On November 9, 2018, the Supreme Court of Canada unanimously ruled that a national securities regulator would be allowable under the current constitutional rules, overturning a decision made by the Quebec Court of Appeal. This ruling provides the green light for Ottawa and the participating provinces and territories to move forward with their proposal to set up a national securities regulator. Canada is currently one of the only industrialized countries without a national securities regulator, and although there are conflicting opinions, the general view is that a national securities regulator will bring additional efficiencies to the Canadian markets.
Background
In 2011, the Supreme Court of Canada decision regarding the draft legislation being beyond the scope of authority for the federal government left an opening for a potential path forward. They stated that national securities legislation regulation could be valid based on one of two situations:
- Federal regulation of national concerns under the federal trade and commerce power, or
- A cooperative federal and provincial scheme.
In the 2013 budget, the government of Canada announced they were forming a cooperative securities regulator through the second option provided.
In September 2016, the provinces of Ontario, British Columbia, Saskatchewan, Prince Edward Island, New Brunswick and the Yukon Territory (the "Participating Jurisdictions") entered a Memorandum of Agreement with the Federal Government that sets out the framework for the Cooperative Capital Markets Regulatory System ("CCMRS"). The principal elements of the CCMRS are:
- The Capital Markets Act – the uniform provincial legislation which each Participating Jurisdiction will enact,
- The Capital Markets Stability Act – the complementary Federal legislation which will be enacted by parliament,
- The Capital Markets Regulatory Authority – the national regulator responsible for administering the cooperative arrangement, and
- The Council of Ministers – the supervisory counsel assembled of the Ministers responsible for securities regulation in each Participating Jurisdiction, as well as the Minister of Finance.
In May of 2018, Draft Prospectus and Related Registration Exemptions were published for comment.
There are still certain administrative issues to be addressed, including how the participating and non-participating jurisdictions will interact. Certain provinces, such as Quebec and Alberta, continue to be opposed to the concept of a national regulator, and given participation is voluntary, it is not expected that all jurisdictions will be participating any time soon. We may, however see other provinces and territories make the decision to join.
Since the Supreme Court of Canada decision, the Capital Markets Authority Implementation Organization (CMAIO), the interim body incorporated on behalf of the participating jurisdictions in July of 2015, has not released any further information on how they will be moving forward. We will continue to monitor developments and provide updates as appropriate.
The material contained herein is provided for general informational purposes only and does not constitute legal or other professional advice or opinion. Computershare does not warrant or guarantee the accuracy or completeness of the material contained herein and such material should not be relied upon. "Computershare" refers to Computershare Canada Inc. and its affiliates.
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