Proposed capital markets act allows legislation by
regulatory fiat, lacks consultation
The business and legal community should be paying close
attention to the controversial Provincial Capital Markets Act
(PCMA), legislation proposed under the memorandum of agreement
between the provinces of British Columbia, Ontario, New Brunswick,
Saskatchewan and Prince Edward Island and the Minister of Finance
(Canada) regarding the creation of a Cooperative Capital Markets
Regulatory System. The legislation introduces significant
substantive law changes without meaningful consultation and adopts
a "platform approach" that allows for legislation by
The achievement of consensus among the participating provinces
is a great accomplishment. That said, we have an overarching
concern that makes it difficult to support this legislation. Our
concern is with the extent to which the PCMA introduces significant
substantive changes to Ontario law and the absence of a meaningful
These changes include:
change to the long-standing and widely used definition of
the broadening of the insider trading prohibition to include
conduct that stops short of a sale of a security and to include
transactions in securities of non-reporting companies;
change to the exception to the tipping prohibition;
introduction of a novel fiduciary relationship between
underwriters and their clients;
unprecedented regulation of shareholders holding 20% or more of
a public company as if they were "market participants";
introduction of a novel "obstruction" prohibition
prohibiting the withholding of information from the regulatory
authority and potentially intruding on the solicitor/client
As a general principle, the introduction of the PCMA should not
be used as an opportunity to introduce major substantive changes to
securities law unless the adoption of these changes is preceded by
a thorough public consultation and study of the changes. The
long-established process of the Ontario Securities Commission and
the Canadian Securities Administrators in this regard ought to be
followed here. If that process were followed, each change would be
identified in a request for comments, and its implications
explained and the necessity justified. Comment would be sought from
the broad community in a process that is often iterative and
sometimes extends for months or years.
Here, the changes are buried in an avalanche of draft
legislation in the context of a fundamental regime change, without
the benefit of any justification for the change or any explanation
as to its expected or intended implications.
We recognize that the PCMA is not based on the Ontario
Securities Act (a decision we question given that this Act
governs the largest portion of Canada's capital market), and
that it reflects various elements of the provincial securities
acts. Nonetheless, we believe it is incumbent on the Province of
Ontario to identify, in the manner described above, the changes
against the Ontario legislative base line and to ensure a robust
We are also concerned about the extent to which the PCMA takes a
platform approach to legislation. Not only are entire areas of the
law proposed to be addressed in regulations, but the legislation
omits a number of well-established elements of securities law. We
believe that fundamental established elements of the existing law
should be enshrined in the legislation itself. The commentary
accompanying the release of the draft legislation noted that the
platform approach was intended to promote "regulatory
flexibility allowing the Authority to respond to market
developments in a timely manner".
Originally published in National Post, FP Comment
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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.
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