Bill S-208

1st Session, 40th Parliament,

57 Elizabeth II, 2008

senate of canada

BILL S-208

An Act to regulate securities and to provide for a single securities commission for Canada

Whereas securities are now regulated by each province;

Whereas regulation by each province results in duplication and inconsistencies in the regulation of securities in Canada;

Whereas the replacement of the provincial regulatory regimes by a single regulatory regime for the entire country would eliminate such duplication and inconsistencies;

Whereas having a single securities regulator for Canada would facilitate modernization and improvements in productivity, efficiency and enforcement;

Now, therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

1. This Act may be cited as the Canada Securities Act.

INTERPRETATION

2. (1) In this Act,

“adviser” means a person or company engaging in or holding himself, herself or itself out as engaging in the business of advising others as to the investing in or the buying or selling of securities;

“associate”, where used to indicate a relationship with any person or company, means,

(a) except in Part XVIII, any company of which such person or company beneficially owns, directly or indirectly, voting securities carrying more than 10 per cent of the voting rights attached to all voting securities of the company for the time being outstanding;

(b) in Part XVIII, any issuer of which such person or company beneficially owns or controls, directly or indirectly, voting securities carrying more than 10 per cent of the voting rights attached to all voting securities of the issuer for the time being outstanding;

(c) any partner of that person or company;

(d) any trust or estate in which such person or company has a substantial beneficial interest or as to which such person or company serves as trustee or in a similar capacity;

(e) any relative of that person who resides in the same home as that person;

(f) any person who resides in the same home as that person and to whom that person is married or with whom that person is living in a conjugal relationship outside marriage; or

(g) any relative of a person mentioned in paragraph (f) who has the same home as that person;

“Canadian securities law” means

(a) this Act;

(b) the regulations; and

(c) in respect of a person or company, a decision of the Commission or a Director to which the person or company is subject;

“clearing agency” means a person or company that

(a) acts as an intermediary in paying funds or delivering securities, or both, in connection with trades and other transactions in securities;

(b) provides centralized facilities for the clearing of trades and other transactions in securities, including facilities for comparing data respecting the terms of settlement of a trade or transaction; or

(c) provides centralized facilities as a depository of securities;

but does not include

(d) the Canadian Payments Association or its successors;

(e) a stock exchange or a quotation and trade reporting system;

(f) a registered dealer; or

(g) a bank, trust company, loan corporation, insurance company, treasury branch, credit union or caisse populaire that, in the normal course of its authorized business in Canada, engages in an activity described in paragraph (a), but does not also engage in an activity described in paragraph (b) or (c);

“Commission” means the Canadian Securities Commission;

“company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization;

“contract” includes a trust agreement, declaration of trust or other similar instrument;

“contractual plan” means any contract or other arrangement for the purchase of shares or units of a mutual fund by payments over a specified period or by a specified number of payments where the amount deducted from any one of the payments as sales charges is larger than the amount that would have been deducted from such payment for sales charges if deductions had been made from each payment at a constant rate for the duration of the plan;

“control person” means

(a) a person or company who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and, if a person or company holds more than 20 per cent of the voting rights attached to all outstanding voting securities of an issuer, the person or company is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer; or

(b) each person or company in a combination of persons or companies, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and, if a combination of persons or companies holds more than 20 per cent of the voting rights attached to all outstanding voting securities of an issuer, the combination of persons or companies is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer;

“dealer” means a person or company who trades in securities in the capacity of principal or agent;

“decision” means, in respect of a decision of the Commission or a Director, a direction, decision, order, ruling or other requirement made under a power or right conferred by this Act or the regulations;

“Director” means the Executive Director of the Commission, a Director or Deputy Director of the Commission, or a person employed by the Commission in a position designated by the Executive Director for the purpose of this definition;

“director” means a director of a company or an individual performing a similar function or occupying a similar position for any person;

“distribution”, where used in relation to trading in securities, means

(a) a trade in securities of an issuer that have not been previously issued;

(b) a trade by or on behalf of an issuer in previously issued securities of that issuer that have been redeemed or purchased by or donated to that issuer;

(c) a trade in previously issued securities of an issuer from the holdings of any control person; and

(d) any trade that is a distribution under the regulations;

and includes a distribution as referred to in subsections 87(4), (5), (6) and (7), and also includes any transaction or series of transactions involving a purchase and sale or a repurchase and resale in the course of or incidental to a distribution and “distribute”, “distributed” and “distributing” have a corresponding meaning;

“distribution company” means a person or company distributing securities under a distribution contract;

“distribution contract” means a contract between a mutual fund or its trustees or other legal representative and a person or company under which that person or company is granted the right to purchase the shares or units of the mutual fund for distribution or to distribute the shares or units of the mutual fund on behalf of the mutual fund;

“distribution to the public”, where used in relation to trading in securities, means a distribution that is made for the purpose of distributing to the public securities issued by an issuer, whether such trades are made directly or indirectly to the public through an underwriter or otherwise;

“economic exposure” in relation to a reporting issuer means the extent to which the economic or financial interests of a person or company are aligned with the trading price of securities of the reporting issuer or the economic or financial interests of the reporting issuer;

“economic interest in a security” means

(a) a right to receive or the opportunity to participate in a reward, benefit or return from a security; or

(b) an exposure to a loss or a risk of loss in respect of a security;

“form of proxy” means a written or printed form that, upon completion and execution by or on behalf of a security holder, becomes a proxy;

“forward-looking information” means disclosure regarding possible events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action and includes future oriented financial information with respect to prospective results of operations, financial position or cash flows that is presented either as a forecast or a projection;

“individual” means a natural person, but does not include a partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, or a natural person in his or her capacity as trustee, executor, administrator or other legal personal representative;

“insider” means

(a) a director or officer of a reporting issuer;

(b) a director or officer of a person or company that is itself an insider or subsidiary of a reporting issuer;

(c) a person or company that has

(i) beneficial ownership of, or control or direction over, directly or indirectly, securities of a reporting issuer carrying more than 10 per cent of the voting rights attached to all the reporting issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person or company as underwriter in the course of a distribution, or

(ii) a combination of beneficial ownership of, and control or direction over, directly or indirectly, securities of a reporting issuer carrying more than 10 per cent of the voting rights attached to all the reporting issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person or company as underwriter in the course of a distribution;

(d) a reporting issuer that has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security;

(e) a person or company designated as an insider in an order made under subsection (10);

(f) a person or company that is in a class of persons or companies designated under subparagraph 222(1)(z.19)(v);

“investment fund” means a mutual fund or a non-redeemable investment fund;

“investment fund manager” means a person or company that directs the business, operations or affairs of an investment fund;

“issuer” means a person or company who has outstanding, issues or proposes to issue, a security;

“management company” means a person or company who provides investment advice, under a management contract;

“management contract” means a contract under which a mutual fund is provided with investment advice, alone or together with administrative or management services, for valuable consideration;

“market participant” means a registrant, a person or company exempted from the requirement to be registered under this Act by a ruling of the Commission, a reporting issuer, a director, officer or promoter of a reporting issuer, a manager or custodian of assets, shares or units of a mutual fund, a recognized clearing agency, a recognized quotation and trade reporting system, a recognized stock exchange, a recognized self-regulatory organization, a transfer agent or registrar for securities of a reporting issuer, the Canadian Investor Protection Fund, the general partner of a market participant or any other person or company or member of a class of persons or companies designated by the regulations;

“material change”,

(a) when used in relation to an issuer other than an investment fund, means

(i) a change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer, or

(ii) a decision to implement a change referred to in subparagraph (i) made by the board of directors or other persons acting in a similar capacity or by senior management of the issuer who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable; and

(b) when used in relation to an issuer that is an investment fund, means

(i) a change in the business, operations or affairs of the issuer that would be considered important by a reasonable investor in determining whether to purchase or continue to hold securities of the issuer, or

(ii) a decision to implement a change referred to in subparagraph (i) made

(A) by the board of directors of the issuer or the board of directors of the investment fund manager of the issuer or other persons acting in a similar capacity,

(B) by senior management of the issuer who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable, or

(C) by senior management of the investment fund manager of the issuer who believe that confirmation of the decision by the board of directors of the investment fund manager of the issuer or such other persons acting in a similar capacity is probable;

“material fact”, when used in relation to securities issued or proposed to be issued, means a fact that would reasonably be expected to have a significant effect on the market price or value of the securities;

“Minister” means the Minister of Industry;

“misrepresentation” means

(a) an untrue statement of material fact; or

(b) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made;

“mutual fund” means an issuer whose primary purpose is to invest money provided by its security holders and whose securities entitle the holder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets, including a separate fund or trust account, of the issuer;

“mutual fund in Canada” means a mutual fund that is a reporting issuer or that is organized under the laws of any jurisdiction in Canada, but does not include a private mutual fund;

“non-redeemable investment fund” means an issuer

(a) whose primary purpose is to invest money provided by its security holders;

(b) that does not invest

(i) for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or

(ii) for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund; and

(c) that is not a mutual fund;

“offering memorandum” means a document, together with any amendments to that document, purporting to describe the business and affairs of an issuer that has been prepared primarily for delivery to and review by a prospective purchaser so as to assist the prospective purchaser to make an investment decision in respect of securities being sold in a distribution to which section 68 would apply but for the availability of one or more of the exemptions contained in Canadian securities law, but does not include a document setting out current information about an issuer for the benefit of a prospective purchaser familiar with the issuer through prior investment or business contacts;

“officer”, with respect to an issuer or registrant, means

(a) a chair or vice-chair of the board of directors, a chief executive officer, a chief operating officer, a chief financial officer, a president, a vice-president, a secretary, an assistant secretary, a treasurer, an assistant treasurer and a general manager;

(b) every individual who is designated as an officer under a bylaw or similar authority of the registrant or issuer; and

(c) every individual who performs functions similar to those normally performed by an individual referred to in paragraph (a) or (b);

“person” means an individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator, or other legal representative;

“portfolio manager” means an adviser registered for the purpose of managing the investment portfolio of clients through discretionary authority granted by the clients;

“portfolio securities”, where used in relation to a mutual fund, means securities held or proposed to be purchased by the mutual fund;

“private company” means a company in whose constating document

(a) the right to transfer its shares is restricted;

(b) the number of its shareholders, exclusive of persons who are in its employment and exclusive of persons who, having been formerly in the employment of the company, were, while in that employment, and have continued after termination of that employment to be, shareholders of the company, is limited to not more than fifty, two or more persons who are the joint registered owners of one or more shares being counted as one shareholder; and

(c) any invitation to the public to subscribe for its securities is prohibited;

“private mutual fund” means a mutual fund that is

(a) operated as an investment club, where

(i) its shares or units are held by not more than fifty persons and its indebtedness has never been offered to the public,

(ii) it does not pay or give any remuneration for investment advice or in respect of trades in securities, except normal brokerage fees, and

(iii) all of its members are required to make contributions in proportion to the shares or units each holds for the purpose of financing its operations; or

(b) administered by a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province and consists of a fund in which money belonging to various estates and trusts in its care are combined for the purpose of facilitating investment;

“promoter” means

(a) a person or company who, acting alone or in conjunction with one or more other persons, companies or a combination thereof, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of an issuer; or

(b) a person or company who, in connection with the founding, organizing or substantial reorganizing of the business of an issuer, directly or indirectly, receives in consideration of services or property, or both services and property, 10 per cent or more of any class of securities of the issuer or 10 per cent or more of the proceeds from the sale of any class of securities of a particular issue, but a person or company who receives such securities or proceeds either solely as underwriting commissions or solely in consideration of property shall not be deemed a promoter within the meaning of this definition if such person or company does not otherwise take part in founding, organizing, or substantially reorganizing the business;

“proxy” means a completed and executed form of proxy by means of which a security holder has appointed a person or company as the security holder’s nominee to attend and act for and on the security holder’s behalf at a meeting of security holders;

“quotation and trade reporting system” means a person or company that operates facilities that permit the dissemination of price quotations for the purchase and sale of securities and reports of completed transactions in securities for the exclusive use of registered dealers, but does not include a stock exchange or a registered dealer;

“recognized clearing agency” means a clearing agency recognized by the Commission under section 34;

“recognized quotation and trade reporting system” means a quotation and trade reporting system recognized by the Commission under section 35;

“recognized self-regulatory organization” means a self-regulatory organization recognized by the Commission under section 33;

“recognized stock exchange” means a person or company recognized by the Commission under section 32;

“registrant” means a person or company registered or required to be registered under this Act;

“regulations” means the regulations made under this Act and, unless the context otherwise indicates, includes the rules;

“related financial instrument” means an agreement, arrangement or understanding to which an insider of a reporting issuer is a party, the effect of which is to alter, directly or indirectly, the insider’s

(a) economic interest in a security of the reporting issuer; or

(b) economic exposure to the reporting issuer;

“reporting issuer” means an issuer

(a) that has issued voting securities in respect of which a prospectus was filed and a receipt therefor obtained under a predecessor of this Act or in respect of which a securities exchange takeover bid circular was filed under a predecessor of this Act;

(b) that has filed a prospectus for which the Director has issued a receipt under this Act;

(c) any of whose securities have been at any time listed and posted for trading on any recognized stock exchange, regardless of when such listing and posting for trading commenced;

(d) that is the company whose existence continues following the exchange of securities of a company by or for the account of such company with another company or the holders of the securities of that other company in connection with

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company that in turn loses its existence by operation of law, or under which the existing companies merge into a new company;

where one of the amalgamating or merged companies or the continuing company has been a reporting issuer for at least twelve months, or

(e) that is designated as a reporting issuer in an order made under subsection 10;

“rules” means the rules made under section 222;

“salesperson” means an individual who is employed by a dealer for the purpose of making trades in securities on behalf of the dealer;

“security” includes

(a) any document, instrument or writing commonly known as a security;

(b) any document constituting evidence of title to or interest in the capital, assets, property, profits, earnings or royalties of any person or company;

(c) any document constituting evidence of an interest in an association of legatees or heirs;

(d) any document constituting evidence of an option, subscription or other interest in or to a security;

(e) any bond, debenture, note or other evidence of indebtedness, share, stock, unit, unit certificate, participation certificate, certificate of share or interest, preorganization certificate or subscription other than a contract of insurance issued by an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province, and an evidence of deposit issued by a bank, by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province or by a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province;

(f) any agreement under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets, except a contract issued by an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province, which provides for payment at maturity of an amount not less than three quarters of the premiums paid by the purchaser for a benefit payable at maturity;

(g) any agreement providing that money received will be repaid or treated as a subscription to shares, stock, units or interests at the option of the recipient or of any person or company;

(h) any certificate of share or interest in a trust, estate or association;

(i) any profit-sharing agreement or certificate;

(j) any certificate of interest in an oil, natural gas or mining lease, claim or royalty voting trust certificate;

(k) any oil or natural gas royalties or leases or fractional or other interest therein;

(l) any collateral trust certificate;

(m) any income or annuity contract not issued by an insurance company;

(n) any investment contract; and

(o) any document constituting evidence of an interest in a scholarship or educational plan or trust;

whether any of the foregoing relate to an issuer or proposed issuer;

“self-regulatory organization” means a person or company that is organized for the purpose of regulating the operations and the standards of practice and business conduct, in capital markets, of its members and their representatives with a view to promoting the protection of investors and the public interest;

“trade” or “trading” includes

(a) any sale or disposition of a security for valuable consideration, whether the terms of payment be on margin, instalment or otherwise, but does not include a purchase of a security or, except as provided in paragraph (d), a transfer, pledge or encumbrance of securities for the purpose of giving collateral for a debt made in good faith;

(b) any participation as a trader in any transaction in a security through the facilities of any stock exchange or quotation and trade reporting system;

(c) any receipt by a registrant of an order to buy or sell a security;

(d) any transfer, pledge or encumbrancing of securities of an issuer from the holdings of any person or company or combination of persons or companies described in paragraph (c) of the definition of “distribution” for the purpose of giving collateral for a debt made in good faith; and

(e) any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of any of the foregoing;

“underwriter” means a person or company who, as principal, agrees to purchase securities with a view to distribution or who, as agent, offers for sale or sells securities in connection with a distribution and includes a person or company who has a direct or indirect participation in any such distribution, but does not include

(a) a person or company whose interest in the transaction is limited to receiving the usual and customary distributor’s or seller’s commission payable by an underwriter or issuer;

(b) a mutual fund that, under the laws of the jurisdiction to which it is subject, accepts its shares or units for surrender and resells them;

(c) a company that, under the laws of the jurisdiction to which it is subject, purchases its shares and resells them; or

(d) a bank listed in Schedule I, II or III to the Bank Act with respect to securities described in paragraph 52(2)(a) or to such banking transactions as are designated by the regulations;

“voting security”means any security other than a debt security of an issuer carrying a voting right either under all circumstances or under some circumstances that have occurred and are continuing.

(2) For the purposes of this Act, the regulations and the rules, any of “business combination”, “consultant”, “derivatives”, “disclosure controls and procedures”, “future-oriented financial information”, “going private transaction”, “insider bid”, “internal controls”, “penny stocks”, “related party transactions” and “reverse takeovers” may be defined in the regulations or the rules and if so defined shall have the defined meaning.

(3) Except for the purposes of Part XVIII, a company shall be deemed to be an affiliate of another company if one of them is the subsidiary of the other or if both are subsidiaries of the same company or if each of them is controlled by the same person or company.

(4) Except for the purposes of Part XVIII, a company shall be deemed to be controlled by another person or company or by two or more companies if

(a) voting securities of the first-mentioned company carrying more than 50 per cent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or company or by or for the benefit of the other companies; and

(b) the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of the first-mentioned company.

(5) Except for the purposes of Part XVIII, a company shall be deemed to be a subsidiary of another company if

(a) it is controlled by

(i) that other, or

(ii) that other and one or more companies each of which is controlled by that other, or

(iii) two or more companies each of which is controlled by that other; or

(b) it is a subsidiary of a company that is that other’s subsidiary.

(6) A person shall be deemed to own beneficially securities beneficially owned by a company controlled by the person or by an affiliate of such company.

(7) A company shall be deemed to own beneficially securities beneficially owned by its affiliates.

(8) Every management company and every distribution company of a mutual fund that is a reporting issuer and every insider of such management company or distribution company shall be deemed to be an insider of the mutual fund.

(9) If the Commission is satisfied that it would not be prejudicial to the public interest, it may make an order that, for purposes of Canadian securities law, a person or company is not

(a) an insider; or

(b) a reporting issuer.

(10) If the Commission considers that it is in the public interest, it may make an order that, for purposes of Canadian securities law,

(a) a person or company is an insider of a reporting issuer if the person or company would reasonably be expected to have, in the ordinary course, access to material information about the business, operations, assets or revenues of the issuer; or

(b) a person or company is a reporting issuer.

(11) An order under subsection (9) may be made subject to such terms and conditions as the Commission may impose.

(12) An order under subsection (9) or (10) may be made on application by an interested person or by the Director.

(13) The Commission shall not make an order under subsection (9) or (10) without giving the person or company that would be subject to the order an opportunity to be heard.

(14) This Act does not apply with respect to commodity futures contracts or commodities futures options.

3. The purposes of this Act are to provide a single regulatory regime for securities in Canada to replace the provincial regulatory regimes and

(a) to provide protection to investors from unfair, improper or fraudulent practices; and

(b) to foster fair and efficient capital markets and confidence in capital markets.

4. In pursuing the purposes of this Act, the Commission shall have regard to the following fundamental principles:

(a) balancing the importance to be given to each of the purposes of this Act may be required in specific cases;

(b) the primary means for achieving the purposes of this Act are

(i) requirements for timely, accurate and efficient disclosure of information,

(ii) restrictions on fraudulent and unfair market practices and procedures, and

(iii) requirements for the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants;

(c) effective and responsive securities regulation requires timely, open and efficient administration and enforcement of this Act by the Commission;

(d) the Commission should, subject to an appropriate system of supervision, use the enforcement capability and regulatory expertise of recognized self-regulatory organizations;

(e) the integration of capital markets is supported and promoted by the sound and responsible harmonization and coordination of securities regulation regimes;

(f) business and regulatory costs and other restrictions on the business and investment activities of market participants should be proportionate to the significance of the regulatory objectives sought to be realized.

5. (1) The Canadian Securities Commission is established as a corporation without share capital.

(2) The Commission is composed of at least nine and not more than fourteen members.

(3) If there are fewer than nine but at least two members in office, the Commission shall be deemed to be properly constituted for a period not exceeding ninety days after the deficiency in the number of members first occurs.

(4) The members shall be appointed by the Governor in Council for such term of office not exceeding five years as the Governor in Council determines. A member may be reappointed.

(5) The Governor in Council shall, by order, designate a member of the Commission as Chair and may designate one or two members as Vice-Chairs.

(6) The Chair and each Vice-Chair holds office for the term specified by the Governor in Council which shall not exceed his or her term as a member of the Commission.

(7) The Chair is the chief executive officer of the Commission and shall devote his or her full time to the work of the Commission.

(8) The members (other than the Chair) shall devote such time as may be necessary for the due performance of their duties as members.

(9) A member is not liable for an act, an omission, an obligation or a liability of the Commission or its employees. A member is not liable for any act that in good faith is done or omitted in the performance or intended performance of his or her duties as a member of the Commission under this or any other Act.

(10) If the office of Chair is vacant or if the Chair is absent or is unable to act for any reason, a Vice-Chair shall act as Chair.

(11) Two members of the Commission constitute a quorum.

(12) The Commission is an agent of Her Majesty in right of Canada, and its powers may be exercised only as an agent of Her Majesty.

6. (1) The Commission shall have a board of directors composed of the members of the Commission.

(2) The board of directors shall oversee the management of the financial and other affairs of the Commission.

(3) The Chair shall preside over board meetings and, in his or her absence, a Vice-Chair shall do so. In the absence of the Chair and Vice-Chairs, the members in attendance may appoint one of their number to preside at a meeting.

(4) Subject to the bylaws of the Commission, the board of directors may meet at any place in Canada.

7. (1) The Commission has the capacity and the rights, powers and privileges of a natural person.

(2) The Commission is responsible for the administration of this Act and shall perform the duties assigned to it under this Act and any other Act.

(3) Subject to the approval of the Minister, the Commission may make bylaws

(a) governing the administration, management and conduct of the affairs of the Commission;

(b) governing the appointment of an auditor;

(c) setting out the powers, functions and duties of the Chair, each Vice-Chair and the officers employed by the Commission;

(d) delegating to employees of the Commission the exercise or performance of any power or duty conferred or imposed on an officer of the Commission under this Act and fixing the terms or conditions of the delegation;

(e) governing the remuneration and benefits of the Chair, each Vice-Chair and the other members of the Commission;

(f) governing the time, place and method for holding meetings of the board of directors and the procedures at such meetings;

(g) governing the appointment, operation or dissolution of committees of the board of directors and delegating duties of the board to the committees; and

(h) governing the refund of fees paid to the Commission under this or any other Act and authorizing employees of the Commission to approve refunds subject to such conditions and in such circumstances as the Commission considers appropriate.

(4) The Commission shall deliver to the Minister a copy of every bylaw passed by it.

(5) Within sixty days after delivery of the bylaw, the Minister may approve, reject or return it to the Commission for further consideration.

(6) A bylaw that is approved by the Minister becomes effective on the date of the approval or on such later date as the bylaw may provide.

(7) A bylaw that is rejected by the Minister does not become effective.

(8) A bylaw that is returned to the Commission for further consideration does not become effective until the Commission returns it to the Minister and the Minister approves it.

(9) If within the sixty-day period the Minister does not approve, reject or return the bylaw for further consideration, the bylaw becomes effective on the seventy-fifth day after it is delivered to the Minister or on such later date as the bylaw may provide.

(10) The Commission shall publish the bylaw in its Bulletin as soon as practicable after the bylaw becomes effective.

(11) The Statutory Instruments Act does not apply to bylaws made by the Commission.

(12) The Commission may, with the approval of the Governor in Council, enter into an agreement with a province to carry out a duty under the laws of that province.

8. (1) The Commission may hold hearings in or outside Canada.

(2) The Commission may hold hearings in conjunction with other bodies empowered by statute to administer or regulate trading in securities, and may consult with those bodies during the course of, or in connection with, the hearing.

(3) Despite subsection 5(11) and subject to subsection (4), any two or more members of the Commission may in writing authorize one member of the Commission to exercise any of the powers and perform any of the duties of the Commission, except the power to conduct contested hearings on the merits, and a decision of the member shall have the same force and effect as if made by the Commission.

(4) No member who exercises a power or performs a duty of the Commission under Part VI, except section 27, in respect of a matter under investigation or examination shall sit on a hearing by the Commission that deals with the matter, except with the written consent of the parties to the proceeding.

9. (1) The Commission may employ such persons as it considers necessary to enable it effectively to perform its duties and exercise its powers under this or any other Act.

(2) The Commission shall appoint from among its employees an Executive Director and a Secretary as officers of the Commission, and may appoint from among its employees such other officers as it considers necessary.

(3) The members of the Commission are not its employees, and the Chair and Vice-Chairs shall not hold any other office in the Commission or be employed by it in any other capacity.

(4) Sections 120 (disclosure of interest) and 124 (indemnification) of the Canada Business Corporations Act apply with necessary modifications with respect to the Commission as if the Minister were its sole shareholder.

(5) The Public Service Superannuation Act does not apply to the members and employees of the Commission, except as authorized by order of the Governor in Council.

10. (1) Every five years beginning with the Commission’s first fiscal year, the Commission and the Minister shall enter into a memorandum of understanding setting out

(a) the respective roles and responsibilities of the Minister and the Chair;

(b) the accountability relationship between the Commission and the Minister;

(c) the responsibility of the Commission to provide to the Minister business plans, operational budgets and plans for proposed significant changes in the operations or activities of the Commission; and

(d) any other matter that the Minister may require.

(2) The Commission shall comply with the memorandum of understanding in exercising its powers and performing its duties under this Act, but the failure to do so does not affect the validity of any action taken by the Commission or give rise to any rights or remedies by any person.

(3) The Commission shall publish the memorandum of understanding in its Bulletin as soon as practicable after the memorandum is entered into.

11. (1) The Commission shall promptly give the Minister such information about its activities, operations and financial affairs as the Minister requests.

(2) The Minister may designate a person to examine any financial or accounting procedures, activities or practices of the Commission. The person designated shall do so and report the results of the examination to the Minister.

(3) The members and employees of the Commission shall give the person designated by the Minister all the assistance and cooperation necessary to enable him or her to complete the examination.

12. (1) The fiscal year of the Commission begins on April 1.

(2) The Commission shall prepare annual financial statements in accordance with generally accepted accounting principles. The financial statements must present the financial position, results of operations and changes in the financial position of the Commission for its most recent fiscal year.

(3) The Commission shall appoint one or more auditors to audit the financial statements of the Commission for each fiscal year.

(4) The Auditor General of Canada may also audit the financial statements of the Commission.

13. (1) Within six months after the end of each fiscal year, the Commission shall deliver to the Minister an annual report, including the Commission’s audited financial statements, on the affairs of the Commission for that fiscal year.

(2) The Minister shall cause a copy of the report to be laid before each House of Parliament during the first month that House is sitting after the report is delivered to the Minister and each House shall refer the report to the appropriate committee of that House.

14. The Canada Corporations Act and the Corporations Returns Act do not apply with respect to the Commission.

15. (1) The Financial Disclosure Advisory Board is established.

(2) The Board shall be composed of not more than five members, all of whom are appointed by the Minister.

(3) The Commission may designate a member of the Board to be its chair.

(4) The Board shall meet at the call of the Commission.

(5) The Board shall, when requested by the Commission, consult with and advise the Commission concerning the financial disclosure requirements of Canadian securities law.

16. (1) The Commission may appoint one or more experts to assist the Commission in such manner as it may consider expedient.

(2) The Commission may submit any agreement, prospectus, financial statement, report or other document to one or more experts appointed under subsection (1) for examination, and the Commission has the like power to summon and enforce the attendance of witnesses before the expert and to compel them to produce documents, records and things as is vested in the Commission, and subsection 23(1) applies with necessary modifications.

17. (1) There shall be an Executive Director of the Commission.

(2) Subject to the direction of the Commission, the Executive Director is the chief administrative officer of the Commission.

(3) A quorum of the Commission may assign any of its powers and duties under this Act, except powers and duties under section 19 and Part VI, to the Executive Director or to another Director.

(4) The Executive Director may assign any of his or her powers and duties to another Director, other than powers and duties assigned to the Executive Director by the Commission.

(5) The Commission may revoke, in whole or in part, an assignment of powers and duties made under subsection (3) and the Executive Director may revoke, in whole or in part, an assignment of powers and duties made under subsection (4).

(6) An assignment under this section may be subject to such terms and conditions as are set out in the assignment.

(7) If the Executive Director is absent or incapable of acting, the Commission may designate another individual to act as Executive Director.

18. (1) There shall be a Secretary to the Commission.

(2) The Secretary

(a) may accept service of all notices and other documents on behalf of the Commission;

(b) when authorized by the Commission, may sign a decision made by the Commission as a result of a hearing;

(c) may certify under his or her hand a decision made by the Commission or a document, record or thing used in connection with a hearing by the Commission if certification is required for a purpose other than that stated in subsection 20(3);

(d) may exercise such other powers as are vested in the Secretary by this Act or the regulations; and

(e) shall perform such duties as are imposed on the Secretary by this Act or the regulations or by the Commission.

