Recently in Re Dhanani, a British Columbia Securities
Commission (BCSC) panel found that Ayaz Dhanani, a British Columbia
resident, perpetrated a fraud on three investors. Dhanani had
raised a total of $188,800 from three investors in exchange for
promises to purchase shares in three resource companies that
Dhanani claimed were about to go public. Dhanani promised each
investor that their investments would increase significantly in
value over a short period of time. No securities were ever
purchased with the investors' money.
Section 57(b) of British Columbia's Securities Act, provides that a person must not, directly or
indirectly, engage in or participate in conduct relating to
securities if the person knows, or reasonably should know, that the
conduct perpetrates a fraud on any person. The BCSC panel cited
from the decision in Anderson v. British Columbia (Securities
Commission), in which the British Columbia Court of Appeal held
the actus reus of the offence of fraud will be established by proof
of: (i) the prohibited act, be it an act of deceit, a falsehood or
some other fraudulent means; and (ii) deprivation caused by the
prohibited act, which may consist in actual loss or the placing of
the victim's pecuniary interests at risk. Correspondingly, the
mens rea of fraud is established by proof of: (i) subjective
knowledge of the prohibited act; and (ii) subjective knowledge that
the prohibited act could have as a consequence the deprivation of
another (which deprivation may consist in knowledge that the
victim's pecuniary interests are put at risk).
The BCSC panel noted that in order to contravene section 57(b),
the impugned conduct must relate to securities. In this case, the
BCSC panel found that it was clear that the investors were led to
believe they would be purchasing securities and Dhanani committed
acts of deceit. Dhanani committed a deceit when he took the
investors' funds on the promise of investing them in the shares
of companies about to go public and then failed to do so. The BCSC
panel also found that Dhanani had the requisite subjective
knowledge of the deceit and the deprivation. Dhanani was aware that
he told the investors that he would invest their funds and that he
As the BCSC panel found that Dhanani had engaged in fraud, the
panel directed that the parties make submissions on sanctions at a
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.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
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).