BILL 44

 

Securities Act

 

Chapter Outline

 

PART 1

DEFINITIONS AND INTERPRETATION

Definitions and interpretation.................... 1

advertising — annonces publicitaires

adviser — conseiller

associate — personne qui a un lien

business day — jour ouvrable

Chair — président

class of securities — catégorie de valeurs mobilières

clearing agency — agence de compensation et de dépôt

Commission — Commission

common-law partner — conjoint de fait

compliance officer — inspecteur

contract — contrat

contractual plan — plan à versements périodiques

control person — personne participant au contrôle

corporation — corporation

Court of Appeal — Cour d'appel

Court of Queen's Bench — Cour du Banc de la Reine

dealer — courtier en valeurs mobilières

decision — décision

director — administrateur

distribution — placement

distribution company — compagnie de placement

distribution contract — contrat de placement

exchange — bourse

Executive Director — directeur général

form of proxy — formule de procuration

individual — particulier

insider or insider of a reporting issuer — initié ou initié d'un émetteur assujetti

investigator — enquêteur

investment fund — fonds d'investissement

investment fund manager— gestionnaire de fonds d'investissement

investor relations activities — activités liées aux relations avec les investisseurs

issuer — émetteur

management contract — contrat de gestion

market participant — participant au marché

material change — changement important

material fact — fait important

Minister — ministre

misrepresentation — présentation inexacte des faits

mutual fund — fonds commun de placement

mutual fund in New Brunswick — fonds commun de placement du Nouveau-Brunswick

mutual fund manager — gestionnaire d'un fonds commun de placement

New Brunswick securities law — droit des valeurs mobilières du Nouveau-Brunswick

offering memorandum — notice d'offre

officer — dirigeant

person — personne

portfolio manager — portefeuilliste

portfolio securities — valeurs de portefeuille

private mutual fund — fonds commun de placement fermé

promoter — promoteur

proxy — procuration

quotation and trade reporting system — système de cotation et de déclaration des opérations

registered adviser — conseiller inscrit

registered dealer — courtier en valeurs mobilières inscrit

registrant — personne inscrite

regulation — règlement

reporting issuer — émetteur assujetti

rule — règle

sales literature — documentation commerciale

salesperson — représentant de commerce

Secretary — secrétaire

security — valeur mobilière

self-regulatory organization — organisme d'autoréglementation

senior officer — cadre dirigeant

trade — opération

underwriter — preneur ferme

voting security — valeur mobilière avec droit de vote

Purposes of Act 2

PART 2

COMMISSION

Commission... 3

Administration of Act......... 4

Guiding principles... 5

Head office..... 6

Members other than Chair... 7

Chair................ 8

Remuneration and expenses 9

Continuation in office....... 10

Removal from office....... 11

Vacancy or temporary absence.... 12

Quorum......... 13

Employees.... 14

Executive Director... 15

Delegation of powers and duties of Executive Director... 16

Secretary...... 17

Agreement for services.... 18

Appointment of experts..... 19

Immunity...... 20

Indemnity...... 21

By-laws......... 22

Power regarding hearings... 23

Delegation of Commission powers and duties....... 24

Financial matters.................. 25

Self-financing 26

Budget........... 27

Business plan 28

Minister's request for information 29

Fiscal year and financial statements 30

Audit............. 31

Annual report 32

New Brunswick Securities Commission Securities Policy Advisory Committee 33

PART 3

SELF-REGULATION

Interpretation 34

Recognition.. 35

Exchange required to be recognized 36

Designated exchange.. 37

Standards and conduct.... 38

Powers of the Commission.................. 39

Voluntary surrender. 40

Delegation of powers and duties....... 41

Council, committee or ancillary body.................. 42

Contravention of New Brunswick securities law.................. 43

Review of decisions. 44

PART 4

REGISTRATION

Registration for trading required... 45

Registration not required for designated employees 46

Application... 47

Granting registration 48

Subsequent application 49

Further information 50

Surrender of registration 51

Suspension of registration 52

Order suspending or cancelling registration 53

Standards of business conduct.... 54

Exemption order.................. 55

PART 5

TRADING IN SECURITIES GENERALLY

Confirmation of trade......... 56

Calls to residences 57

Prohibited representations................ 58

Registered dealer acting as principal... 59

Disclosure of financial interest of registered advisers and dealers..... 60

Disclosure of underwriting liability.... 61

Disclosure of investor relations activities.. 62

Use of name of another registrant. 63

Representation of registration.................. 64

Representation respecting approval of Commission.................. 65

Margin contracts.................. 66

Declaration as to short position.................. 67

Submission of advertising and sales literature.. 68

Fraud and market manipulation.................. 69

Prospecting syndicate agreements 70

PART 6

PROSPECTUS AND DISTRIBUTION

Filing of preliminary prospectus and prospectus required... 71

Form and content of preliminary prospectus 72

Receipt for preliminary prospectus 73

Contents of prospectus 74

Receipt for prospectus 75

Amendment to preliminary prospectus 76

Amendment to prospectus 77

Distribution of securities after lapse date........... 78

Other forms of prospectus 79

Exemption order.................. 80

Orders to provide information regarding distribution 81

Distribution of material during waiting period....... 82

Distribution of preliminary prospectus 83

Distribution list.................. 84

Defective preliminary prospectus 85

Material given on distribution 86

Order to cease trading...... 87

Obligation to deliver prospectus 88

PART 7

CONTINUOUS DISCLOSURE

Disclosure of material change...... 89

Interim financial statements and comparative financial statements 90

Delivery of financial statements to security holders..... 91

Exemption order.................. 92

Filing of information circular.... 93

Filing of documents filed in another jurisdiction 94

Order relieving reporting issuer....... 95

Deeming an issuer to be a reporting issuer....... 96

Certificate regarding reporting issuer....... 97

PART 8

PROXIES AND PROXY SOLICITATION

Definition of "solicitation".................. 98

Conflict........ 99

Mandatory solicitation of proxies... 100

Information circular.. 101

Voting......... 102

Voting securities registered in name of registrant or custodian 103

Compliance with laws of another jurisdiction............... 104

Exemption order............... 105

PART 9

TAKE-OVER BIDS AND ISSUER BIDS

Definitions and interpretation............... 106

equity security — valeur mobilière participante

formal bid — offre formelle

interested person — personne intéressée

issuer bid — offre de l'émetteur

offer to acquire — offre d'acquisition

offeree issuer — émetteur pollicité

offeror — pollicitant

offeror's securities — valeurs mobilières du pollicitant

published market — marché officiel

take-over bid — offre d'achat visant à la mainmise

Computation of time and expiry of bid............... 107

Convertible securities 108

Deemed beneficial ownership 109

Acting jointly or in concert 110

Application to direct and indirect offers............... 111

Exempt take-over bids........ 112

Exempt issuer bids........ 113

Exchange requirements............... 114

Definition of "offeror" 115

Restrictions on acquisitions during take-over bids 116

Restrictions on acquisitions during issuer bids........ 117

Restrictions on pre-bid and post-bid acquisitions............... 118

Sales during bid prohibited 119

General provisions 120

Financing of bid............... 121

Consideration............... 122

Offeror's circular............... 123

Directors' circular.. 124

Commencement of bid..... 125

Reports of acquisitions............... 126

News releases............... 127

Duplicate reports not required............... 128

Applications to the Commission............... 129

Applications to the Court of Queen's Bench..... 130

PART 10

INSIDER TRADING AND SELF-DEALING

Definitions. 131

mutual fund — fonds commun de placement

related mutual funds — fonds communs de placement liés

related person — personne liée

responsible person — personne responsable

Definition of "investment"............... 132

Significant interest, substantial security holder and beneficial ownership 133

Related person and change in beneficial ownership 134

Insider report 135

Report of transfer by insider.... 136

Investments of mutual funds in New Brunswick 137

Indirect investment............... 138

Order for non-application of section 137 or 138......... 139

Exception to paragraph 133(c).... 140

Fees on investment............... 141

Standard of care for management of mutual fund............... 142

Filing by mutual fund managers............... 143

Prohibited transactions............... 144

Trades by mutual fund insiders............... 145

Filing of reports in another jurisdiction............... 146

Prohibited trading.... 147

Exemption order............... 148

PART 11

CIVIL LIABILITY

Liability for misrepresentation in prospectus............... 149

Liability for misrepresentation when securities offered for sale in reliance on an exemption 150

Liability for misrepresentation in advertising or sales literature 151

Liability for verbal misrepresentation......... 152

Liability for misrepresentation in circular.. 153

Standard of reasonableness.............. 154

Liability of dealer or offeror... 155

Liability of seller and underwriter............... 156

Liability where material fact or change undisclosed............... 157

Action by Commission on behalf of issuer..... 158

Rescission of contract. 159

Rescission of purchase of mutual fund security.. 160

Limitation periods... 161

PART 12

RECORD-KEEPING AND COMPLIANCE REVIEWS

Record-keeping............... 162

Compliance review.... 163

Removal of documents............... 164

Obstruction 165

Misleading statements 166

Fees and expenses for compliance reviews.. 167

Continuous disclosure reviews.. 168

Fees and expenses for disclosure reviews.. 169

PART 13

INVESTIGATIONS

Provision of information to Executive Director. 170

Investigation order...... 171

Powers of investigator............... 172

Power to compel evidence 173

Investigators authorized as peace officers............... 174

Seized property............... 175

Report of investigation............... 176

Confidentiality and non-compellability............... 177

Release of information............... 178

PART 14

ENFORCEMENT

Offences generally 179

Offences in respect of self-regulatory organizations............... 180

Misleading or untrue statements 181

Execution of warrant issued in another province. 182

Interim preservation of property............... 183

Orders in the public interest............... 184

Payment of investigation and hearing costs...... 185

Administrative penalty... 186

Applications to the Court of Queen's Bench..... 187

Appointment of receiver. 188

Filing decision with the Court of Queen's Bench..... 189

Enforcement orders when registration has expired or been cancelled or voluntarily surrendered............... 190

Resolution of proceedings............... 191

Limitation period............... 192

PART 15

REVIEWS, REFERRALS AND APPEALS

Review of decision. 193

Referral to Commission............... 194

Appeal......... 195

PART 16

GENERAL PROVISIONS

Certificate of Chair, other member of Commission or Executive Director. 196

Certificate of exchange or self-regulatory organization............... 197

Filing and inspection of information or material. 198

Sending information or material. 199

Regulations and rules....... 200

Notice and publication of rules....... 201

Studies........ 202

Policy statements 203

Memorandum of understanding............... 204

Confidential information............... 205

Revocation or variation of decision. 206

No privilege 207

Exemption order............... 208

Costs........... 209

Decision under more than one provision 210

Letters of request and reciprocal assistance 211

PART 17

TRANSITIONAL

Definition of "previous Act"............... 212

Revocation of appointments............... 213

Decisions... 214

Documentation............... 215

Proceedings 216

Investigations............... 217

Registration 218

Certificates 219

PART 18

CONSEQUENTIAL AMENDMENTS

Auditor General Act.......... 220

Companies Act............... 221

Direct Sellers Act.......... 222

Electricity Act............ 222.1

Loan and Trust Companies Act.......... 223

New Brunswick Municipal Finance Corporation Act.......... 224

Proceedings Against the Crown Act 225

Public Service Labour Relations Act............... 226

Small Business Investor Tax Credit Act 227

Act Respecting the Workers Investment Fund Inc. 228

PART 19

REPEAL AND COMMENCEMENT

Security Frauds Prevention Act.......... 229

Commencement............... 230

SCHEDULE A

 

 

Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

 

PART 1

DEFINITIONS AND INTERPRETATION

Definitions and interpretation

1(1)             The following definitions apply in this Act.

 

"advertising" includes television and radio commercials, newspaper and magazine advertisements and all other sales material generally disseminated through the communications media. (annonces publicitaires)

 

"adviser" means a person engaging in or holding himself, herself or itself out as engaging in the business of advising others as to the investment in or the purchase or sale of securities, regardless of whether such advice is provided in furtherance of a trade in securities or is provided in respect of specific securities. (conseiller)

 

"associate", where used to indicate a relationship with any person, means

 

(a)          an issuer of which that person beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all outstanding voting securities of the issuer,

 

(b)          a partner of that person,

 

(c)          a trust or estate in which that person has a substantial beneficial interest or for which that person serves as trustee or in a similar capacity,

 

(d)          a relative of that person who resides in the same home as that person,

 

(e)          the spouse or common-law partner of that person, or

 

(f)           a relative of the spouse or common-law partner of that person who resides in the same home as that person. (personne qui a un lien)

 

"business day" means a day other than a Saturday or a holiday as defined in the Interpretation Act. (jour ouvrable)

 

"Chair" means the Chair of the Commission. (président)

 

"class of securities" includes a series of a class of securities. (catégorie de valeurs mobilières)

 

"clearing agency" means a person who, in connection with trades in securities, acts as an intermediary in paying funds or delivering securities, or both, or who provides centralized facilities for the clearing of trades in securities or provides centralized facilities as a depository of securities, but does not include an exchange, a quotation and trade reporting system or a registered dealer. (agence de compensation et de dépôt)

 

"Commission" means the New Brunswick Securities Commission established under section 3. (Commission)

 

"common-law partner" means a person who cohabits in a conjugal relationship with another person if the persons are not married to each other. (conjoint de fait)

 

"compliance officer" means a person appointed as a compliance officer under section 163. (inspecteur)

 

"contract" includes a trust agreement, declaration of trust or other similar instrument. (contrat)

 

"contractual plan" means any contract or other arrangement for the purchase of shares or units of a mutual fund by payments over a specified period or by a specified number of payments where the amount deducted from any one of the payments as sales charges is larger than the amount that would have been deducted from that payment for sales charges if deductions had been made from each payment at a constant rate for the duration of the plan. (plan à versements périodiques)

 

"control person" means

 

(a)          a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or

 

(b)          each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer,

 

and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons shall be deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer. (personne participant au contrôle)

 

"corporation" includes a company or other body corporate wherever or however incorporated. (corporation)

 

"Court of Appeal" means The Court of Appeal of New Brunswick. (Cour d'appel)

 

"Court of Queen's Bench" means The Court of Queen's Bench of New Brunswick. (Cour du Banc de la Reine)

 

"dealer" means a person who trades in securities in the capacity of principal or agent. (courtier en valeurs mobilières)

 

"decision", where used in relation to the Commission or the Executive Director, means a decision, ruling, order, temporary order, direction or other requirement made by the Commission or the Executive Director, as the case may be, under a power or right conferred by this Act or the regulations. (décision)

 

"director" means a director of a corporation or an individual occupying or performing, with respect to a corporation or any other person, a similar position or similar functions. (administrateur)

 

"distribution", where used in relation to trading in securities, means

 

(a)          a trade in securities of an issuer that have not been previously issued,

 

(b)          a trade by or on behalf of an issuer in previously issued securities of that issuer that have been redeemed or purchased by or donated to that issuer,

 

(c)          a trade in previously issued securities of an issuer from the holdings of a control person,

 

(d)          a trade by or on behalf of an underwriter in securities which were acquired by that underwriter, acting as underwriter, before the commencement of this section, if those securities continued on the commencement of this section to be owned by or for that underwriter, so acting,

 

(e)          a trade deemed to be a distribution in an order made by the Commission under paragraph 184(1)(o),

 

(f)           a trade that is a distribution under the regulations, and

 

(g)          a transaction or series of transactions involving a purchase and sale or a repurchase and resale in the course of or incidental to a distribution. (placement)

 

"distribution company" means a person distributing securities under a distribution contract. (compagnie de placement)

 

"distribution contract" means a contract between a mutual fund or its trustees or other legal representatives and a person under which that person is granted the right to purchase the shares or units of the mutual fund for distribution or to distribute the shares or units of the mutual fund on behalf of the mutual fund. (contrat de placement)

 

"exchange" means a person who constitutes, maintains or provides a market place or facilities for bringing together purchasers and sellers of securities. (bourse)

 

"Executive Director" means the Executive Director of the Commission. (directeur général)

 

"form of proxy" means a written or printed form that, on completion and execution by or on behalf of a security holder, becomes a proxy. (formule de procuration)

 

"individual" means a natural person, but does not include a partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust or a natural person in his or her capacity as trustee, executor, administrator or other legal personal representative. (particulier)

 

"insider" or "insider of a reporting issuer" means

 

(a)          a director or senior officer of a reporting issuer,

 

(b)          a director or senior officer of a corporation that is itself an insider or subsidiary of a reporting issuer,

 

(c)          a person who beneficially owns, directly or indirectly, who exercises control or direction over or who has a combination of both direct or indirect beneficial ownership of and control or direction over voting securities of a reporting issuer carrying more than 10% of the voting rights attached to all outstanding voting securities of the reporting issuer other than voting securities held by the person as underwriter in the course of a distribution, or

 

(d)          a reporting issuer where it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities. (initié ou initié d'un émetteur assujetti)

 

"investigator" means a person appointed as an investigator under section 171. (enquêteur)

 

"investment fund" means a mutual fund or a non-redeemable investment fund. (fonds d'investissement)

 

"investment fund manager" means a person who has the power and exercises the responsibility to direct the affairs of an investment fund. (gestionnaire de fonds d'investissement)

 

"investor relations activities" means any activities or oral or written communications, by or on behalf of an issuer or security holder of the issuer, that promote or reasonably could be expected to promote the purchase or sale of securities of the issuer, but does not include

 

(a)          the dissemination of information provided, or material prepared, in the ordinary course of the business of the issuer to promote the sale of products or services of the issuer or to raise public awareness of the issuer that cannot reasonably be considered to promote the purchase or sale of securities of the issuer,

 

(b)               activities or communications necessary to comply with the requirements of this Act or the regulations or the by-laws or other regulatory instruments or practices or policies of an exchange or self-regulatory organization,

 

(c)               communications by a publisher of, or writer for, a newspaper, news magazine or business or financial publication that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

 

(i)      the communication is only through the newspaper, magazine or publication, and

 

(ii)     the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer, or

 

(d)               activities or communications prescribed by regulation. (activités liées aux relations avec les investisseurs)

 

"issuer" means a person who has outstanding, issues or proposes to issue a security. (émetteur)

 

"management contract" means a contract under which a mutual fund is provided with investment advice, alone or together with administrative or management services, for valuable consideration. (contrat de gestion)

 

"market participant" means

 

(a)          a registrant,

 

(b)          a person exempted in an order made by the Commission under section 55 from the requirement to be registered under this Act,

 

(c)          a reporting issuer,

 

(d)          a director, officer or promoter of a reporting issuer,

 

(e)          a manager or custodian of assets, shares or units of a mutual fund,

 

(f)           an exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency,

 

(g)          a transfer agent or registrar for securities of a reporting issuer,

 

(h)          the Canadian Investor Protection Fund,

 

(i)           the general partner of a market participant, or

 

(j)           any other person or member of a class of persons prescribed by regulation. (participant au marché)

 

"material change",

 

(a)               where used in relation to an issuer other than an investment fund, means

 

(i)      a change in the business, operations or capital of the issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the issuer, or

 

(ii)     a decision to implement a change referred to in subparagraph (i) made by the board of directors or other persons acting in a similar capacity or by senior management of the issuer who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable, and

 

(b)               where used in relation to an issuer that is an investment fund, means

 

(i)      a change in the business, operations or affairs of the issuer that would be considered important by a reasonable investor in determining whether to purchase or continue to hold securities of the issuer, or

 

(ii)     a decision to implement a change referred to in subparagraph (i) made

 

(A)     by the board of directors of the issuer or the board of directors of the investment fund manager of the issuer or other persons acting in a similar capacity,

 

(B)     by senior management of the issuer who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable, or

 

(C)     by senior management of the investment fund manager of the issuer who believe that confirmation of the decision by the board of directors of the investment fund manager of the issuer or such other persons acting in a similar capacity is probable. (changement important)

 

"material fact", where used in relation to securities issued or distributed or proposed to be issued or distributed, means a fact that would reasonably be expected to have a significant effect on the market price or value of the securities. (fait important)

 

"Minister" means the Minister of Justice and includes any person designated by the Minister to act on the Minister's behalf. (ministre)

 

"misrepresentation" means

 

(a)          an untrue statement of material fact, or

 

(b)          an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. (présentation inexacte des faits)

 

"mutual fund" includes

 

(a)          an issuer

 

(i)          whose primary purpose is to invest money provided by its security holders, and

 

(ii)          whose securities entitle the holder to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets, including a separate fund or trust account, of the issuer,

 

(b)          an issuer that is deemed to be a mutual fund in an order made by the Commission under paragraph 184(1)(n), or

 

(c)          an issuer or a class of issuers prescribed by regulation,

 

but does not include an issuer or a class of issuers that is deemed not to be a mutual fund in an order made by the Commission under subsection 148(2) or an issuer or a class of issuers that is prescribed by regulation. (fonds commun de placement)

 

"mutual fund in New Brunswick" means a mutual fund that is a reporting issuer or that is organized under the laws of New Brunswick, but does not include a private mutual fund. (fonds commun de placement du Nouveau-Brunswick)

 

"mutual fund manager" means a person who provides investment advice under a management contract. (gestionnaire d'un fonds commun de placement)

 

"New Brunswick securities law" means

 

(a)          this Act,

 

(b)          the regulations, and

 

(c)          in respect of a person, a decision of the Commission or the Executive Director to which the person is subject. (droit des valeurs mobilières du Nouveau-Brunswick)

 

"offering memorandum" means

 

(a)          a document, together with any amendments to that document, purporting to describe the business and affairs of an issuer that has been prepared primarily for delivery to and review by a prospective purchaser so as to assist the prospective purchaser to make an investment decision in respect of securities being sold in a distribution to which section 71 would apply but for the availability of one or more of the exemptions contained in New Brunswick securities law, or

 

(b)          a document that is prescribed by regulation that purports to describe the business and affairs of an issuer, together with any amendments to that document,

 

but does not include a document setting out current information about an issuer for the benefit of a prospective purchaser familiar with the issuer through prior investment or business contacts or a document prescribed by regulation that purports to describe the business and affairs of an issuer. (notice d'offre)

 

