v-1 - Securities Act

Replaced on 6 April 1983

This document has official status.

chapter V-1

Securities Act

Chapter V-1 is replaced by the Securities Act (chapter V-1.1). (1982, c. 48, s. 336).

1982, c. 48, s. 336.

DEFINITIONS

1. In this act, the following terms mean or designate:

(1)  “Commission” : the Commission des valeurs mobilières du Québec;

(2)  “company” : any association of persons constituted as a corporation;

(3)  “investment counsel” : any person or company other than a broker or a security issuer who informs or advises the public, directly or through bulletins or other publications, as to the state of the market for securities or for certain securities; or who gives advice, makes suggestions or expresses opinions as to the expediency of buying or selling securities; or who publishes or causes to be published reports respecting certain securities; or who makes a business of studying, supervising or managing the securities portfolios of particular customers, or of advising them as to the constitution and management of such portfolios and as to the investment of their funds;

(4)  “broker” :

(a)  any person other than a salesman who, directly or through an agent, devotes all or part of his time to trading in securities;

(b)  any company or partnership so trading, and the officers thereof;

(5)  “security issuer” : any person, company, partnership or association of persons trading in securities of its or their own issue;

(6)  “investigator” : any person charged by the Commission with making an investigation under this act;

(7)  “officer” : the chairman or any vice-chairman of the board of directors, the president, any vice-president, the secretary, the assistant secretary, the treasurer, the assistant treasurer or the general manager of a company, partnership or association, or any other person designated an officer under the by-laws or statutes of the company, partnership or association;

(8)  “person” : an individual, partnership or association of individuals not constituted as a corporation;

(9)  “Director” : the Director of the Commission appointed under section 9;

(10)  “regulations” : the regulations made by the Government under this act;

(11)  “securities” :

(a)  any certificate, instrument or other document constituting evidence:

of a right, share or interest in the capital, assets, earnings or profits of an existing or proposed company, or of a person and particularly, but not restrictively, any bond, note, debenture, share, debenture-stock or any title of participation in such capital, assets, earnings or profits; or

of a subscription in any proposed company; or

of an agreement providing that a sum of money received by a person or company will be repaid or treated as a subscription to shares or interests in the capital or assets of an undertaking at the option of any person or company; or

of a share or interest in an association of legatees, heirs or trustees, in a trust estate, in an investment contract or in a bankers’ or trustees’ security; or

of a profit-sharing agreement; or

of interest in an oil, natural gas or mining claim or lease or in a voting trust agreement of an oil, natural gas or mining company; or

of a lease, right to royalties or other interest respecting an oil or natural gas undertaking; or

of a contract of concession under which the concessionary obtains certain special rights respecting the operation of an undertaking;

(b)  generally any certificate, instrument or document commonly known in the trade as a security or designated as such by the regulations;

(c)  any certificate, instrument or other document constituting evidence of a right or interest in an option given upon a security within the meaning of the preceding paragraphs;

(12)  “salesman” : any person employed or authorized by a broker or security issuer to deal in securities and any person acting as customer’s man;

(13)  “private company” : a company whose incorporating documents restrict the right to transfer its shares, prohibit any invitation to the public to subscribe for securities issued by it and limit the number of its shareholders to fifty, not including its employees or those who have already been in its employ;

(14)  repealed;

(15)  “secretary” : the secretary to the Commission appointed under section 9;

(16)  “registered person or company” : a person or company registered or required to be registered under this act;

(17)  “senior officer” :

i.  the chairman or any vice-chairman of the board of directors, the president, any vice-president, the secretary, the treasurer or the general manager of a company, partnership or association or any other individual who performs functions for the company, partnership or association similar to those normally performed by an individual occupying any such office, and

ii.  each of the five highest paid employees of a company, partnership or association, including any individual referred to in subparagraph i;

(18)  “voting share” : any share carrying voting rights under all circumstances or by reason of the occurrence of any condition that has been fulfilled;

(19)  “decision” : in addition to its usual meaning, a directive, order or ruling.

R. S. 1964, c. 274, s. 1; 1971, c. 77, s. 1; 1973, c. 67, s. 1; 1975, c. 76, s. 11; 1977, c. 5, s. 14; 1981, c. 9, s. 24; 1982, c. 52, s. 264.

2. (1)  A company is deemed to be affiliated with another company if one of them is the subsidiary of the other or if both are subsidiaries of the same company or if each of them is controlled by the same person or company.

(2)  A company is deemed to be controlled by another person or company or by two or more companies if:

(a)  voting shares of the first-mentioned company carrying more than fifty per cent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of such other person or company or by or for the benefit of such other companies; and

(b)  the votes carried by such shares are sufficient, if exercised, to elect a majority of the directors of the first-mentioned company.

(3)  A company is deemed to be a subsidiary of another company if:

(a)  it is controlled by:

i.  that other, or

ii.  that other and one or more companies each of which is controlled by that other, or

iii.  two or more companies each of which is controlled by that other; or

(b)  it is a subsidiary of a company that is that other’s subsidiary.

(4)  A company is deemed to be another’s holding company or parent company if that other is its subsidiary.

(5)  A person is deemed to own beneficially securities beneficially owned by a company controlled by him or by an affiliate of such company.

(6)  A company is deemed to own beneficially securities beneficially owned by its affiliates.

1973, c. 67, s. 2.

COMMISSION DES VALEURS MOBILIÈRES DU QUÉBEC

3. A body for the supervision and control of trading in securities is constituted under the name of “Commission des valeurs mobilières du Québec”.

Such body is composed of not more than seven commissioners including a chairman and two vice-chairmen, appointed by the Government, which shall fix their remuneration.

The chairman and the two vice-chairmen are appointed for a fixed period which shall not exceed ten years. Once their terms of office and the amounts of their remuneration are fixed, they cannot be reduced. However, the Government may dismiss any commissioner from office before the expiry of his term on a report by the Court of Appeal after an inquiry upon a request from the Minister.

The four other commissioners are appointed for a fixed period which shall not exceed three years. They shall hold office during pleasure.

On the expiry of their terms of office, the commissioners remain in office until reappointed or replaced.

R. S. 1964, c. 274, s. 2; 1971, c. 77, s. 2; 1973, c. 67, s. 3; 1977, c. 5, s. 14.

4. In case of the absence or inability to act of a commissioner, the Government may appoint a person to replace him temporarily on such conditions and for such remuneration as it may determine.

R. S. 1964, c. 274, s. 3.

5. The seat of the Commission shall be in Montréal, but it holds in Québec an office where may be made validly any service of writ, production of documents, request, petition and other procedure emanating from the division of appeal established in conformity with article 30 of the Code of Civil Procedure.

The Commission may hold sittings at any place in the Province.

R. S. 1964, c. 274, s. 5; 1971, c. 77, s. 4.

6. The quorum of the Commission shall be two members.

In case of disagreement on a decision to be rendered, the chairman shall have a casting vote.

When a matter is heard, in the absence of the chairman, by the other commissioners and the latter do not agree on a decision, the matter shall be referred forthwith to the chairman for final decision by him.

R. S. 1964, c. 274, s. 6.

7. The chairman and the vice-chairmen shall devote their full time to the work of the Commission and their duties of office.

Any commissioner may exercise the powers and shall perform the duties vested in or imposed upon the Commission by this act or the regulations and delegated to him by the Commission, except those referred to in sections 12, 13 and 53 to 63.

Every decision rendered pursuant to a delegation under the preceding paragraph is subject to review by the Commission under section 12 or 13, as the case may be, in the same manner as if it had been made by the Director, and the person who made the decision shall not sit in review.

R. S. 1964, c. 274, s. 7; 1973, c. 67, s. 4.

8. The Commission may appoint experts to assist it in such manner as it may consider expedient.

The Commission may submit a contract, prospectus, financial statement, report or other document to such an expert; it has the powers contemplated in sections 54 and 55 to summon and enforce the attendance of witnesses before the expert and to compel them to file documents, records and other objects, and these sections apply mutatismutandis.

1973, c. 67, s. 4.

9. The Director, the Deputy Directors, the secretary and the other officers and employees of the Commission shall be appointed and remunerated in accordance with the Civil Service Act (chapter F-3.1).

R. S. 1964, c. 274, s. 8; 1966-67, c. 17, s. 14; 1971, c. 77, s. 5; 1973, c. 67, s. 5; 1978, c. 15, s. 140.

10. The Director or any Deputy Director shall exercise the powers and perform the duties vested in or imposed upon him by this act or the regulations, and he may exercise the powers and shall perform the duties vested in or imposed upon the Commission by this act or the regulations and delegated to him by the Commission, except those mentioned in sections 12, 13 and 53 to 63.

R. S. 1964, c. 274, s. 9; 1966-67, c. 17, s. 15; 1971, c. 77, s. 6; 1973, c. 67, s. 6.

11. The Director may refer any matter submitted to him to the Commission.

1973, c. 67, s. 6.

12. The Commission may, of its own motion and for cause, review any decision that it or the Director has made; it may also exercise, by evocation or otherwise, any power vested in the Director by this act.

The Commission shall determine the rules applicable to hearings before the Commission or the Director.

R. S. 1964, c. 274, s. 10; 1966-67, c. 17, s. 16; 1971, c. 77, s. 7; 1973, c. 67, s. 7.

13. Any person or company directly affected by a decision of the Director may, within 30 days of receiving written notice of the decision, request by notice in writing a hearing before the Commission to revise or revoke the decision.

1973, c. 67, s. 7.

14. Any person or company appearing before the Commission may require that the testimony given at the hearing be recorded in accordance with the Code of Civil Procedure.

The cost of recording such testimony, including that of two copies of the transcript for the Commission, is charged to such person or company.

1973, c. 67, s. 7.

15. No commissioner, nor the Director or any officer or employee of the Commission may, on pain of forfeiture of office, have a direct or indirect interest in an undertaking putting his personal interest in conflict with that of the Commission.

Nevertheless, he shall not be so dismissed if such interest devolves to him by succession or by gift, provided that he renounce thereto or dispose thereof with diligence.

R. S. 1964, c. 274, s. 11; 1971, c. 77, s. 8.

16. The commissioners, the Director and the other officers and employees of the Commission cannot be judicially proceeded against by reason of official acts done in good faith in the performance of their duties.

The same applies to any person appointed by the Commission to make an investigation or examination.

R. S. 1964, c. 274, s. 12; 1971, c. 77, s. 9; 1973, c. 67, s. 8.

17. Any person or company directly affected by a decision of the Commission may, if the testimony has been recorded and the case is not one contemplated by the last two paragraphs of section 67, appeal from the decision of the Commission to three judges of the Provincial Court, provided that he or it notifies the Commission thereof by registered or certified letter within thirty days after the decision rendered by the Commission.

Such appeal shall be governed by articles 491 and following of the Code of Civil Procedure which shall apply mutatismutandis, except that the appellant must file, in lieu of the joint record, four copies of the motion and of the decision impugned and the parties are not bound to file a factum of their pretensions. The rules of practice of the Court of Appeal in civil matters shall also apply to such appeal and the duties incumbent upon the prothonotary of the Superior Court shall be fulfilled by the secretary. The Commission may appoint an attorney to make such representations as it sees fit upon any appeal under this section.

