As with any other province and territory, Saskatchewan’s economy relies greatly on investments for businesses and corporations. For this, there must be a high level of trust in the financial system and in the market in which it operates. This is achieved through enacting and enforcing securities laws such as the Saskatchewan Securities Act.
How are securities regulated in Saskatchewan?
In Canada, the regulation of securities is lodged with its provinces and territories, in the absence of a federal securities law and a federal securities regulator. This means that each province and territory would have their own statute and regulator for securities and investments.
To have a consolidated and uniform method of regulating securities nationwide, all these different regulators have banded to form the Canadian Securities Administrators (CSA). The CSA helps by releasing consolidated regulations to help these local regulators (e.g., National Instruments), among other roles.
In Saskatchewan, the provincial law for securities regulation is The Securities Act, 1988. As for its regulator in the province, it would be the Financial and Consumer Affairs Authority of Saskatchewan (FCAA). With the objective of protecting investors and maintaining fairness in the province’s capital market, the Act has several functions, such as:
- governing securities-related transactions
- regulating the conduct of actors in these securities-related transactions
- defining the powers and authority of the FCAA
One of the powers of the FCAA is to warn the public of investment scams, which is punishable under the Saskatchewan Securities Act. Watch this short video to learn more about these scams:
If you’re a dealer or trader of securities, knowledge of the law will help prevent you from becoming tagged as a scammer. Know more about securities regulation by consulting the best corporate finance lawyers in Canada as ranked by Lexpert.
How does the Saskatchewan Securities Act work?
Generally, the Saskatchewan Securities Act governs the conduct of dealers, advisers, and issuers of securities in the province. This starts from the registration of individuals and firms specifically named in the law, up to their obligations when securities are offered to their purchasers.
Registration of dealers and advisers
Under the Securities Act, the following persons or companies must be registered with the FCAA before they can perform as such:
- dealers or underwriters
- advisers
- investment fund managers
This registration requirement includes:
- their representatives and those who act on behalf of registered dealers, underwriters, advisers, and managers
- their ultimate designated person or chief compliance officer, when naming one is required by any regulation
Exemptions and ongoing requirements
There are certain people and businesses who are exempt from this registration requirement. These are explained in detail in CSA’s National Instrument 31-103. Registrants are imposed by FCAA with ongoing requirements, such as the filing of specific reports, continuing education and training, among others. When reading these exemptions, it’s better to have it interpreted by a Canadian securities lawyer.
Filing and delivery of prospectus
One of the main ways to protect investors is to ensure that they’re fully informed about the securities that they’re purchasing. For this reason, a key feature of securities laws, such as the Saskatchewan Securities Act, is the requirement to file and deliver a prospectus before securities can be issued.
A prospectus is a detailed disclosure document prepared by issuers. It must contain full, true, and plain disclosure of all the material facts about the securities being issued.
Process of prospectus filing and delivery
As commonly used by most provinces and territories, here’s a summary of the steps in the filing and delivery of a prospectus:
- Issuer prepares a preliminary prospectus
- Filing of the preliminary prospectus to the securities regulator (e.g., the FCAA)
- After review and issues are addressed, the issuer prepares the final prospectus
- Filing of the final prospectus to the securities regulator and a receipt will be issued
While issuers can start looking for potential investors after step no. 2, investors must still be given a copy of the preliminary prospectus by the issuer. After completing step no. 4, issuers are now called reporting issuers.
Exemption to the prospectus requirement
The Securities Act of Saskatchewan also provides for exemptions from this prospectus requirement. An issuer may be exempt when an issuer applies for an order from the FCAA, or upon the FCAA’s own motion. These are explained in detail in National Instrument 45-106.
Reporting obligations of reporting issuers
Once an issuer becomes a reporting issuer, they’re now required by Canadian securities law to file reports with the securities regulator. Under Saskatchewan’s Securities Act, a reporting issuer has a continuing obligation to file:
- periodic disclosures about its business and affairs
- disclosures in cases of material changes in its affairs
- other disclosures required by the CSA and FCAA (e.g., insider reports)
These disclosures are made available to the public. As additional resources, this will help potential investors when deciding in relation to the reporting issuer’s offered securities.
Requirements for certain transactions
To ensure fairness and transparency between reporting issuers and investors, certain transactions are imposed with some requirements before it can push through.
Take-over bids
A take-over bid is when an investor acquires beneficial ownership of 20% or more of a target company through the securities being offered. Before this can be pursued, CSA regulations under National Instrument 62-104 must be followed. It requires:
- filing of disclosures (e.g., circulars and validations)
- a sufficient period for the target company to assess the bid
- equal treatment requirement among shareholders of the target company
- minimum tender requirement before the securities can be acquired
Insider trading
Aside from those stated above, reporting issuers are also required to file insider reports with the FCAA, which discloses their trading activity. Otherwise, their transactions may be considered illegal insider trading.
What acts are prohibited by the Saskatchewan Securities Act?
The Securities Act of Saskatchewan listed numerous offences that parties to a securities-related transaction can commit. Some examples of these offences are:
- abetting: assisting or counseling another to commit acts which are in violation of the securities law
- fraud and market manipulation: acts whose results in a misleading appearance of a security’s trading activity or its artificial price
- misrepresentations: when there’s false or omitted material information, which can be committed in different ways (e.g., in a prospectus offering)
Penalties for these offences include criminal prosecution, civil liabilities, and administrative penalties, such as fines.
If you have concerns about the Saskatchewan Securities Act, ask the experts by reaching out to the Lexpert-ranked best corporate finance lawyers in Saskatchewan.
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