First Session, 46th

General Assembly

57 Elizabeth II,

BILL 49

AN ACT TO AMEND THE SECURITIES ACT

Received

and Read the First Time ...................................................................

Second

Reading ..............................................................................................

Committee ......................................................................................................

Third

Reading .................................................................................................

Royal

Assent ...................................................................................................

HONOURABLE KEVIN

O'BRIEN

Minister of

Government Services

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Securities Act in order to continue implementation

of the Passport System of Securities Regulation. The province committed to the

Passport System of Securities Regulation in 2004 and consequently amendments to

this Act were made in 2006.

This second phase of amendments would

harmonize the law for persons and companies trading in securities and harmonize

enforcement powers with passport jurisdictions.

Clause 1 of the Bill contains new

definitions and amendments to

definitions required in subsequent proposed

sections to facilitate harmonization.

Clause 2 of the Bill would amend

section 12 of the Act for the purposes of harmonization.

Clause 3 of the Bill would add

section 23.1 to the Act in order to clarify that persons and companies are

subject to rules of recognized self-regulatory organizations.

Clause 4 of the Bill would repeal and

substitute

section 26 of the Act to change how advisers are regulated in the

industry to facilitate harmonization.

Clause 5 would add sections 26.1 and

26.2 to the Act to prescribe a new duty of care consequent to harmonization

amendments.

Clause 6 of the Bill would repeal and

substitute

section 27 of the Act to ensure its consistency with other

harmonized provisions.

Clause 7 of the Bill would add

section 27.1 to the Act consequent to the harmonization process.

Clause 8 of the Bill would amend

section 28 of the Act consequent to the harmonization process.

Clauses 9 to 12 of the Bill contain

proposed changes to harmonize terms and reflect registration changes consequent

to harmonization.

Clause 13 of the Bill would add

section 42.1 to the Act containing a new disclosure requirement stemming from

proposed harmonization amendments.

Clause 14 of the Bill would correct a

grammatical error.

Clause 15 would repeal and substitute

section 51 of the Act and contains proposed changes consequent to the

harmonization process.

In clause 16 of the Bill,

section 66

of the Act would be amended to eliminate the time requirement contained in that

section for harmonization purposes.

Clause 17 of the Bill would

reorganize various sections of the Act relating to harmonization and to ensure

consistency.

Clause 18 of the Bill would repeal sections

84.1 and 84.2 consequent to changes in clause 17.

Clauses 19 and 20 of the Bill would

correct a grammatical error and change "commission" to

"superintendent" an amendment inadvertently omitted from changes to

the Act in 2006.

Clause 21 of the Bill would repeal

section 117 of the Act consequential to changes contained in clause 4.

Clause 22 of the Bill would amend

section 127 of the Act to harmonize the cease trading orders and orders which

may be made in the public interest.

Clause 23 of the Bill combines the

current

section 130 of the Act and new provisions required by harmonization.

Clause 24 of the Bill would add

section 130.1 to the Act to add new civil liabilities for misrepresentations in

offering memorandums.

Clause 25 of the Bill would amend

subsections 131(1) and (2) of the Act to be consistent with changes proposed to

section 130.1. Amendments proposed to subsections 131(5) to

(9) are required to correct grammatical errors in the references to a "person

or company".

The proposed amendment contained in

clause 26 of the Bill would correct a grammatical error.

Amendments proposed in clauses 27 and

28 of the Bill would delete the reference to "exchange contracts",

which was inadvertently added to the Act in 2006.

Clause 29 of the Bill would repeal

and substitute

section 138.20 of the Act to clarify that the superintendent may

rely on substantially similar decisions of extra-provincial securities

commissions, as is consistent with passport system harmonization.

Clause 30 of the Bill would amend the

rule-making provision of the Act consequent to changes proposed in this Bill,

and would correct a number of reference errors.

Clause 31 of the Bill is a

commencement clause. The provisions of the Bill identified to come into force

by proclamation will come into force in a synchronized manner with other

passport jurisdictions.

A BILL

AN ACT TO AMEND THE SECURITIES ACT

Analysis

S.2 Amdt.

Interpretation

S.12 Amdt.

Investigation order

S.23.1 Added

Member of stock exchanges, etc.

S.26 R&S

Requirement to be registered

Ss.26.1 & 26.2 Added

26.1 Responsible person

26.2 Duty of care

S.27 R&S

Registration by superintendent

S.27.1 Added

Suspension or termination of registration

S.28 Amdt.

Surrender of registration

S.34 Amdt.

