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The Securities Amendment Act

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If you need an official copy, contact Statutory Publications.

S.M. 2006, c. 11

Bill 17, 4th Session, 38th Legislature

The Securities Amendment Act

(Assented to June 13, 2006)

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

C.C.S.M. c. S50 amended

1           The Securities Act is amended by this Act.

2(1)        Subsection 1(1) is amended

(a) by repealing the definitions "broker", "broker-dealer", "investment counsel", "investment dealer", "salesperson", "securities adviser" and "sub-broker-dealer";

(b) by adding the following definitions:

"adviser" means a person or company that engages in or holds himself, herself or itself out as engaging in the business of advising others with respect to buying, selling or investing in securities; (« conseiller »)

"dealer" means a person or company that is registered or required to be registered under this Act in one or more of the categories of dealer prescribed in the regulations; (« courtier »)

"reporting issuer" means an issuer that

(a) has issued securities in respect of which

(i) a prospectus was filed and a receipt for it was issued, or

(ii) a statement of material facts was filed and accepted,

under a former enactment,

(b) has filed a prospectus or statement of material facts and obtained a receipt for it under this Act or the regulations,

(c) has any securities that have at any time been listed and posted for trading on any exchange in Manitoba recognized by the commission, regardless of when the listing and posting for trading began,

(d) has exchanged its securities with another issuer or with the holders of the securities of another issuer in connection with an amalgamation, merger, reorganization or arrangement if one of the parties to the amalgamation, merger, reorganization or arrangement was a reporting issuer at the time of the amalgamation, merger, reorganization or arrangement,

(e) is designated as a reporting issuer in an order made by the commission under subsection (1.2), or

(f) has filed a securities exchange take-over bid circular under this Act or the regulations for the acquisition of securities of a reporting issuer, and has taken up and paid for securities subject to the bid in accordance with the circular,

but does not include an issuer that the commission declares under subsection (1.2) has ceased to be a reporting issuer; (« émetteur assujetti »)

(c) in the definition ""trade" or "trading"", by striking out "or "trading"".

2(2)        Clause 1(1.1)(e) is repealed.

2(3)        The following is added after subsection 1(1.1):

Commission orders re reporting issuer

1(1.2)      For the purpose of the definition "reporting issuer", the commission may make an order

(a) designating an issuer as a reporting issuer; or

(b) declaring that an issuer has ceased to be a reporting issuer;

if the commission is of the opinion that the order would not prejudice the public interest and is adequately justified in the circumstances.

Effect of issuer exchanging shares with a reporting issuer

1(1.3)      For the purposes of clause (d) of the definition "reporting issuer" in subsection (1), the issuer that exchanged its securities is deemed to have been a reporting issuer as at the date of the amalgamation, merger, reorganization or arrangement, for a period of time equal to the longest period that one of the parties to the amalgamation, merger, reorganization or arrangement had been a reporting issuer at that date.

3           Subsection 2(9) is amended by striking out "when compensation for financial loss is claimed under section 148.2".

4(1)        Subsection 6(1) is replaced with the following:

Registration as dealer required

6(1)        No person or company shall trade in a security unless the person or company is registered in accordance with the regulations

(a) in one or more of the categories of dealer prescribed in the regulations; or

(b) as a salesperson, partner, director or officer of a registered dealer and is acting on behalf of that dealer.

4(2)        Subsections 6(2) to (6) are repealed.

4(3)        Subsection 6(7) is replaced with the following:

Registration as adviser required

6(7)        No person or company shall act as an adviser unless the person or company is registered in accordance with the regulations

(a) in one or more of the categories of adviser prescribed in the regulations; or

(b) as an advising employee, partner, director or officer of a registered adviser and is acting on behalf of that adviser.

4(4)        Subsection 6(12) is replaced with the following:

Separate registration not required

6(12)       When a person or company is registered as

(a) a dealer, every individual who is a partner, officer or branch manager of the person or company and is named in the registration as a trading partner or trading official may act as a dealer on the person's or company's behalf without a separate registration; or

(b) an adviser, every individual who is a partner, officer or branch manager of the person or company and is named in the registration as a trading partner or trading official may act as an adviser on the person's or company's behalf without a separate registration.

5           Clause 14(2)(b) is amended by striking out "broker, investment dealer, underwriter, broker-dealer, sub-broker-dealer, security issuer, investment counsel, securities adviser or salesperson" and substituting "salesperson, dealer, adviser or security issuer".

6           Section 15 is replaced with the following:

Notice of status to director

15          Every registered dealer and every registered adviser shall comply with the reporting requirements set out in the regulations, within the time frame set out in the regulations.

7           Section 18 is repealed.

8(1)         Subsections 19(1) and (2) are replaced with the following:

Trades exempt from registration

19(1)       Registration is not required for a trade

(a) that is exempted by the regulations; or

(b) if the purchaser is a person or company that the commission recognizes as an exempt purchaser.

Trading exempted from registration

19(2)       Registration is not required to trade in the following securities:

(a) securities that are exempted by the regulations;

(b) securities

(i) to which section 89 or 91 of The Cooperatives Act applies, or

(ii) that are memberships or shares issued by a cooperative entity, as defined in section 1 of The Cooperatives Act, for the purpose of qualifying a person or company as a member of the cooperative entity;

(c) securities that are

(i) shares or memberships in a credit union, or

(ii) receipts or certificates issued by a credit union for money deposited with it on term deposits by its members in accordance with The Credit Unions and Caisses Populaires Act or the special Act of the Legislature incorporating it.

8(2)        Subsections 19(3) and (4) are repealed.

8(3)        Subsection 19(5) is amended

(a) in the part before clause (a), by striking out "subsections (1), (2) and (3)" and substituting "subsections (1) and (2)"; and

(b) in clause (a), by striking out "or (3)".

9           Subsection 34(1) is replaced with the following:

Recordkeeping and annual financial statements

34(1)        A registrant whose financial affairs are not subject to examination under section 33 shall

(a) keep the books and records that are necessary to properly record his or her business transactions and financial affairs; and

(b) file with the commission annually, and at such other times as the commission may require,

(i) a financial statement satisfactory to the commission as to the registrant's financial position, certified by the registrant or an officer or partner of the registrant and reported upon by the registrant's auditors, and

(ii) any other information that the commission may require.

Deadline for filing annual financial statement

34(1.1)     The registrant shall file the annual financial statement required by clause (1)(b) no later than 90 days after the end of the registrant's fiscal year.

