportunity to be heard

  • (2) An order under subsection (1) shall not be made without giving the person in respect of which the order is made an opportunity to be heard.

Deemed not to be a reporting issuer

  • 84. On the application of a reporting issuer or the Executive Director, the Commission may, if the Commission considers that it would not be prejudicial to the public interest to do so, order that the reporting issuer is deemed to have ceased to be a reporting issuer.

Maintaining books and records

  • 85. (1) Every reporting issuer, and every officer, director, promoter and transfer agent of a reporting issuer, shall maintain the books and records that are necessary to properly record the business transactions and financial affairs of the reporting issuer and the transactions that the reporting issuer executes on behalf of others and any other books and records that may be required under Canadian securities law.

Delivering books and records

  • (2) Every reporting issuer, and every officer, director, promoter and transfer agent of a reporting issuer, shall deliver to the Commission or the Executive Director any books and records or other information that the Commission or the Executive Director may require.

PART 7

CONTINUOUS DISCLOSURE

Disclosure generally

  • 86. A reporting issuer shall, in accordance with the rules, provide

  • ( a ) periodic disclosure about its business, operations, affairs or capital;

  • ( b ) timely disclosure of any material change relating to the reporting issuer;

  • ( c ) timely disclosure of any proxies solicited by the reporting issuer; and

  • ( d ) any other disclosure required by the rules.

Purchase or sale by person in special relationship

  • 87. (1) No person in a special relationship with a reporting issuer shall purchase or sell securities of the reporting issuer with the knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed.

Security of a reporting issuer

  • (2) For the purposes of subsection (1), a security of a reporting issuer includes

  • ( a ) a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer; and

  • ( b ) a security the market price of which varies materially with the market price of the securities of the reporting issuer.

No contravention if certain things proved

  • (3) No person shall be found to have contravened subsection (1) if

  • ( a ) in the case of an individual, the person proves that the person did not have any actual knowledge of the material fact or material change referred to in that subsection or, in the case of a person other than an individual, the person proves each of the following:

  • (i) the person had knowledge of that material fact or material change by reason only that the material fact or material change was known to one or more of that person’s directors, officers, partners, employees or agents,

  • (ii) the decision to purchase or sell the securities was made by that person’s director, officer, partner, employee or agent who did not have any actual knowledge of that material fact or material change, and

  • (iii) the person’s director, officer, partner, employee or agent who had actual knowledge of that material fact or material change did not, with respect to the purchase or sale of the securities, give any specific advice based on that knowledge to that person’s director, officer, partner, employee or agent who made the decision to purchase or sell the securities;

  • ( b ) the person proves that

  • (i) the person purchased or sold the securities as an agent for another person pursuant to an unsolicited order or a solicited order given before the person that acted as agent had knowledge of the material fact or material change, and

  • (ii) the person did not, with respect to the purchase or sale of the securities, give any specific advice to that other person based on the knowledge of that material fact or material change;

  • ( c ) the person proves that the purchase or sale of the securities was made pursuant to the person’s participation in an automatic dividend reinvestment plan, an automatic security purchase plan or another similar automatic plan that the person had entered into before acquiring knowledge of the material fact or material change;

  • ( d ) the person proves that the purchase or sale of the securities was made pursuant to a legal obligation that the person had entered into before acquiring knowledge of the material fact or material change; or

  • ( e ) the person proves that the person, as an agent for another person, purchased or sold the securities as a result of that other person’s participation in an automatic dividend reinvestment plan, an automatic security purchase plan or another similar automatic plan or as a result of that other person’s legal obligation.

No contravention by principal

  • (4) If a person, with knowledge of a material fact or material change with respect to a reporting issuer, purchases or sells securities of that reporting issuer for the account of another person while acting as agent with discretionary authority for that other person, the person for whose account the securities were purchased or sold is not to be found to have contravened subsection (1) if

  • ( a ) the transaction was entered into without the knowledge of the person for whose account the securities were purchased or sold;

  • ( b ) the material fact or material change was not communicated to the person for whose account the securities were purchased or sold; or

  • ( c ) the person for whose account the securities were purchased or sold had actual knowledge of the material fact or material change but did not exercise influence over or make recommendations to the person acting as the agent with the discretionary authority.

Tipping

  • 88. No reporting issuer or person in a special relationship with a reporting issuer shall, other than when it is necessary in the course of business, inform another person of a material fact or material change with respect to the reporting issuer before the material fact or material change has been generally disclosed.

Recommendations by persons in special relationship

  • 89. No reporting issuer or person in a special relationship with a reporting issuer shall, with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed, recommend that another person

  • ( a ) purchase or sell a security of the reporting issuer; or

  • ( b ) enter into a transaction involving a security the value of which varies materially with the market price or value of a security of the reporting issuer.

Disclosure during reorganization

  • 90. No person that proposes to do any of the following shall, other than when it is necessary in the course of business for doing any of the following, inform another person of a material fact or material change with respect to a reporting issuer before the material fact or material change has been generally disclosed:

  • ( a ) make a take‑over bid, as defined in section 93 , for the securities of the reporting issuer;

  • ( b ) become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with the reporting issuer; or

  • ( c ) acquire a substantial portion of the property of the reporting issuer.

No contravention of certain provisions

  • 91. No person shall be found to have contravened any of sections 87 to 90 if that person proves that

  • ( a ) the person reasonably believed that the material fact or material change had been generally disclosed; or

  • ( b ) the person reasonably believed that the other party to the purchase or sale of the securities, or the other person informed of the material fact or material change, had prior knowledge of or ought reasonably to have known of the material fact or material change.

No contravention by informing Commission

  • 92. It is not a contravention of any of sections 87 to 90 to provide information to the Commission.

PART 8

TAKE-OVER BIDS AND ISSUER BIDS

Definitions

  • 93. The following definitions apply in this Part.

“interested person”

« intéressé »

“interested person” means

  • ( a ) an issuer whose securities are the subject of a take-over bid, issuer bid or other offer to acquire;

  • ( b ) a security holder, director or officer of an issuer described in paragraph ( a );

  • ( c ) an offeror;

  • ( d ) the Executive Director; and

  • ( e ) any person not referred to in paragraphs ( a ) to ( d ) who, in the opinion of the Commission or the court, as the case may be, is a proper person to make an application under section 97 or 98 .

“issuer bid”

« offre publique de rachat »

“issuer bid” means an offer to acquire or redeem securities of an issuer made by the issuer to one or more persons, any of whom is in Canada or whose last address as shown on the books of the offeree issuer is in Canada, and includes an acquisition or redemption of securities of the issuer by the issuer from those persons, but does not include an offer to acquire or redeem or an acquisition or redemption,

  • ( a ) if no valuable consideration is offered or paid by the issuer for the securities;

  • ( b ) if the offer to acquire or redeem, or the acquisition or redemption, is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders; or

  • ( c ) if the securities are debt securities that are not convertible into securities other than debt securities.

“take-over bid”

« offre publique d’achat »

“take-over bid” means an offer to acquire outstanding voting securities or equity securities of a class made to one or more persons, any of whom is in Canada or whose last address as shown on the books of the offeree issuer is in Canada, if the securities subject to the offer to acquire, together with the offeror’s securities, constitute in the aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire but does not include an offer to acquire if the offer to acquire is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders.

Making a bid

  • 94. A person shall not make a take-over bid or issuer bid, whether alone or acting jointly or in concert with one or more persons, except in accordance with the rules.

Recommendations of directors and officers

  • 95. (1) When a take-over bid has been made, the directors of the issuer whose securities are the subject of the bid shall

  • ( a ) determine whether to recommend acceptance or rejection of the bid or determine not to make a recommendation; and

  • ( b ) make the recommendation, or a statement that they are not making a recommendation, in accordance with the rules.

Individual recommendations

  • (2) An individual director or officer of the issuer described in subsection (1) may recommend acceptance or rejection of the take-over bid if the recommendation is made in accordance with the rules.

Equal treatment

  • 96. (1) Subject to the rules, a take-over bid or issuer bid must be subject to the same terms and conditions for all holders of the same class of securities.

No collateral agreements

  • (2) Subject to the rules, if a person makes or intends to make a take-over bid or issuer bid, that person or any person acting jointly or in concert with that person must not enter into any collateral agreement, arrangement, commitment or understanding that has the effect of providing to a holder or beneficial owner of securities of the offeree issuer a consideration of greater value than that offered to the other holders of securities of the same class.

Variation in terms

  • (3) Subject to the rules, if, before the expiry of a take-over bid or issuer bid, a variation in the terms of the bid increases the value of the consideration offered for the securities subject to the bid, the offeror must pay that increased consideration to each person whose securities are taken up under the bid, whether or not the securities were taken up by the offeror before the variation.

Bid for less than all of class

  • (4) Subject to the rules, if a take-over bid or issuer bid is made for less than all of the class of securities subject to the bid, and a greater number of securities is deposited under the bid than the offeror is bound or willing to acquire under the bid, the securities must be taken up and paid for by the offeror as nearly as may be proportionately, disregarding fractions, according to the number of securities deposited by each depositing security holder.

Application to Commission — compliance orders

  • 97. (1) On application by an interested person, the Commission may, if it considers that a person has not complied or is not complying with this Part or the rules, make one or more of the following orders:

  • ( a ) restraining the distribution of any document, record or materials used or issued in connection with a take-over bid or issuer bid;

  • ( b ) requiring an amendment to or variation of any document, record or materials used or issued in connection with a take-over bid or issuer bid and requiring the distribution of amended, varied or corrected information;

  • ( c ) directing any person to comply with this Part or the rules;

  • ( d ) restraining any person from contravening this Part or the rules; or

  • ( e ) directing the directors and officers of any person to cause the person to comply with or to cease contravening this Part or the rules.

Application to Commission — exemptions

  • (2) On application by an interested person, the Commission may order that a person is exempt from any requirement under this Part or the rules if the Commission considers that it would not be prejudicial to the public interest to do so.

Application to court — compliance orders

  • 98. (1) On application by an interested person, if a superior court of record is satisfied that a person has not complied with this Part or the rules, the court may make any interim or final order that it sees fit, including, without limitation, an order

  • ( a ) compensating any interested person who is a party to the application for damages suffered as a result of a contravention of this Part or the rules;

  • ( b ) rescinding a transaction with any interested person, including the issue of a security or a purchase and sale of a security;

  • ( c ) requiring any person to dispose of any securities acquired pursuant to, or in connection with, a take-over bid or issuer bid;

  • ( d ) prohibiting any person from exercising all or any of the voting rights attached to any securities; or

  • ( e ) requiring the trial of an issue.

Notice to Executive Director

  • (2) If the Executive Director is not the applicant under subsection (1), the Executive Director must be given notice of the application and is entitled to appear at the hearing and make representations to the court.

PART 9

INSIDER TRADING AND SELF-DEALING

Definitions

  • 99. (1) The following definitions apply in this Part.

“investment”

« investissement »

“investment” means a purchase of any security or any class of securities of an issuer including loans to persons, but does not include advances or loans, whether secured or unsecured, that

  • ( a ) are made by a mutual fund or its management company or distribution company; and

  • ( b ) are ancillary to the main business of the mutual fund or its management company or distribution company.

“mutual fund”

« fonds mutuel »

“mutual fund” means, except in section 103 , a mutual fund that is a reporting issuer.

“related mutual funds”

« fonds mutuel associés »

“related mutual funds” means mutual funds that are under common management.

“related person”

« personne afiliée »

“related person” means, in relation to a mutual fund, a person in which the mutual fund, its management company and its distribution company are prohibited by this Part from making any investment.

Deemed related persons

  • (2) For the purposes of this Part, any issuer in which a mutual fund holds in excess of 10% of the outstanding voting securities is deemed to be a related person of that mutual fund. Any issuer in which a mutual fund and related mutual funds hold in excess of 20% of the outstanding voting securities is deemed to be a related person of each of those mutual funds.

Additional rules

  • (3) The following rules apply for the purposes of sections 103 to 107  :

  • ( a ) a person or a combination of persons has a significant interest in an issuer if the person, either directly or indirectly, beneficially owns more than 10% of the outstanding shares or units of the issuer or, in the case of a combination of persons, they, either individually or together and either directly or indirectly, beneficially own more than 50% of the outstanding shares or units of the issuer;

  • ( b ) a person or a combination of persons is a substantial security holder of an issuer if that person or combination of persons, either individually or together or directly or indirectly, beneficially owns voting securities to which are attached more than 20% of the voting rights attached to all the outstanding voting securities of the issuer; and

  • ( c ) if a person or a combination of persons, directly or indirectly, beneficially owns voting securities of an issuer, that person or combination of persons is deemed to beneficially own a proportion of voting securities of any other issuer that are beneficially owned, directly or indirectly, by that issuer, in a proportion that is equal to the proportion of the voting securities of that issuer that are beneficially owned, directly or indirectly, by that person or combination of persons.

