In the latest step toward establishing the Cooperative Capital
Markets Regulatory Authority, the Department of Finance Canada has
released a revised draft of the federal Capital Markets
Stability Act (CMSA) for public comment. A copy is available
This is a revision to the draft Act that was originally released
in September 2014. Public comments on that initial draft are posted
on the CCMR website.
The deadline for comments on the revised draft is July 6, 2016,
making it a brief 60-day comment period.
While this draft of the CMSA still proposes to give the
Authority broad powers to identify and address systemic risks in
Canada's capital markets, these powers appear to be
significantly pared down from the previous version. The CMSA also
enhances criminal offences relating to capital markets. More
background is available in this
commentary released with the draft CMSA.
The CMSA is the federal legislative component of the Cooperative
Capital Markets Regulatory initiative amongst the federal
government, five provinces and one territory. The revised
provincial / territorial component, being the uniform Capital
Markets Act, was released for public comment on August 25,
2015 for a 120-day comment period. Public comments on that
legislation have been posted
on the CCMR website. The revised draft CMSA has been anticipated
for some time, and its absence from the last set of released
consultation drafts in the summer of 2015 emphasized the logistical
complications associated with this initiative.
Key Changes in the Draft Legislation
Some of the main changes in the new draft CMSA from the previous
Thresholdfor "Systemic Risk": The
definition has been revised to state that systemic risk must have
the potential for a material adverse effect on the Canadian
economy. In other words, threats to financial stability must be
sufficiently large before the Authority can exercise its broad
Designating "Systemically Important"
Entities: The revised draft removes the Authority's power
to designate trading facilities, clearing houses, credit rating
organizations and capital market intermediaries as systemically
important. The Authority will generally focus, instead, on systemic
risks posed by activities, products and benchmarks.
Regulatory Burden: The revised draft requires the
Authority to coordinate its activities – including data
collection – with other financial regulators, and consider
the extent to which products, practices and benchmarks are already
regulated before implementing new requirements.
Procedural Fairness: The revised draft gives market
participants the opportunity to be heard, rather than the
opportunity to make representations, with respect to
certain orders or activities of the Authority that directly affect
those market participants.
A Step Forward, But Much Work Remains
The release of this consultation draft is a step forward,
particularly because it reflects the Trudeau government's
support for the initiative. But a number of crucial promised
elements of the initiative still remain to be delivered, putting
the previously published timeline for the project's
implementation in question. Most notably, the public is still
awaiting the proposed legislative framework to establish the
governance and structure of the cooperative regulator, and the
appointment of the initial Board of Directors. (The appointment of
the Chair of the Board, Bill Black, was announced on July 24,
Both critics and supporters of the initiative point to the
delays in progress as giving rise to increased uncertainty
surrounding the future of capital markets regulation in Canada, and
have urged participating jurisdictions to clarify the project's
direction and pace of implementation. Commentators have also
emphasized the need for the participating jurisdictions to clarify
how the cooperative regime will integrate its regulatory activities
with those of non-participating jurisdictions, such as Quebec and
We will continue to analyze and comment on the proposed capital
markets legislation and progress of the initiative.
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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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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