(3) If the Secretary is absent for any reason, the Commission may designate another individual to act in the capacity of Secretary and the individual designated has all the powers and duties of the Secretary.

(4) A certificate purporting to be signed by the Secretary is, without proof of the office or signature, admissible in evidence, so far as it is relevant, for all purposes in any action, prosecution or other proceeding.

19. (1) Within thirty days after a decision of the Director, the Commission may notify the Director and any person or company directly affected of its intention to convene a hearing to review the decision.

(2) Any person or company directly affected by a decision of the Director may, by notice in writing sent by registered mail to the Commission within thirty days after the mailing of the notice of the decision, request and be entitled to a hearing and review thereof by the Commission.

(3) Upon a hearing and review, the Commission may by order confirm the decision under review or make such other decision as the Commission considers proper.

(4) Despite the fact that a person or company requests a hearing and review under subsection (2), the decision under review takes effect immediately, but the Commission may grant a stay until disposition of the hearing and review.

20. (1) A person or company directly affected by a final decision of the Commission, other than a decision under section 89, may appeal to the Federal Court within thirty days after the later of the making of the final decision or the issuing of the reasons for the final decision.

(2) Despite the fact that an appeal is taken under this section, the decision appealed from takes effect immediately, but the Commission or the Federal Court may grant a stay until disposition of the appeal.

(3) The Secretary shall certify to the Federal Court

(a) the decision that has been reviewed by the Commission;

(b) the decision of the Commission, together with any statement of reasons therefor;

(c) the record of the proceedings before the Commission; and

(d) all written submissions to the Commission or other material that is relevant to the appeal.

(4) The Commission is the respondent to an appeal under this section.

(5) The Minister is entitled to be heard by counsel or otherwise on the argument of an appeal under this section, whether or not the Minister is named as a party to the appeal.

(6) Where an appeal is taken under this section, the court may by its order direct the Commission to make such decision or to do such other act as the Commission is authorized and empowered to do under this Act or the regulations and as the court considers proper, having regard to the material and submissions before it and to this Act and the regulations, and the Commission shall make such decision or do such act accordingly.

(7) Despite an order of the court on an appeal, the Commission may make any further decision upon new material or where there is a significant change in the circumstances, and every such decision is subject to this section.

21. (1) The Commission may, by order, appoint one or more persons to make such investigation with respect to a matter as it considers expedient

(a) for the due administration of Canadian securities law or the regulation of the capital markets in Canada; or

(b) to assist in the due administration of the securities laws or the regulation of the capital markets in another jurisdiction.

(2) An order under this section shall describe the matter to be investigated.

(3) For the purposes of an investigation under this section, a person appointed to make the investigation may investigate and inquire into

(a) the affairs of the person or company in respect of which the investigation is being made, including any trades, communications, negotiations, transactions, investigations, loans, borrowings or payments to, by, on behalf of, or in relation to or connected with the person or company and any property, assets or things owned, acquired or alienated in whole or in part by the person or company or by any other person or company acting on behalf of or as agent for the person or company; and

(b) the assets at any time held, the liabilities, debts, undertakings and obligations at any time existing, the financial or other conditions at any time prevailing in or in relation to or in connection with the person or company, and any relationship that may at any time exist or have existed between the person or company and any other person or company by reason of investments, commissions promised, secured or paid, interests held or acquired, the loaning or borrowing of money, stock or other property, the transfer, negotiation or holding of stock, interlocking directorates, common control, undue influence or control or any other relationship.

(4) For the purposes of an investigation under this section, a person appointed to make the investigation may examine any documents or other things, whether they are in the possession or control of the person or company in respect of which the investigation is ordered or of any other person or company.

(5) Despite subsection (1), the Minister may, by order, appoint one or more persons to make such investigation as the Minister considers expedient

(a) for the due administration of Canadian securities law or the regulation of the capital markets in Canada; or

(b) to assist in the due administration of the securities laws or the regulation of the capital markets in another jurisdiction.

(6) A person appointed under subsection (5) has, for the purpose of the investigation, the same authority, powers, rights and privileges as a person appointed under subsection (1).

22. (1) The Commission may, by order, appoint one or more persons to make such examination of the financial affairs of a market participant as it considers expedient

(a) for the due administration of Canadian securities law or the regulation of the capital markets in Canada; or

(b) to assist in the due administration of the securities laws or the regulation of the capital markets in another jurisdiction.

(2) An order under subsection (1) shall describe the matter to be examined.

(3) For the purposes of an examination under this section, a person appointed to conduct the examination may examine any documents or other things, whether they are in the possession or control of the market participant or any other person or company.

23. (1) A person making an investigation or examination under section 21 or 22 has the same power to summon and enforce the attendance of any person and to compel him or her to testify on oath or otherwise, and to summon and compel any person or company to produce documents and other things, as is vested in the Federal Court for the trial of civil actions, and the refusal of a person to attend or to answer questions or of a person or company to produce such documents or other things as are in his, her or its custody or possession makes the person or company liable to be committed for contempt by the Federal Court as if in breach of an order of that court.

(2) A person or company giving evidence under subsection (1) may be represented by counsel and may claim any privilege to which the person or company is entitled.

(3) A person making an investigation or examination under section 21 or 22 may, on production of the order appointing him or her, enter the business premises of any person or company named in the order during business hours and inspect any documents or other things that are used in the business of that person or company and that relate to the matters specified in the order, except those maintained by a lawyer in respect of his or her client’s affairs.

(4) A person making an investigation or examination under section 21 or 22 may apply to a provincial court judge in the absence of the public and without notice for an order authorizing the person or persons named in the order to enter and search any building, receptacle or place specified and to seize anything described in the authorization that is found in the building, receptacle or place and to bring it before the judge granting the authorization or another judge to be dealt with by him or her according to law.

(5) No authorization shall be granted under subsection (4) unless the judge to whom the application is made is satisfied on information under oath that there are reasonable and probable grounds to believe that there may be in the building, receptacle or place to be searched anything that may reasonably relate to the order made under section 21 or 22.

(6) A person named in an order under subsection (4) may, on production of the order, enter any building, receptacle or place specified in the order between 6 a.m. and 9 p.m., search for and seize anything specified in the order, and use as much force as is reasonably necessary for that purpose.

(7) Every order under subsection (4) shall name the date that it expires, and the date shall be not later than fifteen days after the order is granted.

(8) For the purpose of subsections (4), (5) and (6),

“building, receptacle or place” does not include a private residence.

24. (1) Anything seized or produced under this Part shall be made available for inspection and copying by the person or company from which it was obtained, if practicable.

(2) Anything seized or produced under this Part shall be returned to the person or company from which it was obtained when

(a) retention is no longer necessary for the purposes of an investigation, examination, proceeding or prosecution; or

(b) the Commission so orders.

25. (1) A person appointed under subsection 21(1) or 22(1) shall, at the request of the Chair of the Commission or of a member of the Commission involved in making the appointment, provide a report to the Chair or member, as the case may be, or any testimony given and any documents or other things obtained under section 23.

(2) A person appointed under subsection 21(5) shall, at the request of the Chair of the Commission, provide a report to the Chair or any testimony given and any documents or other things obtained under section 23.

(3) A report provided under this section is privileged.

26. (1) Except in accordance with section 27, no person or company shall disclose at any time, except to his, her or its counsel,

(a) the nature or content of an order under section 21 or 22; or

(b) the name of any person examined or sought to be examined under section 23, any testimony given under section 23, any information obtained under section 23, the nature or content of any questions asked under section 23, the nature or content of any demands for the production of any document or other thing under section 23, or the fact that any document or other thing was produced under section 23.

(2) If the Commission issues an order under section 21 or 22, all reports provided under section 25, all testimony given under section 23 and all documents and other things obtained under section 23 relating to the investigation or examination that is the subject of the order are for the exclusive use of the Commission or of such other regulator as the Commission may specify in the order, and shall not be disclosed or produced to any other person or company or in any other proceeding except as permitted under section 27.

27. (1) If the Commission considers that it would be in the public interest, it may make an order authorizing the disclosure to any person or company of

(a) the nature or content of an order under section 21 or 22;

(b) the name of any person examined or sought to be examined under section 23, any testimony given under section 23, any information obtained under section 23, the nature or content of any questions asked under section 23, the nature or content of any demands for the production of any document or other thing under section 23, or the fact that any document or other thing was produced under section 23; or

(c) all or part of a report provided under section 25.

(2) No order shall be made under subsection (1) unless the Commission has, where practicable, given reasonable notice and an opportunity to be heard to

(a) persons and companies named by the Commission; and

(b) in the case of disclosure of testimony given or information obtained under section 23, the person or company that gave the testimony or from which the information was obtained.

(3) Without the written consent of the person from whom the testimony was obtained, no order shall be made under subsection (1) authorizing the disclosure of testimony given under subsection 23(1) to

(a) a municipal, provincial, federal or other police force or to a member of a police force; or

(b) a person responsible for the enforcement of the criminal law of Canada or of any other country or jurisdiction.

(4) An order under subsection (1) may be subject to terms and conditions imposed by the Commission.

(5) A court having jurisdiction over a prosecution under this Act initiated by the Commission may compel production to the court of any testimony given or any document or other thing obtained under section 23, and after inspecting the testimony, document or thing and providing all interested parties with an opportunity to be heard, the court may order the release of the testimony, document or thing to the defendant if the court determines that it is relevant to the prosecution, is not protected by privilege and is necessary to enable the defendant to make full answer and defence, but the making of an order under this subsection does not determine whether the testimony, document or thing is admissible in the prosecution.

(6) A person appointed to make an investigation or examination under this Act may disclose or produce anything mentioned in subsection (1), but may do so only in connection with

(a) a proceeding commenced or proposed to be commenced by the Commission under this Act; or

(b) an examination of a witness, including an examination of a witness under section 23.

(7) Without the written consent of the person from whom the testimony was obtained, no disclosure shall be made under subsection (6) of testimony given under subsection 23(1) to

(a) a municipal, provincial, federal or other police force or to a member of a police force; or

(b) a person responsible for the enforcement of the criminal law of Canada or of any other country or jurisdiction.

28. Testimony given under section 23 shall not be admitted in evidence against the person from whom the testimony was obtained in a prosecution for an offence under section 181 or in any other prosecution other than a prosecution under section 131 of the Criminal Code (perjury).

29. (1) Every market participant shall keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs and the transactions that it executes on behalf of others and shall keep such other books, records and documents as may otherwise be required under Canadian securities law.

(2) Without limiting the generality of subsection (1), every recognized stock exchange shall keep a record of the time at which each transaction on the recognized stock exchange took place and shall supply to any client of a member of the recognized stock exchange, on production of a written confirmation of a transaction with the member, particulars of the time at which the transaction took place and verification or otherwise of the matters set forth in the written confirmation.

(3) Every market participant shall deliver to the Commission at such time or times as the Commission or any member, employee or agent of the Commission may require,

(a) any of the books, records and documents that are required to be kept by the market participant under Canadian securities law; and

(b) except where prohibited by law, any filings, reports or other communications made to any other regulatory agency whether within or outside of Canada.

30. (1) The Commission may designate in writing one or more persons to review the books, records and documents that are required to be kept by a market participant under section 29 for the purpose of determining whether Canadian securities law is being complied with.

(2) A person conducting a compliance review under this section may, on production of his or her designation,

(a) enter the business premises of any market participant during business hours; and

(b) inquire into and examine the books, records and documents of the market participant that are required to be kept under section 29, and make copies of the books, records and documents.

(3) A market participant in respect of which a compliance review is conducted under this section shall pay the Commission such fees as may be prescribed by the regulations.

31. (1) The Commission or any member, employee or agent of the Commission may conduct a review of the disclosures that have been made or that ought to have been made by a reporting issuer or mutual fund in Canada, on a basis to be determined at the discretion of the Commission or the Director.

(2) A reporting issuer or mutual fund in Canada that is subject to a review under this section shall, at such time or times as the Commission or Director may require, deliver to the Commission or Director any information and documents relevant to the disclosures that have been made or that ought to have been made by the reporting issuer or mutual fund.

(3) Despite the Access to Information Act, information and documents obtained pursuant to a review under this section are exempt from disclosure under that Act if the Commission determines that the information and documents should be maintained in confidence.

(4) A reporting issuer or mutual fund in Canada, or any person or company acting on behalf of a reporting issuer or mutual fund in Canada, shall not make any representation, written or oral, that the Commission has in any way passed upon the merits of the disclosure record of the reporting issuer or mutual fund.

32. (1) No person or company shall carry on business as a stock exchange in Canada unless recognized by the Commission under this section.

(2) The Commission may, on the application of a person or company proposing to carry on business as a stock exchange in Canada, recognize the person or company if the Commission is satisfied that to do so would be in the public interest.

(3) A recognition under this section shall be made in writing and shall be subject to such terms and conditions as the Commission may impose.

(4) A recognized stock exchange shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its bylaws, rules, regulations, policies, procedures, interpretations and practices.

(5) The Commission may, if it appears to be in the public interest, make any decision with respect to

(a) the manner in which a recognized stock exchange carries on business;

(b) the trading of securities on or through the facilities of a recognized stock exchange;

(c) any security listed or posted for trading on a recognized stock exchange;

(d) issuers, whose securities are listed or posted for trading on a recognized stock exchange, to ensure that they comply with Canadian securities law; and

(e) any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized stock exchange.

33. (1) The Commission may, on the application of a self-regulatory organization, recognize the self-regulatory organization if the Commission is satisfied that to do so would be in the public interest.

(2) A recognition under this section shall be made in writing and shall be subject to such terms and conditions as the Commission may impose.

(3) A recognized self-regulatory organization shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its bylaws, rules, regulations, policies, procedures, interpretations and practices.

(4) The Commission may, if it is satisfied that to do so would be in the public interest, make any decision with respect to any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized self-regulatory organization.

34. (1) No person or company shall carry on business in Canada as a clearing agency unless the person or company is recognized by the Commission under this section as a clearing agency.

(2) The Commission may, on the application of a clearing agency, recognize the clearing agency if the Commission is satisfied that to do so would be in the public interest.

(3) A recognition under this section shall be made in writing and shall be subject to such terms and conditions as the Commission may impose.

(4) The Commission may make decisions with respect to any of the following matters if the Commission is satisfied that it is in the public interest to do so:

(a) any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized clearing agency; or

(b) the manner in which a recognized clearing agency carries on its business.

35. (1) The Commission may, on the application of a quotation and trade reporting system, recognize the quotation and trade reporting system if the Commission is satisfied that to do so is in the public interest.

(2) A recognition under this section shall be made in writing and is subject to such terms and conditions as the Commission may impose.

(3) The Commission may, if it is satisfied that to do so is in the public interest, make any decision with respect to any bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized quotation and trade reporting system.

36. (1) A recognized stock exchange, a recognized quotation and trade reporting system or a recognized self-regulatory organization may, with the prior approval of the Commission and on such terms and conditions as the Commission determines to be necessary or appropriate in the public interest, establish a council, committee or ancillary body and assign to it regulatory or self-regulatory powers or responsibilities or both.

(2) A council, committee or ancillary body that exercises the powers or assumes the responsibilities of a recognized stock exchange, recognized quotation and trade reporting system or recognized self-regulatory organization is also included in

(a) the recognition of the recognized stock exchange, recognized quotation and trade reporting system or recognized self-regulatory organization;

(b) any suspension, restriction or termination of the recognition of the recognized stock exchange, recognized quotation and trade reporting system or recognized self-regulatory organization; and

(c) any imposition of terms or conditions on the recognition of the recognized stock exchange, recognized quotation and trade reporting system or recognized self-regulatory organization.

(3) The provisions of Canadian securities law that apply to recognized stock exchanges, recognized quotation and trade reporting systems and recognized self-regulatory organizations also apply with necessary modifications to the council, committee or ancillary body.

37. On application by a recognized stock exchange, recognized self-regulatory organization, recognized quotation and trade reporting system or recognized clearing agency, the Commission may accept, and may impose terms and conditions that shall apply to the acceptance, the voluntary surrender of the recognition of the stock exchange, self-regulatory organization, quotation and trade reporting system or clearing agency, if the Commission is satisfied that the surrender of the recognition is not prejudicial to the public interest.

38. (1) The Commission may, on such terms and conditions as it may impose, assign to a recognized stock exchange or recognized self-regulatory organization any of the powers and duties of the Commission under Part IX or the regulations related to that Part.

(2) The Executive Director may, with the approval of the Commission, assign to a recognized stock exchange or recognized self-regulatory organization any of the powers and duties of the Director under Part IX or the regulations related to that Part.

(3) The Commission or, with the approval of the Commission, the Executive Director may at any time revoke, in whole or in part, an assignment of powers and duties made under this section.

39. No bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized stock exchange, recognized self-regulatory organization, recognized quotation and trade reporting system or recognized clearing agency shall contravene Canadian securities law, but a recognized stock exchange, recognized self-regulatory organization, recognized quotation and trade reporting system or recognized clearing agency may impose additional requirements within its jurisdiction.

40. (1) The Executive Director or a person or company directly affected by, or by the administration of, a direction, decision, order or ruling made under a bylaw, rule, regulation, policy, procedure, interpretation or practice of a recognized stock exchange, recognized self-regulatory organization, recognized quotation and trade reporting system or recognized clearing agency may apply to the Commission for a hearing and review of the direction, decision, order or ruling.

(2) Section 19 applies to the hearing and review of the direction, decision, order or ruling in the same manner as it applies to a hearing and review of a decision of the Director.

41. (1) Every recognized stock exchange shall appoint an auditor for the exchange.

(2) At the request of the Commission, a recognized self-regulatory organization shall appoint an auditor for the self-regulatory organization.

(3) At the request of the Commission, a recognized clearing agency shall appoint an auditor for the clearing agency.

42. (1) Every recognized stock exchange and every recognized self-regulatory organization shall cause each of its members to appoint an auditor.

(2) The auditor of a member shall be chosen from the panel of auditing firms selected under subsection (3).

(3) Every recognized stock exchange and recognized self-regulatory organization shall select a panel of auditing firms for their members.

(4) No person shall be appointed as an auditor under subsection (1) unless the person has practised as an auditor in the securities industry in Canada for five years or more.

(5) The auditor of a member shall make an examination, in accordance with generally accepted auditing standards, of the annual financial statements and regulatory filings of the member as called for by the bylaws, rules, regulations, policies, procedures, interpretations or practices applicable to the member, and shall report on the financial affairs of the member to the recognized stock exchange or recognized self-regulatory organization, as the case may be, in accordance with professional reporting standards.

43. (1) Every registrant that is not subject to section 42 shall appoint an auditor who satisfies such requirements as may be established by the Commission.

(2) The auditor of a registrant that is not subject to section 42 shall make an examination of the annual financial statements and other regulatory filings of the registrant, in accordance with generally accepted auditing standards, and shall prepare a report on the financial affairs of the registrant in accordance with professional reporting standards.

(3) The registrant shall file the report with the Commission together with its annual financial statements and other regulatory filings.

(4) A registrant that is not subject to section 42 shall deliver to the Commission annual audited financial statements, prepared in accordance with generally accepted accounting principles, and other regulatory filings as prescribed by the regulations, within ninety days after the end of its financial year or as otherwise prescribed by the regulations.

(5) The annual financial statements and regulatory filings delivered to the Commission shall be certified by the registrant or an officer or partner of the registrant.

(6) The registrant shall deliver to the Commission such other information as the Commission may require in such form as it may require.

44. (1) No person or company shall

(a) trade in a security or act as an underwriter unless the person or company is registered as a dealer, or is registered as a salesperson or as a partner or as an officer of a registered dealer and is acting on behalf of the dealer; or

(b) act as an adviser unless the person or company is registered as an adviser, or is registered as a representative or as a partner or as an officer of a registered adviser and is acting on behalf of the adviser,

and the registration has been made in accordance with Canadian securities law and the person or company has received written notice of the registration from the Director and, where the registration is subject to terms and conditions, the person or company complies with such terms and conditions.

(2) The termination of the employment of a salesperson with a registered dealer shall operate as a suspension of the registration of the salesperson until notice in writing has been received by the Director from another registered dealer of the employment of the salesperson by the other registered dealer and the reinstatement of the registration has been approved by the Director.

(3) The Director may designate as non-trading any employee or class of employees of a registered dealer that does not usually sell securities, but the designation may be cancelled as to any employee or class of employees where the Director is satisfied that any such employee or any member of such class of employees should be required to apply for registration as a salesperson.

45. (1) Unless it appears to the Director that the applicant is not suitable for registration, renewal of registration or reinstatement of registration or that the proposed registration, renewal of registration, reinstatement of registration or amendment to registration is objectionable, the Director shall grant registration, renewal of registration, reinstatement of registration or amendment to registration to an applicant.

(2) The Director may in his or her discretion restrict a registration by imposing terms and conditions thereon and, without limiting the generality of the foregoing, may restrict the duration of a registration and may restrict the registration to trades in certain securities or a certain class of securities.

(3) The Director shall not refuse to grant, renew, reinstate or amend registration or impose terms and conditions thereon without giving the applicant an opportunity to be heard.

46. On application by a registrant, the Commission may accept, subject to such terms and conditions as it may impose, the voluntary surrender of the registration of the registrant if the Commission is satisfied that the financial obligations of the registrant to his, her or its clients have been discharged and the surrender of the registration would not be prejudicial to the public interest.

47. A further application for registration may be made upon new or other material or where it is clear that material circumstances have changed.

48. An application for registration or renewal of registration shall be made in writing in such form as may be required by the Commission and shall be accompanied by such fee as is prescribed by the regulations.

49. Every applicant shall state in the application an address for service in Canada and, except as otherwise provided in this Act, all notices under this Act or the regulations are sufficiently served for all purposes if delivered or sent by prepaid mail to the latest address for service so stated.

50. The Director may require any further information or material to be submitted by an applicant or a registrant within a specified time and may require verification by affidavit or otherwise of any information or material then or previously submitted or may require the applicant or the registrant or any partner, officer, director, governor or trustee of, or any person performing a like function for, or any employee of, the applicant or of the registrant to submit to examination under oath by a person designated by the Director.

51. Registration as an adviser is not required to be obtained by

(a) a bank, the Business Development Bank of Canada, a trust company under the Trust and Loan Companies Act, a trust corporation incorporated by or under an Act of the legislature of a province, an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province;

(b) a lawyer, accountant, engineer or teacher;

(c) a registered dealer, or any partner, officer or employee thereof; and

(d) a publisher of or any writer for any newspaper, news magazine or business or financial publication of general and regular paid circulation distributed only to subscribers thereto for value or to purchasers thereof, who gives advice as an adviser only through such publication and has no interest either directly or indirectly in any of the securities upon which the advice is given and receives no commission or other consideration for giving the advice,

where the performance of the service as an adviser is solely incidental to their principal business or occupation, or

(e) such other persons or companies as are designated by the regulations.

52. (1) Subject to the regulations, registration is not required in respect of the following trades:

(a) a trade by an executor, administrator, guardian or committee or by an authorized trustee or assignee, an interim or official receiver or a custodian under the Bankruptcy and Insolvency Act or by a receiver or liquidator under the Winding-up and Restructuring Act or an Act of the legislature of a province, or at a judicial sale;

(b) an isolated trade by or on behalf of an issuer in a specific security of its own issue, for the issuer’s account, or by or on behalf of an owner in a specific security, for the owner’s account, where the trade is not made in the course of continued and successive transactions of a like nature, and is not made by a person or company whose usual business is trading in securities;

(c) a trade where the party purchasing as principal, but not as underwriter, is

(i) a bank or the Business Development Bank of Canada,

(ii) a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province,

(iii) an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

(iv) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) a subsidiary of any company referred to in subparagraph (i), (ii), (iii) or (iv), where the company owns all of the voting shares of the subsidiary,

(vi) a dealer registered in the category of broker, investment dealer or securities dealer,

(vii) Her Majesty in right of Canada or any province, or

(viii) any municipal corporation or public board or commission in Canada;

(d) a trade where the party purchasing as principal is a company or a person and is recognized by the Commission as an exempt purchaser;

(e) a trade where the purchaser purchases as principal, if the trade is in a security which has an aggregate acquisition cost to such purchaser of not less than $150,000 or such other amount as is prescribed;

(f) a trade from the holdings of any person, company or combination of persons or companies described in paragraph (c) of the definition of “distribution” in subsection 2(1) for the purpose of giving collateral for a debt made in good faith;

(g) a trade by or for the account of a pledgee, mortgagee or other encumbrancer for the purpose of liquidating a debt made in good faith by selling or offering for sale a security pledged, mortgaged or otherwise encumbered in good faith as collateral for the debt;

(h) a trade in a security that may occasionally be transacted by employees of a registered dealer where the employees do not usually sell securities and have been designated by the Director as non-trading employees, either individually or as a class;

(i) a trade between a person or company and an underwriter acting as purchaser or between or among underwriters;

(j) a trade in a security by a person or company acting solely through an agent who is a registered dealer;

(k) the execution of an unsolicited order to purchase or sell through a registered dealer by a bank, an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, as agent for a person or company and the trade by such person or company in placing the unsolicited order with the bank, association, society, trust company or trust corporation;

(l) a trade by an issuer

(i) in a security of its own issue that is distributed by it to holders of its securities as a stock dividend or other distribution out of earnings or surplus,

(ii) in a security whether of its own issue or not that is distributed by it to holders of its securities as incidental to a good faith reorganization or winding up of the issuer or distribution of its assets for the purpose of winding up its affairs pursuant to the laws of the jurisdiction in which the issuer was incorporated, organized or continued,

(iii) in securities of its own issue transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer, provided that no commission or other remuneration is paid or given to others in respect of such distribution except for ministerial or professional services or for services performed by a registered dealer;

(m) a trade by an issuer in a security of a reporting issuer held by it that is distributed by it to holders of its securities as a dividend in kind;

(n) a trade by an issuer

(i) in a right, transferable or otherwise granted by the issuer to holders of its securities to purchase additional securities of its own issue and the issue of securities pursuant to the exercise of the right, or

(ii) in securities of a reporting issuer held by it transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

if the issuer has given the Commission written notice stating the date, amount, nature and conditions of the proposed trade, including the approximate net proceeds to be derived by the issuer on the basis of such additional securities being fully taken up and paid for, and either

(iii) the Commission has not informed the issuer in writing within ten days of the giving of the notice that it objects to the proposed trade, or

(iv) the issuer has delivered to the Commission information relating to the securities that is satisfactory to and accepted by the Commission;

(o) a trade in a security of a company that is exchanged by or for the account of the company with another company or the holders of the securities of that other company in connection with

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company which in turn loses its existence by operation of law, or under which the existing companies merge into a new company;

(p) a trade in a security of an issuer that is exchanged by or for the account of the issuer with the security holders of another issuer in connection with a takeover bid as defined in Part XVIII;

(q) a trade in a security to a person or company pursuant to a takeover bid or issuer bid made by that person or company;

(r) a trade by an issuer in a security of its own issue as consideration for a portion or all of the assets of any person or company, if the fair value of the assets so purchased is not less than $150,000 or such other amount as is prescribed;

(s) a trade by an issuer in the securities of its own issue with its employees or the employees of an affiliate who are not induced to purchase by expectation of employment or continued employment, whether such trade takes place directly between the issuer and the employee or through a trustee or an administrator of a share purchase plan established for the benefit of employees of the issuer or its affiliates;

(t) a trade by an issuer in securities of its own issue where the trade is reasonably necessary to facilitate the incorporation or organization of the issuer and the securities are traded for a nominal consideration to not more than five incorporators or organizers unless the statute under which the issuer is incorporated or organized requires the trade to be for a greater consideration or to a larger number of incorporators or organizers, in which case the securities may be traded for that greater consideration or to that larger number of incorporators or organizers;

(u) a trade made by an issuer with a view to the sale of securities of its own issue if solicitations are made to not more than fifty prospective purchasers resulting in sales to not more than twenty-five purchasers and

(i) each purchaser purchases as principal, and all of the purchases are completed within a period of six months of the first purchase, except that subsequent sales to the same purchasers may be carried out if made in compliance with written agreements entered into during that six-month period,

(ii) each purchaser has access to substantially the same information concerning the issuer that a prospectus filed under this Act would provide and is

(A) an investor who, by virtue of net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the issuer whose securities are being offered and who is a registered adviser or a registered dealer, is able to evaluate the prospective investment on the basis of information respecting the investment presented by the issuer,

(B) a senior officer or director of the issuer,

(C) a parent, brother, sister or child of the person mentioned in clause (B), or

(D) a person to whom the person mentioned in clause (B) is married or with whom the person mentioned in clause (B) is living in a conjugal relationship outside marriage,

(iii) the offer and sale of the securities are not accompanied by an advertisement and no selling or promotional expenses have been paid or incurred in connection therewith, except for professional services or for services performed by a registered dealer, and

(iv) no promoter of the issuer, other than a registered dealer, has acted as a promoter of any other issuer which has traded in securities of its own issue pursuant to the exemption in this paragraph within the previous twelve months,

but an issuer which has relied upon this exemption may not again thereafter rely upon this exemption;

(v) a trade in respect of which the regulations provide that registration is not required.

