Bill 651 — An Act To Amend the Securities Act No. 2 (45th General Assembly, 3rd Session)
Bill 651
Newfoundland and Labrador — Bills
Third
Session, 45th General Assembly
Elizabeth II, 2006
BILL 51
AN ACT TO AMEND THE
SECURITIES ACT NO. 2
Received and Read the First Time ...................................................................................................
Second Reading .................................................................................................................................
Committee ............................................................................................................................................
Third Reading .....................................................................................................................................
Royal Assent ......................................................................................................................................
HONOURABLE
DIANNE WHALEN
Minister
of Government Services
Ordered
to be printed by the Honourable House of Assembly
EXPLANATORY NOTES
The purpose of this Bill is to amend
the Securities Act so as to harmonize
its provisions with the securities legislation of other provinces and
territories of Canada . Included in these amendments is the ability for our chief regulator, the
Superintendent of Securities, to adopt the securities laws and rules of another
province or territory after the Act comes into force. A securities industry participant would then
only have to deal with the principal regulator for the transaction jurisdiction
and all jurisdictions would abide by the rules and decisions of the principal
regulator. The provisions of this Act
will come into force over the next 2 years as proclaimed by the
Lieutenant-Governor in Council at times co-ordinated with their implementation
in the other jurisdictions.
A BILL
AN ACT TO AMEND THE SECURITIES ACT NO. 2
Analysis
S.2 Amdt.
Definitions
Ss.27 to 31 R&S
27. Registration by
superintendent
28. Surrender of
registration
29. Sending of documents
S.33 Rep .
Residence
S.46 R&S
Representation or holding out of registration
Ss.58 to 61 Rep .
58. Amendment to
preliminary prospectus
59. Certificate
by issuer
60. Certificate
underwriter
61. Statement of rights
Ss.62 & 63 Rep .
Receipt for prospectus
Ss.67 & 68 Rep .
67. Distribution of
preliminary prospectus
68. Distribution list
S.69 Amdt .
Defective preliminary prospectus
S.72 R&S
Revocation of purchase
S.76 Amdt .
Disclosure
Ss.78 to 81 R&S
Relief against certain requirement
S.85 R&S
Interpretation
Ss.90 to 106 R&S
Interpretation
91. Making a
bid
92. Director
recommendation
93. Applications
superintendent
94. Application to Trial
Division
Ss.107 to 110 R&S
107. Reports of insider
108. Early warning
S.114 Rep .
Relieving orders
S.117 R&S
Standard of care for investment fund management
17. Ss.121.1 & 121.2 Added
121.1 Authorized
exceptions to
prohibitions
121.2 Oversight etc. of
investment funds
S.127.1 Added
Administrative penalty
S.130 Amdt .
Liability for misrepresentation in prospectus
S.131 Amdt .
Liability for misrepresentation in circular
S.132 R&S
Defence to liability for misrepresentation
S.133 Amdt .
Liability of dealer or offeror
S.135 Amdt .
Action by superintendent on behalf of issuer
S.137 Rep .
Rescission of purchase of mutual fund securities
25. Parts XXII.1 & XXII.2 Added
PART XXII.1
CIVIL LIABILITY FOR SECONDARY MARKET DISCLOSURE
138.1
Definitions
138.2 Application
138.3 Liability for
secondary market
disclosure
138.4 Non-core documents
and public oral
statements
138.5 Assessment of
damages
138.6 Proportionate
liability
138.7 Limits on damages
138.8 Leave to proceed
138.9 Notice
138.10 Restriction on
discontinuation etc.
138.11 Costs
138.12 Superintendent
power
138.13 No derogation from
other rights
138.14 Limitation period
PART XXII.2
INTERJURISDICTIONAL
CO-OPERATION
138.15
Definitions
138.16 Delegation and
acceptance of
authority
138.17 Sub-delegation
138.18 Adoption of
extra-provincial
securities laws
138.19 Exemptions
138.20 Exercise of
discretion
S.144.1 Amdt .
Superintendent may make rules
Commencement
Be it enacted by the Lieutenant-Governor and
House of Assembly in Legislative Session convened, as follows:
RSNL1990 cS-13
as amended
(1) The Securities Act is amended by adding immediately after paragraph 2(1 )(
h) the following:
(h.1) "control person" means
(
i) a person or company 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 or
company holds more than 20% of the voting rights attached to all outstanding
voting securities of an issuer, the person shall be considered, 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
(ii) a person or company in a combination of
persons or companies 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 or
companies holds more than 20% of the voting rights attached to all outstanding
voting securities of an issuer, the combination of persons or companies shall
be considered, 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;
(2) Paragraph 2(1 )(
j) of
the Act is amended by deleting the word "regulations" and
substituting the words " rules or under a delegation or other transfer of
an extra-provincial authority under
section 138.16".