Exclusion of underwriter securities

  • (4) For the purposes of paragraph (3)( c ), when computing the percentage of voting rights attached to voting securities owned by an underwriter there shall be excluded any voting securities acquired by the person as underwriter in a distribution of the securities up until the time of completion or cessation of the distribution by the underwriter.

Reports of insider

  • 100. (1) An insider of a reporting issuer, other than a mutual fund, shall comply with the disclosure requirements of the rules regarding that person’s direct or indirect beneficial ownership of, or control or direction over, the following:

  • ( a ) securities of the reporting issuer;

  • ( b ) any put or call option or other right or obligation to purchase or sell securities of the reporting issuer; or

  • ( c ) any interest in, or right or obligation associated with, a related financial instrument.

Deemed passing of ownership

  • (2) For the purposes of subsection (1), ownership is deemed to pass at the time an offer to sell is accepted by the purchaser or the purchaser’s agent or an offer to buy is accepted by the vendor or the vendor’s agent.

Duty of deemed insider

  • (3) Subject to the regulations, a person that becomes an insider of a reporting issuer by reason of section 8 shall comply with the disclosure requirements of the rules in respect of the previous six months or for such shorter period that the person was a director or officer of the reporting issuer.

Early warning

  • 101. If a person acquires beneficial ownership, directly or indirectly, of, or direct or indirect control or direction over, securities of a prescribed type or class of a reporting issuer representing a prescribed percentage of the outstanding securities of that type or class, the person and any person acting jointly or in concert with the person shall make and file disclosure in accordance with the regulations and comply with any prohibitions in the regulations on transactions in securities of the reporting issuer.

Report of a legal owner

  • 102. (1) If voting securities are registered in the name of a person other than the beneficial owner and that person knows that the securities are beneficially owned by an insider who has failed to comply with the disclosure requirements of the rules regarding such ownership, that person shall comply with the disclosure requirements of the rules.

Exception

  • (2) A person in whose name securities referred to in subsection (1) are registered need not comply with the disclosure requirements of the rules if the securities became registered through a transfer made for the purpose of giving collateral for a genuine debt.

Prohibition — investment by way of loan

  • 103. (1) No mutual fund shall knowingly make an investment by way of loan to

  • ( a ) an officer or director of the mutual fund, its management company, its distribution company or an associate of any of them; or

  • ( b ) an individual, if the individual or an associate of the individual is a substantial security holder of the mutual fund, its management company or its distribution company.

Prohibition — other investments

  • (2) No mutual fund shall knowingly make an investment

  • ( a ) in a person that is a substantial security holder of the mutual fund, its management company or its distribution company;

  • ( b ) in a person in which the mutual fund, alone or together with one or more related mutual funds, is a substantial security holder; or

  • ( c ) in an issuer in which

  • (i) an officer or director of the mutual fund or its management company or its distribution company or an associate of any of them has a significant interest, or

  • (ii) any person who is a substantial security holder of the mutual fund, its management company or its distribution company has a significant interest.

Prohibition — holding investments

  • (3) No mutual fund or its management company or its distribution company shall knowingly hold an investment that it is prohibited from making under subsection (1) or (2).

Prohibition — Indirect investments

  • (4) No mutual fund or its management company or its distribution company shall knowingly enter into any contract or other arrangement that results in it being directly or indirectly liable or contingently liable in respect of any investment that it is prohibited from making under subsection (1) or (2).

Deemed investment

  • (5) A contract or other arrangement referred to in subsection (4) is deemed to be an investment for the purposes of subsections (1) and (2).

Permitted investment — mutual fund

  • 104. A mutual fund is not prohibited from making an investment in an issuer by reason only that a person or a combination of persons that, directly or indirectly, beneficially owns voting securities of the mutual fund or its management company or its distribution company is, as a result of the investment, deemed under paragraph 99 (3)( c ) to beneficially own voting securities of the issuer.

Prohibition — fees on investments

  • 105. (1) No mutual fund shall make an investment if, as a result, a related person of the mutual fund will receive a fee or other compensation.

Exception

  • (2) Subsection (1) does not apply to a fee paid pursuant to a contract that is disclosed in a preliminary prospectus or prospectus in respect of which a receipt has been issued to the mutual fund.

Order to except

  • (3) On the application of a mutual fund, the Commission may, if it considers that it would not be prejudicial to the public interest to do so, order that subsection (1) does not apply to the mutual fund.

Filing by management companies

  • 106. (1) Every management company shall, in respect of each mutual fund to which it provides service or advice, file in accordance with the rules a report containing the information required by the rules.

Order to except

  • (2) The Commission may order that subsection (1) does not apply to any transaction or class of transactions.

Definition of “responsible person”

  • 107. (1) In this section, “responsible person” means a portfolio manager and includes

  • ( a ) every individual who is a partner, director or officer of a portfolio manager;

  • ( b ) every affiliate of a portfolio manager; and

  • ( c ) every individual who is a director, officer or employee of an affiliate of a portfolio manager, or is an employee of the portfolio manager, if the individual or the affiliate participates in the formulation of, or has access prior to the implementation of, investment decisions made on behalf of, or advice given to, the client of the portfolio manager.

Prohibition — certain investments

  • (2) A portfolio manager shall not knowingly cause any investment in a portfolio managed by it to be made up of any of the following:

  • ( a ) an investment in any issuer in which a responsible person or an associate of a responsible person is an officer or director unless that specific fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase;

  • ( b ) a purchase or sale of the securities of any issuer from or to the account of a responsible person or any associate of a responsible person; or

  • ( c ) a loan made to a responsible person or an associate of a responsible person.

Prohibition — trades by mutual fund insiders

  • 108. No person that has access to information concerning the investment program of a mutual fund, or the investment portfolio managed for a client by a portfolio manager, shall purchase or sell securities of an issuer for the person’s account if

  • ( a ) the portfolio securities of the mutual fund or the investment portfolio managed for a client by a portfolio manager include securities of that issuer; and

  • ( b ) the information is used by the person for the person’s direct benefit or advantage.

Authorized exceptions to prohibitions

  • 109. If the regulations so provide, a body established under subsection 110 (1) by an investment fund may approve a transaction that is prohibited under this Part, in which case the prohibition does not apply to the transaction.

Oversight of investment funds

  • 110. (1) If required to do so by the regulations, an investment fund shall establish and maintain a body for the purposes of

  • ( a ) overseeing activities of the investment fund and the investment fund manager;

  • ( b ) reviewing or approving prescribed matters affecting the investment fund, including transactions referred to in section 109 ; and

  • ( c ) disclosing information to security holders of the fund, to the investment fund manager and to the Commission.

Powers and duties

  • (2) A body established under subsection (1) has the prescribed powers and duties.

PART 10

INVESTIGATIONS

Order to produce records

  • 111. (1) For any purposes related to the administration of Canadian securities law, the Executive Director may, by an order that is applicable generally or that is directed to one or more of the following persons, require the person to provide to the Executive Director the information, documents or records as set out in the order within the time set out in the order:

  • ( a ) a registrant;

  • ( b ) a person that is exempted by an order made under section 82 from the requirement to be registered under section 52 ;

  • ( c ) a reporting issuer;

  • ( d ) a manager or custodian of assets, shares or units of an investment fund;

  • ( e ) a general partner of a person referred to in paragraph ( a ), ( b ), ( c ), ( f ) or ( i );

  • ( f ) a person purporting to distribute securities in reliance on an exemption provided for in the regulations or in an order made under section 82 ;

  • ( g ) a transfer agent or registrar for securities of a reporting issuer;

  • ( h ) a director or officer of a reporting issuer;

  • ( i ) a promoter or control person of a reporting issuer;

  • ( j ) the Canadian Investor Protection Fund; and

  • ( k ) a clearing agency.

Verification by affidavit

  • (2) The Executive Director may require verification by affidavit that a person has produced to the Executive Director all of the information, documents and records required pursuant to an order made under subsection (1).

Investigation order

  • 112. (1) The Executive Director may, by order, appoint a person to make any investigation that the Executive Director considers necessary

  • ( a ) for the administration of Canadian securities law;

  • ( b ) to assist in the administration of the securities or exchange contract laws of another jurisdiction;

  • ( c ) in respect of matters relating to trading in securities or exchange contracts in Canada; or

  • ( d ) in respect of matters in Canada relating to trading in securities or exchange contracts in another jurisdiction.

Allegation of contravention

  • (2) If an individual alleges under oath that a person has contravened Canadian securities law, the Executive Director may, by order, appoint a person to make an investigation in respect of the allegation.

Scope of order

  • (3) The Executive Director shall, in an order made under subsection (1) or (2), set out the scope of the investigation that is to be carried out under the order.

Powers of investigation

  • (4) For the purposes of an investigation ordered under this section, the person appointed to make the investigation may, with respect to the person that is the subject of the investigation, investigate, inquire into and examine

  • ( a ) the affairs of that person;

  • ( b ) documents, records, correspondence, communications, negotiations, trades, transactions, investigations, loans, borrowings and payments to, by, on behalf of or in relation to or connected with that person;

  • ( c ) the property, assets or things owned, acquired or alienated in whole or in part by that person or by any person acting on behalf of or as agent for that person;

  • ( d ) the assets at any time held by, and the liabilities, debts, undertakings and obligations at any time existing and the financial or other conditions at any time prevailing in respect of, that person; and

  • ( e ) the relationship that may at any time exist or have existed between that person and any other person by reason of any of the following:

  • (i) investments,

  • (ii) commissions promised, secured or paid,

  • (iii) interests held or acquired,

  • (iv) the loaning or borrowing of money, securities or other property,

  • (v) the transfer, negotiation or holding of securities or exchange contracts,

  • (vi) interlocking directorates,

  • (vii) common control,

  • (viii) undue influence or control, or

  • (ix) any other matter not referred to in subparagraphs (i) to (viii).

Clarification

  • (5) For the purposes of an investigation under this section, a person appointed to make the investigation may examine any documents, records or other things, whether they are in the possession or control of the person in respect of which the investigation is ordered or of any other person.

Powers of investigator

  • 113. (1) A person appointed to make an investigation under section 112 has the same power as is vested in a superior court of record

  • ( a ) to summon and enforce the attendance of witnesses;

  • ( b ) to compel witnesses to give evidence on oath or otherwise; and

  • ( c ) to compel witnesses to produce documents, records, securities, exchange contracts, contracts and things.

Making copies

  • (2) A person appointed to make an investigation under section 112 may make copies or cause copies to be made of any documents, records, securities, exchange contracts, contracts or things produced pursuant to subsection (1).

Power of contempt

  • (3) The failure or refusal of a person summoned as a witness under subsection (1) to attend, to answer questions or to produce documents, records, securities, exchange contracts, contracts or things that are in that person’s custody or possession makes that person, on application to a superior court of record by the person making the investigation, liable to be committed for contempt by that court in the same manner as if that person were in breach of an order or judgment of that court.

Representation by counsel

  • (4) A person giving evidence at an investigation under section 112 may be represented by counsel.

Search and seizure

  • 114. (1) If authorized to do so by an order of a superior court of record, a person conducting an investigation under section 112 may

  • ( a ) enter into and search any premises of the person whose affairs are being investigated; and

  • ( b ) seize and take possession of any documents, records, securities, exchange contracts, contracts or things of that person.

Ex parte applications

  • (2) An application for an order under subsection (1) may be made ex parte unless the court to which the application is made otherwise directs.

Request to inspect and copy

  • (3) Documents, records, securities, exchange contracts, contracts or things seized under subsection (1) shall, at a time and place mutually convenient to the person from whom they were seized and the person making the investigation, be made available for inspection and copying by the person from whom they were seized if a request for an opportunity to inspect or copy is made by that person to the person making the investigation.

Return of things seized

  • (4) If a matter in respect of which documents, records, securities, exchange contracts, contracts or things were seized under subsection (1) is concluded, the Executive Director shall return them to the person from whom they were seized within 60 days after the day that the matter is concluded.

Application for return

  • (5) If the person from whom documents, records, securities, exchange contracts, contracts or things are seized under subsection (1) alleges that they are not relevant in respect of the matter for which they were seized, that person may apply by a notice of motion to a superior court of record for the return of the documents, records, securities, exchange contracts, contracts or things.

Order to return

  • (6) On hearing an application under subsection (5), the court shall order the return of any documents, records, securities, exchange contracts, contracts or things that it determines are not relevant to the matter for which they were seized.

Appointment of experts

  • 115. (1) If an investigation is ordered under section 112 , the Executive Director may appoint persons having special technical or other knowledge or skills to assist and be responsible to the person appointed under that section to conduct the investigation.

Duties of expert

  • (2) A person appointed under subsection (1) shall, as required by the person conducting the investigation, examine documents, records, securities, exchange contracts, contracts and things of the person whose affairs are being investigated and perform any other duties required.

