Ontario Court of Appeal Clarifies Scope of “Promoter” Definition

The Ontario Court of Appeal decision in Goldsmith v. National Bank of Canada,1  provides important guidance on the meaning of the term “promoter,” a significant characterization, as under Canadian securities laws a “promoter” can be liable for a public company’s misrepresentations in prospectuses and continuous disclosure documents. In Goldsmith, the Court established a narrow framework for determining whether a person is a promoter, concluding that a “promoter” is someone who:

  • “plays a vital role in the organization of or reorganization of an issuer’s business;”
  • “played a driving role in founding an issuer, and consequently wields influence comparable to that of an officer or director;” or
  • is “an active participant” or a “driving force” behind a reorganization or is at the very heart of the issuer and organization.”