Provinces support national regulator plans

April 27, 2012 | Last updated on April 27, 2012
3 min read

The federal government is working with the provinces in an attempt to finally create a common securities regulator within Canada—it will replace the patchwork of 13 regional regulators currently in existence.

Finance Minister Jim Flaherty told the Financial Post, “there is a critical mass of support” across the country to create a countrywide securities regulator within the parameters set out by the Supreme Court of Canada.

Last December, the court ruled that the federal government didn’t have the power to unilaterally create a national securities regulator through legislation, but suggested there might be a way forward through federal and provincial co-operation.

Read: Requiem for a regulator

Currently, Flaherty is unsure of how plans will progress. He would like to get on with the 2010 budget plans to create national legislation, and has stated, “it’s embarrassing for Canada to be the only country among the Group of 20 industrialized nations without a single national regulator.”

Earlier this week, officials from the Finance department met with representatives from the provinces and territories who have shown interest in working together to reach this common goal. Flaherty says Ottawa is willing to buckle down and make strides toward forming the elusive securities agency, which has failed to materialize over the past three decades.

While many may applaud the efforts of the government, some people like Bill Singer offer a different view. He asserts that when investors ignore their good sense, they may deserve to lose their money. Having proper regulation is one thing, but it doesn’t replace proper financial literacy and common sense.

In other news, the federal government is also promising more disclosure on decisions to block foreign takeovers judged as detrimental to Canadian interests.

Industry Minister Christian Paradis says that he will introduce amendments to the Investment Canada Act that would allow him to disclose that he has sent a preliminary notice to a potential investor against a takeover and to explain his reasons.

The explanation would only occur in a manner that does not break company confidentiality or cause harm to the Canadian firm involved or the investor, the statement said.

As well, an amendment would allow Ottawa to accept security in lieu of cash in payment should a court levy penalties on a foreign investor for breaking contractual commitments.

“Canada has one of the best investment climates in the world,” says Paradis. “Our businesses depend on investment to expand, innovate and create jobs.”

The government gave no reasons for the changes, but they follow another 2010 motion—one that calls for more transparency, including public hearings, and conditions applied to a successful bidder.

The reforms are unlikely to clear up the confusion over the calculations the government makes in determining when a takeover is not considered of net benefit to Canada.

“This is just telling people where the process is at, but it doesn’t give them any insight into what the proposals are or what the conditions are … (so) it doesn’t given them a chance to propose their views,” she says.

Although the government has intervened twice to stop takeovers, Nash said the holes in the current act were revealed recently by the closing of the Electro-Motive plant in London, Ont., by Caterpillar Inc. in February.

“The Conservative government has to do much more to protect the interests of Canadians,” Nash says.