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S.M. 1987-88, c. 18
An Act to amend The Securities Act
(Assented to July 17, 1987)
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:
Subsection 108(1) of The Securities Act, chapter S50 of the Continuing Consolidation of the Statutes of Manitoba, is amended by adding thereto, immediately after clause (c) thereof, the following clauses:
"material change" where used in relation to the affairs of a corporation means a change in the business, operations or capital of the corporation that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the corporation and includes a decision to implement such a change made by the board of directors of the corporation or by senior management of the corporation who believe that confirmation of the decision by the board of directors is probable; ("changement important")
"material fact" where used in relation to securities issued or proposed to be issued means a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of such securities. ("fait important")
Section 113 of the Act is repealed and the following section is substituted therefor:
Trading where undisclosed change.
No person or company in a special relationship with a corporation shall purchase or sell securities of the corporation with the knowledge of a material fact or material change with respect to the corporation that has not been generally disclosed.
No corporation and no person or company in a special relationship with a corporation shall inform, other than in the necessary course of business, another person or company of a material fact or material change with respect to the corporation before the material fact or material change has been generally disclosed.
No person or company that proposes,
(a) to make a take-over bid, as defined in Part IX, for the securities of a corporation;
(b) to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a corporation; or
(c) to acquire a substantial portion of the property of a corporation, shall inform another person or company of a material fact or material change with respect to the corporation before the material fact or material change has been generally disclosed except where the information is given in the necessary course of business to effect the take-over bid, business combination or acquisition.
No person or company shall be found to have contravened subsection (1), (2) or (3) if the person or company proves that
(a) 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.
For the purposes of this section, "person or company in a special relationship with a corporation" means,
(a) a person or company that is an insider, affiliate or associate of,
(i) the corporation,
(ii) a person or company that is proposing to make a take-over bid, as defined in Part IX, for the securities of the corporation, or
(iii) a person or company that is proposing to become a party to a reorganization, amalgamation, merger or arrangement or similar business combination with the corporation or to acquire a substantial portion of its property;
(b) a person or company that is engaging in or proposes to engage in any business or professional activity with or on behalf of the corporation or with or on behalf of a person or company described in subclause (a)(ii) or (iii);
(c) a person who is a director, officer or employee of the corporation or of a person or company described in subclause (a)(ii) or (iii) or clause (b);
(d) a person or company that learned of the material fact or material change with respect to the corporation while the person or company was a person or company described in clause (a), (b), or (c);
(e) a person or company that learns of a material fact or material change with respect to the corporation from any other person or company described in this subsection, including a person or company described in this clause, and knows or ought reasonably to have known that the other person or company is a person or company in such a relationship.
Definition of "security of the corporation".
For the purpose of subsection (1), a security of the corporation shall be deemed to include,
(a) a put, call, option or other right or obligation to purchase or sell securities of the corporation; or
(b) a security, the market price of which varies materially with the market price of the securities of the corporation.
The Act is amended by adding immediately after section 113 the following section:
Liability where material fact or change undisclosed.
Every person or company in a special relationship with a corporation who purchases or sells securities of the corporation with knowledge of a material fact or material change with respect to the corporation 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 the person or company in the special relationship with the corporation proves that,
(a) 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.
Every,
(a) corporation;
(b) person or company in a special relationship with a corporation; and
(c) person or company that proposes,
(i) to make a take-over bid, as defined in Part IX, for the securities of a corporation, (ii) to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a corporation, or
(iii) to acquire a substantial portion of the property of a corporation, and who informs another person or company of a material fact or material change with respect to the corporation that has not been generally disclosed is liable to compensate for damages any person or company that thereafter sells securities of the corporation to or purchases securities of the corporation from the person or company that received the information unless the person or company in the special relationship with the corporation proves that
(d) the informing person or company reasonably believed that 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 corporation or a person in a special relationship with the corporation, 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 subclause (c)(i), (ii) or (iii), the information was given in the necessary course of business to effect the take-over bid, business combination or acquisition.
Any person or company who has access to information concerning the investment program of a mutual fund in Manitoba or the investment portfolio managed for a client by a registered dealer acting as a portfolio manager and uses that information for his or its direct benefit or advantage to purchase or sell securities of a corporation for his or its account where the portfolio securities of the mutual fund or the investment portfolio managed for the client by the registered dealer include securities of that corporation is accountable to the mutual fund or the client of the registered dealer, as the case may be, for any benefit or advantage received or receivable as a result of such purchase or sale.