(2) Subject to the regulations, registration is not required to trade in the following securities:

(a) bonds, debentures or other evidences of indebtedness

(i) of or guaranteed by the Government of Canada or any province or by the Government of the United Kingdom or any foreign country or any political division thereof,

(ii) of any municipal corporation in Canada, including debentures issued for public, separate, secondary or vocational school purposes, or guaranteed by any municipal corporation in Canada, or secured by or payable out of rates or taxes levied under the law of any province on property in such province and collectable by or through the municipality in which such property is situated,

(iii) of any school board,

(iv) of or guaranteed by a bank, a body corporate to which the Trust and Loan Companies Act applies, a trust or loan corporation incorporated by or under an Act of the legislature of a province, an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) issued by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, to members of the association or society or to an insurer of its deposits,

(vi) of or guaranteed by the International Bank for Reconstruction and Development established by the Agreement for an International Bank for Reconstruction and Development approved by the Bretton Woods and Related Agreements Act, if the bonds, debentures, or evidences of indebtedness are payable in the currency of Canada or the United States of America,

(vii) of or guaranteed by the International Finance Corporation established by Articles of Agreement approved by the Bretton Woods and Related Agreements Act, if the bonds, debentures or evidences of indebtedness are payable in the currency of Canada or the United States of America and if, with respect to such securities, such documents, certificates, reports, releases, statements, agreements or other information as may be required by the Commission are filed, or

(viii) of or guaranteed by the Asian Development Bank or the Inter-American Development Bank, if the bonds, debentures or evidences of indebtedness are payable in the currency of Canada or the United States of America and if, with respect to such securities, such documents, certificates, reports, releases, statements, agreements or other information as may be required by the Commission are filed;

(b) certificates or receipts issued by a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, or by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province for money received for guaranteed investment;

(c) securities issued by a private mutual fund;

(d) negotiable promissory notes or commercial paper maturing not more than one year from the date of issue, provided that each such note or commercial paper traded to an individual has a denomination or principal amount of not less than $50,000;

(e) mortgages or other encumbrances upon real or personal property, other than mortgages or other encumbrances contained in or secured by a bond, debenture or similar obligation or in a trust deed or other instrument to secure bonds or debentures or similar obligations, if such mortgages or other encumbrances are offered for sale by a person or company registered or licensed, or exempted from the requirement to be registered or licensed, by or under an Act of the legislature of a province that regulates persons who sell such mortgages or encumbrances;

(f) securities evidencing indebtedness due under any conditional sales contract or other title retention contract providing for the acquisition of personal property if such securities are not offered for sale to an individual;

(g) securities issued by an issuer organized exclusively for educational, benevolent, fraternal, charitable, religious or recreational purposes and not for profit, where no commission or other remuneration is paid in connection with the sale thereof;

(h) securities issued by a cooperative to which the Canada Cooperatives Act applies or by a cooperative entity incorporated and regulated by or under an Act of the legislature of a province;

(i) membership shares of an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province;

(j) securities issued to its members by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province;

(k) securities of a private company where they are not offered for sale to the public;

(l) securities issued and sold by a prospector for the purpose of financing a prospecting expedition;

(m) securities issued by a prospecting syndicate that has filed a prospecting syndicate agreement under Part XII for which the Director has issued a receipt, where the securities are sold by the prospector or one of the prospectors who staked claims that belong to or are the subject of a declaration of trust in favour of the prospecting syndicate, and the prospector delivers a copy of the prospecting syndicate agreement to the person or company purchasing the security before accepting payment therefor;

(n) securities issued by a prospecting syndicate that has filed a prospecting syndicate agreement under Part XII for which the Director has issued a receipt, if the securities are not offered for sale to the public and are sold to not more than fifty persons or companies;

(o) securities issued by a mining company or a mining exploration company as consideration for mining claims

(i) where the vendor enters into such escrow or pooling agreement as the Director considers necessary, or

(ii) where the security that is proposed to be issued, or the security underlying that security, is listed and posted for trading on a stock exchange recognized for the purpose of this paragraph by the Commission and the issuer has received (where required by the bylaws, rules or policies of that stock exchange) the consent of that stock exchange to the issuance of the security;

(p) securities in respect of which the regulations provide that registration is not required.

(3) For the purpose of subsection (1), a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, shall be deemed to be acting as principal when it trades as trustee or as agent for accounts fully managed by it.

53. (1) Every registered dealer who has acted as principal or agent in connection with any trade in a security shall promptly send by prepaid mail or deliver to the customer a written confirmation of the transaction, setting forth

(a) the quantity and description of the security;

(b) the consideration;

(c) whether or not the registered dealer is acting as principal or agent;

(d) if acting as agent in a trade, the name of the person or company from or to or through whom the security was bought or sold;

(e) the date and the name of the stock exchange, if any, upon which the transaction took place;

(f) the commission, if any, charged in respect of the trade; and

(g) the name of the salesperson, if any, in the transaction.

(2) Where a trade is made in a security of a mutual fund, the confirmation shall contain, in addition to the requirements of subsection (1),

(a) the price per share or unit at which the trade was effected; and

(b) the amount deducted by way of sales, service and other charges.

(3) Subject to the regulations, where a trade is made in a security of a mutual fund under a contractual plan, the confirmation shall contain in addition to the requirements of subsections (1) and (2),

(a) in respect of an initial payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the initial payment and the portion of the sales, service and other charges that is allocated to subsequent investments in the mutual fund and the manner of allocation thereof;

(b) in respect of each subsequent payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the portion of the sales, service and other charges, that is allocated to the payment which is the subject of the confirmation;

(c) in respect of an initial purchase made under a contractual plan which permits the deduction of sales, service and other charges from the first and subsequent instalments, a brief statement of the sales, service and other charges to be deducted from subsequent purchases;

(d) in respect of each purchase made under a contractual plan, a statement of the total number of shares or units of the mutual fund acquired and the amount of sales charges paid under the contractual plan up to the date the confirmation is sent or delivered.

(4) For the purposes of paragraphs (1)(d) and (g), a person or company or a salesperson may be identified in a written confirmation by means of a code or symbols if the written confirmation also contains a statement that the name of the person, company or salesperson will be furnished to the customer on request.

(5) Where a person or company uses a code or symbols for identification in a confirmation under subsection (1), the person or company shall forthwith file the code or symbols and their meaning, and shall notify the Commission within five days of any change in or addition to the code or symbols or their meaning.

(6) Every dealer who has acted as agent in connection with any trade in a security shall promptly disclose to the Commission, upon request by the Commission, the name of the person or company from or to or through whom the security was bought or sold.

(7) A registered dealer need not send to its client a written confirmation of a trade in a security of a mutual fund where the manager of the mutual fund sends the client a written confirmation containing the information required to be sent under this section.

54. (1) The Commission may by order suspend, cancel, restrict or impose terms and conditions upon the right of any person or company named or described in the order to

(a) call at any residence; or

(b) telephone from within Canada to any residence within or outside Canada,

for the purpose of trading in any security or in any class of securities.

(2) The Commission shall not make an order under subsection (1) without giving the person or company affected an opportunity to be heard.

(3) In this section,

“residence” includes any building or part of a building in which the occupant resides either permanently or temporarily and any premises appurtenant thereto.

(4) For the purposes of this section, a person or company shall be deemed conclusively to have called or telephoned where an officer, director or salesperson of the person or company calls or telephones on its behalf.

55. (1) No person or company, with the intention of effecting a trade in a security, other than a security that carries an obligation of the issuer to redeem or purchase, or a right of the owner to require redemption or purchase, shall make any representation, written or oral, that he, she or it or any person or company

(a) will resell or repurchase; or

(b) will refund all or any of the purchase price of,

such security.

(2) No person or company, with the intention of effecting a trade in a security, shall give any undertaking, written or oral, relating to the future value or price of such security.

(3) Subject to the regulations, no person or company, with the intention of effecting a trade in a security, shall, except with the written permission of the Director, make any representation, written or oral, that such security will be listed on any stock exchange or quoted on any quotation and trade reporting system, or that application has been or will be made to list such security upon any stock exchange or quote such security on any quotation and trade reporting system, unless

(a) application has been made to list or quote the securities being traded, and securities of the same issuer are currently listed on any stock exchange or quoted on any quotation and trade reporting system; or

(b) the stock exchange or quotation and trade reporting system has granted approval to the listing or quoting of the securities, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation.

(4) This section does not apply to any representation referred to in subsection (1) made to a person or to a company where the representation is contained in an enforceable written agreement and the security has an aggregate acquisition cost of more than $50,000.

56. (1) Where a registered dealer, with the intention of effecting a trade in a security with any person or company other than another registered dealer, issues, publishes or sends a circular, pamphlet, letter, telegram or advertisement, and proposes to act in the trade as a principal, the registered dealer shall so state in the circular, pamphlet, letter, telegram or advertisement or otherwise in writing before entering into a contract for the sale or purchase of any such security and before accepting payment or receiving any security or other consideration under or in anticipation of any such contract.

(2) A statement made in compliance with this section or paragraph 53(1)(c) that a dealer proposes to act or has acted as principal in connection with a trade in a security does not prevent such dealer from acting as agent in connection with a trade of such security.

(3) This section does not apply to trades referred to in subsection 52(1) or to securities referred to in subsection 52(2).

57. Subject to the regulations, every registered adviser shall cause to be printed in a conspicuous position on every circular, pamphlet, advertisement, letter, telegram and other publication issued, published or sent out by the adviser, in which the adviser recommends that a specific security be purchased, sold or held, in type not less legible than that used in the body of the circular, pamphlet, advertisement, letter or other publication, a full and complete statement of any financial or other interest that the adviser or any partner, director, officer or a person or company that would be an insider of the adviser if the adviser was a reporting issuer may have either directly or indirectly in any securities referred to therein or in the sale or purchase thereof, including

(a) any ownership, beneficial or otherwise, that any of them may have in respect of such securities or in any securities issued by the same issuer;

(b) any option that any of them may have in respect of such securities, and the terms thereof;

(c) any commission or other remuneration that any of them has received or may expect to receive from any person or company in connection with any trade in such securities;

(d) any financial arrangement relating to such securities that any of them may have with any person or company; and

(e) any financial arrangement that any of them may have with any underwriter or other person or company who has any interest in the securities.

58. Every registered dealer that recommends a purchase, sale, exchange or hold of a security in any circular, pamphlet, advertisement, letter, telegram or other publication issued, published or sent by it and intended for general circulation shall, in type not less legible than that used in the body of the publication, state whether the registered dealer or any of its officers or directors has at any time during the past twelve months assumed an underwriting liability with respect to such securities or for consideration provided financial advice to the issuer of such securities or whether the registered dealer or any of its officers or directors will receive any fees as a result of the recommended action.

59. No registrant shall use the name of another registrant on letterheads, forms, advertisements or signs, as correspondent or otherwise, unless the registrant is a partner, officer or agent of or is authorized so to do in writing by the other registrant.

60. No person or company shall hold himself, herself or itself out as being registered by having printed in a circular, pamphlet, advertisement, letter, telegram or other stationery that he, she or it is registered.

61. No person or company who is not registered shall, either directly or indirectly, hold himself, herself or itself out as being registered.

62. No person or company shall make any representation, written or oral, that the Commission has in any way passed upon the financial standing, fitness or conduct of any registrant or upon the merits of any security or issuer.

63. (1) Where a person, or a partner or employee of a partnership, or a director, officer or employee of a company, after the person or the partnership or company has contracted as a registered dealer with any customer to buy and carry upon margin any securities of any issuer either in Canada or elsewhere, and while such contract continues, sells or causes to be sold securities of the same issuer for any account in which

(a) the person;

(b) the firm or a partner thereof; or

(c) the company or a director thereof,

has a direct or indirect interest, if the effect of such sale would, otherwise than unintentionally, be to reduce the amount of such securities in the hands of the dealer or under the dealer’s control in the ordinary course of business below the amount of such securities that the dealer should be carrying for all customers, any such contract with a customer is, at the option of the customer, voidable and the customer may recover from the dealer all money paid with interest thereon or securities deposited in respect thereof.

(2) The customer may exercise such option by a notice to that effect sent by prepaid mail addressed to the dealer at the dealer’s address for service in Canada.

64. Any person or company who places an order for the sale of a security through an agent acting for him, her or it that is a registered dealer and who,

(a) at the time of placing the order, does not own the security; or

(b) if acting as agent, knows the principal does not own the security,

shall, at the time of placing the order to sell, declare to the agent that he, she or it or the principal, as the case may be, does not own the security.

65. (1) Subject to subsection (4), voting securities of an issuer registered in the name of

(a) a registrant or in the name of the registrant’s nominee; or

(b) a custodian or in the name of the custodian’s nominee, where such issuer is a mutual fund that is a reporting issuer,

that are not beneficially owned by the registrant or the custodian, as the case may be, shall not be voted by the registrant or custodian at any meeting of security holders of the issuer.

(2) Forthwith after receipt of a copy of a notice of a meeting of security holders of an issuer, the registrant or custodian shall, where the name and address of the beneficial owner of securities registered in the name of the registrant or custodian are known, send or deliver to each beneficial owner of such security so registered at the record date for notice of meeting a copy of any notice, financial statement, information circular or other material but the registrant or custodian is not required to send or deliver such material unless the issuer or the beneficial owner of such securities has agreed to pay the reasonable costs to be incurred by the registrant or custodian in so doing.

(3) At the request of a registrant or custodian, the person or company sending material referred to in subsection (2) shall forthwith furnish to the registrant or custodian, at the expense of the sender, the requisite number of copies of the material.

(4) A registrant or custodian shall vote or give a proxy requiring a nominee to vote any voting securities referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

(5) A registrant or custodian shall, if requested in writing by a beneficial owner, give to the beneficial owner or his, her or its nominee a proxy enabling the beneficial owner or the nominee to vote any voting securities referred to in subsection (1).

(6) For the purpose of this section,

“custodian” means a custodian of securities issued by a mutual fund held for the benefit of plan holders under a custodial agreement or other arrangement.

66. (1) The Commission may, after giving the registered dealer an opportunity to be heard, and upon being satisfied that the registered dealer’s past conduct with respect to the use of advertising and sales literature affords reasonable grounds for belief that it is necessary for the protection of the public to do so, order that the registered dealer shall deliver to the Commission at least seven days before it is used, copies of all advertising and sales literature which the registered dealer proposes to use in connection with trading in securities.

(2) For the purposes of this section,

“advertising” includes television and radio commercials, newspaper and magazine advertisements and all other sales material generally disseminated through the communications media;

“sales literature” includes records, videotapes and similar material, written matter and all other material, except preliminary prospectuses and prospectuses, designed for use in a presentation to a purchaser, whether such material is given or shown to the purchaser.

(3) Where the Commission has issued an order pursuant to subsection (1), the Director may prohibit the use of the advertising and sales literature so delivered or may require that deletions or changes be made prior to its use.

67. (1) Upon the filing of a prospecting syndicate agreement and the issuance of a receipt therefor by the Director, the liability of the members of the syndicate or parties to the agreement is limited to the extent provided by the terms of the agreement where

(a) the sole purpose of the syndicate is the financing of prospecting expeditions, preliminary mining development, or the acquisition of mining properties, or any combination thereof;

(b) the agreement clearly sets out

(i) the purpose of the syndicate,

(ii) the particulars of any transaction effected or in contemplation involving the issue of units for a consideration other than cash,

(iii) the maximum amount, not exceeding 25 per cent of the sale price, that may be charged or taken by a person or company as commission upon the sale of units in the syndicate,

(iv) the maximum number of units in the syndicate, not exceeding 33 1/3 per cent of the total number of units of the syndicate, that may be issued in consideration of the transfer to the syndicate of mining properties,

(v) the location of the principal office of the syndicate and that the principal office shall at all times be maintained in Canada and that the Director and the members of the syndicate shall be notified immediately of any change in the location of the principal office,

(vi) that a person or company holding mining properties for the syndicate shall execute a declaration of trust in favour of the syndicate with respect to such mining properties,

(vii) that after the sale for cash of any issued units of the syndicate no mining properties shall be acquired by the syndicate other than by staking unless such acquisition is approved by members of the syndicate holding at least two-thirds of the issued units of the syndicate that have been sold for cash,

(viii) that the administrative expenditures of the syndicate, including, in addition to any other items, salaries, office expenses, advertising and commissions paid by the syndicate with respect to the sale of its units, shall be limited to one-third of the total amount received by the treasury of the syndicate from the sale of its units,

(ix) that a statement of the receipts and disbursements of the syndicate shall be furnished to the Director and to each member annually,

(x) that 90 per cent of the vendor units of the syndicate shall be escrowed units and may be released upon the consent of the Director and that any release of such units shall not be in excess of one vendor unit for each unit of the syndicate sold for cash,

(xi) that no securities, other than those of the syndicate’s own issue, and no mining properties owned by the syndicate or held in trust for the syndicate shall be disposed of unless such disposal is approved by members of the syndicate holding at least two-thirds of the issued units of the syndicate other than escrowed units; and

(c) the agreement limits the capital of the syndicate to a sum not exceeding $250,000.

(2) The Director may in his or her discretion issue a receipt for a prospecting syndicate agreement filed under this section and is not required to determine whether it is in conformity with paragraphs (1)(a), (b) and (c).

(3) No registered dealer shall trade in a security issued by a prospecting syndicate either as agent for the prospecting syndicate or as principal.

(4) The Director shall not refuse to issue a receipt under subsection (1) without giving the person or company who filed the prospecting syndicate agreement an opportunity to be heard.

68. (1) No person or company shall trade in a security on his, her or its own account or on behalf of any other person or company if the trade would be a distribution of the security, unless a preliminary prospectus and a prospectus have been filed and receipts have been issued for them by the Director.

(2) A preliminary prospectus and a prospectus may be filed in accordance with this Part to enable the issuer to become a reporting issuer, despite the fact that no distribution is contemplated.

69. (1) A preliminary prospectus shall substantially comply with the requirements of Canadian securities law respecting the form and content of a prospectus, except that the report or reports of the auditor or accountant required by the regulations need not be included.

(2) A preliminary prospectus may exclude information with respect to the price to the underwriter and offering price of any securities and other matters dependent upon or relating to such prices.

70. The Director shall issue a receipt for a preliminary prospectus forthwith upon the filing thereof.

71. (1) A prospectus shall provide full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed and shall comply with the requirements of Canadian securities law.

(2) The prospectus shall contain or be accompanied by such financial statements, reports or other documents as are required by this Act or the regulations.

72. (1) Where a material adverse change occurs after a receipt is obtained for a preliminary prospectus filed in accordance with subsection 68(1) and before the receipt for the prospectus is obtained or, where a material change occurs after the receipt for the prospectus is obtained but prior to the completion of the distribution under such prospectus, an amendment to such preliminary prospectus or prospectus, as the case may be, shall be filed as soon as practicable and in any event within ten days after the change occurs.

(2) If, after a receipt for a prospectus or for an amendment to a prospectus is issued but before the distribution under the prospectus or amendment is completed, securities in addition to those previously disclosed in the prospectus or amendment are to be distributed, the issuer making the distribution shall file an amendment to the prospectus disclosing the additional securities as soon as practicable and, in any event, within ten days after the decision to increase the number of securities offered is made.

(3) The Director shall issue a receipt for an amendment to a prospectus that must be filed under subsection (1) or (2) unless the Director refuses in accordance with subsection 76(2) to issue the receipt.

(4) Unless otherwise permitted by regulation, an issuer shall not proceed with a distribution or an additional distribution until a receipt is issued for an amendment to the prospectus that must be filed under subsection (1) or (2).

(5) An amendment to a preliminary prospectus referred to in subsection (1) shall, forthwith after it has been filed, be forwarded to each recipient of the preliminary prospectus according to the record maintained under section 82.

73. (1) Subject to subsection (3) of this section and subsection 78(2), and subject to any waiver or variation consented to in writing by the Director, a prospectus filed under subsection 68(1) or subsection 77(1) shall contain a certificate in the prescribed form, signed by the chief executive officer, the chief financial officer, and, on behalf of the board of directors, any two directors of the issuer, other than the foregoing, duly authorized to sign, and any person or company who is a promoter of the issuer.

(2) Subject to subsection (3) of this section and subsection 78(2), a prospectus filed under subsection 68(2) shall contain a certificate in the prescribed form, signed by the chief executive officer, the chief financial officer, and, on behalf of the board of directors, any two directors of the issuer, other than the foregoing, duly authorized to sign, and any person or company who is a promoter of the issuer.

(3) Where the issuer has only three directors, two of whom are the chief executive officer and the chief financial officer, the certificate may be signed by all the directors of the issuer.

(4) Where the Director is satisfied upon evidence or on submissions that either, or both of, the chief executive officer or chief financial officer of the issuer is for adequate cause not available to sign a certificate in a prospectus, the Director may permit the certificate to be signed by any other responsible officer or officers of the issuer in lieu of either, or both of, the chief executive officer or chief financial officer.

(5) With the consent of the Director, a promoter or a guarantor need not sign the certificate in a prospectus.

(6) The Director may, in his or her discretion, require any person or company who was a promoter of the issuer within the two preceding years or who is a guarantor of the securities being distributed to sign the certificate required by subsection (1) or (2) subject to such conditions as the Director may consider proper.

(7) With the consent of the Director, a promoter or a guarantor may sign a certificate in a prospectus by his, her or its agent duly authorized in writing.

74. (1) Subject to subsection 78(2), where there is an underwriter, a prospectus shall contain a certificate in the prescribed form, signed by the underwriter or underwriters who, with respect to the securities offered by the prospectus, are in a contractual relationship with the issuer or security holder whose securities are being offered by the prospectus.

(2) With the consent of the Director, an underwriter may sign a certificate in a prospectus by his, her or its agent duly authorized in writing.

75. Every prospectus shall contain a statement of the rights given to a purchaser by sections 86 and 193.

76. (1) Subject to subsection (2) of this section and subsection 78(4), the Director shall issue a receipt for a prospectus filed under this Part unless it appears to the Director that it is not in the public interest to do so.

(2) The Director shall not issue a receipt for a prospectus or an amendment to a prospectus if it appears to the Director that

(a) the prospectus or any document required to be filed with it

(i) does not comply in any substantial respect with any of the requirements of this Act or the regulations,

(ii) contains any statement, promise, estimate or forward-looking information that is misleading, false or deceptive, or

(iii) contains a misrepresentation;

(b) an unconscionable consideration has been paid or given or is intended to be paid or given for any services or promotional purposes or for the acquisition of property;

(c) the aggregate of

(i) the proceeds from the sale of the securities under the prospectus that are to be paid into the treasury of the issuer, and

(ii) the other resources of the issuer,

is insufficient to accomplish the purpose of the issue stated in the prospectus;

(d) the issuer cannot reasonably be expected to be financially responsible in the conduct of its business because of the financial condition of

(i) the issuer,

(ii) any of the issuer’s officers, directors, promoters, or control persons, or

(iii) the investment fund manager of the issuer or any of the investment fund manager’s officers, directors or control persons;

(e) the business of the issuer may not be conducted with integrity and in the best interests of the security holders of the issuer because of the past conduct of

(i) the issuer,

(ii) any of the issuer’s officers, directors, promoters, or control persons, or

(iii) the investment fund manager of the issuer or any of the investment fund manager’s officers, directors or control persons;

(f) a person or company that has prepared or certified any part of the prospectus, or that is named as having prepared or certified a report or valuation used in connection with the prospectus, is not acceptable;

(g) an escrow or pooling agreement in the form that the Director considers necessary or advisable with respect to the securities has not been entered into; or

(h) adequate arrangements have not been made for the holding in trust of the proceeds payable to the issuer from the sale of the securities pending the distribution of the securities.

(3) The Director shall not refuse to issue a receipt under subsection (1) or (2) without giving the person or company who filed the prospectus an opportunity to be heard.

(4) Where it appears to the Director that a preliminary prospectus, pro forma prospectus, or prospectus raises a material question involving the public interest under subsection (1) or a new or novel question of interpretation under subsection (2) that might result in the Director refusing to issue a receipt under subsection (1) or (2), the Director may refer the question to the Commission for determination.

(5) The Director shall state the question in writing setting out the facts upon which the question is based.

(6) The question, together with any additional material, shall be lodged by the Director with the Secretary of the Commission, and a copy of the question shall forthwith be served by the Secretary upon any interested person or company.

(7) The Commission, after giving the parties an opportunity to be heard, shall consider and determine the question and refer the matter back to the Director for final consideration under subsections (1) and (2).

(8) Subject to any order of the Federal Court made under section 20, the decision of the Commission on the question is binding on the Director.

77. (1) In this section,

“lapse date” means, with reference to a security that is being distributed under subsection 68(1) or this section, the date that is twelve months after the date of the most recent prospectus relating to the security.

(2) No distribution of a security to which subsection 68(1) applies shall continue after the lapse date, unless a new prospectus that complies with this Part is filed and a receipt for the new prospectus is obtained from the Director.

(3) A distribution may be continued for a further twelve months after a lapse date if

(a) a pro forma prospectus prepared in accordance with the regulations is filed not less than thirty days prior to the lapse date of the previous prospectus;

(b) a prospectus is filed not later than ten days following the lapse date of the previous prospectus; and

(c) a receipt for the prospectus is obtained from the Director within the twenty days following the lapse date of the previous prospectus.

(4) The continued distribution of securities after the lapse date does not contravene subsection (2) unless and until any of the conditions of subsection (3) are not complied with.

(5) Subject to any extension granted under subsection (6), all trades completed in reliance upon subsection (3) after the lapse date may be cancelled at the option of the purchaser within ninety days of the purchaser’s first knowledge of the failure to comply with such conditions where any of the conditions to the continuation of a distribution under subsection (3) are not complied with.

(6) The Commission may, upon an application of a reporting issuer, extend, subject to such terms and conditions as it may impose, the times provided by subsection (3) where in its opinion it would not be prejudicial to the public interest to do so.

78. (1) A person or company may, if permitted by the regulations, file a short form of preliminary prospectus, short form of prospectus, pro forma prospectus, preliminary simplified prospectus, simplified prospectus or pro forma simplified prospectus under section 68 or 77 in the prescribed form and any such prospectus that complies with the applicable regulations shall, for the purposes of section 71, be considered to provide sufficient disclosure of all material facts relating to the securities issued or proposed to be distributed under the prospectus.

(2) A short form prospectus may contain one or more forms of certificate to be signed as alternatives to the forms of certificate set out in subsections 73(1) and (2) and subsection 74(1) and, where any such certificate in a short form prospectus is used in accordance with the regulations, it is not necessary to use the alternative certificate required by subsections 73(1) and (2) and subsection 74(1), as the case may be.

(3) A person or company may, if permitted by the regulations, file a summary statement as a separate document in the prescribed form together with a prospectus filed under section 68 or 77.

(4) Where a summary statement is filed with a prospectus, the Director shall not issue a receipt for the prospectus if it appears to the Director that the summary statement does not comply with the regulations applicable thereto.

(5) A summary statement filed with a prospectus for which a receipt has been issued may be sent or delivered by a dealer to a purchaser of securities instead of a prospectus as required in section 86, and, where a dealer so elects, the provisions of sections 86 and 198 with respect to a prospectus apply with necessary modifications to a summary statement.

(6) Every summary statement sent or delivered to a purchaser shall contain a statement informing the purchaser that a copy of the prospectus which was filed with the summary statement will be provided to the purchaser on request, and each person or company who signs or causes to be signed, as the case may be, the certificate contained in the prospectus shall ensure compliance with any such request.

(7) Where, during the distribution or distribution to the public of a security under a prospectus, an order is made to cease trading in the security, or the receipt issued by the Director for the prospectus is revoked or the prospectus lapses or the use of a prospectus is otherwise prohibited by this Act, the regulations or by a decision of the Commission or an order of a court, a summary statement filed with the prospectus shall cease to have force and effect for the purposes of section 86 unless the Director otherwise orders.

(8) Nothing in this section shall be construed to provide relief from liability arising under section 193 where a misrepresentation is contained in a prescribed short form prospectus and, for the purposes of section 193, where a misrepresentation is contained in a summary statement filed with a prospectus, the misrepresentation shall be deemed to be contained in the prospectus.

79. (1) Where a person or company proposing to make a distribution of previously issued securities of an issuer is unable to obtain from the issuer of the securities information or material that is necessary for the purpose of complying with this Part or the regulations, the Director may order the issuer of the securities to furnish to the person or company that proposes to make the distribution such information and material as the Director considers necessary for the purposes of the distribution, upon such terms and subject to such conditions as the Director considers proper, and all such information and material may be used by the person or company to whom it is furnished for the purpose of complying with this Part and the regulations.

(2) Where a person or company proposing to make a distribution of previously issued securities of an issuer is unable to obtain any or all of the signatures to the certificates required by this Act or the regulations, or otherwise to comply with this Part or the regulations, the Director may, upon being satisfied that all reasonable efforts have been made to comply with this Part and the regulations and that no person or company is likely to be prejudicially affected by such failure to comply, make such order waiving any of the provisions of this Part or the regulations as the Director considers advisable, upon such terms and subject to such conditions as he or she considers proper.

80. (1) In this section,

“waiting period” means the period prescribed by regulation or, if no period is prescribed, the period between the Director’s issuance of a receipt for a preliminary prospectus relating to the offering of a security and the Director’s issuance of a receipt for the prospectus.

