Ontario Securities Act

Part XXI Insider Trading and Self-Dealing

In this Part, “investment fund” means, except in sections 111, 112, 116 and 121.1, an investment fund that is a reporting issuer;

In this Part,…

“mutual fund” means a mutual fund that is a reporting issuer;

(2) For the purpose of this Part,

(a) any issuer in which an investment fund holds in excess of 10 per cent of the voting securities or in which the investment fund and related investment funds hold in excess of 20 per cent of the voting securities shall be deemed to be a related person or company of that investment fund or of each of those investment funds; and

(b) the acquisition or disposition by an insider of a put, call or other transferable option with respect to a security shall be deemed to be a change in the beneficial ownership of the security to which such put, call or other transferable option relates.

For the purposes of sections 111, 112, 113, 114 and 115, “investment” means a purchase of any security of any class of securities of an issuer including bonds, debentures, notes, or other evidences of indebtedness thereof, and a loan to persons or companies but does not include an advance or loan, whether secured or unsecured, that is made by an investment fund, its management company or its distribution company that is merely ancillary to the main business of the investment fund, its management company or its distribution company.

(2) For the purposes of sections 111, 112, 113, 114 and 115,

(a) a person or company or a group of persons or companies has a significant interest in an issuer, if,

(i) in the case of a person or company, he, she or it, as the case may be, owns beneficially, either directly or indirectly, more than 10 per cent, or

(ii) in the case of a group of persons or companies, they own beneficially, either individually or together and either directly or indirectly, more than 50 per cent,of the outstanding shares or units of the issuer;

(b) a person or company or a group of persons or companies is a substantial security holder of an issuer if that person or company or group of persons or companies owns beneficially, either individually or together or directly or indirectly, voting securities to which are attached more than 20 per cent of the voting rights attached to all the voting securities of the issuer for the time being outstanding, but in computing the percentage of voting rights attached to voting securities owned by an underwriter, there shall be excluded any voting securities acquired by the underwriter as such in a distribution of such securities but the exclusion ceases to have effect on completion or cessation of the distribution by the underwriter;

(c) where a person or company or group of persons or companies owns beneficially, directly or indirectly, or pursuant to this clause is deemed to own beneficially, voting securities of an issuer, that person or company or group of persons or companies shall be deemed to own beneficially a proportion of voting securities of any other issuer that are owned beneficially, directly or indirectly, by the first mentioned issuer, which proportion shall equal the proportion of the voting securities of the first mentioned issuer that are owned beneficially, directly or indirectly, or that pursuant to this clause are deemed to be owned beneficially, by that person or company or group of persons or companies.

(1) No investment fund shall knowingly make an investment by way of loan to,

(a) any officer or director of the investment fund, its management company or distribution company or an associate of any of them;

(b) any individual, where the individual or an associate of the individual is a substantial security holder of the investment fund, its management company or distribution company.

Investments of investment funds, etc.

(2) No investment fund shall knowingly make an investment,

(a) in any person or company who is a substantial security holder of the investment fund, its management company or its distribution company;

(b) in any person or company in which the investment fund, alone or together with one or more related investment funds, is a substantial security holder; or

(c) in an issuer in which any of the following has a significant interest:

(i) any officer or director of the investment fund, its management company or distribution company or an associate of any of them; or

(ii) any person or company who is a substantial security holder of the investment fund, its management company or its distribution company. Divesting of prohibited loans and investments

(3) No mutual fund in Ontario or its management company or its distribution company shall knowingly hold an investment made after September 15, 1979 and before the day this section comes into force if the investment is an investment described in this section.

Same

(4) No investment fund or its management company or its distribution company shall knowingly hold an investment made on or after the day this section comes into force if the investment is an investment described in this section.

Interpretation

(5) In this section, “investment fund” means a mutual fund in Ontario or a non-redeemable investment fund that is a reporting issuer.