(3) Paragraph 2(1 )(
k) of
the Act is repealed and the following substituted:
(k) " 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;
(4) Subsection 2(1) of the Act is amended by
adding immediately after paragraph (
q) the following:
(q.1) "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 represented
either as a forecast or a projection;
(5) Paragraph 2(1 )(
s) of
the Act is repealed and the following substituted:
(s) " insider "
means
(
i) a director or officer
of an issuer,
(ii) a director or officer
of person or company that is itself an insider or subsidiary of an issuer,
(iii) a person or company
that has
(
A) beneficial ownership
of, or control or direction over, directly or indirectly, or
(
B) 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, securities held by the person or company as underwriter in the course of
a distribution,
(iv) 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,
(
v) a person designated by
order as an insider by the superintendent; or
(vi) a person that is in a
class of persons prescribed under
section 144.1;
(6) Subsection 2(1) of the Act is amended by
adding immediately after paragraph (
t) the following:
(t.1) "investment fund" means a mutual
fund or a non-redeemable investment fund;
(7) Paragraph 2(1 )(
w) of
the Act is repealed and the following is substituted:
(w) " material change"
means
(
i) if used in relation
to an issuer other than an investment fund,
(
A) 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
(
B) a decision to
implement a change referred to in clause (
A) 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
(ii) if used in relation
to an issuer that is a investment fund,
(
A) 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
continue to hold a security of the issuer, or
(
B) a decision to
implement a change referred to in clause (
A) made
(
I) by the directors of the issuer or by the directors
of the investment fund manager of the issuer,
(II) by senior management
of the issuer who believe that confirmation of the decision by the directors is
probable, or
(III) 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;
(8) Paragraph 2(1 )( dd) of
the Act is repealed and the following substituted:
( dd ) "officer"
with respect to an issuer or registrant, means
(
i) 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,
(ii) an individual who is
designated as an officer under a bylaw or similar authority of the issuer or
registrant, and
(iii) an individual who
performs functions for a person or
company similar to those normally performed by an individual referred to in
subparagraph (
i) or (ii);
(9) Subparagraph 2(1 )( oo )(iii) of the Act is repealed and the following
substituted:
(iii) whose existence continues following the
exchange of securities of an issuer in connection with an amalgamation, merger,
reorganization, arrangement or statutory procedure, in which one of the parties
to the amalgamation, merger, reorganization, arrangement or statutory procedure
was a reporting issuer at the time of the amalgamation, merger, reorganization,
arrangement or statutory procedure, or
(10) Paragraph 2(1 )( qq.1)
of the Act is repealed and the following substituted:
(qq.1) "self-regulatory organization" means
a person or company that is organized for the purpose of regulating the
operations and standards of practice and business conduct of its members;
(11) Subparagraph 2(1 )( tt )(iv) of the Act is repealed and the following
substituted
(iv) a bank listed in
Schedule I, II or III of the Bank Act (Canada) with respect to
securities described in paragraph 36(2)(
a) and to the banking transactions designated
by a rule under
section 144.1; and
(12) Subsections 2(8) and (9) of the Act are
repealed.
2. Sections 27 to 31 of the Act are repealed and
the following substituted:
Registration by
superintendent
(1) Unless it appears to the superintendent that
(
a) an applicant is not
suitable for registration, renewal of registration, reinstatement of
registration or amendment of registration; or
(
b) the proposed
registration, renewal of registration, reinstatement of registration or
amendment of registration is objectionable,
the superintendent shall grant to the applicant the registration,
renewal of registration, reinstatement of registration or amendment of registration
for which the applicant has applied.
(2) The superintendent may restrict a registration
(
a) restrict the duration
of the registration; and
(
b) restrict the
registration to trades in certain securities or exchange contracts or a certain
class of securities or exchange contracts.
(3) The superintendent shall not refuse to grant,
without giving the registrant or applicant an opportunity to be heard.
Surrender of registration
(1) If
a registrant applies to surrender its registration, the superintendent shall
accept the surrender unless the superintendent considers it prejudicial to the
public interest to do so.
(2) Upon receiving an application under subsection
(1), the superintendent may, without providing an opportunity to be heard, suspend
the registration or impose conditions or restrictions on the registration.
Sending of documents
(1) Unless
otherwise provided under this Act, a document required to be sent,
communicated, delivered or served under securities laws of the province may be
(
a) personally delivered
to the person or company that is to receive it;
(
b) sent by prepaid post
to the person or company that is to receive it; or
(
c) sent by electronic
means that produces a printed copy to the person or company that is to receive
it.
(2) A document sent to a person or company
referred to in subsection (1 )(
b) or (
c) shall be sent
to that person or company
(
a) at the latest address
known for that person or company by the sender of the document; or
(
b) at the address for
service in the province filed by that person or company with the
superintendent.
(3) A document referred to in subsection (1) that
is sent by the superintendent by prepaid post shall be considered, unless the
contrary is proved, to be served on the person to whom or the company to which
it is sent on the 7th day from the day that the document is sent to that person
or company.
(4) If a document referred to in subsection (1) is
sent to a person or company by prepaid post and is returned on 2 successive
occasions because the person or company cannot be found, then there is no further
requirement to send further documents to that person or company until the
person or company provides to the sender notification in writing of the
person's or company's new address.
Section 33 of the Act is repealed.
Section 46 of the Act is repealed and the
following substituted:
Representation or
holding out of registration
(1) A
person or company shall not represent that a person or company is registered
under this Act unless
(
a) the representation is
true; and
(
b) in making the
representation, the person or company specifies the person or company's
category of registration under this Act.
(2) A person or company 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 or company if the statement is untrue or omits information necessary to
prevent the statement from being false or misleading in the circumstances in
which it is made.
5. Sections 58 to 61 of the Act are repealed.
6. Sections 62 and 63 of the Act are repealed and
the following substituted:
Receipt for
prospectus
(1) The superintendent shall issue a receipt for a prospectus
filed under this Part unless he or she considers that it is not in the public interest
to do so.
(2) Notwithstanding subsection (1), the superintendent
shall not issue a receipt for a prospectus filed under this
Part if he or she
considers that
(
a) the prospectus or a
document required to be filed with it
(
i) does not comply in a
substantial respect with the requirements of this Part or the rules,
(ii) contains a statement,
promise, estimate or forward-looking information that is misleading, false or
deceptive, or
( iii ) contains a
misrepresentation;
(
b) an unconscionable
consideration has been paid or given for services or promotional purposes or
for the acquisition of property;
(
c) the aggregate of
(
i) the proceeds from the
sale of the securities under the prospectus that are to be paid into the
treasury of the issuer, and
(ii) the other resources
of the issuer
is insufficient to accomplish the purpose of the issue stated in the
prospectus;
(
d) the issuer cannot
reasonably be expected to be financially responsible in the conduct of its
business because of the financial condition of
(
i) the issuer,
(ii) an issuer's officer,
director, promoter or control person, or
(iii) the investment fund
manager of the issuer of the investment fund manager's officer, director or
control person;
(
e) the business of the
issuer may not be conducted with integrity and in the best interests of the
security holders of the issuer because of the past conduct of
(
i) the issuer,
(ii) an issuer's officer,
director, promoter or control person, or
(iii) the investment fund
manager of the issuer of the investment fund manager's officer, director or
control person;
(
f) a person or company that has prepared or certified
a part of the prospectus, or that is named as having prepared or certified a
report or valuation used in connection with the prospectus, is not acceptable;
(
g) an escrow or pooling agreement in the form
that the superintendent considers necessary or advisable with respect to the
securities has not been entered into; or
(
h) adequate arrangements
have not been made for the holding in trust of the proceeds payable to the
issuer from the sale of securities pending the distribution of the securities.