For the purposes of an appeal, the secretary shall send to the clerk of the Provincial Court a copy of the decision appealed from, the depositions of the witnesses, the exhibits, briefs and other pertinent documents and, where applicable, the decision reviewed or revoked by the Commission.

The three judges of the Provincial Court may confirm, amend or quash the decision of the Commission and render the decision that should have been rendered in first instance.

The decision appealed from shall be executory and shall have full force and effect during the appeal.

The decision of the three judges of the Provincial Court shall be final and without appeal.

Notwithstanding such judgment, the Commission may thereafter render a further decision upon new facts or information, which decision shall also be subject to this section.

R. S. 1964, c. 274, s. 13; 1971, c. 77, s. 10; 1973, c. 67, s. 9; 1975, c. 83, s. 84.

18. No extraordinary recourse provided in articles 834 to 850 of the Code of Civil Procedure shall be exercised and no injunction shall be granted against the Commission or the members of the Commission, against a person appointed by it to conduct an investigation or examination or against the Director acting in their official capacity.

Article 33 of the Code of Civil Procedure shall not apply to the Commission or its members or the Director or to its members acting in their official capacity.

1971, c. 77, s. 10; 1973, c. 67, s. 10.

19. A judge of the Court of Appeal, upon motion, may annul summarily any writ, order or injunction issued or granted contrary to section 18.

1971, c. 77, s. 10; 1979, c. 37, s. 43.

20. No writing or document shall be attributed to the Director or the Commission unless it is signed or attested by the Director or a commissioner, as the case may be, or by any other person duly authorized by the Commission.

Any document or writing signed or attested by the Director, a commissioner or any other person duly authorized by the Commission shall be authentic.

1971, c. 77, s. 10.

21. The secretary shall sign, when authorized by the Commission, or, as the case may be, authenticate any document emanating from the Commission, receive service of documents intended for it and exercise the other duties vested in him by the act, the regulations or the Commission.

1973, c. 67, s. 11.

TRADING IN SECURITIES AND REGISTRATION

22. The following shall constitute trading in securities:

(a)  any alienation or disposal, for a valuable consideration, of a security or of an interest in or option on a security, any solicitation for or obtaining of a subscription to a security for such a consideration and any attempt to do any of the aforesaid acts;

(b)  any underwriting of all or part of an issue of securities;

(c)  any act, transaction, advertisement, conduct or negotiation other than a preliminary negotiation for the purpose or having the effect of carrying out, directly or indirectly, any operation contemplated in subparagraphs a and b or defined by the regulations as constituting a trade in securities.

R. S. 1964, c. 274, s. 14.

23. There shall be four classes of registration under this act: as a broker, as a security issuer, as an investment counsel and as a salesman.

R. S. 1964, c. 274, s. 15.

24. No one shall:

(a)  trade in any security unless he is registered as a broker or security issuer or as salesman for a broker or security issuer registered as such;

(b)  act as an employee, officer or agent of a person or company in connection with trading in any security by such person or company, unless he himself or such person or company is registered as a broker or as a security issuer;

(c)  act as investment counsel without being registered as such;

(d)  act as salesman for a person or company, in connection with trading in any security by such person or company, unless he is registered as a salesman for a duly registered broker or security issuer.

Registration as a security issuer shall not give the holder thereof the right to do any of the things mentioned in paragraphs 3, 4 and 12 of section 1 or in section 22, with respect to securities other than those which such holder itself has issued.

Every person or company doing any of the things mentioned in this section without the required registration or when such registration is suspended commits an offence.

The Government may, by regulation, withdraw from the application of this section certain sales or transactions designated by it.

R. S. 1964, c. 274, s. 16; 1971, c. 77, s. 11.

25. Where a person or company is registered as a broker, security issuer or investment counsel, every partner of such person or officer of such company may, without separate registration, act in the name and on behalf of the person whose partner he is or of the company of which he is an officer, if such action was authorized by the Commission when such person or company was registered.

R. S. 1964, c. 274, s. 17.

26. Except in the case where the Commission has given, at the time of registration, the authorization contemplated in section 25, no individual who becomes a member of a partnership or association or an officer of a company after the registration of such partnership, association or company, may trade in securities as such partner or officer unless the partnership, association or company concerned has received from the Commission written authorization for such purpose.

Every contravention of the provisions of this section shall constitute an offence.

R. S. 1964, c. 274, s. 18.

27. Where a person registered as a salesman for a broker or security issuer ceases to act for such broker or security issuer, his registration shall be suspended ipso facto until the Commission has received written notice of the employment of such salesman by a registered broker or security issuer and such employment has been approved by the Commission.

R. S. 1964, c. 274, s. 19.

28. No registration shall be required for the following sales of and transactions in securities:

(a)  a judicial sale or a sale by a testamentary executor, tutor, curator, trustee, the public curator, a trustee in bankruptcy or liquidator, under judicial authorization or any legislative provision;

(b)  an isolated sale or transaction by or on behalf of the owner, where such sale is not made in the course of continued and successive transactions of a like nature nor by a person whose usual occupation is trading in securities;

(c)  a sale made in the performance of his duties by an officer or employee of Her Majesty in the right of Canada or of any Canadian province, or by an officer or employee of a commission constituted under an act of the Parliament of Canada or of the Legislature of a province;

(d)  a sale made in good faith by a creditor-pledgee or for his account, in the ordinary course of business, of any security pledged as security for a debt contracted in good faith, for the purpose of liquidating such debt;

(e)  subject to the provisions of the penultimate paragraph of this section, the issuance, distribution or sale of shares, debentures or other securities of a person or company to the holders of securities already issued by such person or company and also, in the case of a company incorporated without pecuniary gain, to its members only, provided that no commission or remuneration is paid or allowed in connection therewith, except that a compensation equal to the disbursements estimated or incurred may be paid to any person or company registered with the Commission, for services rendered with respect to such issuance, distribution or sale;

(f)  subject to the provisions of the last paragraph of this section, the exchange by or on behalf of one company, of securities issued by it for securities of another company, already issued or to be issued, for the purpose of merging and amalgamating such companies or of reorganizing one of them or, at the discretion of the Commission, for any other purpose;

(g)  sales of securities to insurance or trust companies or to chartered banks and to any other institution or company designated by the Commission;

(h)  sales or transactions specifically exempted by the regulations from the application of section 24;

(i)  the issuances, distributions, sales or transactions of the securities issued by a private company; however, the Commission may always, in its discretion, make such private company subject to this act.

The Commission may also, at its discretion, grant an exemption from registration in the case of an issue of securities sold en bloc to one or more registered brokers, provided that the permission contemplated by section 67 has been given with respect to such issue whenever such permission is required.

The Commission may furthermore grant to a company or corporation an exemption from registration for the issuance, distribution and sale of any of its securities to its officers, directors and employees or to the officers, directors and employees of its affiliates.

When a company or corporation plans an issue, distribution or sale of securities in a case contemplated by the provisions of paragraph e of this section, it must give the Commission a notice indicating the date, amount, nature and conditions of the proposed issue, distribution or sale; the Commission may then, at its discretion, either not object to such proposed issue, distribution or sale or decide that it shall not take place unless the company or corporation applies for and obtains registration as a security issuer; and such proposed issue, distribution or sale shall not take place unless the Commission informs the company or corporation in writing that, subject to the conditions it imposes, it does not object thereto or, it grants the registration and permission necessary for such purpose.

When a company or corporation plans an issue of securities, in a case of exchange contemplated by the provisions of paragraph f of this section, it must give the Commission notice thereof indicating the date, amount, nature and conditions of the proposed issue and exchange; the Commission may then, at its discretion, either not object to the proposed issue and exchange or decide that they shall not take place unless the company or corporation applies for and obtains registration as a security issuer; and the proposed issue and exchange shall not take place unless the Commission informs the company or corporation in writing that, subject to the conditions it imposes, it does not object thereto or, it grants the registration and permission necessary for such purpose.

R. S. 1964, c. 274, s. 20; 1971, c. 77, s. 12; 1973, c. 67, s. 12.

29. No registration shall be required of the security issuer in the case of the following securities:

(a)  bonds or other evidences of indebtedness contemplated in paragraphs a and c and subparagraph 1 of paragraph e of article 981o of the Civil Code;

(b)  repealed;

(c)  promissory notes and negotiable instruments payable on demand or within twelve months of their issue provided that, if trading in such securities is not limited to corporations, each such promissory note or negotiable instrument be for a principal sum of at least $50,000;

(d)  any class of securities trading in which is specifically exempted by the regulations from the application of section 24.

The Commission, when it deems it expedient, may grant an exemption from registration for issues of securities made in another province of Canada and in which trust funds may be invested under the laws of the said province.

It may also, at its discretion, grant an exemption from registration in the case of securities quoted or which it has been agreed to quote on a recognized stock exchange.

It may also, at its discretion, grant an exemption from registration for the sale of certain securities forming part of issues to which the foregoing provisions of this section apply.

R. S. 1964, c. 274, s. 21; 1966-67, c. 82, s. 2; 1977, c. 5, s. 14; 1979, c. 14, s. 7.

30. Registration as an investment counsel shall not be required of:

(a)  a member of a legally constituted professional body who occasionally gives financial advice in the ordinary practice of his profession;

(b)  a publisher of a newspaper or business or financial journal, magazine or other periodical of general paid circulation, published in good faith and distributed, for a consideration, exclusively to subscribers or purchasers, who gives advice as an investment or financial counsel solely through such publications and who has no interest, direct or indirect, in any of the securities respecting which he gives advice and receives no commission or other consideration for his advice and gives the same only incidentally in the course of his business as a publisher;

(c)  a bank, a loan society, a savings and credit union, a trust company or an insurance company;

(d)  a person or company recognized by the regulations as not being an investment counsel within the meaning of this act.

R. S. 1964, c. 274, s. 22.

31. No broker or security issuer shall employ, directly or indirectly, any person as salesman who is not registered as such for such broker or security issuer.

Every contravention of the provisions of this section shall constitute an offence.

R. S. 1964, c. 274, s. 23.

32. The granting or renewal of registration is at the discretion of the Director.

R. S. 1964, c. 274, s. 24; 1971, c. 77, s. 13; 1973, c. 67, s. 13.

33. The Director must, whenever he refuses the granting or renewal of registration to a person or company, give him or it the opportunity to be heard.

1973, c. 67, s. 13.

34. No registration may be granted to an applicant not qualified therefor under this act and the regulations.

1973, c. 67, s. 13.

35. (1)  Registration or renewal of registration shall be done annually.

(2)  Registration or renewal of registration may however be granted for a period of less than one year if the Director considers it necessary in the public interest or for reasons of administrative planning.

The fees may be proportionately reduced.

R. S. 1964, c. 274, s. 25; 1971, c. 77, s. 14; 1973, c. 67, s. 14.

36. The Commission may at any time, after having given to the registered person or company an opportunity to be heard, suspend, cancel or revoke a registration.

1973, c. 67, s. 14.

37. Where the Commission considers that the holding of a hearing would cause a delay contrary to public interest, it may suspend the registration without hearing the registered person or company; in that case, it must notify such person or company of the suspension and request him or it to be present at a review to be held within fifteen days.

1973, c. 67, s. 14.