Notice of changes

S.37 Amdt.

Confirmation of trade

11. S.38 Amdt.

Order prohibiting calls to residences

Ss.40 to 42 Rep.

40. Where dealer is

principal

41. Disclosure of financial

interest of advisers and

dealers

42. Disclosure of

underwriting liability

S.42.1 Added

Disclosure by registered dealer

14. S.45 R&S

Registration not to be advertised

S.51 Rep.

Submission of advertising

S.66 Amdt.

"Waiting period" defined

S.75 R&S

75. Exemption order

75.1 Considering issuer to

be reporting issuer

75.2 Considering a trade to

be a distribution

Ss.84.1 and 84.2 Rep.

84.1 Considering issuer to

be a reporting issuer

84.2 Considering a trade to

be a distribution

19. S.87 Amdt.

Information circular

20. S.93 Amdt.

Applications to superintendent

S.117 Rep.

Standard of care for investment

fund management

S.127 Amdt.

Cease tracking orders in the public interest

S.130 R&S

Civil liability -misrepresentation in prospectus

24. S.130.1

Added

Civil liability-misrepresentation in offering memorandum

S.131 Amdt.

Civil liability -misrepresentation in circular

26. S.136 Amdt.

Rescission of contract

27. 138.15 Amdt.

Definitions

28. S.138.19 R&S

Exemptions

29. S.138.20 R&S

Exercise of discretion- interjurisdictional reliance

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. (1) Subsection 2(1) of the Securities Act is amended

(

a) by repealing paragraph (

a) and substituting the

following:

(a) "adviser" means a person or company

engaging in or holding himself, herself or the company out as engaging in the

business of advising in securities;

(a.1) "advising in securities " includes

giving, offering or agreeing to give advice to another person or company about

investing in or buying or selling securities;

(

b) in subparagraph (h.1)(i), by adding

immediately after the word "person" the third time it occurs, the

words "or company";

(

c) by repealing paragraph (

i) and substituting

the following:

(i) "dealer" means a person or company

engaging in or holding himself, herself or the company out as engaging in the

business of dealing in securities;

(i.1) "dealing in securities " includes

(

i) trading a security as principal or agent,

(ii) acquiring a security as principal or agent or

an act, advertisement, solicitation, conduct or negotiation directly or

indirectly in furtherance of that activity, and

(iii) acting as an underwriter;

(

d) by adding immediately after paragraph (

s) the

following:

(s.1) "investor relations activities"

means any activity or oral or written communication by or on behalf of an

issuer or security holder of the issuer that promotes or reasonably could be

expected to promote the purchase or sale of securities of the issuer, but does

not include

(

i) the dissemination of information provided, or

records prepared, in the ordinary course of the business of the issuer to

promote the sale of products or services of the issuer or to raise public

awareness of the issuer that cannot reasonably be considered to promote the purchase

or sale of securities of the issuer,

(ii) activities or communications necessary to

comply with the requirements of the securities law of the province or the

by-laws or other regulatory instruments or practices or policies of a stock exchange

or self-regulatory organization or quotation and trade reporting system,

(iii) communications by a publisher of, or writer

for a newspaper, news magazine or business or financial publication that is of

general and regulator paid circulation, distributed only to subscribers to it

for value or to purchasers of it, if

(

A) the communication is only through the newspaper,

magazine or publication, and

(

B) the publisher or writer receives no commission

or other consideration other than for acting in the capacity of publisher or

writer, or

(iv) activities or communications that the

superintendent may prescribe for the purpose of this definition;

(

e) by adding immediately after paragraph (t.1)

the following:

(t.2) "investment fund manager" means a

person or company who has the power to direct and exercises the responsibility

of directing the affairs of an investment fund;

(

f) by repealing subparagraph (oo)(iii) and

substituting the following:

(iii) 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, or

(

g) by repealing paragraph (pp); and

(

h) by repealing paragraph (pp.1) and substituting

the following:

(pp.1) "securities law of the province"

means this Act, the regulations and rules made under

section 144.1, any

extra-provincial securities laws adopted or incorporated by reference under

section 138.18, and, with respect to a person or company, a decision of the

superintendent to which that person or company is subject;

(2) Section 2 of the Act is amended by adding

immediately after subsection (7) the following:

(7.1) If an issuer becomes an insider of a reporting

issuer, every director or officer of the issuer is considered to have been an

insider of the reporting issuer for the previous 6 months or for that shorter

period during which the director or officer was a director or officer of the issuer.