(3) A person or company filing a prospectus shall
not be refused a receipt for that prospectus without being given an opportunity
to be heard.
7. Sections 67 and 68 of the Act are repealed.
Section 69 of the Act is amended by deleting
the words and number "under
section 68" and substituting the words and
number "in accordance with rules made under
section 144.1".
9. Sections 72, 73 and 74 of the Act are repealed
and the following is substituted:
Revocation of
purchase
72. A
person or company that purchases a security under a distribution to which
section 54 applies may cancel the purchase in accordance with rules made under
section 144.1.
Section 76 of the Act is repealed and the
following is substituted:
Disclosure
76. A
reporting issuer shall, in accordance with rules made under
section 144.1,
(
a) provide periodic
disclosure about its business and affairs;
(
b) provide disclosure of
a material change; and
(
c) provide other
disclosure as required under those rules.
11. Sections 78 to 81 of the Act are repealed and
the following substituted:
Relief against
certain requirement
81. Upon the application of a reporting issuer or upon the
motion of the superintendent, the superintendent may, where in the opinion of
the superintendent to do so would not be prejudicial to the public interest,
in whole or in part, a reporting issuer or class of reporting issuers from a
requirement of this Part or the rules relating to a requirement of this Part
(
a) where the requirement
conflicts with a requirement of the laws of the jurisdiction under which the
reporting issuer or class of reporting issuers is incorporated, organized or continued;
(
b) where the reporting issuer or class of
reporting issuers ordinarily distributes financial information to holders of
its or their securities in a form, or at times, different from those required
by this Part; or
(
c) where otherwise
satisfied in the circumstances of the particular case that there is adequate
justification for so doing.
Section 85 of the Act is repealed and the
following substituted:
Interpretation
85. In
this Part, "information circular" means an
information circular prepared in accordance with the rules.
13. Sections 90 to 106 of the Act are repealed and
the following substituted:
Interpretation
90. In this Part
(a) " interested
person" means
(
i) an issuer whose
securities are the subject of a take-over bid, issuer bid or other offer to
acquire,
(ii) a security holder,
director or officer of an issuer described in subparagraph (i),
(iii) an offeror,
(iv) the superintendent,
and
(
v) a person or company not referred to in
subparagraphs (
i) to (iv) who, in the opinion of the superintendent or a judge
of the Trial Division is a proper person to make an application under
section
93 or 94;
(b) " issuer bid"
means a direct or indirect offer to acquire or redeem a security or a direct or
indirect acquisition or redemption of a security that is
(
i) made by the issuer of
the security, and
(ii) within a prescribed
class of offers, acquisitions or redemptions;
(c) " take-over bid"
means a direct or indirect offer to acquire a security that is
(
i) made directly or
indirectly by a person or company other than the issuer of the security, and
(ii) within a prescribed
class of offers to acquire.
Making a bid
91. A
person or company 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.
Director recommendation
(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.
(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.
Applications to
superintendent
(1) An
interested person may apply to the superintendent and, if the superintendent considers
that a person has not complied or is not complying with this Part or the rules,
he or she may make an order
(
a) restraining the
distribution of a 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 a
document, record or material 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 a person or
company to comply with this Part or the rules;
(
d) restraining a person
or company from contravening this Part or the rules; or
(
e) directing the
directors and officers of a person or company to cause the person or company to
comply with or to cease contravening this Part or the rules.
(2) On application by an interested person, the commission
may order that a person or company is exempt from a requirement under this Part
or the rules if the superintendent considers it would not be prejudicial to the
public interest to do so.
Application to
Trial Division
(1) An
interested person may apply to the Trial Division and, if the Trial Division is
satisfied that a person or company has not complied with this Part or the rules,
the Trial Division may make an interim or final order as it sees fit, including
an order
(
a) compensating an
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 an interested person, including the issue of a security or a
purchase and sale of a security;
(
c) requiring a person or
company to dispose of securities acquired under or in connection with a
take-over bid or issuer bid;
(
d) prohibiting a person
or company from exercising any or all of the voting rights attached to securities;
and
(
e) requiring the trial
of an issue.
(2) If the superintendent is not the applicant
under subsection (1), he or she
(
a) shall be given notice
of the application, and
(
b) is entitled to appear
at the hearing and make representations to the Trial Division.
14. Sections 107 to 110 of the Act are repealed and
the following substituted:
Reports of
insider
107. An
insider of a reporting issuer shall file reports and make disclosure in
accordance with rules made under
section 144.1.
Early warning
108. If
a person or company acquires beneficial ownership, directly or indirectly of,
or direct or indirect control or direction over, securities of a type or class prescribed
by the rules of a reporting issuer representing a prescribed percentage of the
outstanding securities of that type or class, the person or company and a
person or company acting jointly or in concert with the person or company shall
make and file disclosure in accordance with the rules and comply with
prohibitions in the rules on transactions in securities of the reporting issuer.
Section 114 of the Act is repealed.
Section 117 of the Act is repealed and the
following substituted:
Standard of care
for investment fund management
117. An
investment fund manager shall
(
a) exercise the powers
and discharge the duties of its 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.
17. The Act is amended by adding immediately after
section 121 the following:
Authorized exceptions
to prohibitions
121.1 If
the rules made under
section 144.1 provide for it, a body established under
section 121.2 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 etc. of
investment funds
121.2
(1) If
required to do so by the rules made under
section 144.1, an investment fund
shall establish and maintain a body for the purpose of overseeing activities of
the investment fund and the investment fund manager, reviewing or approving matters
affecting the investment fund, including transactions referred to in
section
121.1 and disclosing information to security holders of the fund, to the
investment fund manager and to the superintendent.
(2) The body referred to in subsection (1) has the
powers and duties that may be prescribed by the rules.
18. The Act is amended by adding immediately after
section 127 the following:
Administrative
penalty
127.1
(1) If
the superintendent, after a hearing,
(
a) determines that
(
i) a person or company
has contravened or failed to comply with a provision of the securities laws of
the province, or
(ii) a director or officer of a person or company
or a person other than an individual authorized, permitted or acquiesced in a
contravention or failure to comply with a provision of the securities laws of
the province by the person or company; and
(
b) considers it to be
in the public interest to make the order,
the superintendent may order the person or company to pay an administrative
penalty of not more than $1,000,000 for each contravention or failure to
comply.