Report to Executive Director

  • 116. (1) Every person appointed under subsection 112 (1) or (2) shall provide the Executive Director with

  • ( a ) interim reports as requested by the Executive Director; and

  • ( b ) a full and complete report of the investigation including all transcripts of evidence and material in the person’s possession relating to the investigation.

Report is privileged

  • (2) A report provided to the Executive Director under subsection (1) is privileged and is not admissible in evidence in any action, proceeding or prosecution.

Exception

  • (3) Despite subsection (2), if the Executive Director considers that it is in the public interest to do so, the Executive Director may by order at any time authorize the disclosure of any information, testimony, record, document, report or thing obtained under this Part subject to any terms and conditions that the Executive Director may impose.

Investigation confidential

  • 117. Anything acquired and all information or evidence obtained pursuant to an investigation is confidential and shall not be divulged except

  • ( a ) by a person to the person’s counsel;

  • ( b ) if authorized by the Executive Director; or

  • ( c ) as otherwise permitted by Canadian securities law.

Information

  • 118. (1) Subject to subsection (2), if the Executive Director considers that it would not be prejudicial to the public interest to do so, the Executive Director may provide information to and receive information from

  • ( a ) other securities or financial regulatory authorities, exchanges, self‑regulatory bodies or organizations, law enforcement agencies and other governmental or regulatory authorities in Canada and elsewhere; and

  • ( b ) any person acting on behalf of, or providing services to, the Commission or the Executive Director.

Collection and disclosure

  • (2) The Commission or the Executive Director may, with respect to any personal information referred to in or dealt with or governed under the applicable provisions of the Access to Information Act or the Privacy Act , collect that information, whether directly from the individual or by some other method, and disclose that information for the purposes of carrying out any duties and exercising any powers of the Commission or the Executive Director under this or any other Act.

Agreement or arrangement

  • (3) The Commission or the Executive Director may enter into an arrangement or agreement for the purposes of subsection (2).

Information confidential

  • (4) Any information received by the Commission or the Executive Director under this section is confidential and shall not be disclosed except if authorized by the Executive Director.

Conflict

  • 119. (1) Subject to subsection (2), if anything in section 86 , 116 or 117 or subsection 118 (4) is inconsistent or in conflict with the Access to Information Act or the Privacy Act , those provisions prevail despite that Act.

Limited application

  • (2) Where information is collected or received pursuant to the provisions referred to in subsection (1), that subsection ceases to apply in respect of that information after 50 years has elapsed from the end of the year in which the information was collected or received.

Circumstances in which property may be frozen

  • 120. (1) The Executive Director may take any action permitted under subsection (2) in respect of a person:

  • ( a ) if the Executive Director is about to order an investigation in respect of the person under section 112 ;

  • ( b ) at any time during or after the carrying out of an investigation under section 112 in respect of the person;

  • ( c ) if the Commission has made, or the Executive Director has reasonable grounds to believe that the Commission is about to make, an order under section 151 in respect of the person that trading in securities of an issuer or trading in exchange contracts shall cease;

  • ( d ) if the Commission has made, or the Executive Director has reasonable grounds to believe that the Commission is about to make, a decision

  • (i) suspending or cancelling the registration of the person, or

  • (ii) affecting the right of the person to trade in securities or exchange contracts; or

  • ( e ) if there is evidence of a contravention by the person of Canadian securities law or any other Act relating to the trading of securities or exchange contracts.

Order to freeze property

  • (2) The following action is permitted to be taken in respect of a person referred to in subsection (1):

  • ( a ) directing any other person having on deposit, under control or for safekeeping any funds, securities, exchange contracts or other property of the person to hold the funds, securities, exchange contracts or other property;

  • ( b ) directing the person to refrain from withdrawing any funds, securities, exchange contracts or other property referred to in paragraph ( a ); and

  • ( c ) directing the person to hold all funds, securities, exchange contracts or other property of clients or others in the person’s possession or control in trust for any interim receiver, custodian, trustee, receiver, receiver and manager or liquidator appointed under the Bankruptcy and Insolvency Act , the Winding‑up and Restructuring Act or section 124 of this Act.

Service required

  • (3) An order under subsection (2) does not take effect until it is served on the person to whom the order is directed.

Limited application

  • (4) Unless an order under subsection (2) provides to the contrary, it does not apply to funds, securities or exchange contracts in a clearing agency or to securities in process of transfer by a transfer agent.

Order in respect of financial institution

  • (5) An order under subsection (2) made in respect of a financial institution applies only to the offices, branches or agencies of the financial institution named in the order.

Application for directions

  • 121. A person in receipt of an order made under subsection 120 (2) that

  • ( a ) is in doubt as to the application of the order to any funds, securities, exchange contracts or other property may apply to the Executive Director for direction as to the disposition of the funds, securities, exchange contracts or other property; or

  • ( b ) is in doubt as to a claim being made to that person by any person not named in the order may apply to the Executive Director for direction as to the disposition of the claim.

Revocation or consent to release

  • 122. On the application of a person directly affected by a direction given in an order made under subsection 120 (2), the Executive Director may make an order revoking that direction or consenting to the release of any funds, securities, exchange contracts or other property in respect of which the order was made.

Notice of proceedings

  • 123. (1) In any of the circumstances referred to in subsection 120 (1), the Executive Director may send to a land registrar or mining recorder a notice that proceedings are being or are about to be taken that may affect land or mining claims belonging to the person referred to in the notice.

Content of notice

  • (2) A notice sent under subsection (1) shall be registered or recorded against the lands or claims mentioned in the notice and has the same effect as the registration or recording of a certificate of pending litigation or a caveat.

Revocation or modification

  • (3) The Executive Director may, in writing, revoke or modify a notice sent under subsection (1).

Appointment of receivers, managers, trustees or liquidators

  • 124. (1) The Executive Director may apply to a superior court of record for the appointment of a receiver, receiver and manager, trustee or liquidator of the property of a person

  • ( a ) if any of the circumstances set out in subsection 120 (1) apply in respect of the person; or

  • ( b ) if the person fails or neglects to comply with the minimum net asset requirements, investment restrictions, ownership restrictions or capital requirements prescribed for that person.

Best interests

  • (2) The court to which an application is made under subsection (1) may appoint a receiver, receiver and manager, trustee or liquidator of all or any part of the property of a person if the court is satisfied that it is in the best interests of any of the following:

  • ( a ) the creditors of that person;

  • ( b ) the persons whose property is in the possession or under the control of that person; or

  • ( c ) the security holders of, or subscribers to, that person.

Ex parte applications

  • (3) An application under subsection (1) may be made ex parte if the court considers it proper to do so in the circumstances but the court may only make an order appointing a receiver, receiver and manager, trustee or liquidator for a period not exceeding 15 days.

Scope of authority

  • (4) A receiver, receiver and manager, trustee or liquidator of the property of a person appointed under this section is the receiver, receiver and manager, trustee or liquidator of all or part of the property owned by the person or held by the person on behalf of, or in trust for, any other person.

Winding-up

  • (5) If so directed by the court, a receiver, receiver and manager, trustee or liquidator of the property of a person appointed under this section shall wind up or manage the business and affairs of the person and exercise those powers that are necessary or incidental to the winding‑up or management.

Income and liabilities

  • 125. A receiver of the property of a person appointed under section 124 may, subject to the rights of secured creditors,

  • ( a ) receive income from that property and pay liabilities in respect of that property; and

  • ( b ) realize the security of the person on whose behalf the receiver is appointed.

Powers of a receiver and manager

  • 126. (1) A receiver and manager of the property of a person appointed under section 124 may carry on the business and affairs of the person and for that purpose is vested with the following powers:

  • ( a ) if the person is a company, all of the powers of the shareholders and directors of the company; and

  • ( b ) if the person is not a company, all of the powers of that person with respect to the operation of that person’s business and affairs.

Certain actions prohibited

  • (2) Once an order is made under section 124 appointing a receiver and manager of the property of a person, then, except as directed by the receiver and manager,

  • ( a ) in the case of a company, the shareholders and directors of the company shall not exercise any powers in respect of the company; and

  • ( b ) in the case of a person other than a company, the person shall not exercise any powers in respect of the operation of the person’s business and affairs.

Court order

  • 127. The superior court of record, in making an order under section 124 appointing a receiver or a receiver and manager, may provide for any matter or thing relating to the business and affairs of the person during the appointment of the receiver or the receiver and manager.

Term of office

  • 128. A receiver and manager of the property of a person appointed under section 124 remains in office until the receiver or manager is removed from office or until

  • ( a ) the receiver or manager winds up the business and affairs of the person pursuant to authority given under that section; or

  • ( b ) a liquidator is appointed to wind up the business and affairs of the person.

Setting of fees

  • 129. (1) The fees charged and expenses incurred by a receiver, receiver and manager, trustee or liquidator appointed under section 124 in relation to the exercise of powers pursuant to the appointment are in the discretion of the court that made the appointment.

Liability for fees

  • (2) The fees referred to in subsection (1) are to be paid

  • ( a ) out of the assets of the person in respect of which the receiver or receiver and manager was appointed; or

  • ( b ) if the assets of the person are insufficient for the purpose, as directed by the court from the assets of those persons that benefitted from the appointment of the receiver or receiver and manager.

Rank of fees

  • (3) In the case of the winding‑up of a company, the fees referred to in subsection (1) rank on the estate equally with the remuneration paid to the liquidator.

Application for directions

  • 130. (1) A receiver, receiver and manager, trustee or liquidator may apply to a superior court of record for directions on any matter arising with respect to the carrying out of the duties of the receiver, receiver and manager, trustee or liquidator.

Directions from court

  • (2) On an application under subsection (1), the superior court of record may give direction, declare the rights of parties before the court and make any further order that the court considers necessary.

Appointment of successor

  • 131. The superior court of record may at any time revoke the appointment of a receiver, receiver and manager, trustee or liquidator under section 124 and appoint another in place of the receiver, receiver and manager, trustee or liquidator.

Funds expended by Executive Director

  • 132. If the Executive Director expends funds in respect of the appointment under this Act of a receiver, receiver and manager, trustee or liquidator that directly relate to a person, the amount expended is a debt owing by that person to Her Majesty and may be recovered by Her Majesty in the same manner as any other debt owing to the Crown in right of Canada.

Solicitor‑client privilege

  • 133. Nothing in this Part is to be interpreted so as to affect the privilege that exists between a lawyer or notary and the client of the lawyer or notary.

Duty to seal

  • 134. Any person that is about to examine or seize, under this Act, any documents, records, securities, exchange contracts, contracts or things in the possession of a lawyer or notary who claims that a privilege might exist between the lawyer or notary and the client of the lawyer or notary with respect to those documents, records, securities, exchange contracts, contracts or things, shall, without examining or copying them,

  • ( a ) seize the documents, records, securities, exchange contracts, contracts or things;

  • ( b ) seal the documents, records, securities, exchange contracts, contracts or things in a marked package so that the package can be identified; and

  • ( c ) place the package in the custody of the clerk of a superior court of record or any other person that the parties agree on.

Application to court

  • 135. (1) On the application of the lawyer or notary, the client or the person seizing, a superior court of record shall hear the matter in camera and determine whether the claim of the privilege is proper.

Notice of application

  • (2) Notice of an application under subsection (1) and the supporting documents must be served on the Executive Director, the person having custody of the package and the parties to the application not less than three days before the application is to be heard.

Delivering custody

  • (3) On being served with the notice of application and the supporting documents, the person having custody of the package shall promptly deliver the package to the custody of the clerk of the superior court of record.

Court may open and inspect

  • 136. (1) In determining whether a claim of privilege is proper for the purposes of subsection 135 (1), the superior court of record may open the package and inspect its contents.

Resealing

  • (2) Following its inspection of the package and its contents, the superior court of record shall reseal the contents in the package.

Order of court

  • 137. If the superior court of record determines

  • ( a ) that the claim of privilege is proper, the court shall order that the documents, records, securities, exchange contracts, contracts or things seized be delivered to the lawyer or notary; or

  • ( b ) that the claim of privilege is not proper, the court shall order that the documents, records, securities, exchange contracts, contracts or things be delivered to the person who seized them.

PART 11

ENFORCEMENT

General Prohibitions and Duties

Misleading statements

  • 138. (1) No person shall make a statement that the person knows or reasonably ought to know

  • ( a ) in any material respect and at the time and in the light of the circumstances in which it is made

  • (i) is misleading or untrue, or

  • (ii) does not state a fact that is required to be stated or that is necessary to make the statement not misleading; and

  • ( b ) would reasonably be expected to have a significant effect on the market price or value of a security or an exchange contract.

Exception

  • (2) No person is guilty of an offence under subsection (1) if the person did not know, and in the exercise of reasonable diligence would not have known, that the statement referred to in that subsection was misleading or untrue or that it omitted to state a fact that was required to be stated or that was necessary to make the statement not misleading in light of the circumstances in which it was made.

