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 territories.
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, include:
- 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 mandates;
- an integrated regulatory and criminal enforcement regime and tribunal, operated as a separate division of the Canadian Securities Regulatory Authority, with new evidence gathering powers; and
- 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 Regulation.
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 24 months.
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 these proposals.
The proposed Act and related materials are available on the Department of Finance website.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.