Ontario’s New Civil Liability Regime: Implications For Investment Funds

Article by John Black, Linda Currie, Lorraine Lynds & Valerie A.E. Dyer

Originally published 23 September, 2005

The recently-proclaimed amendments to the Ontario Securities Act that create causes of action for investors in the secondary market with respect to misleading, insufficient or late disclosure will become effective on December 31, 2005. This update considers how the new regime will affect mutual funds and other investment funds that are reporting issuers.

What are the new rights of action?

Ontario securities law already provides investors who purchase a security offered by a prospectus with a right of action in respect of misrepresentations contained in the prospectus.

The new legislation will now enable investors who acquire or dispose of securities in the secondary markets (i.e., who do not acquire securities directly from the issuer pursuant to a prospectus, but who acquire or dispose of securities in transactions with other investors) to sue "responsible issuers"