10(1)       Subsection 58(1) is replaced with the following:

Section 37 not applicable to certain trades

58(1)       Section 37 does not apply to a trade

(a) that is exempted by the regulations; or

(b) if the purchaser is a person or company that the commission recognizes as an exempt purchaser.

10(2)       Subsection 58(2) is repealed.

10(3)       Subsection 58(3) is replaced with the following:

Section 37 not applicable to certain securities

58(3)       Section 37 does not apply to the primary distribution to the public of securities that are

(a) exempted by the regulations; or

(b) referred to in clause 19(2)(b) or (c).

11(1)       The part of subsection 72(1) before clause (a) is amended by striking out "registered investment counsel and securities".

11(2)       Clauses 72(2)(a) and (b) are amended by striking out "investment counsel or securities".

12           Subsection 80(1) is amended by repealing the definition "reporting issuer".

13          Subsection 82(2) is amended by striking out "registered".

14          Clause 85(7)(a) of the English version is amended

(a) by striking out "broker" and substituting "dealer"; and

(b) by striking out "broker's" and substituting "dealer's".

15          Section 100 is amended

(a) in the section heading, by striking out "Definitions" and substituting "Definition"; and

(b) by repealing the definitions "information circular" and "reporting issuer".

16          Section 101 is replaced with the following:

Reporting issuer to comply with proxy regulations

101         The management of a reporting issuer must comply with the regulations respecting proxies and proxy solicitation.

17          Section 102, subsections 103(1) and (3), section 104, subsection 106(3) and section 107 are repealed.

18(1)       Subsection 108(1) is amended

(a) by repealing the definitions "capital security" and "reporting issuer"; and

(b) in the definition "control or direction over", by striking out "section 104" and substituting "the regulations".

18(2)       Subsection 108(2) is amended

(a) in clause (b), by striking out "capital" wherever it occurs; and

(b) in clause (c) of the French version, by striking out "d'un titre" and substituting "d'une valeur mobilière".

19          Section 109 is amended by striking out "capital" wherever it occurs.

20          Section 111 is repealed.

21          Subsection 113(3) is amended by striking out "registered" wherever it occurs.

22          The part of subsection 114(1) before clause (a) is amended by striking out "capital".

23          Subsection 116(2) and sections 118 and 119 are repealed.

24          Section 120 is replaced with the following:

Documents to be filed

120         A reporting issuer must file with the commission the documents required by this Act and the regulations, including its financial statements and auditor's report.  The documents must be prepared and filed in accordance with the regulations.

25          Sections 121 to 130 are repealed.

26          Section 131 is replaced with the following:

Exemption from requirements

131         Upon the application of a person or company that is or may become a reporting issuer, the commission may make an order, with or without conditions, exempting the person or company in whole or in part from the requirements of this Part or the regulations, if the commission is of the opinion that the exemption would not prejudice the public interest and is adequately justified in the circumstances.

27          Section 135 is repealed.

28(1)       The part of subsection 136(1) after clause (d) is replaced with "is guilty of an offence and is liable on summary conviction to a fine of not more than $5,000,000. or imprisonment for a term of not more than two years, or both."

28(2)       Subsection 136(3) is amended by striking out everything after "acquiesced in" and substituting "the offence is guilty of the offence and is liable on summary conviction to a fine of not more than $5,000,000. or imprisonment for a term of not more than two years, or both."

28(3)       Subsection 136(4) is amended

(a) in clause (a), by striking out "$1,000,000." and substituting "$5,000,000."; and

(b) in the part after clause (b), by adding "or (3)" after "subsection (1)".

29          The following is added after section 141:

Statutory rights — offering memorandum

141.1(1)    When an offering memorandum contains a misrepresentation, a purchaser who purchases a security offered by the offering memorandum is deemed to have relied on the representation if it was a misrepresentation at the time of purchase and has

(a) a right of action for damages against

(i) the issuer,

(ii) every director of the issuer at the date of the offering memorandum, and

(iii) every person or company who signed the offering memorandum; and

(b) a right of rescission against the issuer.

No action for damages if recission

141.1(2)    If the purchaser chooses to exercise a right of rescission against the issuer, the purchaser has no right of action for damages against a person or company referred to in clause (1)(a).

Defences

141.1(3)    Subject to subsection (4), when a misrepresentation is contained in an offering memorandum, no person or company is liable under subsection (1)

(a) if the person or company proves that the purchaser had knowledge of the misrepresentation;

(b) if the person or company proves

(i) that the offering memorandum was sent to the purchaser without the person's or company's knowledge or consent, and

(ii) that, after becoming aware that it was sent, the person or company promptly gave reasonable notice to the issuer that it was sent without the person's or company's knowledge and consent;

(c) if the person or company proves that, after becoming aware of the misrepresentation, the person or company withdrew the person's or company's consent to the offering memorandum and gave reasonable notice to the issuer of the withdrawal and the reason for it;

(d) if, with respect to any part of the offering memorandum purporting to be made on the authority of an expert or to be a copy of, or an extract from, an expert's report, opinion or statement, the person or company proves that the person or company did not have any reasonable grounds to believe and did not believe that

(i) there had been a misrepresentation, or

(ii) the relevant part of the offering memorandum

(A) did not fairly represent the expert's report, opinion or statement, or

(B) was not a fair copy of, or an extract from, the expert's report, opinion or statement; or

(e) with respect to any part of the offering memorandum not purporting to be made on an expert's authority and not purporting to be a copy of, or an extract from, an expert's report, opinion or statement, unless the person or company

(i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or

(ii) believed there had been a misrepresentation.

Exception

141.1(4)    Clauses (3)(b) to (e) do not apply to the issuer.

Limit on amount recoverable

141.1(5)    The amount recoverable under this section shall not exceed the price at which the securities were offered under the offering memorandum.

Damages not recoverable

141.1(6)    In an action for damages pursuant to subsection (1), the defendant is not liable for all or any part of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation.

Joint and severable liability

141.1(7)    All or any one or more of the persons or companies specified in subsection (1) that are found to be liable or accept liability under this section are jointly and severally liable.

Defendant may recover contribution

141.1(8)     A defendant who is found liable to pay a sum in damages may recover a contribution, in whole or in part, from a person who is jointly and severally liable under this section to make the same payment in the same cause of action unless, in all circumstances of the case, the court is satisfied that it would not be just and equitable.