(2) Despite section 68, but subject to Part XI, it is permissible during the waiting period

(a) to distribute a notice, circular, advertisement or letter to or otherwise communicate with any person or company identifying the security proposed to be issued, stating the price thereof, if then determined, the name and address of a person or company from whom purchases of the security may be made and containing such further information as may be permitted or required by the regulations, if every such notice, circular, advertisement, letter or other communication states the name and address of a person or company from whom a preliminary prospectus may be obtained;

(b) to distribute a preliminary prospectus; and

(c) to solicit expressions of interest from a prospective purchaser if, prior to such solicitation or forthwith after the prospective purchaser indicates an interest in purchasing the security, a copy of the preliminary prospectus is forwarded to him, her or it.

81. Any dealer distributing a security to which section 80 applies shall, in addition to the requirements of paragraph 80(2)(c), send a copy of the preliminary prospectus to each prospective purchaser who, without solicitation, indicates an interest in purchasing the security and requests a copy of such preliminary prospectus.

82. Any dealer distributing a security to which section 80 applies shall maintain a record of the names and addresses of all persons and companies to whom the preliminary prospectus has been forwarded.

83. Where it appears to the Director that a preliminary prospectus is defective in that it does not substantially comply with the requirements of Canadian securities law as to form and content, the Director may, without giving notice, order that the trading permitted by subsection 80(2) in the security to which the preliminary prospectus relates shall cease until a revised preliminary prospectus satisfactory to the Director is filed and forwarded to each recipient of the defective preliminary prospectus according to the record maintained under section 82.

84. From the date of the issuance by the Director of a receipt for a prospectus relating to a security, a person or company trading in the security in a distribution, either on his, her or its own account or on behalf of any other person or company, may distribute the prospectus, any document filed with or referred to in the prospectus and any notice, circular, advertisement or letter of the nature described in paragraph 80(2)(a) or in the regulations, but shall not distribute any other printed or written material respecting the security that is prohibited by the regulations.

85. (1) Where it appears to the Commission, after the filing of a prospectus under this Part and the issuance of a receipt therefor, that any of the circumstances set out in subsection 76(2) exist, the Commission may order that the distribution of the securities under the prospectus shall cease.

(2) No order shall be made under subsection (1) without a hearing unless in the opinion of the Commission the length of time required for a hearing could be prejudicial to the public interest, in which event a temporary order may be made which shall expire fifteen days from the date of the making thereof unless the hearing is commenced in which case the Commission may extend the order until the hearing is concluded.

(3) A notice of every order made under this section shall be served upon the issuer to whose securities the prospectus relates, and forthwith upon the receipt of the notice,

(a) distribution of the securities under prospectus by the person or company named in the order shall cease; and

(b) any receipt issued by the Director for the prospectus is revoked.

86. (1) A dealer not acting as agent of the purchaser who receives an order or subscription for a security offered in a distribution to which subsection 68(1) or section 77 is applicable shall, unless the dealer has previously done so, send by prepaid mail or deliver to the purchaser the latest prospectus and any amendment to the prospectus filed either before entering into an agreement of purchase and sale resulting from the order or subscription or not later than midnight on the second day, exclusive of Saturdays and holidays, after entering into such agreement.

(2) An agreement of purchase and sale referred to in subsection (1) is not binding upon the purchaser, if the dealer from whom the purchaser purchases the security receives written or telegraphic notice evidencing the intention of the purchaser not to be bound by the agreement of purchase and sale not later than midnight on the second day, exclusive of Saturdays and holidays, after receipt by the purchaser of the latest prospectus and any amendment to the prospectus.

(3) Subsection (2) does not apply if the purchaser is a registrant or if the purchaser sells or otherwise transfers beneficial ownership of the security referred to in subsection (2), otherwise than to secure indebtedness, before the expiration of the time referred to in subsection (2).

(4) For the purpose of this section, where the latest prospectus and any amendment to the prospectus is sent by prepaid mail, the latest prospectus and any amendment to the prospectus shall be deemed conclusively to have been received in the ordinary course of mail by the person or company to whom it was addressed.

(5) The receipt of the latest prospectus or any amendment to the prospectus by a dealer who is acting as agent of or who thereafter commences to act as agent of the purchaser with respect to the purchase of a security referred to in subsection (1) shall, for the purpose of this section, be receipt by the purchaser as of the date on which the agent received such latest prospectus and any amendment to the prospectus.

(6) The receipt of the notice referred to in subsection (2) by a dealer who acted as agent of the vendor with respect to the sale of the security referred to in subsection (1) shall, for the purpose of this section, be receipt by the vendor as of the date on which the agent received such notice.

(7) For the purpose of this section, a dealer shall not be considered to be acting as agent of the purchaser unless the dealer is acting solely as agent of the purchaser with respect to the purchase and sale in question and has not received and has no agreement to receive compensation from or on behalf of the vendor with respect to the purchase and sale.

(8) The onus of proving that the time for giving notice under subsection (2) has expired is upon the dealer from whom the purchaser has agreed to purchase the security.

87. (1) Subject to the regulations, sections 68 and 77 do not apply to a distribution where

(a) the purchaser is

(i) a bank or the Business Development Bank of Canada,

(ii) an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

(iii) a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province,

(iv) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) a subsidiary of any company referred to in subparagraph (i), (ii), (iii) or (iv), where the company owns all of the voting shares of the subsidiary,

(vi) a dealer registered in the category of broker, investment dealer or securities dealer,

(vii) Her Majesty in right of Canada or any province, or

(viii) any municipal corporation or public board or commission in Canada,

who purchases as principal;

(b) the trade is an isolated trade by or on behalf of an issuer in a specific security of its own issue, for the issuer’s account, where the trade is not made in the course of continued and successive transactions of a like nature, and is not made by a person or company whose usual business is trading in securities;

(c) the party purchasing as principal is a company or a person and is recognized by the Commission as an exempt purchaser;

(d) the purchaser purchases as principal, if the trade is in a security which has an aggregate acquisition cost to such purchaser of not less than $150,000 or such other amount as is prescribed;

(e) the trade is to a lender, pledgee, mortgagee or other encumbrancer from the holdings of any person, company or combination of persons or companies described in paragraph (c) of the definition of “distribution” in subsection 2(1) for the purpose of giving collateral for a debt made in good faith;

(f) the trade is made by an issuer

(i) in a security of its own issue that is distributed by it to holders of its securities as a stock dividend or other distribution out of earnings or surplus,

(ii) in a security whether of its own issue or not that is distributed by it to holders of its securities as incidental to a good faith reorganization or winding up of the issuer or distribution of its assets for the purpose of winding up its affairs pursuant to the laws of the jurisdiction in which the issuer was incorporated, organized or continued, or

(iii) in securities of its own issue transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

provided that no commission or other remuneration is paid or given to others in respect of such distribution except for ministerial or professional services or for services performed by a registered dealer;

(g) the trade is made by an issuer in a security of a reporting issuer held by it that is distributed by it to holders of its securities as a dividend in kind;

(h) the trade is made by an issuer

(i) in a right, transferable or otherwise granted by the issuer to holders of its securities to purchase additional securities of its own issue and the issue of securities pursuant to the exercise of the right, or

(ii) in securities of a reporting issuer held by it transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

if the issuer has given the Commission written notice stating the date, amount, nature and conditions of the proposed trade, including the approximate net proceeds to be derived by the issuer on the basis of such additional securities being fully taken up and either

(iii) the Commission has not informed the issuer in writing within ten days of the giving of the notice that it objects to the proposed trade, or

(iv) the issuer has delivered to the Commission information relating to the securities that is satisfactory to and accepted by the Commission;

(i) the trade is made in a security of a company that is exchanged by or for the account of such company with another company or the holders of the securities of that other company in connection with

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company which in turn loses its existence by operation of law, or under which the existing companies merge into a new company;

(j) the trade is made in a security of an issuer that is exchanged by or for the account of the issuer with the security holders of another issuer in connection with a takeover bid as defined in Part XVIII;

(k) the trade is made in a security to a person or company pursuant to a takeover bid or issuer bid made by that person or company;

(l) the trade is made by an issuer in a security of its own issue as consideration for a portion or all of the assets of any person or company, if the fair value of the assets so purchased is not less than $150,000 or such other amount as is prescribed;

(m) the trade is made by an issuer in a security of its own issue in consideration of mining claims where the vendor enters into such escrow or pooling agreement as the Director considers necessary or where the security proposed to be issued, or the security underlying that security, is listed and posted for trading on a stock exchange recognized for the purpose of this paragraph by the Commission and the issuer has received, where required by the bylaws, rules or policies of that stock exchange, the consent of that stock exchange to the issuance of the security;

(n) the trade is made by an issuer in the securities of its own issue with its employees or the employees of an affiliate who are not induced to purchase by expectation of employment or continued employment, whether such trade takes place directly between the issuer and the employee or through a trustee or an administrator of a share purchase plan established for the benefit of employees of the issuer or its affiliates;

(o) the trade is made by an issuer in securities of its own issue where the trade is reasonably necessary to facilitate the incorporation or organization of the issuer and the securities are traded for a nominal consideration to not more than five incorporators or organizers unless the statute under which the issuer is incorporated or organized requires the trade to be for a greater consideration or to a larger number of incorporators or organizers, in which case the securities may be traded for that greater consideration or to that larger number of incorporators or organizers;

(p) the trade is made by an issuer with a view to the sale of securities of its own issue if solicitations are made to not more than fifty prospective purchasers resulting in sales to not more than twenty-five purchasers and

(i) each purchaser purchases as principal, and all of the purchases are completed within a period of six months of the first purchase except that subsequent sales to the same purchasers may be carried out if made in compliance with written agreements entered into during that six-month period,

(ii) each purchaser has access to substantially the same information concerning the issuer that a prospectus filed under this Act would provide and is

(A) an investor who, by virtue of net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the issuer whose securities are being offered and who is a registered adviser or a registered dealer, is able to evaluate the prospective investment on the basis of information respecting the investment presented by the issuer,

(B) a senior officer or director of the issuer,

(C) a parent, brother, sister or child of the person mentioned in sub-subparagraph (B), or

(D) a person to whom the person mentioned in sub-subparagraph (B) is married or with whom the person mentioned in sub-subparagraph (B) is living in a conjugal relationship outside marriage,

(iii) the offer and sale of the securities are not accompanied by an advertisement and no selling or promotional expenses have been paid or incurred in connection therewith, except for professional services or for services performed by a registered dealer, and

(iv) no promoter of the issuer, other than a registered dealer, has acted as a promoter of any other issuer which has traded in securities of its own issue pursuant to the exemption in this paragraph within the previous twelve months,

but an issuer which has relied upon this exemption may not again thereafter rely upon this exemption;

(q) the trade is made from one registered dealer to another registered dealer where the registered dealer making the purchase is acting as principal; or

(r) the trade is made between a person or company and an underwriter acting as purchaser or between or among underwriters.

(2) For the purpose of subsection (1), a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, shall be deemed to be acting as principal when it trades as trustee or as agent for accounts fully managed by it.

(3) Subject to the regulations, where a trade has been made under paragraph (1)(a), (b), (c), (d), (l), (p) or (q), the vendor shall within ten days file a report prepared and executed in accordance with the regulations, but no report is required where, by a trade under paragraph (1)(a), a bank listed in Schedule I or II to the Bank Act or a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province acquires from a customer an evidence of indebtedness of the customer or an equity investment in the customer acquired concurrently with an evidence of indebtedness.

(4) The first trade in securities previously acquired pursuant to an exemption contained in paragraph (1)(a), (b), (c), (d), (l), (m), (p) or (q), other than a further trade exempted by Canadian securities law, is a distribution, unless

(a) the issuer of the security is a reporting issuer and is not in default of any requirement of this Act or the regulations;

(b)(i) the securities are listed and posted for trading on a stock exchange recognized for this purpose by the Commission and comply with the requirements prescribed by the regulations and have been held at least six months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is the later, or

(ii) the securities are bonds, debentures or other evidences of indebtedness issued or guaranteed by an issuer or are preferred shares of an issuer and comply with the requirements prescribed by the regulations and have been held at least six months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is the later, or

(iii) the securities are listed and posted for trading on a stock exchange recognized for this purpose by the Commission or are bonds, debentures or other evidences of indebtedness issued or guaranteed by the reporting issuer whose securities are so listed, and have been held at least one year from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is later, or

(iv) the securities have been held at least eighteen months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is later; and

(c) the vendor files a report within ten days prepared and executed in accordance with the regulations,

provided that no unusual effort is made to prepare the market or to create a demand for such securities and no extraordinary commission or consideration is paid in respect of such trade.

(5) The first trade in securities previously acquired under an exemption contained in paragraph (1)(f), (i), (j), (k) or (n) and the first trade in previously issued securities of a company that has ceased to be a private company, other than a further trade exempted by Canadian securities law, is a distribution except that where

(a) the issuer of the securities is a reporting issuer and has been a reporting issuer for at least twelve months or, in the case of securities acquired under paragraph (1)(i), one of the amalgamating or merged corporations or one of the continuing corporations has been a reporting issuer for twelve months and the issuer is not in default of any requirement of this Act or the regulations;

(b) disclosure to the Commission has been made of its exempt trade or in the case of a company that has ceased to be a private company the issuer has filed with the Commission such report with respect to its outstanding securities as may be required by the regulations; and

(c) no unusual effort is made to prepare the market or to create a demand for the securities and no extraordinary commission or consideration is paid in respect of the trade,

then such first trade is a distribution only if it is a distribution as defined in paragraph (c) of the definition of “distribution” in subsection 2(1).

(6) The first trade in securities previously purchased under an exemption contained in paragraph (1)(o) or (r), other than a further trade exempted by Canadian securities law, is a distribution.

(7) Sections 68 and 77 do not apply to a distribution within the meaning of paragraph (c) of the definition of “distribution” in subsection 2(1) or by a lender, pledgee, mortgagee or other encumbrancer for the purpose of liquidating a debt made in good faith by selling or offering for sale a security pledged, mortgaged or otherwise encumbered in good faith as collateral for the debt in accordance with paragraph (1)(e), if

(a) the distribution is exempted by Canadian securities law; or

(b) the issuer of the security is a reporting issuer and has been a reporting issuer for at least eighteen months and is not in default of any requirement of this Act or the regulations and the seller, unless exempted by the regulations,

(i) files with the Commission and any stock exchange recognized by the Commission for this purpose on which the securities are listed at least seven days and not more than fourteen days prior to the first trade made to carry out the distribution

(A) a notice of intention to sell in the form prescribed by the regulations disclosing particulars of the control position known to the seller, the number of securities to be sold and the method of distribution, and

(B) a declaration signed by each seller as at a date not more than twenty-four hours prior to its filing and prepared and executed in accordance with the regulations and certified as follows:

“The seller for whose account the securities to which this certificate relates are to be sold hereby represents that the seller has no knowledge of any material change which has occurred in the affairs of the issuer of the securities which has not been generally disclosed and reported to the Commission, nor has the seller any knowledge of any other material adverse information in regard to the current and prospective operations of the issuer which have not been generally disclosed”,

and,

(ii) files within three days after the completion of any trade, a report of the trade in the form prescribed under Part XIX,

provided that the notice required to be filed under clause (i)(A) and the declaration required to be filed under clause (i)(B) shall be renewed and filed at the end of sixty days after the original date of filing and thereafter at the end of each twenty-eight day period so long as any of the securities specified under the original notice have not been sold or until notice has been filed that the securities so specified or any part thereof are no longer for sale; and

(c) no unusual effort is made to prepare the market or to create a demand for the securities and no extraordinary commission or other consideration is paid in respect of such trade.

(8) The Commission may publish a list of reporting issuers who are in default of any requirement of this Act or the regulations.

88. (1) Sections 68 and 77 do not apply to a distribution of securities

(a) referred to in subsection 52(2), excepting paragraphs (o) and (p) thereof;

(b) that are listed and posted for trading on any stock exchange recognized for the purpose of this section by the Commission where the securities are distributed through the facilities of the stock exchange pursuant to the rules of the stock exchange and the requirements of the Commission, provided that a statement of material facts, which shall comply as to form and content with the regulations, is filed with and is accepted for filing by the stock exchange and the Commission;

(c) that are options to sell or purchase securities known as puts and calls or any combination thereof which provide that the holder thereof may sell to or purchase from the writer of the option a specified amount of securities at a specific price, on or prior to a specified date or the occurrence of a specified event, provided

(i) the option has been written by a member of an exchange recognized by the Commission for this purpose or the performance under the option is guaranteed by a member of an exchange recognized by the Commission for this purpose,

(ii) the securities that are the subject of the option are listed and posted for trading on an exchange recognized by the Commission for this purpose, and

(iii) the option is in the form from time to time prescribed by the regulations; or

(d) that are exempted by the regulations.

(2) Sections 86 and 193 apply with necessary modifications to a distribution under paragraph (1)(b) as if sections 68 and 77 were applicable thereto, and the statement of material facts referred to in paragraph (1)(b) shall be deemed conclusively to be a prospectus for the purposes of sections 86 and 193.

89. (1) The Commission may, upon the application of an interested person or company, rule that any trade, intended trade, security, person or company is not subject to section 44 or 68 where it is satisfied that to do so would not be prejudicial to the public interest, and may impose such terms and conditions as are considered necessary.

(2) Where doubt exists whether a distribution of any security has been concluded or is currently in progress, the Commission may determine the question and rule accordingly.

(3) A decision of the Commission under this section is final and there is no appeal therefrom.

90. (1) Subject to subsection (3), where a material change occurs in the affairs of a reporting issuer, it shall forthwith issue and file a news release authorized by a senior officer disclosing the nature and substance of the change.

(2) Subject to subsection (3), the reporting issuer shall file a report of such material change in accordance with the regulations as soon as practicable and in any event within ten days of the date on which the change occurs.

(3) Where,

(a) in the opinion of the reporting issuer, and if that opinion is arrived at in a reasonable manner, the disclosure required by subsections (1) and (2) would be unduly detrimental to the interests of the reporting issuer; or

(b) the material change consists of a decision to implement a change made by senior management of the issuer who believe that confirmation of the decision by the board of directors is probable and senior management of the issuer has no reason to believe that persons with knowledge of the material change have made use of that knowledge in purchasing or selling securities of the issuer,

the reporting issuer may, in lieu of compliance with subsection (1), forthwith file with the Commission the report required under subsection (2) marked so as to indicate that it is confidential, together with written reasons for non-disclosure.

(4) Where a report has been filed with the Commission under subsection (3), the reporting issuer shall advise the Commission in writing where it believes the report should continue to remain confidential within ten days of the date of filing of the initial report and every ten days thereafter until the material change is generally disclosed in the manner referred to in subsection (1) or, if the material change consists of a decision of the type referred to in paragraph (3)(b), until that decision has been rejected by the board of directors of the issuer.

(5) Although a report has been filed with the Commission under subsection (3), the reporting issuer shall promptly generally disclose the material change in the manner referred to in subsection (1) upon the reporting issuer becoming aware, or having reasonable grounds to believe, that persons or companies are purchasing or selling securities of the reporting issuer with knowledge of the material change that has not been generally disclosed.

91. (1) No person or company in a special relationship with a reporting issuer shall purchase or sell securities of the reporting issuer with the knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed.

(2) No reporting issuer and no person or company in a special relationship with a reporting issuer shall inform, other than in the necessary course of business, another person or company of a material fact or material change with respect to the reporting issuer before the material fact or material change has been generally disclosed.

(3) No person or company that proposes

(a) to make a takeover bid, as defined in Part XVIII, for the securities of a reporting issuer;

(b) to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a reporting issuer; or

(c) to acquire a substantial portion of the property of a reporting issuer,

shall inform another person or company of a material fact or material change with respect to the reporting issuer before the material fact or material change has been generally disclosed except where the information is given in the necessary course of business to effect the takeover bid, business combination or acquisition.

(4) No person or company shall be found to have contravened subsection (1), (2) or (3) if the person or company proves that the person or company reasonably believed that the material fact or material change had been generally disclosed.

(5) For the purposes of this section,

“person or company in a special relationship with a reporting issuer” means

(a) a person or company that is an insider, affiliate or associate of

(i) the reporting issuer,

(ii) a person or company that is proposing to make a takeover bid, as defined in Part XVIII, for the securities of the reporting issuer, or

(iii) a person or company that is proposing to become a party to a reorganization, amalgamation, merger or arrangement or similar business combination with the reporting issuer or to acquire a substantial portion of its property;

(b) a person or company that is engaging in or proposes to engage in any business or professional activity with or on behalf of the reporting issuer or with or on behalf of a person or company described in subparagraph (a)(ii) or (iii);

(c) a person who is a director, officer or employee of the reporting issuer or of a person or company described in subparagraph (a)(ii) or (iii) or paragraph (b);

(d) a person or company that learned of the material fact or material change with respect to the reporting issuer while the person or company was a person or company described in paragraph (a), (b) or (c);

(e) a person or company that learns of a material fact or material change with respect to the issuer from any other person or company described in this subsection, including a person or company described in this paragraph, and knows or ought reasonably to have known that the other person or company is a person or company in such a relationship.

(6) For the purpose of subsection (1), a security of the reporting issuer shall be deemed to include

(a) a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer; or

(b) a security, the market price of which varies materially with the market price of the securities of the issuer.

92. (1) Every reporting issuer that is not a mutual fund shall file within sixty days of the date to which it is made up an interim financial statement,

(a) where the reporting issuer has not completed its first financial year, for the periods commencing with the beginning of that year and ending nine, six and three months respectively before the date on which that year ends, but no interim financial statement is required to be filed for any period that is less than three months in length;

(b) where the reporting issuer has completed its first financial year, to the end of each of the three-month, six-month and nine-month periods of the current financial year that commenced immediately following the last financial year, including a comparative statement to the end of each of the corresponding periods in the last financial year,

made up and certified as required by the regulations and in accordance with generally accepted accounting principles.

(2) Every mutual fund in Canada shall file within sixty days of the date to which it is made up an interim financial statement,

(a) where the mutual fund in Canada has not completed its first financial year, for the period commencing with the beginning of that year and ending six months before the date on which that year ends but, if the first financial year is less than six months in length, no interim financial statement is required to be filed;

(b) where the mutual fund in Canada has completed its first financial year, for the six-month period of the current financial year that commenced immediately following the last financial year,

made up and certified as required by the regulations and in accordance with generally accepted accounting principles.

93. (1) Every reporting issuer that is not a mutual fund and every mutual fund in Canada shall file annually within 140 days from the end of its last financial year comparative financial statements relating separately to

(a) the period that commenced on the date of incorporation or organization and ended as of the close of the first financial year or, if the reporting issuer or mutual fund has completed a financial year, the last financial year, as the case may be; and

(b) the period covered by the financial year next preceding the last financial year, if any,

made up and certified as required by the regulations and in accordance with generally accepted accounting principles.

(2) Every financial statement referred to in subsection (1) shall be accompanied by a report of the auditor of the reporting issuer or mutual fund prepared in accordance with the regulations.

(3) The auditor of a reporting issuer or mutual fund shall make such examinations as will enable the auditor to make the report required by subsection (2).

(4) For the purposes of this Part,

“auditor”, where used in relation to the reporting issuer or mutual fund, includes the auditor of the reporting issuer or mutual fund and any other independent public accountant.

94. (1) Every reporting issuer or mutual fund in Canada that is required to file a financial statement under section 92 or 93 shall send a true copy of the financial statement to every holder of its securities whose latest address, as shown on its books, is in Canada.

(2) The reporting issuer or mutual fund in Canada shall send the true copy of the financial statement no later than the end of the period during which it is required to file the financial statement under section 92 or 93.

(3) Despite subsection (1), a reporting issuer or mutual fund in Canada is not required to send a copy of the financial statement to a security holder who holds its evidence of indebtedness only.

(4) If the laws of a reporting issuer’s jurisdiction of incorporation, organization or continuance impose requirements corresponding to the requirements in subsections (1) and (2), compliance with the requirements imposed by that jurisdiction shall be deemed to be compliance with the requirements in subsections (1) and (2).

95. Upon the application of a reporting issuer or other interested person or company or upon the motion of the Commission, the Commission may, where in the opinion of the Commission to do so would not be prejudicial to the public interest, make an order on such terms and conditions as the Commission may impose, exempting, in whole or in part, any reporting issuer from a requirement of this Part or the regulations relating to a requirement of this Part

(a) if such requirement conflicts with a requirement of the laws of the jurisdiction under which the reporting issuer is incorporated, organized or continued;

(b) if the reporting issuer ordinarily distributes financial information to holders of its securities in a form, or at times, different from those required by this Part; or

(c) if otherwise satisfied in the circumstances of the particular case that there is adequate justification for so doing.

96. (1) Where the management of a reporting issuer is required to send an information circular under paragraph 100(1)(a), the reporting issuer shall forthwith file a copy of such information circular certified in accordance with the regulations.

(2) In any case where subsection (1) is not applicable, the reporting issuer shall file annually within 140 days from the end of its last financial year a report prepared and certified in accordance with the regulations.

97. Where the laws of the jurisdiction in which the reporting issuer was incorporated, organized or continued require the reporting issuer to file substantially the same information in that jurisdiction as is required by this Part, the reporting issuer may comply with the filing requirements of this Part by filing copies of the news release, timely disclosure report, information circular or financial statements and auditor’s report, as the case may be, required by that jurisdiction provided such releases, reports, circulars or statements are manually signed or certified in accordance with the regulations.

98. In this Part,

“information circular” means an information circular prepared in accordance with the regulations;

“solicit” and “solicitation” include

(a) any request for a proxy whether or not accompanied by or included in a form of proxy;

(b) any request to execute or not to execute a form of proxy or to revoke a proxy;

(c) the sending or delivery of a form of proxy or other communication to a security holder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy;

(d) the sending or delivery of a form of proxy to a security holder under section 99,

but do not include

(e) the sending or delivery of a form of proxy to a security holder in response to an unsolicited request made by the security holder or on the security holder’s behalf;

(f) the performance by any person or company of ministerial acts or professional services on behalf of a person or company soliciting a proxy; or

(g) such other activities as may be prescribed in the regulations.

99. Subject to section 102, if the management of a reporting issuer gives or intends to give to holders of its voting securities notice of a meeting, the management shall, concurrently with or prior to giving the notice to the security holders whose latest address as shown on the books of the reporting issuer is in Canada, send to each such security holder who is entitled to notice of meeting, at the security holder’s latest address as shown on the books of the reporting issuer, a form of proxy for use at the meeting that complies with the regulations.

100. (1) Subject to subsection (2) and section 102, no person or company shall solicit proxies from holders of its voting securities whose latest address as shown on the books of the reporting issuer is in Canada unless

(a) in the case of a solicitation by or on behalf of the management of a reporting issuer, an information circular, either as an appendix to or as a separate document accompanying the notice of the meeting, is sent to each such security holder of the reporting issuer whose proxy is solicited at the security holder’s latest address as shown on the books of the reporting issuer; or

(b) in the case of any other solicitation, the person or company making the solicitation, concurrently with or prior thereto, delivers or sends an information circular to each such security holder whose proxy is solicited.

(2) Subsection (1) does not apply to

(a) any solicitation, otherwise than by or on behalf of the management of a reporting issuer, where the total number of security holders whose proxies are solicited is not more than fifteen, two or more persons or companies who are the joint registered owners of one or more securities being counted as one security holder;

(b) any solicitation, otherwise than by or on behalf of the management of a reporting issuer, in such other circumstances as may be prescribed in the regulations;

(c) any solicitation by a person or company made under section 65; or

(d) any solicitation by a person or company in respect of securities of which he, she or it is the beneficial owner.

101. The chair at a meeting has the right not to conduct a vote by way of ballot on any matter or group of matters in connection with which the form of proxy has provided a means whereby the person or company whose proxy is solicited may specify how such person or company wishes the securities registered in his, her or its name to be voted unless

(a) a poll is demanded by any security holder present at the meeting in person or represented thereat by proxy; or

(b) proxies requiring that the securities represented thereby be voted against what would otherwise be the decision of the meeting in relation to such matters or group of matters total more than 5 per cent of all the voting rights attached to all the securities entitled to be voted and be represented at the meeting.

102. (1) Where a reporting issuer is complying with the requirements of the laws of the jurisdiction under which it is incorporated, organized or continued and the requirements are substantially similar to the requirements of this Part, the requirements of this Part do not apply.

(2) Subject to subsection (1), upon the application of any interested person or company, the Commission may,

(a) if a requirement of this Part conflicts with a requirement of the laws of the jurisdiction under which the reporting issuer is incorporated, organized or continued; or

(b) if otherwise satisfied in the circumstances of the particular case that there is adequate justification for so doing,

make an order on such terms and conditions as the Commission may impose, exempting, in whole or in part, a person or company from the requirements of this Part and of section 96.

