On October 30, 2012, Ontario Securities Commission Enforcement
Director Tim Atkinson affirmed Staff 's previous commitment to
crack down on emerging market issuers who fail to abide by Canadian
business standards and securities laws.
Targeted Review of Emerging Market Issuers Earlier this year,
the OSC published Staff Notice 51-719 - Emerging Markets Issuer
Review, reporting the results of its targeted review of
"emerging market issuers" that began back in July 2011
(see our March 2012 Update - "OSC Staff Reports on
Concerns Identified in Review of "Emerging Market
Issuers""). The review focused on Ontario reporting
issuers that were listed on Canadian exchanges and had significant
business operations in emerging market jurisdictions. In its March
Report, Staff identified a number of areas of concern with respect
to emerging market issuers, many of which involved the role of
market "gatekeepers" including auditors, corporate
officers and directors, and underwriters who help companies list on
In a panel discussion on enforcement initiatives at the
Commission's annual "dialogue" conference, Atkinson
revealed that, moving forward, the Commission's enforcement
division plans to address the concerns identified in the Report by
focusing on these gatekeepers in situations where emerging market
issuers are accused of wrongdoing. In particular, the Commission
will look at whether gatekeepers have properly performed their role
in protecting investors, and where they have not, they will be held
Focusing on the Role of Gatekeepers
The rationale behind holding gatekeepers accountable in cases
where emerging market issuers are found to have violated Canadian
securities laws is that these parties are uniquely situated to
verify information about an issuer, its operations and management.
Particularly where an issuer has significant business operations in
foreign jurisdictions, investors rely on these gatekeepers to
undertake the appropriate due diligence and certify that the
information released to the market constitutes full, true and plain
disclosure of all material facts relating to the securities being
The Commission's focus on emerging market issuers stems from
the recent collapse of a number of foreign- based companies listed
on North American exchanges, most notably the collapse of Chinese
forestry company Sino-Forest Corp.
It has been suggested that the risks identified for emerging
market issuers are greater where a company becomes a reporting
issuer in Ontario by way of a reverse take-over or back door
listing (as was the case in Sino-Forest). However, the OSC Report
does not identify any particular method of accessing the market as
being specifically problematic. Accordingly, the OSC, together with
the Canadian Public Accountability Board (CPAB), will continue to
monitor the activities of all emerging market issuers and the
activities of those who assist these companies access Canadian
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).