"officer" means the chair or a vice-chair of the board of directors, the president, a vice-president, the secretary, an assistant secretary, the treasurer, an assistant treasurer and the general manager of a corporation and any other individual designated an officer of a corporation by by-law or similar authority or any individual acting in a similar capacity on behalf of an issuer or registrant. (dirigeant)

 

"person" includes an individual, a corporation, a partnership, an unincorporated association, an unincorporated syndicate, an unincorporated organization and a trust and a trustee, an executor, an administrator or other legal representative. (personne)

 

"portfolio manager" means an adviser who manages the investment portfolio of clients through discretionary authority granted by the clients. (portefeuilliste)

 

"portfolio securities", where used in relation to a mutual fund, means securities held or proposed to be purchased by the mutual fund. (valeurs de portefeuille)

 

"private mutual fund" means a mutual fund that is

 

(a)               operated as an investment club if

 

(i)      its shares or units are held by not more than 50 persons and its indebtedness has never been offered to the public,

 

(ii)     it does not pay or give any remuneration for investment advice or in respect of trades in securities, except normal brokerage fees, and

 

(iii)   all of its members are required to make contributions in proportion to the shares or units each holds for the purpose of financing its operations, or

 

(b)               administered by a trust company licensed under the Loan and Trust Companies Act and consists of a common trust fund as defined in section 1 of that Act. (fonds commun de placement fermé)

 

"promoter" means

 

(a)          a person who, acting alone or in conjunction with one or more other persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of an issuer, or

 

(b)          a person who, in connection with the founding, organizing or substantial reorganizing of the business of an issuer, directly or indirectly, receives in consideration of services or property or both, 10% or more of any class of securities of the issuer or 10% or more of the proceeds from the sale of any class of securities of the issuer of a particular issue, but does not include a person who receives such securities or proceeds either solely as underwriting commissions or solely in consideration of property if the person does not otherwise take part in founding, organizing or substantially reorganizing the business. (promoteur)

 

"proxy" means a completed and executed form of proxy by means of which a security holder has appointed a person as the security holder's nominee to attend and act for and on behalf of the security holder at a meeting of security holders. (procuration)

 

"quotation and trade reporting system" means a person who operates facilities that permit the dissemination of price quotations for the purchase and sale of securities and reports of completed transactions in securities for the exclusive use of registered dealers, but does not include an exchange or a registered dealer. (système de cotation et de déclaration des opérations)

 

"registered adviser" means an adviser registered under this Act. (conseiller inscrit)

 

"registered dealer" means a dealer registered under this Act. (courtier en valeurs mobilières inscrit)

 

"registrant" means a person registered or required to be registered under this Act. (personne inscrite)

 

"regulation" means a regulation made under this Act and, unless the context otherwise indicates, includes a rule. (règlement)

 

"reporting issuer" means an issuer

 

(a)          that has issued voting securities in respect of which

 

(i)      a prospectus was filed, and

 

(ii)     a certificate was issued under section 17 of the Security Frauds Prevention Act, chapter S-6 of the Revised Statutes, 1973, or evidence of authority to trade was provided under section 17.1 of that Act,

 

(b)          that has filed a prospectus in respect of which the Executive Director has issued a receipt under this Act or the regulations,

 

(c)          any of whose securities have been at any time listed for trading on an exchange recognized by the Commission under paragraph 35(1)(a), regardless of when such listing for trading commenced,

 

(d)          that is the corporation whose existence continues following the exchange of securities of a corporation by or for the account of the corporation with another corporation or the holders of the securities of that other corporation in connection with

 

(i)      a statutory amalgamation, arrangement or reorganization, or

 

(ii)     a statutory procedure under which one corporation takes title to the assets of the other corporation that in turn ceases to exist by operation of law or under which the existing corporations merge into a new corporation,

 

if one of the amalgamating or merged corporations or the continuing corporation has been a reporting issuer for at least 12 months,

 

(e)          that is deemed to be a reporting issuer in an order made by the Commission under section 96, or

 

(f)           that is a reporting issuer under the regulations,

 

unless the Commission makes an order under section 95 that the issuer is deemed to have ceased to be a reporting issuer. (émetteur assujetti)

 

"rule" means a rule made under section 200. (règle)

 

"sales literature" includes discs, videotapes and similar material, written matter and all other material, except preliminary prospectuses and prospectuses, designed for use in a presentation to a purchaser or prospective purchaser, whether such material is given or shown to the purchaser or prospective purchaser. (documentation commerciale)

 

"salesperson" means an individual who is employed by a dealer for the purpose of making trades in securities on behalf of the dealer. (représentant de commerce)

 

"Secretary" means the Secretary of the Commission. (secrétaire)

 

"security" includes

 

(a)          a document, record, instrument or writing commonly known as a security,

 

(b)          a document or record constituting evidence of title to, or an interest in, the capital, assets, property, profits, earnings or royalties of any person,

 

(c)          a document or record constituting evidence of an interest in an association of legatees or heirs,

 

(d)          a document or record constituting evidence of an option, subscription or other interest in or to a security,

 

(e)          a bond, debenture, note or other evidence of indebtedness, share, stock, unit, unit certificate, participation certificate, certificate of share or interest, preorganization certificate or subscription other than a contract of insurance issued by an insurance company licensed under the Insurance Act or an evidence of deposit issued by a bank listed in Schedule I, II or III of the Bank Act (Canada), by a credit union as defined in the Credit Unions Act or by a loan company or trust company licensed under the Loan and Trust Companies Act,

 

(f)           an agreement under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets, except a contract issued by an insurance company licensed under the Insurance Act which provides for payment at maturity of an amount not less than 3¤4 of the premiums paid by the purchaser for a benefit payable at maturity,

 

(g)          an agreement providing that money received will be repaid or treated as a subscription to shares, stock, units or interests at the option of the recipient or of any person,

 

(h)          a certificate of share or interest in a trust, estate or association,

 

(i)           a profit-sharing agreement or certificate,

 

(j)           a certificate of interest in an oil, natural gas or mining lease, claim or royalty voting trust certificate,

 

(k)          an oil or natural gas royalty or lease or a fractional or other interest in either,

 

(l)           a collateral trust certificate,

 

(m)         an income or annuity contract not issued by an insurance company licensed under the Insurance Act,

 

(n)          an investment contract,

 

(o)          a document or record constituting evidence of an interest in a scholarship or educational plan or trust, and

 

(p)          a document, record, instrument or writing prescribed by regulation,

 

whether any of the above relate to an issuer or proposed issuer. (valeur mobilière)

 

"self-regulatory organization" means a person who represents registrants and is organized for the purpose of regulating the operations and the standards of practice and business conduct of its members and their representatives with a view to promoting the protection of investors and the public interest. (organisme d'autoréglementation)

 

"senior officer" means

 

(a)          the chair or a vice-chair of the board of directors, the president, a vice-president, the secretary, the treasurer or the general manager of a corporation or any other individual who performs functions for an issuer similar to those normally performed by an individual occupying any such office, and

 

(b)          each of the 5 highest paid employees of an issuer, other than commissioned salespersons who do not act in a management capacity, including any individual referred to in paragraph (a). (cadre dirigeant)

 

"trade" includes

 

(a)          a sale or disposition of a security for valuable consideration or an attempt to sell or dispose of a security for valuable consideration, whether the terms of payment be on margin, instalment or otherwise, but does not include a purchase of a security or, except as provided in paragraph (d), a transfer, pledge or encumbrance of securities for the purpose of giving collateral for a debt made in good faith,

 

(b)               participation as a trader in any transaction in a security on or through the facilities of an exchange or quotation and trade reporting system,

 

(c)          the receipt by a registrant of an order to buy or sell a security,

 

(d)          a transfer, pledge or encumbrancing of securities of an issuer from the holdings of a control person for the purpose of giving collateral for a debt made in good faith, and

 

(e)          an act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of any of the activities specified in paragraphs (a) to (d). (opération)

 

"underwriter", except as otherwise prescribed by regulation, means a person who, as principal, agrees to purchase securities with a view to distribution or who, as agent, offers for sale or sells securities in connection with a distribution and includes a person who has a direct or indirect participation in any such distribution, but does not include

 

(a)          a person whose interest in the transaction is limited to receiving the usual and customary distributor's or seller's commission payable by an underwriter or issuer,

 

(b)          a mutual fund that accepts its shares or units for surrender and resells them,

 

(c)          a corporation that purchases its shares and resells them, or

 

(d)          a bank listed in Schedule I, II or III of the Bank Act (Canada) with respect to the securities prescribed by regulation and to such banking transactions as are prescribed by regulation. (preneur ferme)

 

"voting security" means any security of an issuer that is not a debt security and that carries a voting right either under all circumstances or under some circumstances that have occurred and are continuing. (valeur mobilière avec droit de vote)

 

1(2)             A corporation shall be deemed to be an affiliate of another corporation if one of them is the subsidiary of the other or if both are subsidiaries of the same corporation or if each of them is controlled by the same person.

 

1(3)             A corporation shall be deemed to be controlled by another person or by 2 or more corporations if

 

(a)               voting securities of the first-mentioned corporation carrying more than 50% of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or by or for the benefit of the other corporations, and

 

(b)          the votes carried by such securities are entitled, if exercised, to elect a majority of the board of directors of the first-mentioned corporation.

 

1(4)             A corporation shall be deemed to be a subsidiary of another corporation if

 

(a)          it is controlled by

 

(i)      that other corporation,

 

(ii)     that other corporation and one or more corporations each of which is controlled by that other corporation, or

 

(iii)   two or more corporations each of which is controlled by that other corporation, or

 

(b)          it is a subsidiary of a corporation that is that other corporation's subsidiary.

 

1(5)             A person shall be deemed to own beneficially securities beneficially owned by a corporation controlled by the person or by an affiliate of that corporation.

 

1(6)             A corporation shall be deemed to own beneficially securities beneficially owned by its affiliates.

 

1(7)             A mutual fund manager and a distribution company of a mutual fund that is a reporting issuer and an insider of such mutual fund manager or distribution company shall be deemed to be an insider of the mutual fund.

 

1(8)                    Where an issuer becomes an insider of a reporting issuer, every director or senior officer of the issuer shall be deemed to have been an insider of the reporting issuer for the previous 6 months or for such shorter period that he or she was a director or senior officer of the issuer.

 

1(9)                    Where a reporting issuer becomes an insider of any other reporting issuer, every director or senior officer of the second-mentioned reporting issuer shall be deemed to have been an insider of the first-mentioned reporting issuer for the previous 6 months or for such shorter period that he or she was a director or senior officer of the second-mentioned reporting issuer.

 

Purposes of Act

2                  The purposes of this Act are

 

(a)          to provide protection to investors from unfair, improper or fraudulent practices, and

 

(b)          to foster fair and efficient capital markets and confidence in capital markets.

 

PART 2

COMMISSION

Commission

3(1)             There is established a body corporate without share capital to be known as the New Brunswick Securities Commission.

 

3(2)             The Commission shall consist of a Chair and at least 2 and not more than 5 other members.

 

3(3)             The Commission is, for all purposes, an agent of Her Majesty the Queen in right of New Brunswick.

 

3(4)             The Commission has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.

 

Administration of Act

4                  The Commission is responsible for the administration of this Act.

 

Guiding principles

5                  For the purposes of this Act, the Commission shall be guided by the following fundamental principles:

 

(a)               balancing the importance to be given to each of the purposes of this Act may be required in specific cases;

 

(b)          the primary means for achieving the purposes of this Act are:

 

(i)          requirements for timely, accurate and efficient disclosure of information;

 

(ii)          restrictions on fraudulent and unfair market practices and procedures; and

 

(iii)          requirements for the maintenance of high standards of ethics and business conduct to ensure honest and responsible conduct by market participants;

 

(c)               effective and responsive securities regulation requires timely, open and efficient administration and enforcement of this Act by the Commission;

 

(d)          the Commission should, while ensuring adequate supervision, use the enforcement capability and regulatory expertise of self-regulatory organizations;

 

(e)          the integration of capital markets is supported and promoted by the sound and responsible harmonization and coordination of securities regulation regimes; and

 

(f)               business and regulatory costs and other restrictions on the business and investment activities of market participants should be proportionate to the significance of the regulatory objectives sought to be realized.

 

Head office

6                  The head office of the Commission is at The City of Saint John.

 

Members other than Chair

7(1)             The members of the Commission, other than the Chair, shall be appointed by the Lieutenant-Governor in Council for a term not exceeding 5 years and may be reappointed.

 

7(2)                    Members of the Commission appointed under subsection (1) shall perform their duties on a part-time basis.

 

Chair

8(1)             The Chair shall be appointed by the Lieutenant-Governor in Council for a term of 5 years and may be reappointed.

 

8(2)             The Chair is the chief executive officer of the Commission and shall perform the duties of the office on a full-time basis.

 

8(3)             The Public Service Superannuation Act applies to the Chair.

 

Remuneration and expenses

9(1)             The Chair and other members of the Commission are entitled to be paid such remuneration as is fixed by the by-laws of the Commission.

 

9(2)             Each member of the Commission is entitled to be paid such travelling and living expenses incurred by him or her in the performance of his or her duties as are fixed by the by-laws of the Commission.

 

Continuation in office

10                    Notwithstanding subsections 7(1) and 8(1) and subject to section 11, a member of the Commission remains in office until the member resigns or is reappointed or replaced.

 

Removal from office

11                The appointment of the Chair and any other member of the Commission may be revoked by the Lieutenant-Governor in Council for cause.

 

Vacancy or temporary absence

12(1)                    Where a vacancy occurs on the Commission, the Lieutenant-Governor in Council may appoint a person to fill the vacancy for the balance of the term of the Chair or other member replaced.

 

12(2)          The Lieutenant-Governor in Council may, in the case of the temporary absence, illness or incapacity to act of any member of the Commission, other than the Chair, appoint a substitute for the member for the period of the temporary absence, illness or incapacity.

 

12(3)          In the case of the temporary absence, illness or incapacity to act of the Chair, his or her powers and duties shall be exercised by such member as may be designated by resolution of the Commission.

 

12(4)          A vacancy on the Commission does not impair the capacity of the Commission to act so long as a quorum is maintained.

 

Quorum

13                Two members of the Commission constitute a quorum.

 

Employees

14(1)          The Commission may employ or engage such persons as it considers necessary.

 

14(2)          The Commission shall appoint from among its employees an Executive Director and a Secretary.

 

14(3)          The remuneration and other conditions of employment of the Executive Director, Secretary and other employees of the Commission shall be established by the by-laws of the Commission.

 

14(4)          The Public Service Superannuation Act applies to employees of the Commission.

 

Executive Director

15(1)          The Executive Director is the chief administrative officer of the Commission.

 

15(2)          The Executive Director shall perform the duties and may exercise the powers imposed on the Executive Director by this Act, by the regulations or by the Commission or delegated to the Executive Director under subsection 24(1).

 

15(3)          The Commission may, in the case of the temporary absence, illness or incapacity to act of the Executive Director, designate by resolution another person to act as Executive Director.

 

Delegation of powers and duties of Executive Director

16(1)          The Executive Director may delegate his or her powers and duties under this Act or the regulations to an employee of the Commission other than the powers and duties delegated to the Executive Director under subsection 24(1).

 

16(2)          The Executive Director may impose such terms and conditions as he or she considers appropriate on a delegation made under subsection (1).

 

16(3)          The Executive Director may revoke, in whole or in part, a delegation made under subsection (1).

 

16(4)          A decision, ruling, order, temporary order or direction made by a person under a delegation made by the Executive Director under subsection (1) shall be deemed to be a decision, ruling, order, temporary order or direction of the Executive Director.

 

Secretary

17(1)          In addition to the duties imposed on the Secretary by this Act, by the regulations or by the Commission, the Secretary may

 

(a)               accept service of all notices and other documents on behalf of the Commission,

 

(b)          when authorized by the Commission, sign a decision made by the Commission as a result of a hearing,

 

(c)               certify under his or her hand a decision made by the Commission or a document or other thing used in connection with a hearing by the Commission, and

 

(d)               exercise such powers as are conferred on the Secretary by this Act, by the regulations or by the Commission.

 

17(2)          The Commission may, in the case of the temporary absence, illness or incapacity to act of the Secretary, designate by resolution another person to act as Secretary.

 

17(3)          A certificate purporting to be signed by the Secretary is, without proof of the Secretary's appointment, authority or signature, admissible in evidence and is, in the absence of evidence to the contrary, proof of the facts stated in the certificate.

 

17(4)          A certificate referred to in subsection (3) shall not be received in evidence unless the party intending to produce it has given to the person against whom it is to be produced reasonable notice of the party's intention, together with a copy of the certificate.

 

17(5)          A person against whom a certificate referred to in subsection (3) is produced may, with leave of the court, require the attendance of the person who signed the certificate for purposes of cross-examination.

 

Agreement for services

18                The Commission may enter into agreements with any Minister of the Crown for the provision by employees of the Crown, for an agreed on amount, of any service required by the Commission to carry out its duties and exercise its powers.

 

Appointment of experts

19(1)          The Commission may appoint an expert to assist the Commission in such manner as it considers expedient.

 

19(2)          The Commission may submit any document or other thing to any expert appointed under subsection (1) for examination.

 

19(3)          The Commission has the same power as is vested in an investigator under subsections 173(1) and (2) to summon and enforce the attendance of witnesses before any expert appointed under subsection (1), to compel witnesses to give evidence under oath or in any other manner before the expert and to compel witnesses to produce books, records, documents and things or classes of books, records, documents and things to the expert.

 

19(4)          An expert appointed under subsection (1) shall be paid such amounts for services and expenses as the Commission may determine.

 

Immunity

20                No action lies for damages or otherwise against any of the following persons in relation to anything done or purported to be done in good faith, or in relation to anything omitted in good faith, under this Act by the person:

 

(a)          the Commission;

 

(b)          the Chair or a former Chair;

 

(c)          any other member or former member of the Commission;

 

(d)          any employee or former employee of the Commission;

 

(e)          any person appointed under this Act; and

 

(f)           any person acting under or who has acted under the authority of this Act or the instructions of a person referred to in paragraph (a), (b), (c) or (d).

 

Indemnity

21(1)                    Except in relation to an action by or on behalf of the Commission, in which case the approval of the Court of Queen's Bench must first be obtained, the Commission may indemnify the Chair or a former Chair, any other member or former member of the Commission or any employee or former employee of the Commission, and his or her heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in relation to any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been the Chair or other member of the Commission or an employee of the Commission, if he or she

 

(a)          acted honestly and in good faith with a view to the best interests of the Commission, and

 

(b)          in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that his or her conduct was lawful.

 

21(2)                    Notwithstanding anything in this section, a person referred to in subsection (1) is entitled to indemnity from the Commission in respect of all costs, charges and expenses reasonably incurred in connection with the defence of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been the Chair or other member of the Commission or an employee of the Commission if the person seeking indemnity

 

(a)          was substantially successful on the merits of the person's defence of the action or proceeding,

 

(b)               fulfils the conditions set out in paragraphs (1)(a) and (b), and

 

(c)          is fairly and reasonably entitled to indemnity.

 

21(3)          The Commission may purchase and maintain insurance for the benefit of any person referred to in subsection (1) against any liability incurred by that person as the Chair or as another member of the Commission or as an employee of the Commission, except where the liability relates to the failure of that person to act honestly and in good faith with a view to the best interests of the Commission.

 

21(4)          The Commission or a person referred to in subsection (1) may apply to the Court of Queen's Bench for an order approving an indemnity under this section and the Court of Queen's Bench may so order and make any further order it thinks fit.

 

21(5)          On an application under subsection (4), the Court of Queen's Bench may order notice to be given to any interested person and that person is entitled to appear and be heard in person or by legal counsel.

 

By-laws

22(1)          The Commission may make by-laws governing the administration, management and conduct of its affairs, including without limiting the generality of the foregoing,

 

(a)               setting out additional powers and duties of the Chair, the Executive Director and the Secretary,

 

(b)               delegating to an employee of the Commission the exercise or performance of any power or duty conferred on or imposed on the Executive Director or the Secretary under this Act or the regulations and fixing the terms or conditions of the delegation, and

 

(c)               governing the establishment, operation or dissolution of committees of the Commission and delegating the powers and duties of the Commission to the committees.

 

22(2)          A decision, ruling, order, temporary order or direction made by a person under a delegation made under paragraph (1)(b) of a power or duty conferred or imposed on the Executive Director under this Act or the regulations shall be deemed to be a decision, ruling, order, temporary order or direction of the Executive Director.

 

22(3)          A by-law made by the Commission becomes effective on the date determined by resolution of the Commission.

 

22(4)          The Commission shall, as soon as practicable after a by-law made by it becomes effective, publish the by-law electronically and publish notice of the by-law in The Royal Gazette.

 

22(5)          The Regulations Act does not apply to by-laws made by the Commission.

 

Power regarding hearings

23(1)          In relation to any hearing under this Act, the Commission or any person to whom the power to hold hearings is delegated by the Commission has the same power to summon and enforce the attendance of witnesses, to compel witnesses to give evidence under oath or in any other manner and to compel witnesses to produce books, records, documents and things or classes of books, records, documents and things as the Court of Queen's Bench has for the trial of civil actions.

 

23(2)          On application to the Court of Queen's Bench by the Commission or by any person to whom the power to hold hearings is delegated, the failure or refusal of a person to attend, to take an oath, to answer questions or to produce books, records, documents and things or classes of books, records, documents and things in the custody, possession or control of the person makes the person liable to be committed for contempt as if in breach of an order or judgment of the Court of Queen's Bench.

 

23(3)          The Commission may hold hearings within or outside New Brunswick.

 

23(4)          The Commission may hold hearings in conjunction with other bodies empowered by statute to administer and regulate trading in securities or commodities, and may consult with those bodies during the course of, or in connection with, the hearing.

 

23(5)          The Commission may decide all questions of fact or law arising in the course of a hearing.

 

Delegation of Commission powers and duties

24(1)                    Subject to subsection (3), the Commission may delegate its powers and duties under this Act or the regulations to the Chair, another member of the Commission, the Executive Director or a committee of the Commission established by the by-laws of the Commission.

