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CCCA_V4No2_IMAX-FIN.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 4/29/10 4:31 PM Page 32 Feature n Dec. 31, 2005, Part XXIII.1 of the Ontario Securities Act (Act), which provides for a statuto- ry right of action against reporting issuers, their officers and directors for misrepresentation in secondary markets, came into force. One of the provisions of the amendment is that plaintiffs must obtain leave of the court to proceed with a claim. On Dec. 9, 2009, a landmark pair of decisions were handed down by Madam Justice Katherine van Rensburg of the Ontario Superior Court, who in Silver v. IMAX granted leave for the first action to be brought pursuant to Part XXIII.I and certified the first class action claim involving secondary market disclosure. In-house counsel in public companies have been watching the case with interest. In the decisions, which are currently under appeal, Justice van Rensburg not only certified the claim as a “global” class action, but also, in applying the statutory test for leave, set a low threshold for deciding that the action is brought in good faith; and that the plaintiffs have a reasonable possibility of success at trial. In light of the IMAX decisions, CCCA Magazine asked three lawyers who defend securi- ties class actions to suggest practice points for in-house counsel to consider. Here are their top eight suggestions: Correcting misrepresentations or omissions What happens if your organization discovers that there has been a misrepresentation or an omission? First of all,there should be a procedure in place that immediately involves in-house counsel.The way the matter is handled from the outset can have enormous implications for your organization. Defending Ei ht practice points to 8 safeguard your organization “If and when an issuer becomes aware that they may have made a misrepresentation (or an omission), they should ensure that the legal department is involved and seriously consider get- ting external advice,” says Andrea Laing, a partner at Osler Hoskin Harcourt LLP in Toronto, who has been active in defending public issuers pursuant to the new secondary market liabil- ity provisions. “Procedures should be in place to ensure that any potentially material errors or omissions that are discovered are promptly reported and are raised with the legal department so that legal can be involved in the investigation and any corrective measures that are taken,” she says. “The damages provisions of new Part XXIII.I are set up so that damages payable by an issuer ALENA GEDEONOVA are measured in relation to the drop in the market price of its securities following a correc- tion,” says Laing.Thus, the way an issuer handles corrections can have a serious effect on its 32 CCCA Canadian Corporate Counsel Association SUMMER 2010