On December 17, 2014, Alberta’s Bill 5, the Securities Amendment Act, 2014, received Royal Assent. Bill 5 makes both technical and housekeeping amendments to Alberta’s Securities Act and consequential amendments to Alberta’s Cooperatives Act and Business Corporations Act. The notable amendments to the Securities Act include:
1. Auditor Oversight Organizations
Bill 5 provides for the recognition and oversight of the Canadian Public Accountability Board (“CPAB”) as an auditor oversight body under the Securities Act. Bill 5 provides that CPAB shall regulate the operations, standards of practice and business conduct of its participants to the extent that it relates to the auditing or review of financial statements that are required to be filed under Alberta securities laws. Bill 5 provides CPAB with access to the contents of audit working files, only with the consent of the client.
2. Registered Professional Corporations (“RPC”)
Bill 5 establishes a framework for individual representatives of registered dealers and advisers to provide services through a professional corporation that is registered in accordance with Alberta securities laws, while still under the supervision of a registered firm. The articles of the RPC shall restrict its business to acting as a dealer or adviser and include a restriction that its voting shares can be owned only by one or more RPC representatives.
3. Orders Without a Hearing
Bill 5 provides for the making of orders by the Alberta Securities Commission (“ASC”) without a hearing including:
(a) Halt Trade
Where the ASC considers or becomes aware of information that there are unusual volume or price fluctuations, that there may have been a material change that could affect the market price of a security or derivative or considers that circumstances exist or are about to occur that could result in other than an orderly trading of a security or a derivative and that it would be in the public interest, it may order a halt trade for a period not longer than 15 business days, without providing the opportunity for the issuer to be heard.
(b) Extra-Provincial Orders
The ASC no longer has to provide a person or company with an opportunity to be heard before making an order if the person or company: has been convicted of an offence in Canada or elsewhere arising from a transaction, business or course of conduct related to securities or derivatives or under the laws respecting trading in securities or derivatives; has been found by a court in Canada or elsewhere to have contravened securities laws; or is subject to an order by a securities regulatory authority both outside and anywhere in Canada. Further, an order made by a securities regulatory authority anywhere in Canada with respect to sanctions, conditions, restrictions or requirements will now automatically apply to that person or company in Alberta without notice and without a hearing, as if the order were made by the ASC.
4. Investor Relations Activities
Bill 5 establishes the requirement for disclosure of activities in relation to a trade. An issuer or holder of an issuer’s security that is aware that a person is engaged in investor relations activities on their behalf must disclose those facts to anyone who inquires. A person engaged in investor relations activities and the issuer or holder of an issuer’s security on whose behalf they are engaged must ensure that every statement made by that person clearly discloses that the statement is made by or on behalf of the issuer or the holder of the issuer’s security. In addition, Bill 5 requires that every person or company engaged in investor relations activities must maintain books and records to properly record investor relations activities and other business transactions and financial affairs and deliver such records upon the request of the ASC. Bill 5 also provides for the ASC to prohibit a person or company from engaging in investor relations activities if they believe it to be in the public’s interest to do so.
5. Fee Setting
Currently the fees charged by the ASC are prescribed in the Securities Regulation to the Securities Act as set by the Alberta Ministry of Treasury Board and Finance. Under the new amendments, the ASC will have the authority to set its own fees with the approval of the Minister.