Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Monday, September 26, 2005

Ontario's New Law on Public Company Disclosure

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.


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