Insider reporting

An insider is generally someone who has routine access to material undisclosed information concerning a reporting issuer and significant influence over the reporting issuer.

The actual persons who meet the definition of insider or reporting insider are contained in securities law:

• an insider is defined in section 1(1) of Ontario’s Securities Act
• a reporting insider is defined in NI 55-104

A reporting insider of a company is generally required to file insider reports that disclose:

• any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer
• any interest in, or right or obligation associated with, a related financial instrument involving a security of the reporting issues
• any change in any of the above information

Separate and supplementary insider reporting requirements exist for derivatives (which are outlined in Part 4 of NI 55-104). A reporting insider is generally required to file a report about a derivative transaction involving securities of the reporting issuer if:

• the transaction directly or indirectly alters the insider's economic interest in a security of the reporting issuer or economic exposure to the reporting issuer
• the insider is not otherwise required to file an insider report about the transaction

A reporting insider who is required to file an insider report about a derivative transaction must disclose the existence and material terms of the transaction in the insider report.

We review compliance of reporting insiders and reporting issuers with insider reporting requirements through a risk-based compliance program. We actively and regularly assist reporting issuers and advisors by providing guidance on filing matters. The objective of our insider reporting oversight work is twofold:
 

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Insider reporting serves a number of functions, including deterring improper insider trading based on material undisclosed information and increasing market efficiency by providing investors with information about the trading activities of insiders, and, by inference, the insiders’ views of the reporting issuer’s future prospects. Non-compliance affects the integrity, reliability, and effectiveness of the insider reporting regime, which in turn has a negative impact on market efficiency. Where we identify non-compliance, we reach out to reporting issuers and request remedial filings. A reporting issuer should make remedial filings as soon as it becomes aware of an error to accurately inform investors of its activities, and to avoid any further late filing fees.

We educate reporting issuers through our compliance reviews and we also reach out to new reporting issuers directly to inform them of insider reporting obligations. We encourage reporting issuers to implement insider trading policies and monitor insider trading to meet best practice standards in NP 51-201.

How does an issuer, that is an insider, report transactions under a normal course issuer bid?

Under NI 55-104, a reporting issuer can report acquisitions in connection with normal course issuer bids (as defined in NI 55-104) within 10 calendar days of the end of the month in which the acquisitions occurred, as opposed to within five calendar days of the transaction. NI 55-104 requires you to report each acquisition.

We recommend that you report transactions under a normal course issuer bid within 10 calendar days of the end of the month, in the following manner.

How do I report a change in the exercise price of options (repricing of options)?

When options are repriced, report two transactions:

• a disposition for the cancellation of options (code 38)
• an acquisition for the grant of new options with the new exercise price (code 50)
• the “general remarks” field can be utilized to indicate additional information relating to the repricing of the options.

If I am no longer a reporting insider, what do I have to do on SEDI?

Generally, you no longer need to file insider reports in respect of securities you hold in the Issuer once you have ceased to be an insider, provided that you have reported all transactions that took place while you were an insider. However, you must record the date you ceased to be an insider in SEDI by amending your Insider Profile.

How do I report a change of ownership?

To amend an Ownership Type and/or Registered Holder:

• click Amend holder
• Select ownership type and registered holder screen opens.
• Select appropriate option (direct, indirect, control or direction)

What is the benefit of filing an issuer grant report?

If a reporting issuer files an issuer grant report within five calendar days of a grant, award or issue of securities or related financial instruments, the reporting insiders named in the issuer grant report can report the grant on a deferred basis. Instead of reporting the grant within the usual five-calendar day reporting timeframe, the reporting insiders have until March 31 of the next calendar year to report the grant or award.

Staff have observed that reporting issuers are, in many cases, not taking advantage of this extended timeline by filing an issuer grant report.

A reporting insider is generally required to file an initial insider report within 10 calendar days of becoming a reporting insider. Any subsequent insider reports reflecting changes in their holdings must be filed within five calendar days.

Canadian securities legislation contains a number of exemptions that allow reporting insiders to file reports on a deferred basis in circumstances where the policy rationale for "real time" reporting does not apply.

It is an offence in Ontario:

• to fail to file an insider report in accordance with the deadlines outlined in NI 55-104
• to submit information in an insider report that, in a material respect, is misleading or untrue

The penalties for these offences may include one or more of the following:

• a late filing fee
• the reporting insider being identified as a late filer on a public database
• the issuance of a cease trade order that prohibits the reporting insider from trading in securities and related financial instruments until the failure to file is corrected
• in appropriate circumstances, enforcement proceedings

Ontario securities law includes a number of exemptions from the insider reporting requirement, which are outlined in:

• National Instrument 51-102 Continuous Disclosure Obligations
• National Instrument 55-104 Insider Reporting Requirements and Exemptions
• National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues
• National Instrument 71-101 The Multijurisdictional Disclosure System
• National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers

For more information on the OSC’s service standard timing to complete insider reporting reviews, see the OSC Service Commitment.