(7.2) If a reporting issuer becomes an insider of

any other reporting issuer, every director or officer of the second‑mentioned

reporting issuer is considered to have been an insider of the first‑mentioned

reporting issuer for the previous 6 months or for that shorter period during

which the director or officer was a director or officer of the second‑mentioned

reporting issuer.

2. Subsection 12(1) of the Act is repealed and the

following substituted:

Investigation

order

(1) The

superintendent may, by order, appoint a person to make any investigation that

the superintendent considers necessary

(

a) for the administration of the securities law

of the province;

(

b) to assist in the administration of the

securities laws of another jurisdiction;

(

c) with respect to matters relating to trading in

securities in the province; or

(

d) with respect to matters in the province relating

to trading in securities in another jurisdiction.

3. The Act is amended by adding immediately after

the heading "PART VIII SELF-REGULATION" the following:

Member of stock exchanges,

etc.

23.1 A

reference in this Part

(

a) to a member of a stock exchange includes

(

i) any holder of a security in an organization

that carries on business as a stock exchange, and

(ii) any person or company that agrees to comply

with the by-laws, rules, regulations, policies, procedures,

interpretations and

practices of the stock exchange and is granted trading access on or through the

facilities of the stock exchange;

(

b) to a member of a self-regulatory organization

includes any person or company carrying on business as an investment dealer

that agrees to be regulated by that self-regulatory organization;

(

c) to a representative of a member of a stock exchange

includes

(

i) any person or company approved by the stock exchange

as a partner, officer, director, trader or assistant trader of the member, and

(ii) any employee of a member not otherwise

referred to in subparagraph (i); and

(

d) to a representative of a member of a

self-regulatory organization includes

(

i) any person or company approved by the

self-regulatory organization as a partner, officer, director, branch manager,

assistant branch manager or co-branch manager of the member, and

(ii) any employee of the member not otherwise

referred to in subparagraph (i).

Section 26 of the Act is repealed and the

following substituted:

Requirement to be

registered

(1) A

person or company shall not act as

(

a) a dealer;

(

b) an adviser; or

(

c) an investment fund manager

unless that person or company is

registered in accordance with the securities law of the province.

(2) An individual shall not, directly or

indirectly

(

a) deal in securities on behalf of a person or

company required to be registered under subsection (1);

(

b) advise in securities on behalf of a person or

company required to be registered under subsection (1); or

(

c) perform a prescribed function or duty for a

person or company required to be registered under subsection

(1) unless that person or company is

registered in accordance with the securities law of the province.

(3) A registrant shall comply with any terms,

conditions, restrictions or requirements imposed on the registrant's

registration.

5. The Act is amended by adding immediately after

section 26 the following:

Responsible

person

26.1 A

person or company required to be registered under subsection 26(1) shall

appoint an individual to perform on his, her or its behalf a prescribed

function or duty.

Duty of care

26.2

(1) A

registrant shall deal fairly, honestly and in good faith with his, her or the

company's clients.

(2) A registrant who manages the investment of a

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 interest.

(3) An investment fund manager shall

(

a) exercise the powers and discharge the duties

of his, her or 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 or company would exercise in the

circumstances.

Section 27 of the Act is repealed and the

following substituted:

Registration by superintendent

(1) Unless

it appears to the superintendent that

(

a) an applicant is not suitable for registration,

reinstatement of registration or amendment of registration; or

(

b) the proposed registration, reinstatement of

registration or amendment of registration is objectionable;

the superintendent shall grant the

registration, reinstatement of registration or the amendment of registration

for which the applicant has applied.

(2) Notwithstanding subsection (1), the

superintendent may, at any time, impose terms, conditions, restrictions or

requirements on a registration.

(3) Notwithstanding subsections (1) and (2), the superintendent

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.

7. The Act is amended by adding immediately after

section 27 the following:

Suspension or

termination of registration

27.1

(1) The

superintendent may suspend or terminate a registration if he or she considers

that it is in the public interest to do so.

(2) Notwithstanding subsection (1), the superintendent

shall not suspend or terminate a registration under subsection (1) without

giving the registrant an opportunity to be heard.

8. Subsection 28(2) of the Act is repealed and the

following substituted:

(2) On receiving an application under subsection

(1), the superintendent may, without providing an opportunity to be heard,

suspend the registration or impose terms, conditions, restrictions or requirements

on the registration.

9. (1) Paragraph 34(1)(

d) of the Act is

amended by deleting the word "salesperson" and substituting the word

"individual".