 

24(2)          The Commission may impose such terms and conditions as it considers appropriate on a delegation made under subsection (1).

 

24(3)          The Commission shall not delegate the power to conduct contested hearings on the merits or the power to make rules under section 200.

 

24(4)          The Commission may revoke, in whole or in part, a delegation made under subsection (1).

 

24(5)          No member of the Commission who exercises a power or performs a duty of the Commission under Part 13 in respect of a matter under investigation shall sit on a hearing by the Commission that deals with the matter, except with the written consent of the parties to the proceeding.

 

24(6)          A decision, ruling, order, temporary order or direction made by a person under a delegation made by the Commission under subsection (1) shall be deemed to be a decision, ruling, order, temporary order or direction of the Commission.

 

Financial matters

25(1)          The Commission shall maintain in its own name one or more accounts in any bank, trust company or credit union designated by the Minister of Finance for the purposes of subsection 23(1) of the Financial Administration Act.

 

25(2)                    Notwithstanding the Financial Administration Act, all money received by the Commission through the conduct of its operations or otherwise shall be deposited to the credit of the account or accounts maintained under subsection (1) and shall be administered by the Commission exclusively for the purposes of this Act.

 

25(3)          The Commission

 

(a)          may, with the approval of the Minister of Finance, borrow money for the purposes of carrying on its activities, and

 

(b)          may, for the purposes of carrying on its activities, invest money in securities authorized by the Trustees Act as investments in which trustees or executors may invest money.

 

25(4)          For the purposes of subsection (2), money received by the Commission from administrative penalties under section 186 shall not be used for the normal operating expenditures of the Commission and must only be used for endeavours or activities that in the opinion of the Commission enhance or may enhance the capital market in New Brunswick.

 

25(5)          When ordered to do so by the Minister, the Commission shall pay into the Consolidated Fund such of its surplus funds as, subject to the approval of the Board of Management, are determined by the Minister.

 

25(6)          In determining the amount of any payment to be made under subsection (5), the Minister shall allow such reserves for the future needs of the Commission as he or she considers appropriate and shall ensure that the payment will not impair the Commission's ability to pay its liabilities, to meet its obligations as they become due or to fulfil its contractual commitments.

 

Self-financing

26                The remuneration and expenses of the Chair, the other members of the Commission and the employees of the Commission, and generally all costs, charges and expenses incurred and payable in respect of the conduct of the business and affairs of the Commission shall be paid by the Commission.

 

Budget

27(1)          The Commission shall, before the thirty-first day of December in each year, prepare and submit to the Board of Management a proposed budget containing the estimates of the amounts required for the operation of the Commission for the next fiscal year.

 

27(2)          The Secretary of the Board of Management may make a report on the proposed budget, containing such recommendations as he or she considers appropriate, to the Chair within 30 days after receiving the proposed budget.

 

Business plan

28                At least once in every fiscal year of the Commission and as directed by the Minister, the Commission shall submit to the Minister for review and approval a business plan that includes the following:

 

(a)          a proposed budget for the next 3 fiscal years;

 

(b)               management objectives for the next three 3 years; and

 

(c)          other information that the Minister may specify.

 

Minister's request for information

29(1)          The Commission shall promptly give the Minister such information about its activities, operations and financial affairs as the Minister requests.

 

29(2)          The Minister may designate a person to examine any financial or accounting procedures, activities or practices of the Commission, and the person designated shall do so and report the results of the examination to the Minister.

 

29(3)          The members and employees of the Commission shall give the person designated by the Minister all the assistance and cooperation necessary to enable the person to complete the examination.

 

Fiscal year and financial statements

30(1)          The fiscal year of the Commission ends on the thirty-first of March in each year.

 

30(2)                    Within 6 months after the end of the Commission's fiscal year, the Commission shall, in accordance with generally accepted accounting principles, prepare annual financial statements that present the financial position, results of operations and changes in the financial position of the Commission for its most recent fiscal year.

 

Audit

31                The accounts and financial statements of the Commission shall be audited at least once a year by the Auditor General.

 

Annual report

32(1)          The Commission shall, within 6 months after the end of the Commission's fiscal year, prepare and deliver to the Minister a report consisting of

 

(a)          a summary of the nature and number of

 

(i)          filings under this Act or the regulations,

 

(ii)          registrations under this Act or the regulations, and

 

(iii)          enforcement proceedings taken under this Act or the regulations,

 

(b)          a general commentary on the law concerning securities and on the practice and development of that law,

 

(c)          the audited financial statements of the Commission, and

 

(d)          other information requested by the Minister or Lieutenant-Governor in Council.

 

32(2)          On receiving a report delivered to the Minister under subsection (1), the Minister shall,

 

(a)          if the Legislature is in session when the report is received by the Minister, lay the report before the Legislative Assembly, or

 

(b)          if the Legislature is not in session when the report is received by the Minister, lay the report before the Legislative Assembly within 15 days after the commencement of the next ensuing session.

 

New Brunswick Securities Commission Securities Policy Advisory Committee

33(1)          The Minister may establish a New Brunswick Securities Commission Securities Policy Advisory Committee.

 

33(2)          The Committee shall consist of not more than 5 members appointed by the Minister.

 

33(3)          The Minister may designate a member of the Committee as its chair.

 

33(4)          The Committee shall meet when requested by the Commission.

 

33(5)          The Committee shall, when requested by the Commission, consult with and advise the Commission concerning administrative, regulatory and legislative matters relating to trading in securities and to the securities industry.

 

33(6)          The members of the Committee shall serve without salary, but the Minister may fix a daily allowance to be payable to each member, and every member is entitled to be paid such travelling and living expenses as are incurred by him or her in the performance of his or her duties and as are certified by the chair of the Committee.

 

PART 3

SELF-REGULATION

Interpretation

34(1)          A reference in this Part

 

(a)          to a member of an exchange includes

 

(i)      any security holder in an organization that carries on business as an exchange, and

 

(ii)     any person who agrees to comply with the by-laws and other regulatory instruments and the practices and policies of the exchange and is granted trading access on or through the facilities of the exchange,

 

(b)          to a member of a self-regulatory organization includes any person carrying on business as a dealer who agrees to be regulated by the self-regulatory organization,

 

(c)          to a representative of a member of an exchange includes

 

(i)      any person approved by the exchange as a partner, officer, director, salesperson, trader or assistant trader of the member, and

 

(ii)     any employee of the member not otherwise referred to in subparagraph (i), or

 

(d)          to a representative of a member of a self-regulatory organization includes

 

(i)      any person approved by the self-regulatory organization as a partner, officer, director, salesperson, branch manager or assistant branch manager of the member, and

 

(ii)     any employee of the member not otherwise referred to in subparagraph (i).

 

34(2)          A reference in sections 38 to 44 to an exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency is a reference to a person who has been recognized as an exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency, as the case may be, under section 35.

 

Recognition

35(1)          On application, the Commission may, if in the opinion of the Commission it is in the public interest, make an order recognizing a person as

 

(a)          an exchange,

 

(b)          a self-regulatory organization,

 

(c)          a quotation and trade reporting system, or

 

(d)          a clearing agency.

 

35(2)          A recognition under this section shall be made in writing and shall be subject to such terms and conditions as the Commission considers appropriate.

 

Exchange required to be recognized

36                No person shall carry on business as an exchange in New Brunswick unless the person is recognized by the Commission as an exchange under paragraph 35(1)(a).

 

Designated exchange

37(1)                    Where a person is not carrying on business as an exchange, but is carrying on business as a quotation and trade reporting system, or is otherwise facilitating trading in securities, the Commission may, if in the opinion of the Commission it is in the public interest, order that

 

(a)          the person is an exchange for the purposes of this Act and the regulations, and

 

(b)          the person shall not carry on business as a quotation and trade reporting system, or otherwise facilitate trading in securities, unless the person is recognized by the Commission as an exchange under paragraph 35(1)(a).

 

37(2)          An order under subsection (1) may be made on the application of an interested person or on the Commission's own motion.

 

Standards and conduct

38(1)          An exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency shall regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its by-laws and other regulatory instruments and its practices and policies.

 

38(2)          The authority of an exchange or a self-regulatory organization to regulate the operations and the standards of practice and business conduct of its members and their representatives under subsection (1) extends to any former member, any former representative of a member and any former representative of a former member with respect to that person's operations and business conduct while a member of the exchange or self-regulatory organization or while a representative of a member of the exchange or self-regulatory organization, as the case may be.

 

Powers of the Commission

39                The Commission may, if in the opinion of the Commission it is in the public interest, make any decision with respect to

 

(a)          the manner in which an exchange carries on business,

 

(b)          the trading of securities on or through the facilities of an exchange or of a quotation and trade reporting system,

 

(c)          any security listed on an exchange or quoted on a quotation and trade reporting system,

 

(d)               issuers, whose securities are listed on an exchange or quoted on a quotation and trade reporting system, to ensure that they comply with New Brunswick securities law, and

 

(e)          any by-law or other regulatory instrument or practice or policy of an exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency.

 

Voluntary surrender

40                On the application of an exchange, a self-regulatory organization, a quotation and trade reporting system or a clearing agency, the Commission may, subject to such terms and conditions as the Commission considers appropriate, accept the voluntary surrender of the recognition of the exchange, self-regulatory organization, quotation and trade reporting system or clearing agency, if the Commission is satisfied that the surrender of the recognition is not prejudicial to the public interest.

 

Delegation of powers and duties

41(1)          The Commission may, subject to such terms and conditions as it considers appropriate, delegate to an exchange or self-regulatory organization any of the powers and duties of the Commission under Part 4 or the regulations relating to that Part.

 

41(2)          The Executive Director may, subject to such terms and conditions as the Executive Director considers appropriate and with the approval of the Commission, delegate to an exchange or self-regulatory organization any of the powers and duties of the Executive Director under Part 4 or the regulations relating to that Part.

 

41(3)          The Commission or, with the approval of the Commission, the Executive Director may revoke, in whole or in part, a delegation of powers and duties made under this section.

 

41(4)                    Where, in making a decision, an exchange or self-regulatory organization is exercising or performing or intends to exercise or perform a power or duty delegated to it under subsection (1) or (2), the Commission may withdraw from the exchange or self-regulatory organization any matter that is before the exchange or self-regulatory organization for its decision, and the Commission may decide the matter or refer the matter to the Executive Director for decision.

 

Council, committee or ancillary body

42(1)          With the approval of the Commission and subject to such terms and conditions as the Commission considers to be necessary or appropriate in the public interest, an exchange, a self-regulatory organization or a quotation and trade reporting system may establish a council, committee or ancillary body for the purposes of this section.

 

42(2)          With the approval of the Commission and subject to such terms and conditions as the Commission considers to be necessary or appropriate in the public interest, an exchange, a self-regulatory organization or a quotation and trade reporting system may delegate to the council, committee or ancillary body regulatory or self-regulatory powers or responsibilities or both.

 

42(3)          With the approval of the Commission and subject to such terms and conditions as the Commission considers to be necessary or appropriate in the public interest, an exchange or a self-regulatory organization may subdelegate to the council, committee or ancillary body any powers or duties delegated to the exchange or self-regulatory organization under subsection 41(1) or (2).

 

42(4)                    Where, in making a decision, a council, committee or ancillary body is exercising or performing or intends to exercise or perform a power or duty subdelegated to it under subsection (3), the Commission may withdraw from the council, committee or ancillary body any matter that is before the council, committee or ancillary body for its decision, and the Commission may decide the matter or refer the matter to the Executive Director for decision.

 

42(5)          A decision, ruling, order or direction made by a council, committee or ancillary body established by an exchange, a self-regulatory organization or a quotation and trade reporting system under subsection (1) shall be deemed to be a decision, ruling, order or direction of the exchange, self-regulatory organization or quotation and trade reporting system, as the case may be.

 

42(6)          A council, committee or ancillary body that exercises the powers or assumes the responsibilities of an exchange, a self-regulatory organization or a quotation and trade reporting system is also included in

 

(a)          the recognition of the exchange, self-regulatory organization or quotation and trade reporting system,

 

(b)          any suspension, restriction or revocation of the recognition of the exchange, self-regulatory organization or quotation and trade reporting system, and

 

(c)          any imposition of terms or conditions on the recognition of the exchange, self-regulatory organization or quotation and trade reporting system.

 

42(7)          The provisions of this Act and the regulations that apply to exchanges, self-regulatory organizations or quotation and trade reporting systems also apply with the necessary modifications to the council, committee or ancillary body.

 

Contravention of New Brunswick securities law

43                No by-law or other regulatory instrument or practice or policy of an exchange, self-regulatory organization, quotation and trade reporting system or clearing agency shall contravene New Brunswick securities law, but an exchange, self-regulatory organization, quotation and trade reporting system or clearing agency may impose additional requirements within its jurisdiction.

 

Review of decisions

44(1)          The Executive Director or a person directly affected by a decision, ruling, order or direction made under a by-law or other regulatory instrument or practice or policy of an exchange, self-regulatory organization, quotation and trade reporting system or clearing agency may apply to the Commission for a hearing and review of the decision, ruling, order or direction.

 

44(2)                    Section 193 applies to the hearing and review of the decision, ruling, order or direction in the same manner as it applies to a hearing and review of a decision of the Executive Director.

 

PART 4

REGISTRATION

Registration for trading required

45                    Unless exempted under this Act or the regulations, no person shall

 

(a)          trade in a security or act as an underwriter unless the person is registered as a dealer, or is registered as a salesperson, as a partner or as an officer of a registered dealer and is acting on behalf of the dealer, or

 

(b)          act as an adviser unless the person is registered as an adviser, or is registered as a representative, as a partner or as an officer of a registered adviser and is acting on behalf of the adviser.

 

Registration not required for designated employees

46(1)          The Executive Director may, for the purposes of this Part, designate as non-trading any employee or class of employees of a registered dealer that does not usually trade in securities, and an employee so designated or of a class so designated need not register as a salesperson.

 

46(2)          The Executive Director may, for the purposes of this Part, designate as non-advising any employee or class of employees of a registered adviser that does not usually act as an adviser, and an employee so designated or of a class so designated need not register as an adviser.

 

46(3)          The Executive Director may cancel a designation made under subsection (1) or (2) as to any employee or class of employees if the Executive Director is satisfied that any such employee or any member of such class of employees should be required to apply for registration as a salesperson or adviser, as the case may be.

 

Application

47(1)          An application for registration or renewal or reinstatement of registration or amendment to registration shall be made to the Executive Director in writing in the form prescribed by regulation and shall be accompanied by the fee prescribed by regulation.

 

47(2)          An applicant shall state in an application for registration an address for service in New Brunswick.

 

Granting registration

48(1)          The Executive Director shall grant registration, renewal or reinstatement of registration or amendment to registration to an applicant, as the case may be, unless

 

(a)          in the opinion of the Executive Director, the applicant is not suitable for registration, renewal or reinstatement of registration or amendment to registration,

 

(b)          in the opinion of the Executive Director, the proposed registration, renewal or reinstatement of registration or amendment to registration is objectionable, or

 

(c)          the applicant has not paid the fee prescribed by regulation.

 

48(2)          The Executive Director may, in granting a registration, a renewal or a reinstatement of registration or an amendment to registration, restrict the registration of the applicant by imposing terms and conditions on the registration and, without limiting the generality of the foregoing, may restrict

 

(a)          the duration of the registration, and

 

(b)          the registration to trades in certain securities or a certain class of securities.

 

48(3)          A registrant shall comply with the terms and conditions imposed on the registration by the Executive Director under subsection (2).

 

48(4)          The Executive Director shall not refuse to grant, renew, reinstate or amend a registration or impose terms and conditions on the registration without giving the applicant an opportunity to be heard.

 

Subsequent application

49                If a person has been refused registration, a further application for registration may only be made by the person if the person uses information not previously submitted or if material circumstances have changed since the person's previous application.

 

Further information

50                The Executive Director may require

 

(a)          that further information or material be submitted by an applicant or a registrant within a specified period of time,

 

(b)          that the authenticity, accuracy or completeness of information or material at any time submitted by an applicant or registrant be verified by affidavit, or

 

(c)          that the applicant or the registrant or any partner, officer, director, or trustee of, or any person performing a similar function for, the applicant or the registrant, or any employee of the applicant or the registrant, submit to an examination under oath by a person designated in writing by the Executive Director.

 

Surrender of registration

51                On the application of a registrant, the Executive Director may accept, subject to the regulations and such terms and conditions as the Executive Director considers appropriate, the voluntary surrender of the registration of the registrant, if the Executive Director is satisfied that the financial obligations of the registrant to the registrant's clients have been discharged and that the surrender of the registration would not be prejudicial to the public interest.

 

Suspension of registration

52                    Where the employment of a registrant is terminated or suspended, the registration of the registrant is immediately suspended until the Executive Director reinstates the registration.

 

Order suspending or cancelling registration

53(1)                    Subject to subsection (2), the Executive Director may, following a hearing, make an order suspending or cancelling the registration of a registrant if the Executive Director is of the opinion that the registrant has contravened or failed to comply with a term or condition imposed on the registration under subsection 48(2).

 

53(2)                    Where the Executive Director is of the opinion that the length of time required to hold a hearing under subsection (1) could be prejudicial to the public interest, the Executive Director may, without a hearing, make a temporary order under subsection (1) to have effect for not longer than 15 days after the date the temporary order is made, unless a hearing is commenced within the 15 days, in which case the Executive Director may extend the temporary order until the hearing is concluded.

 

53(3)          The Executive Director shall without delay give written notice of an order or temporary order made under this section to the registrant to whom the order or temporary order relates.

 

Standards of business conduct

54                A registrant shall

 

(a)          act fairly, honestly, in good faith and in the best interest of a client of the registrant,

 

(b)               exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances,

 

(c)          not engage in conduct that would bring the reputation of the capital market into disrepute,

 

(d)          take all reasonable steps to learn the essential facts about the identity, reputation and financial circumstances of each of the clients of the registrant and to keep current the registrant's knowledge of those essential facts, and

 

(e)               ensure that the recommendations made to a client of the registrant are appropriate to the general investment needs and objectives of the client and the client's risk tolerance level.

 

Exemption order

55(1)          The Commission may, subject to such terms and conditions as it considers appropriate, order that any trade, intended trade, security or person or class of trades, intended trades, securities or persons is not subject to section 45 if it is satisfied that to do so would not be prejudicial to the public interest.

 

55(2)          An order under subsection (1) may be made on the application of an interested person or on the Commission's own motion.

 

PART 5

TRADING IN SECURITIES GENERALLY

Confirmation of trade

56(1)          A registered dealer who has acted as principal or agent in connection with any trade in a security shall, within the period prescribed by regulation, send to the client a written confirmation of the transaction, setting forth

 

(a)          the quantity and description of the security,

 

(b)          the consideration,

 

(c)               whether or not the registered dealer is acting as principal or agent,

 

(d)          if acting as agent in a trade, the name of the person from or to or through whom the security was bought or sold,

 

(e)          the date and the name of the exchange, if any, on which the transaction took place,

 

(f)           the commission, if any, charged in respect of the trade, and

 

(g)          the name of the salesperson, if any, involved in the transaction.

 

56(2)                    Where a trade is made in a security of a mutual fund, the confirmation shall contain, in addition to the requirements of subsection (1),

 

(a)          the price per share or unit at which the trade was effected, and

 

(b)          the amount deducted by way of sales, service and other charges.

 

56(3)                    Subject to the regulations, where a trade is made in a security of a mutual fund under a contractual plan, the confirmation shall contain, in addition to the requirements of subsections (1) and (2),

 

(a)          in respect of an initial payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the initial payment and the portion of the sales, service and other charges that is allocated to subsequent investments in the mutual fund and the manner of its allocation,

 

(b)          in respect of each subsequent payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the portion of the sales, service and other charges that is allocated to the payment which is the subject of the confirmation,

 

(c)          in respect of an initial purchase made under a contractual plan which permits the deduction of sales, service and other charges from the first and subsequent instalments, a brief statement of the sales, service and other charges to be deducted from subsequent purchases, and

 

(d)          in respect of each purchase made under a contractual plan, a statement of the total number of shares or units of the mutual fund acquired and the amount of sales charges paid under the contractual plan up to the date the confirmation is sent.

 

56(4)          For the purposes of paragraphs (1)(d) and (g), a person or a salesperson may be identified in a written confirmation by means of a code or symbols if the written confirmation also contains a statement that the name of the person or salesperson will be provided to the client on request.

 

56(5)          A person who uses a code or symbols for identification in a confirmation under subsection (1) shall, on request by the Commission, without delay file the code or symbols and their meaning.

 

56(6)          A dealer who has acted as agent in connection with any trade in a security shall without delay disclose to the Commission, on request by the Commission, the name of the person from or to or through whom the security was bought or sold.

 

56(7)          A registered dealer need not send to a client of the registered dealer a written confirmation of a trade in a security of a mutual fund where the mutual fund manager of the mutual fund sends the client a written confirmation containing the information required to be sent under this section.

 

Calls to residences

57(1)          In this section, "residence" includes any building or part of a building in which the occupant resides permanently or temporarily or any appurtenant premises.

 

57(2)          No person shall, for the purpose of trading in any security or in any class of securities,

 

(a)          call at any residence, or

 

(b)               telephone from within New Brunswick to any residence within or outside New Brunswick.

 

57(3)                    Subsection (2) does not apply if

 

(a)          the person calls at or telephones the residence

 

(i)      of a close personal friend, a business associate or a client with whom or on whose behalf the person calling or telephoning has been in the habit of trading in securities, or

 

(ii)     of a person who has received a copy of a prospectus filed under this Act or the regulations and who has requested that information respecting a security offered in that prospectus be provided to that person by the person calling or telephoning if the person calling or telephoning refers only to the requested information respecting that security, or

 

(b)          the person is

 

(i)          making a trade in respect of which the person is exempted under the regulations from the requirement to be registered under this Act, or

 

(ii)          trading in a security in respect of which the person is exempted under the regulations from the requirement to be registered under this Act.

