Some Reflections on the 'responsible Issuer' Definition and Jurisdictional Aspects of Securities Class Actions

• Author: Andrea Laing and Eric Morgan
• Pages: 99-119

99

SOME R EFLECTIONS ON THE

“RESPONSIBLE ISSUER”

DEFINITION AND

JURISDICTIONAL ASPECTS OF

SECURITIES CLASS ACTIONS

Andrea Laing and Eric Morgan

Abstract: The statutory secondar y market liability provisions

in Part XXIII.1 of the Ontar io Securities Act and parallel pro-

visions in the securities acts of other Canadian provinces

have been the subject of recent judicial analysis, in particu-

lar, regarding the provisions’ jurisdictional scope. Whether a

foreign issuer1 is subject to one of these provincial statutory

regimes will depend on whether it has a “real and substan-

tial connection” to the province. What will constitute a real

and substantial connection in such contexts rem ains an open

question, but it will no doubt be considered in light of the Su-

preme Court of Canada’s recent decision in Club Resorts Lim-

ited v Van Breda and the Ontario Court of Appeal’s decision in

Abdula v Canadian Solar.

The authors contend that any analysis of the nexus be-

tween an issuer and a jurisdiction for the purposes of deter-

mining whether the “re sponsible issuer” def‌inition is met

should focus on the substantive claims being advanced by

plaintiff investors and the objects of the legislation — in par-

ticular, the maki ng of misstatements or omissions that affect

the price of an issuer’s securities on secondar y markets. In

other words, connections between an issuer and the jurisdic-

tion that are unrelated to allegations of misrepresentation (or

1 That is, an iss uer who is not a reporting issuer i n the province.

100 The Cana dian Cl ass Action R eview

omission) should not be considered real and substantial. This

approach would not only be consistent with the analytical

framework for the assumption of juri sdiction by Canadian

courts that was articulated by t he Supreme Court of Canada

in Va n B red a, but it would also help to minimize the signif‌i-

cant and undesirable disparity t hat could develop between

Canadian and US approaches to jurisdict ion over secondary

market misrepresent ation claims.