Statutory Rights Disclosure
This disclosure is incorporated by reference into, and legally forms an integral part of, each document delivered to you that links to, or otherwise references, the disclosure herein (each, a “Disclosure Document”). To the extent that the Disclosure Document is an “offering memorandum” under applicable provincial or territorial securities laws, the following rights shall apply in respect of the applicable issuer to which such “offering memorandum” relates (the “Issuer”):
PURCHASER’S STATUTORY RIGHTS OF ACTION
Securities legislation in certain of the provinces and territories of Canada provides purchasers with, in addition to any other right they may have at law, rights of rescission or damages, or both, where an offering memorandum and any amendment to it contains a misrepresentation. However, such rights must be exercised by the purchaser within the time limits prescribed by the applicable securities legislation. Purchasers should refer to the applicable provisions of the securities legislation of their respective provinces for the complete text of these rights or consult with a legal adviser.
The rights of action described below are in addition to and without derogation from any other right or remedy available at law to the purchaser and are intended to correspond to the rights against an issuer of securities provided in the relevant securities legislation and are subject to the defences contained therein.
The following summaries are subject to the express provisions of the securities laws of the provinces of Canada and the regulations, rules, policies and blanket orders thereunder, and reference is made thereto for the complete text of such provisions.
Ontario
Ontario Securities Commission Rule 45-501 – Ontario Prospectus and Registration Exemptions provides that when an offering memorandum, such as the Disclosure Document, is delivered to an investor to whom securities are distributed in reliance upon the “accredited investor” prospectus exemption in Section 73.3 the Securities Act (Ontario), the right of action referred to in Section 130.1 of the Securities Act (Ontario) (“Section 130.1”) is applicable unless the prospective purchaser is:
a Canadian financial institution, meaning either:
an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act; or
a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction in Canada;
a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada);
The Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or
a subsidiary of any person referred to in paragraphs (a), (b) or (c), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by the directors of the subsidiary.
Section 130.1 provides purchasers who purchase securities offered by an offering memorandum with a statutory right of action against the issuer of securities and any selling securityholder for rescission or damages in the event that the offering memorandum or any amendment to it contains a “misrepresentation” without regard to whether the purchaser relied on the “misrepresentation”. “Misrepresentation” means an untrue statement of material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. In the event that this Disclosure Document, together with any amendment to it, is delivered to a prospective purchaser of securities in connection with a trade made in reliance on Section 73.3 of the Securities Act (Ontario), and this Disclosure Document contains a misrepresentation which was a misrepresentation at the time of purchase of the securities of the Issuer, the purchaser will have a statutory right of action against the Issuer for damages or, while still the owner of the securities of the Issuer, for rescission, in which case, if the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages, provided that:
no action shall be commenced more than, in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or, in the case of any other action, the earlier of: (i) 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action;
the defendant will not be liable if it proves that the purchaser purchased the securities of the Issuer with knowledge of the misrepresentation;
the defendant will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities of the Issuer as a result of the misrepresentation relied upon;
in no case will the amount recoverable exceed the price at which the securities of the Issuer were offered to the purchaser; and
the statutory right of action for rescission or damages is in addition to and does not derogate from any other rights or remedies the purchaser may have at law.
Saskatchewan
Section 138 of The Securities Act, 1988 (Saskatchewan), as amended (the “Saskatchewan Act”) provides that where an offering memorandum (such as this Disclosure Document) or any amendment to it is sent or delivered to a purchaser and it contains a misrepresentation (as defined in the Saskatchewan Act), a purchaser who purchases a security covered by the offering memorandum or any amendment to it is deemed to have relied upon that misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for rescission against the issuer or a selling security holder on whose behalf the distribution is made or has a right of action for damages against:
the issuer or a selling security holder on whose behalf the distribution is made;
every promoter and director of the issuer or the selling security holder, as the case may be, at the time the offering memorandum or any amendment to it was sent or delivered;
every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them;
every person who or company that, in addition to the persons or companies mentioned in (a) to (c) above, signed the offering memorandum or the amendment to the offering memorandum; and
every person who or company that sells securities on behalf of the issuer or selling security holder under the offering memorandum or amendment to the offering memorandum.
