Why are definitions so hard to find in securities laws?
Securities laws are highly technical and include many defined terms. Unfortunately, the definitions are very hard to find. If you are reading the laws on public websites, you’ll notice that defined terms aren’t highlighted, capitalized or underlined, and there is no link to the definitions.
The Negative Impact of Inaccessible Defininitions
Definitions being inaccessible is just one reason why public companies, and any non-expert in the field, have trouble answering securities law questions for themselves, quickly and inexpensively, without always needing the help of experienced counsel. With modern technology, there is no reason why securities laws can’t be more accessible to companies, investment banks and their counsel. All that is needed is some creative thinking about how to merge legal rules and tech tools.
A Better Approach to Securities Law Definitions
Central Repository of Definitions
Two tech-driven features are needed to make legal definitions more accessible to experts and non-experts alike. First, a central repository of all definitions within a given legal domain. Lexata has a Definitions page where defined terms are shown in alphabetical order and by source, i.e., the National Instrument or legislation where the definition is found. This central repository also indicates whether a term is defined, identically or differently, in more than one place. (Hopefully, securities regulations will evolve to provide a single source of truth for defined terms.)
Make Defined Terms Obvious in the Rules with Links
Second, wherever a defined term appears in the text of a rule, there should be a link to the definition. For example, Section 6 of National Instrument 52-112 includes references to several defined terms, including the following:
In Lexata’s database, each of these defined terms is linked directly to its definition.
Simple tech-enabled features, like having a central repository of definitions and showing them as links in the text of legal rules, makes securities laws more accessible to non-experts, and also makes the work of expert practictioners faster, less tedious and less expensive. This is Lexata’s mission.