(2) The superintendent may make an order under
this section, notwithstanding the imposition of another penalty or sanction on
the person or company or the making of another order by the superintendent
related to the same matter.
(1) Paragraph 130(1 )(
b) of the Act is repealed and the following substituted:
(
b) each underwriter of
the securities that is in a contractual relationship with the issuer or selling
security holder on whose behalf the distribution is made;
(2) Paragraph 130(1 )(
d) of the Act is repealed and the following substituted:
(
d) a person or company 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
20. (1) Subsections 131(1) and (2) of the Act
are amended by deleting the words and numerals "by
Part XIX" wherever
they occur and substituting the words "under rules made under
section
144.1 and that document".
(2) Subsection 131(10) of the Act is repealed.
Section 132 of the Act is repealed and the
following is substituted:
Defence to
liability for misrepresentation
132. A
person or company is not liable in an action under
section 130 or 131 for a
misrepresentation in forward-looking information if the person or company
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 or company
had a reasonable basis for drawing the conclusions or making the forecasts and
projections set out in the forward‑looking information.
Section 133 of the Act is amended by
(
a) deleting the word and
figure "subsection 72(1)" and substituting the words and figure "the
rules made under
section 144.1"; and
(
b) deleting the words
and figures "section 96 or 99" and substituting the words and figure "the
rules made under
section 144.1".
23. Subsections 135(7) and (8) of the Act are
amended by deleting the word "mutual" wherever it occurs and
substituting the word "investment".
Section 137 of the Act is repealed.
25. The Act is amended by adding immediately after
section
138 the following:
PART XXII.1
CIVIL LIABILITY FOR SECONDARY MARKET DISCLOSURE
Definitions
138.1 In this Part
(a) "compensation" means compensation
received during the 12 month period immediately preceding the day on which the
misrepresentation was made or on which the failure to make timely disclosure
first occurred, together with the fair market value of all deferred
compensation including, without limitation, options, pension benefits and stock
appreciation rights, granted during the same period, valued as of the date that
the compensation is awarded;
(b) " core document"
means,
(
i) where used in
relation to
(
A) a director of a
responsible issuer who is not also an officer of the responsible issuer,
(
B) 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
(
C) 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,
a prospectus, a take-over bid circular,
an issuer bid circular, a directors' circular, 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,
(ii) where used in
relation to
(
A) a responsible issuer
or an officer of the responsible issuer,
(
B) an investment fund
manager where the responsible issuer is an investment fund, or
(
C) an officer of an
investment fund manager where the responsible issuer is an investment fund,
a prospectus, a take-over bid circular,
an issuer bid circular, a directors' circular, a rights offering circular,
management's discussion and analysis, an annual information form, an
information circular, annual financial statements, interim financial statements
and a material change report required under
section 146 of the responsible
issuer, and
(iii) other documents that
may be prescribed by rules for the purpose of this definition;
(c) " document "
means written communication, including a communication prepared and transmitted
only in electronic form,
(
i) that is required to
be filed with the superintendent, or
( ii ) that is not
required to be filed with the superintendent and
(
A) that is filed with the superintendent,
(
B) 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 an exchange or quotation and trade reporting system under
its bylaws, rules or rules, or
(
C) that is another communication the content of
which would reasonably be expected to affect the market price or value of a
security of the responsible issuer;
(d) "expert" means a person or company
whose profession gives authority to a statement made in a professional capacity
by the person or company, 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;
(e) " failure to make
timely disclosure" means a failure to disclose a material change in the
manner and at the time required under this Act;
(f) " influential
person" means, with respect to a responsible issuer,
(
i) a control person,
(ii) a promoter,
(iii) an insider who is not
a director or officer of the responsible issuer, or
(iv) an investment fund
manager, if the responsible issuer is an investment fund;
(g) " issuer's
security" means a security of a responsible issuer and includes a security
(
i) the market price or value of which, or payment
obligations under which, are derived from or based on a security of the
responsible issuer, and
( ii ) that is created by
a person or company on behalf of the responsible issuer or is guaranteed by the
responsible issuer;
(h) " liability limit"
means,
(
i) in the case of a
responsible issuer, the greater of
(A) 5% of its market capitalization as defined in
the rules, and
(B) $1,000,000,
(ii) in the case of a
director or officer of a responsible issuer, the greater of
(A) $25,000, and
(B) 50% of the aggregate of the director's or
officer's compensation from the responsible issuer and its affiliates,
(iii) in the case of an
influential person who is not an individual, the greater of
(A) 5% of its market capitalization as defined in
the rules, and
(B) $1,000,000,
(iv) in the case of an
influential person who is an individual, the greater of
(A) $25,000, and
(B) 50% of the aggregate of the influential
person's compensation from the responsible issuer and its affiliates,
(
v) in the case of a
director or officer of an influential person, the greater of
(A) 25,000, and
(B) 50% of the aggregate of the director's or
officer's compensation from the influential person and its affiliates,
(vi) in the case of an
expert, the greater of
(A) $1,000,000, and
(
B) the revenue that the
expert and the affiliates of the expert have earned from the responsible issuer
and its affiliates during the 12 months preceding the misrepresentation, and
(vii) in the case of a person who made a public oral
statement, other than an individual referred to in subparagraph (iv), (
v) or
(vi), the greater of
(A) $25,000, and
(B) 50% of the aggregate of the person's
compensation from the responsible issuer and its affiliates;
(i) "management's discussion and analysis"
means the
section 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 securities
laws of the province;
(j) " 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;
(k) " release "
means, with respect to information or a document, to file with the superintendent
or another securities regulatory authority in Canada or
an exchange or to otherwise make available to the public;
(l) " responsible
issuer" means
(
i) a reporting issuer,
(ii) another issuer with a
real and substantial connection to the province, any of whose securities are
publicly traded; and
(m) " trading day"
means a day during which the principal market as defined in the rules for the
security is open for trading.
