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The Securities Amendment Act

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S.M. 2008, c. 8

Bill 6, 2nd Session, 39th Legislature

The Securities Amendment Act

(Assented to June 12, 2008)

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           Subsection 1(1) is amended

(a) by adding the following definitions:

"investment fund" means a mutual fund or non-redeemable investment fund; (« fonds de placement »)

"investment fund manager" means a person or company that manages the business, operations or affairs of an investment fund; (« gestionnaire de fonds de placement »)

"mutual fund" means

(a) an issuer

(i) whose primary purpose is to invest money provided by its security holders, and

(ii) whose securities entitle the holder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in all or a part of the issuer's net assets, including a separate fund or trust account, or

(b) an issuer that is designated to be a mutual fund under section 108.1 or the regulations,

but does not include an issuer that is designated under section 108.1 not to be a mutual fund; (« fonds mutuel »)

"non-redeemable investment fund" means

(a) an issuer whose primary purpose is to invest money provided by its security holders, that is not a mutual fund and that does not invest

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

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

(b) an issuer that is designated to be a non-redeemable investment fund under section 108.1 or the regulations,

but does not include an issuer that is designated under section 108.1 not to be a non-redeemable investment fund; (« fonds de placement à capital fixe »)

(b) by replacing the definition "salesperson" with the following:

"salesperson" means an individual employed by a dealer to trade in securities on the dealer's behalf; (« vendeur »)

(c) in the definition "proxy",

(i) by striking out "shareholder" and substituting "security holder", and

(ii) by striking out "shareholders" and substituting "security holders"; and

(d) in the English version of the definition "form of proxy", by striking out "shareholder" and substituting "security holder".

3(1)        Subsection 6(1) is replaced with the following:

Persons who must be registered

6(1)        A person must not

(a) trade in a security;

(b) act as an adviser;

(c) act as an investment fund manager; or

(d) act as an underwriter;

unless the person is registered, in accordance with the regulations, in the category that the regulations prescribe for the activity.

3(2)        Subsection 6(7) is repealed.

3(3)        Subsection 6(8) is replaced with the following:

Registrant must comply with terms and conditions

6(8)        A registrant shall comply with the terms and conditions of the registrant's registration.

3(4)        Subsections 6(12) and (13) are replaced with the following:

Separate registration of certain persons not required

6(12)       An individual who is named

(a) in the registration of a dealer as a person who is authorized to trade in securities on the dealer's behalf; or

(b) in the registration of an adviser as a person who is authorized to advise on the adviser's behalf;

may carry on that activity without a separate registration.

Adding new partner, officer or branch manager

6(13)       After a dealer or adviser is registered, an individual

(a) who becomes a partner, officer or branch manager of the dealer and is not named in the registration as a person who is authorized to trade in securities on the dealer's behalf; or

(b) who becomes a partner, officer or branch manager of the adviser and is not named in the registration as a person who is authorized to advise on the adviser's behalf;

shall not carry on that activity until the registration is amended to name him or her as a person who is authorized to do so.

4(1)        Subsection 7(4) is repealed.

4(2)        The following is added after subsection 7(6):

Suspending or cancelling registration

7(7)        The Director may suspend or cancel the registration of a registrant if the Director considers that the action is in the public interest and has given the registrant an opportunity to be heard.

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, underwriter, investment fund manager or security issuer".

6           Subsection 34(3) is replaced with the following:

Preparing and filing auditor's report

34(3)       An auditor's report filed for the purposes of clause (1)(b) must be prepared and filed in accordance with the regulations.

7           Part VI is repealed.

8           Section 39 is repealed.

9(1)        Subsection 64(1) is replaced with the following:

Obligation to deliver prospectus

64(1)       A person or company that

(a) receives an order or subscription for a security that is offered in the course of a primary distribution to the public and to which section 37 applies;

(b) is not acting as agent of the purchaser; and

(c) has not previously sent to the purchaser the prospectus or amended prospectus for the security, whichever is the last required to be filed with the commission;

must send the prospectus or amended prospectus to the purchaser not later than midnight on the second day, excluding Saturdays and holidays, after entering into an agreement of purchase and sale respecting the order or subscription.  The prospectus or amended prospectus must be sent by prepaid mail or delivery.

