{"id":1741,"date":"2012-11-01T00:00:00","date_gmt":"2012-11-01T00:00:00","guid":{"rendered":"https:\/\/perlaw.ca\/2012\/11\/01\/insider-reporting-what-you-dont-know-can-hurt-you\/"},"modified":"2019-07-24T19:03:15","modified_gmt":"2019-07-24T19:03:15","slug":"insider-reporting-what-you-dont-know-can-hurt-you","status":"publish","type":"post","link":"https:\/\/perlaw.ca\/fr\/2012\/11\/01\/insider-reporting-what-you-dont-know-can-hurt-you\/","title":{"rendered":"Insider Reporting \u2013 What You Don\u2019t Know Can Hurt You"},"content":{"rendered":"

At one point or another, many insiders of reporting issuers find themselves \u201coffside\u201d of the reporting requirements set out in Canadian Securities Administrators National Instrument 55-104 – Insider Reporting Requirements and Exemptions<\/em> (\u201cNI 55-104\u201d).\u00a0 This experience can be painful, as insider reporting is an individual responsibility and failure to file in accordance with NI 55-104 can attract serious penalties, including fines of $50 a day to a maximum of $1,000 a year for a single incident.\u00a0 This article will summarize some of the basic requirements of NI 55-104.\u00a0 However, details are important.\u00a0 If you are a reporting insider, you should consult with your corporation or your lawyer on a regular basis to ensure you are meeting all of the requirements of NI 55-104 that reflect your personal circumstances on a continuing basis.<\/p>\n

Who must report?\u00a0 <\/em>\u00a0NI 55-104 focuses the insider trading reporting obligations on senior insiders of reporting issuers who have the greatest access to material undisclosed information.\u00a0 This group includes officers (such as the CEO, CFO and COO), directors, significant shareholders and any other persons who, in the ordinary course, have access to material undisclosed information about a reporting issuer and directly or indirectly do or have the ability to exercise significant power or influence over the business operations, capital or development of a reporting issuer.<\/p>\n

Who is a significant shareholder?<\/em>\u00a0 Significant shareholders are persons exercising direct or indirect control over 10% or more of the voting shares of a reporting issuer.\u00a0 A person may also be a significant shareholder based on post-conversion beneficial ownership if the person owns convertible securities that can be converted into voting shares within 60 days.\u00a0 This concept is intended to ensure that a person who owns convertible securities that have the right or obligation to acquire beneficial ownership of the underlying security within sixty days cannot avoid the disclosure requirements by holding a convertible security rather than the underlying security.\u00a0 NI 55-104 deems such a party to own the underlying security for the purpose of insider reporting obligations.<\/p>\n

What must be reported?\u00a0 <\/em>The reporting requirements encompass any change in ownership of all securities of the reporting issuer, including, among other things, acquisition, disposition, exercise or expiry of shares, options, put or call rights, forward contracts, stock compensation arrangements, derivative instruments, debt instruments or any other agreement that may affect the economic exposure of a significant shareholder to the reporting issuer.\u00a0 It\u2019s a very broad requirement that captures changes in status of almost any security interest you can imagine.\u00a0 Reporting insiders should assume all changes in the status of their securities are reportable unless specifically advised otherwise.<\/p>\n

What are the reporting deadlines?\u00a0 <\/em>A reporting insider must file an initial report within 10 days of becoming a reporting insider.\u00a0 Any changes after that must be filed within 5 days of the date of the change.\u00a0 Five days is a short time, particularly over a long weekend.\u00a0 Late filing penalties are normally $50 per day and there are almost no exceptions.<\/p>\n

Are there any exemptions?\u00a0 <\/em>There are a few specific exemptions to the reporting requirements.\u00a0 Primarily, these include exemptions for acquisitions and dispositions under automatic securities purchase plans and for certain issuer grants in respect of compensation, provided the corporation files certain reports on these transactions.\u00a0 In such cases, the reporting insider must file alternative reports, generally on a yearly basis.<\/p>\n

As mentioned at the outset, insider reporting requirements are an individual responsibility.\u00a0 You should not assume the corporation of which you are an insider is \u201ctaking care of it.\u201d\u00a0 Even where the corporation or an outside agent does file on your behalf, you should be proactive in ensuring that the appropriate filings are made in a timely fashion.\u00a0 Otherwise, you may find yourself dealing with penalties assessed against you personally.\u00a0 Your lawyer can help you understand your obligations as a reporting insider.<\/p>\n

\n

David J. Lowdon is a\u00a0lawyer in our Business Law Group. He can be reached at dlowdon@perlaw.ca<\/a> or 613.566.2809.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

At one point or another, many insiders of reporting issuers find themselves \u201coffside\u201d of the reporting requirements set out in Canadian Securities Administrators National Instrument 55-104 – Insider Reporting Requirements and Exemptions (\u201cNI 55-104\u201d).\u00a0 This experience can be painful, as insider reporting is an individual responsibility and failure to file in accordance with NI 55-104 […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"wds_primary_category":0,"wds_primary_expertise_area":0,"footnotes":""},"categories":[80],"tags":[],"class_list":["post-1741","post","type-post","status-publish","format-standard","hentry","category-news-release"],"acf":[],"_links":{"self":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/1741","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/comments?post=1741"}],"version-history":[{"count":3,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/1741\/revisions"}],"predecessor-version":[{"id":3134,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/1741\/revisions\/3134"}],"wp:attachment":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/media?parent=1741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/categories?post=1741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/tags?post=1741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}