Canadian Government Releases Proposed Canadian Securities Act

Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Securities Regulation, June 2010

On May 26, 2010, the federal Canadian Department of Finance (Finance) released a proposed draft Canadian Securities Act (the Proposed Act). The Proposed Act was drafted by the Canadian Securities Transition Office (the CSTO), a body established by the Government of Canada in July 2009 to assist in establishing a Canadian securities regulator.

Representatives from 10 of the 13 provinces and territories of Canada (collectively, the Participating Jurisdictions) assisted the CSTO in developing the Proposed Act. The provinces of Alberta, Manitoba and Quebec have to date not participated in the development of the Proposed Act or the federal securities regulatory regime.

PROPOSED TIMING FOR ESTABLISHMENT OF REGULATORY REGIME

Finance has referred the Proposed Act to the Supreme Court of Canada to obtain a ruling as to whether the Proposed Act is within the legislative competence of the federal Parliament and has stated that it expects it will take 10 to 24 months for the Supreme Court to issue its ruling.

The CSTO is drafting a transition plan (the Transition Plan) which it expects to deliver to the Minister of Finance (Canada) and the Participating Jurisdictions by July 12, 2010. According to the CSTO, the Transition Plan will provide a roadmap for establishing the Canadian Securities Regulatory Authority (the Authority) (the securities regulatory body that will administer the Proposed Act), and will also include information on governance, organizational design and other administrative aspects.

Finance has also announced that the CSTO intends to begin discussions with each Participating Jurisdiction for the purposes of co-ordinating the establishment of the Authority and the implementation of the proposed securities regulatory regime. The Canadian government has set aside C$150-million to enter into financial arrangements with the Participating Jurisdictions to assist with the move from provincial and territorial securities regulators to a Canadian securities regulator.

Finance has announced that it is targeting 2012 or 2013 for the establishment of the Authority.

THE CANADIAN SECURITIES REGULATORY AUTHORITY

The Proposed Act establishes the Authority as a Crown corporation and specifies its mandate and structure. Pursuant to the Proposed Act, the Authority will be self-financing and must fund its activities and operations from...