Cease Trade Orders
The British Columbia Securities Commission issues cease trade orders against reporting and non-reporting issuers, as well as individuals, because they have failed to comply with securities regulations, particularly filing requirements.
How are Cease Trade Orders (CTOs) issued?
Cease trade orders (CTO) have effect in the jurisdiction that issues the order. If the issuer is reporting in more than one jurisdiction, the order may also have automatic effect in those other jurisdictions because of statutory reciprocal order provisions or the application of MI 11-103 Failure-to-File Cease Trade Orders in Multiple Jurisdictions.
How long are CTOs in effect?
Cease trade orders typically remain in effect indefinitely until they are revoked. When the BCSC orders that all persons cease trading in the securities of an issuer, that order prohibits trading through an exchange, securities issuances by issuers and private transactions.
Where can I find current and historical CTOs issued in B.C. and other jurisdictions in Canada?
SEDAR+ includes cease trade orders for failure to file as well as cease trade orders found in enforcement decisions, settlements, and temporary orders from companies and individuals from BC and other Canadian jurisdictions. Historical company CTO coverage begins in 1971 for some jurisdictions.
If a person has an order or settlement agreement in a Canadian jurisdiction what happens?
Effective March 27, 2020, if a person is the subject of certain orders or settlement agreements issued by another securities regulator in Canada, that order or settlement is automatically in effect against the person in British Columbia, without notice to the person and without an opportunity to be heard. For more information about the types of orders and settlements that are automatically in effect in BC, see “Automatic Reciprocal Orders”.
The BC Securities Commission issued a Cease Trade Order (CTO), now I can’t sell my shares. Why was a CTO issued? Why did I not receive notice of the CTO in advance?
For further information about who issues CTOs and why, refer to Regulatory Actions FAQ’s on SEDAR+. Cease trade orders are issued for a variety of reasons, and often because the company fails to comply with its continuous disclosure obligations such as filing financial statements for the public to view. Our website includes a significant amount of information about this under the section “Continuous Disclosure Obligations” including a continuous disclosure filing calendar where you can view upcoming filing due dates. Part 7 of National Policy NP 11-207 Failure to File Cease Trade Orders and Revocations in Multiple Jurisdictions discusses important reasoning behind issuing CTO’s for failure to file.
Note: The company may also have provided an update in its continuous disclosure record on SEDAR+.
I hold cease-traded securities through my investment dealer for many years, can I write off the investment for tax purposes?
Refer your investment dealer to BC Instrument 57-502 Partial variation of certain cease trade orders issued under section 164 to permit sales to investment dealers and BC Instrument 57-503 Partial variation of certain cease trade orders issued under section 161(1)(b) to permit sales to investment dealers. This may help investors sell shares held in cease traded issuers for a lengthy time period of over two years for nominal consideration to claim a tax benefit. Other jurisdictions may have similar instruments for investors selling to investment dealers in their local jurisdictions. We recommend you seek tax advice from a qualified specialist.
For a BC resident, no application or review is required by the BCSC under these instruments, and no “physical” CTO revocation order needs to be issued so long as the requirements in the Instruments are satisfied. Usage does not require a fee by the investment dealer or investor.