 

57(4)          For the purposes of this section, a person shall be deemed to have called at or telephoned a residence if an officer, director, salesperson or agent of the person calls at or telephones the residence on the person's behalf.

 

57(5)          The Commission may exempt from subsection (2) a person or class of persons trading in securities generally, a specific security or a class of securities.

 

Prohibited representations

58(1)          No person, with the intention of effecting a trade in a security, other than a security that carries an obligation of the issuer to redeem or purchase it or a right of the owner to require redemption or purchase of it, shall make any representation, orally or in writing, that the person or another person

 

(a)          will resell or repurchase the security, or

 

(b)          will refund all or any of the purchase price of the security.

 

58(2)          No person, with the intention of effecting a trade in a security, shall make any representation, orally or in writing, relating to the future value or price of the security that is not in accordance with the regulations.

 

58(3)          No person, with the intention of effecting a trade in a security, shall make any representation, orally or in writing, that the security will be listed on any exchange or quoted on any quotation and trade reporting system or that application has been or will be made to list the security on any exchange or quote the security on any quotation and trade reporting system unless

 

(a)               application has been made to list or quote the securities being traded, and securities of the same issuer are currently listed on any exchange or quoted on any quotation and trade reporting system,

 

(b)          the exchange or quotation and trade reporting system has granted approval to the listing or quoting of the securities, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation,

 

(c)          the written permission of the Executive Director has been obtained by the person, or

 

(d)          the representation is exempted under the regulations from the application of this subsection.

 

58(4)          No person, with the intention of effecting a trade in a security, shall make a statement, orally or in writing, that the person knows or ought reasonably to know is a misrepresentation.

 

Registered dealer acting as principal

59(1)                    Where a registered dealer, with the intention of effecting a trade in a security with any person other than another registered dealer, issues, publishes or sends a circular, pamphlet, advertisement, letter or other publication and proposes to act in the trade as a principal, the registered dealer shall so state in the circular, pamphlet, advertisement, letter or other publication or otherwise in writing before entering into a contract for the sale or purchase of the security and before accepting payment or receiving any security or other consideration under or in anticipation of the contract.

 

59(2)          A statement made in compliance with this section or paragraph 56(1)(c) that a registered dealer proposes to act or has acted as principal in connection with a trade in a security does not prevent that registered dealer from acting as agent in connection with a trade of the security.

 

59(3)          This section does not apply to a trade in respect of which a person is exempted under the regulations or in an order of the Commission from the requirement to be registered under this Act.

 

Disclosure of financial interest of registered advisers and dealers

60                    Subject to the regulations, a registered dealer or registered adviser shall cause to be printed in a conspicuous position on every circular, pamphlet, advertisement, letter and other publication issued, published or sent by the dealer or adviser, in which the dealer or adviser recommends that a specific security be purchased, sold or held, in type not less legible than that used in the body of the publication, a full and complete statement of any financial or other interest that the dealer or adviser, or any partner, director, officer or person who, if the dealer or adviser were a reporting issuer, would be an insider of the dealer or adviser or who, if the dealer or adviser is a reporting issuer, is an insider of the dealer or adviser, may have either directly or indirectly in any securities referred to in the publication or in the sale or purchase of the securities, including without limiting the generality of the foregoing,

 

(a)          any ownership, beneficial or otherwise, that any of them may have in respect of the securities or in any securities issued by the same issuer,

 

(b)          any option that any of them may have in respect of the securities, and the terms of the option,

 

(c)          any commission or other remuneration that any of them has received or may expect to receive from any person in connection with any trade in the securities,

 

(d)          any financial arrangement relating to the securities that any of them may have with any person, and

 

(e)          any financial arrangement that any of them may have with any underwriter or other person who has any interest in the securities.

 

Disclosure of underwriting liability

61                A registered dealer that recommends a purchase, sale, exchange or hold of a security in any circular, pamphlet, advertisement, letter or other publication issued, published or sent by the registered dealer and intended for general circulation shall, in type not less legible than that used in the body of the publication, disclose

 

(a)               whether the registered dealer or any of the registered dealer's officers or directors has at any time during the preceding 12 months assumed an underwriting liability with respect to the security or for consideration provided financial advice to the issuer of the security, and

 

(b)               whether the registered dealer or any of the registered dealer's officers or directors will receive any fees as a result of the recommended action.

 

Disclosure of investor relations activities

62(1)          An issuer, or an issuer's security holder, who knows that a person is engaged in investor relations activities on behalf of the issuer or a security holder of the issuer shall disclose the fact that the person is engaged in investor relations activities and on whose behalf the person is engaged in those activities to any person who inquires.

 

62(2)          A person engaged in investor relations activities, and an issuer or security holder of the issuer on whose behalf investor relations activities are undertaken, shall ensure that every document disseminated as part of the investor relations activities by the person engaged in those activities clearly and conspicuously discloses that the document is issued by or on behalf of the issuer or security holder.

 

Use of name of another registrant

63                No registrant shall use the name of another registrant on letterheads, forms, advertisements or signs, as correspondent or otherwise, unless the first registrant is a partner, officer or agent of, or is authorized to do so in writing by, the other registrant.

 

Representation of registration

64                No person shall represent that the person is registered under this Act unless

 

(a)          the representation is true,

 

(b)          in making the representation, the person specifies any terms and conditions that may apply to the person's registration,

 

(c)          in making the representation, the person specifies the person's category of registration under the regulations, and

 

(d)          in making the representation, the person provides to the person to whom the representation is made the information necessary to enable the person to whom the representation is made to contact the Commission to confirm the truth of the representation.

 

Representation respecting approval of Commission

65                No person shall make any representation, orally or in writing, that the Commission has in any way passed judgment on the financial standing, fitness or conduct of any registrant or on the merits of any security or issuer.

 

Margin contracts

66(1)                    Where a registered dealer has entered into a contract with a client to buy and carry on margin any securities of any issuer either in Canada or elsewhere and where the dealer or a partner, director, officer or employee of the dealer, while the contract is still in effect, sells or causes to be sold securities of the same issuer for any account in which the dealer or a partner or director of the dealer has a direct or indirect interest, if the effect of the sale would, otherwise than unintentionally, be to reduce the amount of securities in the hands of the dealer or under the dealer's control in the ordinary course of business below the amount of securities that the dealer should be carrying for all clients, the contract with the client is, at the option of the client, voidable and the client may recover from the dealer all money paid with interest or securities deposited in respect of the contract.

 

66(2)          The client may exercise an option under subsection (1) by sending a notice to that effect to the registered dealer.

 

Declaration as to short position

67                A person who places an order for the sale of a security through a registered dealer acting as the person's agent and who does not own the security, or if acting as agent, knows the principal does not own the security, shall, at the time of placing the order to sell, declare to the registered dealer that the person or the person's principal, as the case may be, does not own the security.

 

Submission of advertising and sales literature

68(1)          The Commission may, after giving a person who is a dealer, adviser, underwriter or issuer an opportunity to be heard, and on being satisfied that the

person's past conduct with respect to the use of advertising and sales literature affords reasonable grounds for the belief that it is necessary for the protection of the public to do so, order that the person shall file at least 7 days before it is used, copies of all advertising and sales literature which the person proposes to use in connection with trading in securities.

 

68(2)                    Where the Commission has made an order under subsection (1), the Executive Director may prohibit the use of the advertising and sales literature filed or may require that deletions or changes be made before its use.

 

Fraud and market manipulation

69                No person shall, directly or indirectly, engage or participate in any act, practice or course of conduct relating to securities or derivatives of securities that the person knows or reasonably ought to know

 

(a)               results in or contributes to a misleading appearance of trading activity in, or an artificial price for, a security or derivative of a security, or

 

(b)               perpetrates a fraud on any person.

 

Prospecting syndicate agreements

70(1)          The Executive Director may, if the Executive Director is of the opinion that it is not prejudicial to the public interest to do so, issue a receipt for a prospecting syndicate agreement filed with the Executive Director and is not required to determine whether the agreement is in conformity with paragraphs (2)(a), (b) and (c).

 

70(2)          On the issuance of a receipt for the prospecting syndicate agreement by the Executive Director, the liability of the members of the syndicate or parties to the agreement is limited to the extent provided by the terms of the agreement if

 

(a)          the sole purpose of the syndicate is the financing of prospecting expeditions, preliminary mining development, or the acquisition of mining properties, or any combination of these,

 

(b)          the agreement clearly sets out

 

(i)      the purpose of the syndicate,

 

(ii)     the particulars of any transaction effected or in contemplation involving the issue of units for a consideration other than cash,

 

(iii)   the maximum amount, not exceeding 25% of the sale price, that may be charged or taken by a person as commission on the sale of units in the syndicate,

 

(iv)    the maximum number of units in the syndicate, not exceeding 33 1¤3% of the total number of units of the syndicate, that may be issued in consideration of the transfer to the syndicate of mining properties,

 

(v)     the location of the principal office of the syndicate, that the principal office shall at all times be maintained in New Brunswick and that the Executive Director and the members of the syndicate shall be notified immediately of any change in the location of the principal office,

 

(vi)    that a person holding mining properties for the syndicate shall execute a declaration of trust in favour of the syndicate with respect to the mining properties,

 

(vii)   that after the sale for cash of any issued units of the syndicate no mining properties shall be acquired by the syndicate other than by staking unless the acquisition is approved by members of the syndicate holding at least 2¤3 of the issued units of the syndicate that have been sold for cash,

 

(viii)  that the administrative expenditures of the syndicate, including, in addition to any other items, salaries, office expenses, advertising and commissions paid by the syndicate with respect to the sale of its units, shall be limited to 1¤3 of the total amount received by the treasury of the syndicate from the sale of its units,

 

(ix)    that a statement of the receipts and disbursements of the syndicate shall be provided to the Executive Director and to each member annually,

 

(x)     that 90% of the vendor units of the syndicate shall be escrowed units and may be released with the consent of the Executive Director and that any release of the units shall not be in excess of one vendor unit for each unit of the syndicate sold for cash, and

 

(xi)    that no securities, other than those of the syndicate's own issue, and no mining properties owned by the syndicate or held in trust for the syndicate shall be disposed of unless the disposal is approved by members of the syndicate holding at least 2¤3 of the issued units of the syndicate other than escrowed units, and

 

(c)          the agreement limits the capital of the syndicate to a sum not exceeding the sum prescribed by regulation.

 

70(3)          On the issuance of a receipt by the Executive Director for a prospecting syndicate agreement, the requirements of the Partnerships and Business Names Registration Act as to filing do not apply to the prospecting syndicate.

 

70(4)          No registered dealer shall trade in a security issued by a prospecting syndicate either as agent for the prospecting syndicate or as principal.

 

70(5)          The Executive Director shall not refuse to issue a receipt under subsection (1) without giving the person who filed the prospecting syndicate agreement an opportunity to be heard.

 

PART 6

PROSPECTUS AND DISTRIBUTION

Filing of preliminary prospectus and prospectus required

71(1)                    Unless exempted under this Act or the regulations, no person shall trade in a security on the person's own account or on behalf of any other person where the trade would be a distribution of the security unless

 

(a)          a preliminary prospectus and a prospectus that are in the form prescribed by regulation have been filed with the Executive Director in relation to the security, and

 

(b)          the Executive Director has issued receipts for the preliminary prospectus and prospectus.

 

71(2)          A preliminary prospectus and a prospectus that are in the form prescribed by regulation may be filed with the Executive Director to enable the issuer to become a reporting issuer, notwithstanding the fact that no distribution is contemplated.

 

Form and content of preliminary prospectus

72(1)                    Subject to subsection (2), a preliminary prospectus shall substantially comply with the requirements of New Brunswick securities law respecting the form and content of a prospectus.

 

72(2)          A preliminary prospectus may exclude

 

(a)          the report or reports of the auditor or accountant required by the regulations, or

 

(b)               information with respect to the price of the securities to the underwriter, the offering price of any securities and other matters dependent on or relating to such prices.

 

Receipt for preliminary prospectus

73                On the filing of a preliminary prospectus under this Part, the Executive Director shall issue a receipt for the preliminary prospectus.

 

Contents of prospectus

74(1)          A prospectus shall provide full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed and shall comply with the requirements of New Brunswick securities law.

 

74(2)          A prospectus shall contain or be accompanied by such financial statements, reports or other documents as are required by this Act or the regulations.

 

74(3)                    Subject to any waiver or variation consented to in writing by the Executive Director, a prospectus shall contain such certificates as are required by the regulations.

 

74(4)          A prospectus shall contain a statement of the rights given to a purchaser of securities offered by the prospectus by sections 88 and 149.

 

Receipt for prospectus

75(1)                    Subject to subsection (2), the Executive Director shall issue a receipt for a prospectus filed under this Part unless the Executive Director is of the opinion that it is not in the public interest to do so.

 

75(2)          The Executive Director shall not issue a receipt for a prospectus in the following circumstances:

 

(a)          if in the opinion of the Executive Director

 

(i)      the prospectus or any document required to be filed with the prospectus

 

(A)     fails to comply in any substantial respect with any of the requirements of this Part or the regulations,

 

(B)     contains any statement, promise, estimate or forecast that is misleading, false or deceptive, or

 

(C)     contains a misrepresentation,

 

(ii)     an unconscionable consideration has been paid or given or is intended to be paid or given for promotional purposes or for the acquisition of property,

 

(iii)   the proceeds from the sale of the securities to which the prospectus relates that are to be paid into the treasury of the issuer, together with other resources of the issuer, are insufficient to accomplish the purpose of the issue stated in the prospectus,

 

(iv)          having regard to the financial condition of the issuer or an officer, director, promoter, or a person or combination of persons holding a sufficient number of the securities of the issuer to affect materially the control of the issuer, the issuer cannot reasonably be expected to be financially responsible in the conduct of its business,

 

(v)     the past conduct of the issuer or an officer, director, promoter, or a person or combination of persons holding a sufficient number of the securities of the issuer to affect materially the control of the issuer affords reasonable grounds for belief that the business of the issuer will not be conducted with integrity and in the best interests of its security holders,

 

(vi)    such escrow or pooling agreement as the Executive Director considers necessary or advisable with respect to securities has not been entered into,

 

(vii)   such agreement as the Executive Director considers necessary or advisable to accomplish the objects indicated in the prospectus for the holding in trust of the proceeds payable to the issuer from the sale of the securities pending the distribution of the securities has not been entered into,

 

(viii)  in the case of a prospectus filed by a finance company,

 

(A)     the plan of distribution of the securities offered is not acceptable,

 

(B)     the securities offered are not secured in such manner, on such terms and by such means as are required by the regulations, or

 

(C)     the finance company does not meet such financial and other requirements and conditions as are prescribed by regulation, or

 

(ix)    a person who has prepared or certified any part of the prospectus or is named as having prepared or certified a report or valuation used in or in connection with a prospectus is not acceptable for that purpose; or

 

(b)          in the circumstances prescribed by regulation.

 

75(3)          The Executive Director shall not refuse to issue a receipt under subsection (1) or (2) without giving the person who filed the prospectus an opportunity to be heard.

 

Amendment to preliminary prospectus

76(1)                    Where an adverse material change occurs with respect to an issuer after a receipt is issued for a preliminary prospectus but before the receipt is issued for the prospectus, the person proposing to make the distribution shall file with the Executive Director an amendment to the preliminary prospectus disclosing the change within 10 days after the change occurs.

 

76(2)          On the filing of an amendment to a preliminary prospectus, the Executive Director shall issue a receipt for the amendment to the preliminary prospectus.

 

76(3)          On the filing of an amendment to a preliminary prospectus, the person filing the amendment shall ensure that the amendment is sent to each recipient of the preliminary prospectus according to the record maintained under section 84.

 

Amendment to prospectus

77(1)                    Where a material change occurs with respect to an issuer after the receipt for a prospectus is issued but before the completion of the distribution under the prospectus, the person making the distribution

 

(a)          shall file with the Executive Director an amendment to the prospectus disclosing the change within 10 days after the change occurs, and

 

(b)               except with the written permission of the Executive Director, shall not proceed with the distribution until a receipt for the amendment to the prospectus is issued by the Executive Director.

 

77(2)                    Where securities in addition to securities previously disclosed in a prospectus or an amendment to the prospectus are to be distributed after the receipt for the prospectus has been issued but before the completion of the distribution under the prospectus, the person proposing to make the distribution of additional securities

 

(a)          shall file with the Executive Director an amendment to the prospectus disclosing the additional securities within 10 days after the decision to distribute the additional securities, and

 

(b)          shall not proceed with the distribution of the additional securities

 

(i)      for a period of 10 days after the amendment to the prospectus is filed, or

 

(ii)     until such time as a receipt for the amendment to the prospectus is issued by the Executive Director, if the Commission informs the person proposing to make the distribution in writing within 10 days after the filing of the amendment to the prospectus that the Commission objects to the distribution of the additional securities.

 

77(3)                    Subject to subsection (4) and on the filing of an amendment to a prospectus referred to in subsection (1) or (2), the Executive Director shall issue a receipt for the amendment to the prospectus unless in the opinion of the Executive Director it is not in the public interest to do so.

 

77(4)          The Executive Director shall not issue a receipt for an amendment to a prospectus filed under subsection (1) or (2) if the Executive Director is of the opinion that any of the circumstances referred to in subsection 75(2) exist.

 

77(5)          The Executive Director shall not refuse to issue a receipt under subsection (3) or (4) without giving the person who filed the amendment to the prospectus an opportunity to be heard.

 

Distribution of securities after lapse date

78(1)          In this section, "lapse date", where used in relation to a security that is being distributed under subsection 71(1) or this section, means the date that is 12 months after the date of the most recent prospectus relating to the security.

 

78(2)                    Subject to subsection (3), no person shall continue a distribution of a security after the lapse date, unless a new prospectus that complies with this Part and the regulations is filed under subsection 71(1) with the Executive Director in relation to the security and a receipt for the new prospectus is issued by the Executive Director.

 

78(3)          A distribution of a security may, subject to terms and conditions prescribed by regulation, be continued for 12 months after a lapse date.

 

78(4)          A purchaser of securities may, in the circumstances prescribed by regulation, cancel a trade made in reliance on subsection (3).

 

78(5)          On the application of an interested person or on the Commission's own motion, the Commission may extend, subject to such terms and conditions as it considers appropriate, the period within which a distribution may be continued after the lapse date.

 

78(6)                    Notwithstanding subsection 71(1), a person may file a new prospectus in accordance with subsection (2) with the Executive Director without having filed a preliminary prospectus and obtaining a receipt for the preliminary prospectus.

 

Other forms of prospectus

79(1)          A person may, if permitted by the regulations, file under section 71 a short form of preliminary prospectus and a short form of prospectus that are in the form prescribed by regulation.

 

79(2)          A form of preliminary prospectus and prospectus that are in accordance with the by-laws or other regulatory instruments or the practices or policies of an exchange may be filed under section 71 where the distribution under the prospectus takes place through the facilities of an exchange recognized by the Commission for the purposes of this subsection.

 

79(3)          A form of preliminary prospectus and prospectus that are in accordance with the laws of a jurisdiction recognized by the Commission for the purposes of this subsection may be filed under section 71.

 

79(4)          For the purposes of section 74, any prospectus referred to in subsection (1), (2) or (3) shall, on the issuance of a receipt for the prospectus by the Executive Director, be considered to provide sufficient disclosure of all material facts relating to the securities issued or proposed to be distributed under the prospectus.

 

Exemption order

80(1)          The Commission may, subject to such terms and conditions as it considers appropriate, order that any trade, intended trade, security or person or class of trades, intended trades, securities or persons is not subject to section 71 if it is satisfied that to do so would not be prejudicial to the public interest.

 

80(2)          An order under subsection (1) may be made on the application of an interested person or on the Commission's own motion.

 

80(3)          On the application of an interested person or on the Commission's own motion, the Commission may determine whether a distribution of any security has concluded or is currently in progress.

 

Orders to provide information regarding distribution

81(1)                    Where a person proposing to make a distribution of previously issued securities of an issuer is unable to obtain from the issuer information or material that is necessary for the purpose of complying with this Part or the regulations, the Executive Director may, subject to such terms and conditions as the Executive Director considers appropriate, order the issuer to provide to the person the information and material that the Executive Director considers necessary.

 

81(2)          The information and material supplied under subsection (1) may be used by the person to whom it is provided for the purpose of complying with this Part and the regulations.

 

81(3)                    Where a person proposing to make a distribution of previously issued securities of an issuer is unable to obtain any or all of the signatures to the certificates required by this Part and the regulations, or otherwise to comply with this Part or the regulations, the Executive Director may, subject to such terms and conditions as the Executive Director considers appropriate, make an order exempting the person from any of the provisions of this Part or the regulations, on being satisfied that

 

(a)          all reasonable efforts have been made to comply with this Part and the regulations, and

 

(b)          no person is likely to be prejudicially affected by the failure to comply.

 

Distribution of material during waiting period

82(1)          In this section, "waiting period" means the interval between the issuance by the Executive Director of a receipt for a preliminary prospectus relating to the offering of a security and the issuance by the Executive Director of a receipt for the prospectus.

 

82(2)                    Notwithstanding section 71, but subject to Part 5, it is permissible during the waiting period

 

(a)          to distribute a notice, circular, advertisement or letter to or otherwise communicate with any person, identifying the security proposed to be issued, stating the price of the security, if determined, stating the name and address of a person from whom purchases of the security may be made and stating such further information as may be permitted or required by the regulations, if every such notice, circular, advertisement, letter or other communication states the name and address of a person from whom a preliminary prospectus may be obtained,

 

(b)          to distribute a preliminary prospectus, and

 

(c)          to solicit expressions of interest from a prospective purchaser if, before such solicitation or without delay after the prospective purchaser indicates an interest in purchasing the security, a copy of the preliminary prospectus is sent to the prospective purchaser.

 

Distribution of preliminary prospectus

83                Any person acting under section 82 shall send a copy of the preliminary prospectus to each prospective purchaser who, without solicitation, indicates an interest in purchasing the security and requests a copy of the preliminary prospectus.

 

Distribution list

84                Any person acting under section 82 shall maintain a record of the names and addresses of all persons to whom the preliminary prospectus has been sent and shall make the record available to any person who is required to file an amendment to the preliminary prospectus under subsection 76(1).