INTERPRETATION

103. (1) In this Part,

“bid circular” means a bid circular prepared in accordance with section 114;

“business day” means a day other than a Saturday or holiday;

“class of securities” includes a series of a class of securities;

“equity security” means a security of an issuer that carries a residual right to participate in the earnings of the issuer and, on liquidation or winding up of the issuer, in its assets;

“formal bid” means a formal takeover bid or a formal issuer bid;

“formal bid requirements” means sections 107 to 140;

“formal issuer bid” means an issuer bid that is not exempt from the formal bid requirements by sections 148 to 155;

“formal takeover bid” means a takeover bid that is not exempt from the formal bid requirements by sections 141 to 147;

“issuer bid” means an offer to acquire or redeem securities of an issuer made by the issuer to one or more persons or companies, any of whom is in Canada or whose last address as shown on the books of the offeree issuer is in Canada, and also includes an acquisition or redemption of securities of the issuer by the issuer from those persons or companies, but does not include an offer to acquire or redeem or an acquisition or redemption

(a) if no valuable consideration is offered or paid by the issuer for the securities;

(b) if the offer to acquire or redeem, or the acquisition or redemption is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders; or

(c) if the securities are debt securities that are not convertible into securities other than debt securities;

“offeree issuer” means an issuer whose securities are the subject of a takeover bid, an issuer bid or an offer to acquire;

“offeror” means, except in sections 107 to 111, a person or company that makes a takeover bid, an issuer bid or an offer to acquire;

“offeror’s securities” means securities of an offeree issuer beneficially owned, or over which control or direction is exercised, on the date of an offer to acquire, by an offeror or by any person or company acting jointly or in concert with the offeror;

“offer to acquire” means

(a) an offer to purchase, or a solicitation of an offer to sell, securities;

(b) an acceptance of an offer to sell securities, whether or not the offer has been solicited; or

(c) any combination of the above;

“published market” means, with respect to any class of securities, a market in Canada or outside of Canada on which the securities are traded, if the prices at which they have been traded on that market are regularly

(a) disseminated electronically; or

(b) published in a newspaper or business or financial publication of general and regular paid circulation;

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary;

“takeover bid” means an offer to acquire outstanding voting securities or equity securities of a class made to one or more persons or companies, any of whom is in Canada or whose last address as shown on the books of the offeree issuer is in Canada, where the securities subject to the offer to acquire, together with the offeror’s securities, constitute in the aggregate 20 per cent or more of the outstanding securities of that class of securities at the date of the offer to acquire but does not include an offer to acquire if the offer to acquire is a step in an amalgamation, merger, reorganization or arrangement that requires approval in a vote of security holders.

(2) For the purposes of this Part, an issuer shall be deemed to be an affiliate of another issuer if one of them is the subsidiary of the other or if each of them is controlled by the same person or company.

(3) For the purposes of this Part, a person or company controls a second person or company

(a) if the first person or company, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person or company carrying votes which, if exercised, would entitle the first person or company to elect a majority of the directors of the second person or company, unless the first person or company holds the voting securities only to secure an obligation;

(b) if the second person or company is a partnership, other than a limited partnership, and the first person or company holds more than 50 per cent of the interests of the partnership; or

(c) if the second person or company is a limited partnership and the general partner of the limited partnership is the first person or company.

(4) For the purposes of this Part, a period of days is to be computed as beginning on the day following the event that began the period and ending at 11:59 p.m. on the last day of the period if that day is a business day or at 11:59 p.m. on the next business day if the last day of the period does not fall on a business day.

(5) For the purposes of this Part,

(a) a security shall be deemed to be convertible into a security of another class if, whether or not on conditions, it is or may be convertible into or exchangeable for, or if it carries the right or obligation to acquire, a security of the other class, whether of the same or another issuer; and

(b) a security that is convertible into a security of another class shall be deemed to be convertible into a security or securities of each class into which the second-mentioned security may be converted, either directly or through securities of one or more other classes of securities that are themselves convertible.

104. (1) For the purposes of this Part, in determining the beneficial ownership of securities of an offeror or of any person or company acting jointly or in concert with the offeror, at any given date, the offeror or the person or company shall be deemed to have acquired and to be the beneficial owner of a security, including an unissued security, if the offeror or the person or company is the beneficial owner of a security convertible into the security within sixty days following that date or has a right or obligation permitting or requiring the offeror or the person or company, whether or not on conditions, to acquire beneficial ownership of the security within sixty days, by a single transaction or a series of linked transactions.

(2) The number of outstanding securities of a class in respect of an offer to acquire includes securities that are beneficially owned as determined in accordance with subsection (1).

(3) If two or more offerors acting jointly or in concert make one or more offers to acquire securities of a class, the securities subject to the offer or offers to acquire shall be deemed to be securities subject to the offer to acquire of each offeror for the purpose of determining whether an offeror is making a takeover bid.

(4) For the purposes of this section, an offeror is not a beneficial owner of securities solely because there is an agreement, commitment or understanding that a security holder will tender the securities under a formal bid made by the offeror.

105. (1) For the purposes of this Part, it is a question of fact as to whether a person or company is acting jointly or in concert with an offeror and, without limiting the generality of the foregoing,

(a) the following shall be deemed to be acting jointly or in concert with an offeror:

(i) a person or company who, as a result of any agreement, commitment or understanding with the offeror or with any other person or company acting jointly or in concert with the offeror, acquires or offers to acquire securities of the same class as those subject to the offer to acquire, and

(ii) an affiliate of the offeror; and

(b) the following shall be presumed to be acting jointly or in concert with an offeror:

(i) a person or company who, as a result of any agreement, commitment or understanding with the offeror or with any other person or company acting jointly or in concert with the offeror, intends to exercise jointly or in concert with the offeror or with any person or company acting jointly or in concert with the offeror any voting rights attaching to any securities of the offeree issuer, and

(ii) an associate of the offeror.

(2) Subsection (1) does not apply to a registered dealer acting solely in an agency capacity for the offeror in connection with a bid and not executing principal transactions in the class of securities subject to the offer to acquire or performing services beyond the customary functions of a registered dealer.

(3) For the purposes of this section, a person or company is not acting jointly or in concert with an offeror solely because there is an agreement, commitment or understanding that the person or company will tender securities under a formal bid made by the offeror.

106. For the purposes of this Part, a reference to an offer to acquire or to the acquisition or ownership of securities or to control or direction over securities includes a direct or indirect offer to acquire or the direct or indirect acquisition or ownership of securities, or the direct or indirect control or direction over securities, as the case may be.

BID INTEGRATION RULES FOR FORMAL BIDS

107. In sections 108 to 111,

“offeror” means

(a) a person or company making a formal bid;

(b) a person or company acting jointly or in concert with a person or company referred to in paragraph (a);

(c) a control person of a person or company referred to in paragraph (a); or

(d) a person or company acting jointly or in concert with the control person referred to in paragraph (c).

108. (1) An offeror shall not offer to acquire, or make or enter into an agreement, commitment or understanding to acquire beneficial ownership of any securities of the class that are subject to a formal takeover bid or securities convertible into securities of that class otherwise than under the bid on and from the day of the announcement of the offeror’s intention to make the bid until the expiry of the bid.

(2) Subsection (1) does not apply to an offeror’s acquisitions of beneficial ownership of 5 per cent or less, in the aggregate, of the outstanding securities of the class that is subject to the bid if the acquisitions satisfy such conditions as may be specified by regulation.

(3) For the purposes of subsection (2), the acquisition of beneficial ownership of securities that are convertible into securities of the class that is subject to the bid shall be deemed to be an acquisition of the securities as converted.

(4) An offeror shall not offer to acquire, or make or enter into an agreement, commitment or understanding to acquire, beneficial ownership of any securities of the class that are subject to a formal issuer bid, or securities that are convertible into securities of that class, otherwise than under the bid on and from the day of the announcement of the offeror’s intention to make the bid until the expiry of the bid.

(5) Subsections (1) and (4) do not apply in such other circumstances as may be specified by regulation.

109. (1) If, within the period of ninety days immediately preceding a formal takeover bid, an offeror acquired beneficial ownership of securities of the class subject to the bid in a transaction not generally available on identical terms to holders of that class of securities,

(a) the offeror shall offer

(i) consideration for securities deposited under the bid at least equal to and in the same form as the highest consideration that was paid on a per security basis under any such prior transaction, or

(ii) at least the cash equivalent of that consideration; and

(b) the offeror shall offer to acquire under the bid that percentage of the securities of the class subject to the bid that is at least equal to the highest percentage that the number of securities acquired from a seller in any such prior transaction was of the total number of securities of that class beneficially owned by that seller at the time of that prior transaction.

(2) Subsection (1) does not apply to trades effected in the normal course on a published market if the trades satisfy such conditions as may be specified by regulation.

(3) Subsection (1) does not apply in such other circumstances as may be specified by regulation.

110. (1) During the period beginning with the expiry of a formal bid and ending at the end of the twentieth business day after that, whether or not any securities are taken up under the bid, an offeror shall not acquire or offer to acquire beneficial ownership of securities of the class that was subject to the bid except by way of a transaction that is generally available to holders of that class of securities on identical terms.

(2) Subsection (1) does not apply to trades effected in the normal course on a published market if the trades satisfy such conditions as may be specified by regulation.

(3) Subsection (1) does not apply in such other circumstances as may be specified by regulation.

111. (1) An offeror, except pursuant to the formal bid, shall not sell, or make or enter into an agreement, commitment or understanding to sell, any securities of the class subject to the bid, or securities that are convertible into securities of that class, beginning on the day of the announcement of the offeror’s intention to make the bid until the expiry of the bid.

(2) Despite subsection (1), an offeror may, before the expiry of a bid, make or enter into an agreement, commitment or understanding to sell securities that may be taken up by the offeror under the bid, after the expiry of the bid, if the intention to sell is disclosed in the bid circular.

(3) Subsection (1) does not apply in such other circumstances as may be specified by regulation.

MAKING A FORMAL BID

112. An offeror shall make a formal bid to all holders of the class of securities subject to the bid who are in Canada by sending the bid

(a) to each holder of that class of securities whose last address as shown on the books of the offeree issuer is in Canada; and

(b) to each holder of securities that, before the expiry of the deposit period referred to in the bid, are convertible into securities of that class, whose last address as shown on the books of the offeree issuer is in Canada.

113. (1) An offeror shall commence a formal takeover bid

(a) by publishing an advertisement containing a brief summary of the bid in at least one major daily newspaper of general and regular paid circulation in Canada; or

(b) by sending the bid to the security holders described in section 112.

(2) An offeror shall commence a formal issuer bid by sending the bid to the security holders described in section 112.

114. (1) An offeror making a formal bid shall prepare a takeover bid circular or an issuer bid circular, as the case may be, containing the information required by the regulations and in the form required by the regulations and shall send the bid circular either as part of the bid or together with the bid.

(2) An offeror commencing a formal takeover bid by means of an advertisement under paragraph 113(1)(a) shall,

(a) on or before the date of first publication of the advertisement, deliver the bid and the bid circular to the offeree issuer’s principal office and file the bid, the bid circular and the advertisement;

(b) on or before the date of first publication of the advertisement, request from the offeree issuer a list of security holders described in section 112; and

(c) not later than two business days after receipt of the list of security holders referred to in paragraph (b), send the bid and the bid circular to those security holders.

(3) An offeror commencing a takeover bid under paragraph 113(1)(b) shall file the bid and the bid circular and deliver them to the offeree issuer’s principal office on the day the bid is sent, or as soon as practicable after that.

(4) An offeror making a formal issuer bid shall file the bid and the bid circular on the day the bid is sent, or as soon as practicable after that.

115. (1) If, before the expiry of a formal bid or after the expiry of a bid but before the expiry of all rights to withdraw the securities deposited under the bid, a change has occurred in the information contained in the bid circular or any notice of change or notice of variation that would reasonably be expected to affect the decision of the security holders of the offeree issuer to accept or reject the bid, the offeror shall promptly

(a) issue and file a news release; and

(b) send a notice of the change to every person or company to whom the bid was required to be sent and whose securities were not taken up before the date of the change.

(2) Subsection (1) does not apply to a change that is not within the control of the offeror or of an affiliate of the offeror unless it is a change in a material fact relating to the securities being offered in exchange for securities of the offeree issuer.

(3) For the purposes of this section, a variation in the terms of a bid does not constitute a change in information.

(4) A notice of change in relation to a bid circular shall contain the information required by the regulations and be in the form required by the regulations.

116. (1) If there is a variation in the terms of a formal bid, including any extension of the period during which securities may be deposited under the bid, and whether or not that variation results from the exercise of any right contained in the bid, the offeror shall promptly issue and file a news release and send a notice of variation to every person or company to whom the bid was required to be sent and whose securities were not taken up before the date of the variation.

(2) A notice of variation in relation to a formal bid shall contain the information required by the regulations and be in the form required by the regulations.

(3) If there is a variation in the terms of a formal bid, the period during which securities may be deposited under the bid shall not expire before ten days after the date of the notice of variation.

(4) Subsections (1) and (3) do not apply to a variation in the terms of a bid consisting solely of the waiver of a condition in the bid and any extension of the bid resulting from the waiver where the consideration offered for the securities consists solely of cash, but in that case the offeror shall promptly issue and file a news release announcing the waiver.

(5) A variation in the terms of a formal bid, other than a variation that is the waiver by the offeror of a condition that is specifically stated in the bid as being waivable at the sole option of the offeror, shall not be made after the expiry of the period, including any extension of the period, during which the securities may be deposited under the bid.

117. A notice of change or notice of variation in respect of a formal bid shall be filed and, in the case of a takeover bid, delivered to the offeree issuer’s principal office on the day the notice of change or notice of variation is sent to security holders of the offeree issuer or as soon as practicable after that.

118. (1) If a change or variation occurs to a formal takeover bid that was commenced by means of an advertisement and if the offeror has complied with paragraphs 114(2)(a) and (b) but has not yet sent the bid and the bid circular as required by paragraph 114(2)(c), the offeror shall

(a) publish an advertisement that contains a brief summary of the change or variation in at least one major daily newspaper of general and regular paid circulation in Canada;

(b) concurrently with the date of first publication of the advertisement,

(i) file the advertisement, and

(ii) file and deliver a notice of change or notice of variation to the offeree issuer’s principal office; and

(c) subsequently send the bid, the bid circular and the notice of change or notice of variation to the security holders of the offeree issuer before the expiration of the period set out in paragraph 114(2)(c).

(2) If an offeror satisfies the requirements of subsection (1), the notice of change or notice of variation is not required to be filed and sent under section 117.

119. (1) If a report, valuation, statement or opinion of an expert is included in or accompanies a bid circular or any notice of change or notice of variation, the written consent of the expert to the use of the report, valuation, statement or opinion shall be filed concurrently with the bid circular or notice of change or notice of variation.

(2) For the purposes of this section,

“expert” includes a notary, a solicitor, an auditor, an accountant, an engineer, a geologist, an appraiser or any other person or company whose profession or business gives authority to a statement made in a professional capacity by that person or company.

120. (1) A formal bid, a bid circular and every notice of change or notice of variation shall be mailed by pre-paid mail to the intended recipient or delivered to the intended recipient by personal delivery, courier or other manner acceptable to the Director.

(2) Except for a takeover bid commenced by means of an advertisement under paragraph 113(1)(a), a bid, bid circular, notice of change or notice of variation sent in accordance with subsection (1) shall be deemed to be dated as of the date it was sent to all or substantially all of the persons and companies entitled to receive it.

(3) If a takeover bid is commenced by means of an advertisement under paragraph 113(1)(a), the bid, bid circular, notice of change or notice of variation shall be deemed to have been dated as of the date of first publication of the relevant advertisement.

OFFEREE ISSUER’S OBLIGATIONS

121. (1) If a formal takeover bid has been made, the board of directors of the offeree issuer shall prepare and send, not later than fifteen days after the date of the bid, a directors’ circular to every person or company to whom the bid was required to be sent.

(2) The board of directors of the offeree issuer shall evaluate the terms of a formal takeover bid and, in the directors’ circular,

(a) shall recommend to security holders that they accept or reject the bid and give reasons for the recommendation;

(b) shall advise security holders that the board is unable to make, or is not making, a recommendation and state the reasons for being unable to make a recommendation or for not making a recommendation; or

(c) shall advise security holders that the board is considering whether to make a recommendation to accept or reject the bid, shall state the reasons for not making a recommendation in the directors’ circular and may advise security holders that they should not deposit their securities under the bid until they receive further communication from the board in accordance with paragraph (a) or (b).

(3) If paragraph (2)(c) applies, the board of directors shall communicate to security holders a recommendation or the decision that it is unable to make, or is not making, a recommendation, together with the reasons for the recommendation or the decision, at least seven days before the scheduled expiry of the period during which securities may be deposited under the bid.

(4) A directors’ circular shall contain the information required by the regulations and be in the form required by the regulations.

122. (1) If, before the expiry of a takeover bid or after the expiry of a takeover bid but before the expiry of all rights to withdraw the securities deposited under the bid, a change has occurred in the information contained in the directors’ circular or in any notice of change to the directors’ circular that would reasonably be expected to affect the decision of the security holders to accept or reject the bid, the board of directors of the offeree issuer shall promptly issue and file a news release relating to the change and send a notice of the change to every person or company to whom the takeover bid was required to be sent disclosing the nature and substance of the change.

(2) A notice of change in relation to a directors’ circular shall contain the information required by the regulations and be in the form required by the regulations.

123. The board of directors of the offeree issuer shall concurrently file the directors’ circular or a notice of change in relation to it and deliver it to the principal office of the offeror not later than the date on which it is sent to the security holders of the offeree issuer, or as soon as practicable after that.

124. (1) An individual director or officer may recommend acceptance or rejection of a takeover bid if the director or officer sends with the recommendation a separate director’s or officer’s circular to every person or company to whom the takeover bid was required to be sent.

(2) If, before the expiry of a takeover bid or after the expiry of a takeover bid but before the expiry of all rights to withdraw the securities deposited under the bid, a change has occurred in the information contained in a director’s or officer’s circular or any notice of change in relation to it that would reasonably be expected to affect the decision of the security holders to accept or reject the bid, other than a change that is not within the control of the director or officer, as the case may be, that director or officer shall promptly send a notice of change to every person or company to whom the takeover bid was required to be sent.

(3) A director’s or officer’s circular shall contain the information required by the regulations and be in the form required by the regulations.

(4) A director’s or officer’s obligation to send a circular under subsection (1) or to send a notice of change under subsection (2) may be satisfied by sending the circular or the notice of change, as the case may be, to the board of directors of the offeree issuer.

(5) If a director or officer sends to the board of directors of the offeree issuer a circular under subsection (1) or a notice of change under subsection (2), the board, at the offeree issuer’s expense, shall promptly send a copy of the circular or notice to every person or company to whom the takeover bid was required to be sent.

(6) The board of directors of the offeree issuer or the individual director or officer, as the case may be, shall concurrently file the director’s or officer’s circular or a notice of change in relation to it and send it to the principal office of the offeror not later than the date on which it is sent to the security holders of the offeree issuer, or as soon as practicable after that.

(7) A notice of change in relation to a director’s or officer’s circular shall contain the information required by the regulations and be in the form required by the regulations.

125. If a report, valuation, statement or opinion of an expert, as defined in subsection 119(2), is included in or accompanies a directors’ circular, an individual director’s or officer’s circular or a notice of change, the written consent of the expert to the use of the report, valuation, statement or opinion shall be filed concurrently with the circular or notice.

126. (1) A directors’ circular, an individual director’s or officer’s circular and every notice of change shall be mailed by pre-paid mail to the intended recipient or delivered to the intended recipient by personal delivery, courier or other manner acceptable to the Director.

(2) Any circular or notice sent in accordance with this section shall be deemed to be dated as of the date it was sent to all or substantially all of the persons and companies entitled to receive it.

OFFEROR’S OBLIGATIONS

127. (1) If a formal bid is made, all holders of the same class of securities shall be offered identical consideration.

(2) Subsection (1) does not prohibit an offeror from offering an identical choice of consideration to all holders of the same class of securities.

(3) If a variation in the terms of a formal bid before the expiry of the bid increases the value of the consideration offered for the securities subject to the bid, the offeror shall pay that increased consideration to each person or company whose securities are taken up under the bid, whether or not the securities were taken up by the offeror before the variation of the bid.

128. (1) If a person or company makes or intends to make a formal bid, the person or company or any person or company acting jointly or in concert with that person or company shall not enter into any collateral agreement, commitment or understanding that has the effect, directly or indirectly, of providing a security holder of the offeree issuer with consideration of greater value than that offered to the other security holders of the same class of securities.

(2) Subsection (1) does not apply to such employment compensation arrangements, severance arrangements or other employment benefit arrangements as may be specified by regulation.

129. (1) If a formal bid is made for less than all of the class of securities subject to the bid and a greater number of securities is deposited under the bid than the offeror is bound or willing to acquire under the bid, the offeror shall take up and pay for the securities proportionately, disregarding fractions, according to the number of securities deposited by each security holder.

(2) For the purposes of subsection (1), any securities acquired in a pre-bid transaction to which subsection 109(1) applies shall be deemed to have been deposited under the bid by the person or company who was the seller in the pre-bid transaction.

(3) Subsection (1) does not apply in such circumstances as may be specified by regulation.

130. (1) If a formal bid provides that the consideration for the securities deposited under the bid is to be paid in cash or partly in cash, the offeror shall make adequate arrangements before the bid to ensure that the required funds are available to make full payment for the securities that the offeror has offered to acquire.

(2) The financing arrangements required to be made under subsection (1) may be subject to conditions if, at the time the bid is commenced, the offeror reasonably believes the possibility to be remote that, if the conditions of the bid are satisfied or waived, the offeror will be unable to pay for the securities deposited under the bid due to a financing condition not being satisfied.

BID MECHANICS

131. (1) An offeror shall allow securities to be deposited under a formal bid for at least thirty-five days from the date of the bid.

(2) An offeror shall not take up securities deposited under a formal bid until the expiration of thirty-five days from the date of the bid.

132. (1) A security holder may withdraw securities deposited under a formal bid

(a) at any time before the securities have been taken up by the offeror;

(b) at any time before the expiration of ten days from the date of a notice of change under section 115 or a notice of variation under section 116; or

(c) if the securities have not been paid for by the offeror within three business days after the securities have been taken up.

(2) The right of withdrawal under paragraph (1)(b) does not apply if the securities have been taken up by the offeror before the date of the notice of change or notice of variation or if one or both of the following circumstances occur:

(a) a variation in the terms of the bid consisting only of an increase in consideration offered for the securities and an extension of the time for deposit to not later than ten days after the date of the notice of variation;

(b) a variation in the terms of the bid consisting solely of the waiver of one or more of the conditions of the bid where the consideration offered for the securities subject to the bid consists solely of cash.

(3) The withdrawal of any securities under subsection (1) shall be made by sending a written notice to the depository designated in the bid circular and becomes effective on its receipt by the depository.

(4) If notice is given in accordance with subsection (3), the offeror shall promptly return the securities to the security holder.

133. If an offeror purchases securities under an exemption to subsection 108(1), those purchased securities shall be counted in determining whether a condition as to the minimum number of securities to be deposited under a bid has been fulfilled, but shall not reduce the number of securities the offeror is bound to take up under the bid.

134. (1) If all the terms and conditions of a formal bid have been complied with or waived, the offeror shall take up and pay for securities deposited under the bid not later than ten days after the expiry of the bid or at the time required by subsection (2) or (3), whichever is earliest.

(2) An offeror shall pay for any securities taken up under a formal bid as soon as possible, and in any event not later than three business days after the securities deposited under the bid are taken up.

(3) Securities deposited under a formal bid subsequent to the date on which the offeror first takes up securities deposited under the bid shall be taken up and paid for by the offeror not later than ten days after the deposit of the securities.

(4) An offeror may not extend its formal bid if all the terms and conditions of the bid have been complied with or waived, unless the offeror first takes up all securities deposited under the bid and not withdrawn.

(5) Despite subsections (3) and (4), if a formal bid is made for less than all of the class of securities subject to the bid, an offeror is only required to take up, by the times specified in those subsections, the maximum number of securities that the offeror can take up without contravening section 127 or 129 at the expiry of the bid.

(6) Despite subsection (4), if the offeror waives any terms or conditions of a formal bid and extends the bid in circumstances where the rights of withdrawal conferred by paragraph 132(1)(b) are applicable, the bid shall be extended without the offeror first taking up the securities which are subject to the rights of withdrawal.

135. A formal bid expires at the later of

(a) the end of the period, including any extension, during which securities may be deposited under the bid; and

(b) the time at which the offeror becomes obligated by the terms of the bid to take up or reject securities deposited under the bid.

136. If, following the expiry of a bid, an offeror knows that it will not take up securities deposited under the bid, the offeror shall promptly issue and file a news release to that effect and return the securities to the security holders.

137. If all the terms and conditions of a bid have been complied with or waived, the offeror shall issue and file a news release to that effect promptly after the expiry of the bid, and the news release shall disclose

(a) the approximate number of securities deposited; and

(b) the approximate number that will be taken up.

138. An offeror making a formal bid, and an offeree issuer whose securities are the subject of a formal bid, shall file copies of the documents required by the regulations and any amendments to those documents, in accordance with the regulations, unless the documents and amendments have been previously filed.

139. (1) A bid circular, or a notice of change or notice of variation in respect of the bid circular required under this Part shall contain a certificate of the offeror in the form required by the regulations and the certificate must be signed,

(a) if the offeror is a person or company other than an individual, by each of the following:

(i) the chief executive officer or, in the case of a person or company that does not have a chief executive officer, the individual who performs similar functions to a chief executive officer,

(ii) the chief financial officer or, in the case of a person or company that does not have a chief financial officer, the individual who performs similar functions to a chief financial officer, and

(iii) two directors, other than the chief executive officer and the chief financial officer, who are duly authorized by the board of directors of that person or company to sign on behalf of the board of directors; or

(b) if the offeror is an individual, by the individual.

(2) For the purposes of paragraph (1)(a), if the offeror has fewer than four directors and officers, the certificate must be signed by all of the directors and officers.

(3) A directors’ circular or a notice of change in respect of a directors’ circular required under this Part must contain a certificate of the board of directors of the offeree issuer in the form required by the regulations and the certificate must be signed by two directors who are duly authorized by the board of directors of the offeree issuer to sign on behalf of the board of directors.

(4) Every person who files and sends an individual director’s or officer’s circular or a notice of change in respect of an individual director’s or officer’s circular under this Part shall ensure that the circular or notice contains a certificate in the form required by the regulations and the certificate must be signed by or on behalf of the director or officer sending the circular or notice.

(5) If the Director is satisfied that either or both of the chief executive officer or chief financial officer cannot sign a certificate required under this Part, the Director may accept a certificate signed by another officer or director.

140. (1) If a person or company makes or proposes to make a formal takeover bid for a class of securities of an issuer that is not otherwise required by law to provide a list of its security holders to the person or company, the issuer shall provide a list of holders of that class of securities, and any known holder of an option or right to acquire securities of that class, to enable the person or company to carry out the bid in compliance with this Part.

(2) For the purposes of subsection (1), section 21 of the Canada Business Corporations Act applies with necessary modifications to the person or company making or proposing to make the takeover bid and to the issuer, except that the affidavit that accompanies the request for the list of security holders shall state that the list will not be used except in connection with a formal takeover bid for securities of the issuer.

EXEMPT TAKEOVER BIDS

141. A takeover bid is exempt from the formal bid requirements if all of the following conditions are satisfied:

(a) the bid is for not more than 5 per cent of the outstanding securities of a class of securities of the offeree issuer;

(b) the aggregate number of securities acquired in reliance on this exemption by the offeror and any person or company acting jointly or in concert with the offeror within any period of twelve months, when aggregated with acquisitions otherwise made by the offeror and any person or company acting jointly or in concert with the offeror within the same twelve-month period, other than under a formal bid, does not exceed 5 per cent of the outstanding securities of that class at the beginning of the twelve-month period;

(c) there is a published market for the class of securities that are the subject of the bid;

(d) the value of the consideration paid for any of the securities acquired is not in excess of the market price at the date of acquisition as determined in accordance with the regulations, plus reasonable brokerage fees or commissions actually paid.

142. (1) A takeover bid is exempt from the formal bid requirements if all of the following conditions are satisfied:

(a) purchases are made from not more than five persons or companies in the aggregate, including persons or companies located outside of Canada;

(b) the bid is not made generally to security holders of the class of securities that is the subject of the bid, so long as there are more than five security holders of the class;

(c) if there is a published market for the securities acquired, the value of the consideration paid for any of the securities, including brokerage fees or commissions, is not greater than 115 per cent of the market price of the securities at the date of the bid as determined in accordance with the regulations;

(d) if there is no published market for the securities acquired, there is a reasonable basis for determining that the value of the consideration paid for any of the securities is not greater than 115 per cent of the value of the securities.

(2) For the purposes of subsection (1), if an offeror makes an offer to acquire securities from a person or company and the offeror knows or ought to know after reasonable enquiry that the person or company acquired the securities in order that the offeror might make use of the exemption under subsection (1), then each person or company from whom those securities were acquired shall be included in the determination of the number of persons and companies to whom an offer to acquire has been made.

(3) For the purposes of subsection (1), if an offeror makes an offer to acquire securities from a person or company and the offeror knows or ought to know after reasonable enquiry that the person or company from whom the acquisition is being made is acting as a nominee, agent, trustee, executor, administrator or other legal representative for one or more other persons or companies having a direct beneficial interest in those securities, then each of those other persons or companies shall be included in the determination of the number of persons and companies to whom an offer to acquire has been made.

(4) Despite subsection (3), a trust or estate is to be considered a single security holder in the determination of the number of persons and companies to whom an offer to acquire has been made

(a) if an inter vivos trust has been established by a single settlor; or

(b) if an estate has not vested in all who are beneficially entitled to it.

143. A takeover bid is exempt from the formal bid requirements if the offeree issuer is not a reporting issuer and if such other conditions as may be specified by regulation are satisfied.

