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Secondary Market Civil Liability Proposed in Alberta


May 31, 2006


Alasdair J. Federico
John S. Osler
Cameron F. Schepp

In March 2006, the Alberta Legislature tabled Bill 25, the Securities Amendment Act, 2006, which, if enacted, will create civil liability for secondary market disclosure under the Alberta Securities Act for misrepresentations and omissions made by persons associated with Alberta reporting issuers, and with public issuers having a real and substantial connection to Alberta.

Although secondary market trading constitutes over 90 per cent of all capital markets trading, civil liability under the Alberta Securities Act currently exists only for misrepresentations made in a prospectus, takeover bid circular, directors’ circular or offering memorandum. It is expected that the introduction of statutory civil liability for secondary market disclosure will greatly facilitate the certification of investor class actions under the new Alberta Class Proceedings Act.

The civil liability provisions of the bill are virtually identical to the recent amendments made to the Ontario Securities Act and will create unique rights of private action in

Alberta for parties who buy or sell securities against issuers for damages for:

  • documents containing misrepresentations that are filed with the Alberta Securities Commission, a government agency or a stock exchange;
  • certain public oral statements that contain misrepresentations; and
  • failure to publish material changes.

McCarthy Tétrault Notes:

These proposed legislative amendments should be of particular interest and concern to directors and officers. Influential persons such as control people, promoters, insiders who are not officers or directors as well as investment fund managers are also potentially liable under the proposed amendments.

In addition to secondary market civil liability, the bill contains new provisions designed to harmonize the enforcement of securities regulation between Alberta and the other provinces, together with consequential amendments.

You will find more details in the McCarthy Tétrault Legal Update – Alberta Tables Legislation Introducing Civil Liability for Secondary Market Disclosure.