 

Defective preliminary prospectus

85                    Where in the opinion of the Executive Director a preliminary prospectus does not substantially comply with the requirements of New Brunswick securities law as to the form and content of a prospectus, the Executive Director may, without giving notice, order that the trading permitted by subsection 82(2) in the security to which the preliminary prospectus relates shall cease until a revised preliminary prospectus satisfactory to the Executive Director is filed with the Executive Director and sent to each recipient of the defective preliminary prospectus according to the record maintained under section 84.

 

Material given on distribution

86                From the date of the issuance by the Executive Director of a receipt for a prospectus relating to a security, a person trading in the security in a distribution, either on the person's own account or on behalf of any other person, may distribute the prospectus, any document filed with or referred to in the prospectus and any notice, circular, advertisement or letter referred to in paragraph 82(2)(a) or prescribed by regulation, but shall not distribute any other printed or written material respecting the security that is prohibited by the regulations.

 

Order to cease trading

87(1)                    Subject to subsection (2), where the Commission is of the opinion, after the filing of a prospectus and the issuance of a receipt for the prospectus, that any of the circumstances referred to in subsection 75(2) exist, the Commission may, following a hearing, order that the distribution of the securities under the prospectus shall cease for the period specified in the order.

 

87(2)                    Where the Commission is of the opinion that the length of time required to hold a hearing under subsection (1) could be prejudicial to the public interest, the Commission may, without a hearing, make a temporary order under subsection (1) to have effect for not longer than 15 days after the date the temporary order is made, unless a hearing is commenced within the 15 days, in which case the Commission may extend the temporary order until the hearing is concluded.

 

87(3)          The Commission shall without delay give written notice of an order or temporary order made under this section to the issuer to whose security the prospectus relates.

 

Obligation to deliver prospectus

88(1)          A dealer, not acting as agent of the purchaser of a security, who receives an order or subscription for a security offered in a distribution to which subsection 71(1) applies shall, unless the dealer has previously done so, send to the purchaser the latest prospectus filed or required to be filed under this Act or the regulations in relation to the security and any amendment to the prospectus filed or required to be filed under this Act or the regulations

 

(a)               before entering into an agreement of purchase and sale resulting from the order or subscription, or

 

(b)          not later than midnight on the second business day after entering into the agreement.

 

88(2)          An agreement of purchase and sale referred to in subsection (1) is not binding on the purchaser if the dealer from whom the purchaser purchases the security receives written notice evidencing the intention of the purchaser not to be bound by the agreement of purchase and sale not later than midnight on the second business day after receipt by the purchaser of the latest prospectus and any amendment to the prospectus.

 

88(3)                    Subsection (2) does not apply if the purchaser is a registrant or if the purchaser sells or otherwise transfers beneficial ownership of the security referred to in subsection (2), otherwise than to secure indebtedness, before the expiration of the time referred to in subsection (2).

 

88(4)          A beneficial owner of the security who is not the purchaser under this section may exercise the same rights under subsection (2) as may be exercised by a purchaser.

 

88(5)          A purchaser referred to in subsection (2) who is not the beneficial owner of the security shall advise the person who is the beneficial owner of the security of the provisions of subsections (2) and (4).

 

88(6)                    Subsection (5) only applies if the purchaser knows the name and address of the beneficial owner of the security.

 

88(7)          For the purpose of this section, receipt of the latest prospectus and any amendment to the prospectus by a dealer who is acting as agent of or who after receipt commences to act as agent of the purchaser with respect to the purchase of a security referred to in subsection (1) shall be deemed to be receipt by the purchaser as of the date on which the agent received the latest prospectus and any amendment to the prospectus.

 

88(8)          For the purpose of this section, receipt of the notice referred to in subsection (2) by a dealer who acted as agent of the vendor with respect to the sale of the security referred to in subsection (1) shall be deemed to be receipt by the vendor as of the date on which the agent received the notice.

 

88(9)          For the purpose of this section, a dealer shall not be considered to be acting as agent of the purchaser unless the dealer is acting solely as agent of the purchaser with respect to the purchase and sale in question and has not received and has no agreement to receive compensation from or on behalf of the vendor with respect to the purchase and sale.

 

88(10)        The onus of proving that the time for giving notice under subsection (2) has expired is on the dealer from whom the purchaser has agreed to purchase the security.

 

PART 7

CONTINUOUS DISCLOSURE

Disclosure of material change

89(1)                    Subject to subsection (3), where a material change occurs with respect to a reporting issuer, the reporting issuer shall

 

(a)               without delay issue and file a news release prepared in accordance with the regulations, and

 

(b)               within the period prescribed by regulation, file a report of the material change prepared in accordance with the regulations.

 

89(2)                    Paragraph (1)(a) does not apply to a reporting issuer that without delay files the report required under paragraph (1)(b) marked so as to indicate that it is confidential, together with written reasons why a news release should not be issued and filed under paragraph (1)(a), if

 

(a)          the reporting issuer reasonably believes that the issuance and filing of a news release required by paragraph (1)(a) would be unduly detrimental to the interests of the reporting issuer, or

 

(b)          the material change consists of a decision to implement a change made by senior management of the reporting issuer who believe that confirmation of the decision by the board of directors is probable and senior management of the reporting issuer have no reason to believe that persons with knowledge of the material change have made use of that knowledge in purchasing or selling securities of the reporting issuer.

 

89(3)                    Where a report has been filed under subsection (2), the reporting issuer shall, if it believes the report should continue to remain confidential, advise the Commission in writing within 10 days after the date of filing of the report and every 10 days after that, until the material change is generally disclosed in the manner referred to in paragraph (1)(a) or, if the material change consists of a decision of the type referred to in paragraph (2)(b), until that decision has been rejected by the board of directors of the reporting issuer.

 

89(4)                    Notwithstanding subsections (2) and (3), the reporting issuer shall generally disclose the material change in the manner referred to in paragraph (1)(a) on the reporting issuer becoming aware, or having reasonable grounds to believe, that persons are purchasing or selling securities of the reporting issuer with knowledge of the material change that has not been generally disclosed.

 

89(5)                    Notwithstanding subsections (2) and (3), where the Commission is of the opinion that it is in the public interest that the material change be disclosed, the Commission, after giving the reporting issuer an opportunity to be heard, may order that the material change be generally disclosed in the manner specified in the order.

 

89(6)                    Where, in the opinion of the Commission, a news release will not receive the publicity necessary for the material change disclosed, the Commission may take, or may require the reporting issuer to take, any steps that the Commission considers expedient to ensure that the material change is sufficiently disclosed.

 

Interim financial statements and comparative financial statements

90(1)          Every reporting issuer that is not an investment fund and every investment fund shall, within the period prescribed by regulation, file interim financial statements and comparative financial statements prepared in accordance with the regulations.

 

90(2)          An interim financial statement or a comparative financial statement shall be accompanied by such documents as are required by the regulations.

 

Delivery of financial statements to security holders

91(1)          A reporting issuer that is not an investment fund or an investment fund that is required to file a financial statement under section 90 shall, in accordance with the regulations, send a copy of the financial statement to every holder of its securities whose last address, as shown on its books, is in New Brunswick.

 

91(2)                    Notwithstanding subsection (1), a reporting issuer that is not an investment fund or an investment fund is not required to send a copy of the financial statement to a security holder who holds its evidence of indebtedness only.

 

91(3)                    Where the laws of a reporting issuer's jurisdiction of incorporation, organization or continuance impose requirements substantially similar to the requirements under subsection (1), compliance with the requirements imposed by that jurisdiction shall be deemed to be compliance with the requirements under subsection (1).

 

Exemption order

92(1)          The Commission may, if in the opinion of the Commission to do so would not be prejudicial to the public interest, make an order, subject to such terms and conditions as the Commission considers appropriate, exempting, in whole or in part, a person or class of persons from a requirement of this Part or of the regulations relating to this Part if

 

(a)          the requirement conflicts with a requirement of the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued,

 

(b)          the reporting issuer ordinarily distributes financial information to holders of its securities in a form, or at times, different from those required by this Part, or

 

(c)          the Commission is otherwise satisfied in the circumstances of the particular case that there is adequate justification for doing so.

 

92(2)          An order under subsection (1) may be made on the application of an interested person or on the Commission's own motion.

 

Filing of information circular

93(1)                    Where the management of a reporting issuer is required to send an information circular under paragraph 101(1)(a), the reporting issuer shall without delay file a copy of the information circular certified in accordance with the regulations.

 

93(2)          In any case where subsection (1) is not applicable, the reporting issuer shall file each year, within the period prescribed by regulation, a report prepared and certified in accordance with the regulations.

 

Filing of documents filed in another jurisdiction

94                    Where the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued require the reporting issuer to file substantially the same information in that jurisdiction as is required by this Part, the reporting issuer may comply with the filing requirements of this Part by filing copies of any news release, report of a material change, information circular, financial statement or other document required to be filed by that jurisdiction provided that such releases, reports, circulars, statements or other documents are signed or certified in accordance with the regulations.

 

Order relieving reporting issuer

95                On the application of a reporting issuer, the Commission may order, subject to such terms and conditions as it considers appropriate, that the reporting issuer is deemed to have ceased to be a reporting issuer if the Commission is satisfied that to do so would not be prejudicial to the public interest.

 

Deeming an issuer to be a reporting issuer

96(1)          The Commission may make an order deeming an issuer to be a reporting issuer for the purposes of New Brunswick securities law

 

(a)          on the application of the issuer, if the Commission is of the opinion that it would not be prejudicial to the public interest, or

 

(b)          on the application of the Executive Director, if the Commission is of the opinion that it would be in the public interest.

 

96(2)          The Commission shall not make an order under paragraph (1)(b) without giving the issuer an opportunity to be heard.

 

Certificate regarding reporting issuer

97(1)          On the application of any person, the Commission may issue a certificate

 

(a)          that an issuer is not a reporting issuer, or

 

(b)          that a reporting issuer is not in default of any requirement under this Act or the regulations.

 

97(2)          A list of defaulting reporting issuers shall be maintained by the Commission and shall be made available for public inspection at the Commission offices during the normal business hours of the Commission.

 

97(3)                    Subject to subsection (4), a person may rely on a certificate issued under paragraph (1)(a) to determine that an issuer is not a reporting issuer and may rely on a certificate issued under paragraph (1)(b) or the list maintained under subsection (2) to determine that a reporting issuer is not in default of any requirement under this Act or the regulations.

 

97(4)          No person who knows or ought reasonably to know that a reporting issuer is in default of any requirement under this Act or the regulations may rely on a certificate issued under paragraph (1)(b) or the list maintained under subsection (2) to determine that the reporting issuer is not in default of any requirement under this Act or the regulations.

 

PART 8

PROXIES AND PROXY SOLICITATION

Definition of "solicitation"

98                In this Part, "solicitation"

 

(a)               includes

 

(i)      any request for a proxy whether or not accompanied by or included in a form of proxy,

 

(ii)     any request to execute or not to execute a form of proxy or to revoke a proxy,

 

(iii)   the sending or delivery of a form of proxy or other communication to a security holder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

 

(iv)    the sending of a form of proxy to a security holder under section 100,

 

(b)          but does not include

 

(i)      the sending or delivery of a form of proxy to a security holder in response to an unsolicited request made by the security holder or on the security holder's behalf, or

 

(ii)     the performance by any person of ministerial acts or professional services on behalf of a person soliciting a proxy.

 

Conflict

99                If a conflict exists between a provision of this Part that applies to a reporting issuer or any regulation relating to this Part that applies to a reporting issuer and a provision under the Business Corporations Act or any regulation under that Act, the provision of this Part or the regulation relating to this Part prevails.

 

Mandatory solicitation of proxies

100                    Where the management of a reporting issuer gives or intends to give to holders of its voting securities notice of a meeting, the management shall, concurrently with or before giving the notice, send to each security holder whose last address as shown on the books of the reporting issuer is in New Brunswick and who is entitled to notice of the meeting a form of proxy that complies with the regulations for use at the meeting.

 

Information circular

101(1)        No person shall solicit proxies from holders of its voting securities whose last address as shown on the books of the reporting issuer is in New Brunswick unless,

 

(a)          in the case of a solicitation by or on behalf of the management of a reporting issuer, an information circular prepared in accordance with the regulations, either as an appendix to or as a separate document accompanying the notice of the meeting, is sent to each such security holder of the reporting issuer whose proxy is solicited, or

 

(b)          in the case of any other solicitation, the person making the solicitation, concurrently with or before the solicitation, sends an information circular prepared in accordance with the regulations to each such security holder whose proxy is solicited.

 

101(2)                    Subsection (1) does not apply to

 

(a)          any solicitation, otherwise than by or on behalf of the management of a reporting issuer, where the total number of security holders whose proxies are solicited is not more than 15,

 

(b)          any solicitation by a person made under section 103,

 

(c)          any solicitation by a person in respect of securities of which the person is the beneficial owner, or

 

(d)          any other solicitation prescribed by regulation.

 

101(3)        For the purposes of paragraph (2)(a), 2 or more persons who are the joint registered owners of one or more securities are to be considered one security holder.

 

Voting

102             The chair at a meeting has the right not to conduct a vote by way of ballot on any matter or group of matters in connection with which the form of proxy has provided a means by which the person whose proxy is solicited may specify how the person wishes the securities registered in the person's name to be voted unless

 

(a)          a poll is demanded by any security holder present at the meeting in person or represented at the meeting by proxy, or

 

(b)          more than 5% of all the voting rights attached to all the securities that are entitled to be voted and be represented at the meeting are represented by proxies required to vote against what would otherwise be the decision of the meeting in relation to such matters or group of matters.

 

Voting securities registered in name of registrant or custodian

103(1)        In this section, "custodian" means a custodian of securities issued by a mutual fund held for the benefit of plan holders under a custodial agreement or other arrangement.

 

103(2)                    Subject to subsection (6), voting securities of an issuer that are registered in the name of a registrant or in the name of the registrant's nominee, or if the issuer is a mutual fund that is a reporting issuer, in the name of a custodian or in the name of the custodian's nominee, and that are not beneficially owned by the registrant or the custodian, as the case may be, shall not be voted by the registrant or custodian or by the registrant's nominee or custodian's nominee at any meeting of security holders of the issuer.

 

103(3)        On receipt of a copy of a notice of a meeting of security holders of an issuer, the registrant or custodian shall, where the name and address of the beneficial owner of securities registered in the name of the registrant or custodian are known, send to each beneficial owner of the securities so registered at the record date for notice of the meeting a copy of that notice and any other notice, financial statement, information circular or other material relating to the securities that is received by the registrant or custodian.

 

103(4)        A registrant or custodian is not required to send the material under subsection (3) unless the issuer or the beneficial owner of the securities has agreed to pay the reasonable costs to be incurred by the registrant or custodian in so doing.

 

103(5)        At the request of a registrant or custodian, the issuer of the securities shall without delay send to the registrant or custodian, at the expense of the issuer, the requisite number of copies of the material referred to in subsection (3).

 

103(6)        A registrant or custodian shall vote or give a proxy requiring a nominee to vote any voting securities referred to in subsection (2) in accordance with any written voting instructions received from the beneficial owner.

 

103(7)        A registrant or custodian shall, if requested in writing by a beneficial owner, give to the beneficial owner or the beneficial owner's nominee a proxy enabling the beneficial owner or the nominee to vote any voting securities referred to in subsection (2).

 

Compliance with laws of another jurisdiction

104                    Where a reporting issuer is complying with the requirements of the laws of the jurisdiction in which it is incorporated, organized or continued and the requirements are substantially similar to the requirements of this Part, compliance with the requirements imposed by that jurisdiction shall be deemed to be compliance with the requirements of this Part.

 

Exemption order

105(1)        The Commission may make an order, subject to such terms and conditions as it considers appropriate, exempting, in whole or in part, a person or class of persons from a requirement of this Part or of the regulations relating to this Part if

 

(a)          the requirement conflicts with a requirement of the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued, or

 

(b)          the Commission is of the opinion that to do so would not be prejudicial to the public interest.

 

105(2)        An order under subsection (1) may be made on the application of an interested person or on the Commission's own motion.

 

PART 9

TAKE-OVER BIDS AND ISSUER BIDS

Definitions and interpretation

106(1)        The following definitions apply in this Part.

 

"equity security" means any security of an issuer that carries a residual right to participate in the earnings of the issuer and, on the liquidation or winding up of the issuer, in its assets. (valeur mobilière participante)

 

"formal bid" means

 

(a)          a take-over bid or an issuer bid to which section 120 applies, or

 

(b)          a take-over bid that is exempted from sections 120 to 125 or an issuer bid that is exempted from sections 120 to 123 and section 125

 

(i)      by reason of an exemption under paragraph 112(1)(a) or 113(e), if the offeror is required to deliver a disclosure document of the type contemplated by subsection 153(10) to every holder of securities subject to the bid whose last address as shown on the books of the offeree issuer is in New Brunswick, or

 

(ii)     by reason of an exemption under paragraph 112(1)(e) or 113(h), if the offeror is required to deliver disclosure material relating to the bid to holders of the class of securities subject to the bid. (offre formelle)

 

"interested person", in sections 129 and 130, means

 

(a)          an offeree issuer,

 

(b)          a security holder, director or officer of an offeree issuer,

 

(c)          an offeror,

 

(d)          the Executive Director, and

 

(e)          any person not referred to in paragraphs (a) to (d) who, in the opinion of the Commission or the Court of Queen's Bench, as the case may be, is a proper person to make an application under section 129 or 130, as the case may be. (personne intéressée)

 

"issuer bid" means an offer to acquire or redeem securities of an issuer made by the issuer to any person who is in New Brunswick or to any security holder of the issuer whose last address as shown on the books of the issuer is in New Brunswick and includes a purchase, redemption or other acquisition of securities of the issuer by the issuer from any such person, but does not include an offer to acquire or redeem debt securities that are not convertible into securities other than debt securities. (offre de l'émetteur)

 

"offer to acquire" includes

 

(a)          an offer to purchase, or a solicitation of an offer to sell, securities,

 

(b)          an acceptance of an offer to sell securities, whether or not such offer to sell has been solicited, and

 

(c)          any combination of the actions referred to in paragraphs (a) and (b). (offre d'acquisition)

 

"offeree issuer" means an issuer whose securities are the subject of a take-over bid, an issuer bid or an offer to acquire. (émetteur pollicité)

 

"offeror" means a person who makes a take-over bid, an issuer bid or an offer to acquire and, for the purposes of section 126, includes a person who acquires a security, whether or not by way of a take-over bid, issuer bid or offer to acquire. (pollicitant)

 

"offeror's securities" means securities of an offeree issuer beneficially owned, or over which control or direction is exercised, on the date of an offer to acquire, by an offeror or any person acting jointly or in concert with the offeror. (valeurs mobilières du pollicitant)

 

"published market", as to any class of securities, means any market on which such securities are traded if the prices at which they have been traded on that market are regularly published in a newspaper or business or financial publication of general and regular paid circulation. (marché officiel)

 

"take-over bid" means an offer to acquire outstanding voting or equity securities of a class made to any person who is in New Brunswick or to any security holder of the offeree issuer whose last address as shown on the books of the offeree issuer is in New Brunswick, where the securities subject to the offer to acquire, together with the offeror's securities, constitute in the aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire. (offre d'achat visant à la mainmise)

 

106(2)        For the purposes of this Part, a person accepting an offer to sell shall be deemed to be making an offer to acquire to the person who made the offer to sell.

 

Computation of time and expiry of bid

107             For the purposes of this Part,

 

(a)          a period of days shall be computed as beginning on the day next following the event which began the period and ending at midnight on the last day of the period, except that if the last day of the period does not fall on a business day, the period terminates at midnight on the next business day, and

 

(b)          a take-over bid or an issuer bid expires at the later of

 

(i)      the end of the period, including any extension, during which securities may be deposited pursuant to the bid, and

 

(ii)     the time at which the offeror becomes obligated by the terms of the bid to take up or reject securities deposited pursuant to the bid.

 

Convertible securities

108             For the purposes of this Part,

 

(a)          a security shall be deemed to be convertible into a security of another class if, whether or not on conditions, it is or may be convertible into or exchangeable for, or if it carries the right or obligation to acquire, a security of the other class, whether of the same or another issuer, and

 

(b)          a security that is convertible into a security of another class shall be deemed to be convertible into a security or securities of each class into which the second-mentioned security may be converted, either directly or through securities of one or more other classes of securities that are themselves convertible.

 

Deemed beneficial ownership

109(1)        For the purposes of this Part, in determining the beneficial ownership of securities of an offeror or of any person acting jointly or in concert with the offeror, at any given date, the offeror or the person shall be deemed to have acquired and be the beneficial owner of a security, including an unissued security, if the offeror or the person

 

(a)          is the beneficial owner of any security convertible into the security within 60 days following such date, or

 

(b)          has the right or obligation, whether or not on conditions, to acquire within 60 days following such date beneficial ownership of the security, whether through the exercise of an option, warrant, right or subscription privilege or otherwise.

 

109(2)                    Where 2 or more offerors acting jointly or in concert make one or more offers to acquire securities of a class, the securities subject to any such offer or offers to acquire shall be deemed to be securities subject to the offer to acquire of each such offeror for the purpose of determining whether any such offeror is making a take-over bid.

 

109(3)                    Where an offeror or any person acting jointly or in concert with the offeror is deemed by reason of subsection (1) to be the beneficial owner of unissued securities, the securities shall be deemed to be outstanding for the purpose of calculating the number of outstanding securities of that class in respect of that offeror's offer to acquire.

 

Acting jointly or in concert

110(1)        For the purposes of this Part, it is a question of fact as to whether a person is acting jointly or in concert with an offeror and, without limiting the generality of the foregoing, the following shall be presumed to be acting jointly or in concert with an offeror:

 

(a)          every person who, as a result of any agreement, commitment or understanding, whether formal or informal, with the offeror or with any other person acting jointly or in concert with the offeror, acquires or offers to acquire securities of the issuer of the same class as those subject to the offer to acquire;

 

(b)          every person who, as a result of any agreement, commitment or understanding, whether formal or informal, with the offeror or with any other person acting jointly or in concert with the offeror, intends to exercise jointly or in concert with the offeror or with any other person acting jointly or in concert with the offeror any voting rights attaching to any securities of the offeree issuer; and

 

(c)          every associate or affiliate of the offeror.

