Canada: Legislative Amendments Affecting The Securities Sector In Quebec

Many of the provisions of the Act to amend various legislative provisions principally to tighten the regulation of the financial sector (the "Act") came into force on December 4, 2009. The text of the Act can be found on the website of the Quebec National Assembly.

The Act amends several acts that regulate financial institutions and other financial market players.

The Securities Act

Amendments to the Securities Act include the introduction of a legislative framework to govern credit rating organizations. The amendments in question, which will come into force only on a subsequent date to be determined by the Government of Québec, will provide that a designated credit rating organization must comply with the requirements set by regulation, including requirements relating to (i) the establishment, publication and enforcement of a code of conduct applicable to its directors, officers and employees, including the minimum requirements for such a code; (ii) a prohibition to issue or maintain a credit rating; (iii) procedures regarding conflicts of interest between the designated credit rating organization and the person whose securities are being rated; (iv) the keeping of the books and registers necessary for the conduct of its business; (v) the disclosure of information to the Autorité des marchés financiers (the "Authority"), the public and the person whose securities are being rated; and (vi) the appointment of a compliance officer. The particulars of the requirements to be imposed on credit rating organizations will be known only upon publication of a regulation, which we assume will be harmonized across Canada. The Authority will also have the power to inspect the affairs of a designated credit rating organization in order to verify compliance with the law. A designated credit rating organization or another person acting on its behalf will not be permitted to make any representation, written or oral, that the Authority has in any way passed upon the merits of the designated credit rating organization. While the Authority will not be able to regulate the content of a credit rating or the methodology used by a designated credit rating organization, it will be able to impose changes in the practices and procedures of a designated credit rating organization if it considers that such a measure is necessary to protect the public.

The Act introduces some new provisions applicable to accounting firms, which will also come into force on a subsequent date to be determined by the Government of Québec. One such provision states that in accordance with the rules applicable to an accountant's audit of the affairs of any person subject to the Securities Act, an accounting firm that audits the financial statements of a reporting issuer must participate in the inspection program of a body that has entered into an agreement to that effect with the Authority.It is our understanding that that body will be the Canadian Public Accountability Board ("CPAB"), which oversees auditors pursuant to Regulation 52-108 respecting auditor oversight. Accordingly, the CPAB will have to enter into an agreement with the Authority and be subject to the Authority's supervision  in carrying out its mandate.

The Securities Act is amended to specifically provide that a reporting issuer must organize its affairs in accordance with the governance rules prescribed by regulation.

The Act makes certain amendments to the provisions prohibiting the use of privileged information. Among other things, the provision in the Securities Act that prohibits a person having privileged information relating to a reporting issuer's securities from disclosing that information is extended to also prohibit such insider from recommending that another party trade in the issuer's securities. In addition, the Act amends both the Securities Act and the Derivatives Act so as to add a new ban applicable to persons with knowledge of "material order information". Material order information is any information relating to an order, a projected or unexecuted order to purchase or trade a security or in the case of the Derivatives Act a standardized derivative or underlying interest, or even an intention to place such an order, that is likely to have a significant effect on the market price of the security or of the standardized derivative. This new ban was introduced with a view to ensuring that more situations would be covered than were covered by the sections containing the classical provisions prohibiting the use of privileged information.

More exceptions apply in relation to this new ban applicable to persons with knowledge of material order information than apply under sections 187 and 188 of the Securities Act dealing with the prohibited use of privileged information, since the new ban includes exceptions for a person who must enter into a transaction in order to fulfil a written obligation previously entered into and for a person acting as an agent. The applicable fines and penalties have been amended to take account of the new ban.

The Act amends the Securities Act in order to reduce the situations where the Authority's authorization must be sought in order to declare, at the time of a transaction, that securities will be listed or that an application has been or will be made for that purpose. In future, where an application to list the securities concerned has been made and securities of the same issuer are already listed, or where the stock exchange has approved the listing of the securities, even conditionally, or agreed to their being traded, or consented or indicated that it does not object to such a declaration being made, no authorization will be required. In addition, it will no longer be necessary to seek such an authorization for a declaration appearing in an offering memorandum prescribed by the Securities Act or by regulation (i.e., Regulation 45-106), as was the case before and as is currently the case for prospectuses for which the Authority has issued a receipt.

The Act adds clarity to the relevant provisions in order to ensure that the penalties applicable in the case of conspiracy to commit or aiding and abetting in the commission of an offence under the Securities Act extend to cases involving distribution without a prospectus, attempting to influence the market price or the value of securities by means of unfair, improper or fraudulent practices, and misrepresentation in certain types of documents (such as prospectuses and certain offering memoranda, continuous disclosure documents, and take-over bid circulars) as well as in the course of certain transactions and in documents filed with the Authority.

Code Of Penal Procedure

The Act amends the Code of Penal Procedure  to expressly provide that a judge may impose consecutive prison terms.

Other Amendments

The Act amends the Act respecting the distribution of financial products and services, the Securities Act and the Derivatives Act to increase the administrative penalties and fines that may be imposed under these acts from a maximum of $1,000,000 to a maximum of $2,000,000.  In addition, the Securities Act is amended to allow the Authority to impose an administrative monetary penalty for a contravention of, or failure to comply with, not only disclosure requirements but also the requirements pertaining to the distribution of securities to the public.

The Act also amends certain provisions of the Act respecting the distribution of financial products and services relating to distributions carried out otherwise than through a representative, and harmonizes the offence system under that act with the systems applicable under the Securities Act and the Derivatives Act.

The Act amends the Act respecting the Autorité des marchés financiers, among other things in order to give the Bureau de décision et de révision en valeurs mobilières new powers with respect to the distribution of financial products and services. To reflect this change, this administrative tribunal will now be known as the Bureau de décision et de revision.

Lastly, certain acts are amended to confer new special powers on the Authority, particularly for the purposes of pan-Canadian harmonization.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at

Voted best law firm in Canada two years in a row.
2008 and 2009 International Legal Alliance Summit & Awards.

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 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.