Five year review committee final report reviewing the Securities Act (Ontario)

TABLE OF CONTENTS

The Committee

Letter from the Committee

Executive Summary

Introduction

PART 1 THE ROLE OF THE COMMISSION IN CAPITAL MARKETS REGULATION

CHAPTER 1 The Need for a Single Regulator
1.1	Capital Market Formation Transcends Borders
1.2	Thirteen Regulators for One Small Market
1.3	The Final Push for a National Securities Regulator

CHAPTER 2 Thinking Globally in Securities Regulation
2.1	Global Harmonization
2.2	Financial Reporting for Global Accessibility
2.3	Book-Based Settlement and the Indirect Holding System
2.4	Participation in IOSCO

CHAPTER 3 Securities Regulation - Only Part of the Capital Markets Picturen
3.1	History of Regulation of Financial Markets in Canada
3.2	The Current Regulatory Response - Functional Regulation
3.3	One Step Further - Harmonized Functional Regulation

PART 2 FLEXIBLE REGULATION

CHAPTER 4 The Commission - Its Structure, Governance and Accountability
4.1	The Structure of the Commission
4.2	Governance Matters
4.3	Transparency
4.4	The Many Roles of the Commission

CHAPTER 5 Objectives of the Act
5.1	Purposes of the Act
5.2	Principles to Consider

CHAPTER 6 Structure of the Act
6.1	Should the Act Be Overhauled?
6.2	Enshrining Core Concepts
6.3	Housekeeping Amendments
6.4	Plain English

CHAPTER 7 Rulemaking
7.1	Background
7.2	Scope of Rulemaking Authority
7.3	The Need to Streamline the Rulemaking Process
7.4	Cost-Benefit Analyses
7.5	Blanket Rulings and Orders
7.6	Publication of Exemption Requests Granted or Denied under Rules
7.7	Review of Ontario Securities Law

CHAPTER 8 The Impact of the Internet
8.1	Overview
8.2	Application of Existing Regulation to Internet Communications
8.3	Electronic Commerce Act
8.4	Internet Offerings
8.5	Methods of Delivery
8.6	Access-Equals-Delivery

PART 3 REGULATION OF MARKET PARTICIPANTS

CHAPTER 9 Registration
9.1	Registration
9.2	Should the Requirement to Be Registered to "Trade" in Securities Be Modified?
9.3	Does the Requirement to Be Registered to "Trade" in a Security Properly Capture the Range of Activities in Which Intermediaries Engage?
9.4	How Can the Registration System Be Made More Efficient?
9.5	Universal Registration

CHAPTER 10 Self-Regulation
10.1	Overview
10.2	Should SROs Be Required to Be Recognized?
10.3	Should Recognition Be Required for Clearing Agencies?
10.4	Should Recognition Be Required for QTRS?
10.5	Over-the-Counter Trading
10.6	Enforcing Their Own Rules
10.7	Enforcing Compliance with Securities Laws
10.8	The Separation of Self-Interest and Self-Regulation
10.9	Commission Oversight

PART 4 REGULATING ISSUERS: DISCLOSURE, THE CLOSED SYSTEM AND CORPORATE GOVERNANCE

CHAPTER 11 Continuous Disclosure
11.1	The Importance of Continuous Disclosure
11.2	The Current Regime
11.3	Alternative Approaches to Regulation Which Emphasize the Secondary Market
11.4	How Is Continuous Disclosure Monitored and Enforced
11.5	Harmonization Issues
11.6	Civil Liability for Continuous Disclosure

CHAPTER 12 The Closed System
12.1	What Is the Closed System?
12.2	Problems with the Closed System
12.3	Recent Reforms to the Exempt Market Regime and the Resale Rules: Do They Go Far Enough?
12.4	Where Do We Go from Here?

CHAPTER 13 Disclosure Standards
13.1	Material Fact, Material Change and Material Information
13.2	What Is the Appropriate Standard for Materiality?

CHAPTER 14 Selective Disclosure
14.1	Selective Disclosure

CHAPTER 15 Financial Statement Issues
15.1	Financial Statement Disclosure
15.2	Auditor Independence
15.3	Investor Reliance on Audited Financial Statements

CHAPTER 16 Corporate Governance and Accountability of Public Companies
16.1	Certification
16.2	Audit Committees
16.3	Other Corporate Governance Requirements

PART 5 ENHANCING FUNDAMENTAL INVESTOR RIGHTS

CHAPTER 17 Shareholder Rights
17.1	Background
17.2	Recent CBCA Amendments
17.3	The Need for Reform in Ontario
17.4	Shareholder Communications in the Context of a Take-Over Bid

CHAPTER 18 Take-Over Bid Regulation
18.1	Arrangements/Take-Over Bids
18.2	Poison Pills
18.3	Break Fees
18.4	Partial Bids
18.5	Mini-Tenders
18.5	Convertible Securities

CHAPTER 19 Mutual Fund Governance
19.1	Background
19.2	The Case for an Independent Mutual Fund Governance Requirement
19.3	Conflicts of Interest
19.4	Recruiting Qualified Mutual Fund Directors
19.5	How the Independent Governance Body Will Look
19.6	Functions of the Governance Body
19.7	Should Mutual Fund Managers Have to be Registered to Carry on Business?
19.8	Rulemaking Authority

PART 6 ENFORCEMENT

CHAPTER 20 Overview
20.1	Introduction
20.2	Background: The 1990 Proposals
20.3	What Powers Do the Commission and the Court Currently Have?
20.4	Constitutional and Policy Considerations with Respect to Powers of the Commission

CHAPTER 21 What New Powers Should the Commission Have?
21.1	Administrative Fine
21.2	Disgorgement of Profits
21.3	Application of Money Paid as Administrative Fine or Disgorged Profits
21.4	Attribution Provision
21.5	Breach of Undertaking
21.6	Restitution or Compensation Order
21.7	Complaint-Handling and Dispute Resolution

CHAPTER 22 Which Existing Powers of the Commission Should Be Expanded?
22.1	Order Resignation as Director or Officer; Prohibit from Becoming or Acting as Director, Officer, Mutual Fund Manager or Promoter
22.2	Compliance Order
22.3	Cease Trade

CHAPTER 23 Which Existing Powers of the Court Should Be Expanded?
23.1	Maximum Fine and Term of Imprisonment under Section 122 of the Act
23.2	Proposed Authority to Order Restitution

CHAPTER 24 Other Enforcement Matters
24.1	Confidentiality under Section 16 of the Act
24.2	The Need for an Anti-Fraud and Market Manipulation Provision
24.3	Insider Trading
24.4	Insider Reporting
24.5	Freeze Orders
24.6	Costs Orders
24.7	Whistle-Blower Protection
24.8	Federal Enforcement Initiatives - One Further Step

APPENDICES

APPENDIX A - Glossary

APPENDIX B - List of Commenters on Draft Report

APPENDIX C - Issues List

APPENDIX D - List of Commenters on Issues List

APPENDIX E - Presenters to Committee on Issues List

APPENDIX F - Ontario Securities Commission Staff Presentations to Committee on Issues List

APPENDIX G - Lessons From Australia

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