(December 15 – 13:20 ET) – Amendments to securities legislation to enhance investor protection, streamline regulation and promote harmonization with other provinces and territories received Royal Assent last night. The amendments to the Securities Act, the Commodity Futures Act and the Toronto Stock Exchange Act were introduced by the Minister of Finance as part of the government’s fall 1999 Budget Bill.
“The amendments reflect the Government’s commitment to protecting investors and enhancing Ontario’s capital markets,” said Ontario Securities Commission Chairman David Brown.
The most significant changes to the Securities Act are amendments to:
1) Give the Commission the power to order a person or company to pay the costs of a hearing or investigation and to prohibit someone from acting as an officer or director of an issuer.
2) Require insider reports to be filed within 10 days of trades, not 10 days of month-end. This will ensure that the public has access to insider trading information on a more timely basis than is currently the case.
3) Give the Commission the ability to deem issuers to be reporting issuers eitherupon their own application or upon the application of the Director. This amendment provides a further means of protecting the investing public by enabling the Commission to order that in appropriate cases issuers with publicly traded securities are subject to the requirements of the Act.
4) Establish that the Freedom of Information and Protection of Privacy Act does not prevent the exchange of information with other regulators, stock exchanges, self-regulatory organizations and law enforcement agencies. In the context of today’s global capital markets, this provision enhances the ability of the Commission to duly administer Ontario securities law and regulate the capital markets in Ontario.
5) Extend the time periods required for take-over bids, permit bids to be commenced by advertisement and certain related matters. These amendments were recommended in the Report of the Committee of the Investment Dealers Association of Canada to review Take-Over Bid Time Limits (the “Zimmerman Committee Report”). Such amendments have already been made by a number of other Canadian jurisdictions, but their proclamation has been deferred pending legislative change in all jurisdictions, including Ontario.
6) Give investors who purchase securities under certain prospectus exemptions a statutory right of action against the issuer or selling shareholder if the disclosure document contains a misrepresentation. This right replaces the existing contractual right of action.
7) Remove the ability of issuers to become “reporting issuers” by filing a securities exchange take-over bid. Reliance in the past on the filing of a securities exchange take-over bid circular to attain a reporting issuer status has raised investor protection concerns. A take-over bid circular, unlike a prospectus, is not subject to a review process and does not require certification that it “constitutes full, true and plain disclosure of all material facts.”
8) Allow disclosure by an investigator of information obtained for the purpose of an investigation or hearing without the need to obtain additional Commission orders and subject to certain conditions.
Most of the amendments to the Commodity Futures Act seek to update that Act by incorporating the changes that have been made to the Securities Act since 1994, such as those relating to self-regulatory organizations, enforcement and rule-making.
The amendments to the Toronto Stock Exchange Act provide the framework for demutualization to allow continuance of the Toronto Stock Exchange under the Ontario Business Corporations Act.
-IE Staff