Bill S-214

2nd Session, 40th Parliament,

57 Elizabeth II, 2009

senate of canada

BILL S-214

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;

And 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.

PART I

THE COMMISSION

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.

PART II

FINANCIAL DISCLOSURE ADVISORY BOARD

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.

PART III

APPOINTMENT OF EXPERTS

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.

PART IV

EXECUTIVE DIRECTOR AND SECRETARY

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.

PART V

ADMINISTRATIVE PROCEEDINGS, REVIEWS AND APPEALS

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.

PART VI

INVESTIGATIONS AND EXAMINATIONS

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).

PART VII

RECORD-KEEPING AND COMPLIANCE REVIEWS

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.

PART VIII

SELF-REGULATION

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.