On December 31, 2005, Ontario's new law regarding continuous disclosure violations goes into effect. If a company makes a misrepresentation in a public document or an oral statement, a disclosure violation occurs. The violation does not end until the company makes proper disclosure.
The new Ontario law differs from Rule 10b-5 in several ways:
1. Plaintiffs do not need to prove there was an intent to deceive or that defendants acted recklessly;
2. Liability is capped at the greater of $25,000 (Canadian) or one half of his or her compensation for the past 12 months from each director or officer;
3. Liability of the company is limited to the greater of $1 million (Canadian) or 5% of the company's market cap;
4. Plaintiffs must obtain leave of the court to bring a suit, which must be brought in good faith and with a reasonable prospect of success at trial.