Insider trading at large publicly traded corporations makes news
headlines and is the stuff of Hollywood movies. Less talked about
is Canadian and Ontario corporate laws prohibiting insider trading
in privately held corporations.
Under section 131 of the Canada Business Corporations
Act ("CBCA") and section 138 of the Ontario
Business Corporations Act ("OBCA"), an
"insider" will be liable for damages resulting from the
purchase or sale of the securities of a private corporation if the
insider had, or used, confidential information that would
reasonably have affected the value of the corporation's
securities if the information had been generally known. The insider
is also liable to the corporation for any gains made by the
purchase or sale. Insiders include the private corporation or its
affiliates as well as officers, directors and employees of the
corporation.
