Canada: The (Not So) Long Arm Of The OSC: Commission Declines Jurisdiction In Public Interest Dispute

In declining jurisdiction in a proceeding initiated by an activist shareholder, the Ontario Securities Commission (OSC) articulated its approach to long-arm regulation. The recently released reasons in In the Matter of Mangrove Partners and In the Matter of TransAlta Corporation1 provide new and important guidance on joint hearings and the factors to be considered by a Canadian securities commission when asked to assert jurisdiction in a dispute that is being addressed by another commission.


On March 25, 2019, TransAlta, a TSX- and NYSE-listed Calgary-based power generator and electricity marketer, announced that it had entered into an Investment Agreement with an affiliate of Brookfield Renewable Partners. Under the Investment Agreement, Brookfield agreed to invest $750 million in TransAlta in non-voting exchangeable debentures and preferred shares. The first tranche of $350 million was slated to close three business days following the 2019 annual meeting of TransAlta's shareholders, and the second tranche of $400 million is slated to close in October 2020. The securities are exchangeable by Brookfield after December 31, 2024, into an equity ownership interest of up to 49% in an entity holding TransAlta's Alberta hydro assets at a value based on a multiple of the hydro assets' future adjusted EBITDA.

The Brookfield transaction, which did not require shareholder approval, was opposed by Mangrove Partners, which later partnered with Bluescape Energy Partners. Mangrove and Bluescape together held 10.1% of TransAlta's common shares and sought to engage with TransAlta to obtain board seats and other changes. They subsequently filed a joint Schedule 13D and submitted a notice of intention under TransAlta's advance notice bylaw to nominate five directors for election at the upcoming shareholders' meeting. In anticipation of a potential proxy contest at the shareholders' meeting and to avoid binding a newly constituted board to its proposed transaction with Brookfield, TransAlta negotiated a right to enable a new board to revisit the transaction (Governance Out). Under this novel Governance Out, if two directors not recommended by the TransAlta board were elected at the 2019 meeting, TransAlta had the right for 30 days to terminate the Brookfield transaction.

TransAlta's largest shareholder, RBC Global Asset Management, publicly supported the transaction and agreed to vote for the management slate of directors at the 2019 meeting. Ultimately, the shareholders voted overwhelmingly in favour of all of management's director nominees to the TransAlta board, including two Brookfield nominees who were nominated pursuant to the Investment Agreement. The first tranche of the transaction closed on the scheduled date of May 1, 2019.

Application and Decision

Mangrove brought an application for a joint hearing before both the Ontario and Alberta Securities Commissions (ASC) to cease trade the transaction under the Commissions' public interest powers. On a preliminary motion, the OSC ruled that, although both Commissions had jurisdiction to entertain Mangrove's application because a sufficient nexus existed with both provinces, the OSC would not exercise its jurisdiction to participate in a joint hearing with the ASC.

In declining to exercise its jurisdiction, the OSC made the following important findings:

  • The OSC had jurisdiction to entertain Mangrove's application under its public interest power given that TransAlta's securities are listed on the TSX, TransAlta is a reporting issuer in Ontario and it has Ontario investors.
  • Nevertheless, the factors that connected this dispute to Alberta were more compelling, since (i) TransAlta has its head office in Calgary; (ii) the ASC is its principal regulator; (iii) the hydro assets that are the subject of the Investment Agreement are located in Alberta; (iv) representatives of TransAlta based in Calgary were central participants in the negotiations of the Investment Agreement and in the discussions with Mangrove; and (v) the ASC possesses very similar public interest jurisdiction to that possessed by the OSC under s. 127 of Ontario's Securities Act.
  • The involvement of the OSC in addition to the principal regulator requires compelling circumstances. This might occur, for example, if the applicable Ontario securities laws were not substantially the same as the securities laws in the jurisdiction of the principal regulator; if Ontario investors or capital markets were being affected in a fundamentally different or unique way by the transaction in question (as in the Commission's previous decision in AbitibiBowater); or if there are novel issues relating to pan-Canadian legislation (as in the Commission's previous decisions in Aurora and Hecla).
  • The factors in this case that established the existence of the OSC's jurisdiction (e.g., TSX listing, Ontario reporting issuer status and Ontario investors) "would be present in many cases." As a result, if these factors were sufficient to justify the assertion by the OSC of jurisdiction to participate in a joint hearing with the principal regulator, the OSC would find itself becoming "involved in many disputes involving TSX-listed companies" in addition to other commissions with stronger connections to the dispute in question. This would be unduly costly and unnecessary, and increase the possibility of conflicting decisions.
  • To the extent that issues arise under Ontario-specific rules or policies that can be addressed under the public interest jurisdiction of the principal regulator, they should be addressed by that regulator, or through a more limited application to the OSC regarding those specific issues.

Key Takeaways

  • Joint hearings involving the OSC and other securities commissions are the exception, not the rule.
  • The OSC will generally not thrust itself into a dispute that is being addressed by another Canadian securities commission, unless the connecting factors with Ontario, or the differences in applicable rules or public policy, provide non-routine, compelling reasons for it to do so.
  • Joint hearings may not promote harmonization and co-ordination since the possibility exists that conflicting decisions will be rendered by commissions that hear the same matter with equal legal authority.
  • Relying on a rule or policy that is unique to one province or territory will not necessarily function as a "back door," compelling the securities commission in that province or territory to assert jurisdiction in a joint application. This is especially the case if the other commission may address the underlying public policy concerns under its own rules or policies. Alternatively, such a specific issue could be brought to the applicable securities commission through a limited application that deals only with those specific issues.
  • Speed and the willingness of the principal regulator to act may be an overriding factor: the OSC noted that "it was an important consideration that the ASC was prepared to hear preliminary matters arising from the Application in short order following the OSC's hearing on the Motions."

Davies represented TransAlta Corporation with respect to the Brookfield transaction and the proceedings before the OSC and ASC.


1. Mangrove Partners (Re), 2019 ONSEC 18 available at:

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.

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.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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