Application
138.2 This
Part does not apply to
(
a) the purchase of a
security offered by a prospectus during the period of distribution;
(
b) the acquisition of an
issuer's security in connection with a distribution that is exempt from
section
54, except as may be prescribed by rules made under
section 144.1;
(
c) the acquisition or disposition of an issuer's
security in connection with a take-over bid or issuer bid, except as may be
prescribed by rules made under
section 144.1; or
(
d) another transaction
or class of transactions that may be prescribed by rules made under
section
144.1.
Liability for
secondary market disclosure
138.3
(1) Where
a responsible issuer or a person or company with actual, implied or apparent
authority to act on behalf of a responsible issuer releases a document that
contains a misrepresentation, a person or company who acquires or disposes of
the 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, without regard to whether the person or company relied
on the misrepresentation, a right of action for damages against
(
a) the responsible
issuer;
(
b) a director of the
responsible issuer at the time the document was released;
(
c) an officer of the
responsible issuer who authorized, permitted or acquiesced in the release of
the document;
(
d) an influential
person, and each director and officer of an influential person, who knowingly
influenced
(
i) the responsible
issuer or a person or company 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; and
(
e) an expert where
(
i) the misrepresentation
is also contained in a report, statement or opinion made by the expert,
(ii) the document
includes, summarizes or quotes from the report, statement or opinion of the
expert, and
(iii) if the document was
released by a person or company other than the expert, the expert consented in
writing to the use of the report, statement or opinion in the document.
(2) Where 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 or company who acquires
or disposes of the 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, without
regard to whether the person or company relied on the misrepresentation, a
right of action for damages against
(
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;
(
d) each influential
person, and each director and officer of the influential person, who knowingly
influenced
(
i) the person who made
the public oral statement to make it, or
(ii) a director or officer
of the responsible issuer to authorize, permit or acquiesce in the making of
the public oral statement; and
(
e) each expert where
(
i) the misrepresentation
is also contained in a report, statement or opinion made by the expert,
(ii) the person making the
public oral statement includes, summarizes or quotes from the report, statement
or opinion of the expert, and
(iii) 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.
(3) Where an influential person or a person or
company with actual, implied or apparent authority to act or speak on behalf of
the influential person releases a document or makes a public oral statement
that relates to a responsible issuer and that contains a misrepresentation, a
person or company 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, without regard to
whether the person or company relied on the misrepresentation, a right of
action for damages against
(
a) the responsible issuer, if a director or
officer of the responsible issuer, or where the responsible issuer 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;
(
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; and
(
f) each expert where
(
i) the misrepresentation
is also contained in a report, statement or opinion made by the expert,
(ii) the document or
public oral statement includes, summarizes or quotes from the report, statement
or opinion of the expert, and
(iii) 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.
(4) Where a responsible issuer fails to make a
timely disclosure, a person or company who acquires or disposes of the issuer's
security between the time when the material change was required to be disclosed
in the manner required under this Act and the subsequent disclosure of the
material change has, without regard to whether the person or company relied on
the responsible issuer having complied with its disclosure requirements, a
right of action for damages against
(
a) the responsible
issuer;
(
b) each director and
officer of the responsible issuer who authorized, permitted or acquiesced in
the failure to make timely disclosure; and
(
c) an influential
person, and a director and officer of an influential person, who knowingly
influenced
(
i) the responsible
issuer or a person or company acting on behalf of the responsible issuer in the
failure to make timely disclosure, or
(ii) a director or officer
of the responsible issuer to authorize, permit or acquiesce in the failure to
make timely disclosure.
(5) In an action under this section, 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.
(6) In an action under this section,
(
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 timely disclosure.
(7) In an action under subsection (2) or (3), if
the person who made the public oral statement had apparent authority, but not
implied or actual authority, to speak on behalf of the 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.
Non-core documents
and public oral statements
138.4
(1) In
an action under
section 138.3 in relation to a misrepresentation in a document
that is not a core document or a misrepresentation in a public oral statement,
a person or company is not liable unless the plaintiff proves that the person
or company
(
a) 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, deliberately avoided acquiring
knowledge that the document or public oral statement contained the
misrepresentation; or
(
c) 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.
(2) Notwithstanding subsection (1), a plaintiff is
not required to prove a matter set out in subsection (1) in an action under
section 138.3 in relation to an expert.
(3) In an action under
section 138.3 in relation
to a failure to make timely disclosure, a person or company is not liable unless
the plaintiff proves that the person or company
(
a) knew , at the time
that the failure to make timely disclosure first occurred, of the change and
that the change was a material change;
(
b) at the time or before
the failure to make timely disclosure 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 to
make timely disclosure.
(4) Notwithstanding subsection (3), a plaintiff is
not required to prove a matter set out in subsection (3) in an action under
section 138.3 in relation to
(
a) a responsible issuer;
(
b) an officer of a
responsible issuer;
(
c) an investment fund
manager; or
(
d) an officer of an
investment fund manager.
(5) A person or company is not liable in an action
under
section 138.3 in relation to a misrepresentation or a failure to make
timely disclosure if that person or company proves that the plaintiff acquired
or disposed of the issuer's security
(
a) with knowledge that
the document or public oral statement contained a misrepresentation; or
(
b) with knowledge of the
material change.
(6) A person or company is not liable in an action
under
section 138.3 in relation to
(
a) a misrepresentation
if that person or company proves that
(
i) before the release of the document or the
making of the public oral statement containing the misrepresentation, the
person or company conducted or caused to be conducted a reasonable
investigation, and
(ii) at the time of the
release of the document or the making of the public oral statement, the person
or company had no reasonable grounds to believe that the document or public
oral statement contained the misrepresentation; or
(
b) a failure to make
timely disclosure if that person or company proves that
(
i) before the failure to
make timely disclosure first occurred, the person or company conducted or
caused to be conducted a reasonable investigation, and
(ii) the person or company
had no reasonable grounds to believe that the failure to make timely disclosure
would occur.
