Québec Court Of Appeal Rejects Several Aspects Of Pan-Canadian Securities Regime

On May 10, 2017, the Québec Court of Appeal (the "Court of Appeal") ruled that the plan to implement a new regulatory regime for a pan-Canadian securities regime is unconstitutional in several respects.1 The decision was in response to a reference from the government of Québec who took issue with the constitutionality of the proposed regime.

Background

In a landmark ruling in 2011, the Supreme Court of Canada acknowledged that certain aspects of securities regulation raised valid national concerns but rejected the federal government's claim to constitutional authority to displace day-to-day provincial regulation of the securities industry.2

In September 2014, the federal government and the governments of Ontario, British Columbia, Saskatchewan and New Brunswick announced that they signed a memorandum of agreement (the "MOA") formalizing the terms of a Cooperative Capital Markets Regulatory System. See our prior bulletin on the proposed regime. Since then, the governments of Prince Edward Island and the Yukon have entered into the MOA. The government of Québec did not enter into the MOA.

Pursuant to the MOA, a Capital Markets Regulatory Authority (the "CMRA") would administer both the federal and provincial securities acts and would act in accordance with a single set of regulations.

The uniform Provincial Capital Markets Act (the "Uniform Act"), which would be enacted by each participating province and would replace existing provincial securities legislation, purports to harmonize the approaches taken by the various signatory provinces. The complementary federal Capital Markets Stability Act (the "CMSA") addresses those areas under federal jurisdiction, equipping the CMRA with national data collection powers to monitor activity in capital markets and providing the CMRA with the requisite tools to manage systemic risk related to capital markets on a national basis.

Both the Uniform Act and the CMSA empower the CMRA to make regulations. At the head of this proposed regime sits a Council of Ministers that would supervise the CMRA and approve any regulations adopted under the Uniform Act and the CMSA. The Council of Ministers consists of the federal minister of finance and the minister responsible for capital markets regulation from each participating province or territory.

The legislation establishing the CMRA has not yet been published.

Issues & Analysis

On July 15, 2015, the government of Québec referred two questions to the Court of Appeal...