Investors increasingly buy shares in companies that trade on the exchanges of multiple countries. Capital markets are global — Canadians wish to invest in foreign companies and foreign companies wish to raise capital from Canadians.
When disclosure is incomplete or misleading, the legal response in Canada — unlike the U.S. — can be global too. A shareholder who bought on a U.S. exchange can still sue in a Canadian class action, and an asset manager may need to evaluate recovery options in more than one jurisdiction.
Shareholder rights in the U.S. are more geographically constrained. Specifically, investors can only seek recovery in U.S. federal court for losses related to shares purchased on a U.S. exchange.
In Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), the U.S. Supreme Court adopted a bright-line, transaction-based limit on the reach of U.S. federal securities law, limiting its reach to, “the use of a manipulative or deceptive device or contrivance only in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States.”
The practical effect is that U.S. cases are tethered to U.S.-exchange purchases and domestic transactions.
That rule narrows who gets access to U.S. courts, even when the alleged misstatements are the same, the disclosure was global and the harm was widespread. It also means that many investors holding cross-listed stocks — who purchased shares on both U.S. and non-U.S. exchanges — are unable to seek full recovery in U.S. courts alone.
The Canadian approach
Ontario, where most Canadian securities class actions are filed, has specifically rejected the U.S. exchange-based rule for jurisdiction in securities class actions.
Instead, Ontario courts focus on whether there is a “real and substantial connection” to the province. That could include being listed on a Canadian exchange, having significant operations in Canada, etc.
Applying this flexible standard, Ontario courts have certified classes that reach far beyond Canadian borders.
If a real and substantial connection exists, the court may certify a class that reaches beyond Canadian residents and beyond Canadian exchanges. The practical result for investors who have purchased shares on both a Canadian exchange and a foreign exchange — U.S. or otherwise — is that they can seek full recovery in a single proceeding in Canada.
Ontario’s long-arm jurisdiction
In Longair v. Akumin Inc., 2024 ONSC 3675, the court dismissed outright arguments that a proposed class action should be limited to shares purchased on a Canadian exchange, or that respect for foreign courts requires Ontario to step back in favour of a “place of trading” norm.
The relevant shares were traded on the Toronto Stock Exchange and NASDAQ. The core points include:
- Ontario securities law does not contain a “place of trading” limitation.
- Ontario courts can exercise “long-arm” jurisdiction where the defendant has a real and substantial connection to Ontario.
- There is no norm requiring these claims to be heard only where the securities traded.
Akumin Inc. is part of a broader trend — Ontario courts are prepared to certify classes that include foreign-exchange purchasers when Ontario has a close connection to the issuer and the dispute. The courts manage overlap issues through case management rather than by adopting the bright-line exchange-based approach relied on by the U.S. Supreme Court in National Australia Bank.
Claims listed exclusively on foreign exchanges
Akumin Inc. confirmed that with a cross-listed issuer, foreign claimants could bring their claims related to shares purchased on a non-Canadian exchange in an Ontario court. However, this is not the limit of the kinds of claims Ontario courts will hear.
A company listed exclusively on a foreign exchange may be sued for alleged misrepresentations in its disclosure in an Ontario securities class action even if it is not listed on any Canadian exchange.
Abdula v. Canadian Solar, 2015 ONSC 53 confirmed that an issuer listed on a foreign exchange can still face an Ontario securities class action if it has a sufficiently close connection to Ontario. Canadian Solar, incorporated under the Canadian federal corporate statute, was listed on the NASDAQ and less than 4% of its shares were beneficially owned by Ontario residents.
Listing on a foreign exchange does not bar a Canadian class action if the company’s operations establish a meaningful connection to Canada.
The location of the underwriter
In Kamrani-Ghadjar v. Anaergia, 2025 ONSC 2167, the court confirmed that for IPO misrepresentation claims, it is irrelevant whether the selling underwriter was domestic or foreign. Anaergia included both secondary market claims (claims related to freely trading shares) and IPO claims (claims relating to newly issued shares).
Some of the underwriters for the IPO claims were Canadian and others were non-Canadian. The defendants argued that non-Canadian underwriters should be excluded. The court disagreed, holding that it did not, “see why a global class should exclude purchasers who bought from non-Canadian underwriters ”
For investment advisors, this raises important investor protection considerations with direct client service implications. Clients with concentrated positions in companies that are defendants in a class action may receive notices from more than one jurisdiction, and may need to consider which proceedings to participate in.
This is also a governance issue for portfolio managers and institutional investors. A fund may need a litigation participation policy and process for: (i) mapping trading history by exchange, (ii) tracking parallel Canadian and U.S. proceedings and (iii) deciding whether to remain in one class, participate in both where possible or opt-out strategically depending on the claims, available damages and the proposed releases.
Three takeaways:
- Canadian jurisdiction is connection-driven, not exchange-driven. Akumin Inc. reinforces that Canadian courts have specifically rejected National Australia Bank’s exchange-based logic.
- Foreign-exchange purchasers may still be liable in a Canadian lawsuit. Canadian Solar remains a strong example of Ontario courts’ willingness to hear claims where the issuer has a “real and substantial connection” to Ontario.
- Foreign underwriters may be liable in a Canadian lawsuit. As underscored in Anaergia, other capital market participants like underwriters, even those situated abroad, may also find themselves before Canadian courts defending securities misrepresentation claims.
Part 2 of this series will look at the next set of practical differences between Canadian and U.S. securities class actions: thresholds to proceed, liability for misleading forecasts and projections and how damages calculations can diverge across the border.