(7) In determining whether an investigation was
reasonable under subsection (6), or whether a person or company is guilty of
gross misconduct under subsection (1) or (3), the court shall consider all
relevant circumstances, including
(
a) the nature of the
responsible issuer;
(
b) the knowledge,
experience and function of the person or company;
(
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 and the
nature of a system designed to ensure that the responsible issuer meets its
continuous disclosure obligations;
(
f) the reasonableness of reliance by the person
or company on the responsible issuer's disclosure compliance system and on the
responsible issuer's officers, 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) with respect to a
report, statement or opinion of an expert, a professional standards applicable
to the expert;
(
i) the extent to which
the person or company 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 or company in the preparation and release of
the document or the making of the public oral statement containing the
misrepresentation or the ascertaining of the facts contained in that document
or public oral statement; and
(
k) in the case of a failure to make timely
disclosure, the role and responsibility of the person or company involved in a
decision not to disclose the material change.
(8) A person or company is not liable in an action
under
section 138.3 with respect to a failure to make timely disclosure if
(
a) the person or company
proves that the material change was disclosed by the responsible issuer in a
report filed on a confidential basis with the superintendent under
section 76;
(
b) the responsible
issuer had a reasonable basis for making the disclosure on a confidential
basis;
(
c) where 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 company 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) where 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.
(9) A person or company is not liable in an action
under
section 138.3 for a misrepresentation in forward-looking information if
the person or company proves all 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 or company
had a reasonable basis for drawing the conclusions or making the forecasts and
projections set out in the forward‑looking information.
(10) A person or company shall be considered to
have satisfied the requirements of paragraph (9 )(
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) stated 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) stated that
additional information about
(
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,
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.
(11) For the purpose of paragraph (10 )( c), a document filed with the superintendent or otherwise
generally disclosed shall be considered to be readily available.
(12) Subsection (9) does not relieve a person or
company 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.
(13) A person or company, other than an expert, is
not liable in an action under
section 138.3 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 with respect to which the responsible
issuer obtained the written consent of the expert to the use of the report,
statement or opinion if the consent had not been withdrawn in writing before
the document was released or the public oral statement was made, if the person
or company proves that
(
a) the person or company 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 oral public statement fairly represented the report, statement or
opinion made by the expert.
(14) An expert is not liable in an action under
section 138.3 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.
(15) A person or company is not liable in an action
under
section 138.3 with respect to a misrepresentation in a document, other
than a document required to be filed with the superintendent, if the person or
company proves that, at the time of release of the document, the person or
company did not know and had no reasonable grounds to believe that the document
would be released.
(16) A person or company is not liable in an action
under
section 138.3 for a misrepresentation in a document or a public oral
statement if the person or company proves that
(
a) the misrepresentation was also contained in a
document filed by or on behalf of another person or company, other than the
responsible issuer, with the superintendent or another securities regulatory
authority in Canada or an exchange and was not corrected in another document
filed by or on behalf of that other person or company with the superintendent
or that other securities regulatory authority in Canada 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 or company did not
know and had no reasonable grounds to believe that the document or public oral
statement contained a misrepresentation.
(17) A person or company, other than the
responsible issuer, is not liable in an action under
section 138.3 if the
misrepresentation or failure to make timely disclosure was made without the
knowledge or consent of the person or company and if, after the person or
company 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
(
a) the person or company
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 2 business days after the
notification under paragraph (a), the person or company, unless prohibited by
law or by professional confidentiality rules, promptly and in writing notified
the superintendent of the misrepresentation or failure to make timely
disclosure.
Assessment of
damages
138.5
(1) Damages
shall be assessed in favour of a person or company 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 as follows:
(
a) with respect to securities of the responsible
issuer that the person or company 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 shall equal the difference between the average price paid for
those securities, including a commission paid with respect to them, and the
price received on the disposition of those securities, without deducting a commission
paid with respect to the disposition, calculated taking into account the result
of hedging or other risk limitation transactions;
(
b) with respect to
securities of the responsible issuer that the person or company 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 shall equal the lesser of
(
i) an amount equal to the difference between the
average price paid for those securities, including commissions paid with
respect to them, and the price received on the disposition of those securities,
without deducting commissions paid with respect to 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 commissions paid with
respect to 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) with respect to any of the securities of the
responsible issuer that the person or company has not disposed of, assessed
damages shall equal 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 them 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 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.
(2) Damages shall be assessed in favour of a
person or company that disposed of securities after a document was released or
a public oral statement made containing a misrepresentation or after a failure
to make timely disclosure as follows:
(
a) with respect to any of the securities of the
responsible issuer that the person or company 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 shall equal the difference between the average price received
on the disposition of those securities, deducting any commissions paid with
respect to the disposition and the price paid for those securities, without
including any commissions paid with respect to them, calculated taking into
account the result of hedging or other risk limitation transactions;
(
b) with respect to any
of the securities of the responsible issuer that the person or company
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 shall equal 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 with respect to the disposition and the price paid for those
securities, without including any commissions paid with respect to 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 with respect to 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) with respect to securities of the responsible
issuer that the person or company has not acquired, assessed damages shall
equal the number of securities that the person or company disposed of,
multiplied by the difference between the average price per security received on
the disposition of those securities, deducting commissions paid with respect to
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 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.
(3) Notwithstanding subsections (1) and (2),
assessed damages shall not include an 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.
Proportionate
liability
138.6
(1) In
an action under section138.3, the court shall determine, with respect to a defendant
found liable in the action, the defendant's responsibility for the damages
assessed in favour of all plaintiffs in the action, and each defendant is
liable, subject to the limits set out in subsection 138.7(1), to the plaintiffs
for only that portion of the aggregate amount of damages assessed in favour of
the plaintiffs that corresponds to that defendant's responsibility for the
damages.
(2) Notwithstanding subsection (1), where, in an
action under
section 138.3 with respect to a misrepresentation or a failure to
make timely disclosure, 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.
(3) A defendant with respect to whom the court has
made a determination under subsection (2) is jointly and individually liable
with each other defendant with respect to whom the court has made a determination
under subsection (2).
(4) A defendant against whom recovery is obtained
under subsection (2) is entitled to claim contribution from another defendant
who is found liable in the action.
Limits on damages
138.7
(1) Notwithstanding
section 138.5, the damages payable by a
person or company in an action under
section 138.3 are the lesser of
(
a) the aggregate damages
assessed against the person or company in the action; and
(
b) the liability limit for the person or company
less the aggregate of all damages assessed after appeals, if any, against the
person or company in all other actions brought under
section 138.3, and under
comparable legislation in other provinces or territories in Canada with respect
to that misrepresentation or failure to make timely disclosure, and less any
amount paid in settlement of any such actions.