Such rights of rescission and damages are subject to certain limitations including the following:
if the purchaser elects to exercise its right of rescission against the issuer or selling security holder, it shall have no right of action for damages against that party;
in an action for damages, a defendant will not be liable for all or any portion of the damages that he, she or it proves do not represent the depreciation in value of the securities resulting from the misrepresentation relied on;
no person or company, other than the issuer or a selling security holder, will be liable for any part of the offering memorandum or any amendment to it not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation or believed that there had been a misrepresentation;
in no case shall the amount recoverable exceed the price at which the securities were offered; and
no person or company is liable in an action for rescission or damages if that person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation.
In addition, no person or company, other than the issuer or selling security holder, will be liable if the person or company proves that:
the offering memorandum or any amendment to it was sent or delivered without the person’s or company’s knowledge or consent and that, on becoming aware of it being sent or delivered, that person or company gave reasonable general notice that it was so sent or delivered; or
with respect to any part of the offering memorandum or any amendment to it purporting to be made on the authority of an expert, or purporting to be a copy of, or an extract from, a report, an opinion or a statement of an expert, that person or company had no reasonable grounds to believe and did not believe that there had been a misrepresentation, the part of the offering memorandum or any amendment to it did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert.
Not all defences upon which the Issuer or others may rely are described herein. Please refer to the full text of the Saskatchewan Act for a complete listing.
Similar rights of action for damages and rescission are provided in section 138.1 of the Saskatchewan Act in respect of a misrepresentation in advertising and sales literature disseminated in connection with an offering of securities.
Section 138.2 of the Saskatchewan Act also provides that where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the security purchased and the verbal statement is made either before or contemporaneously with the purchase of the security, the purchaser is deemed to have relied on the misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for damages against the individual who made the verbal statement.
Section 141(1) of the Saskatchewan Act provides a purchaser with the right to void the purchase agreement and to recover all money and other consideration paid by the purchaser for the securities if the securities are sold in contravention of the Saskatchewan Act, the regulations to the Saskatchewan Act or a decision of the Saskatchewan Financial Services Commission.
Section 141(2) of the Saskatchewan Act also provides a right of action for rescission or damages to a purchaser of securities to whom an offering memorandum or any amendment to it was not sent or delivered prior to or at the same time as the purchaser enters into an agreement to purchase the securities, as required by Section 80.1 of the Saskatchewan Act.
The rights of action for damages or rescission under the Saskatchewan Act are in addition to and do not derogate from any other right which a purchaser may have at law.
Section 147 of the Saskatchewan Act provides that no action shall be commenced to enforce any of the foregoing rights more than:
in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or
in the case of any other action, other than an action for rescission, the earlier of:
one year after the plaintiff first had knowledge of the facts giving rise to the cause of action; or
six years after the date of the transaction that gave rise to the cause of action.
The Saskatchewan Act also provides a purchaser who has received an amended offering memorandum delivered in accordance with subsection 80.1(3) of the Saskatchewan Act has a right to withdraw from the agreement to purchase the securities by delivering a notice to the person who or company that is selling the securities, indicating the purchaser’s intention not to be bound by the purchase agreement, provided such notice is delivered by the purchaser within two Business Days of receiving the amended offering memorandum.
New Brunswick
Section 150(1) of the Securities Act (New Brunswick) provides that where any information relating to the offering provided to the purchaser of the securities contains a misrepresentation, a purchaser who purchases the securities shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase, and
the purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made; or
where the purchaser purchased the securities from a person referred to in paragraph (a), the purchaser may elect to exercise a right of rescission against the person, in which case the purchaser shall have no right of action for damages against the person.
This right of action is not available if the purchaser purchased the securities with knowledge of the misrepresentation, and a defendant is not liable for all or any portion of the damages that the defendant proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied on.