 

110(2)                    Notwithstanding subsection (1), a registered dealer acting solely in an agency capacity for the offeror in connection with a take-over bid or an issuer bid and not executing principal transactions for the registered dealer's own account in the class of securities subject to the offer to acquire or performing services beyond customary dealer's functions shall not be presumed solely by reason of such agency relationship to be acting jointly or in concert with the offeror in connection with the bid.

 

Application to direct and indirect offers

111             For the purposes of this Part, a reference to an offer to acquire or to the acquisition or ownership of securities or to control or direction over securities shall be construed to include a direct or indirect offer to acquire or the direct or indirect acquisition or ownership of securities, or the direct or indirect control or direction over securities, as the case may be.

 

Exempt take-over bids

112(1)                    Subject to the regulations, a take-over bid is exempt from sections 120 to 125 if

 

(a)          the bid is made through the facilities of an exchange recognized by the Commission for the purposes of this paragraph,

 

(b)          all of the following conditions apply:

 

(i)      the bid is for not more than 5% of the outstanding securities of a class of securities of the issuer;

 

(ii)     the aggregate number of securities acquired by the offeror and any person acting jointly or in concert with the offeror within any period of 12 months in reliance on the exemption provided by this paragraph does not, when aggregated with acquisitions otherwise made by the offeror and any person acting jointly or in concert with the offeror within the same 12-month period, constitute in excess of 5% of the outstanding securities of that class of the issuer at the beginning of the 12-month period; and

 

(iii)   if there is a published market for the securities acquired, the value of the consideration paid for any of the securities acquired is not in excess of the market price at the date of acquisition, determined in accordance with the regulations, plus reasonable brokerage fees or commissions actually paid,

 

(c)          all of the following conditions apply:

 

(i)          purchases are made from not more than 5 persons in the aggregate, including persons outside of New Brunswick;

 

(ii)     the bid is not made generally to security holders of the class of securities that is the subject of the bid; and

 

(iii)   the value of the consideration paid for any of the securities, including brokerage fees or commissions, does not exceed 115% of the market price of securities of that class at the date of the bid, determined in accordance with the regulations,

 

(d)          all of the following conditions apply:

 

(i)      the offeree issuer is not a reporting issuer;

 

(ii)     there is not a published market in respect of the securities that are the subject of the bid; and

 

(iii)   the number of holders of securities of that class is not more than 50, exclusive of holders who are in the employment of the offeree issuer or an affiliate of the offeree issuer, and exclusive of holders who were formerly in the employment of the offeree issuer or an affiliate of the offeree issuer and who while in that employment were, and have continued after that employment to be, security holders of the offeree issuer,

 

(e)          all of the following conditions apply:

 

(i)      the number of holders of securities of the class subject to the bid whose last address as shown on the books of the offeree issuer is in New Brunswick is fewer than 50;

 

(ii)     the securities held by such holders constitute, in the aggregate, less than 2% of the outstanding securities of that class;

 

(iii)   the bid is made in compliance with the laws of a jurisdiction that is recognized by the Commission for the purposes of this subparagraph; and

 

(iv)    all material relating to the bid that is sent by the offeror to holders of securities of the class that is subject to the bid is concurrently filed and is concurrently sent to all holders of such securities whose last address as shown on the books of the offeree issuer is in New Brunswick, or

 

(f)           the bid is exempted by the regulations.

 

112(2)        For the purposes of paragraph (1)(c), where an offeror makes an offer to acquire securities from a person and the offeror knows or ought to know after reasonable inquiry that

 

(a)          one or more other persons on whose behalf that person is acting as nominee, agent, trustee, executor, administrator or other legal representative has a direct beneficial interest in those securities, then each of such others shall be included in the determination of the number of persons to whom the offer to acquire has been made, but, if an inter vivos trust has been established by a single settlor or if an estate has not vested in all persons beneficially entitled to it, the trust or estate shall be considered a single security holder in such determination, or

 

(b)          the person acquired the securities in order that the offeror might make use of the exemption provided by paragraph (1)(c), then each person from whom those securities were acquired shall be included in the determination of the number of persons to whom the offer to acquire has been made.

 

Exempt issuer bids

113                    Subject to the regulations, an issuer bid is exempt from sections 120 to 123 and section 125 if

 

(a)          the securities are purchased, redeemed or otherwise acquired in accordance with terms and conditions attaching to them that permit the purchase, redemption or acquisition of the securities by the issuer without the prior agreement of the owners of the securities, or if the securities are acquired to meet sinking fund or purchase fund requirements,

 

(b)          the purchase, redemption or other acquisition is required by the instrument creating or governing the class of securities or by the laws of the jurisdiction in which the issuer was incorporated, organized or continued,

 

(c)          the securities carry with them or are accompanied by a right of the owner of the securities to require the issuer to redeem or repurchase the securities and the securities are acquired pursuant to the exercise of the right,

 

(d)          the securities are acquired from a current or former employee of the issuer or of an affiliate of the issuer, and if there is a published market in respect of the securities,

 

(i)      the value of the consideration paid for any of the securities acquired does not exceed the market price of the securities at the date of the acquisition, determined in accordance with the regulations, and

 

(ii)     the aggregate number or, in the case of convertible debt securities, the aggregate principal amount of securities acquired by the issuer within a period of 12 months in reliance on the exemption provided by this paragraph does not exceed 5% of the securities of that class issued and outstanding at the beginning the period,

 

(e)          the bid is made through the facilities of an exchange recognized by the Commission for the purposes of this paragraph,

 

(f)               following the publication of a notice of intention in the form and manner prescribed by regulation, the issuer purchases securities in the normal course in the open market, including through the facilities of an exchange, if the aggregate number, or, in the case of convertible debt securities, the aggregate principal amount, of securities acquired by the issuer within a period of 12 months in reliance on the exemption provided by this paragraph does not exceed 5% of the securities of that class issued and outstanding at the beginning of the period,

 

(g)          all of the following conditions apply:

 

(i)      the issuer is not a reporting issuer;

 

(ii)     there is not a published market in respect of the securities that are the subject of the bid; and

 

(iii)   the number of holders of securities of the issuer is not more than 50, exclusive of holders who are in the employment of the issuer or an affiliate of the issuer, and exclusive of holders who were formerly in the employment of the issuer or an affiliate of the issuer and who while in that employment were, and have continued after the employment to be, security holders of the issuer,

 

(h)          all of the following conditions apply:

 

(i)      the number of holders of securities of the class subject to the bid whose last address as shown on the books of the issuer is in New Brunswick is fewer than 50;

 

(ii)     the securities held by such holders constitute, in the aggregate, less than 2% of the outstanding securities of that class;

 

(iii)   the bid is made in compliance with the laws of a jurisdiction that is recognized by the Commission for the purposes of this subparagraph; and

 

(iv)    all material relating to the bid that is sent by the offeror to holders of securities of the class that is subject to the bid is concurrently filed and is concurrently sent to all holders of such securities whose last address as shown on the books of the issuer is in New Brunswick, or

 

(i)           the bid is exempted by the regulations.

 

Exchange requirements

114             A bid that is made in reliance on any exemption in section 112 or 113 through the facilities of an exchange shall be made in accordance with the by-laws and other regulatory instruments and the practices and policies of the exchange.

 

Definition of "offeror"

115             In sections 116 to 119, "offeror" means

 

(a)          an offeror making a formal bid other than a bid referred to in paragraph 112(1)(e) or 113(h),

 

(b)          a person acting jointly or in concert with an offeror referred to in paragraph (a), or

 

(c)          a control person of an offeror referred to in paragraph (a) or an associate or affiliate of such control person.

 

Restrictions on acquisitions during take-over bids

116(1)        An offeror shall not offer to acquire or make, or enter into any agreement, commitment or understanding to acquire beneficial ownership of any securities of the class that are subject to a take-over bid, otherwise than pursuant to the bid, on and from the day of the announcement of the offeror's intention to make the bid until its expiry.

 

116(2)                    Notwithstanding subsection (1), an offeror making a take-over bid may purchase, through the facilities of an exchange recognized by the Commission for the purposes of paragraph 112(1)(a), securities of the class that are subject to the bid and securities convertible into securities of that class beginning on the third business day following the date of the bid until the expiry of the bid, if

 

(a)          the intention to make such purchases is stated in the take-over bid circular,

 

(b)          the aggregate number of securities acquired under this subsection does not constitute in excess of 5% of the outstanding securities of that class at the date of the bid, and

 

(c)          on each day on which securities have been purchased under this subsection, the offeror issues and files a news release without delay after the close of business of the exchange disclosing the information prescribed by regulation.

 

Restrictions on acquisitions during issuer bids

117             An offeror making an issuer bid shall not offer to acquire, or make or enter into any agreement, commitment or understanding to acquire, beneficial ownership of any securities of the class that are subject to the bid, otherwise than pursuant to the bid, on and from the day of the announcement of the offeror's intention to make the bid until the bid's expiry, but this section does not apply so as to prevent the offeror from purchasing, redeeming or otherwise acquiring any such securities during such period in reliance on an exemption under paragraph 113(a), (b) or (c).

 

Restrictions on pre-bid and post-bid acquisitions

118(1)                    Where a take-over bid that is a formal bid is made by an offeror and, within the period of 90 days immediately preceding the bid, the offeror acquired beneficial ownership of securities of the class subject to the bid pursuant to a transaction not generally available on identical terms to holders of that class of securities,

 

(a)          the offeror shall offer consideration for securities deposited pursuant to the bid at least equal to the highest consideration that was paid on a per security basis under any of such prior transactions or the offeror shall offer at least the cash equivalent of such consideration, and

 

(b)          the offeror shall offer to acquire pursuant to the bid that percentage of securities of the class subject to the bid that is at least equal to the highest percentage that the number of securities acquired from a seller in such a prior transaction was of the total number of securities of that class beneficially owned by such seller at the time of the prior transaction.

 

118(2)        An offeror shall not acquire beneficial ownership of securities of the class that was subject to a take-over bid or issuer bid by way of a transaction that is not generally available on identical terms to holders of that class of securities during the period beginning with the expiry of the bid and ending at the end of the twentieth business day after that, whether or not any securities are taken up pursuant to the bid.

 

118(3)                    Subsections (1) and (2) do not apply to trades effected in the normal course on a published market, so long as,

 

(a)          any dealer acting for the purchaser or seller does not perform services beyond the customary dealer's function and does not receive more than reasonable fees or commissions,

 

(b)          the purchaser or any person acting for the purchaser does not solicit or arrange for the solicitation of offers to sell securities of the class subject to the bid, and

 

(c)          the seller or any person acting for the seller does not solicit or arrange for the solicitation of offers to buy securities of the class subject to the bid.

 

Sales during bid prohibited

119(1)        An offeror shall not, except pursuant to a take-over bid or issuer bid, sell or make or enter into any agreement, commitment or understanding to sell any securities of the class subject to the bid on and from the day of the announcement of the offeror's intention to make the bid until its expiry.

 

119(2)                    Notwithstanding subsection (1), an offeror may, before the expiry of a bid, make or enter into an arrangement, commitment or understanding to sell securities that may be taken up after the expiry of the bid by the offeror pursuant to the bid if the intention to sell is disclosed in the take-over bid circular or issuer bid circular, as the case may be.

 

General provisions

120                    Subject to the regulations, the following requirements apply to every take-over bid and issuer bid:

 

(a)               Delivery of bid - The bid shall be made by the offeror to all holders of securities of the class that is subject to the bid who are in New Brunswick, and delivered by the offeror to all holders of securities of that class and of securities that, before the expiry of the bid, are convertible into securities of that class whose last address as shown on the books of the offeree issuer is in New Brunswick.

 

(b)               Minimum deposit period - The offeror shall allow securities to be deposited pursuant to the bid for at least the period prescribed by regulation.

 

(c)          When taking up prohibited - No securities deposited pursuant to the bid shall be taken up by the offeror until the expiration of the period prescribed by regulation.

 

(d)               Withdrawal - Securities deposited pursuant to the bid may be withdrawn by or on behalf of a depositing security holder

 

(i)      at any time, if the securities have not been taken up by the offeror,

 

(ii)     at any time before the expiration of the period prescribed by regulation from the date of a notice of change or variation under section 123, and

 

(iii)   if the securities have not been paid for by the offeror within 3 business days after having been taken up.

 

(e)               Exception - The right of withdrawal conferred by subparagraph (d)(ii) does not apply

 

(i)      if the securities have been taken up by the offeror at the date of the notice,

 

(ii)     if a variation in the terms of a bid consists solely of an increase in the consideration offered for the securities subject to the bid and the time for deposit is not extended for a period greater than that required by subsection 123(5), or

 

(iii)   in the circumstances described in subsection 123(6).

 

(f)               Notice of withdrawal - Notice of withdrawal of any securities under paragraph (d) shall be made by or on behalf of the depositing security holder by a method that provides the depositary designated under the bid with a written or printed copy and, to be effective, the notice must be actually received by the depositary and, if notice is given in accordance with this paragraph, the offeror shall return the securities to the depositing security holder.

 

(g)               Proportionate take up - Where the bid is made for less than all of the class of securities subject to the bid and where a greater number of securities is deposited pursuant to the bid than the offeror is bound or willing to acquire pursuant to the bid, the securities shall be taken up and paid for by the offeror proportionately, disregarding fractions, according to the number of securities deposited by each depositing security holder.

 

(h)          Effect of market purchases - Where an offeror purchases securities as permitted by subsection 116(2), the securities so purchased shall be counted in the determination of whether a condition as to the minimum number of securities to be deposited in the bid has been fulfilled, but shall not reduce the number of securities the offeror is bound under the bid to take up.

 

(i)           When securities must be taken up and paid for - Subject to paragraphs (j) and (k), the offeror shall take up and pay for securities deposited pursuant to the bid, if all the terms and conditions of the bid have been complied with or waived, within the period prescribed by regulation after the expiry of the bid.

 

(j)           Idem - Any securities that are taken up by the offeror pursuant to the bid shall be paid for by the offeror within 3 business days after the taking up of the securities.

 

(k)          Idem - Any securities deposited pursuant to the bid subsequent to the date on which the offeror first takes up securities deposited pursuant to the bid shall be taken up and paid for by the offeror within 10 days after the deposit of the securities.

 

(l)               Extension restricted - A bid may not be extended by the offeror, if all the terms and conditions of the bid have been complied with except those waived by the offeror, unless the offeror first takes up all securities deposited pursuant to the bid and not withdrawn.

 

(m)         Idem - Notwithstanding paragraph (l), if the offeror waives any terms or conditions of a bid and extends the bid in circumstances where the rights of withdrawal conferred by subparagraph (d)(ii) are applicable, the bid shall be extended without the offeror first taking up the securities which are subject to those rights of withdrawal.

 

(n)          News release - Where all the terms and conditions of the bid have been complied with or waived, the offeror shall without delay issue a notice by news release to that effect, which news release shall disclose the approximate number of securities deposited and the approximate number that will be taken up.

 

Financing of bid

121                    Where a take-over bid or issuer bid provides that the consideration for the securities deposited pursuant to the bid is to be paid in cash or partly in cash, the offeror shall make adequate arrangements before the bid to ensure that the required funds are available to effect payment in full for all securities that the offeror has offered to acquire.

 

Consideration

122(1)                    Subject to the regulations, where a take-over bid or issuer bid is made, all holders of the same class of securities shall be offered identical consideration.

 

122(2)        If an offeror makes or intends to make a take-over bid or issuer bid, neither the offeror nor any person acting jointly or in concert with the offeror shall enter into any collateral agreement, commitment or understanding with any holder or beneficial owner of securities of the offeree issuer that has the effect of providing to the holder or owner a consideration of greater value than that offered to the other holders of the same class of securities.

 

122(3)                    Where a variation in the terms of a take-over bid or issuer bid before the expiry of the bid increases the value of the consideration offered for the securities subject to the bid, the offeror shall pay such increased consideration to each person whose securities are taken up pursuant to the bid, whether or not such securities were taken up by the offeror before the variation.

 

Offeror's circular

123(1)        An offeror shall deliver, with or as part of a take-over bid or issuer bid, a take-over bid circular or issuer bid circular, as the case may be.

 

123(2)                    Where, before the expiry of a take-over bid or issuer bid or after the expiry of the bid but before the expiry of all rights to withdraw the relevant securities, a change has occurred in the information contained in a take-over bid circular or issuer bid circular or in any notice of change or notice of variation that would reasonably be expected to affect the decision of the holders of the securities of the offeree issuer to accept or reject the bid, a notice of the change shall be delivered to every person to whom the circular was required to be delivered and whose securities were not taken up at the date of the occurrence of the change.

 

123(3)                    Subsection (2) does not apply to a change that is not within the control of the offeror or of an affiliate of the offeror unless it is a change in a material fact relating to the securities being offered in exchange for securities of the offeree issuer.

 

123(4)                    Where there is a variation in the terms of a take-over bid or issuer bid, including any extension of the period during which securities may be deposited pursuant to the bid and whether or not the variation results from the exercise of any right contained in the bid, a notice of the variation shall be delivered to every person to whom the take-over bid circular or issuer bid circular was required to be delivered and whose securities were not taken up at the date of the variation.

 

123(5)                    Where there is a variation in the terms of a take-over bid or issuer bid, the period during which securities may be deposited pursuant to the bid shall not expire before 10 days after the notice of variation has been delivered.

 

123(6)                    Subsection (5) does not apply to a variation in the terms of a bid consisting solely of the waiver of a condition in the bid where the consideration offered for the securities that are subject to the bid consists solely of cash.

 

123(7)        A take-over bid circular, issuer bid circular, notice of change and notice of variation shall be in the form prescribed by regulation and shall contain the information required by this Part and the regulations.

 

Directors' circular

124(1)                    Where a take-over bid has been made, a directors' circular shall be prepared and delivered by the board of directors of an offeree issuer to every person to whom a take-over bid must be delivered under paragraph 120(a) not later than 15 days after the date of the bid.

 

124(2)        The board of directors shall include in a directors' circular either

 

(a)          a recommendation to accept or to reject a take-over bid and the reasons for their recommendation, or

 

(b)          a statement that they are unable to make or are not making a recommendation and the reasons that they are unable to make or are not making a recommendation.

 

124(3)        An individual director or officer may recommend acceptance or rejection of a take-over bid if the director or officer delivers with the recommendation a circular prepared in accordance with the regulations.

 

124(4)                    Where a board of directors is considering recommending acceptance or rejection of a take-over bid, it shall, at the time of delivering a directors' circular, advise the security holders of this fact and may advise them not to tender their securities until further communication is received from the directors.

 

124(5)                    Where subsection (4) applies, the board of directors shall deliver the recommendation or the decision not to make a recommendation at least 7 days before the scheduled expiry of the period during which securities may be deposited pursuant to the bid.

 

124(6)                    Where, before the expiry of a take-over bid or after the expiry of the bid but before the expiry of all rights to withdraw the securities that have been deposited pursuant to the bid,

 

(a)          a change has occurred in the information contained in a directors' circular or in any notice of change in a directors' circular that would reasonably be expected to affect the decision of the holders of the securities to accept or reject the bid, the board of directors of the offeree issuer shall without delay deliver a notice of the change to every person to whom the circular was required to be delivered disclosing the nature and substance of the change, or

 

(b)          a change has occurred in the information contained in an individual director's or officer's circular or any notice of change in the individual director's or officer's circular that would reasonably be expected to affect the decision of the holders of the securities to accept or reject the bid, other than a change that is not within the control of the individual director or officer, as the case may be, the individual director or officer, shall without delay deliver a notice of change in relation to it to the board of directors.

 

124(7)                    Where an individual director or officer submits a circular under subsection (3) or a notice of change under paragraph (6)(b) to the board of directors, the board, at the offeree issuer's expense, shall deliver a copy of the circular or notice to the persons referred to in subsection (1).

 

124(8)        A directors' circular, an individual director's or officer's circular and a notice of change shall be in the form prescribed by regulation and shall contain the information required by this Part and the regulations.

 

Commencement of bid

125(1)        A take-over bid may be commenced in accordance with either subsection (2) or subsection (7).

 

125(2)        A take-over bid may, and an issuer bid shall, be commenced by delivering the bid to the security holders referred to in paragraph 120(a) in accordance with subsection (6).

 

125(3)        If a bid is commenced under subsection (2), the bid shall be filed and, in the case of a take-over bid, delivered to the offeree issuer's principal office on the same day as the bid is delivered under subsection (2) or as soon as practicable after that.

 

125(4)        A notice of change or variation in respect of a bid shall be filed and, in the case of a take-over bid, delivered to the offeree issuer's principal office on the same day as the notice of change or variation is delivered to holders of securities of the offeree issuer or as soon as practicable after that.

 

125(5)        Every directors' circular and every individual director's or officer's circular, any notice of change in any such circular or any recommendation referred to in subsection 124(5) that is delivered to security holders of an offeree issuer shall be filed and shall be delivered to the offeror's principal office on the same day as the directors' circular, the individual director's or officer's circular, the notice of change or the recommendation is delivered to the holders of securities of the offeree issuer, or as soon as practicable after that.

 

125(6)        A take-over bid or issuer bid, a take-over bid circular, an issuer bid circular, a directors' circular, an individual director's or officer's circular and every notice of change or variation in any such bid or circular shall be delivered in such manner as the Executive Director may approve or mailed to the intended recipient and any bid, circular or notice so delivered or mailed shall be deemed to have been delivered on the date on which it was so delivered or mailed to all or substantially all of the persons entitled to receive it and, subject to subsections (8) and (9), shall be deemed for the purposes of this Part and the regulations to have been dated as of that date.