144. Subject to section 146, a takeover bid is exempt from the formal bid requirements if all of the following conditions are satisfied:

(a) security holders whose last address as shown on the books of the offeree issuer is in Canada hold less than 10 per cent of the outstanding securities of the class subject to the bid at the commencement of the bid;

(b) the offeror reasonably believes that security holders in Canada beneficially own less than 10 per cent of the outstanding securities of the class subject to the bid at the commencement of the bid;

(c) the published market on which the greatest dollar volume of trading in securities of that class occurred during the twelve months immediately preceding the commencement of the bid was not in Canada;

(d) security holders in Canada are entitled to participate in the bid on terms at least as favourable as the terms that apply to the general body of security holders of the same class.

145. Subject to section 146, a takeover bid is exempt from the formal bid requirements if both of the following conditions are satisfied:

(a) the number of beneficial owners of securities of the class subject to the bid in Canada is fewer than fifty and the securities held by them constitute, in aggregate, less than 2 per cent of the outstanding securities of that class;

(b) security holders in Canada are entitled to participate in the bid on terms at least as favourable as the terms that apply to the general body of security holders of the same class.

146. A takeover bid described in section 144 or 145 is not exempt from the formal bid requirements unless

(a) the information and documents specified by regulation are provided to security holders in Canada in accordance with the regulations; and

(b) the information specified by regulation about the bid is made public in accordance with the regulations.

147. A takeover bid is exempt from the formal bid requirements if it is exempted by the regulations.

EXEMPT ISSUER BIDS

148. An issuer bid for a class of securities is exempt from the formal bid requirements if any of the following conditions is satisfied:

(a) the securities are purchased, redeemed or otherwise acquired in accordance with the terms and conditions attaching to the class of securities that permit the purchase, redemption or acquisition of the securities by the issuer without the prior agreement of the owners of the securities, or the securities are acquired to meet sinking fund or purchase fund requirements;

(b) the purchase, redemption or other acquisition is required by the terms and conditions attaching to the class of securities or by the statute under which the issuer was incorporated, organized or continued;

(c) the terms and conditions attaching to the class of securities contain a right of the owner to require the issuer of the securities to redeem, repurchase, or otherwise acquire the securities, and the securities are acquired pursuant to the exercise of the right.

149. An issuer bid is exempt from the formal bid requirements if the securities are acquired from a current or former employee, executive officer, director or consultant of the issuer or of an affiliate of the issuer and, if there is a published market in respect of the securities,

(a) the value of the consideration paid for any of the securities acquired is not greater than the market price of the securities at the date of the acquisition, determined in accordance with the regulations; and

(b) the aggregate number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer within any period of twelve months in reliance on the exemption provided by this subsection does not exceed 5 per cent of the securities of that class outstanding at the beginning of the twelve-month period.

150. (1) An issuer bid that is made in the normal course through the facilities of a designated exchange is exempt from the formal bid requirements if the bid is made in accordance with the bylaws, rules, regulations and policies of that exchange.

(2) An issuer bid that is made in the normal course on a published market, other than a designated exchange, is exempt from the formal bid requirements if all of the following conditions are satisfied:

(a) the bid is for not more than 5 per cent of the outstanding securities of a class of securities of the issuer;

(b) the aggregate number of securities or, in the case of convertible debt securities, the aggregate principal amount of securities acquired in reliance on this exemption by the issuer and any person or company acting jointly or in concert with the issuer within any period of twelve months does not exceed 5 per cent of the outstanding securities of that class at the beginning of the twelve-month period;

(c) the value of the consideration paid for any of the securities acquired is not in excess of the market price at the date of acquisition as determined in accordance with the regulations, plus reasonable brokerage fees or commissions actually paid.

(3) An issuer making a bid under subsection (1) shall promptly file any news releases that the designated exchange requires to be issued.

(4) An issuer making a bid under subsection (2) shall issue and file, at least five days before the commencement of the bid, a news release containing the information prescribed by the regulations.

(5) In this section,

“designated exchange” means an exchange designated by the Commission for the purpose of this section.

151. An issuer bid is exempt from the formal bid requirements if the issuer is not a reporting issuer and if such other conditions as may be specified by regulation are satisfied.

152. Subject to section 154, an issuer bid is exempt from the formal bid requirements if all of the following conditions are satisfied:

(a) security holders whose last address as shown on the books of the offeree issuer is in Canada hold less than 10 per cent of the outstanding securities of the class subject to the bid at the commencement of the bid;

(b) the offeror reasonably believes that security holders in Canada beneficially own less than 10 per cent of the outstanding securities of the class subject to the bid at the commencement of the bid;

(c) the published market on which the greatest dollar volume of trading in securities of that class occurred during the twelve months immediately preceding the commencement of the bid was not in Canada;

(d) security holders in Canada are entitled to participate in the bid on terms at least as favourable as the terms that apply to the general body of security holders of the same class.

153. Subject to section 154, an issuer bid is exempt from the formal bid requirements if both of the following conditions are satisfied:

(a) the number of beneficial owners of securities of the class subject to the bid in Canada is fewer than fifty and the securities held by them constitute, in aggregate, less than 2 per cent of the outstanding securities of that class;

(b) security holders in Canada are entitled to participate in the bid on terms at least as favourable as the terms that apply to the general body of security holders of the same class.

154. An issuer bid described in section 152 or 153 is not exempt from the formal bid requirements unless

(a) the information and documents specified by regulation are provided to security holders in Canada in accordance with the regulations; and

(b) the information specified by regulation about the bid is made public in accordance with the regulations.

155. An issuer bid is exempt from the formal bid requirements if it is exempted by the regulations.

EARLY WARNING SYSTEM

156. For the purposes of sections 157 and 158,

“acquiror” means a person or company who acquires a security other than by way of a formal bid;

“acquiror’s securities” means securities of an offeree issuer that are beneficially owned, or over which control or direction is exercised, on the date of an offer to acquire, by an acquiror or by any person or company acting jointly or in concert with the acquiror.

157. (1) Every acquiror who acquires beneficial ownership of, or the power to exercise control or direction over, voting or equity securities of any class of a reporting issuer or securities convertible into voting or equity securities of any class of a reporting issuer that, when added to the acquiror’s securities of that class, would constitute 10 per cent or more of the outstanding securities of that class, shall disclose the acquisition in the manner and form required by regulation.

(2) An acquiror who is required to make disclosure under subsection (1) shall make further disclosure in the manner and form required by regulation each time any of the following events occur:

(a) the acquiror or any person or company acting jointly or in concert with the acquiror acquires beneficial ownership of, or the power to exercise control or direction over,

(i) an additional 2 per cent or more of the outstanding securities of the class to which the disclosure required under subsection (1) relates, or

(ii) securities convertible into an additional 2 per cent or more of the outstanding securities referred to in subparagraph (i);

(b) there is a change in any material fact in the disclosure required under paragraph (a) or under subsection (1).

(3) During the period beginning on the occurrence of an event in respect of which disclosure is required to be made under this section and ending on the expiry of one business day after the date that the disclosure is made, the acquiror required to make the disclosure or any person or company acting jointly or in concert with the acquiror shall not acquire or offer to acquire beneficial ownership of any securities of the class in respect of which the disclosure is made or any securities convertible into securities of that class.

(4) Subsection (3) does not apply to an acquiror who has beneficial ownership of, or the power to exercise control or direction over, securities that, together with the acquiror’s securities of that class, constitute 20 per cent or more of the outstanding securities of that class.

158. (1) If, after a formal bid has been made for voting or equity securities of a reporting issuer and before the expiry of the bid, an acquiror acquires beneficial ownership of, or the power to exercise control or direction over, securities of the class subject to the bid which, when added to the acquiror’s securities of that class, constitute 5 per cent or more of the outstanding securities of that class, the acquiror shall disclose the acquisition in the manner and form required by regulation.

(2) An acquiror who is required to make disclosure under subsection (1) shall make further disclosure in the manner and form required by regulation each time the acquiror or any person or company acting jointly or in concert with the acquiror acquires beneficial ownership of, or the power to exercise control or direction over, an additional 2 per cent or more of the outstanding securities of the class to which the disclosure required under subsection (1) relates.

APPLICATIONS AND EXEMPTIONS

159. In sections 160 and 161,

“interested person” means

(a) an offeree issuer;

(b) a security holder, director or officer of an offeree issuer;

(c) an offeror;

(d) an acquiror as defined in section 156;

(e) the Director; and

(f) any person or company who in the opinion of the Commission or a superior court, as the case may be, is proper to make an application under section 160 or 161, as the case may be.

160. (1) On application by an interested person, if the Commission considers that a person or company has not complied with, or is not complying with, a requirement under this Part or the regulations related to this Part, the Commission may make an order

(a) restraining the distribution of any document or any communication used or issued in connection with a takeover bid or an issuer bid;

(b) requiring an amendment to or variation of any document or any communication used or issued in connection with a takeover bid or an issuer bid and requiring the distribution of amended, varied or corrected documents or communications;

(c) directing any person or company to comply with a requirement under this Part or the regulations related to this Part;

(d) restraining any person or company from contravening a requirement under this Part or the regulations related to this Part; and

(e) directing the directors and officers of any person or company to cause the person or company to comply with or to cease contravening a requirement under this Part or the regulations related to this Part.

(2) On application by an interested person and subject to such terms and conditions as the Commission may impose, if the Commission is satisfied that it would not be prejudicial to the public interest, the Commission may

(a) decide for the purposes of section 128 that an agreement, commitment or understanding with a selling security holder is made for reasons other than to increase the value of the consideration paid to the selling security holder for the securities of the selling security holder and that the agreement, commitment or understanding may be entered into despite that section;

(b) vary any time period set out in this Part or the regulations related to this Part; and

(c) exempt a person or company from any of the requirements of this Part or the regulations related to this Part.

161. On application by an interested person, if a superior court is satisfied that a person or company has not complied with a requirement under this Part or the regulations related to this Part, the court may make such interim or final order as the court thinks fit, including, without limitation, an order

(a) compensating any interested person who is a party to the application for damages suffered as a result of a contravention of a requirement of this Part or the regulations related to this Part;

(b) rescinding a transaction with any interested person, including the issue of a security or an acquisition and sale of a security;

(c) requiring any person or company to dispose of any securities acquired under or in connection with a takeover bid or an issuer bid;

(d) prohibiting any person or company from exercising any or all of the voting rights attaching to any securities; or

(e) requiring the trial of an issue.

162. (1) In this Part,

“mutual fund” means, except in section 166, a mutual fund that is a reporting issuer;

“related mutual funds” includes more than one mutual fund under common management;

“related person or company” in relation to a mutual fund means a person in whom, or a company in which, the mutual fund, its management company and its distribution company are prohibited by the provisions of this Part from making any investment.

(2) For the purpose of this Part,

(a) any issuer in which a mutual fund holds in excess of 10 per cent of the voting securities or in which the mutual fund and related mutual funds hold in excess of 20 per cent of the voting securities shall be deemed to be a related person or company of that mutual fund or of each of those mutual funds; and

(b) the acquisition or disposition by an insider of a put, call or other transferable option with respect to a security shall be deemed a change in the beneficial ownership of the security to which such put, call or other transferable option relates.

163. (1) Within ten days of becoming an insider or within such other time period as may be prescribed, a person or company who becomes an insider of a reporting issuer, other than a mutual fund, shall file a report disclosing, in the prescribed manner and form, any direct or indirect beneficial ownership of or control or direction over securities of the reporting issuer and any interest in, or right or obligation associated with, a related financial instrument and the insider shall make such other disclosure as may be required by the regulations.

(2) Within ten days, or within such other time period as may be prescribed, of any change in the direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer or any interest in, or right or obligation associated with, a related financial instrument, an insider of a reporting issuer, other than a mutual fund, shall file a report disclosing, in the prescribed manner and form, such change and the insider shall make such other disclosure as may be required by the regulations.

164. Where voting securities are registered in the name of a person or company other than the beneficial owner and the person or company knows that they are beneficially owned by an insider and that the insider has failed to file a report of such ownership with the Commission as required by this Part, the person or company shall file a report in accordance with the regulations except where the transfer was for the purpose of giving collateral for a genuine debt.

165. (1) For the purposes of sections 166, 167, 168, 169 and 170,

“investment” means a purchase of any security of any class of securities of an issuer including bonds, debentures, notes, or other evidences of indebtedness thereof, and a loan to persons or companies but does not include an advance or loan, whether secured or unsecured, that is made by a mutual fund, its management company or its distribution company that is merely ancillary to the main business of the mutual fund, its management company or its distribution company.

(2) For the purposes of sections 166, 167, 168, 169 and 170,

(a) a person or company or a group of persons or companies has a significant interest in an issuer, if,

(i) in the case of a person or company, he, she or it, as the case may be, owns beneficially, either directly or indirectly, more than 10 per cent, or

(ii) in the case of a group of persons or companies, they own beneficially, either individually or together and either directly or indirectly, more than 50 per cent,

of the outstanding shares or units of the issuer;

(b) a person or company or a group of persons or companies is a substantial security holder of an issuer if that person or company or group of persons or companies owns beneficially, either individually or together or directly or indirectly, voting securities to which are attached more than 20 per cent of the voting rights attached to all the voting securities of the issuer for the time being outstanding, but in computing the percentage of voting rights attached to voting securities owned by an underwriter, there shall be excluded any voting securities acquired by the underwriter as such in a distribution of such securities but the exclusion ceases to have effect on completion or cessation of the distribution by the underwriter;

(c) where a person or company or group of persons or companies owns beneficially, directly or indirectly, or pursuant to this paragraph is deemed to own beneficially, voting securities of an issuer, that person or company or group of persons or companies shall be deemed to own beneficially a proportion of voting securities of any other issuer that are owned beneficially, directly or indirectly, by the first mentioned issuer, which proportion shall equal the proportion of the voting securities of the first mentioned issuer that are owned beneficially, directly or indirectly, or that pursuant to this paragraph are deemed to be owned beneficially, by that person or company or group of persons or companies.

166. (1) No mutual fund in Canada shall knowingly make an investment by way of loan to

(a) any officer or director of the mutual fund, its management company or distribution company or an associate of any of them;

(b) any individual, where the individual or an associate of the individual is a substantial security holder of the mutual fund, its management company or distribution company.

(2) No mutual fund in Canada shall knowingly make an investment

(a) in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company;

(b) in any person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial security holder; or

(c) in an issuer in which

(i) any officer or director of the mutual fund, its management company or distribution company or an associate of any of them, or

(ii) any person or company who is a substantial security holder of the mutual fund, its management company or its distribution company,

has a significant interest.

(3) No mutual fund in Canada or its management company or its distribution company shall knowingly hold an investment that is an investment described in this section.

167. No mutual fund or its management company or its distribution company shall knowingly enter into any contract or other arrangement that results in its being directly or indirectly liable or contingently liable in respect of any investment by way of loan to, or other investment in, a person or company to whom it is by section 166 prohibited from making a loan or in which it is prohibited from making any other investment, and for the purpose of section 166 any such contract or other arrangement shall be deemed to be a loan or an investment, as the case may be.

168. Upon an application of an interested person or company, the Commission may, where it is satisfied

(a) that a class of investment or a particular investment represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of a mutual fund; or

(b) that a particular investment is in fact in the best interests of a mutual fund,

order, subject to such terms and conditions as it may impose, that section 166 or 167 does not apply to the class of investment, particular investment, contract or other arrangement, as the case may be.

169. Despite paragraph 165(2)(c), a mutual fund is not prohibited from making an investment in an issuer only because a person or company or a group of persons or companies who own beneficially, directly or indirectly, or are deemed to own beneficially, voting securities of the mutual fund or its management company or its distribution company are by reason thereof deemed to own beneficially voting securities of the issuer.

170. (1) No mutual fund shall make any investment in consequence of which a related person or company of the mutual fund will receive any fee or other compensation except fees paid pursuant to a contract which is disclosed in any preliminary prospectus or prospectus, or any amendment to either of them, that is filed by the mutual fund and is accepted by the Director.

(2) The Commission may, upon the application of a mutual fund and where it is satisfied that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as it may impose, that subsection (1) does not apply to the mutual fund.

171. Every investment fund manager

(a) shall exercise the powers and discharge the duties of their office honestly, in good faith and in the best interests of the investment fund; and

(b) shall exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

172. (1) Every management company shall file a report prepared in accordance with the regulations of

(a) every transaction of purchase or sale of securities between the mutual fund and any related person or company;

(b) every loan received by the mutual fund from, or made by the mutual fund to, any of its related persons or companies;

(c) every purchase or sale effected by the mutual fund through any related person or company with respect to which the related person or company received a fee either from the mutual fund or from the other party to the transaction or from both; and

(d) any transaction in which, by arrangement other than an arrangement relating to insider trading in portfolio securities, the mutual fund is a joint participant with one or more of its related persons or companies,

in respect of each mutual fund to which it provides services or advice, within thirty days after the end of the month in which it occurs.

(2) The Commission may, upon the application of the management company of a mutual fund and where it is of the opinion that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as it may impose, that subsection (1) does not apply to any transaction or class of transactions.

173. (1) In this section,

“responsible person” means a portfolio manager and every individual who is a partner, director or officer of a portfolio manager together with every affiliate of a portfolio manager and every individual who is a director, officer or employee of such affiliate or who is an employee of the portfolio manager, if the affiliate or the individual participates in the formulation of, or has access prior to implementation to investment decisions made on behalf of or the advice given to the client of the portfolio manager.

(2) The portfolio manager shall not knowingly cause any investment portfolio managed by it to

(a) invest in any issuer in which a responsible person or an associate of a responsible person is an officer or director unless the specific fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase;

(b) purchase or sell the securities of any issuer from or to the account of a responsible person, any associate of a responsible person or the portfolio manager; or

(c) make a loan to a responsible person or an associate of a responsible person or the portfolio manager.

(3) Where the Commission determines that a portfolio manager is subject to regulations, imposed by a self-regulatory organization, to substantially the same effect as the requirements set out in subsection (2), the Commission may, subject to such terms and conditions as the Commission may impose, exempt the portfolio manager from the requirements of subsection (2).

174. No person or company who has access to information concerning the investment program of a mutual fund or the investment portfolio managed for a client by a portfolio manager shall purchase or sell securities of an issuer for his, her or its account where the portfolio securities of the mutual fund or the investment portfolio managed for a client by a portfolio manager include securities of that issuer and where the information is used by the person or company for his, her or its direct benefit or advantage.

175. The Commission shall summarize in or as a part of a monthly periodical available to the public on payment of a reasonable fee the information contained in every report filed in compliance with this Part.

176. (1) Where the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued require substantially the same reports in that jurisdiction as are required by this Part, the filing requirements of this Part may be compiled with by filing the reports required by the laws of such jurisdiction manually signed or certified in accordance with the regulations.

(2) Subject to subsection (1), the Commission may,

(a) upon the application of an interested person or company,

(i) if a requirement of this Part conflicts with a requirement of the laws of the jurisdiction under which the reporting issuer is incorporated, organized or continued, or

(ii) if otherwise satisfied in the circumstances of the particular case that there is adequate justification for so doing; or

(b) of its own motion,

make an order on such terms and conditions as seem to the Commission just and expedient, exempting in whole or in part, a person or company from the requirements of this Part.

177. If the regulations so provide, a body established under subsection 180(1) by an investment fund may approve a transaction that is prohibited under this Part and, in that case, the prohibition does not apply to the transaction.

178. In this Part,

“prescribed” means prescribed in the regulations.

179. For the purposes of this Act, a reporting issuer shall comply with such requirements as may be prescribed with respect to the governance of reporting issuers, including requirements relating to

(a) the composition of its board of directors and qualifications for membership on the board, including matters respecting the independence of members;

(b) the establishment of specified types of committees of the board of directors, the mandate, functioning and responsibilities of each committee, the composition of each committee and the qualifications for membership on the committee, including matters respecting the independence of members;

(c) the establishment and enforcement of a code of business conduct and ethics applicable to its directors, officers and employees and applicable to persons or companies that are in a special relationship with the reporting issuer, including the minimum requirements for such a code; and

(d) procedures to regulate conflicts of interest between the interests of the reporting issuer and those of a director or officer of the issuer.

180. (1) If required to do so by the regulations, an investment fund shall establish and maintain a body for the purposes of overseeing activities of the investment fund and the investment fund manager, reviewing or approving prescribed matters affecting the investment fund, including transactions referred to in section 177, and disclosing information to security holders of the fund, to the investment fund manager and to the Commission.

(2) The body has such powers and duties as may be prescribed.

181. (1) Every person or company that

(a) makes a statement in any material, evidence or information submitted to the Commission, a Director, any person acting under the authority of the Commission or the Executive Director or any person appointed to make an investigation or examination under this Act that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading;

(b) makes a statement in any application, release, report, preliminary prospectus, prospectus, return, financial statement, information circular, takeover bid circular, issuer bid circular or other document required to be filed or furnished under Canadian securities law that, in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; or

(c) contravenes Canadian securities law,

is guilty of an indictable offence and on conviction is liable to a fine of not more than $5 million or to imprisonment for a term of not more than five years, or to both.

(2) Paragraphs (1)(a) and (b) do not apply to a statement made or given to the Commission in a submission in respect of a proposed rule or policy.

(3) Without limiting the availability of other defences, no person or company is guilty of an offence under paragraph (1)(a) or (b) if the person or company did not know and in the exercise of reasonable diligence could not have known that the statement was misleading or untrue or that it omitted to state a fact that was required to be stated or that was necessary to make the statement not misleading in light of the circumstances in which it was made.

(4) Every director or officer of a company or of a person other than an individual who authorizes, permits or acquiesces in the commission of an offence under subsection (1) by the company or person, whether or not a charge has been laid or a finding of guilt has been made against the company or person in respect of the offence under subsection (1), is guilty of an indictable offence and is liable on conviction to a fine of not more than $5 million or to imprisonment for a term of not more than five years, or to both.

(5) Despite subsection (1) and in addition to any imprisonment imposed under subsection (1), a person or company who is convicted of contravening subsection 91(1), (2) or (3) is liable to a minimum fine equal to the profit made or the loss avoided by the person or company by reason of the contravention and a maximum fine equal to the greater of

(a) $5 million; and

(b) the amount equal to triple the amount of the profit made or the loss avoided by the person or company by reason of the contravention.

(6) If it is not possible to determine the profit made or loss avoided by the person or company by reason of the contravention, subsection (5) does not apply but subsection (1) continues to apply.

(7) In subsections (5) and (6),

“loss avoided” means the amount by which the amount received for the security sold in contravention of subsection 91(1) exceeds the average trading price of the security in the twenty trading days following general disclosure of the material fact or the material change;

“profit made” means

(a) the amount by which the average trading price of the security in the twenty trading days following general disclosure of the material fact or the material change exceeds the amount paid for the security purchased in contravention of subsection 91(1);

(b) in respect of a short sale, the amount by which the amount received for the security sold in contravention of subsection 91(1) exceeds the average trading price of the security in the twenty trading days following general disclosure of the material fact or the material change; or

(c) the value of any consideration received for informing another person or company of a material fact or material change with respect to the reporting issuer in contravention of subsection 91(2) or (3).

(8) No proceeding under this section shall be commenced except with the consent of the Commission.

182. (1) If a person or company is convicted of an offence under this Act, the court may, in addition to any penalty, order the convicted person or company to make restitution or pay compensation in relation to the offence to an aggrieved person or company.

(2) If a court makes an order for restitution or compensation, it shall cause a copy of the order or a notice of the content of the order to be given to the person or company to whom the restitution or compensation is ordered to be paid.

(3) Where an amount that is ordered to be paid under subsection (1) is not paid forthwith, the person or company in favour of whom the order has been made may file the order in the superior court of the province in which the trial was held and that order is enforceable against the person or company who has been convicted in the same manner as if it were a judgment rendered against the person or company who has been convicted in that court in civil proceedings.

(4) A person or company is not entitled to participate in a proceeding in which an order may be made under this section solely on the basis that the person or company has a right of action against a defendant to the proceeding or that the person or company may be entitled to receive an amount under the order.

(5) A civil remedy for an act or omission is not affected by reason only that an order for restitution or compensation under this section has been made in respect of that act or omission.

183. An information in respect of any contravention of this Act may be for one or more offences, and no information, summons, warrant, conviction or other proceeding in any prosecution is objectionable or insufficient by reason of the fact that it relates to two or more offences.

184. (1) If the Commission considers it expedient

(a) for the due administration of Canadian securities law or the regulation of the capital markets in Canada; or

(b) to assist in the due administration of the securities laws or the regulation of the capital markets in another jurisdiction,

the Commission may direct a person or company having on deposit or under its control or for safekeeping any funds, securities or property of any person or company to retain those funds, securities or property and to hold them until the Commission in writing revokes the direction or consents to release a particular fund, security or property from the direction, or until a superior court orders otherwise.

(2) A direction under subsection (1) that names a bank or other financial institution shall apply only to the branches of the bank or other financial institution identified in the direction.

(3) A direction under subsection (1) shall not apply to funds, securities or property in a recognized clearing agency or to securities in process of transfer by a transfer agent unless the direction so states.

(4) The Commission may order that a direction under subsection (1) be certified to a land registrar or mining recorder and that it be registered or recorded against the lands or claims identified in the direction, and on registration or recording of the certificate it shall have the same effect as a certificate of pending litigation.

(5) As soon as practicable and not later than seven days after a direction is issued under subsection (1), the Commission shall apply to a superior court to continue the direction or for such other order as the court considers appropriate.

(6) A direction under subsection (1) may be made without notice but, in that event, copies of the direction shall be sent forthwith by such means as the Commission may determine to all persons and companies named in the direction.

(7) A person or company directly affected by a direction may apply to the Commission for clarification or to have the direction varied or revoked.

185. A person or company shall not, directly or indirectly, engage or participate in any act, practice or course of conduct relating to securities or derivatives of securities that the person or company knows or reasonably ought to know

(a) results in or contributes to a misleading appearance of trading activity in, or an artificial price for, a security or derivative of a security; or

(b) perpetrates a fraud on any person or company.

186. (1) A person or company shall not make a statement that the person or company knows or reasonably ought to know,

(a) in a material respect and at the time and in the light of the circumstances under which it is made, is misleading or untrue or does not state a fact that is required to be stated or that is necessary to make the statement not misleading; and

(b) would reasonably be expected to have a significant effect on the market price or value of a security.

(2) A breach of subsection (1) does not give rise to a statutory right of action for damages otherwise than under Part XXII or XXIII.

187. (1) The Commission may make one or more of the following orders if in its opinion it is in the public interest to make the order or orders:

(a) an order that the registration or recognition granted to a person or company under Canadian securities law be suspended or restricted for such period as is specified in the order or be terminated, or that terms and conditions be imposed on the registration or recognition;

(b) an order that trading in any securities by or of a person or company cease permanently or for such period as is specified in the order;

(c) an order that acquisition of any securities by a particular person or company is prohibited, permanently or for the period specified in the order;

(d) an order that any exemptions contained in Canadian securities law do not apply to a person or company permanently or for such period as is specified in the order;

(e) an order that a market participant submit to a review of his, her or its practices and procedures and institute such changes as may be ordered by the Commission;

(f) if the Commission is satisfied that Canadian securities law has not been complied with, an order that a release, report, preliminary prospectus, prospectus, return, financial statement, information circular, takeover bid circular, issuer bid circular, offering memorandum, proxy solicitation or any other 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;

(g) an order that a person or company be reprimanded;

(h) an order that a person resign one or more positions that the person holds as a director or officer of an issuer;

(i) an order that a person is prohibited from becoming or acting as a director or officer of any issuer;

(j) an order that a person resign one or more positions that the persons holds as a director or officer of a registrant;

(k) an order that a person is prohibited from becoming or acting as a director or officer of a registrant;

(l) an order that a person resign one or more positions that the person holds as a director or officer of an investment fund manager;

(m) an order that a person is prohibited from becoming or acting as a director or officer of an investment fund manager;

(n) an order that a person or company is prohibited from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(o) if a person or company has not complied with Canadian securities law, an order requiring the person or company to pay an administrative penalty of not more than $1 million for each failure to comply;

(p) if a person or company has not complied with Canadian securities law, an order requiring the person or company to disgorge to the Commission any amounts obtained as a result of the non-compliance.

(2) An order under this section may be subject to such terms and conditions as the Commission may impose.

(3) The Commission may make an order under paragraph (1)(b) despite the delivery of a report to it under subsection 90(3).

(4) A person or company is not entitled to participate in a proceeding in which an order may be made under paragraph (1)(o) or (p) solely on the basis that the person or company may be entitled to receive any amount paid under the order.

(5) No order shall be made under this section without a hearing unless the parties and the Commission consent to waive the requirement for a hearing.

(6) Despite subsection (5), if in the opinion of the Commission the length of time required to conclude a hearing could be prejudicial to the public interest, the Commission may make a temporary order under paragraph (1)(a), (b) or (d) or subparagraph 1(f)(ii).

(7) The temporary order shall take effect immediately and shall expire on the fifteenth day after its making unless extended by the Commission.

(8) The Commission may extend a temporary order until the hearing is concluded if a hearing is commenced within the fifteen-day period.

(9) Despite subsection (8), the Commission may extend a temporary order under paragraph (1)(b) for such period as it considers necessary if satisfactory information is not provided to the Commission within the fifteen-day period.

(10) The Commission shall give written notice of every temporary order made under subsection (6), together with a notice of hearing, to any person or company directly affected by the temporary order.