(2) Section 34 of the Act is amended by adding

immediately after subsection (2) the following:

(2.1) Subject to the regulations, a registered

advisor shall, within 5 business days of the event, notify the superintendent

in the form required for the purpose of the commencement and termination of employment

of a registered individual, and in the case of termination of employment, the

reason for termination.

(3) Subsection 34(3) of the Act is amended by

deleting the word "salesperson" and substituting the word

"individual".

10. (1) Paragraph 37(1)(

g) of the Act is

amended by deleting the word "salesperson" and substituting the words

"registered individual".

(2) Subsection 37(4) of the Act is amended by

deleting the word "salesperson" wherever it occurs and substituting

the words "registered individual".

11. Subsection 38(4) of the Act is repealed and the

following substituted:

(4) For the purpose of this section, a person or

company shall be considered conclusively to have called or telephoned where an

officer or director of the person or company or a registered individual representing

the person or company calls or telephones on his, her or the company's behalf.

12. Sections 40 to 42 of the Act are repealed.

13. The Act is amended by adding immediately after

section 42 the following:

Disclosure by

registered dealer

42.1

(1) A

registered dealer shall, within 30 days of receiving a customer's request,

provide

(

a) the names of officers, directors or the

partners of the dealer as of the date of the request or any other date specified

in the request;

(

b) the names of any person or company who or

which has a direct or indirect interest of not less than 5% of the registered

dealer's capital; and

(

c) the most recently prepared annual financial

statement of the dealer's financial position as filed

(

i) with the self-regulatory organization of which

the dealer is a member, or

(ii) with the superintendent.

(2) A registered dealer shall inform its customers

on every statement of account or in another manner as the superintendent may

approve that the information referred to in subsection (1) is available.

(3) Where the superintendent determines that a

registered dealer or class of registered dealers is

(

a) under the conditions of registration, or

(

b) in regulations imposed by a recognized self-regulating

organization under

section 25,

required to provide to customers

information similar to the information required under subsections (1) and (2),

the superintendent may by order exempt the registered dealer or class of

registered dealers from the requirements of this section.

Section 45 of the Act is repealed and the

following substituted:

Registration not

to be advertised

45. A

person or company shall not hold himself, herself or the company out as being

registered by having printed in a circular, pamphlet, advertisement, letter,

telegram or other stationary that the person or company is registered.

Section 51 of the Act is repealed.

16. Subsection 66(1) of the Act is amended by

deleting the comma immediately after the word "interval" and by

deleting the words and comma "which shall be at least 10 days,".

Section 75 of the Act is repealed and the

following substituted:

Exemption order

(1) The superintendent may, upon the application of an interested person or company

or upon the superintendent's own motion, order that a trade, intended trade,

security, person or company is not subject to

section 26 or 54 where he or she

is satisfied that to do so would not be prejudicial to the public interest.

(2) Where doubt exists whether a distribution of a

security has been concluded or is currently in progress, the superintendent may

determine the question and make an order accordingly.

(3) A decision of the superintendent under this

section is final and there is no appeal from the decision.

(4) An order made under subsection (1) may, at the

discretion of the superintendent, come into force on a date prior to the date

on which the order is made.

Considering

issuer to be a reporting issuer

75.1

(1) The superintendent may,

(

a) upon the application of an issuer, where the

superintendent considers that it would not be prejudicial to the public interest;

(

b) on his or her own motion, where he or she is

of the opinion that it would be in the public interest

make an order that the issuer be

considered a reporting issuer for the purposes of the securities law of the

province.

(2) The superintendent shall not make an order

under paragraph (1)(

b) without giving the issuer an opportunity to be heard.

Considering a

trade to be a distribution

75.2

(1) The superintendent may order that a trade or intended trade or class of trades or

intended trades be considered a distribution, where the superintendent is of

the opinion that the order would be in the public interest.

(2) An order made under this

section may be made

by the superintendent on his or her own motion or on an application of a person

or company directly affected by the trade in respect of which the application

is being made.

(3) An order made under subsection (1) may, at the

discretion of the superintendent, come into force on a date prior to the date

on which the order is made.

(4) A decision of the superintendent under this

section is final and there is no appeal from the decision.

18. Sections 84.1 and 84.2 of the Act are repealed.

19. Paragraph 87(2)(

c) of the Act is amended by

deleting the phrase "he or she" and substituting the phrase "he,

she or the company".

20. Subsection 93(2) of the Act is amended by

deleting the word "commission" and substituting the word

"superintendent".

Section 117 of the Act is repealed.

