Insider trading and record-keeping requirements of Ontario Securities Act amended

June 5, 2015

The Ontario Securities Act was recently amended to broaden the scope of insider trading liability and certain record-keeping requirements. As of June 4, 2015, restrictions against insider trading or tipping will apply generally to “issuers” whose securities are publicly traded, and not just “reporting issuers.” Effectively, persons in a “special relationship” with any issuer will therefore be prohibited from purchasing or selling securities of the issuer with knowledge of an undisclosed material fact or material change and from passing such information on to others, subject to specific exemptions.

An additional amendment was made to section 19(1) of the Securities Act to require that all “market participants” (including registrants, persons or companies exempted from the registration requirement, reporting issuers, and directors, officers and promoters of reporting issuers) must keep books, records and other documents as required to demonstrate compliance with Ontario securities law. Previously, section 19(1) only required records to be maintained to properly record a market participant’s business transactions and financial affairs, the transactions that it executes on behalf of others and as may otherwise be required under Ontario securities law.

The amendments come into force effective June 4, 2015 by virtue of Bill 91, the Building Ontario Up Act (Budget Measures), 2015, having received royal assent.  Certain other amendments were made to the Securities Act and amendments were also made to the Commodity Futures Act.  For further details, please see Schedule 6 of Bill 91, which amends the Commodity Futures Act, and Schedule 39 of Bill 91, which amends the Securities Act.

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