(2) Subsection (1) does not apply to a person or
company, other than the responsible issuer, if the plaintiff proves that the
person or company authorized, permitted or acquiesced in 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, 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.
Leave to proceed
138.8
(1) An action shall not be commenced under
section 138.3 without
leave of the court granted on motion with notice to each defendant.
(2) The court shall grant leave only where 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.
(3) On an application under this section, the
plaintiff and each defendant shall serve and file one or more affidavits setting
forth the material facts on which each intends to rely.
(4) The maker of an affidavit may be examined on
it in accordance with the Rules of the
Supreme Court, 1986 .
(5) A copy of the application for leave to proceed
and affidavits filed with the court shall be sent to the superintendent when
filed.
Notice
138.9 A
person or company that has been granted leave to commence an action under
section 138.3 shall
(
a) promptly issue a news
release disclosing that leave has been granted to commence an action under
section138.3,
(
b) send a written notice to the superintendent
within 7 days of leave being 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 superintendent when
filed.
Restriction on discontinuation etc.
138.10 An action under
section 138.3 shall not be
discontinued, abandoned or settled without the approval of the court given on terms
that the court thinks fit including, terms as to costs, and in determining
whether to approve the settlement of the action, the court shall consider,
among other things, whether there are other actions outstanding under
section
138.3 or under comparable legislation in another province or territory in
Canada with respect to the same misrepresentation or failure to make timely
disclosure.
Costs
138.11 Notwithstanding the Judicature Act and the Class Actions Act , the prevailing
party in an action under
section 138.3 is entitled to costs determined by a
court in accordance with the Rules of the
Supreme Court, 1986 .
Superintendent
power
138.12 The superintendent may intervene in an action
under
section 138.3 and in an action under
section 138.8.
No derogation
from other rights
138.13 The right of action for damages and the
defences to an action under
section 138.3 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
138.14 An action shall not be commenced under
section
138.3
(
a) in the case of
misrepresentation in a document, later than the earlier of
(i) 3 years after the date on which the document
containing the misrepresentation was first released, and
(ii) 6 months after the issuance of a news release
disclosing that leave has been granted to commence an action under
section
138.3 or under comparable legislation in another province or territory in
Canada with respect to the same misrepresentation;
(
b) in the case of a
misrepresentation in a public oral statement, later than the earlier of
(i) 3 years after the date on which the public
oral statement containing the misrepresentation was made, and
(ii) 6 months after the issuance of a news release
disclosing that leave has been granted to commence an action under
section
138.3 or under comparable legislation in another province or territory of
Canada with respect to the same misrepresentation; and
(
c) in the case of a
failure to make timely disclosure, later than the earlier of
(i) 3 years after the date on which the requisite
disclosure was required to be made, and
(ii) 6 months after the issuance of a news release
disclosing that leave has been granted to commence an action under
section
138.3 or under comparable legislation in another province or territory of Canada with
respect to the same failure to make timely disclosure.
PART XXII.2
INTERJURISDICTIONAL CO-OPERATION
Definitions
138.15
(1) In this Part
(a) " authority "
means a power, function or duty of the superintendent that is or is intended to
be performed by him or her under securities laws of the province;
(b) "extra-provincial authority" means a
power, function or duty of an extra-provincial securities commission that is or
is intended to be performed or exercised by that commission under the extra-provincial
securities laws under which that commission operates;
(c) "extra-provincial securities commission"
means a body empowered by the laws of another province or territory of Canada
to regulate trading in securities or exchange contracts or to administer or
enforce laws respecting trading in securities or exchange contracts; and
(d) "extra-provincial securities laws"
means the laws of another province or territory of Canada that, with respect to
that province or territory deals with the rules of securities markets and the
trading in securities and exchange contracts in that province or territory.
(2) A reference to an extra-provincial securities
commission includes, unless otherwise provided
(
a) its delegate; and
(
b) a person or company
who, with respect to the extra-provincial securities commission exercises a
power or performs a duty or function that is substantially similar to a power,
duty or function exercised or performed by the superintendent under this Act.
Delegation and
acceptance of authority
138.16
(1) The
superintendent may by order, for the purpose of this Part,
(
a) delegate an authority
of the province to an extra-provincial securities commission; and
(
b) accept a delegation
or other transfer of an extra-provincial authority from an extra-provincial
securities commission.
(2) The superintendent shall not delegate a power,
function or duty held by him or her that is or is intended to be performed or
exercised by him or her under
Part I,
Part IV or this Part
Sub-delegation
138.17
(1) Subject to a restriction or
condition imposed by an extra-provincial commission with respect to a
delegation of extra-provincial authority to the superintendent or a commission,
the superintendent may delegate that authority in the manner and to the extent
that the superintendent or the deputy superintendent may give an authorization
or otherwise delegate an authority of the province under securities law of the
province.
(2) Subject to a restriction or condition imposed
by the superintendent with respect to the delegation of authority to an
extra-provincial securities commission, nothing in this Part shall be construed
as prohibiting the extra-provincial securities commission from delegating that
authority in the manner and to the extent that the extra-provincial securities
commission may delegate under the laws under which it operates.
Adoption of
extra-provincial securities laws
138.18
(1) Subject to rules made under
section 144.1, the superintendent may make rules to adopt or incorporate by
reference one or more provision of an extra-provincial securities law of another
jurisdiction as a securities law of the province, to be applied to
(
a) a person or company
or a class of persons or companies whose primary jurisdiction is that
extra-provincial jurisdiction; or
(
b) trades or other
activities involving a person or company or a class of persons or companies
referred to in paragraph (a).
(2) If the superintendent adopts or incorporates
by reference an extra-provincial securities law under subsection (1), it may,
with the necessary changes, adopt or incorporate it by reference and may amend
that adoption or incorporation retroactively.
Exemptions
138.19 Subject to rules made under
section 144.1,
the superintendent may by order exempt a person, company, security, exchange
contract or trade or a class of persons companies, securities, exchange
contracts or trades from one or more requirements of the securities laws of the
province if the person, company, security, exchange contract or trade or a
class of persons companies, securities, exchange contracts or trades satisfies
the conditions set out in the order.
