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Issuer Regulation

Requirements for Reporting Insiders

Disclosing Your Transactions in a Company’s Securities

People who have certain relationships with a company that is a “reporting issuer” must publicly disclose what they hold, and buy and sell, in that company’s securities.

These people are “reporting insiders” of the company and/or hold a certain percentage of the company’s securities.

The following information suggests questions to ask yourself, to see whether you might have such a relationship and, if so, what disclosure you must make.

This is not legal advice, and is not meant to cover every situation – for example, Canadian stock exchanges may require additional reporting.

  • Reporting Insiders Defined
  • Registration on SEDI for Reporting Insiders
  • Transaction Reporting Requirements for Reporting Insiders
  • Illegal Insider Trading
  • Early Warning Reports for 10% or More Securities Holders
  • Trade Exemptions for Control Persons
  • Acquiring 20% or more of a Company's Securities Requires a Take-Over-Bid
  • What Issuers Should Do for Insider Reporting
  • Consequences for Not Reporting
  • Contact Information

Reporting Insiders Defined

The Securities Act defines who is an “insider”.  A broader category of people, however, are “reporting insiders”.  The definition of “reporting insider” is in National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104) and it is further explained in Companion Policy 55-104CP Insider Reporting Requirements and Exemptions (55-104CP).

You are a reporting insider, if you have any of the following relationships:

I am a:

for any:

Management Company1

Reporting Issuer (often called a “public company”)

Major Subsidiary of a Reporting Issuer

Significant Shareholder2

(including based on post-conversion beneficial ownership)

Reporting Issuer

Management Company for a Reporting Issuer

Director

Reporting Issuer

Major Subsidiary of a Reporting Issuer

Significant Shareholder of a Reporting Issuer
(including based on post-conversion beneficial ownership)

Management Company for a Reporting Issuer

Chief Executive Officer (CEO),

Chief Financial Officer (CFO), or

Chief Operating Officer (COO)

Reporting Issuer

Major Subsidiary of a Reporting Issuer

Significant Shareholder of a Reporting Issuer
(including based on post-conversion beneficial ownership)

Management Company for a Reporting Issuer

Responsible for a Principal Business Unit, Division, or Function

Reporting Issuer

Individual performing similar functions to any of the reporting insiders listed above

Any of the above

“Insider” with early access to certain information about the reporting issuer3, and the ability to exercise certain significant power over the reporting issuer4

Reporting Issuer

1 A “management company” provides significant management or administrative services.

2 A “significant shareholder” means a person or company that has beneficial ownership of, or control or direction over, whether direct or indirect, or a combination of beneficial ownership of, and control or direction over, whether direct or indirect, securities of an issuer carrying more than 10 per cent of the voting rights attached to all the issuer’s outstanding voting securities.

3 Who in the ordinary course receives or has access to information as to material facts or material changes concerning the reporting issuer before the material facts or material changes are generally disclosed.

4 Who directly or indirectly exercises, or has the ability to exercise, significant power or influence over the business, operations, capital or development of the reporting issuer

Registration on SEDI for Reporting Insiders

SEDI is the System for Electronic Disclosure by Insiders, a website where the investing public can see the securities holdings of, and transactions by, reporting insiders.

If you are a reporting insider, you must create a profile and file reports on SEDI.  The company of which you are a reporting insider must also register.

For details, please read the “Frequently Asked Questions” in: Canadian Securities Administrators Staff Notice 55-316 Questions and Answers on Insider Reporting and the System for Electronic Disclosure by Insiders (SEDI)

It is vital to keep your SEDI profile up to date, including your email address.

Transaction Reporting Requirements for Reporting Insiders

As a reporting insider, you should carefully read NI 55-104 and the 55-104CP (which are linked to above) to learn what, how, and when you need to report on SEDI.

In summary, though, for every change in your:

  • beneficial ownership of securities of the company, or
  • control or direction over securities of the company (whether direct or indirect),

you must file on SEDI an insider report disclosing the change within five calendar days.