22. Subsection 127(1) of the Act is repealed and

the following substituted:

Cease trading

orders and orders in the public interest

(1) The

superintendent may, where in his or her opinion it is in the public interest to

do so, order

(

a) that trading in or purchasing cease in respect

of any security as specified in the order;

(

b) that a person or company cease trading in or

purchasing securities, specified securities or a class of securities as specified

in the order;

(

c) that exemptions contained in the securities

law of the province do not apply to a person or company permanently or for the

period specified in the order;

(

d) that a market participant submit to a review

of his, her or its practices and procedures and institute changes ordered by

the superintendent;

(

e) where the superintendent is satisfied that the

securities law of the province has not been complied with, that a release,

report, preliminary prospectus, prospectus, return, financial statement, information

circular, take-over bid circular, issuer bid circular, offering memorandum,

proxy solicitation or another document described in the order,

(

i) be provided by a market participant to a

person or company,

(ii) not be provided by a market participant to a

person or company, or

(iii) be amended by a market participant to the

extent that amendment is practicable;

(

f) that a person or company be reprimanded;

(

g) 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 or as both a director and officer of the issuer, registrant or

investment fund manager;

(

h) that a person is prohibited from becoming or

acting as a director or officer of an issuer, registrant or investment fund

manager or as both a director and officer of the issuer, registrant or

investment fund manager;

(

i) that a person or company is prohibited from

becoming or acting as a registrant, investment fund manager, or promoter;

(

j) that a person or company is prohibited from

acting in a management or consultative capacity in connection with activities

in the securities market;

(

k) that a person or company is prohibited from

engaging in investor relations activities;

(

l) that a person or company 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;

(

m) that a person or company 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 the registrant or

issuer that the superintendent considers must be disseminated;

(

n) that a person or company amend, in the manner specified

in the order, any information or record of any kind disseminated to the public

as described in the order;

(

o) if a person or company has not complied with

provincial securities law, that the person or company pay to the Consolidated

Revenue Fund any amounts obtained or payments or losses avoided as a result of

the non‑compliance; or

(

p) that a person or company comply with or cease

contravening and that the directors and officers of the person or company cause

the person or company to cease contravening or to comply with the securities

law of the province.

(2) Section 127 of the Act is amended by adding

immediately after subsection (1) the following:

(1.1) The superintendent may make an order under subsection (1) with respect to a person or company

if the person or company

(

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

(ii) under laws respecting trading in securities;

(

b) has been found by a court in Canada or

elsewhere to have contravened laws respecting trading in securities;

(

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 company; or

(

d) has agreed with a securities regulatory

authority in Canada or elsewhere to be subject to sanctions, conditions, restrictions

or requirements.

(1.2) The superintendent may make an order under

subsection (1) against a director or officer of a company or of a person other

than an individual who authorizes, permits or acquiesces in the contravention

of provincial securities laws or conduct contrary to the public interest.

Section 130 of the Act is repealed and the

following substituted:

Civil liability -

misrepresentation in prospectus

(1) Where

a prospectus or a prospectus together with an amendment to it contains a

misrepresentation, a purchaser who purchases a security offered by it during

the period of distribution or distribution to the public whether or not the

purchaser relied on the misrepresentation has a right of action for damages

against

(

a) the issuer or a selling security holder on

whose behalf the distribution is made;

(

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;

(

c) a director of the issuer at the time the

prospectus or the amendment to the prospectus was filed;

(

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

(

e) a person or company who signed the prospectus

or the amendment to the prospectus other than the persons or companies included

in paragraphs (

a) to (d),

or, where the purchaser purchased the

security from a person or company referred to in paragraph (

a) or (

b) or from another

underwriter of the securities, the purchaser may elect to exercise a right of

rescission against the person, company or underwriter, in which case the purchaser

shall have no right of action for damages against the person, company or

underwriter.

(2) A person or company is not liable under

subsection (1) where the person or company proves that the purchaser purchased

the securities with knowledge of the misrepresentation.