188. (1) If, in respect of a person or company whose affairs were the subject of an investigation, the Commission

(a) is satisfied that the person or company has not complied with, or is not complying with, Canadian securities law; or

(b) considers that the person or company has not acted in the public interest,

the Commission may, after conducting a hearing, order the person or company to pay the costs of the investigation.

(2) If, in respect of a person or company whose affairs were the subject of a hearing, the Commission, after conducting the hearing,

(a) is satisfied that the person or company has not complied with, or is not complying with, Canadian securities law; or

(b) considers that the person or company has not acted in the public interest,

the Commission may order the person or company to pay the costs of or related to the hearing that are incurred by or on behalf of the Commission.

(3) Where a person or company is guilty of an offence under this Act or the regulations, the Commission may, after conducting a hearing, order the person or company to pay the costs of any investigation carried out in respect of that offence.

(4) For the purposes of subsections (1), (2) and (3), the costs that the Commission may order the person or company to pay include, but are not limited to, all or any of the following:

(a) costs incurred in respect of services provided by persons appointed or engaged under section 16, 21 or 22;

(b) costs of matters preliminary to the hearing;

(c) costs for time spent by the Commission or the staff of the Commission;

(d) any fee paid to a witness;

(e) costs of legal services provided to the Commission.

189. (1) The Commission may apply to a superior court for a declaration that a person or company has not complied with or is not complying with Canadian securities law.

(2) The Commission is not required, before making an application under subsection (1), to hold a hearing to determine whether the person or company has not complied with or is not complying with Canadian securities law.

(3) If the court makes a declaration under subsection (1), the court may, despite the imposition of any penalty under section 181 and despite any order made by the Commission under section 187, make any order that the court considers appropriate against the person or company, including, without limiting the generality of the foregoing, one or more of the following orders:

(a) an order that the person or company comply with Canadian securities law;

(b) an order requiring the person or company to submit to a review by the Commission of his, her or its practices and procedures and to institute such changes as may be directed by the Commission;

(c) an order directing that a release, report, preliminary prospectus, prospectus, return, financial statement, information circular, takeover bid circular, issuer bid circular, offering memorandum, proxy solicitation or any other document described in the order

(i) be provided by the person or company to another person or company,

(ii) not be provided by the person or company to another person or company, or

(iii) be amended by the person or company to the extent that amendment is practicable;

(d) an order rescinding any transaction entered into by the person or company relating to trading in securities including the issuance of securities;

(e) an order requiring the issuance, cancellation, purchase, exchange or disposition of any securities by the person or company;

(f) an order prohibiting the voting or exercise of any other right attaching to securities by the person or company;

(g) an order prohibiting the person from acting as officer or director or prohibiting the person or company from acting as promoter of any market participant permanently or for such period as is specified in the order;

(h) an order appointing officers and directors in place of or in addition to all or any of the officers and directors of the company then in office;

(i) an order directing the person or company to purchase securities of a security holder;

(j) an order directing the person or company to repay to a security holder any part of the money paid by the security holder for securities;

(k) an order requiring the person or company to produce to the court or an interested person financial statements in the form required by Canadian securities law, or an accounting in such other form as the court may determine;

(l) an order directing rectification of the registers or other records of the company;

(m) an order requiring the person or company to compensate or make restitution to an aggrieved person or company;

(n) an order requiring the person or company to pay general or punitive damages to any other person or company;

(o) an order requiring the person or company to disgorge to the Minister any amounts obtained as a result of the non-compliance with Canadian securities law;

(p) an order requiring the person or company to rectify any past non-compliance with Canadian securities law to the extent that rectification is practicable.

(4) On an application under this section the court may make such interim orders as it considers appropriate.

190. (1) The Commission may apply to a superior court for an order appointing a receiver, receiver and manager, trustee or liquidator of all or any part of the property of any person or company.

(2) No order shall be made under subsection (1) unless the court is satisfied that

(a) the appointment of a receiver, receiver and manager, trustee or liquidator of all or any part of the property of the person or company is in the best interests of the creditors of the person or company or of persons or companies any of whose property is in the possession or under the control of the person or company or the security holders of or subscribers to the person or company; or

(b) it is appropriate for the due administration of Canadian securities law.

(3) The court may make an order under subsection (1) on an application without notice, but the period of appointment shall not exceed fifteen days.

(4) If an order is made without notice under subsection (3), the Commission may make a motion to the court within fifteen days after the date of the order to continue the order or for the issuance of such other order as the court considers appropriate.

(5) A receiver, receiver and manager, trustee or liquidator of the property of a person or company appointed under this section shall be the receiver, receiver and manager, trustee or liquidator of all or any part of the property belonging to the person or company or held by the person or company on behalf of or in trust for any other person or company, and, if so directed by the court, the receiver, receiver and manager, trustee or liquidator has the authority to wind up or manage the business and affairs of the person or company and has all powers necessary or incidental to that authority.

(6) If an order is made appointing a receiver, receiver and manager, trustee or liquidator of the property of a person or company under this section, the powers of the directors of the company that the receiver, receiver and manager, trustee or liquidator is authorized to exercise may not be exercised by the directors until the receiver, receiver and manager, trustee or liquidator is discharged by the court.

(7) The fees charged and expenses incurred by a receiver, receiver and manager, trustee or liquidator appointed under this section in relation to the exercise of powers pursuant to the appointment shall be in the discretion of the court.

(8) An order made under this section may be varied or discharged by the court on motion.

191. Except where otherwise provided in this Act, no proceeding under this Act shall be commenced later than six years from the date of the occurrence of the last event on which the proceeding is based.

192. For the purposes of this Act, if a company or a person other than an individual has not complied with Canadian securities law, a director or officer of the company or person who authorized, permitted or acquiesced in the non-compliance shall be deemed to also have not complied with Canadian securities law, whether or not any proceeding has been commenced against the company or person under Canadian securities law or any order has been made against the company or person under section 187.

193. (1) Where a prospectus, together with any amendment to the prospectus, contains a misrepresentation, a purchaser who purchases a security offered by the prospectus during the period of distribution or during distribution to the public has, without regard to whether the purchaser relied on the misrepresentation, 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 who is required to sign the certificate required by section 74;

(c) every director of the issuer at the time the prospectus or the amendment to the prospectus was filed;

(d) every person or company whose consent to disclosure of information in the prospectus has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by them; and

(e) every 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 such person, company or underwriter, in which case the purchaser shall have no right of action for damages against such person, company or underwriter.

(2) No person or company is liable under subsection (1) if he, she or it proves that the purchaser purchased the securities with knowledge of the misrepresentation.

(3) No person or company, other than the issuer or selling security holder, is liable under subsection (1) if he, she or it 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, he, she or it forthwith 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 any misrepresentation in the prospectus or an amendment to the prospectus he, she or it withdrew the consent thereto and gave reasonable general notice of such withdrawal and the reason therefor;

(c) that, with respect to any 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, he, she or it had no reasonable grounds to believe and did not believe that there had been a misrepresentation or that such 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 any part of the prospectus or the amendment to the prospectus 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 his, her or its own report, opinion or statement as an expert but that contains a misrepresentation attributable to failure to represent fairly his, her or its report, opinion or statement as an expert,

(i) the person or company had, after reasonable investigation, reasonable grounds to believe and did believe that such part of the prospectus or the amendment to the prospectus fairly represented his, her or its report, opinion or statement, or

(ii) on becoming aware that such 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, he, she or it forthwith advised the Commission and gave reasonable general notice that such use had been made and that he, she or it 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 he, she or it had reasonable grounds to believe and did believe that the statement was true.

(4) No person or company, other than the issuer or selling security holder, is liable under subsection (1) with respect to any part of the prospectus or the amendment to the prospectus 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 his, her or its own report, opinion or statement as an expert unless he, she or it

(a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation; or

(b) believed there had been a misrepresentation.

(5) No person or company, other than the issuer or selling security holder, is liable under subsection (1) with respect to any 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 he, she or it

(a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation; or

(b) believed there had been a misrepresentation.

(6) No underwriter is liable for more than the total public offering price represented by the portion of the distribution underwritten by the underwriter.

(7) In an action for damages pursuant to subsection (1), the defendant is not liable for all or any portion of such damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation relied upon.

(8) All or any one or more of the persons or companies specified in subsection (1) are jointly and severally liable, and every person or company who becomes liable to make any payment under this section may recover a contribution from any 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 such contribution where, in all the circumstances of the case, it is satisfied that to permit recovery of such 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 any other right the purchaser may have at law.

194. (1) Where an offering memorandum contains a misrepresentation, a purchaser who purchases a security offered by the offering memorandum during the period of distribution has, without regard to whether the purchaser relied on the misrepresentation, the following rights:

(a) the purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made;

(b) if the purchaser purchased the security from a person or company referred to in paragraph (a), the purchaser may elect to exercise a right of rescission against the person or company.

(2) If the purchaser exercises the right under paragraph (1)(b), the purchaser ceases to have a right of action for damages against the person or company.

(3) No person or company is liable under subsection (1) if he, she or it proves that the purchaser purchased the securities with knowledge of the misrepresentation.

(4) In an action for damages pursuant to subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation relied upon.

(5) Subject to subsection (6), all or any one or more of the persons or companies specified in subsection (1) are jointly and severally liable, and every person or company who becomes liable to make any payment under this section may recover a contribution from any person or company who, if sued separately, would have been liable to make the same payment, unless the court rules that, in all the circumstances of the case, to permit recovery of the contribution would not be just and equitable.

(6) Despite subsection (5), an issuer shall not be liable where it is not receiving any proceeds from the distribution of the securities being distributed and the misrepresentation was not based on information provided by the issuer, unless the misrepresentation

(a) was based on information that was previously publicly disclosed by the issuer;

(b) was a misrepresentation at the time of its previous public disclosure; and

(c) was not subsequently publicly corrected or superseded by the issuer prior to the completion of the distribution of the securities being distributed.

(7) In no case shall the amount recoverable under this section exceed the price at which the securities were offered.

(8) The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the purchaser may have at law.

(9) This section applies only with respect to an offering memorandum which has been furnished to a prospective purchaser in connection with a distribution of a security under an exemption from section 68 that is specified in the regulations for the purposes of this section.

195. (1) Where a takeover bid circular sent to the security holders of an offeree issuer as required by Part XVIII, or any notice of change or variation in respect of the circular, contains a misrepresentation, a security holder may, without regard to whether the security holder relied on the misrepresentation, elect to exercise a right of action for rescission or damages against the offeror or a right of action for damages against

(a) every person who at the time the circular or notice, as the case may be, was signed was a director of the offeror;

(b) every person or company whose consent in respect of the circular or notice, as the case may be, has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by the person or company; and

(c) each person who signed a certificate in the circular or notice, as the case may be, other than the persons included in paragraph (a).

(2) Where a directors’ circular or a director’s or officer’s circular delivered to the security holders of an offeree issuer as required by Part XVIII, or any notice of change or variation in respect of the circular, contains a misrepresentation, a security holder has, without regard to whether the security holder relied on the misrepresentation, a right of action for damages against every director or officer who signed the circular or notice that contained the misrepresentation.

(3) Subsection (1) applies with necessary modifications where an issuer bid circular or any notice of change or variation in respect thereof contains a misrepresentation.

(4) No person or company is liable under subsection (1), (2) or (3) if the person or company proves that the security holder had knowledge of the misrepresentation.

(5) No person or company, other than the offeror, is liable under subsection (1), (2) or (3) if he, she or it proves

(a) that the takeover bid circular, issuer bid circular, directors’ circular or director’s or officer’s circular, as the case may be, was sent without his, her or its knowledge or consent and that, on becoming aware of it, he, she or it forthwith gave reasonable general notice that it was so sent;

(b) that, after the sending of the takeover bid circular, issuer bid circular, directors’ circular or director’s or officer’s circular, as the case may be, on becoming aware of any misrepresentation in the takeover bid circular, issuer bid circular, directors’ circular or director’s or officer’s circular, he, she or it withdrew the consent thereto and gave reasonable general notice of the withdrawal and the reason therefor;

(c) that, with respect to any 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, he, she or it had no reasonable grounds to believe and did not believe that there had been a misrepresentation or that such 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 any 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 his, her or its own report, opinion or statement as an expert, but that contains a misrepresentation attributable to failure to represent fairly his, her or its report, opinion or statement as an expert,

(i) the person or company had, after reasonable investigation, reasonable grounds to believe and did believe that such part of the circular fairly represented his, her or its report, opinion or statement as an expert, or

(ii) on becoming aware that such part of the circular did not fairly represent his, her or its report, opinion or statement as an expert, he, she or it forthwith advised the Commission and gave reasonable general notice that such use had been made and that he, she or it 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 he, she or it had reasonable grounds to believe and did believe that the statement was true.

(6) No person or company, other than the offeror, is liable under subsection (1), (2) or (3) with respect to any 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 his, her or its own report, opinion or statement as an expert unless he, she or it

(a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation; or

(b) believed there had been a misrepresentation.

(7) No person or company, other than the offeror, is liable under subsection (1), (2) or (3) with respect to any 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 he, she or it

(a) failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation; or

(b) believed there had been a misrepresentation.

(8) All or any one or more of the persons or companies specified in subsection (1), (2) or (3) are jointly and severally liable, and every person or company who becomes liable to make any payment under this section may recover a contribution from any 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 such contribution where, in all the circumstances of the case, it is satisfied that to permit recovery of such contribution would not be just and equitable.

(9) In an action for damages pursuant to 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 all or any portion of such damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation.

(10) Where the offeror in an issuer bid that is exempted by subsection 150(1) from the formal bid requirements of Part XVIII is required, by the bylaws, regulations or policies of the applicable designated stock exchange to file with it or deliver to security holders of the offeree issuer a disclosure document, the disclosure document shall be deemed, for the purposes of this section, to be an issuer bid circular delivered to the security holders as required by Part XVIII.

(11) The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the security holders of the offeree issuer may have at law.

196. In determining what constitutes reasonable investigation or reasonable grounds for belief for the purposes of sections 193 and 195, the standard of reasonableness shall be that required of a prudent person in the circumstances of the particular case.

197. (1) A person or company is not liable in an action under section 193, 194 or 195 for a misrepresentation in forward-looking information if the person or company proves all of the following things:

(a) the document containing the forward-looking information contained, proximate to that information,

(i) reasonable cautionary language identifying the forward-looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information, and

(ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information; and

(b) the person or company had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward-looking information.

(2) Subsection (1) does not relieve a person or company of liability respecting forward-looking information in a financial statement or forward-looking information in a document released in connection with an initial public offering.

198. A purchaser of a security to whom a prospectus was required to be sent or delivered but was not sent or delivered in compliance with subsection 86(1) or a security holder to whom a takeover bid and takeover bid circular or an issuer bid and an issuer bid circular, or any notice of change or variation to any such bid or circular, were required under Part XVIII to be sent or delivered but were not sent or delivered in accordance with that Part has a right of action for rescission or damages against the dealer or offeror who failed to comply with the applicable requirement.

199. (1) Every person or company in a special relationship with a reporting issuer who purchases or sells securities of the reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is liable to compensate the seller or purchaser of the securities, as the case may be, for damages as a result of the trade unless

(a) the person or company in the special relationship with the reporting issuer proves that the person or company reasonably believed that the material fact or material change had been generally disclosed; or

(b) the material fact or material change was known or ought reasonably to have been known to the seller or purchaser, as the case may be.

(2) Every

(a) reporting issuer;

(b) person or company in a special relationship with a reporting issuer; and

(c) person or company that proposes

(i) to make a takeover bid, as defined in Part XVIII, for the securities of a reporting issuer,

(ii) to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a reporting issuer, or

(iii) to acquire a substantial portion of the property of a reporting issuer,

and who informs another person or company of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is liable to compensate for damages any person or company that thereafter sells securities of the reporting issuer to or purchases securities of the reporting issuer from the person or company that received the information unless

(d) the person or company who informed the other person or company proves that the informing person or company reasonably believed the material fact or material change had been generally disclosed;

(e) the material fact or material change was known or ought reasonably to have been known to the seller or purchaser, as the case may be;

(f) in the case of an action against a reporting issuer or a person in a special relationship with the reporting issuer, the information was given in the necessary course of business; or

(g) in the case of an action against a person or company described in subparagraph (c)(i), (ii) or (iii), the information was given in the necessary course of business to effect the takeover bid, business combination or acquisition.

(3) Any person or company who has access to information concerning the investment program of a mutual fund in Canada or the investment portfolio managed for a client by a portfolio manager or by a registered dealer acting as a portfolio manager and uses that information for his, her or its direct benefit or advantage to purchase or sell securities of an issuer for his, her or its account where the portfolio securities of the mutual fund or the investment portfolio managed for the client by the portfolio manager or registered dealer include securities of that issuer is accountable to the mutual fund or the client of the portfolio manager or registered dealer, as the case may be, for any benefit or advantage received or receivable as a result of such purchase or sale.

(4) Every person or company who is an insider, affiliate or associate of a reporting issuer that

(a) sells or purchases the securities of the reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed; or

(b) communicates to another person, other than in the necessary course of business, knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed,

is accountable to the reporting issuer for any benefit or advantage received or receivable by the person or company as a result of the purchase, sale or communication, as the case may be, unless the person or company proves that the person or company reasonably believed that the material fact or material change had been generally disclosed.

(5) Where more than one person or company in a special relationship with a reporting issuer is liable under subsection (1) or (2) as to the same transaction or series of transactions, their liability is joint and several.

(6) In assessing damages under subsection (1) or (2), the court shall consider,

(a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security in the twenty trading days following general disclosure of the material fact or material change; or

(b) if the plaintiff is a vendor, the average market price of the security in the twenty trading days following general disclosure of the material fact or material change less the price received by the plaintiff for the security,

but the court may instead consider such other measures of damages as may be relevant in the circumstances.

(7) For the purposes of this section,

“a person or company in a special relationship with a reporting issuer” has the same meaning as in subsection 91(5).

(8) For the purposes of subsections (1) and (2), a security of the reporting issuer shall be deemed to include

(a) a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer; or

(b) a security, the market price of which varies materially with the market price of the securities of the issuer.

200. (1) Upon application by the Commission or by any person or company who was at the time of a transaction referred to in subsection 199(1) or (2) or is at the time of the application a security holder of the reporting issuer, a judge of a superior court may, if satisfied that

(a) the Commission or the person or company has reasonable grounds for believing that the reporting issuer has a cause of action under subsection 199(4); and

(b) either

(i) the reporting issuer has refused or failed to commence an action under section 199 within sixty days after receipt of a written request from the Commission or such person or company so to do, or

(ii) the reporting issuer has failed to prosecute diligently an action commenced by it under section 199,

make an order, upon such terms as to security for costs and otherwise as to the judge seems fit, requiring the Commission or authorizing such person or company or the Commission to commence or continue an action in the name of and on behalf of the reporting issuer to enforce the liability created by subsection 199(4).

(2) Upon the application by the Commission or any person or company who was at the time of a transaction referred to in subsection 199(3) or is at the time of the application a security holder of the mutual fund, a judge of a superior court may, if satisfied that

(a) the Commission or the person or company has reasonable grounds for believing that the mutual fund has a cause of action under subsection 199(3); and

(b) the mutual fund has either

(i) refused or failed to commence an action under subsection 199(3) within sixty days after receipt of a written request from the Commission or the person or company so to do, or

(ii) failed to prosecute diligently an action commenced by it under subsection 199(3),

make an order, upon terms as to security for costs or otherwise as to the judge seems proper, requiring the Commission or authorizing the person or company or the Commission to commence and prosecute or to continue an action in the name of and on behalf of the mutual fund to enforce the liability created by subsection 199(3).

(3) Where an action under subsection 199(3) or (4) is

(a) commenced;

(b) commenced and prosecuted; or

(c) continued,

by a board of directors of a reporting issuer, the trial judge or, on motion to a superior court, a judge of that superior court may order that the costs properly incurred by the board of directors in commencing, commencing and prosecuting or continuing the action, as the case may be, shall be paid by the reporting issuer, if the judge is satisfied that there were apparent grounds for believing the action was in the best interests of the reporting issuer and the security holders thereof.

(4) Where an action under subsection 199(3) or (4) is

(a) commenced;

(b) commenced and prosecuted; or

(c) continued,

by a person or company who is a security holder of the reporting issuer, the trial judge or, on motion to a superior court, a judge of that superior court may order that the costs properly incurred by such person or company in commencing, commencing and prosecuting or continuing the action, as the case may be, shall be paid by the reporting issuer, if the judge is satisfied that

(d) the reporting issuer failed to commence the action or had commenced it but had failed to prosecute it diligently; and

(e) there are apparent grounds for believing that the continuance of the action is in the best interests of the reporting issuer and the security holders thereof.

(5) Where an action under subsection 199(3) or (4) is

(a) commenced;

(b) commenced and prosecuted; or

(c) continued,

by the Commission, the trial judge or, on motion to a superior court, a judge of that superior court shall order the reporting issuer to pay all costs properly incurred by the Commission in commencing, commencing and prosecuting or continuing the action, as the case may be.

(6) In determining whether there are apparent grounds for believing that an action or its continuance is in the best interests of a reporting issuer and the security holders thereof, the judge shall consider the relationship between the potential benefit to be derived from the action by the reporting issuer and the security holders thereof and the cost involved in the prosecution of the action.

(7) Notice of every application under subsection (1) or (2) shall be given to the Commission, the reporting issuer or the mutual fund, as the case may be, and each of them may appear and be heard thereon.

(8) Every order made under subsection (1) or (2) requiring or authorizing the Commission to commence and prosecute or continue an action shall provide that the reporting issuer or mutual fund, as the case may be, shall cooperate fully with the Commission in the commencement and prosecution or continuation of the action, and shall make available to the Commission all books, records, documents and other material or information known to the reporting issuer or mutual fund or reasonably ascertainable by the reporting issuer or mutual fund relevant to such action.

(9) An appeal lies to the appropriate appeal court from any order made under this section.

201. (1) If subsection 56(1) applies to a contract and such subsection is not complied with, a person or company who has entered into the contract is entitled to rescission thereof by mailing or delivering written notice of rescission to the registered dealer within sixty days of the date of the delivery of the security to or by the person or company, as the case may be, but, in the case of a purchase by the person or company, only if he, she or it is still the owner of the security purchased.

(2) If paragraph 53(1)(c) applies to a contract and a registered dealer has failed to comply with such subsection by not disclosing that he, she or it acted as principal, a person or company who has entered into the contract is entitled to rescission thereof by mailing or delivering written notice of rescission to the registered dealer within seven days of the date of the delivery of the written confirmation of the contract.

(3) For the purpose of subsection (2), a confirmation sent by prepaid mail shall be deemed conclusively to have been delivered to the person or company to whom it was addressed in the ordinary course of mail.

(4) In an action respecting a rescission to which this section applies, the onus of proving compliance with section 53 or 56 is upon the registered dealer.

(5) No action respecting a rescission shall be commenced under this section after the expiration of a period of ninety days from the date of the mailing or delivering the notice under subsection (1) or (2).

202. (1) Every purchaser of a security of a mutual fund in Canada may, where the amount of the purchase does not exceed the sum of $50,000, rescind the purchase by notice given to the registered dealer from whom the purchase was made within forty-eight hours after receipt of the confirmation for a lump sum purchase or within sixty days after receipt of the confirmation for the initial payment under a contractual plan but, subject to subsection (5), the amount the purchaser is entitled to recover on exercise of this right to rescind shall not exceed the net asset value of the securities purchased, at the time the right is exercised.

(2) The right to rescind a purchase made under a contractual plan may be exercised only with respect to payments scheduled to be made within the time specified in subsection (1) for rescinding a purchase made under a contractual plan.

(3) The notice mentioned in subsection (1) shall be in writing, and may be given by prepaid mail, telegram or other means.

(4) A confirmation sent by prepaid mail shall be deemed conclusively to have been received in the ordinary course of mail by the person or company to whom it was addressed.

(5) Every registered dealer from whom the purchase was made shall reimburse the purchaser who has exercised the right of rescission in accordance with this section for the amount of sales charges and fees relevant to the investment of the purchaser in the mutual fund in respect of the shares or units of which the notice of exercise of the right of rescission was given.

203. Unless otherwise provided in this Act, no action shall be commenced to enforce a right created by this Part more than,

(a) in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or

(b) in the case of any action, other than an action for rescission, the earlier of

(i) 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or

(ii) three years after the date of the transaction that gave rise to the cause of action.

INTERPRETATION AND APPLICATION

204. In this Part,

“compensation” means compensation received during the twelve-month period immediately preceding the day on which the misrepresentation was made or on which the failure to make timely disclosure first occurred, together with the fair market value of all deferred compensation including, without limitation, options, pension benefits and stock appreciation rights, granted during the same period, valued as of the date that such compensation is awarded;

“core document” means

(a) a prospectus, a takeover bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of a takeover bid circular, issuer bid circular or directors’ circular, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements and interim financial statements of the responsible issuer, where used in relation to

(i) a director of a responsible issuer who is not also an officer of the responsible issuer,

(ii) an influential person, other than an officer of the responsible issuer or an investment fund manager where the responsible issuer is an investment fund, or

(iii) a director or officer of an influential person who is not also an officer of the responsible issuer, other than an officer of an investment fund manager;

(b) a prospectus, a takeover bid circular, an issuer bid circular, a directors’ circular, a notice of change or variation in respect of a takeover bid circular, issuer bid circular or directors’ circular, a rights offering circular, management’s discussion and analysis, an annual information form, an information circular, annual financial statements, interim financial statements and a material change report required by subsection 90(2) or the regulations of the responsible issuer, where used in relation to

(i) a responsible issuer or an officer of the responsible issuer,

(ii) an investment fund manager, where the responsible issuer is an investment fund, or

(iii) an officer of an investment fund manager, where the responsible issuer is an investment fund; or

(c) such other documents as may be prescribed by regulation for the purposes of this definition;

“document” means any written communication, including a communication prepared and transmitted only in electronic form,

(a) that is required to be filed with the Commission; or

(b) that is not required to be filed with the Commission and

(i) that is filed with the Commission,

(ii) that is filed or required to be filed with a government or an agency of a government under applicable securities or corporate law or with any stock exchange or quotation and trade reporting system under its bylaws, rules or regulations, or

(iii) that is any other communication the content of which would reasonably be expected to affect the market price or value of a security of the responsible issuer;

“expert” means a person or company whose profession gives authority to a statement made in a professional capacity by the person or company including, without limitation, an accountant, actuary, appraiser, auditor, engineer, financial analyst, geologist or lawyer, but not including an entity that is an approved rating organization for the purposes of National Instrument 44-101 of the Canadian Securities Administrators;

“failure to make timely disclosure” means a failure to disclose a material change in the manner and at the time required under this Act or the regulations;

“influential person” means, in respect of a responsible issuer,

(a) a control person;

(b) a promoter;

(c) an insider who is not a director or officer of the responsible issuer; or

(d) an investment fund manager, if the responsible issuer is an investment fund;

“issuer’s security” means a security of a responsible issuer and includes a security,

(a) the market price or value of which, or payment obligations under which, are derived from or based on a security of the responsible issuer; and

(b) which is created by a person or company on behalf of the responsible issuer or is guaranteed by the responsible issuer;

“liability limit” means

(a) in the case of a responsible issuer, the greater of

(i) 5 per cent of its market capitalization (as such term is defined in the regulations), and

(ii) $1 million;

(b) in the case of a director or officer of a responsible issuer, the greater of

(i) $25,000, and

(ii) 50 per cent of the aggregate of the director’s or officer’s compensation from the responsible issuer and its affiliates;

(c) in the case of an influential person who is not an individual, the greater of

(i) 5 per cent of its market capitalization (as defined in the regulations), and

(ii) $1 million;

(d) in the case of an influential person who is an individual, the greater of

(i) $25,000, and

(ii) 50 per cent of the aggregate of the influential person’s compensation from the responsible issuer and its affiliates;

(e) in the case of a director or officer of an influential person, the greater of

(i) $25,000, and

(ii) 50 per cent of the aggregate of the director’s or officer’s compensation from the influential person and its affiliates;

(f) in the case of an expert, the greater of

(i) $1 million, and

(ii) the revenue that the expert and the affiliates of the expert have earned from the responsible issuer and its affiliates during the twelve months preceding the misrepresentation; and

(g) in the case of each person who made a public oral statement, other than an individual referred to in paragraph (d), (e) or (f), the greater of

(i) $25,000, and

(ii) 50 per cent of the aggregate of the person’s compensation from the responsible issuer and its affiliates;

“management’s discussion and analysis” means the section of an annual information form, annual report or other document that contains management’s discussion and analysis of the financial condition and results of operations of a responsible issuer as required under Canadian securities law;

“public oral statement” means an oral statement made in circumstances in which a reasonable person would believe that information contained in the statement will become generally disclosed;

“release” means, with respect to information or a document, to file with the Commission or any other securities regulatory authority in Canada or a stock exchange or to otherwise make available to the public;

“responsible issuer” means

(a) a reporting issuer; or

(b) any other issuer with a real and substantial connection to Canada, any securities of which are publicly traded;

“trading day” means a day during which the principal market (as defined in the regulations) for the security is open for trading.

205. This Part does not apply to

(a) the purchase of a security offered by a prospectus during the period of distribution;

(b) the acquisition of an issuer’s security pursuant to a distribution that is exempt from section 68 or 77, except as may be prescribed by regulation;

(c) the acquisition or disposition of an issuer’s security in connection with or pursuant to a takeover bid or issuer bid, except as may be prescribed by regulation; or

(d) such other transactions or class of transactions as may be prescribed by regulation.

