Date of Award

2013

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Keywords

securities regulation venture issuers rules principles compliance governance Toronto Stock Exchange Toronto Venture Exchange

First Advisor

Condon, Mary G.

Abstract

Should the securities regulation of Ontario venture issuers be based primarily on rules or principles? Advocates for rules argue that detailed rules, with predictable meaning and scope, allow participants to focus on matters other than compliance. Advocates for principles argue that when an activity is complex, such as securities trading, detailed rules can become a confusing web, obscuring core values and discouraging creative solutions. The rules and principles literature is reviewed, along with the topics of risk-based, responsive, outcomes oriented and proportionate regulation. Governance theory is addressed and various compliance theories are discussed. From this, eight factors are gleaned to assess where along the rules/principles continuum a particular area of regulation should lie: (i) Is there a shared understanding of regulatory principles within the community being regulated? (ii) Are the regulated committed to the public interest? (iii) Are the regulated able to find analogous solutions? (iv) Are there institutions or actors which promote regulatory collaboration? (v) Do the regulated see enforcement as fair and effective? (vi) Are regulatory issues predictable? (vii) Should historical transactions be disclosed? and (viii) Should future projections be disclosed? These factors are then explored with a survey of 175 managers of venture issuers, followed by in-depth consultations with six experts in the industry and by a consideration of other matters. The assessment of the eight factors suggests that in some respects, principles could be effective for Ontario venture issuers since they are more flexible and can adapt to the changing complexities of securities regulation. However, principles-based regulation requires a shared understanding of, and commitment to, regulatory principles, and the answers given by many of the respondents to the survey and the discussions with the six experts consulted suggest that more work needs to be done before principles-based regulation could be effective.

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