A cease trade order (CTO) is a decision issued by a provincial or territorial securities regulatory authority or similar regulatory body against a company or an individual. CTOs are issued for reasons such as failing to meet disclosure requirements or as a result of an enforcement action that involves an investigation of potential wrongdoing.
The purpose of the National CTO Database (CTO Database) is twofold: provide stakeholders with a publicly searchable database containing all CTOs issued by participating CSA members, regardless of whether their effect is temporary or indefinite, and disseminate such CTOs to its subscribers.
There are two categories of CTOs:
- CTOs that ban trading in securities of a reporting issuer or a non-reporting issuer, regardless of whether the CTO resulted from a continuous disclosure default, an enforcement action or other, and;
- CTOs that ban trading by certain individuals and/or companies, regardless of whether the CTO resulted from a continuous disclosure default of the company (such as a management cease trade order), an enforcement action or other.
Some CTOs may fall under both categories, in which circumstance, they will appear in both categories.
This categorization is intended as a tool to simplify the classification of CTOs and enhance search results. However, it remains the obligation of users to conduct the necessary due diligence before trading to determine whether or not a specific trade can be executed. As such, we cannot overstate the importance of reading all decisions to fully understand their scope.
Who issues CTOs and why?
Securities regulatory authorities have sole authority to issue CTOs. The securities regulatory authorities oversee securities regulation in their respective provinces or territories and require publicly traded companies to disclose material information to the public within delays set by regulation. For example, publicly traded companies must file copies of quarterly and annual financial statements and management’s discussion and analysis with provincial and territorial securities regulatory authorities, and must also send this information to shareholders, on request. Companies must also disclose material events or developments – such as takeover bids and merger and acquisitions, which may affect the value of the company’s shares. When a company fails to do so, a CTO banning trading in the securities of the company or banning certain individuals and/or companies from trading in securities of the company may be issued.
Securities regulatory authorities are also tasked with enforcing the securities legislation in their province or territory. For instance, during the course of an investigation into potential wrongdoing, the securities regulators may issue or ask a tribunal to issue a temporary order banning trading by individuals or companies, or banning the trading in the securities of a company.
Securities regulators can also impose or ask a tribunal to impose sanctions following the conclusion of a proceeding against respondents, which includes orders that ban trading by individuals or companies, or orders that ban trading in the securities of a company, either permanently or for a defined period of time.
How do I find cease trade orders?
You can find information about CTOs by searching the CTO Database. By default, all searches will show all CTOs issued that remain outstanding (active). To view CTOs that have been revoked or have expired (inactive), use Advanced Search and check the inactive box. You can also browse by company name.
Helpful hint for searching the CTO Database:
- To get the best results when searching for a specific name, only input the company name (do not include “Inc.”, “Co.”, etc.) or only input the last name of the individual.
As a result of the implementation of statutory amendments in Alberta, Québec, Nova Scotia, New Brunswick, Manitoba and Saskatchewan, certain orders issued in other provinces or territories automatically take effect in Alberta, Québec, Nova Scotia, New Brunswick, Manitoba and Saskatchewan. For more information click here.
With the adoption of MI 11-103 Failure-to-File Cease Trade Orders in Multiple Jurisdictions (MI 11-103) certain CTOs issued by securities regulatory authorities automatically take effect in other jurisdictions. For more information click here.
How will I know the status of a CTO?
A CTO’s status will be listed as either ‘Issued’, ‘Amended’, ‘Expired’ or ‘Revoked’:
Issued: means that an order to ban trading has been rendered.
Amended: means that the original order has been modified.
Expired: means that the order has lapsed.
Revoked: means that the order has been lifted.
As a result of the implementation of statutory amendments in Alberta, Québec, Nova Scotia, New Brunswick, Manitoba, Saskatchewan and British Columbia, certain orders issued in other provinces or territories automatically take effect in Alberta, Québec, Nova Scotia, New Brunswick, Manitoba, Saskatchewan and British Columbia. For more information click here.
With the adoption of MI 11-103, certain CTOs issued by securities regulatory authorities automatically take effect in other jurisdictions. For more information, click here.
It remains the obligation of users to conduct the necessary due diligence before trading to determine whether or not a specific trade can be executed. As such, we cannot overstate the importance of understanding the applicable securities legislation and reading all decisions to fully understand their scope.
How do I determine where a CTO has effect?
For information to determine where a CTO has effect, click here.
How long does a CTO last?
A CTO may be issued with a specific expiry date (temporary CTO) or for an indefinite period of time (“None” will be indicated under expiry date). When a CTO is issued, it will remain in effect until either its expiry date is reached or, if there is no expiry date, until the decision is revoked by the regulator, when and if the company or individual corrects the deficiencies or meets certain conditions, which caused the CTO to be issued. The deficiencies that need to be remedied or conditions to be met are explained in the CTO.
It is the company’s or individual’s responsibility to comply with securities law. Once a CTO is issued, it is up to the company or individual, and not Securities Regulators, to correct the deficiencies or fulfill certain conditions, and apply to the regulator to have the CTO revoked.
What do I do if I own shares in a company that has a cease trade order (CTO) issued against it?
You may want to contact the company directly to find out how it is addressing the CTO. Company contact information is available on the company’s profile on the System for Electronic Document Analysis and Retrieval at SEDAR.
From the SEDAR homepage:
- click “Company Profiles” in the top navigation bar
- under “Public Company”, choose the first letter of the company’s name
- scroll down the list and click on the company name
If you are unable to reach the company, you may contact the Securities Regulator who issued the CTO for more information. If multiple CTOs are issued against the same company, contact the company’s Principal Regulator. This information is also available under the company’s profile on SEDAR. Follow this link to access the contact information for all Securities Regulators in Canada.
Please note that if “Yes” is indicated under the column “Exception”, trading will be permitted under certain specific conditions. Consult the order for more information on these conditions or, consult the jurisdiction which issued the CTO to see if these conditions apply to your situation.
If there are no exceptions applicable to your situation, you have two options:
- Hold onto your shares in case the CTO is revoked; or
- Consider claiming a capital loss on your income taxes.
We suggest you contact the Canada Revenue Agency for more information on this second option.
You can subscribe to the National CTO Database to receive automatic email alerts when securities regulators add new content to the database. After you subscribe, you’ll also be able to login to view CUSIP numbers for some companies.
To subscribe, email your contact information to the CSA Secretariat. You can contact the CSA Secretariat for further information at (514) 864-9510.
Please contact CSA Secretariat or your local securities regulatory authority if you have any questions or to report errors and omissions. Although we try to ensure the information in the Cease Trade Order Database is complete, accurate and current, this may not always be the case.