Illegal Insider Trading

Insiders, and other persons with “special relationship” to a company as defined in the Act, must not trade in its securities when they know of certain information that is not public – doing so is illegal insider trading.  They must also not share that non-public information with other persons (“tipping”) or recommend that other persons buy or sell securities while the information is not public (“recommending”).

Illegal insider trading, tipping, and recommending are very serious breaches of the law, so you should consult with a lawyer if you have any questions about when you may trade or may discuss non-public information about a company.

Early Warning Reports for 10% or More Securities Holders

As described above, a significant shareholder of a company will be a reporting insider and must file on SEDI.  But when someone acquires certain rights over 10% or more of securities of a reporting issuer, and then acquires or disposes of a certain number of securities while above that threshold, they must make more disclosure, in the form of news releases and “early warning reports”.

For details, read National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) and National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues

In summary, though, whenever:

  • you have beneficial ownership of 10% or more of the outstanding securities of a reporting issuer,
  • you acquire an additional 2%, or
  • you dispose of 2% (until your ownership decreases to less than 10% of the outstanding securities of the company)

you must promptly file:

Trade Exemptions for Control Persons

An insider is deemed to be a “control person” if they, alone or combination with others, hold more than 20% of the voting rights attached to all outstanding voting securities of a reporting issuer. 

Even if they hold 20% or less, an insider may still be a “control person”, if, alone or in combination with others, they hold a sufficient number of the voting rights (attached to all outstanding voting securities) to affect materially the control of the company.

A control person needs a prospectus or an exemption to trade their securities.  For one such exemption, the control person must file on SEDAR+ a Form 45-102F1 Notice of Intention to Distribute Securities under Section 2.8 of NI 45-102 Resale of Securities, at least seven days before any trade.

Acquiring 20% or more of a Company's Securities Requires a Take-Over-Bid

NI 62-104 (which is linked to above) defines “take-over bid”, which includes any purchase of shares that would result in the purchaser acquiring control or direction over 20% or more of a reporting issuer's issued and outstanding share capital.

For a take-over bid, the purchaser make an offer to all holders of the class of securities, in accordance with the regulations, unless an exemption is available.  This includes publishing an advertisement in a major daily newspaper or sending the shareholders a take-over bid circular (a Form 62-104F1 Take-Over Bid Circular).

What Issuers Should Do for Insider Reporting

Under National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI) (NI 55-102), a reporting issuer must maintain an up-to-date issuer profile supplement on SEDI with the information set out in Form 55-102F3 Issuer Profile Supplement.  It must also file an amended issuer profile supplement immediately following a change listed in section 2.3(3)(d) of NI 55-102.

Some companies, or their appointed SEDI filing agent, will file reports on behalf of their reporting insiders. Nevertheless, reporting insiders are ultimately responsible for their own disclosure. 

We encourage companies to monitor trading and reporting by their reporting insiders, and to have policies to prevent illegal insider trading, tipping, and recommending.

An issuer should also confirm with its directors and officers how many securities they hold before disclosing that information, such as in a Form 51-102F2 Annual Information Form or Form 51-102F5 Information Circular.

Consequences for Not Reporting

Transactions that are reported late on SEDI automatically incur a fee [Securities Regulation, section 22, item 19(b)].

Failing to report transactions within the time required or, worse, failing to report transactions at all, may also lead to administrative penalties imposed by notice under section 162.01 of the Act.

When the public interest requires, the BCSC will pursue enforcement against non-compliant insiders.  See, for example, our settlement agreement in which the reporting insider paid $80,000 in addition to late fees of $18,750 (Citation: 2024 BCSECCOM 43).

However, an insider (or issuer) that has not disclosed holdings or transactions on time or accurately may benefit from self-reporting to the BCSC, as described in BC Notice 15-701 Credit for Cooperation in Enforcement Matters.

Contact Information

If you have questions about anything in the information listed above, please email: inquiries@bcsc.bc.ca