Public companies and their shareholders

Region: Ontario Answer # 274

Reporting issuers

Most public companies in Ontario are “reporting issuers.” Reporting issuer is a term used in the Ontario Securities Act. These companies must make continuous and timely disclosure to their shareholders, the securities regulators and to the investing public. An important principle of securities regulation is that all material information about a reporting issuer is available, so that investors can make informed investment decisions.

Continuous disclosure obligations of a public company include annual and quarterly financial reporting as well as providing information in connection with meetings of shareholders. Reporting issuers must also immediately issue press releases when there is a material change in their affairs. The public record of a reporting issuer, containing all electronic filings made with securities regulators in Canada, is available to the public free of charge on the SEDAR website at sedar.com. If you want to find out more about a public company, you will find documents such as annual reports and financial statements, information circulars and press releases at SEDAR.


When a company issues new securities to the public it must provide a prospectus, which is a document containing detailed information about the company and the securities for sale. Companies cannot sell the securities in Ontario until a prospectus has been accepted for filing by the Ontario Securities Commission. By accepting the prospectus, the securities commission is not endorsing or recommending the security as a good investment. Accepting the prospectus means only that the prospectus meets the securities law standards for disclosure of information.

Cease Trading Orders

The securities commission can take enforcement action against public companies when they do not comply with their obligations under the Securities Act.

The securities commission may issue a “cease trading order” which prevents trading of a company’s shares in Ontario. This means that the company cannot sell its shares and also that investors cannot buy or sell the shares while the cease trading order is in effect. A cease trading order may be issued for a number of reasons, most often for not filing financial statements or other disclosure documents as required by Ontario securities law.

Enforcement actions are taken by the securities commission for activities of a company or individual that do not comply with Ontario securities law. These actions may result in various sanctions being imposed on those companies or individuals. However, they generally do not involve obtaining money compensation for individual shareholders or investors.

Shareholders or investors who want to claim damages or compensation for any wrongful activity of a public company must bring their own civil proceedings.

Rights of shareholders

Shareholders of all companies, whether public or private, have rights that arise from corporate law, which is the law under which the company is created. An Ontario incorporated company is governed by the Ontario Business Corporations Act; a federally incorporated company is governed by the Canada Business Corporations Act.

The basic responsibility for management of a company’s affairs, which are sometimes called “corporate governance” issues, rests with the board of directors. The board of directors is accountable to the shareholders of the company who elect them. The right to vote at meetings of shareholders is one of the basic rights of shareholders owning voting shares.

Concerns involving corporate governance issues generally are matters that must be brought to the civil courts. If your concerns about a public company are about these kinds of activities, you should consult a lawyer in Ontario familiar with corporate and securities law to find out how the law applies to your circumstances and what legal remedies are available to you. In particular, shareholders who want to claim money compensation should consider civil remedies through the courts.

Regulation of financial services

The regulation of financial services is covered by different areas of the law. Banks and banking products are regulated by the Office of the Superintendent of Financial Institutions, or OSFI. Federally incorporated insurance companies are also regulated by OSFI.

For the province of Ontario, the Financial Services Commission of Ontario regulates insurance, pension plans, loan and trust companies, credit unions, mortgage brokers and co-operatives. Banks and insurance companies can also be public companies whose shares are listed on a stock exchange and subject to securities laws. Bankruptcy laws and corporate laws can also affect the operation of public companies.


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