Rights are in addition to other rights

141.1(9)    The rights of action for rescission or damages conferred by this section are in addition to and do not derogate from any other right that the purchaser may have at law.

Deemed misrepresentation

141.1(10)   If a misrepresentation is contained in a record incorporated by reference in, or is deemed to be incorporated into, an offering memorandum, the misrepresentation is deemed to be contained in the offering memorandum.

Statutory rights — failure to send memorandum

141.2       When this Act or a regulation under this Act requires a dealer, offeror or issuer to send an offering memorandum to purchasers of a security, a purchaser has a right of rescission or a right of action for damages against a dealer, offeror or issuer who fails to send the offering memorandum within the prescribed time.

Rescission re offering memorandum

141.3(1)    A purchaser of a security to whom an offering memorandum is required to be sent may rescind the contract to purchase the security by sending a written notice of recission to the issuer not later than midnight on the second day, excluding Saturdays and holidays, after the purchaser signs the agreement to purchase the securities.

Additional ways of rescinding mutual fund purchase

141.3(2)    If the security purchased is a mutual fund security, the purchaser may also rescind the contract to purchase it by sending a written notice of rescission to the registered dealer from whom the purchase was made

(a) not later than midnight on the second day, excluding Saturdays and holidays, after the purchaser receives the confirmation of purchase, in the case of a lump sum purchase; or

(b) within 60 days after the purchaser receives the confirmation of purchase, in the case of the initial payment under a contractual plan.

Limit on amount recoverable

141.3(3)    Subject to subsection (5), the amount the purchaser is entitled to recover when exercising the right to rescind under this section shall not exceed the net asset value of the securities purchased, at the time the right to rescind is exercised.

Recission re payments to be made

141.3(4)    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 (2) for rescinding a purchase made under a contractual plan.

Dealer to reimburse purchaser for sales charges and fees

141.3(5)    If the security purchased is a mutual fund security, the dealer from whom the purchase was made must reimburse the purchaser who has exercised the purchaser's right of rescission in accordance with this section for the amount of sales charges and fees relevant to the purchaser's investment in the mutual fund in respect of the shares or units of which the notice of rescission was given.

Limitation period

141.4       Unless otherwise provided in this Act, no action may be commenced to enforce a right created by this Part more than

(a) 180 days after the day of the transaction that gave rise to the cause of action, in the case of an action for rescission; or

(b) the earlier of

(i) 180 days after the day that the plaintiff first had knowledge of the facts giving rise to the cause of action, or

(ii) two years after the day of the transaction that gave rise to the cause of action,

in any other case.

30          Section 148 is replaced with the following:

Order suspending trading

148(1)      If the commission considers that it is in the public interest, it may, with or without conditions, order that trading in securities by or of a person or company cease permanently or for a specified period.  Except as allowed by subsection (2) or (3), the commission shall not make an order without a hearing.

Temporary order

148(2)      If the commission considers that the delay required for a hearing would be prejudicial to the public interest, it may make the order without notice to the person or company. An order made without notice expires 15 days after it is made.

Extension of temporary order

148(3)      A temporary order may be extended for any period that the commission considers necessary, if satisfactory information is not provided to the commission within the 15 day period.

Notice of intention re order or hearing

148(4)      The commission may give notice of its intention to make an order or to hold a hearing under this section

(a) by publication in a newspaper of general circulation; or

(b) in such other manner and to such persons as the commission considers appropriate.

31          The following is added after section 148.2:

Orders respecting directors and officers

148.3(1)    If the commission considers it to be in the public interest, the commission may, after a hearing, make one or more of the following orders:

(a) an order that a person must resign as a director or officer of an issuer;

(b) an order that a person is prohibited from being a director or officer of an issuer;

(c) an order that a person be appointed as a director or officer of an issuer.

Order may be subject to conditions

148.3(2)    In making an order, the commission may impose any conditions that it considers appropriate.

32          Subsection 149.1(1) is replaced with the following:

Commission may make rules

149.1(1)    Subject to this section and the regulations made under clause 149(bb), the commission may make rules respecting any of the matters referred to

(a) in section 149 other than those referred to in clauses 149(z), (bb) and (cc); or

(b) in section 169.

33          The following is added after section 162:

PART XVII

INTERJURISDICTIONAL COMPLIANCE

Definitions

163(1)      The following definitions apply in this Part.

"extra-provincial authority" means any power, function or duty of an extra-provincial securities commission that is, or is intended to be, performed or exercised by that commission under the extra-provincial securities laws under which that commission operates. (« compétences d'une autre commission canadienne »)

"extra-provincial securities commission" means a body empowered by the laws of another province or territory of Canada to regulate trading in securities, or to administer or enforce laws respecting trading in securities; (« autre commission canadienne »)

"extra-provincial securities laws" means the laws of another province or territory of Canada that deal with regulating securities markets and trading in securities in the province or territory. (« autre législation canadienne régissant les valeurs mobilières »)

"Manitoba authority" means any power, function or duty of the commission or the director that is, or is intended to be, performed or exercised by the commission or the director under Manitoba securities laws. (« compétences de la commission manitobaine »)

"Manitoba securities laws" means this Act, the regulations, any decisions made by the commission or the director, and any extra-provincial securities laws adopted or incorporated by reference under section 166. (« législation manitobaine régissant les valeurs mobilières »)

Extra-provincial securities commission includes delegate

163(2)      Unless this Act or the regulations provide otherwise, a reference to an extra-provincial securities commission includes

(a) its delegate; and

(b) any person or company who, in respect of that extra-provincial securities commission, exercises a power or performs a duty or function that is substantially similar to one exercised or performed by the director under this Act.

Delegation and acceptance of authority

164(1)      Subject to subsection (2) and the regulations, the commission may

(a) delegate a Manitoba authority to an extra-provincial securities commission for the purposes of this Part; and

(b) accept a delegation or other transfer of an extra-provincial authority from an extra-provincial securities commission for the purposes of this Part.

Exception

164(2)      The commission must not delegate a power, function or duty of the commission or the director that is, or is intended to be, performed or exercised by the commission or the director under this Part or Part I, or under section 31.5 or 149.1.

Commission may subdelegate

165(1)      Subject to any restrictions or conditions imposed by the extra-provincial securities commission with respect to the delegation of an extra-provincial authority to the commission, the commission may subdelegate the extra-provincial authority in the manner and to the extent that the commission or the director can

(a) give an authorization under subsection 3(4) or 4(1); or

(b) otherwise delegate a Manitoba authority under Manitoba securities laws.