(3) A person or company, other than the issuer or

selling security holder, is not liable under subsection (1) where the person or

company proves

(

a) that the prospectus or the amendment to the

prospectus was filed without his, her or its knowledge or consent, and that, on

becoming aware of its filing, the person or company immediately gave reasonable

general notice that it was so filed;

(

b) that, after the issue of a receipt for the

prospectus and before the purchase of the securities by the purchaser, on

becoming aware of a misrepresentation in the prospectus or an amendment to the

prospectus, the person or company withdrew consent and gave reasonable general

notice of the withdrawal and the reason for it;

(

c) that, with respect to a part of the prospectus

or the amendment to 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 or company had no reasonable grounds to

believe and did not believe that there had been a misrepresentation or that

part of the prospectus or the amendment to the prospectus did not fairly

represent the report, opinion or statement of the expert or was not a fair copy

of or extract from the report, opinion or statement of the expert;

(

d) that, with respect to a part of the prospectus

or the amendment to the prospectus purporting to be made on the person's or company's

authority as an expert or purporting to be a copy of or an extract from his,

her or its report, opinion or statement as an expert but that contains a

misrepresentation attributable to failure to represent fairly the person's or

company's report, opinion or statement as an expert,

(

i) the person or company had, after reasonable

investigation, reasonable grounds to believe and did believe that the part of

the prospectus or the amendment to the prospectus fairly represented the

person's or company's report, opinion or statement, or

(ii) on becoming aware that that part of the

prospectus or the amendment to the prospectus did not fairly represent his, her

or its report, opinion or statement as an expert, the person or company

immediately advised the superintendent and gave reasonable general notice that

that use had been made and that the person or company would not be responsible

for that part of the prospectus or the amendment to 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 or company had reasonable grounds to believe and did believe

that the statement was true.

(4) A person or company, other than the issuer or

selling security holder, is not liable under subsection (1) with respect to a

part of the prospectus or the amendment to the prospectus purporting to be made

on that person's or company's authority as an expert or purporting to be a copy

of or an extract from the person's or company's report, opinion or statement as

an expert unless the person or company

(

a) failed to conduct a reasonable investigation

in order to provide reasonable grounds for a belief that there had been no

misrepresentation; or

(

b) believed there had been a misrepresentation.

(5) A person or company, other than the issuer or

selling security holder, is not liable under subsection (1) with respect to a

part of the prospectus or the amendment to 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 or

company

(

a) failed to conduct the reasonable investigation

necessary to provide reasonable grounds for a belief that there had been no

misrepresentation; or

(

b) believed there had been a misrepresentation.

(6) An underwriter is not liable for more than the

total public offering price represented by the portion of the distribution

underwritten by him, her or the company.

(7) In an action for damages under subsection (1),

the defendant is not liable for all or a portion of the damages that the person

or company proves do not represent the depreciation in value of the security as

a result of the misrepresentation relied upon.

(8) All or one or more of the persons or companies

specified in subsection (1) are jointly and individually liable, and every

person or company who becomes liable to make a payment under this

section may

recover a contribution from a person or company who, if sued separately, would

have been liable to make the same payment provided that the court may deny the

right to recover the contribution where, in all the circumstances of the case,

it is satisfied that to permit recovery of the contribution would not be just

and equitable.

(9) In no case shall the amount recoverable under

this

section exceed the price at which the securities were offered to the

public.

(10) The right of action for rescission or damages

conferred by this

section is in addition to and without derogation from another

right the purchaser may have at law.

(11) If a misrepresentation is contained in a

record incorporated by reference in, or considered to be incorporated into a

prospectus or an amendment to a prospectus, the misrepresentation is considered

to be contained in the prospectus or amendment to the prospectus.

24. The Act is amended by adding immediately after

section 130 the following:

Civil liability misrepresentation

in offering memorandum

130.1

(1) Where

an offering memorandum contains a misrepresentation when a person or company

purchases a security offered by the offering memorandum, the purchaser has,

without regard to whether the purchaser relied on the misrepresentation, a

right of action

(

a) for damages against

(

i) the issuer,

(ii) every director of the issuer at the date of

the offering memorandum, and

(iii) every person or company who signed the

offering memorandum; and

(

b) for rescission against the issuer.

(2) Notwithstanding paragraph (1)(b), where the

purchaser elects to exercise a right of rescission against the issuer, the

purchaser has no right of action for damages against a person or company

referred to in paragraph (1)(a).

(3) Where a misrepresentation is contained in an

offering memorandum, a person or company shall not be liable under subsection

(1) (

a) where the person or company proves that the

purchaser had knowledge of the misrepresentation;

(

b) where the person or company proves that the

offering memorandum was sent to the purchaser without the person's or company's

knowledge or consent and that, on becoming aware of its being sent, the person

or company promptly gave reasonable notice to the issuer that it was sent

without the knowledge and consent of the person or company;

(

c) if the person or company proves that the

person or company, on becoming aware of the misrepresentation in the offering

memorandum, withdrew the person's or company's consent to the offering

memorandum and gave reasonable notice to the issuer of the withdrawal and the

reason for it;

(

d) 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 or company proves that the person or company did not have any

reasonable grounds to believe and did not believe that

(

i) there had been a misrepresentation, or

(ii) the relevant part of the offering memorandum

(

A) did not fairly represent the report, opinion

or statement of the expert, or

(

B) was not a fair copy of, or an extract from,

the report, opinion or statement of the expert; and

(

e) 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 or company

(

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.