Fraud and market manipulation

  • 139. No person shall, directly or indirectly, engage or participate in any act, practice or course of conduct relating to a security or exchange contract that the person knows or reasonably ought to know will

  • ( a ) result in or contribute to a false or misleading appearance of trading activity in a security or an exchange contract or an artificial price for a security or an exchange contract; or

  • ( b ) perpetrate a fraud on any person.

Obstruction

  • 140. (1) A person shall not, and shall not attempt to, destroy, conceal or withhold any information, property or thing reasonably required for a hearing, review or investigation under this Act.

Knowledge

  • (2) A person contravenes subsection (1) if the person knows or ought reasonably to know that a hearing, review or investigation is to be conducted and takes any action referred to in that subsection before the hearing, review or investigation.

Duty to comply with Commission decisions

  • 141. A person shall comply with decisions of the Commission or the Executive Director made under Canadian securities law.

Duty to comply with undertaking

  • 142. A person that gives a written undertaking to the Commission or the Executive Director shall comply with the undertaking.

Offence and Punishment

General

  • 143. Every person who contravenes Canadian securities law is guilty of an offence and is liable

  • ( a ) on proceedings by way of indictment to a fine not exceeding $[5,000,0000] or to imprisonment for a term not exceeding [five years], or to both; or

  • ( b ) on summary conviction, to a fine not exceeding $[100,000] or to imprisonment for a term not exceeding [one year], or to both.

Officers and directors

  • 144. If a person other than an individual commits an offence under this Act, any of the person’s directors, officers, agents or mandataries who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and is liable on conviction to the punishment provided for the offence, whether or not the person has been prosecuted or convicted.

Offences by employees, agents or mandataries

  • 145. In a prosecution for an offence under this Act, it is sufficient proof of the offence to establish that it was committed by the accused’s employee acting within the scope of their employment, or the accused’s agent or mandatary acting within the scope of their authority, whether or not the employee, agent or mandatary is identified or prosecuted for the offence, unless the accused establishes that

  • ( a ) the offence was committed without the accused’s knowledge or consent; and

  • ( b ) the accused exercised all due diligence to prevent its commission.

Due diligence

  • 146. No person who establishes that they exercised all due diligence to prevent the commission of an offence under this Act may be convicted of that offence, except for an offence under

  • ( a ) section 103 ; or

  • ( b ) subsection 107 (2).

Increased fines

  • 147. (1) Despite the fines provided for in section 143 , a person guilty of an offence under that section in relation to a contravention of any of sections 87 to 90 is liable to a fine of

  • ( a ) an amount not less than the profit made by the person because of the contravention; and

  • ( b ) an amount not more than the greater of

  • (i) $5,000,000, and

  • (ii) an amount equal to triple the amount of the profit made or the loss avoided by the person because of the contravention.

Exception

  • (2) If it is not possible to determine the profit made or the loss avoided by a person by reason of the contravention referred to in subsection (1), that subsection does not apply and section 143 applies.

Definitions

  • (3) The following definitions apply for the purposes of this section.

“loss avoided”

« perte évitée »

“loss avoided” means the amount by which the amount received for the security sold in contravention of any of sections 87 to 90 exceeds the average trading price of the security in the 20 trading days following the general disclosure of the material fact or the material change referred to in that section.

“profit made”

« profit réalisé »

“profit made” means

  • ( a ) the amount by which the average trading price of the security in the 20 days following general disclosure of the material fact or the material change referred to in any of sections 87 to 90 exceeds the amount paid for the security purchased in contravention of that section;

  • ( b ) in respect of a short sale, the amount by which the amount received for the security sold in contravention of any of sections 87 to 90 exceeds the average trading price of the security in the 20 trading days following general disclosure of the material fact or the material change referred to in that section; or

  • ( c ) the value of any consideration received for informing another person of a material fact or material change with respect to the reporting issuer in contravention of section 88 or 90 .

Restitution and other orders

  • 148. If a person is guilty of an offence under section 143 , the court may

  • ( a ) make an order requiring the person to compensate or make restitution to an aggrieved person; and

  • ( b ) make any other order that the court considers appropriate in the circumstances.

Administrative Monetary Penalties

[See commentary for further information]

Other Compliance Measures

Compensation for financial losses

  • 149. (1) On the application of a claimant, the Executive Director may, when the Commission holds a hearing about a person, request it to make an order that the person pay the claimant compensation for financial loss.

Director’s decision not reviewable

  • (2) Despite section [•], the Executive Director’s decision whether to make a request is not reviewable.

Order by Commission

  • (3) When so requested by the Executive Director, the Commission may, after conducting a hearing, order the person to pay the claimant compensation [of not more than $] for the claimant’s financial loss, if after the hearing the Commission

  • ( a ) determines that the person has contravened or failed to comply with

  • (i) a provision or decision of Canadian securities law,

  • (ii) a written undertaking made by the person to the Commission or the Executive Director, or

  • (iii) a term or condition of the person’s registration;

  • ( b ) is able to determine the amount of the financial loss on the evidence; and

  • ( c ) finds that the person’s contravention or failure caused the financial loss in whole or in part.

Joint and several, or solidary, liability

  • (4) If the contravention or failure occurs in the course of the person’s employment by another person, or while the person is acting on behalf of another person in any other capacity, the Commission may order that the other person is jointly and severally, or solidarily, liable to pay the claimant the financial compensation ordered under subsection (3).

Clarification

  • (5) For the purposes of subsection (4), a person is employed by another person when

  • ( a ) an employer–employee relationship exists; or

  • ( b ) the person is registered under this Act through the other person.

Compensation in addition

  • (6) The Commission may make an order despite the imposition of any other penalty or sanction on the person, or the making of any other order by the Commission or Tribunal related to the same matter.

Court proceedings take precedence

  • (7) The Commission shall not make an order if the claimant has commenced a civil court proceeding for compensation for the same loss.

Duty to inform Commission

  • (8) A claimant shall inform the Commission without delay after commencing a civil court proceeding for the same loss.

No right of action

  • (9) Once the Commission opens a hearing where a claim for compensation for financial loss is one of the matters before it, the claimant is not entitled to commence a civil court proceeding for compensation for the same loss or any unclaimed loss arising out of the same transaction.

Enforcement of order

  • (10) Despite subsection (9), a claimant in whose favour the Commission makes an order may file a certified copy in a superior court of record. The filed order is enforceable as a judgment of that court in favour of the claimant and against the person the Commission ordered to pay the compensation.

Declaration of non-compliance

  • 150. (1) If the Executive Director considers it to be in the public interest to do so, he or she may apply to a superior court of record for a declaration that a person has not complied with or is not complying with any provision or decision of Canadian securities law.

Ex parte application

  • (2) An application under subsection (1) may be made ex parte , unless the court otherwise directs.

Other rights not affected

  • (3) The right to make an application under subsection (1) is in addition to the other rights that the Executive Director or Commission has under this Act.

Hearing not required

  • (4) Neither the Executive Director nor the Commission is required, before an application is made under subsection (1), to hold a hearing to determine whether the person has not complied with or is not complying with any provision or decision of Canadian securities law.

Orders of court

  • (5) If the court makes a declaration under subsection (1) in respect of a person, the court may make any order that the court considers appropriate with respect to the person including, without limitation, one or more of the following orders:

  • ( a ) an order that the person comply with the provision or the decision;

  • ( b ) an order that the person purchase securities of a security holder;

  • ( c ) an order rescinding any transaction relating to trading in securities or exchange contracts;

  • ( d ) an order requiring the issuance, cancellation, purchase, exchange or disposition of a security or exchange contract;

  • ( e ) an order prohibiting the voting or exercise of any other right attaching to a security or exchange contract;

  • ( f ) an order appointing officers and directors in place of or in addition to all or any of the officers of the issuer that is the subject of the application;

  • ( g ) an order prohibiting the person from acting as officer or director or prohibiting the person from acting as promoter of any market participant permanently or for any period specified in the order;

  • ( h ) an order directing a person to submit to a review by the Commission of the person’s practices and procedures and to institute changes as directed by the Commission;

  • ( i ) an order requiring the person to produce to the court or an interested person financial statements in the form required by Canadian securities law, or an accounting in any other form that the court may determine;

  • ( j ) an order directing rectification of the registers or other records of the person;

  • ( k ) an order requiring the person to rectify any past non-compliance with Canadian securities law to the extent that rectification is practicable;

  • ( l ) an order directing that the person repay to a security holder any part of the money paid by the security holder for a security or exchange contract;

  • ( m ) an order requiring the person to compensate or make restitution to an aggrieved person;

  • ( n ) an order requiring the person to pay general or punitive damages to any other person; and

  • ( o ) an order requiring the person to pay to the Minister any amounts obtained as a result of the non‑compliance with any provision or decision of Canadian securities law.

Order in addition to other remedies

  • (6) An order may be made under subsection (5) despite the imposition of an administrative monetary penalty or any penalty under section 143 or the making of an order under section 151 in relation to the same matter.

Interim orders

  • (7) On an application under subsection (1), the court may make any interim orders that it considers appropriate.

Orders in the public interest

  • 151. (1) If the Commission considers that it is in the public interest to do so, the Commission may order one or more of the following:

  • ( a ) that trading or purchasing cease in respect of any security or exchange contract as specified in the order;

  • ( b ) that a person cease trading in or purchasing securities, exchange contracts, specified securities or a class of securities or exchange contracts as specified in the order;

  • ( c ) that the registration or recognition of a person under Canadian securities law be suspended or restricted for any period that is specified in the order or be terminated, or that terms, conditions, restrictions or requirements be imposed on the registration or recognition;

  • ( d ) that a registrant be reprimanded;

  • ( e ) that any or all of the exemptions contained in Canadian securities law do not apply to the person named in the order;

  • ( f ) that a person resign one or more positions that the person holds as a director or officer of an issuer, registrant or investment fund manager;

  • ( g ) that a person is prohibited from becoming or acting as a director or officer or as both a director and an officer of any issuer, registrant or investment fund manager;

  • ( h ) that a person is prohibited from advising in securities or exchange contracts;

  • ( i ) that a person is prohibited from becoming or acting as a registrant, investment fund manager or promoter;

  • ( j ) that a person is prohibited from acting in a management capacity in connection with activities in the securities market;

  • ( k ) that a person referred to in subsection (2) submit to a review of their practices and procedures;

  • ( l ) that a person referred to in subsection (2) make changes to their practices and procedures;

  • ( m ) that a person is prohibited from disseminating to the public, or authorizing the dissemination to the public of, any information, document, record or other material of any kind that is described in the order;

  • ( n ) that a person disseminate to the public, by the method, if any, described in the order, the information, document, record or other material relating to the affairs of a registrant or issuer that the Commission considers must be disseminated;

  • ( o ) that a person amend, in the manner specified in the order, any information or record of any kind disseminated to the public as described in the order;

  • ( p ) if a person has not complied with Canadian securities law, that the person pay to the Commission any amounts obtained or payments or losses avoided as a result of the non‑compliance; and

  • ( q ) that a person comply with

  • (i) a rule, policy or other similar instrument of a recognized entity, and

  • (ii) a decision, order, ruling or direction of a recognized entity made under an instrument referred to in subparagraph (i).

Orders against certain persons

  • (2) An order under paragraph (1)( k ) or ( l ) may be made against any of the following:

  • ( a ) an exchange or a quotation and trade reporting system;

  • ( b ) a self-regulatory organization;

  • ( c ) a clearing agency;

  • ( d ) a registrant;

  • ( e ) a partner, director, officer, insider or control person of a registrant;

  • ( f ) a person providing record-keeping services to a registrant;

  • ( g ) a person that manages a compensation, contingency or similar fund formed to compensate clients of dealers or advisers;

  • ( h ) an issuer;

  • ( i ) an investment fund manager or custodian of assets or securities of an investment fund;

  • ( j ) a transfer agent or registrar for securities of an issuer;

  • ( k ) a director, officer, insider or control person of an issuer;

  • ( l ) a general partner of a person referred to in this subsection; or

  • ( m ) a person that the Commission has ordered is exempt from a provision of Canadian securities law.

Conditions for certain orders

  • (3) The Commission may, after providing an opportunity to be heard, make an order under any of paragraphs (1)( a ) to ( o ) in respect of a person if the person

  • ( a ) has been convicted in Canada or elsewhere of an offence

  • (i) arising from a transaction, business or course of conduct related to securities or exchange contracts, or

  • (ii) under laws respecting trading in securities or exchange contracts;

  • ( b ) has been found by a court in Canada or elsewhere to have contravened laws respecting trading in securities or exchange contracts;

  • ( c ) is subject to an order made by a securities regulatory authority in Canada or elsewhere imposing sanctions, conditions, restrictions or requirements on the person; or

  • ( d ) has agreed with a securities regulatory authority in Canada or elsewhere to be subject to sanctions, conditions, restrictions or requirements.

Orders against directors and officers

  • (4) The Commission may, after providing an opportunity to be heard, make an order under any of paragraphs (1)( a ) to ( o ) against a director or officer of a person other than an individual who authorizes, permits or acquiesces in the contravention of Canadian securities law or conduct contrary to the public interest.

