Bill S-226

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) 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.