The Manitoba Securities Act plays a crucial role in keeping financial markets fair and transparent. This key provincial statute helps protect investors by setting up the rules for investment practices and market behavior. At the same time, it’s also important for corporations to understand this law, so that their investment activities are fairly and legally conducted.
What is the Manitoba Securities Act?
Manitoba’s Securities Act is the provincial law that governs investments and the entities that are engaged with it. This includes the corporations that issue securities and provide financial services to the public. The statute was enacted in 1988 and has been amended many times since then; the most recent was in 2021 which came into force on July 1, 2022.
Aside from protecting investors from any illegal and fraudulent activities related to securities, it also punishes those who perpetrate these activities. With huge amounts of money at stake in transactions involving securities and investments, it’s with the government to regulate such activities by enforcing this law.
What are the rules under The Securities Act of Manitoba?
Officially called The Securities Act, it consists of 20 Parts that contain different rules and govern all actors when it comes to trading securities. Below are some of the most important provisions of the Manitoba Securities Act:
- continuing the existence of the Manitoba Securities Commission
- registration requirements of specific persons, professions, and organizations
- investigative powers and the investigation process of the Commission
- regulating trading activities of securities and derivatives
- rules on disclosures and continuing reporting requirements
- insider trading, general and specific prohibitions, and other offences
One of the closely related topics when it comes to securities is investment fraud. Many Canadians still fall victim to these schemes, which makes it one of the things that are governed by securities laws. Learn more about investment fraud with this video from the Commission:
If you’re an investor who is a victim of securities-related fraud, or a corporation who wants to ensure compliance with securities law, calling up a lawyer is one of the things to do. You can reach out to the best corporate finance lawyers in Canada as ranked by Lexpert.
Registration requirements of specific persons or professions
The Manitoba Securities Act says that the following persons, in relation to investments and securities, must be registered with the Commission:
- traders of securities or derivatives
- financial advisers
- investment fund managers
- underwriters
In addition, firms and organizations are also covered by this registration requirement as mandated by the Commission, such as:
- dealers of investments, mutual funds, security of scholarship or educational plans
- portfolio managers
- investment fund managers
One of the purposes of this registration requirement is to, again, protect investors and the public from illegal and fraudulent schemes. For instance, the Commission will only register individuals or firms if they’re qualified and solvent enough to handle and transact with securities. Note that this registration is just the start; ongoing requirements are also imposed on the registered individuals and firms.
Exemption from the registration requirement
However, Manitoba’s The Securities Act provides for some exceptions to this registration requirement. It includes:
- those who are exempted by the regulations and the Commission as elaborated more in the National Instrument 31-103
- shares or securities issued by cooperatives under The Cooperatives Act
- securities issued by credit unions in relation to The Credit Unions and Caisses Populaires Act
When in doubt, knowing if you’re exempt from this registration requirement is better consulted with a securities lawyer in Canada or with the Commission. It is way too risky to think you are right; you should know you are right by getting expert advice.
Regulating trading activities of securities and derivatives
There are general restrictions imposed by the Manitoba Securities Act on trading in securities and derivatives. Here are some examples of these restrictions:
- telephoning a residence: traders cannot directly call a residence to trade in any security or derivative without a prior appointment, or without a personal or business relationship with the person being called
- prohibition on misrepresentations: making written or oral misrepresentations that the:
- trader will resell, repurchase, or illegally refund the purchase price of the securities being traded
- security or derivative being traded will be listed on any exchange in the future, unless there's a written permission from the Commission
- person or firm trading in a security or derivative is registered with the Commission
- Commission’s approval of the registration of a registrant or about the traded securities or derivatives
- prohibition on promises: it’s prohibited to make written or oral promises about the future value or price of the security or derivative, with the intent of trading in the subject security or derivative
- requirement on insider trade reporting: insiders are required to report trades in securities, and for reporting issuers to continually disclose issuer events, among other things to prevent illegal insider trading
Still, these prohibitions must be read along with the specific provisions of the Manitoba Securities Act and the regulations implemented by the Commission on other offences. Corporations and investors should know about these offences, as penalties can be hefty in addition to possible criminal liabilities.
Rules on disclosures
The Securities Act of Manitoba requires that when a person or firm wants to sell securities to the public, in addition to being registered with the commission, they must:
- prepare a prospectus: this must be filed with the Commission, where a receipt will be issued after its review
- continually disclose relevant information to the public: this is done through the filing of financial statements, material change reports, etc. still with the Commission
Who regulates securities law in Manitoba?
The provincial regulator of securities in Manitoba is the Manitoba Securities Commission. Aside from The Securities Act, the Commission also enforces The Commodity Futures Act. In addition to the powers of the Commission that were discussed above, the Commission has other regulatory powers granted to it by law:
- restrict, suspend, or cancel a registration, if they pose a risk to the public
- restrict the trading activities of persons who illegally promote securities
- stop the trading of securities of a public company because of its inaccurate, missing, or undisclosed material information when trading securities
- bring prosecutions to the court where in case of violation of the securities law
Interested in knowing more about the Manitoba Securities Act? Hear more about this law straight from the Lexpert-ranked best corporate finance lawyers in Manitoba themselves.