38. The Commission may, when it considers it expedient in the public interest, give public notice of any refusal, suspension, cancellation or revocation of a registration.

1973, c. 67, s. 14.

39. Registration may be limited to trading in certain securities or certain classes of securities and may be granted on special conditions as determined by the Director.

Every person or company trading in securities other than those for which he or it has been registered, or violating any of the conditions on which such registration was granted, shall be guilty of an offence.

R. S. 1964, c. 274, s. 26; 1973, c. 67, s. 15.

40. Registration shall be effected by entering, in a register kept for the purpose, the name of the applicant and the place where service may be made upon him in Québec.

Such register may be examined by the public during the office hours of the Commission.

R. S. 1964, c. 274, s. 27.

41. Application for registration shall be made in writing on forms provided by the Commission and shall be accompanied by the fees prescribed by the regulations and the security required by the Commission.

R. S. 1964, c. 274, s. 28; 1973, c. 67, s. 16.

42. When an application for a registration or renewal is withdrawn, the Director may recommend to the Minister of Finance that a refund be made to the applicant of all or part of the fees that he has paid.

The Minister of Finance shall make such refund out of the consolidated revenue fund.

1973, c. 67, s. 17.

43. Every applicant shall indicate in his application the place where notices may be sent to him and service made upon him in Québec, whether he is domiciled therein or not. Notices under this act or the regulations shall be validly sent and legal proceedings shall be validly served if sent to or served at such place. Such notice may be sent to the applicant by registered or certified mail.

R. S. 1964, c. 274, s. 29; 1975, c. 83, s. 84.

44. The Director may at any time require an applicant or a registered person or company to furnish it, within a specified delay, with any additional information or document and may require verification by affidavit or otherwise of any information demanded or previously given.

The Director may also require that the applicant or the registered person or company or one of its employees, partners, officers, directors, trustees, or any person performing a similar function be examined under oath before the person designated by the Director.

R. S. 1964, c. 274, s. 30; 1973, c. 67, s. 18.

45. Every registered broker must notify the Director of:

(a)  any change of address of each of its places of business and elected domiciles;

(b)  any change among its officers, directors, partners, shareholders or persons performing a similar function and of the reason for any resignation, dismissal, termination of employment or departure of any partner;

(c)  the commencement and termination of employment of every salesman and the reason for any termination of employment;

(d)  the opening and closing of any branch office and, in the case of the opening of a branch office, the name and address of the person in charge of it; and

(e)  any change in the name or address of the person in charge of any branch office.

1973, c. 67, s. 19.

46. Every registered investment counsel must notify the Director of:

(a)  any change of address of each of its places of business or elected domiciles;

(b)  any change among its officers, directors, partners, shareholders or among the persons performing a similar function.

1973, c. 67, s. 19.

47. Every registered salesman shall notify the Director of:

(a)  any change of address of each of his places of business or elected domiciles;

(b)  the commencement and termination of his employment with a registered person or company.

1973, c. 67, s. 19.

48. The notice provided for in sections 45 to 47 must be given in writing within five days of the event giving rise to it.

1973, c. 67, s. 19.

49. Every registered security issuer shall comply with the requirements of section 45; however, in the event of a change among its shareholders, the notice shall only be given if the Director so requires, upon such terms and conditions as he determines.

1973, c. 67, s. 19.

50. The Director may exempt any person or company from the requirements of sections 45 to 47, upon the terms and conditions he considers appropriate.

1973, c. 67, s. 19.

51. The omission, without a reasonable excuse, to comply with one of the provisions 45 to 48 constitutes an offence.

1973, c. 67, s. 19.

FRAUDULENT ACTS AND INVESTIGATIONS

52. The following are fraudulent acts within the meaning of this act:

(a)  any false representation made intentionally, in writing, orally, by conduct or in any other manner, of a material fact, past or present, and any intentional omission to disclose such fact;

(b)  any affirmation or promise respecting the future, which is beyond reasonable expectation and is not made in good faith;

(c)  any fictitious or pretended trade in securities;

(d)  obtaining or attempting to obtain, directly or indirectly, through trading in securities, any commission, fees or gross profit incompatible with the practice of the trade or with business methods generally recognized as equitable, or with the sound development of trade, industry, natural resources or any other branch of the economic field;

(e)  subject to the last paragraph of this section, any promise or representation, written or oral, made by a broker, security issuer or salesman with a view to inducing a person to acquire a security by representing to him that it will be repurchased or resold by such broker, security issuer or salesman, or by another person or company, or that the whole or part of the price of sale of such security will be reimbursed to the purchaser in any manner;

(f)  any promise or representation, written or oral, made by a broker, security issuer or salesman with a view to inducing a person to acquire a security by representing to him, without reasonable excuse, that it will be quoted on a stock exchange;

(g)  upon the occasion of a dangerously hazardous speculative transaction respecting securities, to abuse the credulity, ignorance, weakness or manifest inexperience in business of a person incapable of estimating the risk involved in the transaction, and so to cause him serious prejudice;

(h)  any deliberate false declaration relating to a material fact, contained in any registration application, document, statement or information submitted or given to the Commission, its representatives or the Director under the provisions of this act or of the regulations, or in a prospectus or other publication relating to securities and intended for the information of the public;

(i)  generally any artifice, bargain, stratagem, prospectus, circular, publication, advertisement, business method or act employed to obtain money, profit or property by any of the above mentioned means or by any other unlawful means;

(j)  any other act or omission relating to trading in securities and described as a fraudulent act by the regulations.

The provisions of subparagraph e of this section shall not apply to a statement made by a broker, security issuer or salesman that the security sold or offered for sale is redeemable or reimbursable by the company which issued it, if such statement is true.

R. S. 1964, c. 274, s. 35; 1971, c. 77, s. 15.

53. The Commission may, at any time, on its own authority or following a complaint, make any investigation, question any person, require any information and examine any document or thing, in order to ascertain if a fraudulent act or offence against this act or the regulations has been or is about to be committed.

It may also authorize in writing any person to hold such investigations for it.

R. S. 1964, c. 274, s. 36; 1973, c. 67, s. 21.

54. The first paragraph of section 6 and sections 9, 10, 11, 12, 13 and 16 of the Act respecting public inquiry commissions (chapter C-37) shall apply, mutatis mutandis, to such investigations.

When they are made by a person other than a commissioner, he must take, before a judge of the Provincial Court or a member of the Commission, the oath contemplated in section 2 of the said act, mutatis mutandis.

R. S. 1964, c. 274, s. 37; 1965 (1st sess.), c. 17, s. 2; 1971, c. 77, s. 16.

55. A person called upon to testify in the course of such investigation cannot refuse to answer or to produce any document, record or thing on the ground that he might thereby be incriminated or exposed to a penalty or to civil proceedings, subject however to the provisions of the Canada Evidence Act (Revised Statutes of Canada, 1970, chapter E-10).

R. S. 1964, c. 274, s. 38.

56. The Commission may take possession of any document, object or record belonging or not to a person or company subject to an investigation, and whether or not the same be in the possession of such person or company, whenever the Commission deems the same necessary for the purposes of such investigation.

Such power may also be exercised by any investigator authorized by the Commission and who must produce this authorization on demand.

Such power shall not extend to any document or record which the holder thereof owing to his professional secrecy, cannot be compelled to produce before the courts of Québec.

R. S. 1964, c. 274, s. 39.

57. Where the Commission deems it necessary for the proper conduct of an investigation, it may retain the services of accountants and other experts to examine documents, records and any other things and to report their findings to it.

Each such accountant and expert shall have, for the purposes of the investigation, the powers conferred on the Commission and investigators by sections 54, 55 and 56.

R. S. 1964, c. 274, s. 40.

58. It shall be an offence for any person or company to fail or refuse, without reasonable excuse:

(a)  to furnish, within the specified time, any information or document required under this act or the regulations;

(b)  in the course of an investigation by the Commission or an investigator, to appear after summons or to give evidence, or to answer questions, or to produce any document, paper or thing the production whereof is required, or to permit the examination or the taking possession of documents, property, records or things by the accountants or experts contemplated in section 57, or to answer the questions put by such accountants or experts.

R. S. 1964, c. 274, s. 41; 1973, c. 67, s. 22.

59. Any failure or refusal, without reasonable excuse, to do anything required by section 58:

(a)  shall authorize the Commission to decide without further evidence, that a fraudulent act has been committed, and by whom, respecting the operation under investigation;

(b)  shall constitute, for the purposes of a prosecution for an offence against section 58, prima facie evidence that such offence has been committed.

R. S. 1964, c. 274, s. 42.

60. When the Commission makes or is about to make or order an investigation or is in possession of serious information to the effect that a person or company has committed a fraudulent act, or when it has ordered the suspension or cancellation of any registration, or when criminal proceedings involving, in its opinion, any trading in securities are instituted or about to be instituted, it may, in writing or by telegram:

(a)  order any person or company having in Québec on deposit or under control or for safe-keeping any funds or securities of the person or company in question, to hold such funds or securities in trust until such order is revoked in whole or in part by the Commission;

(b)  prohibit any person or company, about to be or actually accused or examined in the course of an investigation, from withdrawing any such funds or securities from the possession of any other person or company having them on deposit, under control or for safe keeping, or from trading in or otherwise parting with funds or securities entrusted to him or it by customers or other persons or companies;

(c)  order any company or other corporation, firm or person habitually leasing safety deposit boxes, safes or compartments in safes, not to permit the opening or removal of a safety deposit box, safe or compartment in a safe leased to a person or company mentioned in the order of the Commission, unless a minute, stating that such safety deposit box, safe or compartment has been opened and containing a complete and detailed list of all the securities, documents, sums of money and all other things found therein, is drawn up in triplicate, at the instance and under the supervision of the lessor of such safety deposit box, safe or compartment in a safe, or the authorized representative of such lessor, and a copy thereof, certified true by the lessor or his said representative, has been sent to the Commission;

(d)  in the case of subparagraph c, order the lessor in question not to permit any of the securities, documents, sums of money or things found in the said safety deposit box, safe or compartment in a safe to be taken away or moved until so authorized by the Commission.

Such order or prohibition, in the case of banks or loan or trust companies, shall apply only to the offices, branches or agencies mentioned therein.

No such order or prohibition shall apply, unless the contrary is expressly stipulated therein, to funds or securities deposited in a stock exchange clearing house, or to securities in process of transfer through a transfer agent.

Failure, without reasonable excuse, or refusal to comply with such order or prohibition shall constitute an offence.

The orders, prohibitions and injunctions above contemplated shall also apply to funds and securities received in trust, on deposit or for safe keeping by a person or company after the issuing of such orders, prohibitions and injunctions and until they are revoked, in whole or as regards such funds or securities.

R. S. 1964, c. 274, s. 43.

61. Any person or company in receipt of an order given or prohibition made by the Commission under section 60, if in doubt as to the identity of the funds or securities to which the same relates, may obtain, from the Commission, particulars in this respect in order to ascertain precisely what funds or securities are involved.

R. S. 1964, c. 274, s. 44.

62. No order or prohibition issued by the Commission under section 60 shall be interpreted as depriving any person or company of his recourse to the courts to enforce his right of ownership in the funds or securities contemplated by such order or prohibition.

