Ontario’s Insider Trading Laws: Reporting Requirements for Canadian Securities in Ontario

Enforcing Transparency and Accountability in Ontario’s Securities Market

Ontario’s securities legislation plays a vital role in Canada’s securities market, enforcing transparency and accountability. This legislation, which applies mostly to reporting insiders of reporting issuers, mandates the disclosure of transactions involving securities or related financial instruments, unless an exemption is granted.

Reporting Insider Responsibilities

Defining Insiders

An insider is a person, as per the Securities Act of Ontario, who:

• Possesses routine access to material undisclosed information
• Wields significant influence over a reporting issuer

A reporting insider, as per National Instrument 55-104, is a more detailed category of insider, including those involved in management, activities, or with substantial security holdings.

Reporting Requirements

Reporting insiders must submit insider reports to disclose:

1. Direct or indirect ownership of, or control or direction over, securities of the reporting issuer
2. Any interest in, or rights or obligations associated with, a related financial instrument involving the reporting issuer’s securities
3. Any changes to the above information

Additionally, reporting insiders must file insider reports within specific timeframes to disclose derivative transactions influencing their economic interest or exposure to the issuer.

Insider Deadlines and Consequences

Reporting insiders are required to file:

• An initial report within 10 business days of becoming a reporting insider
• Subsequent reports within 5 business days of a change in holdings

Penalties for failing to comply with reporting requirements can result in late filing fees, public identification as a late filer, cease trade orders, and possible enforcement action.

Exemptions to Insider Reporting Requirements

For more information on the Ontario Securities Commission’s (OSC) insider reporting review timing, consult the OSC Service Commitment.

Insider Trading Prohibitions

All insiders, regardless of reporting status, are also subject to prohibitions against improper insider trading under Canadian securities legislation.

Activities Prohibited by Insider Trading Laws

Insider trading laws aim to discourage insider trading based on undisclosed material information, increase market efficiency, and prevent unlawful activities like:

• Stock option backdating
• Option repricing
• Spring-loading
• Bullet-dodging