Canada Business Corporations Act (R.S.C., 1985, c. C-44)

Marginal note:Definitions

• 131 (1) In this section, insider means, with respect to a corporation,

  • (a) the corporation;

  • (b) an affiliate of the corporation;

  • (c) a director or an officer of the corporation or of any person described in paragraph (b), (d) or (f);

  • (d) a person who beneficially owns, directly or indirectly, shares of the corporation or who exercises control or direction over shares of the corporation, or who has a combination of any such ownership, control and direction, carrying more than the prescribed percentage of voting rights attached to all of the outstanding shares of the corporation not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;

  • (e) a person, other than a person described in paragraph (f), employed or retained by the corporation or by a person described in paragraph (f);

  • (f) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the corporation;

  • (g) a person who received, while they were a person described in any of paragraphs (a) to (f), material confidential information concerning the corporation;

  • (h) a person who receives material confidential information from a person described in this subsection or in subsection (3) or (3.1), including a person described in this paragraph, and who knows or who ought reasonably to have known that the person giving the information is a person described in this subsection or in subsection (3) or (3.1), including a person described in this paragraph; and

  • (i) a prescribed person.

• Marginal note:Expanded definition of security

  (2) For the purposes of this section, the following are deemed to be a security of the corporation:

  • (a) a put, call, option or other right or obligation to purchase or sell a security of the corporation; and

  • (b) a security of another entity, the market price of which varies materially with the market price of the securities of the corporation.

• Marginal note:Deemed insiders

  (3) For the purposes of this section, a person who proposes to make a take-over bid (as defined in the regulations) for securities of a corporation, or to enter into a business combination with a corporation, is an insider of the corporation with respect to material confidential information obtained from the corporation and is an insider of the corporation for the purposes of subsection (6).

• Marginal note:Deemed insiders

  (3.1) An insider of a person referred to in subsection (3), and an affiliate or associate of such a person, is an insider of the corporation referred to in that subsection. Paragraphs (1)(b) to (i) apply in determining whether a person is such an insider except that references to “corporation” in those paragraphs are to be read as references to “person described in subsection (3)”.

• Marginal note:Insider trading — compensation to persons

  (4) An insider who purchases or sells a security of the corporation with knowledge of confidential information that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the corporation is liable to compensate the seller of the security or the purchaser of the security, as the case may be, for any damages suffered by the seller or purchaser as a result of the purchase or sale, unless the insider establishes that

  • (a) the insider reasonably believed that the information had been generally disclosed;

  • (b) the information was known, or ought reasonably to have been known, by the seller or purchaser; or

  • (c) the purchase or sale of the security took place in the prescribed circumstances.

• Marginal note:Insider trading — compensation to corporation

  (5) The insider is accountable to the corporation for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (4) unless the insider establishes the circumstances described in paragraph (4)(a).

• Marginal note:Tipping — compensation to persons

  (6) An insider of the corporation who discloses to another person confidential information with respect to the corporation that has not been generally disclosed and that, if generally known, might reasonably be expected to affect materially the value of any of the securities of the corporation is liable to compensate for damages any person who subsequently sells securities of the corporation to, or purchases securities of the corporation from, any person that received the information, unless the insider establishes

  • (a) that the insider reasonably believed that the information had been generally disclosed;

  • (b) that the information was known, or ought reasonably to have been known, by the person who alleges to have suffered the damages;

  • (c) that the disclosure of the information was necessary in the course of the business of the insider, except if the insider is a person described in subsection (3) or (3.1); or

  • (d) if the insider is a person described in subsection (3) or (3.1), that the disclosure of the information was necessary to effect the take-over bid or the business combination, as the case may be.

• Marginal note:Tipping — compensation to corporation

  (7) The insider is accountable to the corporation for any benefit or advantage received or receivable by the insider as a result of a disclosure of the information as described in subsection (6) unless the insider establishes the circumstances described in paragraph (6)(a), (c) or (d).

• Marginal note:Measure of damages

  (8) The court may assess damages under subsection (4) or (6) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in a situation involving a security of a distributing corporation, the court must consider the following:

  • (a) if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security over the twenty trading days immediately following general disclosure of the information; and

  • (b) if the plaintiff is a seller, the average market price of the security over the twenty trading days immediately following general disclosure of the information, less the price that the plaintiff received for the security.

• Marginal note:Liability

  (9) If more than one insider is liable under subsection (4) or (6) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

• Marginal note:Limitation

  (10) An action to enforce a right created by subsections (4) to (7) may be commenced only within two years after discovery of the facts that gave rise to the cause of action.