Subdelegation of Manitoba authority

165(2)      Subject to any restrictions or conditions imposed by the commission with respect to the delegation of a Manitoba authority to an extra-provincial securities commission, nothing in this Part is to be construed as prohibiting the extra-provincial securities commission from subdelegating the Manitoba authority, in the manner and to the extent that the extra-provincial securities commission can delegate its authority under the extra-provincial securities laws under which it operates.

Extra-provincial securities laws may be adopted or incorporated

166(1)      Subject to the regulations, the commission may by order adopt or incorporate by reference as Manitoba securities laws any or all provisions of an extra-provincial securities law, to be applied to

(a) persons or companies, or a class of persons or companies, whose primary jurisdiction is that extra-provincial jurisdiction; or

(b) trades or other activities involving a person or company, or a class of persons or companies, referred to in clause (a).

Amendment may be adopted or incorporated

166(2)      If the commission adopts or incorporates an extra-provincial securities law under subsection (1), it may adopt or incorporate it

(a) as amended from time to time, whether amended before or after the adoption or incorporation; and

(b) with the necessary changes.

Exemption orders

167         Subject to the regulations, the commission may by order exempt

(a) a person, company, security or trade; or

(b) a class of persons, companies, securities or trades;

from complying with any or all requirements of Manitoba securities laws if the person, company, security or trade or the class of persons, companies, securities or trades satisfies the conditions set out in the order.

Exercise of discretion, interprovincial reliance

168(1)      Subject to the regulations, if the commission or the director is empowered to make a decision regarding a person, company, trade or security, the commission or the director may make a decision on the basis that the commission or the director considers that an extra-provincial securities commission has made a substantially similar decision regarding the person, company, trade or security.

Hearing not required

168(2)      Despite any other provision of this Act, but subject to the regulations, the commission or director may make a decision referred to in subsection (1) without giving a person affected by the decision an opportunity to be heard.

Regulations

169         The Lieutenant Governor in Council may make regulations

(a) respecting the delegation of Manitoba authorities to extra-provincial securities commissions;

(b) respecting the acceptance by the commission of the delegation or other transfer of an extra-provincial authority from an extra-provincial securities commission;

(c) respecting any amendments to, or the revocation of, any delegation or acceptance of a delegation referred to in clause (a) or (b);

(d) respecting the adoption or incorporation by reference of extra-provincial securities laws under section 166, including the administration of those laws once adopted or incorporated;

(e) respecting the administration of exemptions from Manitoba securities laws under section 167;

(f) respecting the administration of extra-provincial securities laws arising from or as a result of a matter described in any of clauses (a) to (e);

(g) respecting any matter that the Lieutenant Governor in Council considers necessary or advisable to carry out the purposes of this Part.

Definitions

170(1)      The following definitions apply in this section.

"commission" includes the director and any member, officer, employee, appointee or agent of the commission. (« Commission »)

"securities regulatory authority" means

(a) an extra-provincial securities commission referred to in subsection (3), and includes any member, officer, employee, appointee or agent of that commission;

(b) any person referred to in clause (3)(b); and

(c) any exchange, quotation and trade reporting system, or self-regulatory organization referred to in clause (3)(c). (« organisme de réglementation des valeurs mobilières »)

Immunity re Manitoba authority

170(2)      No action or proceeding may be brought against the commission or a securities regulatory authority for anything done or not done, or for any neglect,

(a) in the performance or exercise, or the intended performance or exercise, in good faith of a Manitoba authority; or

(b) in delegating or accepting in good faith the delegation of a Manitoba authority.

Application re immunity

170(3)      This section applies only with respect to a Manitoba authority

(a) that has been delegated by the commission to an extra-provincial securities commission;

(b) that

(i) has been subdelegated by an extra-provincial securities commission to a person other than an exchange, a quotation and trade reporting system or a self-regulatory organization, and

(ii) is being, or is intended to be, exercised by the person, or by the person's subdelegate other than an exchange, a quotation and trade reporting system or a self-regulatory organization; or

(c) that

(i) has been subdelegated by an extra-provincial securities commission to a body that is recognized or authorized by the extra-provincial securities commission to carry on business and is an exchange, a quotation and trade reporting system or a self-regulatory organization, and

(ii) is, or is intended to be, exercised by the exchange, quotation and trade reporting system or self-regulatory organization.

Definitions

171(1)      The following definitions apply in this section.

"commission" includes the director and any member, officer, employee, appointee or agent of the commission. (« Commission »)

"securities regulatory authority" means

(a) any person referred to in clause (3)(b); and

(b) any exchange, quotation and trade reporting system or self-regulatory organization referred to in clause (3)(c). (« organisme de réglementation des valeurs mobilières »)

Immunity re extra-provincial authority

171(2)      No action or proceeding may be brought against the commission or a securities regulatory authority for anything done or not done, or for any neglect,

(a) in the performance or exercise, or the intended performance or exercise, in good faith of an extra-provincial authority; or

(b) in delegating or accepting in good faith the delegation of an extra-provincial authority.

Application of immunity

171(3)      This section applies only with respect to an extra-provincial authority

(a) that has been delegated by an extra-provincial securities commission to the commission;

(b) that

(i) has been subdelegated to a person by the commission other than an exchange, a quotation and trade reporting system or a self-regulatory organization, and

(ii) is being , or is intended to be, exercised by the person or by the person's subdelegate other than an exchange, a quotation and trade reporting system or a self-regulatory organization; or

(c) that

(i) has been subdelegated by the commission to a body that is recognized or authorized by the commission to carry on business and is an exchange, a quotation and trade reporting system or a self-regulatory organization, and

(ii) is, or is intended to be, exercised by the exchange, quotation and trade reporting system or self-regulatory organization.

Definitions

172(1)      The following definitions apply in this section.

"extra-provincial decision" means a decision of an extra-provincial securities commission made under a Manitoba authority delegated to it by the commission. (« décision canadienne »)

"extra-provincial securities commission" means the extra-provincial commission that made the extra-provincial decision that is being appealed under this section. (« autre commission canadienne »)

Appeal re extra-provincial decision

172(2)      A person or company that is directly affected by an extra-provincial decision may appeal that extra-provincial decision to the Court of Appeal in accordance with section 30.

Extra-provincial securities commission is respondent

172(3)      The extra-provincial securities commission is the respondent to an appeal under this section.

Definition

173(1)      In this section, "delegated authority" means an extra-provincial authority that is delegated to and accepted by the commission under section 164.

