Canada: Executive Summary of the New Insider Reporting Requirements and Exemptions in Force Since April 30, 2010

Last Updated: July 7 2010
Article by Peter Villani and Christian Jacques

The new National Instrument 55-104 Insider Reporting Requirements and Exemptions ("NI 55-104") sets forth the main insider reporting requirements and exemptions for reporting issuers. This document is an executive summary of the new rules that have been in force since April 30, 2010. Readers should consult the full text of NI 55-104.


Insider reports that are filed must now contain information not only on beneficial ownership of the securities of a reporting issuer, but information on their interest in, or right or obligation associated with, "related financial instruments" involving securities of the reporting issuer.

Reduced Number of Targeted Persons:

Only those persons who qualify under the new definition of "reporting insider" and are not exempted are now required to file insider reports. This new definition of "reporting insider" includes:

  1. the CEO, CFO, COO or director of the reporting issuer, of a significant shareholder of the reporting issuer or of a major subsidiary of the reporting issuer;
  2. the reporting issuer itself and any significant shareholder thereof; and
  3. any other insider that meets the following conditions: 
    1. receives or has access to information as to material facts before they are generally disclosed; and
    2. exercises or has the ability to exercise significant power or influence over the business of the reporting issuer.

Retroactive Effect:

A director may be retroactively designated a "reporting insider" of a third-party issuer upon acquiring a significant interest in that issuer. The director would then have to report any transactions involving the securities of that third-party issuer completed within the six month period before being designated a "reporting insider."


Initial report: within 10 days of becoming a "reporting issuer."

Subsequent reports: this deadline will be reduced from 10 to 5 days after October 31, 2010.

Transitory Measure:

Existing insiders who qualify under the new definition of "reporting insider" have to reflect their current position in respect of related financial instruments in their next report, using either of the two methods set out in the Canadian Securities Administrators Staff Notice 55-315 Frequently Asked Questions About National Instrument 55-104 Insider Reporting Requirements and Exemptions.

Other Important Definitions

  • "significant shareholder": a person or company that has beneficial ownership of and/or direct or indirect control over securities carrying more than 10% of the voting rights attached to all of the outstanding voting securities. Any person or company that has "post-conversion beneficial ownership" of securities will be considered a significant shareholder if he is the beneficial owner of a security convertible into a security within 60 days.
  • "major subsidiary": a subsidiary of an issuer representing 30% of the consolidated assets or consolidated revenues of the issuer.
  • "related financial instrument": an instrument the value, market price or payment obligations of which are derived from, referenced to or based on the value, market price or payment obligations of a security, or that have an effect on a person's economic interest in a security.

Common Exemptions

Automatic Securities Purchase Plans:

Directors or officers that comply with the alternative reporting requirement and acquire the securities of a reporting issuer as part of an "automatic securities purchase plan" will be exempted from the insider reporting requirement.

Security-Based Compensation Arrangements:

Directors or officers who acquire securities under a compensation arrangement established by the reporting issuer are exempted from the insider reporting requirement when the following conditions are met:

  1. the reporting issuer has already disclosed the existence and material terms of the compensation arrangement in an information circular;
  2. the reporting issuer has already filed an issuer grant report on SEDI containing all of the necessary information (including issuance date, quantity, issue price, exercise price, type of security and any other material information);
  3. the directors or officers comply with the alternative reporting requirement.

Normal Course Issuer Bids:

The insider reporting requirement does not apply to issuers that acquire their own securities under a normal course issuer bid. However, the issuer must file an insider report within 10 days following the end of each month in which such a transaction took place.

Transactions of a Reporting Issuer:

The insider reporting requirement does not apply to a reporting issuer whose beneficial ownership of, or control over, a security of the reporting issuer changes as a result of an issuer event of the reporting issuer. This change must be disclosed in the next report

Mutual Funds:

The insider reporting requirement does not apply to an insider of an issuer that is a mutual fund.

Directors or Officers of a Significant Shareholder:

The reporting insider requirement does not apply to directors or officers of a significant shareholder that meets the following conditions: (i) does not have access to material facts; and (ii) is not a reporting insider of the issuer in any capacity other than as a director or officer of the significant shareholder or a subsidiary thereof.

Reference Documents

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.

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