Canada: The Tides Are Changing For Cyber Regulation, And You May Need To Take Action In Order To Stay Afloat

Last Updated: April 5 2017
Article by Jason A. Chertin, Maria Valdivieso and Christie Bates

In 2017 businesses will see significant changes to the cyber regulatory landscape, and Canadian businesses' cyber protocol will have to adapt accordingly.

This bulletin focuses on two areas of anticipated change. First, securities regulators are stressing the need for issuers to disclose their cybersecurity risks and incidents in their Annual Information Forms, MD&A and other continuous disclosure documents. Second, the new Canadian anti-spam regulations will now permit private actions to be pursued for the sending of commercial electronic messages. These two examples illustrate the diverse ways in which Canadian businesses will need to critically re-assess their cyber activities to respond to changing cyber regulation.

Issuers' disclosure of cybersecurity risks and incidents

Since the Canadian Securities Administrators ("CSA") identified cybersecurity as a priority in their 2016-2019 Business Plan, a number of Staff Notices have been published to provide guidance for issuers on the disclosure of their cybersecurity protocols.1 Based on an assessment of the disclosure practices of 240 reporting issuers, the CSA found that 40% of issuers did not identify cybersecurity as a material risk in their continuous disclosure documents. Considering the rate at which the detection of security incidents has increased, these statistics suggest that reporting issuers are not acknowledging and/or disclosing their vulnerabilities to cybersecurity risks.

The low rate of disclosure may be attributed to the fact that there is no explicit requirement in Canadian securities law for the disclosure of cybersecurity risks; rather, the requirement is that all material risks be disclosed, with materiality being defined as information that a reasonable investor would consider important when deciding whether to invest. As data breaches are becoming more commonplace, and gaining higher profiles, cybersecurity is expected to become increasingly material to investors.

For example, Yahoo's handling of their 2013/2014 cyber attacks illustrates how data breaches, public opinion, and securities regulators can become intertwined. Not only did Yahoo's data breach and public outcry jeopardise their estimated $4.8 billion deal with Verizon, it also led to Verizon receiving a $350 million offset for damages. Subsequently, the U.S. Securities Exchange Commission opened a formal investigation in December 2016 to assess whether Yahoo's disclosure to investors ought to have occurred earlier.2

While there have only been a limited number of reported data breaches, this is likely to change as well. Issuers should be aware that the long-awaited Digital Privacy Act3 regulations will likely come into force by the end of this year.4 It is anticipated that these regulations will require organizations to maintain a record of all breaches, and notify users of any breach that could pose "a real risk or significant harm" to any individual whose personal information was involved in the breach. A failure to handle breaches in accordance with the regulations could result in fines of up to $1,000,000. This means that news of data breaches will garner higher profiles and greater backlash. In 2016, not one of the 240 studied issuers claimed they had a material breach. This is unlikely for 2018 as the new regulations come into effect.

In light of this, issuers should revisit the mechanisms used to assess their disclosure of material risks and what might constitute a material change or fact to merit disclosure. In particular issuers should be aware of the following when preparing risk and incident disclosures:

  • Risk Disclosure: Entity specific and non-boilerplate descriptions of why issuers are exposed to potential breaches, the source and nature of risk, the consequences of a breach, the preventative measures and any mitigation steps will assist issuers in asserting sufficient information was disclosed.
  • Incident Disclosure: While there is no bright line test to know when a data breach constitutes a material change or fact, issuers need to realise that the assessment is a dynamic one and something that is not initially identified as a material change or fact could become one with time. Designating a body, such as the audit committee, to monitor the situation can assist in this process.

In short, issuers need to shift from being reactive to proactive.

Trigger clicking: think before you click

As of July 1, 2017, individuals and organizations can bring a "private right of action" before the courts against those organizations that contravene Canada's Anti-Spam Law5 ("CASL"). CASL regulates the sending of commercial electronic messages ("CEMs") and requires individuals and entities that distribute CEMs to obtain prior consent (direct or implied) from intended recipients.

Given the increase in potential liability, issuers should ensure their policies and procedures are in compliance with CASL.

  • First, firms must have a clear understanding of the breadth of the legislation and how their existing communication with clients can be captured under the law. The broad definition of CEMs is "an electronic message that encourages participation in a commercial activity, regardless of whether there is an expectation of profit", this includes e-mails, texts, instant messages, and social media messages sent to the electronic addresses of clients.
  • Second, firms should ensure that a clear and comprehensible CASL policy is in place. The policy should delineate the types of communications requiring consent, the processes that must be followed to collect consent from clients, and specify how consent is recorded.
  • Third, the policy should also detail the mechanism to deal with client complaints and how these are addressed. The existence of a policy is increasingly important with the private "right of action" coming into force seeing as organizations can employ a due diligence defence when accused of a violation under CASL.

The potential liability of a private right of action is in addition to the existing enforcement by the Canadian Radio-television and Telecommunications Commission (CRTC), the Competition Bureau and the Office of the Privacy Commissioner of Canada.

CASL infringement is not a small risk by any measure. Court ordered damages can be of up to a $1,000,000 for each day on which a contravention occurred, and the CRTC has already imposed penalties in the millions of dollars. With a few months to go, this is the perfect time to ensure compliance with CASL. For more information visit our bulletin on this issue.


As cyber regulation tries to catch up with the cybersecurity crises that has been picking up steam over the past decade, issuers should review their cybersecurity protocols to ensure compliance with the array of new requirements.


[1] CSA Multilateral Staff Notice 51-347 – Disclosure of cybersecurity risks and incidents; CSA Staff Notice 11- 332 – Cybersecurity.

[2] Aruna Viswanatha and Robert McMillan , "Yahoo Faces SEC Probe Over Data Breaches", Wall Street Journal, January 23, 2017.

[3] Digital Privacy Act, SC 2015, c.32.


[5] An Act to Promote the Efficiency and Adaptability of the Canadian Economy by Regulating Certain Activities that Discourage Reliance on Electronic Means of Carrying out Commercial Activities, and to Amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, SC 2010, c 23.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2017

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Jason A. Chertin
Christie Bates
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions