January 27, 2010
By Daryl-Lynn Carlson
An Ontario court’s certification of a class action launched against Imax Corp. by disgruntled shareholders is being touted as a wake-up call for publicly traded companies. While certification approval is being appealed by IMAX, law firms that defend companies against class actions are advising clients to revisit their compliance and corporate governance procedures to protect against similar suits.
The IMAX lawsuit was launched more than three years ago following amendments to the Ontario Securities Act, known as Bill 198. The amendments were intended to make it easier for shareholders to sue officers and directors for civil liability over the alleged misrepresentations or omissions of information in the secondary market.
It’s the first case to be certified after the amendments, which passed on Dec. 31, 2005, and unless it’s successfully overturned on appeal, reflects the legislation’s intent.
Alberta, British Columbia and Quebec have adopted similar amendments to their provincial securities legislation, but those provinces haven’t seen a significant rise in securities class actions as a result.
Tristram Mallett, managing partner at Osler, Hoskin & Harcourt LLP’s Calgary office, says that because Alberta’s investment environment is largely focused on natural resources and income trusts, the nature of class action litigation there is much different.
But he acknowledges lawyers across the country are watching the IMAX matter with interest.
“The global class issue is an interesting one,” Mr. Mallett says, referring to the judge’s ruling that the Canadian action applies to investors outside the country. “There are differing views on reach of class actions even within Canada, but to extend that outside of Canada is getting toward untested waters and it will be interesting to see what happens.”