Appeal re decision of the commission

173(2)      A person or company that is directly affected by

(a) a decision of the commission made under a delegated authority; or

(b) a decision of an extra-provincial securities commission that is adopted by the commission under section 168;

may appeal that decision to the Court of Appeal in accordance with section 30.

Right to appeal in Manitoba

173(3)      A person or company that has a right to appeal a decision under this section may, subject to any direction of the Court of Appeal, exercise that right of appeal whether or not the person or company may have a right to appeal that decision to a court in another jurisdiction.

PART XVIII

CIVIL LIABILITY FOR SECONDARY

MARKET DISCLOSURE

INTERPRETATION AND APPLICATION

Definitions

174         The following definitions apply in this Part.

"compensation" means compensation received during the 12-month period immediately before 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, but not limited to, options, pension benefits and stock appreciation rights granted during the same period, valued as of the date that the compensation is awarded. (« rémunération »)

"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;

(b) each person or company, or combination of persons or companies acting in concert by virtue of an agreement, arrangement, commitment or understanding, that 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; or

(c) a person or company, or combination of persons or companies, that holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, unless there is evidence that the holding does not affect materially the control of the issuer. (« personne qui a le contrôle »)

"core document" means any of the following documents:

(a) 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, when the responsible issuer is an investment fund, an investment fund manager, or

(iii) a director or officer of an influential person — other than an officer of an investment fund manager — who is not also an officer of the responsible issuer,

a prospectus, a take-over bid circular, an issuer bid circular, a 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;

(b) in relation to

(i) a responsible issuer or an officer of the responsible issuer, or

(ii) an investment fund manager or an officer of an investment fund manager, when the responsible issuer is an investment fund,

a prospectus, a take-over bid circular, an issuer bid circular, a 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, and a material change report required from the responsible issuer by the regulations;

(c) any other document that is prescribed as a core document by the regulations. (« document essentiel »)

"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 but

(i) is filed with it,

(ii) 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 by-laws, rules or regulations, or

(iii) is another communication the content of which would reasonably be expected to affect the market price or value of a security of the responsible issuer. (« document »)

"expert" means a person or company whose profession gives authority to a statement made in a professional capacity by the person or company, and includes, but is not limited to, an accountant, actuary, appraiser, auditor, engineer, financial analyst, geologist or lawyer, but does not include an approved rating organization. (« expert »)

"failure to make timely disclosure" means a failure to disclose a material change in the manner and at the time required by this Act or the regulations. (« défaut de divulgation obligatoire »)

"influential person", in relation to a responsible issuer, means

(a) a control person;

(b) a promoter;

(c) an insider who is not a director or senior officer of the responsible issuer; or

(d) an investment fund manager, if the responsible issuer is an investment fund. (« personne influente »)

"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. (« valeur mobilière d'un émetteur »)

"liability limit", in relation to

(a) a responsible issuer, means the greater of

(i) 5% of its market capitalization, as defined in the regulations, and

(ii) $1,000,000.;

(b) a director or officer of a responsible issuer, means the greater of

(i) $25,000., and

(ii) 50% of the total of the director's or officer's compensation from the responsible issuer and its affiliates;

(c) an influential person that is not an individual, means the greater of

(i) 5% of its market capitalization, as defined in the regulations, and

(ii) $1,000,000.;

(d) an influential person who is an individual, means the greater of

(i) $25,000., and

(ii) 50% of the total of the influential person's compensation from the responsible issuer and its affiliates;

(e) a director or officer of an influential person, means the greater of

(i) $25,000., and

(ii) 50% of the total of the director's or officer's compensation from the influential person and its affiliates;

(f) an expert, means the greater of

(i) $1,000,000., and

(ii) the revenue that the expert and the affiliates of the expert have earned from the responsible issuer and its affiliates during the 12 months before the misrepresentation; and

(g) a person who made a public oral statement, other than an individual referred to in clause (d), (e) or (f), means the greater of

(i) $25,000., and

(ii) 50% of th

e total of the person's compensation from the responsible issuer and its affiliates. (« limite de responsabilité »)

"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 by the regulations. (« rapport de gestion »)

"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. (« déclaration verbale publique »)

"release", in relation to information or a document, means file it with the Commission or any other securities regulatory authority in Canada or a stock exchange or otherwise make it available to the public. (« publier »)

"responsible issuer" means

(a) a reporting issuer; or

(b) another issuer with a real and substantial connection to Manitoba, any of whose securities are publicly traded. (« émetteur responsable »)

"trading day" means a day during which the principal market, as defined in the regulations, for the security is open for trading. (« jour d'ouverture du marché boursier »)

Application

175         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 a security under a distribution that is exempt from the requirement for filing a preliminary prospectus and a prospectus under the regulations or under an order made by the commission, except as prescribed by the regulations;

(c) the acquisition or disposition of an issuer's security in connection with or under a take-over bid or issuer bid, except as prescribed by the regulations; or

(d) any other transactions or class of transactions prescribed by the regulations.

LIABILITY

Liability for Secondary Market Disclosure

Documents released by responsible issuer

176(1)      If a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company that acquires or disposes of the issuer's security during the period between

(a) the time when the document was released; and

(b) the time when the misrepresentation contained in the document was publicly corrected;

has a right of action for damages against the parties listed in subsection (2), without regard to whether the person or company relied on the misrepresentation.

Persons and companies who may be liable

176(2)      The right of action is against

(a) the responsible issuer;

(b) each director of the responsible issuer at the time the document was released;

(c) each officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document;

(d) each influential person, and each director or officer of an influential person, who knowingly influenced

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer to release the document, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document; and

(e) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released by a person or company other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document.

Public oral statements by responsible issuer

176(3)      If a person with actual, implied or apparent authority to speak on behalf of a responsible issuer makes a public oral statement that relates to the business or affairs of the responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer's security during the period between

(a) the time when the public oral statement was made; and

(b) the time when the misrepresentation contained in the public oral statement was publicly corrected;

has a right of action for damages against the parties listed in subsection (4), without regard to whether the person or company relied on the misrepresentation.

Persons and companies who may be liable

176(4)      The right of action is against

(a) the responsible issuer;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the making of the public oral statement;

(d) each influential person, and each director and officer of the influential person, who knowingly influenced

(i) the person who made the public oral statement to make it, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the making of the public oral statement; and

(e) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the person making the public oral statement includes, summarizes or quotes from the expert's report, statement or opinion, and

(iii) if the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the public oral statement.