R. S. 1964, c. 274, s. 45.

63. When, to the knowledge of the Commission, criminal proceedings involving, in its opinion, any trading in securities are instituted or about to be instituted, it may, by letter or telegram, give notice thereof to the registrar of any registration division or to the Minister of Energy and Resources, mentioning the names of the persons or companies accused or about to be accused and specifying the immoveables or mining rights to which the securities concerned relate.

Such notice must be registered by the registrar of the registry office or in the Ministère de l’Énergie et des Ressources, as the case may be, and thereafter no transaction respecting such immoveables or mining rights shall be registered as long as such notice has not been revoked.

R. S. 1964, c. 274, s. 46; 1977, c. 5, s. 14; 1979, c. 81, s. 20.

REGULATION OF BROKERAGE

64. Every broker who, as agent for a customer, has bought or sold securities for such customer or who, as principal, has bought securities from a customer or has sold securities to him, shall without delay send or deliver to him a written confirmation of the transaction, indicating whether he acted as agent or principal, and also:

(a)  the quantity and description of such securities;

(b)  the purchase or sale price, as the case may be;

(c)  the commission, if any, payable on the purchase or sale;

(d)  the date of the transaction.

Failure, without reasonable excuse, to comply with the provisions of this section shall constitute an offence.

R. S. 1964, c. 274, s. 47.

65. Every broker shall keep a record showing, in addition to the information mentioned in section 64:

(a)  the name of the person or company from, to or through whom or which securities were bought or sold;

(b)  the name of the salesman having acted as mandatary, agent or employee of the broker or for the latter in the case of each sale;

(c)  in the case of a member of a stock exchange, the hours between which the transaction took place and the name of the stock exchange on which it was effected.

Every broker, at any time within two years after a transaction, must furnish his customer, on demand, with the details of the transaction mentioned in the foregoing subparagraphs a and b.

R. S. 1964, c. 274, s. 48.

66. Every stock exchange shall keep a record showing the time of each transaction made through such stock exchange and shall supply to any customer of any of its members, upon production of a written confirmation of any transaction with such member, particulars of the time of such transaction together with a certificate establishing the truth or falsity of the facts mentioned in the confirmation, provided the transaction concerned was not effected more than two years previously.

Every contravention of a provision of this section shall constitute an offence.

R. S. 1964, c. 274, s. 49.

67. Subject to section 69, no issue of securities shall, in Québec, be the object of an initial sale, offer of sale or distribution to the public before the Commission has permitted trading, even if the person, company or undertaking, existing or proposed, including any mining undertaking, by or on behalf of or for the benefit of whom or of which such issue is made, is domiciled or has its corporate seat outside Québec.

The sale, offer of sale or distribution of securities made in any part of Québec to persons, firms, companies or corporations having their domicile, residence or place of business outside Québec are deemed, for the purposes of this section, to be a sale, offer of sale or distribution made in Québec.

In the case of an issue of corporate shares which have already been the object of an initial sale or distribution to the public, but which are held by a person or company, or by a group of persons or companies acting together, to an extent representing the control of the company or the majority of a particular class of shares of its capital stock, the permission of the Commission must also be obtained to sell, offer for sale or distribute them again to the public, en bloc or to an extent representing the control of the company or of the particular class of shares concerned, whether such sale, offer or distribution be made directly as principal or indirectly through an agent, broker or salesman.

If, in the case of the preceding paragraph, the holder or holders of the shares wishing to sell or distribute them again to the public cannot obtain from the company which issued such shares all the information they require, either to prepare their prospectus or to meet the Commission’s demands for information, the Commission may order the company to give the holders of such shares all the information it deems necessary for such purpose.

Furthermore, if the holders of such shares have been unable to obtain all the signatures required for the prospectus and the Commission is satisfied that they have made all reasonable efforts to do so and that the lack of some of the signatures will not prejudice anyone, it may, at its discretion, exempt the holders of such shares from obtaining such of the signatures to the prospectus as are lacking, on such conditions as it may deem it expedient to prescribe.

The Commission, whenever it deems it expedient, may grant such permission subject to such conditions as it may impose.

Such permission shall not imply any guarantee by the Commission as to the accuracy of the prospectus or the value of the securities issued or any recommendation respecting them. The Commission may revoke it, at its discretion, at any time when it deems it to be in the public interest so to do.

No broker or other person or company shall sell, offer for sale or distribute to the public any securities subject to the provisions of this section before giving written notice thereof to the Commission.

The Commission shall have power to decide in last resort if a sale, offer for sale or distribution of securities is subject to the provisions of this section.

Notwithstanding the foregoing provisions of this section, the Commission, in cases where it deems it expedient to do so, may grant an exemption from registration for the sale of securities contemplated by this section.

R. S. 1964, c. 274, s. 50.

68. Any broker, security issuer or salesman who makes any trade in securities respecting which the requirements of section 67 have not been observed shall be guilty of an offence.

R. S. 1964, c. 274, s. 51.

69. The provisions of sections 67 and 68 shall not apply:

(a)  to the transactions and securities contemplated by sections 28 and 29;

(b)  repealed;

(c)  when there is an exemption of registration under section 28 or section 29.

R. S. 1964, c. 274, s. 52; 1977, c. 5, s. 14; 1979, c. 14, s. 8.

70. Every issue of securities which is subject to the application of section 67 must, unless the Commission otherwise determines, be accompanied by a typewritten, polygraphic or printed prospectus containing respecting the person, company or undertaking concerned, a full disclosure of relevant facts as prescribed by the regulations.

Copies of such prospectus must be furnished to the Commission in such number as it may specify.

No prospectus shall be distributed to the public, nor shall any copy be remitted to an eventual or prospective purchaser of a security to which such prospectus relates, unless the Commission has previously permitted the distribution thereof in writing.

A copy of such prospectus, after distribution thereof has been permitted, shall be remitted, by the broker or issuer, to every purchaser of securities subject to the application of section 67, at or before the confirmation of the sale and before any payment, in cash or otherwise, of the price of sale of the securities.

Any violation of any provision whatsoever of this section constitutes an offence.

The Commission may require that such prospectus be revised or replaced, even after permission has been granted under section 67, when it deems it necessary for the protection of the public.

Section 42 applies to the withdrawal of the prospectus, mutatismutandis.

R. S. 1964, c. 274, s. 53; 1973, c. 67, s. 23.

71. No broker, security issuer or salesman shall be entitled to trade in securities before he has received written notice of his registration.

No investment counsel shall be entitled to engage in any activity as such before he has received such notice.

No broker, security issuer, investment counsel or salesman shall declare, directly or indirectly, that he is registered under the provisions of this act, or exhibit to any person the original or a copy of any document or letter received from an officer of the Commission on such subject, or announce his registration in any other manner, except by replying to persons questioning him on the subject that he is registered under such a name and such a number.

No person or company shall make any representation, written or oral, that the Commission has approved the financial standing, competence, ability, conduct or operations of a broker, security issuer, investment counsel or salesman or that it has passed upon the merits of a security.

Every contravention of a provision of this section shall constitute an offence.

R. S. 1964, c. 274, s. 54.

72. No salesman shall trade in securities for a broker or security issuer other than the one for whom he is registered as a salesman, unless the written consent of the broker or security issuer for whom he is registered has been filed with the Commission and the latter has registered him as a salesman for the other broker or security issuer.

Failure, without reasonable excuse, to comply with the provisions of this section shall constitute an offence.

R. S. 1964, c. 274, s. 55.

73. A broker who buys and carries on margin, for a customer, securities of any company or undertaking in Canada or elsewhere, must not sell or cause to be sold, for any account in which he has a direct or indirect interest, securities of such company or undertaking which he also holds on margin, if such sale would have the effect of reducing below the amount which the broker should be carrying for all his customers, the amount of securities, rights or interest which he has in his possession or under his control, for such customer, in the ordinary course of business.

R. S. 1964, c. 274, s. 56.

74. The requirements of section 73 shall also apply:

(a)  if the broker is a firm of which a member or an employee has a direct or indirect interest in the account for which such securities would be sold;

(b)  if the broker is a company, and a director, officer or employee thereof has a similar interest in such account.

R. S. 1964, c. 274, s. 57.

75. In case of a sale by the broker, or by his partner or the employee of the firm of which he is a member, or by any director, officer or employee of the company acting as a broker, of securities contemplated in section 73, in the circumstances stated in the said section or in section 74, the injured customer may, if he so desires, treat as null his contract under which the broker purchased such securities for him and recover from the broker the amount he paid to him, with interest, together with the securities deposited by him with the broker as security or otherwise.

The customer may exercise such right of treating his contract with the broker as null, by notice in conformity with the provisions of section 43.

Every sale of securities in contravention of section 73 or section 74 shall also constitute an offence on the part of the broker.

The action in recovery provided for in the first paragraph of this section is prescribed after one year dating from the day when the client became aware of such sale.

R. S. 1964, c. 274, s. 58.

76. Any agreement inconsistent with any provision of sections 73, 74 or 75 shall be null and void.

R. S. 1964, c. 274, s. 59.

77. Any proceeding contemplated in paragraph g of section 52 shall entitle the party seriously prejudiced to proceed in rescission of the transaction, under reserve of any other legal recourse which he may have.

The action in rescission may be brought before the civil court of competent jurisdiction of the domicile of the injured party. It shall be prescribed by one year from the date of the transaction.

R. S. 1964, c. 274, s. 60.

78. Any representation made at the residence of an individual with a view to trading in securities is prohibited and constitutes an offence.

Any sale or transaction in securities made with an individual upon or following any representations made at a residence is annullable at the option of such individual.

The action in annulment and in recovery of the amount paid, if any, resulting from a sale or transaction contemplated in the preceding paragraph, may be brought before the civil court of competent jurisdiction of the domicile of the plaintiff. It shall be prescribed by one year from the date of the sale or transaction.

R. S. 1964, c. 274, s. 61.

79. For the purposes of section 78:

(a)  the word “residence” means any building or part of a building in which the occupant resides, permanently or temporarily, and any premises appurtenant thereto, excepting a business office;

(b)  the term “individual” shall not include close personal friends or business associates of the broker or salesman, or customers with whom he habitually trades;

(c)  the expression “representations” includes visits, written solicitations and telephonic or telegraphic communications from a place situated in Québec or not, except, in the case of telephonic or telegraphic communications, if it is a matter of supplying to a person informations that he has himself requested. This expression shall not include however the sending by mail of invitations to subscribe for the purchase of securities or of offers to sell such securities, provided that such invitations or offers be accompanied with a prospectus meeting the requirements of section 70, nor the sending of communications addressed by a company to the registered holders of its securities, provided that in each of such cases, such invitations, offers or communications be made in good faith and be not a fraudulent act or an attempt to commit a fraudulent act within the meaning of section 52.

R. S. 1964, c. 274, s. 62.

80. The Commission may at any time issue an order prohibiting a broker, salesman, security issuer or any person or company, registered or not, from trading in securities or in one or more classes of securities which it may determine, even after authorization under section 67.

From and after receipt of such order, the broker, salesman, security issuer or person or company to whom or which such order is addressed must refrain, so long as it is not repealed, from trading in securities or in any class of securities indicated in the prohibitory order.

Any transaction in securities made in contravention of such order shall constitute an offence.