 

125(7)        An offeror may commence a take-over bid by publishing an advertisement containing a brief summary of the bid in at least one major daily newspaper of general and regular paid circulation in New Brunswick, or by disseminating the advertisement in a manner prescribed by regulation, if

 

(a)          on or before the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on the offeror's behalf, files the bid and delivers it to the offeree issuer's principal office and files the advertisement,

 

(b)          on or before the date of first publication or first dissemination of the advertisement, the offeror, or a person acting on the offeror's behalf, requests from the offeree issuer a list of the security holders referred to in paragraph 120(a), and

 

(c)               within 2 business days after the receipt by or on behalf of the offeror of a list of the security holders referred to in paragraph 120(a), the bid is delivered to those security holders in accordance with subsection (6).

 

125(8)        If a take-over bid is commenced in accordance with subsection (7), the bid shall be deemed for the purposes of this Part and the regulations to have been dated as of the date of first publication or first dissemination of the advertisement referred to in subsection (7).

 

125(9)        If a take-over bid is advertised in accordance with subsection (7), and the offeror or a person acting on the offeror's behalf has complied with paragraphs (7)(a) and (b) but has not yet delivered the bid under paragraph (7)(c), a change or variation in the bid before the date on which the bid is delivered to security holders in accordance with paragraph (7)(c) that is advertised in a manner provided under subsection (7) shall be deemed for the purposes of this Part and the regulations to have been dated as of the date of first publication or first dissemination of the advertisement relating to the change or variation if

 

(a)          the advertisement contains a brief summary of the change or variation,

 

(b)          on or before the date of first publication or first dissemination of the advertisement relating to the change or variation, the offeror, or a person acting on the offeror's behalf, files the notice of change or variation and delivers it to the offeree issuer's principal office and files the advertisement, and

 

(c)               within 2 business days after the receipt by or on behalf of the offeror of a list of the security holders referred to in paragraph 120(a), the bid and the notice of change or variation is delivered to those security holders in accordance with subsection (6) and subsection 123(2) or (4), as the case may be.

 

125(10)      If an offeror, or a person acting on the offeror's behalf, satisfies the requirements of subsection (9), the notice of change or variation shall not be required to be filed and delivered under subsection (4).

 

Reports of acquisitions

126(1)        Every offeror that acquires beneficial ownership of, or the power to exercise control or direction over, or securities convertible into, voting or equity securities of any class of a reporting issuer that, together with such offeror's securities of that class, would constitute 10% or more of the outstanding securities of that class,

 

(a)          shall without delay issue and file a news release containing the information prescribed by regulation, and

 

(b)          shall, within 2 business days after issuing and filing the news release under paragraph (a), file a report containing the same information as is contained in the news release.

 

126(2)                    Where an offeror is required to file a report under subsection (1) or a further report under this subsection and the offeror or any person acting jointly or in concert with the offeror acquires beneficial ownership of, or the power to exercise control or direction over, or securities convertible into, an additional 2% or more of the outstanding securities of the class or there is a change in any other material fact in such a report, the offeror

 

(a)          shall without delay issue and file a news release containing the information prescribed by regulation, and

 

(b)          shall, within 2 business days after issuing and filing the news release under paragraph (a), file a report containing the same information as is contained in the news release.

 

126(3)                    During the period beginning on the occurrence of an event in respect of which a report or further report is required to be filed under this section and ending on the expiry of one business day after the date that the report or further report is filed, neither the offeror nor any person acting jointly or in concert with the offeror shall acquire or offer to acquire beneficial ownership of any securities of the class in respect of which the report or further report is required to be filed or any securities convertible into securities of that class.

 

126(4)                    Subsection (3) does not apply to an offeror that is the beneficial owner of, or has the power to exercise control or direction over, securities that, together with such offeror's securities of that class, constitute 20% or more of the outstanding securities of that class.

 

News releases

127(1)                    Where, after a formal bid has been made for voting or equity securities of an offeree issuer that is a reporting issuer and before the expiry of the bid, an offeror, other than the person making the bid, acquires beneficial ownership of, or the power to exercise control or direction over, securities of the class subject to the bid which, when added to such offeror's securities of that class, constitute 5% or more of the outstanding securities of that class, the offeror shall not later than the opening of trading on the next business day, issue a news release containing the information prescribed by regulation, and, without delay, shall file a copy of the news release.

 

127(2)                    Where an offeror that has filed a news release under subsection (1) or a further news release under this subsection or any person acting jointly or in concert with the offeror acquires beneficial ownership of, or control or direction over, securities of the class subject to the bid which, when added to the securities of that class acquired after the filing of the news release by the offeror and any person acting jointly or in concert with the offeror, aggregates an additional 2% or more of the class of outstanding securities, the offeror shall not later than the opening of trading on the next business day, issue a further news release containing the information prescribed by regulation, and, without delay, shall file a copy of the news release.

 

Duplicate reports not required

128                    Where the facts required to be reported or in respect of which a news release is required to be filed under sections 126 and 127 are identical, a report or news release is required only under the provision requiring the earlier report or news release, as the case may be.

 

Applications to the Commission

129(1)                    Where the Commission is of the opinion that a person has not complied or is not complying with this Part or the regulations relating to this Part, the Commission may, subject to such terms and conditions as it considers appropriate, make an order

 

(a)               restraining the distribution of any document used or issued in connection with a take-over bid or issuer bid,

 

(b)               requiring an amendment to or variation of any document used or issued in connection with a take-over bid or issuer bid and requiring the distribution of any amended, varied or corrected document, and

 

(c)               directing any person to comply with this Part or the regulations relating to this Part or restraining any person from contravening this Part or the regulations relating to this Part and directing the directors and senior officers of the person to cause the person to comply with or to cease contravening this Part or the regulations relating to this Part.

 

129(2)                    Where the Commission is of the opinion that do so would not be prejudicial to the public interest, the Commission may, subject to such terms and conditions as it considers appropriate, make an order

 

(a)               deciding for the purposes of subsection 122(2) that an agreement, commitment or understanding with a selling security holder is made for reasons other than to increase the value of the consideration paid to the selling security holder for the securities of the selling security holder and that the agreement, commitment or understanding may be entered into notwithstanding that subsection,

 

(b)               varying any time period set out in this Part or the regulations relating to this Part, and

 

(c)               exempting, in whole or in part, a person or class of persons from any of the requirements of this Part or the regulations relating to this Part.

 

129(3)        An order under subsection (1) or (2) may be made on the application of an interested person or on the Commission's own motion.

 

129(4)        An order under paragraph (2)(c) may be retroactive in its operation.

 

Applications to the Court of Queen's Bench

130(1)        An interested person may apply to the Court of Queen's Bench for an order under this section.

 

130(2)                    Where, on an application under subsection (1), the Court of Queen's Bench is satisfied that a person has not complied with this Part or the regulations relating to this Part, the Court of Queen's Bench may make an interim or final order

 

(a)               compensating any interested person who is a party to the application for damages suffered as a result of a contravention of this Part or the regulations relating to this Part,

 

(b)               rescinding a transaction with any interested person, including the issuance of a security or a purchase and sale of a security,

 

(c)               requiring any person to dispose of any securities acquired pursuant to or in connection with a take-over bid or an issuer bid,

 

(d)               prohibiting any person from exercising any or all of the voting rights attaching to any securities,

 

(e)               requiring the trial of an issue, and

 

(f)               respecting any matter not referred to in paragraphs (a) to (e) that the Court of Queen's Bench considers proper.

 

130(3)        The applicant shall give the Executive Director notice of an application being made under subsection (1).

 

130(4)        The Executive Director is entitled to appear and to make representations at the hearing of an application under this section.

 

PART 10

INSIDER TRADING AND SELF-DEALING

Definitions

131             The following definitions apply in this Part.

 

"mutual fund", except in section 137, means a mutual fund that is a reporting issuer. (fonds commun de placement)

 

"related mutual funds" includes two or more mutual funds under common management. (fonds communs de placement liés)

 

"related person", in relation to a mutual fund, means a person in whom the mutual fund, its mutual fund manager and its distribution company are prohibited by the provisions of this Part from making any investment. (personne liée)

 

"responsible person" means

 

(a)          a portfolio manager,

 

(b)          every individual who is a partner, director or officer of a portfolio manager,

 

(c)          every affiliate of a portfolio manager, and

 

(d)          every individual who is a director, officer or employee of such affiliate or who is an employee of the portfolio manager, if the affiliate or individual participates in the formulation of investment decisions made on behalf of the client of the portfolio manager or in advice given to such client, or if the affiliate or individual has access to such decisions or advice before implementation. (personne responsable)

 

Definition of "investment"

132             In the definition "related person" in section 131 and in sections 137 to 141, "investment" means a purchase of any security of any class of securities of an issuer and a loan to persons, but does not include an advance or loan, whether secured or unsecured, that is made by a mutual fund, its mutual fund manager or its distribution company that is ancillary to the main business of the mutual fund, its mutual fund manager or its distribution company.

 

Significant interest, substantial security holder and beneficial ownership

133             For the purposes of sections 137 to 141,

 

(a)          a person or a combination of persons has a significant interest in an issuer, if

 

(i)      in the case of one person, the person owns beneficially, either directly or indirectly, more than 10% of the outstanding shares or units of the issuer, or

 

(ii)     in the case of a combination of persons, they own beneficially, either individually or together and either directly or indirectly, more than 50% of the outstanding shares or units of the issuer,

 

(b)          a person or a combination of persons is a substantial security holder of an issuer if that person or combination of persons owns beneficially, either individually or together and either directly or indirectly, voting securities carrying more than 20% of the voting rights attached to all outstanding voting securities of the issuer, but in computing the percentage of voting rights attached to voting securities owned by an underwriter, there shall be excluded any voting securities acquired by the person as underwriter in a distribution of the securities, except that the exclusion ceases to have effect on completion or cessation of the distribution by the underwriter, and

 

(c)               where a person or combination of persons owns beneficially, directly or indirectly, voting securities of an issuer, that person or combination of persons shall be deemed to own beneficially a proportion of voting securities of any other issuer that are owned beneficially, directly or indirectly, by the first mentioned issuer, which proportion shall equal the proportion of the voting securities of the first mentioned issuer that are owned beneficially, directly or indirectly, by that person or combination of persons.

 

Related person and change in beneficial ownership

134             For the purposes of this Part,

 

(a)          any issuer in which a mutual fund holds voting securities carrying more than 10% of the voting rights attached to all outstanding voting securities of the issuer or in which the mutual fund and related mutual funds hold voting securities carrying more than 20% of the voting rights attached to all outstanding voting securities of the issuer shall be deemed to be a related person of that mutual fund or of each of those mutual funds, and

 

(b)          the acquisition or disposition by an insider of a put, call or other transferable option with respect to a security shall be deemed to be a change in the beneficial ownership of the security to which the put, call or other transferable option relates.

 

Insider report

135(1)                    Unless exempted under the regulations, a person who becomes an insider of a reporting issuer, other than a mutual fund, shall, within the period prescribed by regulation, file a report prepared in accordance with the regulations disclosing, as of the day on which the person became an insider, any direct or indirect beneficial ownership of or control or direction over securities of the reporting issuer.

 

135(2)        An insider who has filed or is required to file a report under this section and whose direct or indirect beneficial ownership of or control or direction over securities of the reporting issuer changes from that shown or required to be shown in the report or in the latest report filed by the person under this section shall, within the period prescribed by regulation, file a report prepared in accordance with the regulations that indicates the direct or indirect beneficial ownership of or control or direction over securities of the reporting issuer as of the day on which the change took place and that indicates the change or changes that occurred.

 

135(3)        A person who becomes an insider of a reporting issuer by reason of subsection 1(8) or (9) shall, within the period prescribed by regulation, file the reports required by subsections (1) and (2) for the previous 6 months or such shorter period that he or she was a director or officer of the reporting issuer.

 

135(4)        For the purpose of reporting under this section, ownership shall be deemed to pass at such time as an offer to sell is accepted by the purchaser or the purchaser's agent or an offer to buy is accepted by the vendor or the vendor's agent.

 

Report of transfer by insider

136             No insider of a reporting issuer shall transfer or cause to be transferred any securities of the reporting issuer into the name of an agent, nominee or custodian without filing a report of the transfer prepared in accordance with the regulations, except for a transfer for the purpose of giving collateral for a debt made in good faith.

 

Investments of mutual funds in New Brunswick

137(1)        No mutual fund in New Brunswick shall knowingly make an investment by way of loan to

 

(a)          any officer or director of the mutual fund, its mutual fund manager or its distribution company or an associate of any of them, or

 

(b)          any individual, if the individual or an associate of the individual is a substantial security holder of the mutual fund, its mutual fund manager or its distribution company.

 

137(2)        No mutual fund in New Brunswick shall knowingly make an investment

 

(a)          in any person who is a substantial security holder of the mutual fund, its mutual fund manager or its distribution company,

 

(b)          in any person in whom the mutual fund, alone or together with one or more related mutual funds, is a substantial security holder, or

 

(c)          in an issuer in which

 

(i)      any officer or director of the mutual fund, its mutual fund manager or its distribution company or an associate of any of them has a significant interest, or

 

(ii)     any person who is a substantial security holder of the mutual fund, its mutual fund manager or its distribution company has a significant interest.

 

Indirect investment

138             No mutual fund or its mutual fund manager or distribution company shall knowingly enter into any contract or other arrangement that results in its being directly or indirectly liable or contingently liable in respect of any investment by way of loan to, or other investment in, a person to whom it is by section 137 prohibited from making a loan or in whom it is by section 137 prohibited from making any other investment, and for the purpose of section 137 any such contract or other arrangement shall be deemed to be a loan or an investment, as the case may be.

 

Order for non-application of section 137 or 138

139             On the application of an interested person, the Commission may, subject to such terms and conditions as it considers appropriate, order that section 137 or 138 does not apply to a class of investment, a particular investment, a contract or other arrangement, as the case may be, if the Commission is satisfied

 

(a)          that the class of investment or the particular investment, contract or other arrangement represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of a mutual fund, or

 

(b)          that the particular investment, contract or other arrangement is in fact in the best interests of a mutual fund.

 

Exception to paragraph 133(c)

140                    Notwithstanding paragraph 133(c), a mutual fund is not prohibited from making an investment in an issuer only because a person or a combination of persons who owns beneficially, directly or indirectly, voting securities of the mutual fund or its mutual fund manager or distribution company is by reason of such ownership deemed to own beneficially voting securities of the issuer.

 

Fees on investment

141(1)        No mutual fund shall make any investment in consequence of which a related person of the mutual fund will receive any fee or other compensation except fees paid pursuant to a contract which is disclosed in any preliminary prospectus or prospectus, or any amendment to either of them, that is filed by the mutual fund and in respect of which a receipt is issued by the Executive Director.

 

141(2)        The Commission may, on the application of a mutual fund and where the Commission is satisfied that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as the Commission considers appropriate, that subsection (1) does not apply to the mutual fund.

 

Standard of care for management of mutual fund

142(1)        A person responsible for the management of a mutual fund shall exercise the powers and discharge the duties of the person's office honestly, in good faith and in the best interests of the mutual fund, and shall, in exercising such powers and discharging such duties, exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

 

142(2)        For the purposes of subsection (1), a person is responsible for the management of a mutual fund if the person has a legal power or right to control the mutual fund or if in fact the person is able to do so.

 

Filing by mutual fund managers

143(1)        A mutual fund manager shall, in respect of each mutual fund to which the mutual fund manager provides services or advice and within the period prescribed by regulation, file a report, prepared in accordance with the regulations, of

 

(a)          any purchase or sale of securities between the mutual fund and any related person,

 

(b)          any loan received by the mutual fund from, or made by the mutual fund to, any of its related persons,

 

(c)          any purchase or sale effected by the mutual fund through any related person with respect to which the related person received a fee either from the mutual fund or from the other party to the transaction or from both, and

 

(d)          any transaction in which, by arrangement other than an arrangement relating to insider trading in portfolio securities, the mutual fund is a joint participant with one or more of its related persons.

 

143(2)        The Commission may, on the application of the mutual fund manager of a mutual fund and where the Commission is of the opinion that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as the Commission considers appropriate, that subsection (1) does not apply to any transaction or class of transactions.

 

Prohibited transactions

144(1)        A portfolio manager shall not knowingly cause any investment portfolio managed by the portfolio manager to be made up of

 

(a)          an investment in any issuer in which a responsible person or an associate of a responsible person is an officer or director unless that information is disclosed to the client and the written consent of the client to the investment is obtained before the purchase,

 

(b)          a purchase or sale of the securities of any issuer from or to the account of a responsible person, an associate of a responsible person or the portfolio manager, or

 

(c)          a loan to a responsible person, an associate of a responsible person or the portfolio manager.

 

144(2)                    Where the Commission determines that a portfolio manager is subject to by-laws or other regulatory instruments or practices or policies imposed by a self-regulatory organization which have substantially the same effect as the requirements set out in subsection (1), the Commission may, subject to such terms and conditions as the Commission considers appropriate, exempt the portfolio manager from the requirements of subsection (1).

 

Trades by mutual fund insiders

145             No person who has access to information concerning the investment program of a mutual fund or the investment portfolio managed for a client by a portfolio manager shall purchase or sell securities of an issuer for the person's account if the portfolio securities of the mutual fund or the investment portfolio managed for a client by a portfolio manager include securities of that issuer and if the information is used by the person for the person's direct benefit or advantage.

 

Filing of reports in another jurisdiction

146                    Where the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued require substantially the same reports in that jurisdiction as are required by this Part, the filing requirements of this Part may be complied with by filing the reports required by the laws of that jurisdiction if the reports are signed or certified in accordance with the regulations.

 

Prohibited trading

147(1)        In this section, "person in a special relationship with a reporting issuer" means

 

(a)          a person who is an insider, affiliate or associate of

 

(i)      the reporting issuer,

 

(ii)     a person who is proposing to make a take-over bid, as defined in section 106, for the securities of the reporting issuer, or

 

(iii)   a person who is proposing to become a party to a reorganization, amalgamation, merger or arrangement or similar business combination with the reporting issuer or to acquire a substantial portion of its property,

 

(b)          a person who is engaging in or proposes to engage in any business or professional activity with or on behalf of the reporting issuer or with or on behalf of a person described in subparagraph (a)(ii) or (iii),

 

(c)          a person who is a director, officer or employee of the reporting issuer or of a person described in subparagraph (a)(ii) or (iii) or paragraph (b),

 

(d)          a person who learned of a material fact or material change with respect to the reporting issuer while the person was a person described in paragraph (a), (b) or (c), or

 

(e)          a person who learns of a material fact or material change with respect to the reporting issuer from any other person described in this subsection, including a person described in this paragraph, and knows or ought reasonably to have known that the other person is a person in such a relationship.

 

147(2)        No person in a special relationship with a reporting issuer shall purchase or sell securities of the reporting issuer with the knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed.

 

147(3)        For the purposes of subsection (2), a security of the reporting issuer shall be deemed to include

 

(a)          a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer, or

 

(b)          a security, the market price of which varies materially with the market price of the securities of the issuer.

 

147(4)        No reporting issuer and no person in a special relationship with a reporting issuer shall inform, other than in the necessary course of business, another person of a material fact or material change with respect to the reporting issuer before the material fact or material change has been generally disclosed.

 

147(5)        No person who proposes to make a take-over bid, as defined in section 106, for the securities of a reporting issuer, to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a reporting issuer or to acquire a substantial portion of the property of a reporting issuer shall inform another person of a material fact or material change with respect to the reporting issuer before the material fact or material change has been generally disclosed unless the information is given in the necessary course of business to effect the take-over bid, business combination or acquisition, as the case may be.

 

147(6)        No person shall be found to have contravened subsection (2), (4) or (5) if the person proves on the balance of probabilities that, at the time of the purchase or sale referred to in subsection (2) or at the time of giving the information under subsection (4) or (5), as the case may be,

 

(a)          the person reasonably believed that the material fact or material change had been generally disclosed, or

 

(b)          the person reasonably believed that the other party to the purchase or sale of securities or the other person informed of the material fact or material change, as the case may be, knew of or ought reasonably to have known of the material fact or material change.

 

Exemption order

148(1)        The Commission may make an order, subject to such terms and conditions as it considers appropriate, exempting, in whole or in part, a person or class of persons from a requirement of this Part or of the regulations relating to this Part if

 

(a)          the requirement conflicts with a requirement of the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued, or

 

(b)          the Commission is otherwise satisfied in the circumstances of the particular case that there is adequate justification for doing so.

 

148(2)        The Commission may, if the Commission is of the opinion that it would not be prejudicial to the public interest to do so, make an order, subject to such terms and conditions as it considers appropriate, that an issuer or a class of issuers is deemed not to be a mutual fund.

 

148(3)        An order under subsection (1) or (2) may be made on the application of an interested person or on the Commission's own motion.

 

PART 11

CIVIL LIABILITY

Liability for misrepresentation in prospectus

149(1)                    Where a prospectus together with any amendment to the prospectus contains a misrepresentation, a purchaser who purchases securities offered by the prospectus during the period of distribution shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase and has a right of action for damages against

 

(a)          the issuer or a selling security holder on whose behalf the distribution is made,

 

(b)          each underwriter of the securities who is required by the regulations to sign a certificate required to be contained in the prospectus,

 

(c)          every director of the issuer at the time the prospectus or the amendment to the prospectus was filed,

 

(d)          every person whose consent has been filed as required by the regulations, but only with respect to reports, opinions or statements that have been made by the person, and

 

(e)          every person who signed the prospectus or the amendment to the prospectus other than the persons referred to in paragraphs (a) to (d).

 

149(2)                    Where the purchaser purchased the securities from a person referred to in paragraph (1)(a) or (b) or from another underwriter of the securities, the purchaser may elect to exercise a right of rescission against the person or underwriter, in which case the purchaser shall have no right of action for damages against the person or underwriter.