Terms and conditions

  • (5) An order under subsection (1) is subject to any terms and conditions that the Commission may impose.

Hearing required

  • (6) Except as provided in section [•], the Commission shall not make an order under subsection (1) without conducting a hearing.

Order to cease trading on an exchange

  • 152. (1) If the Commission considers that it is in the public interest to do so, the Commission may order that no trading in securities and exchange contracts be permitted to take place in a recognized exchange for any period, not exceeding 90 days, specified in the order.

Delivery to Minister

  • (2) The Commission must provide the Minister with a copy of any order that the Commission makes under subsection (1) immediately after it is made.

Effect of order

  • (3) An order under subsection (1) takes effect from the time that it is made but ceases to have effect if it is rejected by the Minister.

Defaulting reporting issuers

  • 153. The Commission may publish a list of reporting issuers who are in default of any requirement of Canadian securities law.

General

Filing decision with court

  • 154. A certified copy of a decision made by the Commission after conducting a hearing may be filed with the clerk of a superior court of record and on being so filed has the same force and effect as if it were a judgment of that court.

Limitation period

  • 155. Proceedings under this Part in a court or before the Commission may not be commenced more than six years from the day of the occurrence of the event that gave rise to the proceedings.

Payment of investigation costs

  • 156. (1) The Commission or the Executive Director may, after conducting a hearing, order a person to pay, subject to the regulations, the costs of any investigation into the affairs of the person, including any costs incurred in respect of services provided by persons appointed or engaged under Part 1 or under section 112 or 115 or the appearance of any witnesses under this Act, but only if

  • ( a ) the Commission or Executive Director is satisfied that the person has not complied with, or is not complying with, any provision or decision of Canadian securities law; or

  • ( b ) the Commission or Executive Director considers that the person has not acted in the public interest.

Payment of hearing costs

  • (2) The Commission or the Executive Director may, after conducting a hearing, order a person to pay, subject to the regulations, the costs of or related to any hearing into the affairs of a person, including any costs incurred in respect of services provided by persons appointed or engaged under Part 1 or under section 112 or 115 or the appearance of any witnesses under this Act, but only if

  • ( a ) the Commission or Executive Director is satisfied that the person has not complied with, or is not complying with, any provision or decision of Canadian securities law; or

  • ( b ) the Commission or Executive Director considers that the person has not acted in the public interest.

Payment of costs relating to offences

  • (3) The Executive Director may, after conducting a hearing, order a person found guilty of an offence under Canadian securities law to pay, subject to the regulations, the costs of any investigation carried out in respect of that offence, including any costs incurred in respect of services provided by persons appointed or engaged under Part 1 or under section 112 or 115 and the appearance of any witnesses under this Act.

Filing with court

  • (4) The Executive Director may prepare and file with the clerk of a superior court of record a certificate certifying the amount of the costs that a person is required to pay under subsection (1), (2) or (3) and on being so filed has the same force and effect as if it were a judgment of that court for the recovery of debt in the amount specified in the certificate together with costs of filing.

Non-application

  • (5) The rules of court of the superior court of record with respect to costs and the taxation of costs do not apply to costs referred to in this section.

PART 12

CIVIL LIABILITY

Action for damages — prospectus

  • 157. (1) If, during the period of distribution, a person purchases a security offered by a prospectus that contains a misrepresentation, that person has a right of action for damages against the following:

  • ( a ) the issuer on whose behalf the distribution is made;

  • ( b ) a selling security holder on whose behalf the distribution is made;

  • ( c ) every underwriter of the securities that is in a contractual relationship with a person referred to in paragraph ( a ) or ( b );

  • ( d ) every director of the issuer at the time the prospectus was filed;

  • ( e ) every person whose consent to disclosure of information in the prospectus has been filed but only with respect to reports, opinions or statements that have been made by them; and

  • ( f ) every person, other than a person referred to in paragraphs ( a ) to ( e ), who signed the prospectus.

Defence

  • (2) In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation referred to in that subsection.

Amount recoverable

  • (3) The amount recoverable under subsection (1) shall not exceed the price at which the securities were offered to the public.

Liability of underwriter

  • (4) No underwriter is liable under this section for more than the total public offering price represented by the portion of the distribution underwritten by the underwriter.

Joint and several, or soildary, liability

  • (5) Each of the persons liable under this section is jointly and severally, or solidarily, liable with every other person so liable.

Contributions

  • (6) A person who is liable to pay damages under this section may recover a contribution, in whole or in part, from a person who is jointly and severally, or solidarily, liable for those damages unless, in all circumstances of the case, the court is satisfied that it would not be just and equitable.

Action for rescission — prospectus

  • 158. If, during the period of distribution, a person purchases a security offered by a prospectus that contains a misrepresentation, that person has a right of action for rescission against the following:

  • ( a ) the issuer on whose behalf the distribution is made;

  • ( b ) a selling security holder on whose behalf the distribution is made;

  • ( c ) every underwriter of the securities that is in a contractual relationship with a person referred to in paragraph ( a ) or ( b ); and

  • ( d ) every other underwriter of the securities.

Reliance not required

  • 159. A person who has a right of action under section 157 or 158 has that right irrespective of whether the person relied on the misrepresentation giving rise to the right.

Purchaser to elect

  • 160. A purchaser that elects to exercise a right of action for rescission against a person under section 158 has no right of action for damages against that person.

No liability — knowledge of misrepresentation

  • 161. (1) No person is liable under section 157 or 158 if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

No liability — other circumstances

  • (2) No person, other than the issuer or a selling security holder, is liable under section 157 or 158 if the person proves

  • ( a ) that the prospectus was filed without the person’s knowledge or consent and that, on becoming aware of its filing, the person promptly gave reasonable general notice that it was so filed;

  • ( b ) that, after the issuance of a receipt for the prospectus and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the prospectus the person withdrew the person’s consent to it and gave reasonable general notice of the withdrawal and the reason for it;

  • ( c ) that, with respect to any part of the prospectus purporting to be made on the authority of an expert or purporting to be a copy of or an extract from a report, opinion or statement of an expert, the person had no reasonable grounds to believe and did not believe that

  • (i) there had been a misrepresentation,

  • (ii) the part of the prospectus did not fairly represent the report, opinion or statement of the expert, or

  • (iii) the part of the prospectus was not a fair copy of, or extract from, the report, opinion or statement of the expert;

  • ( d ) that, with respect to any part of the prospectus purporting to be made on the person’s own authority as an expert or purporting to be a copy of or an extract from the person’s own report, opinion or statement as an expert, but that contains a misrepresentation attributable to a failure to represent fairly the person’s report, opinion or statement as an expert,

  • (i) the person had, after reasonable investigation, reasonable grounds to believe and did believe that the part of the prospectus fairly represented the person’s report, opinion or statement, or

  • (ii) on becoming aware that the part of the prospectus did not fairly represent the person’s report, opinion or statement as an expert, the person promptly advised the Executive Director and gave reasonable general notice that misuse had been made of it and that the person would not be responsible for that part of the prospectus; or

  • ( e ) that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document and the person had reasonable grounds to believe, and did believe, that the statement was true.

Liability — purported authority of expert

  • (3) No person, other than the issuer or a selling security holder, is liable under section 157 or 158 with respect to any part of the prospectus purporting to be made on the person’s own authority as an expert or purporting to be a copy of or an extract from the person’s own report, opinion or statement as an expert unless

  • ( a ) the person did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation; or

  • ( b ) the person believed there had been a misrepresentation.

Liability — no purported authority of expert

  • (4) No person, other than the issuer or a selling security holder, is liable under section 157 or 158 with respect to any part of the prospectus not purporting to be made on the authority of an expert and not purporting to be a copy of or an extract from a report, opinion or statement of an expert unless the person

  • ( a ) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation; or

  • ( b ) believed there had been a misrepresentation.

Distribution without prospectus

  • 162. If a misrepresentation exists in respect of a distribution of securities for which no receipt for a prospectus was issued and no exemption for the filing of a prospectus exists or was granted, each purchaser of the securities has a right of action under sections 157 and 158 as if a prospectus containing a misrepresentation had been filed in respect of the distribution.

Action for damages — offering memorandum

  • 163. (1) If a person purchases a security offered by an offering memorandum specified in the rules and the offering memorandum contains a misrepresentation, that person has, without regard to whether they relied on the misrepresentation, a right of action for damages against the following:

  • ( a ) the issuer;

  • ( b ) a selling security holder on whose behalf the distribution is made;

  • ( c ) every director of the issuer on the date of the offering memorandum; and

  • ( d ) every person who signed the offering memorandum.

Defence

  • (2) In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation referred to in that subsection.

Action for rescission — offering memorandum

  • (3) A person described in subsection (1) has a right of action for rescission against the issuer or selling security holder, but if the person elects to exercise that right, the person has no right of action for damages under that subsection.

No liability — knowledge of misrepresentation

  • (4) No person is liable under subsection (1) or (3) in respect of a misrepresentation contained in an offering memorandum if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

No liability — other circumstances

  • (5) No person, other than the issuer of an offering memorandum or a selling security holder, is liable under subsection (1) or (3) in respect of a misrepresentation contained in the offering memorandum

  • ( a ) if the person proves that the offering memorandum was sent to the purchaser without the person’s knowledge or consent and that, on becoming aware of its being sent, the person promptly gave reasonable notice to the issuer or selling security holder that it was sent without the knowledge and consent of the person;

  • ( b ) if the person proves that the person, on becoming aware of the misrepresentation in the offering memorandum, withdrew the person’s consent to the offering memorandum and gave reasonable notice to the issuer or selling security holder of the withdrawal and the reason for the withdrawal;

  • ( c ) if, with respect to any part of the offering memorandum purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, the person proves that the person did not have any reasonable grounds to believe and did not believe that there had been a misrepresentation or that the relevant part of the offering memorandum did not fairly represent the report, opinion or statement of the expert or was not a fair copy of, or an extract from, the report, opinion or statement of the expert; or

  • ( d ) with respect to any part of the offering memorandum not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person

  • (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or

  • (ii) believed there had been a misrepresentation.

Certain provisions apply

  • (6) Subsections 157 (3), (5) and (6) apply, with any necessary modifications, to liability under this section in respect of a misrepresentation contained in an offering memorandum.

Actions relating to take‑over or issuer bid circular

  • 164. (1) If a take‑over bid circular, issuer bid circular or a notice of change or variation to either of them is sent to the holders of securities of an offeree issuer or to the holders of securities convertible into securities of an offeree issuer as required under the regulations and that document contains a misrepresentation, each of those holders may, without regard to whether the holders relied on the misrepresentation, elect to exercise a right of action

  • ( a ) for rescission or damages against the offeror; or

  • ( b ) for damages against

  • (i) every person who, at the time the circular or notice was signed, was a director of the offeror,

  • (ii) every person whose consent has been filed pursuant to a requirement of the rules, but only with respect to reports, opinions or statements that have been made by them, and

  • (iii) every person who signed a certificate in the circular or notice.

Actions relating to other circulars

  • (2) If a directors’ circular or an individual director’s or officer’s circular or a notice of change or variation to any of them is sent to security holders of an offeree issuer as required under the rules and that document contains a misrepresentation, each of the persons to whom the circular or notice was sent has, without regard to whether they relied on the misrepresentation, a right of action for damages against

  • ( a ) every director or officer who signed the circular or notice of change or variation; and

  • ( b ) every person whose consent has been filed pursuant to a requirement of the rules, but only with respect to reports, opinions or statements that have been made by them.

Defence

  • (3) In an action for damages under subsection (1) or (2) based on a misrepresentation affecting a security offered by the offeror in exchange for securities of the offeree issuer, the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation.

No liability — knowledge of misrepresentation

  • (4) No person is liable under subsection (1) or (2) if the person proves that the security holder had knowledge of the misrepresentation.

No liability — other circumstances

  • (5) No person, other than the offeror, is liable under subsection (1) or (2) if the person proves that

  • ( a ) the circular or the notice of change or variation in respect of it, as the case may be, was sent without the person’s knowledge or consent and that, on becoming aware of it, the person promptly gave reasonable general notice that it was so sent;

  • ( b ) after the sending of the circular or the notice of change or variation in respect of it, as the case may be, on becoming aware of any misrepresentation in the circular or the notice of change or variation in respect of it, the person withdrew the person’s consent to it and gave reasonable general notice of the withdrawal and the reason for it;

  • ( c ) with respect to any part of the circular or the notice of change or variation in respect of it purporting to be made on the authority of an expert or purporting to be a copy of or an extract from a report, opinion or statement of an expert, the person had no reasonable grounds to believe and did not believe

  • (i) that there had been a misrepresentation,

  • (ii) that the part of the circular or the change or variation did not fairly represent the report, opinion or statement of the expert, or

  • (iii) that the part of the circular or the change or variation was not a fair copy of or extract from the report, opinion or statement of the expert;

  • ( d ) with respect to any part of the circular or the notice of change or variation in respect of it purporting to be made on the person’s own authority as an expert or purporting to be a copy of or an extract from the person’s own report, opinion or statement as an expert, but that contains a misrepresentation attributable to a failure to represent fairly the person’s report, opinion or statement as an expert,

  • (i) the person had, after conducting an investigation, reasonable grounds to believe and did believe that the part of the circular fairly represented the person’s report, opinion or statement as an expert, or

  • (ii) becoming aware that the part of the circular did not fairly represent the person’s report, opinion or statement as an expert, the person promptly advised the Executive Director and gave reasonable general notice that misuse had been made of it and that the person would not be responsible for that part of the circular; or

  • ( e ) with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document,

  • (i) it was a correct and fair representation of the statement or copy of or extract from the document, and

  • (ii) the person had reasonable grounds to believe and did believe that the statement was true.

