Ontario releases new proposed securities law for comment

Ontario’s government is proposing new securities legislation that would fundamentally restructure the Ontario Securities Commission (OSC), while also ushering in sweeping changes to regulation.

The province released its proposed new Capital Markets Act (CMA), which would replace the province’s existing securities legislation, for public comment.

The Capital Markets Modernization Taskforce recommended adopting the CMA in January as part of a sweeping set of 74 reform recommendations, many of which are included in the proposed legislation.

The CMA would redesign the OSC by spinning out its adjudicative function into a separate tribunal, while also separating the commission’s chair and CEO roles.

The new act would also beef up the OSC’s enforcement power, increasing maximum penalties to $10 million per offence from $5 million, giving the regulator greater investigative tools, and enabling it to more easily return money to harmed investors.

It would create a new prohibition against making misleading statements about a public company and a prohibition against front-running, while also giving the OSC greater authority to address the emerging crypto sector.

The proposed legislation would also broaden civil liability in the exempt market, expand the accredited investor categories, develop a well-known seasoned issuer (WKSI) model, and require issuers to have an annual advisory vote on the board’s approach to executive compensation.

“The CMA would modernize Ontario’s current capital markets legislation, retaining key components while introducing new elements to promote flexibility within a modern regulatory framework,” the government said.

“Modernizing capital markets will give our province a competitive edge and play a critical role in attracting global investment, supporting economic growth and innovation, and creating good jobs,” said Finance Minister Peter Bethlenfalvy in a statement.

“Strong, modern capital markets that protect investors and prioritize consumer choice will play an important role in building a more prosperous Ontario. I look forward to reviewing the public’s feedback on this proposed legislation,” he added.

The draft legislation will be out for comment until Jan. 21, 2022.

The government said the feedback it receives will “be considered before [it] decides on moving forward with any legislative changes.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.