Every person or company who is an insider, affiliate or an associate of a corporation that,
(a) sells or purchases the securities of the corporation with knowledge of a material fact or material change with respect to the corporation 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 corporation that has not been generally disclosed, is accountable to the corporation 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.
Where more than one person or company in a special relationship with a corporation is liable under subsection (1) or (2) as to the same transaction or series of transactions, their liability is joint and several.
In assessing damages under subsection (1) or (2), the court shall consider,
(a) if the plaintiff is a purchaser, the price that he paid for the security less the average market price of the security in the 20 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 20 trading days following general disclosure of the material fact or material change less the price that he received for the security, but the court may instead consider such other measures of damages as may be relevant in the circumstances.
For the purposes of this section, "a person or company in a special relationship with a corporation" has the same meaning as in subsection 113(5).
For the purposes of subsections (1) and (2), a security of the corporation shall be deemed to include,
(a) a put, call, option or other right or obligation to purchase or sell securities of the corporation; or
(b) a security, the market price of which varies materially with the market price of the securities of the corporation.
Subsection 114(1) of the Act is amended by
(a) striking out "a transaction referred to in subsection (1) of section 113" and substituting therefor "the purchase, sale or communication, as the case may be, referred to in subsection 113.1(4)"; and
(b) striking out "section 113" wherever it appears in the subsection and substituting therefor "subsection 113.1(4)".
Section 115 of the Act is repealed and the following section is substituted therefor:
The Lieutenant Governor in Council may make regulations ancillary to this Part and not inconsistent therewith; and every regulation and order made under and in accordance with the authority granted by this section has the force of law; and, without restricting the generality of the foregoing, the Lieutenant Governor in Council may make regulations,
(a) prescribing the form and content of the reports required to be filed under sections 109 and 109.1; and
(b) respecting any matter necessary or advisable to carry out effectively the intent and purpose of sections 113 and 113.1 including
(i) exempting any class or classes of persons and companies, trades or securities from any of the requirements of section 113 and from liability under section 113.1, and
(ii) prescribing standards for determining when a material fact or material change has been generally disclosed.
Subsection 136(1) of the Act is repealed and the following subsection is substituted therefor:
Every person or company who
(a) makes a statement in any material, evidence, or information submitted or given under this Act or the regulations to the commission, its representative, or the director, or to any person appointed to make an investigation or audit under this Act, that, at the time, and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or that omits to state any material fact, the omission of which makes the statement false or misleading; or
(b) makes a statement in any application, report, prospectus, return, financial statement or other document, required to be filed or furnished under this Act or the regulations that, at the time, and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or that omits to state any material fact, the omission of which makes the statement false or misleading; or
(c) contravenes this Act or the regulations; or
(d) fails to observe or comply with any order, direction or other requirement made under this Act or the regulations; is, except where the conduct also constitutes an offence under Part IX, X or XII or section 111, guilty of an offence and is liable to a fine of not more than $1, 000, 000. or to imprisonment for a term of not more than two years, or to both.
Subsection 136(3) of the Act is repealed and the following subsections are substituted therefor:
Where a company or a person other than an individual is guilty of an offence under subsection (1), every director or officer of such company or person who authorized, permitted, or acquiesced in such offence is also guilty of an offence and is liable to a fine of not more than $1, 000, 000. or to imprisonment for a term of not more than two years, or to both.
Fine for contravention of subs. 113(1), (2) or (3).
Where a person or company has contravened subsection 113(1), (2) or (3) and the person or company has made a profit by reason of the contravention, the fine to which the person or company is liable on summary conviction shall be not less than the profit made by the person or company by reason of the contravention and not more than the greater of,
(a) $1,000,000.; and
(b) an amount equal to triple the profit made by such person or company by reason of the contravention, and subsection (1) does not apply in such circumstances.
For the purposes of subsection (4), "profit" means,
(a) if the accused purchased securities in contravention of subsection 113(1), the average market price of the security in the 20 trading days following general disclosure of the material fact or material change less the amount that the accused paid for the security;
(b) if the accused sold securities in contravention of subsection 113(1), the amount that the accused received for the security less the average market price of the security in the 20 trading days following general disclosure of the material fact or material change;
(c) if the accused informed another person or company of a material fact or material change in contravention of subsection 113(2) or (3) and received any direct or indirect consideration for providing such information, the value of the consideration received.
This Act comes into force on a day fixed by proclamation.