Exercise of discretion
138.20
(1) Where he or she is empowered to do
so and subject to rules made under
section 144.1, the superintendent may make a
decision regarding a person, company, trade, security or exchange contract
where he or she considers that an extra-provincial securities commission has
made a substantially similar decision regarding the person, company, trade,
security or exchange contract.
(2) Subject to rules made under
section 144.1 and
notwithstanding a provision of this Act the superintendent may make a decision
referred to in subsection (1) without giving the person affected by the
decision an opportunity to be heard.
(1) Paragraph 144.1(1 )(
h) of the Act is repealed and the following substituted:
(
h) providing for
(
i) exemptions from the
registration requirements of this Act or for the removal of exemptions from
those requirements, and
(ii) considering a person,
class of persons, company or class of companies to be registered under this
Act,
including the circumstances in which a person, class of persons, company or
class of companies is registered under the laws of another jurisdiction
respecting trading in securities or exchange contracts;
(h.1) respecting records to be maintained on
preliminary prospectuses;
(2) Subsection 144.1(1) of the Act is amended by
adding immediately after paragraph (
t) the following:
(t.1) the acceptance, amendment of an acceptance or
revocation of an acceptance by the superintendent of a delegation or other
authority from an extra-provincial securities commission;
(t.2) the adoption or incorporation by reference of
extra-provincial securities laws and the administration of those laws once
adopted or incorporated by reference and the administration of exemptions from
those securities laws;
(t.3) respecting the cancellation of security
purchases;
(t.4) designating a person or a class of persons as
insiders;
(t.5) designating a bank transaction for the purpose
of paragraph 2(1 )( tt );
(3) Paragraph 144.1(1 )( bb)
of the Act is repealed and the following substituted:
( bb ) regulating
take-over bids, take-overs and issuer bids including
(
i) prescribing
requirements for different classes of bids or take-overs,
(ii) prescribing
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) prescribing the disclosure, certification,
delivery or dissemination of any circular, notice, report or other document
required to be filed or delivered to a person or company,
(
v) prescribing
percentages and requirements respecting early warning, and
(vi) prescribing
exemptions from the requirements of
Part XIV or the rules;
(bb.1) prescribing circumstances in which a person or
company or a class of persons or companies 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 contracts;
(bb.2) governing the solicitation of proxies including
(
i) prescribing
requirements for the solicitation and voting of proxies;
(ii) prescribing requirements
relating to communication with registered and beneficial owners of securities
and relating to other persons or companies, including depositories and
registrants, that hold securities on behalf of beneficial owners;
(bb.3) respecting prohibited transactions of
investment funds and overseeing bodies;
(4) Paragraph 144.1(1 )( ee)
of the Act is amended by adding immediately after subparagraph (
x) the
following:
(x.1) requiring investment funds to establish and
maintain a body for the purposes described in
section 121.1, prescribing its
powers and duties and prescribing 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,
(5) Subsection 144.1(1) of the Act is amended by adding
immediately after paragraph (ee) the following:
(ee.1) governing disclosure obligations under this
Act and the rules made under
section 144.1 including
(
i) requiring
a person or company or class of persons or companies to comply with a
section
or Part of this Act or the rules, and
(ii) prescribing
disclosure requirements, including the form, content, preparation, review,
audit, approval, certification, filing, delivery and use of disclosure
documents;
(ee.2) governing insider trading, early warning and
self-dealing including
(
i) requiring
an issuer, class of issuer or other person or company to comply with any of the
requirements of
Part XV or the rules,
(ii) prescribing how a
security or class of security or a related financial instrument or class of
related financial instruments shall be reported in an insider report,
(iii) prescribing
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, and
(
v) prescribing
exemptions from the requirements of
Part XX or the rules;
(ee.3) respecting the types or classes of securities
a reporting issuer and the allowable percentage of outstanding securities of a
type or class;
(ee.4) respecting the records to be maintained on
preliminary prospectuses, receipts issued for the purpose of this Act and respecting
the form of certificates relating to a preliminary prospectus, amendments to
them and persons required to sign the certificates;
(ee.5) respecting lapse dates for prospectuses and
after lapse dates;
(ee.6) respecting amendments to preliminary
prospectuses and the filing of them;
(6) Subsection 144.1(1) of the Act is amended by
adding immediately after paragraph ( uu ) the
following:
(uu.1) respecting reports and disclosure required by
a reporting issuer;
(7) Subsection 144.1(1) of the Act is amended by
adding immediately after paragraph (xx) the following:
(xx.1) prescribing circumstances in which a person or
company that purchases a security under a distribution may cancel the purchase,
including
(
i) prescribing the
period in which a purchaser may cancel the purchase,
(ii) prescribing 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
prescribing the period in which the refund shall be paid, and
(iv) prescribing different
circumstances, periods, principles or persons or companies for different
classes of securities, issuers or purchasers;
(xx.2) designating a person or company or class or
classes of persons or companies as an accredited investor;
(8) Subsection 144.1(1) of the Act is amended by
adding immediately after paragraph (yy) the following:
(yy.1) exempting a class of persons, companies,
trades or securities from one or more of the provisions of securities laws of
the province;
(yy.2) prescribing circumstances and conditions for
the purpose of an exemption under paragraph (yy.1), including
(
i) conditions relating to the laws of another
jurisdiction of Canada or relating to an exemption from those laws granted by a
body empowered by the laws of that jurisdiction to regulate trading in
securities or exchange contracts or to administer or enforce laws respecting
trading in securities or exchange contracts in that jurisdiction, or
(ii) conditions that refer
to a person or company or to a class of persons or companies designated by the
superintendent;
(yy.3) defining a word or phrase for the purpose of
this Act;
(yy.4) prescribing transactions or classes of
transactions for the purpose of
section 138.2;
(yy.5) providing for the application of
Part XXII.1
to the acquisition of an issuer's security under a distribution that is exempt
from
section 54 and to the acquisition of an issuer's security in connection
with or under a take-over bid or issuer bid;
Commencement
27. This Act or one or more sections of this Act
shall come into force on a date or dates to be proclaimed by the
Lieutenant-Governor in Council.
Earl G. Tucker, Queen's Printer