Influential persons

176(5)      If an influential person or a person or company with actual, implied or apparent authority to act on behalf of the influential person releases a document or makes a public oral statement that relates to a responsible issuer and contains a misrepresentation, a person or company who acquires or disposes of the issuer's security during the period between

(a) the time when the document was released or the public oral statement was made; and

(b) the time when the misrepresentation contained in the document or public oral statement was publicly corrected;

has a right of action for damages against the parties listed in subsection (6), without regard to whether the person or company relied on the misrepresentation.

Persons and companies who may be liable

176(6)      The right of action is against

(a) the responsible issuer if

(i) a director or officer of the responsible issuer, or

(ii) the investment fund manager, when the responsible issuer is an investment fund,

authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(d) the influential person;

(e) each director and officer of the influential person who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement; and

(f) each expert where

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document or public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released or the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document or public oral statement.

Failure to make timely disclosure

176(7)      If a responsible issuer fails to make timely disclosure, a person or company who acquires or disposes of the issuer's security between

(a) the time when the material change was required by this Act or the regulations to be disclosed; and

(b) the later disclosure of the material change in the manner required by this Act or the regulations;

has a right of action for damages against the parties listed in subsection (8), without regard to whether the person or company relied on the responsible issuer having complied with its disclosure requirements.

Persons and companies who may be liable

176(8)      The right of action is against

(a) the responsible issuer;

(b) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the failure to make timely disclosure; and

(c) each influential person, and each director and officer of an influential person, who knowingly influenced

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer in the failure to make timely disclosure, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the failure to make timely disclosure.

Multiple roles

176(9)      In an action under this section, a person who is a director or officer of an influential person is not liable in that capacity if he or she is liable as a director or officer of the responsible issuer.

Multiple misrepresentations

176(10)     In an action under this section, the court may treat

(a) multiple misrepresentations having common subject matter or content as a single misrepresentation; and

(b) multiple instances of failure to make timely disclosure of material changes concerning common subject matter as a single failure to make timely disclosure.

No implied or actual authority

176(11)     In an action under subsection (3) or (5), if the person who made the public oral statement had apparent authority, but not implied or actual authority, to speak on behalf of the issuer, no other person is liable with respect to any of the responsible issuer's securities that were acquired or disposed of before the other person became, or should reasonably have become, aware of the misrepresentation.

Burden of Proof and Defences

Non-core documents and public oral statements

177(1)      Subject to subsection (2), in an action under section 176 in relation to a misrepresentation in a document that is not a core document, or a misrepresentation in a public oral statement, a person or company is not liable unless the plaintiff proves that the person or company

(a) knew, at the time when the document was released or the public oral statement was made, that the document or public oral statement contained the misrepresentation;

(b) at or before the time when the document was released or the public oral statement was made, deliberately avoided acquiring knowledge that the document or public oral statement contained the misrepresentation; or

(c) was, by acting or failing to act, guilty of gross misconduct in connection with the release of the document or the making of the public oral statement.

Exception re experts

177(2)      A plaintiff is not required to prove any of the matters set out in subsection (1) in an action under section 176 in relation to an expert.

Failure to make timely disclosure

178(1)      Subject to subsection (2), in an action under section 176 in relation to a failure to make timely disclosure, a person or company is not liable unless the plaintiff proves that the person or company

(a) knew, at the time when the failure to make timely disclosure first occurred, of the change and that the change was a material change;

(b) at or before the time when the failure to make timely disclosure first occurred, deliberately avoided acquiring knowledge of the change or that the change was a material change; or

(c) was, by acting or failing to act, guilty of gross misconduct in connection with the failure to make timely disclosure.

Exception re responsible issuers and others

178(2)      A plaintiff is not required to prove any of the matters set out in subsection (1) in an action under section 176 in relation to

(a) a responsible issuer;

(b) an officer of a responsible issuer;

(c) an investment fund manager; or

(d) an officer of an investment fund manager.

Knowledge of the misrepresentation or material change

179         A person or company is not liable in an action under section 176 in relation to a misrepresentation or a failure to make timely disclosure if the person or company proves that the plaintiff acquired or disposed of the issuer's security

(a) with knowledge that the document or public oral statement contained a misrepresentation; or

(b) with knowledge of the material change.

Reasonable investigation

180         A person or company is not liable in an action under section 176 in relation to

(a) a misrepresentation if the person or company proves that

(i) before the document or public oral statement containing the misrepresentation was released or made, the person or company conducted a reasonable investigation or caused a reasonable investigation to be conducted, and

(ii) at the time the document was released or the public oral statement was made, the person or company had no reasonable grounds to believe that the document or public oral statement contained the misrepresentation; or

(b) a failure to make timely disclosure if the person or company proves that

(i) before the failure to make timely disclosure first occurred, the person or company conducted a reasonable investigation or caused a reasonable investigation to be conducted, and

(ii) the person or company had no reasonable grounds to believe that the failure to make timely disclosure would occur.

Factors to be considered by the court

181         In determining whether an investigation was reasonable under section 180 or whether any person or company is guilty of gross misconduct under section 177 or 178, the court must consider all relevant circumstances, including

(a) the nature of the responsible issuer;

(b) the knowledge, experience and function of the person or company;

(c) the office held, if the person was an officer;

(d) the presence or absence of another relationship with the responsible issuer, if the person was a director;

(e) the existence, if any, and the nature of any system designed to ensure that the responsible issuer meets its continuous disclosure obligations;

(f) the reasonableness of the person's or company's reliance on the responsible issuer's disclosure compliance system and on the responsible issuer's officers and employees and other persons whose duties would in the ordinary course have given them knowledge of the relevant facts;

(g) the period within which disclosure was required to be made under the applicable law;

(h) in respect of a report, statement or opinion of an expert, any professional standards applicable to the expert;

(i) the extent to which the person or company knew, or should reasonably have known, the content and medium of dissemination of the document or public oral statement;

(j) in the case of a misrepresentation in a document or public oral statement, the person's or company's role and responsibility in preparing or releasing the document or making the public oral statement, or in ascertaining the facts contained in the document or public oral statement; and

(k) in the case of a failure to make timely disclosure, the person's or company's role and responsibility in the decision not to disclose the material change.