Subject to any penalty or other recourse provided by this act or any other law, the Commission, in the case of contravention of a prohibitory order made under this section, may take any proceeding by way of injunction before the Superior Court to compel the offender to cease trading in securities or in any class of securities mentioned in the prohibitory order.

The application for an injunction shall constitute an action in itself; it need not be accompanied by the issue of a writ of summons.

No security shall be exigible for the issue of the interlocutory injunction.

The injunction proceedings provided for by this section shall also be subject to the application of the rules of the Code of Civil Procedure respecting injunctions.

R. S. 1964, c. 274, s. 63; 1965 (1st sess.), c. 80, a. 1.

ACCOUNTS, AUDIT AND INFORMATION

81. For the purposes of sections 82 to 93, the following terms, unless the context requires a different interpretation, shall have the following meaning:

(a)  “stock exchange” : a stock exchange having its place of business in Québec;

(b)  “executive committee” : the board of directors, managing committee and any other governing committee of a stock exchange in Québec;

(c)  “member” : a broker who is a member of a stock exchange as above defined, as well as a partnership or company represented on such stock exchange;

(d)  “brokers’ auditor” or “auditor” : an accountant or firm of accountants charged with auditing the books and accounts of members of a stock exchange within the meaning of this section and whose name is on the panel of brokers’ auditors drawn up by the executive committee.

R. S. 1964, c. 274, s. 64.

82. A financial statement of the affairs of every member of a stock exchange shall be prepared, at his expense, at least once a year.

R. S. 1964, c. 274, s. 65.

83. The executive committee shall see that the books of every member are audited at least once a year and shall prepare from time to time, for the purposes of such audit, a panel of brokers’ auditors, chosen from amongst the accountants who have been practising their profession in Québec for at least five years.

Each auditor shall audit the books of the members assigned to him by the executive committee.

The executive committee may at any time change its instructions in that regard and direct other auditors to do such work instead of those already appointed.

No auditor shall audit the books of a member of which or of whom he is an officer or employee.

R. S. 1964, c. 274, s. 66.

84. The expenses of audit, report or statement paid to the auditor by a stock exchange, for auditing the affairs of a member, must be repaid to it forthwith by the latter.

For the repayment of such expenses, the stock exchange shall have a privilege upon the seat held or controlled by such member.

R. S. 1964, c. 274, s. 67.

85. Every brokers’ auditor shall, once a year and oftener if the rules of the stock exchange so require, audit the assets and liabilities and investigate the financial situation of every member whose books he has been instructed to audit, and submit a balance sheet and a report showing the position of the business and affairs of such member.

He shall also make all such further audits and prepare all such further statements and reports as he may think advisable or as the executive committee may require.

Furthermore, every member shall submit to the executive committee all financial statements and reports as the stock exchange may require under its rules.

If a member is at the same time a member of a stock exchange having its place of business outside Québec or is represented on such a stock exchange, the executive committee may accept the statements and reports required by the latter to avail in lieu of the statements and reports provided for by the preceding paragraphs.

R. S. 1964, c. 274, s. 68.

86. The executive committee of a stock exchange may, at any time, require any auditor to make any general or special audit or report upon the whole or any aspect of the business or affairs of a member of such stock exchange or of a person who has been a member thereof or of a firm or company which has been represented thereon.

R. S. 1964, c. 274, s. 69.

87. In making any audit, report or statement contemplated in sections 85 and 86, every auditor shall comply with instructions given to him by the executive committee.

R. S. 1964, c. 274, s. 70.

88. For the purposes of any audit, report or statement under the provisions of sections 85 and 86, the auditor shall be entitled to free access to the books of account, securities, cash, bank accounts, vouchers, correspondence, records and documents of every description of the member whose affairs are being audited.

Every member hindering or obstructing the auditor in the free examination of the documents and things above mentioned, or refusing to place the same at his disposal or concealing or destroying the same, in whole or in part, or preventing the auditor in any other manner from freely making his audit, shall be guilty of an offence.

R. S. 1964, c. 274, s. 71.

89. During or on the completion of any audit made under sections 85 and 86, the auditor shall furnish the executive committee with such statements, reports and information as it may required of him respecting the operations and affairs of the member whose affairs are being or have been audited.

He shall also make a special report to such committee containing the particular information required by the by-laws, rules or regulations of the stock exchange and any further information which the auditor deems it to be in the public interest to supply.

R. S. 1964, c. 274, s. 72.

90. Any person thereto authorized in writing by an executive committee may examine under oath any member of a stock exchange and any officer, partner or employee of such member upon any matter arising out of any report of a brokers’ auditor.

For the purposes of such inquiry the person so authorized shall have all the powers conferred upon an investigator by section 54.

Any person examined under this section who fails to answer the person authorized to examine him or who refuses to furnish the examiner with the information and documents which he requires shall be guilty of an offence.

R. S. 1964, c. 274, s. 73.

91. An executive committee may, in writing, require any member, during or after an audit of his or its affairs, to alter, supplement or replace its system of book or record keeping. Such member shall then be bound to comply with such requirements within the delay fixed by the executive committee.

R. S. 1964, c. 274, s. 74.

92. Where any member of a stock exchange fails to comply with any requirements made by the executive committee under section 91 or by a person appointed by it in accordance with section 90, the executive committee may expel or suspend for such time as it determines such member or the person representing such member on the stock exchange.

R. S. 1964, c. 274, s. 75.

93. The executive committee may expel or suspend, for such period as it may determine, any member of a stock exchange who withholds, destroys, conceals or refuses to make available to an auditor the documents he requires, or refuses to give him information reasonably required by him for the purpose of his audit or report on the affairs of such member or, who fails to comply with any requirement made under section 91 by the executive committee or by any person appointed by it in accordance with section 90.

R. S. 1964, c. 274, s. 76.

94. A financial statement of the affairs of any broker who is not a member of a stock exchange or who is not represented thereon must be made, at his own expense, at least once in each year, in accordance with the provisions of sections 95 and 97.

R. S. 1964, c. 274, s. 77.

95. Such statement shall be prepared by an accountant retained and paid by the broker himself, but his choice must be approved by the Commission. A copy of such statement shall be delivered with diligence to the Commission.

R. S. 1964, c. 274, s. 78.

96. Every broker who is not a member of a stock exchange or who is not represented thereon must also furnish to the Commission any financial statement which the latter deems it advisable to require, in addition to that provided for by sections 94 and 95.

R. S. 1964, c. 274, s. 79.

97. Such financial statements must be furnished on the dates and within the delays fixed by the Commission.

They shall be prepared in the manner determined by the Commission and their accuracy must be certified by the broker himself, or by two partners in the case of a firm, or by two directors in the case of a company.

R. S. 1964, c. 274, s. 80.

98. Every broker who is neither a member of a stock exchange nor represented thereon shall furnish to the Commission, on demand, any additional report or information which it may require.

R. S. 1964, c. 274, s. 81.

99. Every broker who is neither a member of a stock exchange nor represented thereon must keep books of account in which are entered:

(a)  his receipts and expenditures, indicating the sources of the receipts and the purposes to which the expenditures relate;

(b)  his purchases and sales of securities;

(c)  the names and addresses of the persons from whom he purchases or to whom he sells securities and the details of such transactions;

(d)  a statement of his assets and liabilities;

(e)  a mention of all the securities which he holds, at all times, for himself or for others, with a separate indication of each account of clients for whom such securities are held.

Such books of account must be kept at the main business office of the broker in Québec, unless he has obtained written authorization from the Commission to keep them elsewhere.

R. S. 1964, c. 274, s. 82.

100. The Commission or a person designated by it for that purpose may, at any time, investigate the financial affairs of a person or company registered or whose securities have been the subject of an application for exemption or of a prospectus, report, statement or other document or material furnished or transmitted to or filed with the Commission, and prepare a balance sheet or any other statement or report considered necessary.

The Commission, or the designated person, shall have access to all books of account, securities, money in hand, documents, bank accounts, vouchers, correspondence and records of the person or company whose affairs are being investigated, and no person may keep, destroy, hide or refuse to produce any information or other thing required for the purpose of the investigation.

The expenses incurred for the investigation shall be paid by the person or company whose affairs are being investigated, if so ordered by the Commission and on the conditions it determines.

1973, c. 67, s. 24.

REGULATIONS AND OFFENCES

101. The Government may, by regulation:

(a)  designate as securities any certificates, instruments or documents usually recognized as such in trading or that it considers appropriate to recognize as such;

(b)  assign to the Director or any other officer it designates, in addition to the keeping of the registers for registration, the custody of the records and files of the Commission and the documents filed with it or with the Director and assign to him any other duties that it considers expedient;

(c)  qualify as trading in securities any act, transaction, advertisement, conduct or negotiation other than a preliminary negotiation for the purpose or having the effect of carrying out directly or indirectly one of the operations contemplated in subparagraphs a and b of section 22 or other operations that it specifically designates;

(d)  remove from the application of section 24 trading in any class of securities, or sales or transactions expressly designated;

(e)  consider as not investment counsels within this act certain persons or companies specifically designated;

(f)  fix the conditions any applicant must fulfill to obtain registration;

(g)  prescribe the fees that may be required in the application of this act and the regulations;

(h)  qualify as a fraudulent act any act or omission relating to trading in securities;

(i)  determine the form and content of any prospectus required under section 70;

(j)  remove any class of securities or any class of persons or companies from the application of sections 113 to 179;

(k)  prescribe the form and content of the financial statements to be filed with the Commission under this act;

(l)  regulate the quoting of stocks and the trading of securities as well as the form and content of the registers pertaining to them;

(m)  establish rules respecting the furnishing, by a registered person or company, of information concerning securities or trading in securities;

(n)  regulate trading in securities otherwise than through a stock exchange recognized by the Commission;

(o)  regulate the keeping and auditing of the books of account and registers to be kept by security issuers;

(p)  prescribe the documents, certificates, reports, statements, contracts and information to be filed, furnished or sent for the purposes of this act, as well as their form and content and the qualifications of the persons preparing them;

(q)  prescribe the forms to be used for the purposes of this act and the regulations;

(r)  make any other provision considered necessary or desirable for the application of this act.

Any violation of a provision of such regulations the Government qualifies as such shall be an offence.

These regulations and amendments to them shall have force of law while not repealed as if they are part of this act from the date of their publication in the Gazette officielle du Québec unless the Government fixes a later date for such purpose.

R. S. 1964, c. 274, s. 83; 1971, c. 77, s. 17; 1973, c. 67, s. 25.

102. Every person convicted of an offence against any provision of this act or the regulations or of any fraudulent act not punishable under the Criminal Code of Canada shall be condemned, in addition to the costs in all cases, for a first offence to a fine of not less than five hundred dollars nor more than ten thousand dollars and, in default of payment of the fine and costs, to imprisonment for not less than two months nor more than six months; and, for each subsequent offence, to a fine of not less than two thousand dollars nor more than twenty thousand dollars or to imprisonment for not less than six months nor more than two years, or to both penalties at the same time, and in default of payment of the fine and costs, to imprisonment for not less than six months nor more than two years.

