The Securities Act (Ontario) (OSA) is expected to be amended to include a prohibition on recommending the purchase or sale of securities of an issuer where the person or company making the recommendation is in a “special relationship” with the issuer and has knowledge of a material fact or material change with respect to such issuer that has not been generally disclosed. Currently, section 76 of the OSA provides that a person in a “special relationship” with the issuer includes:

  • a person or company who is an insider, affiliate or associate of the issuer, or a person or company that is considering, evaluating or proposing to make a take-over bid for the securities of the issuer (or considering, evaluating or proposing to enter into another similar transaction with the issuer, such as a reorganization, merger or business combination);
  • a person or company that is engaging in, considering or evaluating whether to engage in, or proposes to engage in, any business or professional activity with or on behalf of the issuer or a person described above;
  • a person who is a director, officer or employee of the issuer, a subsidiary of the issuer, a person or company that controls, directly or indirectly, the issuer, or a person or company described above;
  • a person or company that learned of the material fact or material change with respect to the issuer while the person or company was a person or company described above; or
  • a person or company that learns of a material fact or material change with respect to the issuer from any other person or company described above, including where the first person or company knew or ought reasonably to have known that the other person or company was in a special relationship.

A similar prohibition can be found in the securities legislation of most other Canadian jurisdictions and has also been proposed to be included in the draft cooperative provincial/territorial Capital Markets Act published last August.

The amendments, along with previously discussed amendments regarding anti-retaliatory measures, are part of the Ontario Budget Measures Bill 173,which received royal assent on April 19, 2016 and are expected to come into force upon proclamation of the Lieutenant Governor. For further information, please see Bill 173, Jobs for Today and Tomorrow Act (Budget Measures), 2016.