Liability — purported authority of expert

  • (6) No person, other than the offeror, is liable under subsection (1) or (2) with respect to any part of the circular or the notice of change or variation in respect of it purporting to be made on the person’s own authority as an expert or purporting to be a copy of or an extract from the person’s own report, opinion or statement as an expert unless the person

  • ( a ) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation; or

  • ( b ) believed there had been a misrepresentation.

Liability — no purported authority of expert

  • (7) No person, other than the offeror, is liable under subsection (1) or (2) with respect to any part of the circular or the notice of change or variation in respect of it not purporting to be made on the authority of an expert and not purporting to be a copy of or an extract from a report, opinion or statement of an expert unless the person

  • ( a ) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation; or

  • ( b ) believed there had been a misrepresentation.

Certain provisions apply

  • (8) Subsections 157 (5) and (6) apply, with any necessary modifications, to liability under this section in respect of a misrepresentation contained in a circular or notice of change or variation.

No derogation

  • 165. The rights of action conferred on a purchaser under sections 157 , 158 , 163 and 164 are in addition to, and do not derogate from, any other right that the purchaser may have at law.

Misrepresentation in records

  • 166. A misrepresentation contained in a record that is incorporated by reference in, or deemed incorporated into, a prospectus, offering memorandum, take‑over bid circular, issuer bid circular or notice of change or variation is deemed to be contained in the prospectus, memorandum, circular or notice for the purposes of sections 157 , 158 , 163 and 164 .

Defence — forward-looking information

  • 167. (1) A person is not liable in an action under section 157 , 158 , 163 or 164 for a misrepresentation in forward‑looking information if the person proves all of the following:

  • ( a ) the document containing the forward‑looking information contained, proximate to that information,

  • (i) reasonable cautionary language identifying the forward‑looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward‑looking information, and

  • (ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward‑looking information; and

  • ( b ) the person had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward‑looking information.

Clarification

  • (2) Subsection (1) does not relieve a person of liability respecting forward-looking information in a financial statement or forward-looking information in a document released in connection with an initial public offering.

Liability of dealer, offeror or issuer

  • 168. Each of the following persons has a right of action for rescission or damages against the dealer, offeror or issuer, as the case may be, who did not comply with the applicable statutory requirement:

  • ( a ) a purchaser of a security to whom a prospectus was required to be sent in compliance with section 80 , but was not so sent;

  • ( b ) a security holder of an offeree issuer or another person that is not a security holder of an offeree issuer to which a take‑over bid and take‑over bid circular, an issuer bid and issuer bid circular or a notice of change or variation to such a bid or circular was required to be sent under the rules, but was not so sent; or

  • ( c ) a purchaser of a security to whom an offering memorandum was required to be sent in compliance with Canadian securities law but was not sent within the time required for sending the offering memorandum.

Purchase or sale by person in special relationship

  • 169. (1) A person who purchases or sells securities in contravention of section 87 is liable to compensate the seller or purchaser of the securities, as the case may be, for damages as a result of the trade.

Joint and several, or solidary, liability

  • (2) Each of the persons liable under subsection (1) is jointly and severally, or solidarily, liable with every other person so liable in respect of the same transaction or series of transactions.

Factors for assessment of damages

  • (3) In assessing damages under subsection (1), the court shall consider the following:

  • ( a ) if the plaintiff is a purchaser, the price that the plaintiff paid for the security less the weighted average market price of the security as determined with respect to the first 20 trading days for that security following the general disclosure of the relevant material fact or material change; and

  • ( b ) if the plaintiff is a vendor, the weighted average market price of the security as determined with respect to the first 20 trading days for that security following the general disclosure of the relevant material fact or material change less the price that the plaintiff received for the security.

Other measure of damages

  • (4) Despite subsection (3), the court may consider any other measure of damages that may be relevant in the circumstances.

Purchase or sale by insider, associate or affiliate

  • 170. (1) Every person in a special relationship with a reporting issuer who is an insider or an associate or affiliate of the reporting issuer is accountable to the reporting issuer for any benefit or advantage received or receivable by the person as a result of

  • ( a ) the person purchasing or selling securities of the reporting issuer with knowledge of a material fact or material change in respect of the reporting issuer that has not been generally disclosed; or

  • ( b ) the person communicating, directly or indirectly and other than when it is necessary in the course of business, knowledge of a material fact or material change in respect of the reporting issuer that has not been generally disclosed.

Security of a reporting issuer

  • (2) For the purposes of subsection (1), a security of a reporting issuer includes

  • ( a ) a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer; and

  • ( b ) a security the market price of which varies materially with the market price of the securities of the reporting issuer.

No liability — reasonable belief

  • (3) Subsection (1) does not apply if the person in the special relationship with the reporting issuer reasonably believed that the material fact or material change had been generally disclosed.

Court may require action

  • (4) On application by the Commission or by any person that was at the time of a transaction referred to in section 169 (1), or is at the time of the application, a security holder of the reporting issuer, a superior court of record may make an order requiring the Commission or authorizing the person or the Commission, to commence or continue an action in the name of and on behalf of the reporting issuer to enforce the liability created by subsection (1).

Exception

  • (5) The court shall not make an order under subsection (4) unless it is satisfied

  • ( a ) that the Commission or person referred to in that subsection has reasonable grounds for believing that the reporting issuer has a cause of action under subsection (1); and

  • ( b ) that either

  • (i) the reporting issuer has refused or failed to commence an action under this section or under section 169 or 171 within 60 days after the day on which it received a written request from the Commission or the person to do so, or

  • (ii) the reporting issuer has failed to prosecute diligently an action commenced by it under this section or under section 169 or 171 .

Access to information — investment program or portfolio

  • 171. (1) Any person who has access to information concerning the investment program of a mutual fund or the investment portfolio managed for a client by a portfolio manager or by a registered dealer acting as a portfolio manager and uses that information for the person’s direct benefit or advantage to purchase or sell securities of an issuer for the person’s account is accountable to the mutual fund or the client of the portfolio manager or registered dealer, as the case may be, for any benefit or advantage received or receivable as a result of such purchase or sale if the portfolio securities of the mutual fund or the investment portfolio managed for the client by the portfolio manager or registered dealer include securities of that issuer.

Court may require action

  • (2) The court may, on application of either of the following persons, make an order requiring or authorizing that person to commence and prosecute or continue an action in the name of and on behalf of the investment fund to enforce the liability created by subsection (1):

  • ( a ) the Commission; or

  • ( b ) any person that was, at the time of the transaction giving rise to that liability, or is, at the time of the application, a security holder of the investment fund.

Exception

  • (3) The court shall not make an order under subsection (2) unless it is satisfied

  • ( a ) that the Commission or person referred to in that subsection has reasonable grounds for believing that the investment fund has a cause of action under subsection (1); and

  • ( b ) that either

  • (i) the investment fund has refused or failed to commence an action under that subsection within 60 days after the day on which it received a written request from the Commission or the person to do so, or

  • (ii) the investment fund has failed to prosecute diligently an action commenced by it under that subsection.

Orders as to costs — directors

  • 172. (1) If an action under section 170 or 171 is commenced, commenced and prosecuted or continued by the directors of a reporting issuer, the court may order that the costs properly incurred by the directors in commencing, commencing and prosecuting or continuing the action, as the case may be, must be paid by the reporting issuer, if the court is satisfied that the action was, on its face, in the best interests of the reporting issuer and its security holders.

Orders as to costs — security holders

  • (2) If an action under section 170 or 171 is commenced, commenced and prosecuted or continued by a person that is a security holder of the reporting issuer, the court may order that the costs properly incurred by that person in commencing, commencing and prosecuting or continuing the action, as the case may be, must be paid by the reporting issuer, if the court is satisfied that

  • ( a ) the reporting issuer failed to commence the action or had commenced it but had failed to prosecute it diligently; and

  • ( b ) the continuance of the action is, on its face, in the best interests of the reporting issuer and the security holders of the reporting issuer.

Orders as to costs — Commission

  • (3) When an action under section 170 or 171 is commenced, commenced and prosecuted or continued by the Commission, the court shall order the reporting issuer to pay all costs properly incurred by the Commission in commencing, commencing and prosecuting or continuing the action, as the case may be.

Determination of best interests

  • (4) In determining, for the purposes of this section, whether an action or its continuance is, on its face, in the best interests of a reporting issuer and its security holders, the court shall consider the relationship between the potential benefit to be derived from the action by the reporting issuer and its security holders and the cost involved in respect of the action.

Notice of application

  • 173. Notice of every application under subsection 170 (4) or 171 (2) must be given to the Commission, the reporting issuer or the investment fund, as the case may be, and each of them may appear and be heard.

Order to cooperate

  • 174. Every order made under section 170 or 171 requiring or authorizing the Commission to commence and prosecute or continue an action shall provide that the reporting issuer shall cooperate fully with the Commission in the commencement and prosecution or continuation of the action, and shall make available to the Commission all books, records, documents and other material or information known to the reporting issuer or reasonably ascertainable by the reporting issuer relevant to that action.

Rescission of contract

  • 175. (1) If subsection 60 (1) applies to a contract and a registered dealer has failed to comply with the rules by not disclosing that the registered dealer acted as principal, a person that has entered into the contract may rescind the contract.

Notice of rescission

  • (2) A person may rescind a contract under subsection (1) by sending written notice of rescission to the registered dealer within seven days after the day on which the delivery of the written confirmation of the contract is effected.

Onus

  • (3) In an action respecting a rescission to which this section applies, the onus of proving compliance with subsection 60 (1) is on the registered dealer.

Time limit

  • (4) No action respecting a rescission under this section may be commenced after the expiry of 90 days after the day on which the notice under subsection (2) is sent.

Rescission — offering memorandum

  • 176. A purchaser of a security to whom an offering memorandum is required to be sent may rescind the contract to purchase the security by sending written notice to the issuer not later than midnight on the 2nd day, exclusive of Saturdays and holidays, after the purchaser signs the agreement to purchase the securities.

Limitation period

  • 177. Unless otherwise provided in this Act, no action may be commenced to enforce a right created by this Part

  • ( a ) in the case of an action for rescission, more than 180 days after the day on which the transaction that gave rise to the cause of action is made; or

  • ( b ) in the case of any action, other than an action for rescission, more than the earlier of

  • (i) 180 days after the day on which the plaintiff first had knowledge of the facts giving rise to the cause of action, or

  • (ii) three years after the day on which the transaction that gave rise to the cause of action is made.

PART 13

CIVIL LIABILITY FOR SECONDARY MARKET DISCLOSURE

Interpretation

Definitions

  • 178. The following definitions apply in this Part.

“compensation”

« rémunération »

“compensation” means compensation received during the 12‑month period immediately before the day on which a misrepresentation is made or on which a failure to make timely disclosure of a material change in the manner and at the time required under this Act first occurs, together with the fair market value of all deferred compensation including, without limitation, options, pension benefits and stock appreciation rights, granted during that period, valued as of the day on which that compensation is awarded.

“core document”

« document essentiel »

“core document” means

  • ( a ) a prospectus, a take-over bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of any of those circulars, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements and interim financial statements of the responsible issuer, where used in relation to any of the following:

  • (i) a director of a responsible issuer who is not also an officer of the responsible issuer,

  • (ii) an influential person, other than an officer of the responsible issuer or an investment fund manager where the responsible issuer is an investment fund, or

  • (iii) a director or officer of an influential person who is not also an officer of the responsible issuer, other than an officer of an investment fund manager;

  • ( b ) a prospectus, a take-over bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of any of those circulars, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements and interim financial statements of the responsible issuer and a material change report required by section 86 or the regulations, where used in relation to any of the following:

  • (i) a responsible issuer or an officer of the responsible issuer,

  • (ii) an investment fund manager, where the responsible issuer is an investment fund, or

  • (iii) an officer of an investment fund manager, where the responsible issuer is an investment fund; and

  • ( c ) any other document prescribed for the purposes of this definition.