LIABILITY

206. (1) Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against

(a) the responsible issuer;

(b) each director of the responsible issuer at the time the document was released;

(c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document;

(d) each influential person, and each director and officer of an influential person, who knowingly influenced

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer to release the document, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document; and

(e) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released by a person or company other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document.

(2) Where a person with actual, implied or apparent authority to speak on behalf of a responsible issuer makes a public oral statement that relates to the business or affairs of the responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the public oral statement was made and the time when the misrepresentation contained in the public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against

(a) the responsible issuer;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the making of the public oral statement;

(d) each influential person, and each director and officer of the influential person, who knowingly influenced

(i) the person who made the public oral statement to make the public oral statement, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the making of the public oral statement; and

(e) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the person making the public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the public oral statement.

(3) Where an influential person or a person or company with actual, implied or apparent authority to act or speak on behalf of the influential person releases a document or makes a public oral statement that relates to a responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released or the public oral statement was made and the time when the misrepresentation contained in the document or public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against

(a) the responsible issuer, if a director or officer of the responsible issuer, or where the responsible issuer is an investment fund, the investment fund manager, authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(d) the influential person;

(e) each director and officer of the influential person who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement; and

(f) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document or public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released or the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document or public oral statement.

(4) Where a responsible issuer fails to make a timely disclosure, a person or company who acquires or disposes of the issuer’s security between the time when the material change was required to be disclosed in the manner required under this Act or the regulations and the subsequent disclosure of the material change has, without regard to whether the person or company relied on the responsible issuer having complied with its disclosure requirements, a right of action for damages against

(a) the responsible issuer;

(b) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the failure to make timely disclosure; and

(c) each influential person, and each director and officer of an influential person, who knowingly influenced

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer in the failure to make timely disclosure, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the failure to make timely disclosure.

(5) In an action under this section, a person who is a director or officer of an influential person is not liable in that capacity if the person is liable as a director or officer of the responsible issuer.

(6) In an action under this section,

(a) multiple misrepresentations having common subject matter or content may, in the discretion of the court, be treated as a single misrepresentation; and

(b) multiple instances of failure to make timely disclosure of a material change or material changes concerning common subject matter may, in the discretion of the court, be treated as a single failure to make timely disclosure.

(7) In an action under subsection (2) or (3), if the person who made the public oral statement had apparent authority, but not implied or actual authority, to speak on behalf of the issuer, no other person is liable with respect to any of the responsible issuer’s securities that were acquired or disposed of before that other person became, or should reasonably have become, aware of the misrepresentation.

207. (1) In an action under section 206 in relation to a misrepresentation in a document that is not a core document, or a misrepresentation in a public oral statement, a person or company is not liable, subject to subsection (2), unless the plaintiff proves that the person or company

(a) knew, at the time that the document was released or public oral statement was made, that the document or public oral statement contained the misrepresentation;

(b) at or before the time that the document was released or public oral statement was made, deliberately avoided acquiring knowledge that the document or public oral statement contained the misrepresentation; or

(c) was, through action or failure to act, guilty of gross misconduct in connection with the release of the document or the making of the public oral statement that contained the misrepresentation.

(2) A plaintiff is not required to prove any of the matters set out in subsection (1) in an action under section 206 in relation to an expert.

(3) In an action under section 206 in relation to a failure to make timely disclosure, a person or company is not liable, subject to subsection (4), unless the plaintiff proves that the person or company

(a) knew, at the time that the failure to make timely disclosure first occurred, of the change and that the change was a material change;

(b) at the time or before the failure to make timely disclosure first occurred, deliberately avoided acquiring knowledge of the change or that the change was a material change; or

(c) was, through action or failure to act, guilty of gross misconduct in connection with the failure to make timely disclosure.

(4) A plaintiff is not required to prove any of the matters set out in subsection (3) in an action under section 206 in relation to

(a) a responsible issuer;

(b) an officer of a responsible issuer;

(c) an investment fund manager; or

(d) an officer of an investment fund manager.

(5) A person or company is not liable in an action under section 206 in relation to a misrepresentation or a failure to make timely disclosure if that person or company proves that the plaintiff acquired or disposed of the issuer’s security

(a) with knowledge that the document or public oral statement contained a misrepresentation; or

(b) with knowledge of the material change.

(6) A person or company is not liable in an action under section 206 in relation to

(a) a misrepresentation if that person or company proves that,

(i) before the release of the document or the making of the public oral statement containing the misrepresentation, the person or company conducted or caused to be conducted a reasonable investigation, and

(ii) at the time of the release of the document or the making of the public oral statement, the person or company had no reasonable grounds to believe that the document or public oral statement contained the misrepresentation; or

(b) a failure to make timely disclosure if that person or company proves that,

(i) before the failure to make timely disclosure first occurred, the person or company conducted or caused to be conducted a reasonable investigation, and

(ii) the person or company had no reasonable grounds to believe that the failure to make timely disclosure would occur.

(7) In determining whether an investigation was reasonable under subsection (6), or whether any person or company is guilty of gross misconduct under subsection (1) or (3), the court shall consider all relevant circumstances, including

(a) the nature of the responsible issuer;

(b) the knowledge, experience and function of the person or company;

(c) the office held, if the person was an officer;

(d) the presence or absence of another relationship with the responsible issuer, if the person was a director;

(e) the existence, if any, and the nature of any system designed to ensure that the responsible issuer meets its continuous disclosure obligations;

(f) the reasonableness of reliance by the person or company on the responsible issuer’s disclosure compliance system and on the responsible issuer’s officers, employees and others whose duties would in the ordinary course have given them knowledge of the relevant facts;

(g) the period within which disclosure was required to be made under the applicable law;

(h) in respect of a report, statement or opinion of an expert, any professional standards applicable to the expert;

(i) the extent to which the person or company knew, or should reasonably have known, the content and medium of dissemination of the document or public oral statement;

(j) in the case of a misrepresentation, the role and responsibility of the person or company in the preparation and release of the document or the making of the public oral statement containing the misrepresentation or the ascertaining of the facts contained in that document or public oral statement; and

(k) in the case of a failure to make timely disclosure, the role and responsibility of the person or company involved in a decision not to disclose the material change.

(8) A person or company is not liable in an action under section 206 in respect of a failure to make timely disclosure if

(a) the person or company proves that the material change was disclosed by the responsible issuer in a report filed on a confidential basis with the Commission under subsection 90(3) or the regulations;

(b) the responsible issuer had a reasonable basis for making the disclosure on a confidential basis;

(c) where the information contained in the report filed on a confidential basis remains material, disclosure of the material change was made public promptly when the basis for confidentiality ceased to exist;

(d) the person or company or responsible issuer did not release a document or make a public oral statement that, due to the undisclosed material change, contained a misrepresentation; and

(e) where the material change became publicly known in a manner other than the manner required under this Act or the regulations, the responsible issuer promptly disclosed the material change in the manner required under this Act or the regulations.

(9) A person or company is not liable in an action under section 206 for a misrepresentation in forward-looking information if the person or company proves all of the following things:

(a) the document or public oral statement containing the forward-looking information contained, proximate to that information,

(i) reasonable cautionary language identifying the forward-looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information, and

(ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information;

(b) the person or company had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward-looking information.

(10) The person or company shall be deemed to have satisfied the requirements of paragraph (9)(a) with respect to a public oral statement containing forward looking information if the person who made the public oral statement

(a) made a cautionary statement that the oral statement contains forward looking information;

(b) stated that

(i) the actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and

(ii) certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information; and

(c) stated that additional information about

(i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and

(ii) the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information,

is contained in a readily-available document or in a portion of such a document and has identified that document or that portion of the document.

(11) For the purposes of paragraph (10)(c), a document filed with the Commission or otherwise generally disclosed shall be deemed to be readily available.

(12) Subsection (9) does not relieve a person or company of liability respecting forward-looking information in a financial statement required to be filed under this Act or the regulations or forward-looking information in a document released in connection with an initial public offering.

(13) A person or company, other than an expert, is not liable in an action under section 206 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert in respect of which the responsible issuer obtained the written consent of the expert to the use of the report, statement or opinion, if the consent had not been withdrawn in writing before the document was released or the public oral statement was made, if the person or company proves that

(a) the person or company did not know and had no reasonable grounds to believe that there had been a misrepresentation in the part of the document or public oral statement made on the authority of the expert; and

(b) the part of the document or oral public statement fairly represented the report, statement or opinion made by the expert.

(14) An expert is not liable in an action under section 206 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert, if the expert proves that the written consent previously provided was withdrawn in writing before the document was released or the public oral statement was made.

(15) A person or company is not liable in an action under section 206 in respect of a misrepresentation in a document, other than a document required to be filed with the Commission, if the person or company proves that, at the time of release of the document, the person or company did not know and had no reasonable grounds to believe that the document would be released.

(16) A person or company is not liable in an action under section 206 for a misrepresentation in a document or a public oral statement, if the person or company proves that

(a) the misrepresentation was also contained in a document filed by or on behalf of another person or company, other than the responsible issuer, with the Commission or any other securities regulatory authority in Canada or a stock exchange and was not corrected in another document filed by or on behalf of that other person or company with the Commission or that other securities regulatory authority in Canada or stock exchange before the release of the document or the public oral statement made by or on behalf of the responsible issuer;

(b) the document or public oral statement contained a reference identifying the document that was the source of the misrepresentation; and

(c) when the document was released or the public oral statement was made, the person or company did not know and had no reasonable grounds to believe that the document or public oral statement contained a misrepresentation.

(17) A person or company, other than the responsible issuer, is not liable in an action under section 206 if the misrepresentation or failure to make timely disclosure was made without the knowledge or consent of the person or company and, if, after the person or company became aware of the misrepresentation before it was corrected, or the failure to make timely disclosure before it was disclosed in the manner required under this Act or the regulations,

(a) the person or company promptly notified the board of directors of the responsible issuer or other persons acting in a similar capacity of the misrepresentation or the failure to make timely disclosure; and

(b) if no correction of the misrepresentation or no subsequent disclosure of the material change in the manner required under this Act or the regulations was made by the responsible issuer within two business days after the notification under paragraph (a), the person or company, unless prohibited by law or by professional confidentiality rules, promptly and in writing notified the Commission of the misrepresentation or failure to make timely disclosure.

DAMAGES

208. (1) Damages shall be assessed in favour of a person or company that acquired an issuer’s securities after the release of a document or the making of a public oral statement containing a misrepresentation or after a failure to make timely disclosure as follows:

(a) in respect of any of the securities of the responsible issuer that the person or company subsequently disposed of on or before the tenth trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, assessed damages shall equal the difference between the average price paid for those securities (including any commissions paid in respect thereof) and the price received upon the disposition of those securities (without deducting any commissions paid in respect of the disposition), calculated taking into account the result of hedging or other risk limitation transactions;

(b) in respect of any of the securities of the responsible issuer that the person or company subsequently disposed of after the tenth trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, assessed damages shall equal the lesser of

(i) an amount equal to the difference between the average price paid for those securities (including any commissions paid in respect thereof) and the price received upon the disposition of those securities (without deducting any commissions paid in respect of the disposition), calculated taking into account the result of hedging or other risk limitation transactions, and

(ii) an amount equal to the number of securities that the person disposed of, multiplied by the difference between the average price per security paid for those securities (including any commissions paid in respect thereof determined on a per security basis) and,

(A) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market (as those terms are defined in the regulations) for the ten trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, or

(B) if there is no published market, the amount that the court considers just;

(c) in respect of any of the securities of the responsible issuer that the person or company has not disposed of, assessed damages shall equal the number of securities acquired, multiplied by the difference between the average price per security paid for those securities (including any commissions paid in respect thereof determined on a per security basis) and,

(i) if the issuer’s securities trade on a published market, the trading price of the issuer’ securities on the principal market (as those terms are defined in the regulations) for the ten trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, or

(ii) if there is no published market, the amount that the court considers just.

(2) Damages shall be assessed in favour of a person or company that disposed of securities after a document was released or a public oral statement made containing a misrepresentation or after a failure to make timely disclosure as follows:

(a) in respect of any of the securities of the responsible issuer that the person or company subsequently acquired on or before the tenth trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, assessed damages shall equal the difference between the average price received upon the disposition of those securities (deducting any commissions paid in respect of the disposition) and the price paid for those securities (without including any commissions paid in respect thereof), calculated taking into account the result of hedging or other risk limitation transactions;

(b) in respect of any of the securities of the responsible issuer that the person or company subsequently acquired after the tenth trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, assessed damages shall equal the lesser of

(i) an amount equal to the difference between the average price received upon the disposition of those securities (deducting any commissions paid in respect of the disposition) and the price paid for those securities (without including any commissions paid in respect thereof), calculated taking into account the result of hedging or other risk limitation transactions, and

(ii) an amount equal to the number of securities that the person disposed of, multiplied by the difference between the average price per security received upon the disposition of those securities (deducting any commissions paid in respect of the disposition determined on a per security basis) and,

(A) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market (as those terms are defined in the regulations) for the ten trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, or

(B) if there is no published market, the amount that the court considers just;

(c) in respect of any of the securities of the responsible issuer that the person or company has not acquired, assessed damages shall equal the number of securities that the person or company disposed of, multiplied by the difference between the average price per security received upon the disposition of those securities (deducting any commissions paid in respect of the disposition determined on a per security basis) and,

(i) if the issuer’s securities trade on a published market, the trading price of the issuer’s securities on the principal market (as such terms are defined in the regulations) for the ten trading days following the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act or the regulations, or

(ii) if there is no published market, then the amount that the court considers just.

(3) Despite subsections (1) and (2), assessed damages shall not include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely disclosure.

209. (1) In an action under section 206, the court shall determine, in respect of each defendant found liable in the action, the defendant’s responsibility for the damages assessed in favour of all plaintiffs in the action, and each such defendant shall be liable, subject to the limits set out in subsection 210(1), to the plaintiffs for only that portion of the aggregate amount of damages assessed in favour of the plaintiffs that corresponds to that defendant’s responsibility for the damages.

(2) Despite subsection (1), where, in an action under section 206 in respect of a misrepresentation or a failure to make timely disclosure, a court determines that a particular defendant, other than the responsible issuer, authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing it to be a misrepresentation or a failure to make timely disclosure, the whole amount of the damages assessed in the action may be recovered from that defendant.

(3) Each defendant in respect of whom the court has made a determination under subsection (2) is jointly and severally liable with each other defendant in respect of whom the court has made a determination under subsection (2).

(4) Any defendant against whom recovery is obtained under subsection (2) is entitled to claim contribution from any other defendant who is found liable in the action.

210. (1) Despite section 208, the damages payable by a person or company in an action under section 206 is the lesser of

(a) the aggregate damages assessed against the person or company in the action; and

(b) the liability limit for the person or company less the aggregate of all damages assessed after appeals, if any, against the person or company in all other actions brought under section 206 in respect of that misrepresentation or failure to make timely disclosure, and less any amount paid in settlement of any such actions.

(2) Subsection (1) does not apply to a person or company, other than the responsible issuer, if the plaintiff proves that the person or company authorized, permitted or acquiesced in the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure, or influenced the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure.

PROCEDURAL MATTERS

211. (1) No action may be commenced under section 206 without leave of the court granted upon motion with notice to each defendant. The court shall grant leave only where it is satisfied that

(a) the action is being brought in good faith; and

(b) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

(2) Upon an application under this section, the plaintiff and each defendant shall serve and file one or more affidavits setting forth the material facts upon which each intends to rely.

(3) The maker of such an affidavit may be examined on it in accordance with the rules of court.

(4) A copy of the application for leave to proceed and any affidavits filed with the court shall be sent to the Commission when filed.

212. A person or company that has been granted leave to commence an action under section 206 shall

(a) promptly issue a news release disclosing that leave has been granted to commence an action under section 206;

(b) send a written notice to the Commission within seven days, together with a copy of the news release; and

(c) send a copy of the statement of claim or other originating document to the Commission when filed.

213. An action under section 206 shall not be discontinued, abandoned or settled without the approval of the court given on such terms as the court thinks fit including, without limitation, terms as to costs, and in determining whether to approve the settlement of the action, the court shall consider, among other things, whether there are any other actions outstanding under section 206 in respect of the same misrepresentation or failure to make timely disclosure.

214. The prevailing party in an action under section 206 is entitled to costs determined by a court in accordance with applicable rules of civil procedure.

215. The Commission may intervene in an action under section 206 and in an application for leave under section 211.

216. The right of action for damages and the defences to an action under section 206 are in addition to, and without derogation from, any other rights or defences the plaintiff or defendant may have in an action brought otherwise than under this Part.

217. No action shall be commenced under section 206,

(a) in the case of misrepresentation in a document, later than the earlier of

(i) three years after the date on which the document containing the misrepresentation was first released, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 206 in respect of the same misrepresentation;

(b) in the case of a misrepresentation in a public oral statement, later than the earlier of

(i) three years after the date on which the public oral statement containing the misrepresentation was made, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 206 in respect of the same misrepresentation; and

(c) in the case of a failure to make timely disclosure, later than the earlier of

(i) three years after the date on which the requisite disclosure was required to be made, and

(ii) six months after the issuance of a news release disclosing that leave has been granted to commence an action under section 206 in respect of the same failure to make timely disclosure.

218. A statement as to

(a) the registration or non-registration of any person or company;

(b) the filing or non-filing of any document or material required or permitted to be filed;

(c) any other matter pertaining to such registration, non-registration, filing or non-filing, or to any such person, company, document or material; or

(d) the date the facts upon which any proceedings are to be based first came to the knowledge of the Commission,

purporting to be certified by the Commission or a member thereof or by the Director is, without proof of the office or signature of the person certifying, admissible in evidence, so far as relevant, for all purposes in any action, proceeding or prosecution.

219. (1) Where Canadian securities law requires that material be filed, the filing shall be effected by depositing the material, or causing it to be deposited, with the Commission and all material so filed shall, subject to subsection (2), be made available by the Commission for public inspection during the normal business hours of the Commission.

(2) Despite subsection (1), the Commission may hold material or any class of material required to be filed by Canadian securities law in confidence so long as the Commission is of the opinion that the material so held discloses intimate financial, personal or other information and that the desirability of avoiding disclosure thereof in the interests of any person or company affected outweighs the desirability of adhering to the principle that material filed with the Commission be available to the public for inspection.

220. (1) No action or other proceeding for damages shall be instituted against the Commission or any member thereof, or any employee or agent of the Commission for any act done in good faith in the performance or intended performance of any duty or in the exercise or the intended exercise of any power under Canadian securities law, or for any neglect or default in the performance or exercise in good faith of such duty or power.

(2) No person or company has any rights or remedies and no proceedings lie or shall be brought against any person or company for any act or omission of the last-mentioned person or company done or omitted in compliance with Canadian securities law.

(3) Subsection (1) does not, by reason of section 10 of the Crown Liability and Proceedings Act, relieve the Crown of liability in respect of a tort committed by the Commission or any person referred to in subsection (1) to which the Crown would otherwise be subject.

221. (1) Subject to subsection (2), this Act applies to

(a) Her Majesty in right of Canada; and

(b) Her Majesty in right of any province,

and agents and servants thereof.

(2) Subsections 23(1), (3) and (4), sections 75, 181, 184, 185, 186, 190, 193, 194, 195, 199 and 200, Part XXIII and section 218 do not apply to

(a) Her Majesty in right of Canada;

(b) Her Majesty in right of any province; or

(c) an agent or servant of Her Majesty, as referred to in paragraph (a) or (b), where the matter arises from the performance of a duty or the exercise of a power as an agent or servant thereof or from any neglect or default in the performance or exercise of such duty or power.

222. (1) The Commission may make rules in respect of the following matters:

(a) prescribing requirements in respect of applications for registration and the renewal, amendment, expiration or surrender of registration and in respect of suspension, cancellation or reinstatement of registration;

(b) prescribing categories or subcategories of registrants, classifying registrants into categories or subcategories and prescribing the conditions of registration or other requirements for registrants or any category or subcategory, including

(i) standards of practice and business conduct of registrants in dealing with their customers and clients and prospective customers and clients,

(ii) requirements that are advisable for the prevention or regulation of conflicts of interest, and

(iii) requirements in respect of membership in a self-regulatory organization;

(c) extending any requirements prescribed under paragraph (b) to unregistered directors, partners, salespersons and officers of registrants;

(d) prescribing requirements in respect of the residence in Canada of registrants;

(e) prescribing requirements in respect of notification by a registrant or other person or company in respect of a proposed change in beneficial ownership of, or control or direction over, securities of the registrant and authorizing the Commission to make an order that a proposed change may not be effected before a decision by the Commission as to whether it will exercise its powers under paragraph 187(1)(a) as a result of the proposed change;

(f) prescribing requirements for persons and companies in respect of calling at or telephoning to residences for the purposes of trading in securities;

(g) prescribing requirements in respect of the disclosure or furnishing of information to the public or the Commission by registrants or providing for exemptions from or varying the requirements under this Act in respect of the disclosure or furnishing of information to the public or the Commission by registrants;

(h) providing for exemptions from the registration requirements under this Act or for the removal of exemptions from those requirements;

(i) providing for exemptions from the requirements of section 58 in respect of dealers;

(j) prescribing requirements in respect of the books, records and other documents required by subsection 29(1) to be kept by market participants, including the form in which and the period for which the books, records and other documents are to be kept;

(k) regulating the listing or trading of publicly traded securities including requiring reporting of trades and quotations;

(l) regulating recognized stock exchanges, recognized self-regulatory organizations, recognized quotation and trade reporting systems and recognized clearing agencies, including prescribing requirements in respect of the review or approval by the Commission of any bylaw, rule, regulation, policy, procedure, interpretation or practice;

(m) regulating trading or advising in securities to prevent trading or advising that is fraudulent, manipulative, deceptive or unfairly detrimental to investors;

(n) regulating trading or advising in penny stocks, including prescribing requirements in respect of additional disclosure and suitability for investment;

(o) prescribing categories or subcategories of issuers for purposes of the prospectus requirements under this Act, the regulations and the rules and classifying issuers into categories or subcategories;

(p) regulating in respect of, or varying this Act to facilitate, expedite or regulate in respect of, the distribution of securities, or the issuing of receipts, including by establishing

(i) requirements in respect of distributions of securities by means of a prospectus incorporating other documents by reference,

(ii) requirements in respect of distributions of securities by means of a simplified or summary prospectus or other form of disclosure document,

(iii) requirements in respect of distributions of securities on a continuous or delayed basis,

(iv) requirements in respect of pricing of distributions of securities after the issuance of a receipt for the prospectus filed in relation thereto,

(v) procedures for the issuing of receipts for prospectuses after expedited or selective review thereof,

(vi) provisions for the incorporation by reference of certain documents in a prospectus and the effect, including from a liability and evidentiary perspective, of modifying or superseding statements,

(vii) requirements for the form of a prospectus certificate, including providing for alternative forms in circumstances other than those referred to in subsection 78(2) of this Act,

(viii) provisions for eligibility requirements to obtain a receipt for, or distribute under, a particular form of prospectus and the loss of that eligibility, and

(ix) provisions for varying withdrawal rights;

(q) prescribing requirements for the certification of prospectuses by persons and companies in relation to the following:

(i) if the issuer is a trust, requiring individuals who perform functions for the issuer similar to those performed by a chief executive officer or chief financial officer of an issuer to certify the prospectus,

(ii) if the issuer is a trust and its business or a material part of its business is conducted through a person or company other than the issuer, requiring a director and the chief executive officer and the chief financial officer of the person or company, or individuals who perform functions for the person or company similar to those performed by a chief executive officer or chief financial officer, to certify the prospectus,

(iii) if the issuer is a limited partnership, requiring the general partner of the issuer and individuals who perform functions for the issuer similar to those performed by a chief executive officer or a chief financial officer of an issuer to certify the prospectus, and

(iv) if the issuer is not organized as a company, trust or limited partnership, requiring persons or companies that perform functions similar to those performed by persons or companies described in subparagraph (i), (ii) or (iii) or section 73 to certify the prospectus;

(r) prescribing requirements for the escrow of securities in connection with distributions;

(s) designating activities, including the use of documents or advertising, in which registrants or issuers are permitted to engage or are prohibited from engaging in connection with distributions;

(t) prescribing which distributions and trading in relation to the distributions are distributions and trading outside Canada;

(u) providing for exemptions from the prospectus requirements under this Act and for the removal of exemptions from those requirements;

(v) prescribing the circumstances in which the Director must refuse to issue a receipt for a prospectus and prohibiting the Director from issuing a receipt in those circumstances;

(w) prescribing requirements in respect of the preparation and dissemination and other use, by reporting issuers, of documents providing for continuous disclosure that are in addition to the requirements under this Act, including requirements in respect of

(i) an annual report,

(ii) an annual information form, and

(iii) supplemental analysis of financial statements;

(x) respecting the preparation, form and content requirements applicable to the public dissemination of forward-looking information by reporting issuers where the dissemination is not part of a required filing;

(y) exempting reporting issuers from any requirement of Part XVI (Continuous Disclosure)

(i) if the requirement conflicts with a requirement of the laws of the jurisdiction under which the reporting issuers are incorporated, organized or continued,

(ii) if the reporting issuers ordinarily distribute financial information to holders of their securities in a form, or at times, different from those required by Part XVI, or

(iii) under circumstances that the Commission considers justify the exemption;

(z) requiring issuers or other persons and companies to comply, in whole or in part, with Part XVI (Continuous Disclosure), or rules made under paragraph (w);

(z.1) prescribing requirements in respect of financial accounting, reporting and auditing for purposes of this Act, the regulations and the rules, including

(i) defining accounting principles and auditing standards acceptable to the Commission,

(ii) financial reporting requirements for the preparation and dissemination of future-oriented financial information and pro forma financial statements,

(iii) standards of independence and other qualifications for auditors,

(iv) requirements respecting a change in auditors by a reporting issuer or a registrant,

(v) requirements respecting a change in the financial year of an issuer or in an issuer’s status as a reporting issuer under this Act, and

(vi) defining auditing standards for attesting to and reporting on a reporting issuer’s internal controls;

(z.2) prescribing requirements for the validity and solicitation of proxies, prescribing activities for the purposes of paragraph (g) of the definition of “solicit” and “solicitation” in section 98 and prescribing circumstances for the purposes of paragraph 100(2)(b);

(z.3) providing for the application of Part XVI (Continuous Disclosure) and Part XVII (Proxies and Proxy Solicitation) in respect of registered holders or beneficial owners of voting securities or equity securities of reporting issuers or other persons or companies on behalf of whom the securities are held, including requirements for reporting issuers, recognized clearing agencies, registered holders, registrants and other persons or companies who hold securities on behalf of persons or companies but who are not the registered holders;

(z.4) regulating takeover bids, issuer bids, insider bids, going-private transactions, business combinations and related party transactions, including

(i) providing for the matters that, under Part XVIII, may be specified by regulation or required by the regulations or that, under Part XVIII, must or may be determined or done in accordance with the regulations,

(ii) varying the requirements of sections 108 to 111, providing exemptions from any of those sections or removing any exemption set out in those sections,

(iii) varying the requirements of sections 112 to 140 or providing exemptions from any of those sections,

(iv) removing any exemption set out in sections 141 to 145 or 148 to 153,

(v) establishing exemptions under sections 147 and 155,

(vi) varying the requirements of sections 157 and 158 or providing exemptions from either of those sections,

(vii) prescribing requirements in respect of issuer bids, insider bids, going-private transactions and related party transactions, for disclosure, valuations, review by independent committees of boards of directors and approval by minority security holders,

(viii) prescribing requirements respecting defensive tactics in connection with takeover bids, and

(ix) varying any or all of the time periods in Part XVIII;

(z.5) providing for exemptions from any requirement of section 91 or from liability under section 199 and prescribing standards or criteria for determining when a material fact or material change has been generally disclosed;

(z.6) prescribing time periods under section 163 or varying or providing for exemptions from any requirement of Part XIX (Insider Trading and Self-Dealing);

(z.7) regulating the disclosure or furnishing of information to the public or the Commission by insiders, including

(i) prescribing filing requirements for the reporting by insiders of their respective direct or indirect beneficial ownership of, or control or direction over, securities of a reporting issuer or changes in ownership, control or direction,

(ii) prescribing requirements respecting the reporting by insiders of any interest in or right or obligation associated with a related financial instrument or changes in such interests, rights or obligations,

(iii) prescribing requirements respecting the reporting by insiders of any agreement, arrangement or understanding that alters, directly or indirectly, an insider’s economic interest in a security or an insider’s economic exposure to a reporting issuer or changes in such agreements, arrangements or understandings;

(z.8) prescribing requirements in respect of a reporting issuer to facilitate compliance by insiders of the reporting issuer with this Act and with the rules made under paragraph (z.7);

(z.9) requiring that reports under paragraph (z.7) shall also provide information for the period of up to six months before a person or company became an insider;

(z.10) regulating investment funds and the distribution and trading of the securities of investment funds, including

(i) varying Part XIII or Part XVI by prescribing additional disclosure requirements in respect of investment funds and requiring or permitting the use of particular forms or types of additional offering or other documents in connection with the funds,

(ii) prescribing permitted investment policy and investment practices for investment funds and prohibiting or restricting certain investments or investment practices for investment funds,