9(2)        Subsection 64(2) is amended

(a) by striking out "exclusive of Saturdays, Sundays and holidays" and substituting "excluding Saturdays and holidays"; and

(b) in the English version, by striking out "director" and substituting "Director".

10          Sections  67 and 70 to 73 are repealed.

11          Section 76 is replaced with the following:

Representations about commission approval

76          No person or company shall make an oral or written representation that the commission or the Director has

(a) approved the financial standing, fitness or conduct of a registrant; or

(b) passed judgment on the merits

(i) of any security, or

(ii) of the disclosure record of a reporting issuer or investment fund.

12          Section 149 is amended

(a) in clause (j), by adding the following after subclause (iv):

(iv.1) prescribing the activities that may be carried on by a category or subcategory of registrants,

(b) by adding the following after clause (m):

(m.1) designating an issuer to be a mutual fund or non-redeemable investment fund, or a class of issuers to be mutual funds or non-redeemable investment funds;

Amendments to S.M. 2006, c. 11 (unproclaimed)

13          Subsections 4(1), (3) and (4) and section 5 of The Securities Amendment Act, S.M. 2006, c. 11, are repealed.

Amendments to S.M. 2007, c. 12 (unproclaimed)

14(1)       In this section, "amending Act" means The Securities Amendment Act, S.M. 2007, c. 12.

14(2)       Section 16 of the amending Act is repealed.

14(3)       Clause 108.1(b) of the English version of The Securities Act, as enacted by section 31 of the amending Act, is replaced with the following:

(b) an issuer to be, or not to be, a mutual fund or a non-redeemable investment fund, or a class of issuers to be, or not to be, mutual funds or non-redeemable investment funds.

14(4)       Clause 148.1(1.1)(a) of the English version of The Securities Act, as enacted by section 46 of the amending Act, is replaced with the following:

(a) determines that a company or a person other than an individual has committed a contravention or failure referred to in clause (1)(a) and that

(i) a director or officer of the company or person, or

(ii) another person other than an individual,

authorized, permitted or acquiesced in the contravention or failure; and

14(5)       Clause 149(o.1) of The Securities Act, as enacted by clause 49(g) of the amending Act, is replaced with the following:

(o.1) governing persons or companies who act as auditors of reporting issuers or registrants, including

(i) prescribing the qualifications and affiliations that such an auditor must have,

(ii) prohibiting certain persons or companies or classes of persons or companies from acting as such auditors, and

(iii) prescribing reports, notices and other information that such an auditor must provide to the commission in specified circumstances;

Conditional amendments

15(1)       In this section, "amending Act" means The Securities Amendment Act, S.M. 2007, c. 12.

15(2)       Upon the coming into force of section 154.2 of The Securities Act, as enacted by section 50 of the amending Act, section 154.2 is renumbered as subsection 154.2(1) and the following is added as subsections 154.2(2) and (3):

Standards of care for investment portfolio managers

154.2(2)    Every registrant who manages the investment portfolio of a client through discretionary authority granted by the client shall act fairly, honestly and in good faith toward the client, and in the client's best interests.

Standards of care for other registrants

154.2(3)    Every registrant, other than an investment fund manager or investment portfolio manager, shall act fairly, honestly and in good faith toward his or her clients.

15(3)       Upon the coming into force of section 154.3 of The Securities Act, as enacted by section 50 of the amending Act, the following is added as section 154.4:

Filing advertising

154.4(1)    The Director may order a dealer, adviser, underwriter or issuer to file with the Director copies of all advertising and sales literature that the person or company proposes to use in connection with trading in securities, but only if the Director

(a) has given the person or company an opportunity to be heard; and

(b) is satisfied that the order is necessary for the protection of the public because of the person's or company's past conduct in using advertising and sales literature.

Copies must be filed at least seven days before use

154.4(2)    The person or company must file the copies at least seven days before using the advertising or sales literature.

Director may prohibit use or require changes

154.4(3)     After examining the advertising and sales literature, the Director may make an order prohibiting their use or requiring that deletions or changes be made in them before they are used.

Coming into force

16(1)       This Act, except sections 13 to 15, comes into force on a day to be fixed by proclamation.

Coming into force: sections 13 to 15

16(2)       Sections 13 to 15 come into force on the day this Act receives royal assent.