“document”

« document »

“document” means any written communication, including a communication prepared and transmitted only in electronic form,

  • ( a ) that is required to be filed with the Commission; or

  • ( b ) that is not required to be filed with the Commission but

  • (i) that is filed with the Commission,

  • (ii) that is filed or required to be filed with a government or an agency of a government under applicable securities or corporate law or with any exchange or quotation and trade reporting system under its bylaws, rules or regulations, or

  • (iii) that is any other communication the content of which would reasonably be expected to affect the market price or value of a security of the responsible issuer.

“expert”

« expert »

“expert” means a person whose profession gives authority to a statement made in a professional capacity by the person, including, without limitation, an accountant, actuary, appraiser, auditor, engineer, financial analyst, geologist or lawyer but not including an entity that is an approved rating organization.

“influential person”

« personne influente »

“influential person” means, in respect of a responsible issuer,

  • ( a ) a control person;

  • ( b ) a promoter;

  • ( c ) an insider who is not a director or officer of the responsible issuer; and

  • ( d ) an investment fund manager, if the responsible issuer is an investment fund.

“issuer’s security”

« valeur mobilière d’un émetteur »

“issuer’s security” means a security of a responsible issuer and includes

  • ( a ) a security the market price or value of which, or the payment obligations under which, is derived from or based on a security of the responsible issuer; and

  • ( b ) a security that is created by a person on behalf of the responsible issuer or is guaranteed by the responsible issuer.

“liability limit”

« limite de responsabilité »

“liability limit” means

  • ( a ) in respect of a responsible issuer, the greater of

  • (i) 5% of its market capitalization, as defined in the rules, and

  • (ii) $1,000,000;

  • ( b ) in respect of a director or officer of a responsible issuer, the greater of

  • (i) 50% of the aggregate of the director’s or officer’s compensation from the responsible issuer and its affiliates, and

  • (ii) $25,000;

  • ( c ) in respect of an influential person who is not an individual, the greater of

  • (i) 5% of its market capitalization, as defined in the rules, and

  • (ii) $1,000,000;

  • ( d ) in respect of an influential person who is an individual, the greater of

  • (i) 50% of the aggregate of the influential person’s compensation from the responsible issuer and its affiliates, and

  • (ii) $25,000;

  • ( e ) in respect of a director or officer of an influential person, the greater of

  • (i) 50% of the aggregate of the director’s or officer’s compensation from the influential person and its affiliates, and

  • (ii) $25,000;

  • ( f ) in respect of an expert, the greater of

  • (i) the revenue that the expert and the affiliates of the expert have earned from the responsible issuer and its affiliates during the 12-month period preceding the misrepresentation, and

  • (ii) $1,000,000; and

  • ( g ) in respect of each person who made a public oral statement, other than an individual referred to in paragraph ( d ), ( e ) or ( f ), the greater of

  • (i) 50% of the aggregate of the person’s compensation from the responsible issuer and its affiliates, and

  • (ii) $25,000.

“management’s discussion and analysis”

« rapport de gestion »

“management’s discussion and analysis” means the portion of an annual information form, annual report or other document that contains management’s discussion and analysis of the financial condition and results of operations of a responsible issuer as required under Canadian securities law.

“public oral statement”

« déclaration orale publique »

“public oral statement” means an oral statement made in circumstances in which a reasonable person would believe that information contained in the statement will become generally disclosed.

“release”

« publier »

“release” means, with respect to information or a document, to file with the Commission or an exchange or to otherwise make available to the public.

“responsible issuer”

« émetteur responsable »

“responsible issuer” means

  • ( a ) a reporting issuer; or

  • ( b ) an issuer, other than a reporting issuer, with real and substantial connection to Canada, any of whose securities are publicly traded.

“trading day”

« jour de bourse »

“trading day” means a day during which the principal market as defined in the rules for a security is open for trading.

Non-application

Non-application

  • 179. This Part does not apply to any of the following:

  • ( a ) the purchase of a security offered by a prospectus during the period of distribution;

  • ( b ) the acquisition of an issuer’s security pursuant to a distribution that is exempt from section 72 , except as may be provided for in the rules;

  • ( c ) the acquisition or disposition of an issuer’s security in connection with or pursuant to a take-over bid or issuer bid, except as may be provided for in the rules: or

  • ( d ) any other transaction or class of transactions that may be prescribed.

Causes of Action

Documents released by responsible issuer

  • 180. (1) If a responsible issuer or a person with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document containing a misrepresentation, a person who acquires or disposes of the responsible issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has a right of action for damages against each of the following:

  • ( a ) the responsible issuer;

  • ( b ) each director of the responsible issuer at the time the document was released;

  • ( c ) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document; and

  • ( d ) each influential person and each director and officer of an influential person who knowingly influenced

  • (i) the responsible issuer or any person acting on behalf of the responsible issuer to release the document, or

  • (ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document.

Liability of expert

  • (2) A person who has a right of action for damages under subsection (1) in respect of a document containing a misrepresentation also has a right of action for damages against an expert, but only if

  • ( a ) the misrepresentation is also contained in a report, statement or opinion made by the expert;

  • ( b ) the document includes, summarizes or quotes from the report, statement or opinion of the expert; and

  • ( c ) if the document was released by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document.

Public oral statements by responsible issuer

  • 181. (1) If a person with actual, implied or apparent authority to speak on behalf of a responsible issuer makes a public oral statement that relates to the business or affairs of the responsible issuer and that contains a misrepresentation, a person who acquires or disposes of the responsible issuer’s security during the period between the time when the public oral statement was made and the time when the misrepresentation contained in the public oral statement was publicly corrected has a right of action for damages against each of the following:

  • ( a ) the responsible issuer;

  • ( b ) the person who made the public oral statement;

  • ( c ) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the making of the public oral statement; and

  • ( d ) each influential person, and each director and officer of an influential person, who knowingly influenced

  • (i) the person who made the public oral statement to make the public oral statement, or

  • (ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the making of the public oral statement.

Liability of expert

  • (2) A person who has a right of action for damages under subsection (1) in respect of a public oral statement also has a right of action for damages against an expert, but only if

  • ( a ) the misrepresentation is also contained in a report, statement or opinion made by the expert;

  • ( b ) the person making the public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert; and

  • ( c ) if the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the public oral statement.

Influential persons

  • 182. (1) If an influential person or a person with actual, implied or apparent authority to act or speak on behalf of an influential person releases a document or makes a public oral statement that relates to a responsible issuer and that contains a misrepresentation, a person who acquires or disposes of the issuer’s security during the period between the time when the document was released or the public oral statement was made and the time when the misrepresentation contained in the document or public oral statement was publicly corrected has a right of action for damages against each of the following:

  • ( a ) the responsible issuer if a director or officer of the responsible issuer or, in the case of a responsible issuer that is an investment fund, the investment fund manager, authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

  • ( b ) the person who made the public oral statement;

  • ( c ) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

  • ( d ) the influential person; and

  • ( e ) each director and officer of the influential person who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement.

Liability of expert

  • (2) A person who has a right of action for damages under subsection (1) in respect of a document or public oral statement also has a right of action for damages against an expert, but only if

  • ( a ) the misrepresentation is also contained in a report, statement or opinion made by the expert;

  • ( b ) the document or public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert; and

  • ( c ) if the document was released or the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document or public oral statement.

Reliance not required

  • 183. A person who has a right of action under any of sections 180 to 182 has that right irrespective of whether the person relied on the misrepresentation giving rise to the right.

No implied or actual authority

  • 184. In an action under section 181 or 182 , if the person who made the public oral statement had apparent authority, but not implied or actual authority, to speak on behalf of the responsible issuer, no other person is liable with respect to any of the responsible issuer’s securities that were acquired or disposed of before that other person became, or should reasonably have become, aware of the misrepresentation.

Failure to make timely disclosure

  • 185. (1) If a responsible issuer fails to disclose a material change in the manner and at the time required under this Act, a person who acquires or disposes of the issuer’s security between the time when the material change was required to be disclosed and the subsequent disclosure of the material change has a right of action for damages against each of the following:

  • ( a ) the responsible issuer;

  • ( b ) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the failure to make the disclosure; and

  • ( c ) each influential person, and each director and officer of an influential person, who knowingly influenced

  • (i) the responsible issuer or any person acting on behalf of the responsible issuer in the failure to make the disclosure, or

  • (ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the failure to make the disclosure.

Reliance not required

  • (2) A person who has a right of action under subsection (1) has that right irrespective of whether the person relied on the responsible issuer having complied with its disclosure requirements.

Multiple roles

  • 186. In an action under section 180 , 181 , 182 or 185 , a person who is a director or officer of an influential person is not liable in that capacity if the person is liable as a director or officer of the responsible issuer.

Multiple misrepresentations

  • 187. The following rules apply in an action under section 180 , 181 , 182 or 185  :

  • ( a ) multiple misrepresentations having common subject matter or content may, in the discretion of the court, be treated as a single misrepresentation; and

  • ( b ) multiple instances of failure to make timely disclosure of a material change or material changes concerning common subject matter may, in the discretion of the court, be treated as a single failure to make such disclosure.

Burden of Proof and Defences

Conditions for liability — certain misrepresentations

  • 188. (1) Subject to subsection (2), a person is not liable in an action under section 180 , 181 or 182 in relation to a misrepresentation in a document that is not a core document or a misrepresentation in a public oral statement, unless the plaintiff proves that

  • ( a ) the person knew, at the time that the document was released or the public oral statement was made, that the document or public oral statement contained the misrepresentation;

  • ( b ) at or before the time that the document was released or the public oral statement was made, the person deliberately avoided acquiring knowledge that the document or public oral statement contained the misrepresentation; or

  • ( c ) the person was, through action or failure to act, guilty of gross misconduct in connection with the release of the document or the making of the public oral statement that contained the misrepresentation.

Exception

  • (2) A plaintiff is not required to prove any of the matters referred to in subsection (1) in an action described in subsection 180 (2), 181 (2) or 182 (2).

No liability for misrepresentation — reasonable investigation

  • 189. (1) A person is not liable in an action under section 180 , 181 or 182 in relation to a misrepresentation in a document or in a public oral statement if the person proves that

  • ( a ) before the release of the document or the making of the public oral statement containing the misrepresentation, the person conducted or caused to be conducted a reasonable investigation; and

  • ( b ) at the time of the release of the document or the making of the public oral statement, the person had no reasonable grounds to believe that the document or public oral statement contained the misrepresentation.

No liability for misrepresentation — forward-looking information

  • (2) A person is not liable in an action under section 180 , 181 or 182 for a misrepresentation in forward‑looking information if the person proves both of the following:

  • ( a ) the document or public oral statement containing the forward‑looking information contained, proximate to that information,

  • (i) reasonable cautionary language identifying the forward‑looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward‑looking information, and

  • (ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward‑looking information; and

  • ( b ) the person had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward‑looking information.

Deemed satisfaction

  • (3) A person is deemed to have satisfied the requirements of paragraph (2)( a ) with respect to a public oral statement containing forward‑looking information if the person who made the public oral statement

  • ( a ) made a cautionary statement that the oral statement contains forward‑looking information;

  • ( b ) made a statement that

  • (i) the actual results could differ materially from a conclusion, forecast or projection in the forward‑looking information, and

  • (ii) certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward‑looking information; and

  • ( c ) made a statement that additional information about the following is contained in a readily available document or in a portion of such a document and has identified that document or that portion of the document:

  • (i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward‑looking information, and

  • (ii) the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward‑looking information.

Certain documents deemed readily available

  • (4) For the purposes of paragraph (3)( c ), a document filed with the Commission or otherwise generally disclosed is deemed to be readily available.

Financial statements and initial public offerings

  • (5) Subsection (2) does not relieve a person of liability respecting forward‑looking information in a financial statement required to be filed under this Act or forward‑looking information in a document released in connection with an initial public offering.

No liability — person other than expert

  • (6) A person, other than an expert, is not liable in an action under section 180 , 181 or 182 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by an expert from whom the responsible issuer obtained the written consent for the use of the report, statement or opinion, if the person proves that

  • ( a ) the person did not know and had no reasonable grounds to believe that there had been a misrepresentation in the part of the document or public oral statement made on the authority of the expert; and

  • ( b ) the part of the document or public oral statement fairly represented the report, statement or opinion made by the expert.

Exception

  • (7) Subsection (6) does not apply to a document or public oral statement if the consent referred to in that subsection is withdrawn in writing before the document is released or the public oral statement is made.

No liability — expert

  • (8) An expert is not liable in an action under section 180 , 181 or 182 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert if the expert proves that the written consent previously provided was withdrawn in writing before the document was released or the public oral statement was made.

No liability — unanticipated release

  • (9) A person is not liable in an action under section 180 , 181 or 182 in respect of a misrepresentation in a document, other than a document required to be filed with the Commission, if the person proves that, at the time of release of the document, the person did not know and had no reasonable grounds to believe that the document would be released.