Confidential disclosure

182         A person or company is not liable in an action under section 176 in respect of a failure to make timely disclosure if

(a) the person or company proves that the material change was disclosed by the responsible issuer in a report filed on a confidential basis with the commission;

(b) the responsible issuer had a reasonable basis for making the disclosure on a confidential basis;

(c) where the information contained in the report filed on a confidential basis remains material, disclosure of the material change was made public promptly when the basis for confidentiality ceased to exist;

(d) the person or company or the responsible issuer did not release a document or make a public oral statement that, due to the undisclosed material change, contained a misrepresentation; and

(e) where the material change became publicly known in a manner other than the manner required under this Act, the responsible issuer promptly disclosed the material change in the manner required under this Act.

Forward-looking information

183(1)      A person or company is not liable in an action under section 176 for a misrepresentation in forward-looking information if the person or company proves that

(a) the document or public oral statement containing the forward-looking information contained, proximate to that information,

(i) reasonable cautionary language identifying the forward-looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information, and

(ii) a statement of the material factors or assumptions that were applied in drawing the conclusion or making the forecast or projection; and

(b) the person or company had a reasonable basis for drawing the conclusions or making the forecasts or projections set out in the forward-looking information.

Public oral statements

183(2)      The person or company is deemed to have satisfied the requirements of clause (1)(a) with respect to a public oral statement containing forward-looking information if the person who made the public oral statement

(a) made a cautionary statement that the oral statement contains forward-looking information;

(b) stated that

(i) the actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and

(ii) certain material factors or assumptions were applied in drawing the conclusion or making the forecast or projection; and

(c) stated that additional information about

(i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and

(ii) the material factors or assumptions that were applied in drawing the conclusion or making the forecast or projection,

is contained in a readily available document or in a portion of such a document and has identified that document or that portion of the document.

When a document is deemed to be readily available

183(3)      For the purposes of subsection (2), a document that is filed with the commission or otherwise generally disclosed is deemed to be readily available.

Exception

183(4)      Subsection (1) does not relieve a person or company of liability respecting forward-looking information in a financial statement required to be filed under this Act or forward-looking information in a document released in connection with an initial public offering.

Expert report, statement or opinion

184(1)      A person or company, other than an expert, is not liable in an action under section 176 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert in respect of which the responsible issuer obtained the expert's written consent to the use of the report, statement or opinion, if the person or company proves that

(a) the consent was not withdrawn in writing before the document was released or the public oral statement was made;

(b) the person or company did not know and had no reasonable grounds to believe that there had been a misrepresentation in the part of the document or public oral statement made on the authority of the expert; and

(c) the part of the document or oral public statement fairly represented the report, statement or opinion made by the expert.

Expert's consent withdrawn

184(2)      An expert is not liable in an action under section 176 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert, if the expert proves that the written consent previously provided was withdrawn in writing before the document was released or the public oral statement was made.

Release of documents

185         A person or company is not liable in an action under section 176 in respect of a misrepresentation in a document, other than a document that must be filed with the commission, if the person or company proves that, at the time of the document's release, the person or company did not know and had no reasonable grounds to believe that it would be released.

Derivative information

186         A person or company is not liable in an action under section 176 for a misrepresentation in a document or a public oral statement, if the person or company proves that

(a) the misrepresentation

(i) was also contained in a document filed by or on behalf of another person or company, other than the responsible issuer, with the commission, another securities regulatory authority in Canada or a stock exchange, and

(ii) was not corrected in another document filed by or on behalf of that other person or company with the commission or that other securities regulatory authority in Canada or stock exchange before the release of the document or the public oral statement made by or on behalf of the responsible issuer;

(b) the document or public oral statement contained a reference identifying the document that was the source of the misrepresentation; and

(c) when the document was released or the public oral statement was made, the person or company did not know and had no reasonable grounds to believe that the document or public oral statement contained a misrepresentation.

When corrective action taken

187         A person or company, other than the responsible issuer, is not liable in an action under section 176

(a) if the misrepresentation or failure to make timely disclosure was made without the person's or company's knowledge or consent; and

(b) if — where the person or company was aware of the misrepresentation or failure to make timely disclosure before it was corrected or remedied —

(i) the person or company promptly notified the directors of the responsible issuer about the misrepresentation or the failure to make timely disclosure, and

(ii) in the event that the responsible issuer did not correct the misrepresentation or remedy the failure within two business days after the notification, the person or company, unless prohibited by law or professional confidentiality rules, promptly notified the commission in writing about the misrepresentation or failure to make timely disclosure.

DAMAGES

Assessment of damages — securities acquired

188(1)      Damages must be assessed in favour of a person or company that acquired an issuer's securities after the release of a document or the making of a public oral statement containing a misrepresentation or after a failure to make timely disclosure as follows:

(a) in respect of any of the securities of the responsible issuer that the person or company subsequently disposed of on or before the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages must equal the difference between

(i) the average price paid for those securities, including any commissions paid in respect of them, and

(ii) the price received on the disposition of those securities, without deducting any commissions paid in respect of the disposition, calculated taking into account the result of hedging or other risk limitation transactions;

(b) in respect of any of the securities of the responsible issuer that the person or company subsequently disposed of after the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages must equal the lesser of

(i) an amount equal to the difference between

(A) the average price paid for those securities, including any commissions paid in respect of them, and

(B) the price received on the disposition of those securities, without deducting any commissions paid in respect of the disposition, calculated taking into account the result of hedging or other risk limitation transactions, and

(ii) an amount equal to the number of securities that the person or company disposed of, multiplied by the difference between the average price per security paid for those securities, including any commissions paid in respect of them determined on a per security basis, and,

(A) if the issuer's securities trade on a published market, the trading price of the issuer's securities on the principal market — as those terms are defined in the regulations — for the 10 trading days after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

(B) if there is no published market, the amount that the court considers just;

(c) in respect of any of the securities of the responsible issuer that the person or company has not disposed of, assessed damages must equal the number of securities acquired, multiplied by the difference between the average price per security paid for those securities, including any commissions paid in respect of them determined on a per security basis, and,

(i) if the issuer's securities trade on a published market, the trading price of the issuer's securities on the principal market — as those terms are defined in the regulations — for the 10 trading days after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

(ii) if there is no published market, the amount that the court considers just.

