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Statutes of Newfoundland and Labrador 2008


CHAPTER 44

AN ACT TO AMEND THE SECURITIES ACT

(Assented to December 18, 2008)

Analysis


††††††† 1. S.2 Amdt.
Interpretation

††††††† 2. S.12 Amdt.
Investigation order

††††††† 3. S.23.1 Added
Member of stock exchanges, etc.

††††††† 4. S.26 R&S
Requirement to be registered

††††††† 5. Ss.26.1 & 26.2 Added
26.1 Responsible person
26.2 Duty of care

††††††† 6. S.27 R&S
Registration by
superintendent

††††††† 7. S.27.1 Added
Suspension or termination of registration

††††††† 8. S.28 Amdt.
Surrender of registration

††††††† 9. S.34 Amdt.
Notice of changes

††††† 10. S.37 Amdt.
Confirmation of trade

††††† 11.†† S.38 Amdt.
Order prohibiting calls to residences

††††† 12. Ss.40 to 42 Rep.
40.†† Where dealer is
††††††† principal
41.†† Disclosure of financial
††††††† interest of advisers and
††††††† dealers
42.†† Disclosure of
††††††† underwriting liability

††††† 13. S.42.1 Added
Disclosure by registered dealer

††††† 14.†† S.45 R&S
Registration not to be
advertised

††††† 15. S.51 Rep.
Submission of advertising

††††† 16. S.66 Amdt.
"Waiting period" defined

††††† 17. S.75 R&S
75.†† Exemption order
75.1 Considering issuer to
††††††† be reporting issuer
75.2 Considering a trade to
††††††† be a distribution

††††† 18. 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

††††† 21. S.117 Rep.
Standard of care for investment fund management

††††† 22. S.127 Amdt.
Cease tracking orders in the public interest

††††† 23. S.130 R&S
Civil liability -misrepresentation in prospectus

†††† 24.†† S.130.1 Added
Civil liability-misrepresentation in offering memorandum

††††† 25. 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

††††† 30. S.144.1 Amdt.
Superintendent may make rules

††††† 31. 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

††††† 12. (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).

 

††††††† 4. Section 26 of the Act is repealed and the following substituted:

Requirement to be registered

††††† 26. (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.

 

††††††† 6. Section 27 of the Act is repealed and the following substituted:

Registration by superintendent

††††† 27. (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 customerís 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 dealerís capital; and

†††††††††††† (c)the most recently prepared annual financial statement of the dealerís 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.

 

††††† 14. 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.

 

††††† 15. 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,".

 

††††† 17. Section 75 of the Act is repealed and the following substituted:

Exemption order

††††† 75. (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; or

†††††††††††† (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".

 

††††† 21. 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

†† 127. (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.

 

††††† 23. Section 130 of the Act is repealed and the following substituted:

Civil liability - misrepresentation in prospectus

†† 130. (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

†† 131. (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; or

†††††††††††† (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".

††††† 27. (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".

 

††††† 28. 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.

††††† 29. 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.

 

††††† 30. (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 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.