No liability — other circumstances

  • (10) A person is not liable in an action under section 180 , 181 or 182 for a misrepresentation in a document or a public oral statement if the person proves all of the following:

  • ( a ) the misrepresentation was also contained in a document filed by or on behalf of another person, other than the responsible issuer, with the Commission or an exchange and was not corrected in another document filed by or on behalf of that other person with the Commission or exchange before the release of the document or the public oral statement made by or on behalf of the responsible issuer;

  • ( b ) the document or public oral statement contained a reference identifying the document that was the source of the misrepresentation; and

  • ( c ) when the document was released or the public oral statement was made, the person did not know and had no reasonable grounds to believe that the document or public oral statement contained a misrepresentation.

Conditions for liability — failure to make timely disclosure

  • 190. (1) Subject to subsection (2), a person is not liable in an action under section 185 in relation to a failure to make timely disclosure of a material change, unless the plaintiff proves that the person

  • ( a ) at the time that the failure first occurred, knew of the change and knew that it was a material change;

  • ( b ) at the time that or before the failure first occurred, deliberately avoided acquiring knowledge of the change or that the change was a material change; or

  • ( c ) was, through action or failure to act, guilty of gross misconduct in connection with the failure.

Exception

  • (2) A plaintiff is not required to prove any of the matters referred to in subsection (1) in an action under section 185 brought against a responsible issuer, an investment fund manager or an officer of either of them.

No liability for failure to disclose — certain circumstances

  • 191. (1) A person is not liable in an action under section 185 in respect of a failure to make timely disclosure of a material change if

  • ( a ) the person proves that the material change was disclosed by the responsible issuer in a report filed on a confidential basis with the Commission under section 86 ;

  • ( b ) the responsible issuer had a reasonable basis for making the disclosure on a confidential basis;

  • ( c ) if the information contained in the report filed on a confidential basis remains material, disclosure of the material change was made public promptly when the basis for confidentiality ceased to exist;

  • ( d ) the person or responsible issuer did not release a document or make a public oral statement that, due to the undisclosed material change, contained a misrepresentation; and

  • ( e ) if the material change became publicly known in a manner other than the manner required under this Act, the responsible issuer promptly disclosed the material change in the manner required under this Act.

No liability — reasonable investigation

  • (2) A person is not liable in an action under section 185 in relation to a failure to make timely disclosure of a material change if the person proves that

  • ( a ) before the failure to make timely disclosure first occurred, the person conducted or caused to be conducted a reasonable investigation; and

  • ( b ) the person had no reasonable grounds to believe that the failure to make timely disclosure would occur.

Circumstances to be considered

  • 192. In determining whether a person is guilty of gross misconduct under paragraph 188 (1)( c ) or 190 (1)( c ) or whether an investigation under paragraph 189 (1)( a ) or 191 (2)( a ) is reasonable, the court shall consider all relevant circumstances, including all of the following:

  • ( a ) the nature of the responsible issuer;

  • ( b ) the knowledge, experience and function of the person;

  • ( c ) the office held, if the person was an officer;

  • ( d ) the presence or absence of another relationship with the responsible issuer, if the person was a director;

  • ( e ) the existence, if any, and the nature of any system designed to ensure that the responsible issuer meets its continuous disclosure obligations;

  • ( f ) the reasonableness of reliance by the person on the responsible issuer’s disclosure compliance system and on the responsible issuer’s officers and employees and others whose duties would in the ordinary course have given them knowledge of the relevant facts;

  • ( g ) the period within which disclosure was required to be made under the applicable law;

  • ( h ) in respect of a report, statement or opinion of an expert, any professional standards applicable to the expert;

  • ( i ) the extent to which the person knew, or should reasonably have known, the content and medium of dissemination of the document or public oral statement;

  • ( j ) in the case of a misrepresentation, the role and responsibility of the person in the preparation and release of the document or the making of the public oral statement containing the misrepresentation or the ascertainment of the facts contained in that document or public oral statement; and

  • ( k ) in the case of a failure to make timely disclosure of a material change, the role and responsibility of the person involved in a decision not to disclose the material change.

No liability — plaintiff knowledge

  • 193. A person is not liable in an action under section 180 , 181 , 182 or 185 in relation to a misrepresentation in a document or public oral statement or a failure to make timely disclosure of a material change if the person proves that the plaintiff acquired or disposed of the issuer’s security with knowledge that the document or public oral statement contained a misrepresentation or with knowledge of the material change.

No liability — prompt notice

  • 194. A person, other than the responsible issuer, is not liable in an action under section 180 , 181 , 182 or 185 if the misrepresentation or failure to make timely disclosure of a material change was made without the knowledge or consent of the person and if, after the person became aware of the misrepresentation before it was corrected, or the failure to make timely disclosure before it was disclosed in the manner required under this Act, each of the following occurred:

  • ( a ) the person promptly notified the directors of the responsible issuer or other persons acting in a similar capacity of the misrepresentation or the failure to make timely disclosure; and

  • ( b ) if no correction of the misrepresentation or no subsequent disclosure of the material change in the manner required under this Act was made by the responsible issuer within two business days after the notification under paragraph ( a ), the person, unless prohibited by law or by professional confidentiality rules, promptly notified the Commission in writing of the misrepresentation or the failure to make timely disclosure.

Damages

Assessment — acquisition of securities

  • 195. (1) The following rules apply to the assessment of damages in favour of a person that acquired an issuer’s securities after the release of a document or the making of a public oral statement containing a misrepresentation or after a failure to make timely disclosure of a material change:

  • ( a ) in respect of any of the securities of the responsible issuer that the person subsequently disposed of on or before the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages are equal to the difference between the average price paid for those securities, including any commissions paid in respect of them, and the price received on the disposition of those securities, without deducting any commissions paid in respect of the disposition, calculated taking into account the result of hedging or other risk limitation transactions;

  • ( b ) in respect of any of the securities of the responsible issuer that the person subsequently disposed of after the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages are to equal the lesser of

  • (i) an amount equal to the difference between the average price paid for those securities, including any commissions paid in respect of them, and the price received on the disposition of those securities, without deducting any commissions paid in respect of the disposition, calculated taking into account the result of hedging or other risk limitation transactions, and

  • (ii) an amount equal to the number of securities that the person disposed of, multiplied by the difference between the average price per security paid for those securities, including any commissions paid in respect of that disposition determined on a per security basis, and

  • (A) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market, as those terms are defined in the rules, for the 10 trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

  • (B) if there is no published market, the amount that the court considers just; and

  • ( c ) in respect of any of the securities of the responsible issuer that the person has not disposed of, assessed damages are equal to the number of securities acquired, multiplied by the difference between the average price per security paid for those securities, including any commissions paid in respect of the acquisition determined on a per security basis, and

  • (i) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market, as those terms are defined in the rules, for the 10 trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

  • (ii) if there is no published market, the amount that the court considers just.

Assessment — disposal of securities

  • (2) The following rules apply to the assessment of damages in favour of a person that disposed of securities after a document was released or a public oral statement was made containing a misrepresentation or after a failure to make timely disclosure of a material change:

  • ( a ) in respect of any of the securities of the responsible issuer that the person subsequently acquired on or before the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages are equal to the difference between the average price received on the disposition of those securities, deducting any commissions paid in respect of the disposition and the price paid for those securities, without including any commissions paid in respect of them, calculated taking into account the result of hedging or other risk limitation transactions;

  • ( b ) in respect of any of the securities of the responsible issuer that the person subsequently acquired after the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages are equal to the lesser of

  • (i) an amount equal to the difference between the average price received on the disposition of those securities, deducting any commissions paid in respect of the disposition and the price paid for those securities, without including any commissions paid in respect of them, calculated taking into account the result of hedging or other risk limitation transactions, and

  • (ii) an amount equal to the number of securities that the person disposed of, multiplied by the difference between the average price per security received on the disposition of those securities, deducting any commissions paid in respect of the disposition determined on a per security basis, and

  • (A) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market, as defined in the rules, for the 10 trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

  • (B) if there is no published market, the amount that the court considers just; and

  • ( c ) in respect of any of the securities of the responsible issuer that the person has not acquired, assessed damages are equal to the number of securities that the person disposed of, multiplied by the difference between the average price per security received on the disposition of those securities, deducting any commissions paid in respect of the disposition determined on a per security basis, and

  • (i) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market, as those terms are defined in the rules, for the 10 trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

  • (ii) if there is no published market, the amount that the court considers just.

Exception

  • (3) For the purposes of subsections (1) and (2), assessed damages are not to include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely disclosure of a material change.

Proportionate liability

  • 196. (1) Subject to section 197 , each defendant found liable in an action under section 180 , 181 , 182 or 185 is only liable for that portion of the aggregate amount of damages assessed in favour of the plaintiff that corresponds to that defendant’s responsibility for the damages, as determined by the court.

Exception

  • (2) Despite subsection (1), if, in an action referred to in that subsection in respect of a misrepresentation or a failure to make timely disclosure of a material change, a court determines that a particular defendant, other than the responsible issuer, authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing it to be a misrepresentation or a failure to make timely disclosure, the whole amount of the damages assessed in the action may be recovered from that defendant.

Joint and several, or solidary, liability

  • (3) Each defendant in respect of whom the court has made a determination under subsection (2) is jointly and severally, or solidarily, liable with each other defendant in respect of whom the court has made such a determination.

Contribution

  • (4) Any defendant against whom recovery is obtained under subsection (2) is entitled to claim contribution from any other defendant who is found liable in the action.

Liability limit

  • 197. (1) Despite section 195 , the damages payable by a person in an action under section 180 , 181 , 182 or 185 is not to exceed the lesser of

  • ( a ) the aggregate damages assessed against the person in the action, and

  • ( b ) the liability limit for the person less the aggregate of all damages assessed after appeals, if any, against the person in all other actions brought under those sections less any amount paid in settlement of any of those actions.

Exception

  • (2) Subsection (1) does not apply to a person, other than the responsible issuer, if the plaintiff proves that the person authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure of a material change while knowing that it was a misrepresentation or a failure to make timely disclosure, or influenced the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure.

Procedural Matters

Leave required

  • 198. (1) No action may be commenced under section 180 , 181 , 182 or 185 without leave of the court granted on motion with notice to each defendant.

Conditions for leave

  • (2) The court may grant leave only if it is satisfied that

  • ( a ) the action is being brought in good faith; and

  • ( b ) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

Affidavits required

  • (3) On an application for leave under this section, the plaintiff and each defendant must serve and file one or more affidavits setting out the material facts on which each intends to rely.

Examination permitted

  • (4) The maker of an affidavit referred to in subsection (3) may be examined on it in accordance with the rules of court in which the action is brought.

Copies to Commission

  • (5) A copy of the application for leave and any affidavits filed with the court shall be sent to the Commission when filed.

Notice

  • 199. A person that has been granted leave to commence an action under section 180 , 181 , 182 or 185 shall

  • ( a ) promptly issue a news release disclosing that leave has been granted to commence an action under that section;

  • ( b ) send a written notice to the Commission within seven days after leave is granted, together with a copy of the news release; and

  • ( c ) send a copy of the statement of claim or other originating document to the Commission when filed.

Restriction on discontinuation

  • 200. (1) An action under section 180 , 181 , 182 or 185 shall not be discontinued, abandoned or settled without the approval of the court given on any terms that the court thinks fit including, without limitation, terms as to costs.

Consideration

  • (2) In determining whether to approve the settlement of an action referred to in subsection (1), the court shall consider, among other things, whether there are any other actions outstanding under section 180 , 181 , 182 or 185 .

Costs

  • 201. The prevailing party in an action under section 180 , 181 , 182 or 185 is entitled to costs determined by a court in accordance with the rules of court in which the action is brought.

Commission may intervene

  • 202. The Commission may intervene in an action under section 180 , 181 , 182 or 185 and in an application for leave under section 198 .

No derogation

  • 203. The right of action for damages and the defences to an action under section 180 , 181 , 182 or 185 are in addition to and without derogation from any other rights or defences the plaintiff or defendant may have in an action brought otherwise than under this Part.

Limitation period

  • 204. No action shall be commenced under section 180 , 181 , 182 or 185

  • ( a ) in relation to a misrepresentation in a document, later than the earlier of

  • (i) three years after the day on which the document containing the misrepresentation was first released, and

  • (ii) six months after the day of issuance of a news release disclosing that leave has been granted to commence an action under that section;

  • ( b ) in relation to a misrepresentation in a public oral statement, later than the earlier of

  • (i) three years after the day on which the public oral statement containing the misrepresentation was made, and

  • (ii) six months after the day of issuance of a news release disclosing that leave has been granted to commence an action under that section;

  • ( c ) in relation to a failure to make timely disclosure of a material change, later than the earlier of

  • (i) three years after the day on which the disclosure was required to be made, and

  • (ii) six months after the day of issuance of a news release disclosing that leave has been granted to commence an action under that section.

PART 14

GENERAL

[See commentary for further information, including information regarding the amending formula]

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