Securities such as investments are important for businesses; they generate capital to keep their operations running and their employees paid. As such, regulation of securities, such as the New Brunswick Securities Act, is crucial to ensure that activities related to investments are truthful, safe, and transparent.
In this article, you’ll get an overview of the New Brunswick Securities Act. We'll talk about what the Securities Act covers, who New Brunswick’s securities regulator is, and other important information.
What is the New Brunswick Securities Act?
Every province or territory in Canada has its own laws for regulating securities, which are imposed by their own regulating authority. These local statutes and regulators fill in the gap since there is no sole federal law in Canada on securities, let alone a federal regulator.
To coordinate these different local regulators, they formed the umbrella organization called the Canadian Securities Administrators (CSA). Through the CSA, different regulations are then harmonized, so that there’s a uniform law on securities across the country, such as the issuance of its National Instruments (NI). However, there are still instances where some provinces or territories may differ when it comes to specific matters.
New Brunswick's Securities Act is the province’s law for regulating its securities industry. Generally, the Securities Act of New Brunswick covers:
- what necessary information corporations must disclose when they distribute securities (e.g., to their shareholders and to the public)
- what are the qualifications of securities advisors and dealers, the process when they register, and who are exempt from this registration requirement
- what are the offences that are considered violations of the Securities Act, who can be liable for these offences, and what are their penalties
- who is the province’s securities regulator, and what are their powers and responsibilities when it comes to enforcing the Securities Act
Investment scams, such as financial exploitation of seniors, are one of the prohibited acts under New Brunswick’s Securities Act. Know more about these scams and how to prevent them with this video:
If you’re interested in your province’s counterpart law with New Brunswick’s Securities Act, reach out to the best corporate finance lawyers in Canada as ranked by Lexpert.
New Brunswick’s securities regulator
The Financial and Consumer Services Commission (called FCNB) is the securities regulator of the province. They enforce the Securities Act of New Brunswick, including the Act’s Regulations and the decisions it renders when an issue is raised.
The FCNB is also empowered by the Securities Act to make rules for its implementation. The commission also oversees other financial industries, such as:
- insurance
- pensions
- credit unions
- cooperatives
- trust and loan companies
Who is regulated under the New Brunswick Securities Act?
One of the important ways of protecting investors and ensuring fair practices in the securities industry is the registration and licensing of investment professionals. As a rule, those who are engaged in the advising or trading in securities or derivatives in New Brunswick must be registered with the FCNB, which includes:
- dealers of investments, mutual funds, scholarship plans
- managers of investor portfolios, restricted investor portfolios, investment funds
- representatives of dealers and advisers
- certain officers of securities business, such as ultimate designated person or CEO; chief compliance officer
People who would want to be registered can check with the FCNB on the specific procedures of registration. At the same time, investors can also ask the FCNB if the dealers or advisers they’re dealing with are registered.
Exemptions from the registration requirement
Under New Brunswick’s Securities Act, the FCNB may exempt a person or class of persons from this registration requirement, if it’s not prejudicial to the public interest. The regulations of the FCNB and the CSA may also issue regulations, or amend existing ones, which exempt certain transactions or persons from this registration requirement. These exemptions are spelled out under CSA’s NI 31-103. For more information on this NI, you can also ask a securities lawyer in Canada.
What rules are imposed by New Brunswick’s Securities Act?
Aside from requiring certain persons to be registered with the FCNB, the Securities Act of New Brunswick also imposes a disclosure requirement. In addition, certain acts or omissions are also classified by the law as illegal.
Disclosure requirements under New Brunswick’s Securities Act
There are two parts to this disclosure requirement under Canada’s securities law:
- first, issuers must file a prospectus with the FCNB before they can deal any securities to the public
- next, there’s a continuing disclosure obligation on the part of a reporting issuer
When a prospectus is filed by an issuer with the FCNB, the issuer is now called a reporting issuer. They are now then required to file regular reports with the FCNB, which will inform the public of their financial status or when there’s significant changes to their business.
Issuers can also be exempt from these requirements, when an exempt order is issued by the FCNB in their favor, or when stated in a relevant NI by the CSA.
Enforcement and penalties prescribed by the New Brunswick Securities Act
The following are the prohibited acts and omissions by the Securities Act of New Brunswick:
Misrepresentations
Civil liabilities are imposed on people who misrepresent any information on the securities being offered or sold, either verbally, on a prospectus, on a disclosure, on a takeover bid circular, or in advertising or sales literature.
Omissions
Civil liabilities are imposed on dealers, offerors, or reporting issuers for their non-filing or delivery of preliminary prospectus or prospectus, disclosure documents, takeover bids, or other documents, whenever it’s required by law.
Insider trading
Except when allowed by law, it’s illegal for a person who has a special professional relationship with an issuer and who has material knowledge of the securities offered by the issuer, to purchase these securities.
These are just some of the prohibitions in the Securities Act. Whether you’re an investor or a business transacting with securities, it’s better to consult with a lawyer near you before engaging in anything related to securities.
If you want to learn more about the New Brunswick Securities Act, consult any of the Lexpert-ranked best corporate finance lawyers in New Brunswick.