Assessment of damages — securities disposed of

188(2)      Damages must be assessed in favour of a person or company that disposed of securities after a document was released or a public oral statement made containing a misrepresentation or after a failure to make timely disclosure as follows:

(a) in respect of any of the securities of the responsible issuer that the person or company subsequently acquired on or before the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages must equal the difference between

(i) the average price received on the disposition of those securities, deducting any commissions paid in respect of the disposition, and

(ii) the price paid for those securities, without including any commissions paid in respect of them, calculated taking into account the result of hedging or other risk limitation transactions;

(b) in respect of any of the securities of the responsible issuer that the person or company subsequently acquired after the 10th trading day after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, assessed damages must equal the lesser of

(i) an amount equal to the difference between

(A) the average price received on the disposition of those securities, deducting any commissions paid in respect of the disposition, and

(B) the price paid for those securities, without including any commissions paid in respect of them, calculated taking into account the result of hedging or other risk limitation transactions, and

(ii) an amount equal to the number of securities that the person or company disposed of, multiplied by the difference between the average price per security received upon the disposition of those securities, deducting any commissions paid in respect of the disposition determined on a per security basis, and,

(A) if the issuer's securities trade on a published market, the trading price of the issuer's securities on the principal market — as those terms are defined in the regulations — for the 10 trading days after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

(B) if there is no published market, the amount that the court considers just;

(c) in respect of any of the securities of the responsible issuer that the person or company has not acquired, assessed damages must equal the number of securities that the person or company disposed of, multiplied by the difference between the average price per security received on the disposition of those securities, deducting any commissions paid in respect of the disposition determined on a per security basis, and,

(i) if the issuer's securities trade on a published market, the trading price of the issuer's securities on the principal market — as those terms are defined in the regulations — for the 10 trading days after the public correction of the misrepresentation or the disclosure of the material change in the manner required under this Act, or

(ii) if there is no published market, then the amount that the court considers just.

Unrelated changes in market price

188(3)      Despite subsections (1) and (2), assessed damages must not include any amount that the defendant proves is attributable to a change in the market price of securities that is unrelated to the misrepresentation or the failure to make timely disclosure.

Proportionate liability

189(1)      In an action under section 176, the court must determine, in respect of each defendant found liable in the action, the defendant's responsibility for the damages assessed in favour of all plaintiffs in the action.  Subject to the limits set out in subsection 190(1), each of those defendants is liable to the plaintiffs for only that portion of the aggregate amount of damages assessed that corresponds to that defendant's responsibility for the damages.

Liability of certain defendants

189(2)      Despite subsection (1), if in an action under section 176 in respect of a misrepresentation or a failure to make timely disclosure a court determines that a particular defendant, other than the responsible issuer, authorized, permitted or acquiesced in the making of the misrepresentation or failure to make timely disclosure while knowing that it was a misrepresentation or failure to make timely disclosure, the plaintiff may recover the whole amount of the damages assessed in the action from that defendant.

Joint and several liability

189(3)      Each defendant in respect of whom the court has made a determination under subsection (2) is jointly and severally liable with each other defendant in respect of whom the court has made a determination under that subsection.

Contribution among defendants

189(4)      Any defendant against whom recovery is obtained under subsection (2) is entitled to claim contribution from any other defendant who is found liable in the action.

Limits on damages

190(1)      Despite section 188, the damages payable by a person or company in an action under section 176 are the lesser of

(a) the total damages assessed against the person or company in the action; and

(b) the liability limit for the person or company,

(i) less the total of all damages assessed after appeals, if any, against the person or company in all other actions brought under section 176 and under comparable legislation in other provinces or territories in Canada in respect of the same misrepresentation or failure to make timely disclosure, and

(ii) less any amount paid in settlement of any such actions.

When subsection (1) does not apply

190(2)      Subsection (1) does not apply to a person or company, other than the responsible issuer, if the plaintiff proves that the person or company

(a) authorized, permitted or acquiesced in; or

(b) influenced;

the making of the misrepresentation or the failure to make timely disclosure while knowing that it was a misrepresentation or a failure to make timely disclosure.

PROCEDURAL MATTERS

Leave to proceed

191(1)      No action may be commenced under section 176 without leave of the court granted on motion with notice to each defendant.

Grounds for granting leave

191(2)      The court must grant leave only if it is satisfied that

(a) the action is brought in good faith; and

(b) there is a reasonable possibility that the action will be successful.

Application must be sent to the commission

191(3)      A copy of the application for leave to proceed and the affidavits filed with the court must be sent to the commission when filed.

News release and other notices

192         A person or company that is granted leave to commence an action under section 176 must

(a) promptly issue a news release stating that leave has been granted to commence the action;

(b) send a written notice to the commission within seven days, together with a copy of the news release; and

(c) send a copy of the statement of claim or other originating document to the commission when it is filed.

Restriction on discontinuation, abandonment and settlement of action

193         An action under section 176 must not be discontinued, abandoned or settled without the approval of the court given on such terms as the court thinks fit, including, but not limited to, terms as to costs. In determining whether to approve the settlement of the action, the court must consider

(a) whether there are any other actions outstanding under section 176 or under comparable legislation in the other provinces or territories in Canada in respect of the same misrepresentation or failure to make timely disclosure; and

(b) any other relevant matter.

Costs

194         Despite The Court of Queen's Bench Act, the prevailing party in an action under section 176 is entitled to costs determined by a court in accordance with applicable rules of civil procedure.

Power of the commission

195         The commission may intervene in an action under section 176 and in an application for leave under section 191.

No derogation from other rights

196         The right of action for damages and the defences to an action under section 176 are in addition to, and do not derogate from, any other rights or defences the plaintiff or defendant may have in an action brought otherwise than under this Part.

Limitation periods

197         No action may be commenced under section 176,

(a) in respect of a misrepresentation in a document, later than the earlier of

(i) three years after the document containing the misrepresentation was first released, and

(ii) six months after a news release is issued stating that leave has been granted to commence an action under section 176 or under comparable legislation in another province or territory of Canada in respect of the same misrepresentation;

(b) in respect of a misrepresentation in a public oral statement, later than the earlier of

(i) three years after the public oral statement containing the misrepresentation was made, and

(ii) six months after a news release is issued stating that leave has been granted to commence an action under section 176 or under comparable legislation in another province or territory of Canada in respect of the same misrepresentation; and

(c) in respect of a failure to make timely disclosure, later than the earlier of

(i) three years after the requisite disclosure was required to be made, and

(ii) six months after a news release is issued stating that leave has been granted to commence an action under section 176 or under comparable legislation in another province or territory of Canada in respect of the same failure to make timely disclosure.

Coming into force

34          This Act comes into force on a day to be fixed by proclamation.