In no case shall the amount recoverable under these rights of action exceed the price at which the securities were offered.
These rights are in addition to and without derogation from any other right the purchaser may have at law.
Nova Scotia
Where an offering memorandum or any amendment thereto or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) contains a misrepresentation, a purchaser to whom the offering memorandum has been delivered and who purchases a security referred to therein shall be deemed to have relied upon such misrepresentation if it was a misrepresentation at the time of purchase and the purchaser has the right of action for damages against the issuer or other seller and, subject to certain additional defences, against directors of the seller and persons who have signed the offering memorandum, but may elect to exercise a right of rescission against the seller, in which case he shall have no right of action for damages against the seller, directors of the seller or persons who have signed the offering memorandum, provided that, among other limitations:
in an action for rescission or damages, the defendant will not be liable if it proves that the purchaser purchased the security with knowledge of the misrepresentation;
in an action for damages, the defendant is not liable for all or any portion of the damages that it proves do not represent the depreciation in value of the security as a result of the misrepresentation relied upon; and
in no case shall the amount recoverable under the right of action described herein exceed the price at which the security was offered.
In addition, no person or company other than the issuer is liable if the person or company proves that:
the offering memorandum or the amendment to the offering memorandum was sent or delivered to the purchaser without the person’s or company’s knowledge or consent and that, on becoming aware of its delivery, the person or company gave reasonable general notice that it was delivered without the person’s or company’s knowledge or consent;
after delivery of the offering memorandum or the amendment to the offering memorandum and before the purchase of the securities by the purchaser, on becoming aware of any misrepresentation in the offering memorandum, or amendment to the offering memorandum, the person or company withdrew the person’s or company’s consent to the offering memorandum, or amendment to the offering memorandum, and gave reasonable general notice of the withdrawal and the reason for it; or
with respect to any part of the offering memorandum or amendment to the offering memorandum purporting: (i) to be made on the authority of an expert; or (ii) to be a copy of, or an extract from, a report, an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that (A) there had been a misrepresentation or (B) the relevant part of the offering memorandum or amendment to the offering memorandum (1) did not fairly represent the report, opinion or statement of the expert or (2) was not a fair copy of, or an extract from, the report, opinion or statement of the expert.
Furthermore, no person or company other than the issuer is liable with respect to any part of the offering memorandum or amendment to the offering memorandum not purporting:
to be made on the authority of an expert; or
to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation or believed that there had been a misrepresentation.
If a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into, the offering memorandum or amendment to the offering memorandum, the misrepresentation is deemed to be contained in the offering memorandum or amendment to the offering memorandum.
Pursuant to section 146 of the Securities Act (Nova Scotia), no action shall be commenced to enforce the right of action conferred by section 138 thereof unless an action is commenced to enforce that right not later than 120 days after the date on which payment was made for the security or after the date on which the initial payment for the security was made where payments subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently with, the initial payment.
The right of action for rescission or damages described herein is conferred by section 138 of the Securities Act (Nova Scotia) and is in addition to and without derogation from any right the purchaser may have at law.
For the purposes of the Securities Act (Nova Scotia) “misrepresentation” means:
an untrue statement of material fact; or
an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.
Newfoundland and Labrador
As required by Local Rule 45‐502 - Offering Disclosure Document Requirements for Newfoundland and Labrador, purchasers of securities of the Issuer resident in Newfoundland and Labrador will be entitled to a contractual right of action for damages or rescission that is equivalent to the statutory right of action for damages or recession available to purchasers resident in Ontario and referred to above, including insofar as such right may be subject to defenses and limitations available under the Securities Act (Ontario).
General
The foregoing summaries are subject to the express provisions of the Securities Act (Ontario), The Securities Act, 1988 (Saskatchewan), the Securities Act (New Brunswick), the Securities Act (Nova Scotia) and the regulations and rules thereunder and purchasers should refer to such statutes for the complete text of those provision.