Canadian Court Provides Guidance On Securities Class Actions

A recent decision of the Ontario Superior Court of Justice has established a framework that will make it relatively easy for shareholders to pursue class actions against public companies for misrepresentations in their disclosure.

Silver v. IMAX Corporation was the first case brought under Ontario's Securities Act regime creating civil liability for continuous disclosure misrepresentations. It was also the first case to consider the merits-based test for leave to make a claim under that regime. The plaintiffs sued IMAX and a number of its officers and directors, seeking leave to proceed with the claim under the Securities Act regime and asserting common law misrepresentation claims. Motions to certify the action as a class action and for leave to proceed under the Securities Act were argued together, and Madam Justice van Rensberg released her decisions at the end of 2009.