(4) The amount recoverable under this

section shall

not exceed the price at which the securities were offered under the offering

memorandum.

(5) Paragraphs (3)(

b) to (

e) do not apply to the

issuer.

(6) In an action for damages under subsection (1),

the defendant is not liable for all or any part of the damages that the

defendant proves do not represent the depreciation in value of the security as

a result of the misrepresentation.

(7) All or any one or more of the persons or

companies specified in subsection (1) found to be liable or accepting liability

under this

section are jointly and individually liable.

(8) A person or company who is found liable to pay

a sum in damages may recover a contribution, in whole or in part, from a person

or company who is jointly and individually liable under this

section who, if

sued separately, would have been liable to make the same payment, provided that

the court may deny the right to recover the contribution where, in all

circumstances of the case, the court is satisfied that to permit recovery of

the contribution would not be just and equitable.

(9) The right of action for rescission or damages

conferred by this

section is in addition to and does not derogate from any

other right that the purchaser may have at law.

(10) Where a misrepresentation is contained in a

record incorporated by reference in, or considered to be incorporated into, an

offering memorandum, the misrepresentation is considered to be contained in the

offering memorandum.

25. (1) Subsections 131(1) and (2) of the Act are

repealed and the following substituted:

Civil liability -misrepresentation

in circular

(1) Where

a take-over bid circular or notice of change or variation that 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 rules 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;

(

b) for damages against

(

i) a person who, at the time the circular or

notice was signed, was a director of the offeror,

(ii) a person or company whose consent has been

filed under a requirement of the rules, but only with respect to reports,

opinions or statements that have been made by them, and

(iii) a person, other than those persons referred to

in subparagraphs (

i) who signed a certificate in the circular or notice.

(2) Where a directors' circular or an individual

director's or officer's circular is delivered to the security holders of an offeree

issuer as required under the rules and that document or a notice of change or

variation in respect of it contains a misrepresentation, a security holder is

considered to have relied on the misrepresentation and has a right of action

for damages against

(

a) a director or officer who signed the

circular or notice that contained the misrepresentation; or

(

b) a person or company whose consent has been

filed under a requirement of the rules, but only with respect to reports,

opinions or statements that have been made by them.

(2) Subsections 131(5) to (9) are repealed and the

following substituted:

(5) A person or company, other than the offeror,

is not liable under subsection (1), (2) or (3) where the person or company proves

(

a) that the take-over bid circular, issuer bid

circular, directors' circular or individual director's or officer's circular

was sent without his, her or its knowledge or consent and that, on becoming

aware of it, the person or company immediately gave reasonable general notice

that it was so sent;

(

b) that, after the sending of the take-over bid

circular, issuer bid circular, directors' circular or individual director's or

officer's circular on becoming aware of a misrepresentation in the take-over

bid circular, issuer bid circular, directors' circular or individual director's

or officer's circular, the person or company withdrew consent to it and gave

reasonable general notice of the withdrawal and the reason for it;

(

c) that, with respect to a part of the circular

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

or company had no reasonable grounds to believe and did not believe that there

had been a misrepresentation or that a part of the circular did not fairly

represent the report, opinion or statement of the expert or was not a fair copy

of or extract from the report, opinion or statement of the expert;

(

d) that, with respect to a part of the circular

purporting to be made on the person's or company's own authority as an expert

or purporting to be a copy of or an extract from his, her or its own report,

opinion or statement as an expert, but that contains a misrepresentation

attributable to failure to represent fairly the person's or company's report,

opinion or statement as an expert

(

i) the person or company had, after reasonable

investigation, reasonable grounds to believe and did believe that the part of

the circular fairly represented the person's or company's report, opinion or

statement as an expert, or

(ii) on becoming aware that that part of the

circular did not fairly represent his, her or its report, opinion or statement

as an expert, the person or company immediately advised the superintendent and

gave reasonable general notice that that use had been made and that the person

or company would not be responsible for that part of the circular; 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 or company had reasonable grounds to believe and did believe

that the statement was true.

