Investments – in whatever form they are – are great financial drivers of any economy.
Because of this power that they have over businesses and investors, laws are in place to regulate how they are dealt with. In Alberta, one of these laws is the securities laws led by the Alberta Securities Act.
What is the purpose of securities law in Canada?
Securities regulation in Canada is with the province and territories, since there’s no federal securities law nor a federal regulatory body for securities.
The main purposes of securities law are to:
- end fraud when issuing and trading in securities
- impose different obligations to issuers of securities (e.g. registration and prospectus requirement)
- establish liabilities (civil and administrative) against violating entities of the securities law
What is Alberta’s Securities Act?
The Securities Act sets up the provincial securities laws and provides the Alberta Securities Commission (ASC) with its powers and duties. It has been amended several times after the revision in 2000 of the original Securities Act.
The Act is divided into different parts, which may be summarized as follows:
- The Alberta Securities Commission
- Investigations, whistleblowing, and review
- Registration requirement
- Regulations of trading in securities and derivatives
- Prospectus requirement and exemptions
- Continuous disclosure requirement
- Regulation of takeover bids and issuer bids
- Regulation of insider trading and self‑dealings
- Enforcement and civil liabilities
Below are discussions of the highlights of some important provisions of the Act:
The Alberta Securities Commission
As will be discussed further, it is the ASC that administers the Alberta Securities Act, among other securities laws in the province.
It was continued by virtue of the Act, which also provides for its powers, responsibilities, and the procedure when appealing the decisions of the ASC.
Part of ASC’s role is to protect investors from fraud and other schemes, such as through its registration requirement of securities dealers.
Watch this video to know more about binary options, and how investors are protected by the securities law of Alberta against these schemes:
Reach out to one of the Lexpert-ranked best corporate finance lawyers in Alberta to learn more about Alberta’s Securities Act.
Investigations, whistleblowing, and review
The ASC can conduct investigations for violations of the securities laws in Alberta. For this, investigators are empowered to:
- summon witnesses and compel them to give evidence
- search a place and seize documents and other things, subject to a court order
- review and examine the business of a registrant or other entity
The Act also safeguards whistleblowers, keeping their identities safe and protecting them against reprisals.
Registration requirement
One of the requirements set by Alberta’s Securities Act is that dealers, advisers, and investment fund manager of securities must be registered with the ASC.
ASC says that this includes firms and individuals that:
- give advice about securities
- trade, buy or sell securities to Albertans
Those registered are burdened with the duty of care, which requires registrants to deal fairly, honestly, and in good faith with their clients.
Exemption of registration
However, there are certain entities that do not need to be registered, according to the Alberta Securities Act (which are mostly the same with the other provinces).
For example, below are some entities or transactions that are exempt from this registration requirement:
- international advisers
- private investment clubs
- loan and trust pools
- when related to personal property security
- variable insurance contracts
In any case, the ACS may also exempt someone from the registration requirement when it is not prejudicial to the public interest.
However, to better understand the language of the law if an entity must be registered or not, it is still important to consult with a corporate finance lawyer.
Trading in securities and derivatives
Canadian laws on securities and derivatives prescribe certain requirements and prohibitions to traders or dealers.
Some examples of prohibition under the Securities Act of Alberta are:
- making a false or misleading appearance of trading activity in a security, a derivative, or its underlying interest
- putting an artificial price over a security, a derivative, or its underlying interest
- improperly influencing the determination of a benchmark, or contributing to making a false or misleading determination of a benchmark
Prospectus requirement and exemptions
When an issuer trades in securities, they are required to do so through what is called a prospectus, unless they are exempted by the Alberta Securities Act.
A prospectus is a document which shall reveal everything that an investor needs to know regarding the transaction.
This will be first filed with the ASC, which will issue a receipt showing that the offer has been properly reviewed.
Who does the Alberta Securities Act apply to?
Broadly speaking, the Alberta Securities Act apply to the three sides of an investment or securities deal:
- the corporation, business, or person that deals the investment for another, or the one that needs it for their operations
- the investor, whether it be a corporate entity or an individual, that is being offered the securities or investments
- the intermediaries of these two parties
When in doubt, it would be more prudent for any of these participants to check with a corporate finance lawyer to stay compliant with the Act.
Who regulates securities in Alberta?
The regulatory body for securities in the province is the ASC, which mainly implements the province’s securities law, which includes the:
- Securities Act of Alberta
- rules and regulations made under the Securities Act
- orders made by the ASC or by its Executive Director
For instance, to address different matters and parties, the ASC has the power to issue the following:
- Blanket Orders
- Designation Orders
- Issuer Regulation
- Registrant and Market Regulation
- Staff Notices and Policy Statements
ASC is also a member of the Canadian Securities Administrators (CSA), the umbrella body composed of all the provincial and territorial securities commissions.
With harmonization of securities regulation across Canada under the CSA, the ASC also implements regulatory instruments as part of its rules, such as the:
- National Instruments
- Multilateral Instruments
The Alberta Securities Act: protecting investors and markets
The Alberta Securities Act plays an important role in safeguarding the interests of investors and maintaining the integrity of the financial markets in Alberta. Understanding this act is essential for anyone involved in securities in Alberta, whether they are issuing, trading, or advising on investments.
For further insights into how this legislation affects your investments or business, consult a corporate finance lawyer in your area.
For more on Alberta’s Securities Act and other similar laws, reach out to the best corporate finance lawyers in Canada as ranked by Lexpert.