The Ontario Securities Commission (OSC) has published
Proposed OSC Policy 15-601 -- Whistleblower Program (the
"Proposed Policy"), which sets out the
details of a proposed whistleblower program intended to encourage
reporting of Ontario securities law breaches to the OSC. The OSC is
requesting comments on the Proposed Policy by January 12, 2016.
The OSC introduced the program earlier this year with Staff
Consultation Paper 15-401: Proposed Framework for an OSC
Whistleblower Program (see our February 11, 2015 Update,
OSC Staff Proposes Whistleblower Program). The Proposed
Policy incorporates feedback received by the OSC and puts forward a
number of significant changes to the program introduced in the
Staff Consultation Paper.
Highlights of Changes in the Proposed Policy
Incentive. The Proposed Policy increases the maximum award for
whistleblowers to $5 million, from a previous amount of $1.5
million, for outcomes where the OSC actually collects monetary
sanctions and/or voluntary payments in excess of $10 million.
Otherwise, whistleblowers are eligible for a maximum amount of up
to $1.5 million. Depending on the facts surrounding the breach and
the attendant whistleblowing, and subject to the maximum amounts,
awards can range from 5% to 15% of the total monetary sanctions
imposed and/or voluntary payments made.
Expanded Eligibility for
Awards. Individuals eligible to receive awards under the
Proposed Policy, in certain circumstances, include whistleblowers
in compliance roles (such as officers, directors, auditors, legal
counsel and chief compliance officers) and those complicit in the
securities law violation. The Staff Consultation Paper proposed
excluding individuals in these types of compliance roles.
While whistleblowers in compliance
roles are generally ineligible to receive awards, they may become
eligible if (a) they reasonably believe reporting is necessary to
prevent substantial injury to the financial interest or property of
the entity or investors, (b) they reasonably believe the subject of
the whistleblower submission is taking actions to hinder the
investigation, or (c) more than 120 days have passed since the
whistleblower reported the incident internally. Legal counsel are
only eligible for awards where disclosure is permitted under
applicable law society rules.
Whistleblowers complicit in a
securities law violation may be eligible for an award, adjusted
according to the degree of culpability, though these individuals
are not immune to OSC prosecution.
The Proposed Policy removes a previously proposed exception
allowing the OSC to reveal a whistleblower's identity (or
information that could be reasonably expected to reveal it) when
deemed necessary to make the OSC's case against a respondent.
The Proposed Policy allows whistleblowers to submit information
anonymously if represented by counsel.
The Proposed Policy attempts to balance concerns expressed by
market participants. While it creates incentives to report outside
of internal reporting mechanisms, it attempts to do so without
discouraging the general use of those mechanisms. Similarly, it
attempts to protect and compensate legitimate whistleblowers
without encouraging frivolous reports.
While the Proposed Policy remains subject to comment, reporting
issuers should begin to consider its potential impact and any
changes to their internal reporting mechanisms and whistleblowing
policies that may become appropriate.
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.
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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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