Know about Penalties Associated with CSOX

• Date: May 21, 2010
• Source: Admin

Providing equivalent legislative measures to the U.S. SOX, the Ontario legislative bill known as Bill 198 provide regulation of securities protecting investors by improving the accuracy and reliability of corporate disclosures. As the legislation acts same as the U.S. SOX, it is also known as the Canadian SOX Act.

The Provincial Government of Ontario, Canada in 2002 introduced an omnibus bill entitled "Keeping the Promise for a Strong Economy Act (Budget Measures), 2002". The bill was enacted as Chapter 22 of the Statutes of Ontario, 2002 and received Royal Assent on December 9, 2002.

With the introduction of Bill 198, a much more rigorous financial disclosure and corporate disclosure requirements were introduced. As per Bill 198, companies are required to review and document their internal controls in order to support the certifications by the CEO and CFO. Moreover, some severe penalties are also there for breaching the law. Some of the notable sections of Bill 198 are:
    
Section 180 – As per this section, public companies, without delay, are needed to report any material changes since their last filing to the Ontario Securities Commission.

Section 181 – This section says about penalizing directors and officers of a company that provide deceptive or false information in any report filed with the OSC, including financial statements. Their fine can reach up to $5 million and they can be imprisoned for up to 5 years.

Section 183 – As per the OSC rule, companies and executives can be forced to return any gains resulting from a breach.

Section 184 – looking at the gravity of the breach, OSC can fine the director and officers for up to $1 million and can also force them to resign. Additionally, the wrong doer would be prohibited from serving as a director or officer of any public company.

Section 185 – In case of issuing misleading documents such as any wrong financial statements, making false oral statements, or not making timely disclosures, investors can sue companies as well as individual directors.