No investment fund or its management company or its distribution company shall knowingly enter into any contract or other arrangement that results in its being directly or indirectly liable or contingently liable in respect of any investment by way of loan to, or other investment in, a person or company to whom it is by section 111 prohibited from making a loan or in which it is prohibited from making any other investment, and for the purpose of section 111 any such contract or other arrangement shall be deemed to be a loan or an investment, as the case may be.

Upon an application of an interested person or company, the Commission may, where it is satisfied,

(a) that a class of investment or a particular investment represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of an investment fund; or

(b) that a particular investment is in fact in the best interests of an investment fund,

order, subject to such terms and conditions as it may impose, that section 111 or 112 does not apply to the class of investment, particular investment, contract or other arrangement, as the case may be.

Despite clause 110 (2) (c), an investment fund is not prohibited from making an investment in an issuer only because a person or company or a group of persons or companies who own beneficially, directly or indirectly, or are deemed to own beneficially, voting securities of the investment fund or its management company or its distribution company are by reason thereof deemed to own beneficially voting securities of the issuer.

(1) No investment fund shall make any investment in consequence of which a related person or company of the investment fund will receive any fee or other compensation except fees paid pursuant to a contract which is disclosed in any preliminary prospectus or prospectus, or any amendment to either of them, that is filed by the investment fund and is accepted by the Director.

Relieving orders

(2) The Commission may, upon the application of an investment fund and where it is satisfied that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as it may impose, that subsection (1) does not apply to the investment fund.

(1) Every investment fund manager,

(a) shall exercise the powers and discharge the duties of their office honestly, in good faith and in the best interests of the investment fund; and

(b) shall exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

(1) Every management company shall, in respect of each investment fund to which it provides services or advice, file a report prepared in accordance with the regulations of any of the following within 30 days after the end of the month in which it occurs:

1. Every transaction of purchase or sale of securities between the investment fund and any related person or company.

2. Every loan received by the investment fund from, or made by the investment fund to, any of its related persons or companies.

3. Every purchase or sale effected by the investment fund through any related person or company with respect to which the related person or company received a fee either from the investment fund or from the other party to the transaction or from both.

4. Any transaction in which, by arrangement other than an arrangement relating to insider trading in portfolio securities, the investment fund is a joint participant with one or more of its related persons or companies.

Relieving orders

(2) The Commission may, on the application of the management company of an investment fund and where it is of the opinion that it would not be prejudicial to the public interest to do so, order, subject to such terms and conditions as it may impose, that subsection (1) does not apply to any transaction or class of transactions.

No person or company that has access to information concerning the investment program of a mutual fund or the investment portfolio managed for a client by a registered adviser or registered dealer through discretionary authority provided by the client shall purchase or sell securities of an issuer for his, her or its own account if,

(a) the portfolio securities of the mutual fund or the investment portfolio managed for the client by the registered adviser or registered dealer include securities of that issuer; and

(b) the person or company has used the information for his, her or its direct benefit or advantage.

The Commission shall summarize in or as a part of a monthly periodical available to the public on payment of a reasonable fee the information contained in every report filed in compliance with this Part.

(1) Where the laws of the jurisdiction in which the reporting issuer is incorporated, organized or continued require substantially the same reports in that jurisdiction as are required by this Part, the filing requirements of this Part may be compiled with by filing the reports required by the laws of such jurisdiction manually signed or certified in accordance with the regulations.

Exemptions by order of Commission

(2) Subject to subsection (1), the Commission may,

(a) upon the application of an interested person or company,

(i) if a requirement of this Part conflicts with a requirement of the laws of the jurisdiction under which the reporting issuer is incorporated, organized or continued, or

(ii) if otherwise satisfied in the circumstances of the particular case that there is adequate justification for so doing; or

(b) of its own motion,

make an order on such terms and conditions as seem to the Commission just and expedient, exempting in whole or in part, a person or company from the requirements of this Part.

If the regulations so provide, a body established under subsection 121.4 (1) by an investment fund may approve a transaction that is prohibited under this Part and, in that case, the prohibition does not apply to the transaction.