The fines provided for in the preceding paragraph must also be imposed, in addition to the costs, when the offender is a company, but they may then be increased, at the discretion of the judge or court, up to fifteen thousand dollars for a first offence and twenty-five thousand dollars for each subsequent offence and the judge or court may order that in default of payment of the fine and costs by the company, such directors, officers or employees of the company as he may designate shall be bound to pay the same in the proportion which he indicates, failing which they shall be imprisoned for a period of not less than two months nor more than six months, for a first offence, and not less than six months nor more than two years for each subsequent offence.

R. S. 1964, c. 274, s. 84.

103. The penalties provided for in section 102 shall be imposed upon summary proceeding under the Summary Convictions Act (chapter P-15).

Part II of said act shall apply to such proceedings.

The complaint or information may, notwithstanding any legislative provision inconsistent herewith, relate to more than one matter or contravention.

R. S. 1964, c. 274, s. 85.

104. Every proceeding for contravention of this act must be brought by a person authorized in writing for such purpose by the Attorney General or the Commission.

Prescription shall be two years and begin to run from the day the offence is brought to the knowledge of the Commission or the Director.

R. S. 1964, c. 274, s. 86; 1971, c. 77, s. 18.

105. Any certificate bearing the signature of the Director or a commissioner and certifying that a person or a company is or is not registered as the case may be, shall be proof of the existence or absence of registration of such person or company and generally of its contents, in any civil or criminal proceedings brought under this act or any other act of Québec. Such certificate shall also be primafacie evidence of the signature, authority and capacity of the person who signed it.

R. S. 1964, c. 274, s. 87; 1971, c. 77, s. 19.

106. Whosoever conspires with one or more persons to commit any infraction of any provision of this act or of the regulations, or any fraudulent act within the meaning of this act, which is not punishable under the Criminal Code of Canada, shall be liable to the penalties provided in section 102.

R. S. 1964, c. 274, s. 88.

107. Every person or company is a party to an offence against this act or the regulations or to a fraudulent act within the meaning of this act and liable to the penalties provided in section 102 who or which:

(a)  does or refrains from doing anything for the purpose of aiding or abetting anyone to commit such offence or fraudulent act;

(b)  in any manner provokes, induces or attempts to induce anyone to commit such offence or fraudulent act.

R. S. 1964, c. 274, s. 89.

108. Whenever, upon a complaint brought by or in the name of the Commission, a person or company is convicted of an indictable offence respecting any trading in securities, of a fraudulent act or offence against this act or the regulations, the Commission may claim and recover attorney’s fees, accountant’s fees and fees of other experts whose services were specially required by the Commission and if there was an investigation all the costs of the Commission relating thereto. Such costs shall be taxed by a judge of the Provincial Court on production of a certificate to that effect of the Commission, after notice of at least 5 days to every party, of the time, date and place of the presentation for adjudication as to costs, which shall be executory and without appeal.

R. S. 1964, c. 274, s. 90; 1971, c. 77, s. 20.

109. Where a magistrate or judge of another province has issued a warrant for the arrest, in Québec, of any person accused of violating any provision of a law of such other province respecting trading in securities, a judge of the sessions or a judge of the Provincial Court of Québec, upon satisfactory proof of the authenticity of the signature of the magistrate or judge who issued the warrant, may stamp his endorsement under his signature, authorizing the execution of such warrant.

Every warrant so endorsed shall be sufficient authority to the bearer of the warrant and to those to whom it was originally delivered and to any constable or peace officer in Québec to execute it and to take the person arrested under such warrant out of or to any place in Québec.

R. S. 1964, c. 274, s. 91; 1965 (1st sess.), c. 17, s. 2.

MISCELLANEOUS

110. (1)  No person or company may operate a stock exchange in Québec unless such stock exchange is recognized as such in writing by the Commission.

(2)  The Commission may, when it is of opinion that the public interest so requires, take any decision, make any order, or give instructions or directions:

(a)  respecting the manner of operating a stock exchange in Québec;

(b)  respecting any regulation, direction, instruction or order of such stock exchange;

(c)  respecting dealing on the floor or by means of other devices of such stock exchange or respecting any security quoted or agreed to be quoted on such stock exchange;

(d)  to ascertain that the companies the securities of which are quoted or agreed to be quoted on such stock exchange comply with this act and the regulations;

(e)  respecting the reports and information to be obtained from any stock exchange, its members or the firms or companies represented on such stock exchange.

(3)  Any person or company believing himself or itself wronged by any regulation, direction, instruction, order or decision of a stock exchange or on account of undue delay to reach a decision or make an order or direction on a question referred to the stock exchange, may apply to the Commission and ask that it revise such direction, order or decision or, as the case may be, that it make the direction, order or decision that such stock exchange fails or refuses to make.

After the hearing, the Commission may, by decision, confirm the direction, order or decision in question or make any other direction or order or take any decision that it deems proper.

Should the stock exchange refuse or neglect to comply, the Commission may, after a hearing, make the direction or order or take the decision which, in its opinion, the stock exchange should have made, or not act if it sees fit.

(4)  Every stock exchange and every association of brokers established in Québec shall deliver to the Commission between the fifteenth of March and the fifteenth of April each year, as regards a stock exchange, a list of its members and the companies or firms represented there and, as regards an association of brokers, a list of the persons and companies who are members thereof.

Every stock exchange and association of brokers shall thereafter inform the Commission of any changes in the composition of such lists as they occur.

(5)  Any infringement of a provision of this section shall be an offence.

R. S. 1964, c. 274, s. 92; 1971, c. 77, s. 21.

111. In the case of a company or person who in good faith and with an excuse deemed reasonable by the Commission, sold or otherwise disposed of shares of its capital stock or other securities without having applied for the permission and registration then required by law, the Commission may grant it or him permission and registration to avail as if such permission and registration had been allowed at the time of the sale or disposal of such shares or other securities.

However, the Commission must not grant such registration if it is of the opinion that the company would have had to be denied the registration then required by law if it had applied for the same.

R. S. 1964, c. 274, s. 93; 1971, c. 77, s. 22.

112. If the Commission, on an investigation made under section 53, deems that there has been malfeasance, breach of trust or any other misconduct by one or more members of the board of directors or several of its officers, or that such board or person is seriously remiss in the performance of the obligations imposed on it or him by this act or resorts to management practices tending to depreciate the value of the instruments issued by the said company, the Commission shall recommend to the Minister that the powers of such board be suspended and an administrator be appointed.

The Commission may also act in such a way whenever it issues an order under section 80 and also at any time when it deems that the interests of holders of securities must be protected.

Before suspending the powers of such board, the Minister shall give to such company or person the opportunity to make his or its representations.

The administrator shall remain in office until the end of the period for which he has been appointed unless the Minister terminates his mandate sooner.

The administrator so appointed shall have full power to dispose of, alienate and wind up all the property owned by such person or company or held in trust by such person or company on behalf of any other person or company.

The administrator shall, as soon as his mandate has expired, make to the Minister and the Commission a complete report on his findings.

The Minister, as soon as he has received the report of the administrator, may:

(a)  dismiss from office the members of the board of directors and order the holding of a special meeting of the shareholders to elect new members of the board; or

(b)  order, on the conditions that he determines, the winding-up of the company and appoint a liquidator.

The decision of the Minister ordering the winding-up shall have the same effect as an order made by a judge of the Superior Court under section 25 of the Winding-up Act (chapter L-4).

R. S. 1964, c. 274, s. 94; 1971, c. 77, s. 23.

FINANCIAL DISCLOSURE

113. For the purposes of this section and sections 114 to 130:

(a)  the word “corporation“ means a company other than a bank to which the Bank Act (Statutes of Canada) applies:

i.  that has issued securities that, after the 1st day of May 1955, have been or are distributed in the course of a distribution to the public in respect of which a prospectus has been or is filed with the Commission and a written permission for the distribution thereof granted, or

ii.  any of whose shares are quoted on any stock exchange in Québec recognized by the Commission;

(b)  the term “financial year” means a financial year covering a period of twelve months, except for the first financial year that commenced on the date of incorporation and may cover a shorter period or except by an order made under section 125 permitting otherwise;

(c)  the word “auditor”, used in relation to a corporation, includes the auditor of the corporation and any other independent accountant qualified for appointment as such.

1971, c. 77, s. 24; 1973, c. 67, s. 26.

114. Section 113 and sections 115 to 130 apply mutatismutandis to any person.

1971, c. 77, s. 24; 1973, c. 67, s. 26.

115. Every corporation shall file with the Commission annually within one hundred and seventy days from the end of its last completed financial year the comparative financial statements, made up as required by the regulations, relating separately to:

(a)  the period that commenced on the date of incorporation and ended as of the close of its first financial year or, if the corporation has completed a financial year, the latest completed financial year; and

(b)  the period covered by the financial year next preceding such latest completed financial year, if any.

1973, c. 67, s. 26.

116. Every corporation shall file with the Commission within sixty days of the date to which they are made up a copy of comparative interim financial statements, made up as required by the regulations, for the six-month period that commenced on the date of incorporation or, if the corporation has completed a financial year, for the six-month period that commenced immediately after the end of the last completed financial year and for the comparable six-month period, if any, in the twelve months immediately preceding the commencement of the six-month period in respect of which such interim financial statements are issued.

1973, c. 67, s. 26.

117. The auditor of a corporation shall make such examination as will enable him to make the reports referred to in sections 118 to 120.

1973, c. 67, s. 26.

118. The financial statements referred to in section 115 shall be accompanied by a report of the auditor of the corporation who shall state in his report whether in his opinion the financial statements in respect of which his report is made present fairly the financial position of the corporation and the results of its operations for the period under review in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding period, if any. If he cannot give such unqualified opinion, the auditor shall state in his report his reasons therefor.

1973, c. 67, s. 26.

119. If the financial statements contain a statement of source and application of funds or a statement of changes in net assets, the auditor shall declare in his report whether in his opinion, each statement presents fairly the information shown therein.

1973, c. 67, s. 26.

120. Where the corporation’s financial statements are not in agreement with its accounting records or are not in accordance with the requirements of this act or the regulations, the auditor in his report shall make such statements as he considers necessary. The same applies if the auditor has not received all the information and explanations that he has required or if proper accounting records have not been kept, so far as appears from his examination.

1973, c. 67, s. 26.

121. A corporation may comply with sections 113 to 130 by filing with the Commission the financial statements and the auditor’s reports thereon and the interim financial statements, if any, that it sends or otherwise makes available to its shareholders and by filing concurrently such additional financial information as, when combined with the financial information contained in such financial statements or interim financial statements, is required to comply substantially with sections 115 and 116 and the regulations.

1973, c. 67, s. 26.

122. The additional financial information filed under section 121 shall be accompanied by a report of the auditor of the corporation who shall state whether, in his opinion, such additional financial information, together with the financial statements filed under section 121 and relating to the same financial period, provides the information required by section 121.

1973, c. 67, s. 26.

123. For the purposes of section 121, the financial statements and the auditor’s reports thereon, the interim financial statements and the additional financial information referred to in sections 121 and 122 shall be sent to the Commission within the delay mentioned in section 115 or 116 according to the nature of the statement in question, or on the date on which such statements are mailed by the corporation to its shareholders, if such date is earlier than the expiration of such delay.

