On May 26, 2010, the Government of Canada released a proposed
federal Securities Act and concurrently referred the Act
to the Supreme Court of Canada for an opinion on whether it falls
within the legislative authority of the Parliament of Canada.
The proposed Act would establish a new regulatory body, the
Canadian Securities Regulatory Authority, as a national securities
and derivatives regulator in participating provinces and
The proposed Act is based on existing provincial securities
regulation, which has been harmonized into a single statute. Key
differences between the proposed regime and the existing provincial
and territorial regulatory structures, according to the Government,
expanding the core purposes of securities regulation to include
enhancing the integrity and stability of the financial system, as
well as the existing investor protection and market efficiency
an integrated regulatory and criminal enforcement regime and
tribunal, operated as a separate division of the Canadian
Securities Regulatory Authority, with new evidence gathering
a single set of rules and regulations that would apply in all
participating provinces and territories.
Notably, the proposed Act would apply only in participating
provinces and territories, with the exception of evidence gathering
provisions. The Government has not included a mechanism for issuers
in non-participating jurisdictions to opt-into the federal regime
as had been suggested in the Report of the Expert Panel on Securities
The Government has indicated that the proposed Act will be
introduced in Parliament following the receipt the opinion from the
Supreme Court of Canada, which it estimates may take between 10 and
In the interim, the Canadian Securities Transition Office will
continue to work towards the launch of the Canadian Securities
Regulatory Authority, with a transition plan to be released by July
12, 2010. The 2009 federal budget allocated $150 million for the
Canadian Securities Transition Office to enter into financial
arrangements with participating provinces and territories. The
timeline released together with the proposed Act indicates that
these efforts will continue in parallel with the reference to the
Supreme Court of Canada.
These initiatives have the potential to significantly affect
issuers, investors and other market participants in Canada.
However, the Government's timeline makes it clear that there
will be no change until 2012-13 at the earliest. During that time,
we expect the details of the proposed regime will continue to
evolve in response to the debate that will certainly result from
The British Columbia Court of Appeal has recently considered whether the doctrine of unconscionability can be invoked to set aside a contractual clause providing for the payment by one party to the other...
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