(6) A person or company, other than the offeror,

is not liable under subsection (1), (2) or (3) with respect to a part of the

circular purporting to be made on his, her or its own authority as an expert or

purporting to be a copy of or an extract from the person's or company's own

report, opinion or statement as an expert unless the person or company

(

a) failed to conduct the reasonable investigation

necessary to provide reasonable grounds for a belief that there had been no

misrepresentation; or

(

b) believed there had been a misrepresentation.

(7) A person or company, other than the offeror,

is not liable under subsection (1), (2) or (3) with respect to a part of the

circular 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 or company

(

a) failed to conduct the reasonable investigation

necessary to provide reasonable grounds for a belief that there had been no

misrepresentation; or

(

b) believed there had been a misrepresentation.

(8) All or one or more of the persons or companies

specified in subsection (1), (2) or (3) are jointly and individually liable,

and a person or company who becomes liable to make a payment under this

section

may recover a contribution from a person or company who, if sued separately,

would have been liable to make the same payment provided that the court may

deny the right to recover the contribution where, in all the circumstances of

the case, it is satisfied that to permit recovery of the contribution would not

be just and equitable.

(9) In an action for damages under subsection (1),

(2) or (3) based on a misrepresentation affecting a security offered by the

offeror company in exchange for securities of the offeree company, the defendant

is not liable for that portion of the damages that the person or company proves

do not represent the depreciation in value of the security as a result of the

misrepresentation.

26. Subsection 136(1) of the Act is amended by

deleting the phrase "he or she" and substituting the phrase "he,

she or the company".

(1) Paragraph 138.15(1)(

c) of the Act is

amended by deleting the phrase "or exchange contracts" wherever it occurs.

(2) Paragraph 138.15(1)(

d) of the Act is amended

by deleting the phrase "and exchange contracts".

Section 138.19 of the Act is repealed and the

following substituted:

Exemptions

138.19 Subject

to the rules, the superintendent may by order exempt a person, company,

security, or trade or a class of persons, companies, securities, or trades from

one or more requirements of the securities laws of the province if the person,

company, security, or trade or a class of persons, companies, securities, or

trades satisfies the conditions set out in the order.

Section 138.20 of the Act is repealed and the

following substituted:

Exercise of discretion-

inter-jurisdictional reliance

138.20

(1) Where

he or she is empowered to do so, and subject to the rules, the superintendent

may make a decision regarding a person, company, trade or security and rely on

a decision of an extra-provincial securities commission where the

superintendent considers that the extra-provincial securities commission has

made a substantially similar decision regarding the person, company, trade or security.

(2) Subject to the rules, 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)(

c) of the Act is repealed

and the following substituted:

(

c) extending requirements prescribed under

paragraph (

b) to unregistered directors, officers, partners or employees of registrants;

(2) Section 144.1(1) of the Act is amended by

adding immediately after paragraph (

g) the following:

(g.1) prescribing functions or duties for the

purpose of paragraph 26(2)(

c) and

section 26.1;

(3) Paragraph 144.1(1)(

h) of the Act is amended by

deleting the phrase "or exchange contracts".

(4) Subparagraph 144.1(1)(bb)(vi) of the Act is

amended by deleting the reference "Part XIV" and substituting the

reference "Part XIX".

(5) Paragraph 144.1(1)(bb.1) of the Act is

repealed and the following substituted:

(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 a particular security, including the circumstances in

which a body empowered by the laws of another jurisdiction to regulate trading

in securities or to administer or enforce securities laws in that jurisdiction,

has ordered that

(

i) a person is prohibited from trading or

purchasing securities, or a particular security, or

(ii) trades or purchases of a particular security

cease;

(6) Clause 144.1(1)(ee)(x.1)(

D) of the Act is

amended by deleting the word "commission" and substituting the word

"superintendent".

(7) Subparagraph 144.1(1)(ee.1) of the Act is

amended by deleting the phrase " made under

section 144.1".

(8) Subparagraph 144.1(1) (ee.2)(

i) of the Act is

amended by deleting the reference "Part XV" and substituting the

reference "Part XX".

(9) Subparagraph 144.1(1) (yy.2)(

i) of the Act is

amended by deleting the phrase "or exchange contracts" wherever it occurs.

Commencement

31. Paragraphs 1(1)(a), (c), (

e) and (g), and sections

4, 5, 6, 7 to 12, 15, 21 and subsections 30(1) and (2) of this Act shall come

into force on a day or days to be proclaimed by the Lieutenant-Governor in Council.

Earl G. Tucker, Queen's Printer