The financial statements and the auditor’s reports thereon, the interim financial statements and the additional financial information required to be filed with the Commission under sections 115 to 122 shall, within the delay prescribed for their filing, be sent by the corporation to every owner of its securities whose latest address as shown on the books of the corporation is in Québec.

1973, c. 67, s. 26.

124. Upon the application of a corporation, the Commission may, where in its opinion such application is not contrary to the public interest, make an order on such terms and conditions as it may impose:

(a)  exempting the corporation from filing any financial statement referred to in section 115 or 116;

(b)  permitting the corporation to omit any information required to be given in the financial statements referred to in section 115 or 116;

(c)  permitting the corporation to file in lieu of a statement of source and application of funds, a declaration containing such information as the Commission considers appropriate, where, in the opinion of the Commission, the corporation is unable to comply with the requirements of the regulations in respect of the contents of such statement.

1973, c. 67, s. 26.

125. Upon the application of a corporation, the Commission may, where in its opinion such application is not contrary to the public interest, make an order on such terms and conditions as it may impose exempting, in whole or in part, the corporation from any requirement of sections 115 to 128, including, among other cases, that where a requirement conflicts with a requirement of the laws of the jurisdiction in which a corporation is incorporated or where the laws of the jurisdiction to which the corporation is subject contain requirements substantially similar to those contained in such sections.

A corporation that is subject to sections 113 to 130 by virtue only of subparagraph i of paragraph a of section 113 ceases to be subject thereto if the corporation does not have owners of its securities whose latest address as shown on the books of the corporation is in Québec.

1973, c. 67, s. 26.

126. The Commission may at its discretion refuse to grant permission to distribute a prospectus until such time as the issuer whose securities it is proposed to distribute delivers or causes to be delivered to the Commission an undertaking satisfactory to the Commission in which the issuer undertakes to comply with sections 115 to 128.

1973, c. 67, s. 26.

127. The Commission may at its dicretion, if satisfied that an undertaking given under section 126 has not been complied with, refuse to grant permission to distribute a prospectus relating to securities of the issuer that previously delivered that undertaking to the Commission or refuse to grant such permission unless the issuer has agreed to comply with such terms and conditions relating to financial disclosure as may be imposed by the Commission.

1973, c. 67, s. 26.

128. Every corporation subject to sections 113 to 130 which sends to its shareholders additional information to that required under sections 115 to 123, shall file with the Commission at the time of such sending, a copy of all such additional information, together with a certificate of an officer, director or transfer agent of the corporation to the effect that such material has been sent to each shareholder whose latest address, as shown on the books of the corporation, is in Québec.

1973, c. 67, s. 26.

129. The financial statements, auditor’s reports thereon, interim financial statements, additional financial information and all other information filed with the Commission under sections 113 to 130 shall be open to public inspection at the seat of the Commission during normal business hours of the Commission, and any person may make extracts therefrom.

1973, c. 67, s. 26.

130. Any person or company, having an obligation to comply with any requirement of sections 115 to 128 who fails to comply therewith, or who authorizes, permits or acquiesces in such failure, is guilty of an offence.

1973, c. 67, s. 26.

TAKE-OVER BIDS

131. For the purposes of this section and sections 132 to 156:

(a)  the term “offeror’s presently-owned shares” means voting-shares of an offeree company beneficially owned, directly or indirectly, on the date of a take-over bid by the offeror or a person related to him;

(b)  the term “related person”, where used to indicate a relationship with any person or company, means:

i.  any company of which such person or company beneficially owns, directly or indirectly, voting shares carrying more than ten per cent of the voting rights attached to all voting shares of the company for the time being outstanding;

ii.  any partner of that person or company acting by or for the partnership of which they are both partners;

iii.  any trust or estate in which such person or company has a substantial beneficial interest or as to which such person or company serves as trustee or in a similar capacity;

iv.  a spouse, son or daughter of that person; or

v.  any relative of such person or of his spouse, other than a relative referred to in subparagraph iv, who has the same home as such person;

(c)  the term “directors’ circular” means a directors’ circular prescribed by the regulations;

(d)  the term “offeree company” means a company whose shares are the subject of a take-over bid;

(e)  the word “offeror” means a person or company, other than an agent, who makes a take-over bid, and includes two or more persons or companies:

i.  whose take-over bids are made jointly or in concert, or

ii.  who intend to exercise jointly or in concert any voting rights attaching to the shares for which a take-over bid is made;

(f)  the term “exempt offer” means:

i.  an offer to purchase shares by way of private agreement with fewer than fifteen shareholders and not made to shareholders generally;

ii.  an offer to purchase shares to be effected through the facilities of a stock exchange or in the over-the-counter market, where such purchases are reported in accordance with sections 163 and 164;

iii.  an offer to purchase shares in a private company; or

iv.  an offer exempted by order of the Commission made under section 154;

(g)  the term “take-over bid” means an offer, other than an exempt offer, made to shareholders the last address of any of whom as shown on the books of the offeree company is in Québec, to purchase such number of voting shares of a company that, together with the offeror’s presently-owned shares, will in the aggregate exceed twenty per cent of the outstanding voting shares of the company;

(h)  the term “offeree” means a person or company to whom a take-over bid is made and whose last address as shown on the books of the offeree company is in Québec.

1973, c. 67, s. 26.

132. The take-over bid shall not have any condition attached thereto except the right for the offeror to withdraw the offer if the offerees fail to tender the minimum number of shares the offeror is bound and willing to take up or if the action of the board of directors of the offeree company subsequent to the date of the offer materially changes the undertakings, assets or capital of the offeree company.

1973, c. 67, s. 26.

133. The period of time in which shares may be deposited pursuant to a take-over bid shall not be less than twenty-one days from the date thereof and the offeror shall not take up and pay for any of those shares before the expiration of seven days from that date.

1973, c. 67, s. 26.

134. Any offeree which has deposited shares pursuant to a take-over bid may withdraw them at any time until the expiration of seven days from its date. Where the terms of the take-over bid are varied before the expiration thereof the offeree shall have an additional seven days from the date of the receipt of the varied offer to withdraw any shares deposited pursuant to the take-over bid.

1973, c. 67, s. 26.

135. Where the offer is made for all of the voting shares owned by offerees, the offeror shall, on the day after the expiration of thirty-five days from the making of the offer, take up and pay for the shares tendered or abandon his take-over bid.

1973, c. 67, s. 26.

136. Notwithstanding the provisions of sections 133 and 134, where a take-over bid is made for less than all the voting shares owned by the offerees:

(a)  the offeror shall not take up the shares deposited pursuant to the take-over bid or pay for them until the expiration of twenty-one days from the date thereof;

(b)  the period of time within which shares may be deposited pursuant to the take-over bid, or any extension thereof, shall not exceed thirty-five days from the date of the take-over bid;

(c)  where all the terms and conditions of the take-over bid not waived by the offeror have been complied with, the offeror shall take up and pay for the shares deposited pursuant to the take-over bid within fourteen days after the last day within which shares may be deposited pursuant thereto;

(d)  where a greater number of shares is deposited pursuant to the take-over bid than the offeror is bound or willing to take up and pay for, the shares taken up by the offeror shall be taken up as nearly as may be prorata, disregarding fractions, according to the number of shares deposited by each offeree.

1973, c. 67, s. 26.

137. Where the offeror intends to purchase securities in the market, his intention shall be set out in the take-over bid circular and, where the take-over bid is made for less than all of the voting shares owned by the offeree, he shall not reduce the number of shares he is bound or willing to take up under paragraph d of section 136 by the number of shares purchased in the market.

1973, c. 67, s. 26.

138. Where the laws applicable to the offeree company provide that the offeror may force the offeree to sell his shares or that the latter may force the offeror to acquire his shares, the offeror shall advise the offeree of his intention to exercise his rights and, in the same notice, mention the offeree’s rights.

1973, c. 67, s. 26.

139. Where the offeror modifies the terms of a take-over bid before the expiration thereof by increasing the consideration offered for the voting shares of an offeree company, the offeror shall pay such increased consideration to each offeree whose shares are taken up and paid for pursuant to the take-over bid whether or not he has taken up such shares before the variation of the take-over bid.

1973, c. 67, s. 26.

140. Where a take-over bid for all the voting shares owned by the offerees is converted, by amendments or otherwise, to a bid for less than all the voting shares owned by offerees, the take-over bid shall be deemed juris et de jure to be for less than all the voting shares owned by offerees.

1973, c. 67, s. 26.

141. Where a take-over bid provides that the consideration is to be paid in cash or partly in cash, the offeror shall make adequate arrangements to ensure that the required funds are available to effect payment in full for all shares owned by offerees that the offeror has offered to purchase pursuant to the take-over bid.

1973, c. 67, s. 26.

142. A take-over bid shall be sent to the offerees and is deemed juris et de jure to have been dated as of the date on which it was so sent; a copy of the take-over bid and all supporting or supplementary material, if any, shall forthwith be filed with the Commission.

1973, c. 67, s. 26.

143. A take-over bid circular shall form part of or accompany a take-over bid and shall be in the form and shall contain the information prescribed by sections 131 to 156 and by the regulations.

1973, c. 67, s. 26.

144. Where a take-over bid provides that the consideration for the shares of the offeree company is to be, in whole or in part, securities of a company, the take-over bid circular shall contain the additional information prescribed by the regulations.

1973, c. 67, s. 26.

145. Where a take-over bid is made on behalf or for the benefit of a person or company, such person or company shall be deemed to be the offeror for the purposes of compliance with sections 131 to 156 and the regulations, and his or its name shall be disclosed in the take-over bid circular.

1973, c. 67, s. 26.

146. Where a take-over bid is made by or on behalf of a company, the contents of the take-over bid circular shall be approved and the delivery thereof authorized by the board of directors of the company and this circular shall contain a statement to that effect.

1973, c. 67, s. 26.

147. Where the board of directors of an offeree company recommends to offerees acceptance or rejection of a take-over bid made to such offerees, the board shall send or cause to be sent to each offeree, together with its recommendation, a directors’ circular which shall be in the form and contain the information prescribed by the regulations.

1973, c. 67, s. 26.

148. The contents of the directors’ circular mentioned in section 147 shall be approved and the delivery thereof authorized by the board of directors of the offeree company and this circular shall contain a statement to that effect.

1973, c. 67, s. 26.

149. Where the board of directors is considering sending a circular under section 147 it may advise its shareholders of this fact and may advise them not to tender their shares until a further commmunication is received from the board of directors which, in such case, shall send a directors’ circular at least seven days prior to the expiry of the take-over bid.

1973, c. 67, s. 26.

150. An individual director or officer may recommend to offerees acceptance or rejection of a take-over bid made to such offerees if the director or officer sends or causes to be sent to each offeree with his communication a circular containing mutatis mutandis the information required by the regulations relating to his holdings and interest.

1973, c. 67, s. 26.

151. Where any financial statements of the offeree company accompany or form part of a directors’ circular, such statements, if not reported upon by the auditor of the company, shall be accompanied by a report of the chief financial officer of the company who shall state in his report whether in his opinion the financial statements referred to therein present fairly the financial position of the company and the results of its operations for the period under review.

1973, c. 67, s. 26.

152. All communications required or permitted by sections 147 to 151 shall be sent to each offeree at his last address as shown on the books of the company; and a copy of the communications, the circulars required by this section and all supporting or supplementary material, if any, shall forthwith be filed with the Commission.