 

149(3)        No person is liable under subsection (1) or (2) if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

 

149(4)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (2) if the person proves

 

(a)          that the prospectus or the amendment to the prospectus was filed without the person's knowledge or consent and that, on becoming aware of its filing, the person gave reasonable general notice that it was so filed,

 

(b)          that, after the issuance of a receipt for the prospectus and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the prospectus or an amendment to the prospectus, the person withdrew the person's consent to it and gave reasonable general notice of the withdrawal and the reason for the withdrawal,

 

(c)          that, with respect to any part of the prospectus or the amendment to the prospectus purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, the person had no reasonable grounds to believe and did not believe that there had been a misrepresentation or that the part of the prospectus or the amendment to the prospectus did not fairly represent the report, opinion or statement of the expert or was not a fair copy of, or extract from, the report, opinion or statement of the expert,

 

(d)          that, with respect to any part of the prospectus or the amendment to the prospectus purporting to be made on the person's own authority as an expert or purporting to be a copy of, or an extract from, the person's own report, opinion or statement as an expert, but that contains a misrepresentation attributable to failure to represent fairly the person's report, opinion or statement as an expert,

 

(i)      the person had, after reasonable investigation, reasonable grounds to believe and did believe that the part of the prospectus or the amendment to the prospectus fairly represented the person's report, opinion or statement, or

 

(ii)     on becoming aware that the part of the prospectus or the amendment to the prospectus did not fairly represent the person's report, opinion or statement as an expert, the person advised the Commission and gave reasonable general notice that such use had been made and that the person would not be responsible for that part of the prospectus or the amendment to the prospectus, or

 

(e)          that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of, or an extract from, a public official document, it was a correct and fair representation of the statement or copy of, or extract from, the document, and the person had reasonable grounds to believe and did believe that the statement was true.

 

149(5)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (2) with respect to any part of the prospectus or the amendment to the prospectus purporting to be made on the person's own authority as an expert or purporting to be a copy of, or an extract from, the person's own report, opinion or statement as an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

149(6)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (2) with respect to any part of the prospectus or the amendment to the prospectus not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

149(7)        No underwriter is liable for more than the total public offering price represented by the portion of the distribution underwritten by the underwriter.

 

149(8)        In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on.

 

149(9)        All or any one or more of the persons referred to in subsection (1) or (2) are jointly and severally liable, and every person who becomes liable to make any payment under this section may recover a contribution from any person who, if sued separately, would have been liable to make the same payment unless the court rules that, in all the circumstances of the case, to permit recovery of the contribution would not be just and equitable.

 

149(10)                    Where in a distribution of securities

 

(a)          no receipt for a prospectus was issued,

 

(b)          no exemption from filing a prospectus exists or was granted, and

 

(c)          a misrepresentation existed in respect of the distribution,

 

each purchaser of the securities has a right of rescission or a right of action for damages as if a prospectus containing a misrepresentation had been filed in respect of the distribution.

 

149(11)      In no case shall the amount recoverable under this section exceed the price at which the securities were offered to the public.

 

149(12)      The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the purchaser may have at law.

 

149(13)      If a misrepresentation is contained in a document incorporated by reference in, or deemed incorporated into, a prospectus, the misrepresentation shall be deemed to be contained in the prospectus.

 

Liability for misrepresentation when securities offered for sale in reliance on an exemption

150(1)                    Where, in connection with a distribution of securities, securities are offered for sale in reliance on an exemption from section 71 that is provided for under the regulations and that is prescribed by regulation for the purposes of this section or in reliance on an exemption from section 71 provided for in an order made by the Commission under section 80, and where any information relating to the offering provided to the purchaser of the securities contains a misrepresentation, a purchaser who purchases the securities shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase, and

 

(a)          the purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made, or

 

(b)               where the purchaser purchased the securities from a person referred to in paragraph (a), the purchaser may elect to exercise a right of rescission against the person, in which case the purchaser shall have no right of action for damages against the person.

 

150(2)        No person is liable under subsection (1) if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

 

150(3)        In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on.

 

150(4)                    Subject to subsection (5), all or any one or more of the persons referred to in subsection (1) are jointly and severally liable, and every person who becomes liable to make any payment under this section may recover a contribution from any person who, if sued separately, would have been liable to make the same payment unless the court rules that, in all the circumstances of the case, to permit recovery of the contribution would not be just and equitable.

 

150(5)        An issuer shall not be liable where it is not receiving any proceeds from the distribution of the securities being distributed and the misrepresentation was not based on information provided by the issuer unless the misrepresentation

 

(a)          was based on information that was previously publicly disclosed by the issuer,

 

(b)          was a misrepresentation at the time of its previous public disclosure, and

 

(c)          was not subsequently publicly corrected or superseded by the issuer before the completion of the distribution of the securities being distributed.

 

150(6)        In no case shall the amount recoverable under this section exceed the price at which the securities were offered.

 

150(7)        The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the purchaser may have at law.

 

Liability for misrepresentation in advertising or sales literature

151(1)                    Where advertising or sales literature that is disseminated in connection with a trade of securities contains a misrepresentation, a purchaser who purchases securities referred to in that advertising or sales literature shall be deemed to have relied on that misrepresentation if it was a misrepresentation at the time of purchase and has a right of action for damages against

 

(a)          the issuer or a selling security holder on whose behalf the trade is made,

 

(b)               where a prospectus is used in connection with the trade, each underwriter of the securities who is required by the regulations to sign a certificate required to be contained in the prospectus,

 

(c)          every promoter or director of the issuer or selling security holder, as the case may be, at the time the advertising or sales literature was disseminated, and

 

(d)          every person who at the time the advertising or sales literature was disseminated, sells securities on behalf of the issuer or selling security holder with respect to which the advertising or sales literature was disseminated.

 

151(2)                    Subsection (1) applies to trades of securities pursuant to

 

(a)          a prospectus,

 

(b)          an exemption from section 71 that is provided for under the regulations or in an order made by the Commission under section 80, or

 

(c)          a decision of the Commission.

 

151(3)                    Where a purchaser referred to in subsection (1) purchased the securities from a person referred to in paragraph (1)(a) or (b) or from another underwriter of the securities, the purchaser may elect to exercise a right of rescission against that person or underwriter, in which case the purchaser shall have no right of action for damages against the person or underwriter.

 

151(4)        No person is liable under subsection (1) or (3) if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

 

151(5)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (3) if the person proves

 

(a)          that the advertising or sales literature was disseminated without the person's knowledge or consent and that, on becoming aware of its dissemination, the person gave reasonable general notice that it was so disseminated,

 

(b)          that, after the dissemination of the advertising or sales literature and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the advertising or sales literature the person withdrew the person's consent to it and gave reasonable general notice of the withdrawal and the reason for the withdrawal, or

 

(c)          that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of, or an extract from, a public official document, it was a correct and fair representation of the statement or copy of, or extract from, the document, and the person had reasonable grounds to believe and did believe that the statement was true.

 

151(6)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (3) with respect to any part of the advertising or sales literature purporting to be made on the person's own authority as an expert or purporting to be a copy of, or an extract from, the person's own report, opinion or statement as an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

151(7)        No person, other than the issuer or selling security holder, is liable under subsection (1) or (3) with respect to any part of the advertising or sales literature not purporting to be made on the authority of an expert and not purporting to be a copy of or, an extract from, a report, opinion or statement of an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

151(8)        A person referred to in paragraph (1)(d) is not liable under subsection (1) or (3) if that person can establish that the person cannot reasonably be expected to have had knowledge that the advertising or sales literature was disseminated or contained a misrepresentation.

 

151(9)        No underwriter is liable for more than the total public offering price represented by the portion of the distribution underwritten by the underwriter.

 

151(10)      In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on.

 

151(11)      All or any one or more of the persons referred to in subsection (1) or (3) are jointly and severally liable, and every person who becomes liable to make any payment under this section may recover a contribution from any person who, if sued separately, would have been liable to make the same payment unless the court rules that, in all the circumstances of the case, to permit recovery of the contribution would not be just and equitable.

 

151(12)      In no case shall the amount recoverable under this section exceed the price at which the securities were offered to the public.

 

151(13)      The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the purchaser may have at law.

 

Liability for verbal misrepresentation

152(1)                    Where a person makes a verbal statement to a purchaser of securities that contains a misrepresentation relating to the securities purchased and the verbal statement is made either before or contemporaneously with the purchase of the securities, the purchaser

 

(a)          shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase, and

 

(b)          has a right of action for damages against the person who made the verbal statement.

 

152(2)        No person is liable under subsection (1) if the person proves that the purchaser purchased the securities with knowledge of the misrepresentation.

 

152(3)        No person is liable under subsection (1) if the person can establish that the person cannot reasonably be expected to have known that the person's statement contained a misrepresentation.

 

152(4)        No person is liable under subsection (1) if, before the purchase of the securities by the purchaser, the person notified the purchaser that the person's statement contained a misrepresentation.

 

152(5)        In no case shall the amount recoverable under this section exceed the price at which the securities were offered to the public.

 

152(6)        In an action for damages under subsection (1), the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on.

 

152(7)        The right of action for damages conferred by this section is in addition to and without derogation from any other right the purchaser may have at law.

 

Liability for misrepresentation in circular

153(1)                    Where a take-over bid circular delivered to the security holders of an offeree issuer as required by Part 9 or any notice of change or variation in respect of a take-over bid circular contains a misrepresentation, every such security holder shall be deemed to have relied on the misrepresentation and may elect to exercise a right of rescission or a right of action for damages against the offeror or a right of action for damages against

 

(a)          every person who at the time the circular or notice, as the case may be, was signed was a director of the offeror,

 

(b)          every person whose consent in respect of the circular or notice, as the case may be, has been filed as required by the regulations, but only with respect to reports, opinions or statements that have been made by the person, and

 

(c)          each person who, as required by the regulations, signed a certificate in the circular or notice, as the case may be, other than the persons referred to in paragraph (a).

 

153(2)                    Where a directors' circular or an individual director's or officer's circular delivered to the security holders of an offeree issuer as required by Part 9 or any notice of change or variation in respect of such circular contains a misrepresentation, every such security holder shall be deemed to have relied on the misrepresentation and has a right of action for damages against every director or officer who signed the circular or notice that contained the misrepresentation.

 

153(3)                    Subsection (1) applies with the necessary modifications where an issuer bid circular or any notice of change or variation in respect of such circular contains a misrepresentation.

 

153(4)        No person is liable under subsection (1), (2) or (3) if the person proves that the security holder had knowledge of the misrepresentation.

 

153(5)        No person, other than the offeror, is liable under subsection (1), (2) or (3) if the person proves

 

(a)          that the take-over bid circular, issuer bid circular, directors' circular or individual director's or officer's circular, as the case may be, was delivered without the person's knowledge or consent and that, on becoming aware of it, the person gave reasonable general notice that it was so delivered,

 

(b)          that, after the delivery of the take-over bid circular, issuer bid circular, directors' circular or individual director's or officer's circular, as the case may be, on becoming aware of any misrepresentation in the take-over bid circular, issuer bid circular, directors' circular or individual director's or officer's circular, the person withdrew the person's consent to it and gave reasonable general notice of the withdrawal and the reason for the withdrawal,

 

(c)          that, with respect to any part of the circular purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, the person had no reasonable grounds to believe and did not believe that there had been a misrepresentation or that the part of the circular did not fairly represent the report, opinion or statement of the expert or was not a fair copy of, or extract from, the report, opinion or statement of the expert,

 

(d)          that, with respect to any part of the circular purporting to be made on the person's own authority as an expert or purporting to be a copy of, or an extract from, the person's own report, opinion or statement as an expert, but that contains a misrepresentation attributable to failure to represent fairly the person's report, opinion or statement as an expert,

 

(i)      the person had, after reasonable investigation, reasonable grounds to believe and did believe that the part of the circular fairly represented the person's report, opinion or statement as an expert, or

 

(ii)     on becoming aware that the part of the circular did not fairly represent the person's report, opinion or statement as an expert, the person advised the Commission and gave reasonable general notice that such use had been made and that the person would not be responsible for that part of the circular, or

 

(e)          that, with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of, or an extract from, a public official document, it was a correct and fair representation of the statement or copy of, or extract from, the document, and the person had reasonable grounds to believe and did believe that the statement was true.

 

153(6)        No person, other than the offeror, is liable under subsection (1), (2) or (3) with respect to any part of the circular purporting to be made on the person's own authority as an expert or purporting to be a copy of, or an extract from, the person's own report, opinion or statement as an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

153(7)        No person, other than the offeror, is liable under subsection (1), (2) or (3) with respect to any part of the circular not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert unless the person

 

(a)          failed to conduct such reasonable investigation as to provide reasonable grounds for a belief that there had been no misrepresentation, or

 

(b)               believed there had been a misrepresentation.

 

153(8)        All or any one or more of the persons referred to in subsection (1), (2) or (3) are jointly and severally liable, and every person who becomes liable to make any payment under this section may recover a contribution from any person who, if sued separately, would have been liable to make the same payment unless the court rules that, in all the circumstances of the case, to permit recovery of the contribution would not be just and equitable.

 

153(9)        In an action for damages under subsection (1), (2) or (3) based on a misrepresentation affecting securities offered by the offeror in exchange for securities of the offeree, the defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation.

 

153(10)                    Where the offeror in a take-over bid described in paragraph 112(1)(a) or in an issuer bid described in paragraph 113(e) is required by the by-laws or other regulatory instruments or the practices or policies of the exchange through the facilities of which the take-over bid or issuer bid is made to file with the exchange or to deliver to security holders of the offeree issuer a disclosure document, the disclosure document shall be deemed, for the purposes of this section, to be a take-over bid circular or issuer bid circular, as the case may be, delivered to the security holders as required by Part 9.

 

153(11)      The right of action for rescission or damages conferred by this section is in addition to and without derogation from any other right the security holders of the offeree issuer may have at law.

 

Standard of reasonableness

154             In determining what constitutes reasonable investigation or reasonable grounds for belief for the purposes of sections 149, 151 and 153, the standard of reasonableness shall be that required of a prudent person in the circumstances of the particular case.

 

Liability of dealer or offeror

155             A purchaser of a security to whom a prospectus was required to be sent but was not sent in compliance with subsection 88(1), a purchaser of a security to whom an offering memorandum or an amendment to an offering memorandum was required to be sent but was not sent in compliance with the regulations or a security holder to whom a take-over bid and take-over bid circular or an issuer bid and an issuer bid circular, or any notice of change or variation to any such bid or circular, were required to be delivered but were not delivered in compliance with section 120 or 123 has a right of action for rescission or damages against the dealer or offeror who failed to comply with the applicable requirement.

 

Liability of seller and underwriter

156(1)                    Where a security is traded in a distribution contrary to section 71, a purchaser of the security has a right of action for rescission against the person from whom the security was purchased and a right of action for damages against the underwriter and the issuer or other person who sold the security.

 

156(2)        No action shall be commenced to enforce a right created by subsection (1) more than

 

(a)          in the case of an action for rescission, 2 years after the date of the transaction that gave rise to the cause of action, or

 

(b)          in the case of an action for damages, 3 years after the date of the transaction that gave rise to the cause of action.

 

Liability where material fact or change undisclosed

157(1)        In this section, "a person in a special relationship with a reporting issuer" has the same meaning as in subsection 147(1).

 

157(2)        A person in a special relationship with a reporting issuer who purchases or sells securities of the reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is liable to compensate the seller or purchaser of the securities, as the case may be, for damages as a result of the trade unless

 

(a)          the person in the special relationship with the reporting issuer proves that the person reasonably believed that the material fact or material change had been generally disclosed, or

 

(b)          the material fact or material change was known or ought reasonably to have been known to the seller or purchaser, as the case may be.

 

157(3)        Every

 

(a)               reporting issuer,

 

(b)               person in a special relationship with a reporting issuer, and

 

(c)               person who proposes to make a take-over bid, as defined in section 106, for the securities of a reporting issuer, to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with a reporting issuer or to acquire a substantial portion of the property of a reporting issuer,

 

and who informs another person of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is liable to compensate for damages any person who after that time sells securities of the reporting issuer to or purchases securities of the reporting issuer from the person who received the information.

 

157(4)                    Subsection (3) does not apply if

 

(a)          the person who informed the other person proves that the informing person reasonably believed the material fact or material change had been generally disclosed,

 

(b)          the material fact or material change was known or ought reasonably to have been known to the seller or purchaser, as the case may be,

 

(c)          in the case of an action against a reporting issuer or a person in a special relationship with the reporting issuer, the information was given in the necessary course of business, or

 

(d)          in the case of an action against a person referred to in paragraph (3)(c), the information was given in the necessary course of business to effect the take-over bid, business combination or acquisition.

 

157(5)        Any person who has access to information concerning the investment program of a mutual fund in New Brunswick or the investment portfolio managed for a client by a portfolio manager or by a registered dealer acting as a portfolio manager and uses that information for the person's direct benefit or advantage to purchase or sell securities of an issuer for the person's account is accountable to the mutual fund or the client of the portfolio manager or registered dealer, as the case may be, for any benefit or advantage received or receivable as a result of the purchase or sale, if the portfolio securities of the mutual fund or the investment portfolio managed for the client by the portfolio manager or registered dealer include securities of that issuer.

 

157(6)        Every person who is an insider, affiliate or associate of a reporting issuer who

 

(a)          sells or purchases the securities of the reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed, or

 

(b)               communicates to another person, other than in the necessary course of business, knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed,

 

is accountable to the reporting issuer for any benefit or advantage received or receivable by the person as a result of the purchase, sale or communication, as the case may be, unless the person proves that the person reasonably believed that the material fact or material change had been generally disclosed.

 

157(7)                    Where more than one person in a special relationship with a reporting issuer is liable under subsection (2) or (3) as to the same transaction or series of transactions, their liability is joint and several.

 

157(8)        In assessing damages under subsection (2) or (3), the court shall consider,

 

(a)          if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security in the 20 trading days following general disclosure of the material fact or material change,

 

(b)          if the plaintiff is a vendor, the average market price of the security in the 20 trading days following general disclosure of the material fact or material change less the price received by the plaintiff for the security, and

 

(c)          any other measure of damages the court considers relevant in the circumstances.

 

157(9)        For the purposes of subsections (2) and (3), a security of the reporting issuer shall be deemed to include

 

(a)          a put, call, option or other right or obligation to purchase or sell securities of the reporting issuer, or

 

(b)          a security, the market price of which varies materially with the market price of the securities of the issuer.

 

Action by Commission on behalf of issuer

158(1)        On the application of the Commission or of any person who was at the time of a transaction referred to in subsection 157(2) or (3) or is at the time of the application a security holder of the reporting issuer, the Court of Queen's Bench may make an order, on terms as to security for costs or otherwise as to the Court of Queen's Bench seems proper, requiring the Commission or authorizing the person or the Commission to commence, commence and prosecute or continue an action in the name of and on behalf of the reporting issuer to enforce the liability created by subsection 157(6) if satisfied

 

(a)          that the Commission or the person has reasonable grounds for believing that the reporting issuer has a cause of action under subsection 157(6), and

 

(b)          that the reporting issuer has either

 

(i)          refused or failed to commence an action under subsection 157(6) within 60 days after receipt of a written request from the Commission or the person to do so, or

 

(ii)     failed to prosecute diligently an action commenced by it under subsection 157(6).

 

158(2)        On the application of the Commission or any person who was at the time of a transaction referred to in subsection 157(5) or is at the time of the application a security holder of the mutual fund, the Court of Queen's Bench may make an order, on terms as to security for costs or otherwise as to the Court of Queen's Bench seems proper, requiring the Commission or authorizing the person or the Commission to commence, commence and prosecute or continue an action in the name of and on behalf of the mutual fund to enforce the liability created by subsection 157(5) if satisfied

 

(a)          that the Commission or the person has reasonable grounds for believing that the mutual fund has a cause of action under subsection 157(5), and

 

(b)          that the mutual fund has either

 

(i)          refused or failed to commence an action under subsection 157(5) within 60 days after receipt of a written request from the Commission or the person to do so, or

 

(ii)     failed to prosecute diligently an action commenced by it under subsection 157(5).

 

158(3)                    Where an action under subsection 157(5) or (6) is commenced, is commenced and prosecuted or is continued by a board of directors of a reporting issuer, on motion to the Court of Queen's Bench, the Court of Queen's Bench may order that the costs properly incurred by the board of directors in commencing, commencing and prosecuting or continuing the action, as the case may be, shall be paid by the reporting issuer, if the Court of Queen's Bench is satisfied that there were apparent grounds for believing the action was in the best interests of the reporting issuer and the security holders of the reporting issuer.

 

158(4)                    Where an action under subsection 157(5) or (6) is commenced, is commenced and prosecuted or is continued by a person who is a security holder of the reporting issuer, on motion to the Court of Queen's Bench, the Court of Queen's Bench may order that the costs properly incurred by such person in commencing, commencing and prosecuting or continuing the action, as the case may be, shall be paid by the reporting issuer, if the Court of Queen's Bench is satisfied that

 

(a)          the reporting issuer failed to commence the action or had commenced it but had failed to prosecute it diligently, and

 

(b)          there are apparent grounds for believing that the continuance of the action is in the best interests of the reporting issuer and the security holders of the reporting issuer.

 

158(5)                    Where an action under subsection 157(5) or (6) is commenced, is commenced and prosecuted or is continued by the Commission, on motion to the Court of Queen's Bench, the Court of Queen's Bench shall order the reporting issuer to pay all costs properly incurred by the Commission in commencing, commencing and prosecuting or continuing the action, as the case may be.

 

158(6)        In determining whether there are apparent grounds for believing that an action or its continuance is in the best interests of a reporting issuer and the security holders of the reporting issuer, the Court of Queen's Bench shall consider the relationship between the potential benefit to be derived from the action by the reporting issuer and the security holders of the reporting issuer and the cost involved in the prosecution of the action.

 

158(7)                    Notice of every application under subsection (1) or (2) shall be given to the Commission and the reporting issuer or the mutual fund, as the case may be, and each of them may appear and be heard at the hearing of the application.

 

158(8)        Every order made under subsection (1) or (2) requiring or authorizing the Commission to commence, commence and prosecute or continue an action shall provide that the reporting issuer or mutual fund, as the case may be, shall cooperate fully with the Commission in the commencement, commencement and prosecution or continuation of the action, and shall make available to the Commission all books, records, documents and other material or information relevant to the action and known to the reporting issuer or mutual fund or reasonably ascertainable by the reporting issuer or mutual fund.