1973, c. 67, s. 26.

153. No report, opinion or statement of a solicitor, auditor, accountant, engineer, appraiser or any other person or company whose profession or specialization gives authority to a statement made by him or it shall form part of or accompany a take-over bid or a directors’ circular unless such person or company has consented in writing to the use of the report, opinion or statement and such consent is reprinted in the circular.

1973, c. 67, s. 26.

154. Any person or company may apply to the Commission for an order declaring a take-over bid to be an exempt offer, and the Commission may, where in its opinion such an order would not be contrary to the public interest, upon such terms and conditions as it may impose, declare the proposed offer to be exempt.

1973, c. 67, s. 26.

155. Every person or company who or which:

(a)  having an obligation to comply with a requirement of sections 132 to 154 or of the regulations adopted thereunder, fails to comply therewith, or authorizes, permits or acquiesces in such failure; or

(b)  knowingly mails or authorizes, permits or acquiesces in the mailing of any document or writing contemplated by sections 132 to 154 or by the regulations adopted thereunder if such document or writing contains any information that, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact or if it omits to state any material fact the omission of which makes the statement contained therein false or misleading,

is guilty of an offence.

1973, c. 67, s. 26.

156. For the purposes of paragraph b of section 155, any person or company is deemed to have known that the information or statement referred to therein was false or misleading unless it is established by satisfactory evidence that such person or company did not know and in the exercise of reasonable diligence could not have known the untruth of the information or the fact of the omission of a material fact.

1973, c. 67, s. 26.

INSIDER TRADING

157. In this section and in sections 158 to 179:

(a)  the term “related person” has the same meaning as in section 131;

(b)  the word “corporation” has the same meaning as in section 113;

(c)  the word “insider” or term “insider of a corporation” means:

i.  any director or senior officer of a corporation,

ii.  any person or company who beneficially owns, directly or indirectly, voting shares of a corporation carrying more than ten per cent of the voting rights attached to all voting shares of the corporation for the time being outstanding, provided that in computing the percentage of voting rights attached to voting shares owned by an underwriter there are excluded any voting shares acquired by him as underwriter in the course of distribution to the public of such shares, such exclusion ceasing to have effect on completion or cessation of the distribution to the public by him, or

iii.  any person or company who exercises control or direction over the voting shares of a corporation carrying more than ten per cent of the voting rights attached to all voting shares of the corporation for the time being outstanding;

(d)  the term “insider interest” means the direct or indirect beneficial ownership of or control or direction over capital securities of a corporation;

(e)  the term “capital security” means any share of any class of shares of a company or any bond, debenture, note or other obligation of a company, whether secured or unsecured.

1973, c. 67, s. 26.

158. For the purposes of section 157 and sections 159 to 179:

(a)  every director or senior officer of a company that is itself an insider of a corporation is deemed an insider of such corporation;

(b)  the acquisition or disposition by an insider of a put, call or other transferable option with respect to a capital security is deemed a change in the beneficial ownership of such capital security; and

(c)  for the purpose of reporting under sections 159 to 164, ownership is deemed to pass at such time as an offer to sell is accepted by the purchaser or his agent or an offer to buy is accepted by the vendor or his agent.

1973, c. 67, s. 26.

159. A person or company that is an insider on 6 July 1973, shall, within ten days after the end of the month of July 1973, file with the Commission a report as of the end of such month of his or its insider interest.

1973, c. 67, s. 26.

160. A person or company that becomes an insider of a corporation shall, within ten days after the end of the month in which he or it becomes an insider, file with the Commission a report as of the day on which he or it became an insider, of his or its insider interest.

1973, c. 67, s. 26.

161. Where a person or company that is an insider of a corporation but has no insider interest therein, acquires insider interest therein, he or it shall, within ten days after the end of the month in which he or it acquired such insider interest, file with the Commission a report, as of the date of such acquisition, of his or its insider interest in the corporation.

1973, c. 67, s. 26.

162. A person or company that has filed or is required to file a report under this section or sections 159 to 161, and whose insider interest in the corporation changes from that shown or required to be shown in such report or in the latest report filed by him or it under this section or sections 159 to 161 shall, within ten days following the end of the month in which such change takes place, if he or it was an insider of the corporation at any time during such month, file with the Commission a report of his or its insider interest in the corporation at the end of such month and the change or changes therein that occurred during the month giving such details of each transaction as may be required by the regulations.

1973, c. 67, s. 26.

163. Where an offeror as defined in section 131 becomes an insider and through purchases effected through a stock exchange or in the over-the-counter market becomes the beneficial owner, directly or indirectly, of voting shares of a corporation carrying twenty per cent or more of the voting rights attached to all voting shares of the corporation for the time being outstanding, such offeror, within three days of acquiring such twenty per cent of the voting rights, shall file with the Commission a report as of the day on which he attained such percentage.

1973, c. 67, s. 26.

164. Every person or company required to file a report under section 163 shall also, within the same delay, each time he or it acquires further voting shares carrying an additional five per cent of the voting rights through a stock exchange or in the over-the-counter market, file with the Commission a report as of the day on which he or it attained the additional five per cent.

1973, c. 67, s. 26.

165. Where the facts required to be reported under sections 163 and 164 and under sections 159 to 162 are identical, a separate report under such last mentioned sections is not required.

1973, c. 67, s. 26.

166. All reports filed with the Commission under sections 159 to 164 shall be open to public inspection at the seat of the Commission during normal business hours of the Commission, and any person may make extracts from such reports.

The Commission may summarize in or as part of a monthly periodical for distribution to the public on payment of a reasonable fee therefor the information contained in the reports so filed.

1973, c. 67, s. 26.

167. Upon the application of an interested person or company, the Commission may, where in its opinion such application is not contrary to the public interest, make an order on such terms and conditions as it may impose, exempting, in whole or in part, the person or company from the requirements of sections 159 to 165, including, among other cases, that where a requirement conflicts with a requirement of the laws of the jurisdiction in which a corporation is incorporated or where the laws of the jurisdiction to which the corporation is subject contain requirements substantially similar to those contained in the above mentioned sections.

1973, c. 67, s. 26.

168. An insider of a corporation who is subject to sections 157 to 179 by virtue only of subparagraph i of paragraph a of section 113, ceases to be subject thereto if the corporation does not have owners of its securities whose latest address as shown on the books of the corporation is in Québec.

1973, c. 67, s. 26.

169. Every insider of a corporation, every person employed or retained by the corporation, the auditor of the corporation or every person related or company affiliated to the insider who, in connection with a transaction relating to capital securities of the corporation, makes use of any specific confidential information for his own benefit or advantage that, if generally known, might reasonably be expected to affect materially the value of the capital securities of the corporation, is liable to compensate any person for any direct loss suffered by that person as a result of the transaction, unless the information was known or ought reasonably to have been known to that person at the time of such transaction, and is also accountable to the corporation for any direct benefit or advantage received or receivable by such insider, employed or retained person, auditor, related person or affiliated company, as the case may be, as a result of the transaction.

1973, c. 67, s. 26.

170. An action to enforce any right created by section 169 shall be commenced only within two years after the date of completion of the transaction that gave rise to the cause of action, or if the transaction was required to be reported under sections 159 to 164, then within two years from the time of reporting in compliance with those sections.

1973, c. 67, s. 26.

171. For the purposes of sections 169 and 170, every director or officer of any company that becomes an insider of a corporation is deemed to have been an insider of that corporation for the previous six months or for such shorter period as he was a director or officer of that company.

1973, c. 67, s. 26.

172. Upon application by any person or company that was at the time of a transaction referred to in section 169 or is at the time of application an owner of capital securities of the corporation, or upon application by the Commission, a judge of the Superior Court may make an order, upon such terms and conditions as he may see fit, directing or permitting that an action be commenced or continued by the Commission in the name of and on behalf of the corporation to enforce the liability created by section 169.

1973, c. 67, s. 26.

173. An order pursuant to section 172 may only be made if the judge is satisfied that the applicant has reasonable grounds for believing that the corporation has a cause of action under sections 169 and 170 and that the corporation has refused or failed to commence an action under section 169 within sixty days after receipt of a written request from such applicant so to do or that the corporation has failed to prosecute diligently an action commenced by it under section 169. With leave of a judge of the Court of Appeal, an appeal to the Court of Appeal lies from such order.

1973, c. 67, s. 26.

174. The corporation and, where the application is made by a person or company, the Commission, shall be given ten days notice of the hearing of an application under section 172 and the corporation and the Commission have a right to appear and be heard thereon.

1973, c. 67, s. 26.

175. Every order made under section 172 shall provide that the corporation shall cooperate fully in the institution and prosecution of the action and shall make available to the Commission all books, records, documents and other material or information relevant to such action and known to the corporation or reasonably ascertainable by the corporation.

1973, c. 67, s. 26.

176. The Commission may at its discretion refuse to grant permission to distribute a prospectus until such time as the corporation, the securities of which it is proposed to offer, delivers or causes to be delivered to the Commission undertakings satisfactory to the Commission in which the corporation undertakes to cause its present and future directors and senior officers to comply with sections 157 to 179 and in which the directors and senior officers of the corporation then in office undertake to comply with sections 157 to 179.

1973, c. 67, s. 26.

177. The Commission may at its discretion, if satisfied that an undertaking given under section 176 has not been complied with, either refuse to grant permission to distribute a prospectus relating to securities of a corporation which previously delivered an undertaking to the Commission or refuse to grant such permission unless the corporation, its directors and senior officers agree to comply with such terms and conditions relating to insider trading as may be imposed by the Commission.

1973, c. 67, s. 26.

178. Every person or company who or which:

(a)  having an obligation to comply with a requirement of sections 157 to 177 or of the regulations adopted thereunder, fails to comply therewith, or authorizes, permits or acquiesces in such failure; or

(b)  knowingly files or authorizes, permits or acquiesces in the filing of a report required under sections 157 to 177 which is false or misleading by reason of the misstatement or omission of any material fact,

is guilty of an offence.

1973, c. 67, s. 26.

179. For the purposes of paragraph b of section 178, any person or company is deemed to have known the report referred to therein was false or misleading unless it is established by satisfactory evidence that such person or company did not know and in the exercise of reasonable diligence could not have known the untruth of the statement or the fact of the omission of a material fact.

1973, c. 67, s. 26.

180. Every person or company refusing to comply with any decision of the Commission or the Director prescribed by this act or the regulations is guilty of an offence.

1973, c. 67, s. 26.

181. The Minister of Finance is responsible for the administration of this Act.

1973, c. 67, s. 26; 1975, c. 76, s. 11; 1981, c. 9, s. 24; 1982, c. 52, s. 265.

182. This Act shall operate notwithstanding the provisions of sections 2 and 7 to 15 of the Constitution Act, 1982 (Schedule B of the Canada Act, chapter 11 in the 1982 volume of the Acts of the Parliament of the United Kingdom).

1982, c. 21, s. 1.

REPEAL SCHEDULE

In accordance with section 17 of the Act respecting the consolidation of the statutes (chapter R-3), chapter 274 of the Revised Statutes, 1964, in force on 31 December 1977, is repealed effective from the coming into force of chapter V-1 of the Revised Statutes.