138.4 (1) In an action under section 138.3 in relation to a misrepresentation in a document that is not a core document, or a misrepresentation in a public oral statement, a person or company is not liable, subject to subsection (2), unless the plaintiff proves that the person or company, (a) knew, at the time that the document was released or public oral statement was made, that the document or public oral statement contained the misrepresentation; (b) at or before the time that the document was released or public oral statement was made, deliberately avoided acquiring knowledge that the document or public oral statement contained the misrepresentation; or (c) was, through action or failure to act, guilty of gross misconduct in connection with the release of the document or the making of the public oral statement that contained the misrepresentation.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (1). Same (2) A plaintiff is not required to prove any of the matters set out in subsection (1) in an action under section 138.3 in relation to an expert.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (2). Failure to make timely disclosure (3) In an action under section 138.3 in relation to a failure to make timely disclosure, a person or company is not liable, subject to subsection (4), unless the plaintiff proves that the person or company, (a) knew, at the time that the failure to make timely disclosure first occurred, of the change and that the change was a material change; (b) at the time or before the failure to make timely disclosure first occurred, deliberately avoided acquiring knowledge of the change or that the change was a material change; or (c) was, through action or failure to act, guilty of gross misconduct in connection with the failure to make timely disclosure.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (3). Same (4) A plaintiff is not required to prove any of the matters set out in subsection (3) in an action under section 138.3 in relation to, (a) a responsible issuer; (b) an officer of a responsible issuer; (c) an investment fund manager; or (d) an officer of an investment fund manager.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (4). Knowledge of the misrepresentation or material change (5) A person or company is not liable in an action under section 138.3 in relation to a misrepresentation or a failure to make timely disclosure if that person or company proves that the plaintiff acquired or disposed of the issuer’s security, (a) with knowledge that the document or public oral statement contained a misrepresentation; or (b) with knowledge of the material change.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (5). Reasonable investigation (6) A person or company is not liable in an action under section 138.3 in relation to, (a) a misrepresentation if that person or company proves that, (i) before the release of the document or the making of the public oral statement containing the misrepresentation, the person or company conducted or caused to be conducted a reasonable investigation, and (ii) at the time of the release of the document or the making of the public oral statement, the person or company had no reasonable grounds to believe that the document or public oral statement contained the misrepresentation; or (b) a failure to make timely disclosure if that person or company proves that, (i) before the failure to make timely disclosure first occurred, the person or company conducted or caused to be conducted a reasonable investigation, and (ii) the person or company had no reasonable grounds to believe that the failure to make timely disclosure would occur.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (6). Factors to be considered by court (7) In determining whether an investigation was reasonable under subsection (6), or whether any person or company is guilty of gross misconduct under subsection (1) or (3), the court shall consider all relevant circumstances, including, (a) the nature of the responsible issuer; (b) the knowledge, experience and function of the person or company; (c) the office held, if the person was an officer; (d) the presence or absence of another relationship with the responsible issuer, if the person was a director; (e) the existence, if any, and the nature of any system designed to ensure that the responsible issuer meets its continuous disclosure obligations; (f) the reasonableness of reliance by the person or company on the responsible issuer’s disclosure compliance system and on the responsible issuer’s officers, employees and others whose duties would in the ordinary course have given them knowledge of the relevant facts; (g) the period within which disclosure was required to be made under the applicable law; (h) in respect of a report, statement or opinion of an expert, any professional standards applicable to the expert; (i) the extent to which the person or company knew, or should reasonably have known, the content and medium of dissemination of the document or public oral statement; (j) in the case of a misrepresentation, the role and responsibility of the person or company in the preparation and release of the document or the making of the public oral statement containing the misrepresentation or the ascertaining of the facts contained in that document or public oral statement; and (k) in the case of a failure to make timely disclosure, the role and responsibility of the person or company involved in a decision not to disclose the material change.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (7, 8). Confidential disclosure (8) A person or company is not liable in an action under section 138.3 in respect of a failure to make timely disclosure if, (a) the person or company proves that the material change was disclosed by the responsible issuer in a report filed on a confidential basis with the Commission under subsection 75 (3) or the regulations; (b) the responsible issuer had a reasonable basis for making the disclosure on a confidential basis; (c) where the information contained in the report filed on a confidential basis remains material, disclosure of the material change was made public promptly when the basis for confidentiality ceased to exist; (d) the person or company or responsible issuer did not release a document or make a public oral statement that, due to the undisclosed material change, contained a misrepresentation; and (e) where the material change became publicly known in a manner other than the manner required under this Act or the regulations, the responsible issuer promptly disclosed the material change in the manner required under this Act or the regulations.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (9); 2006, c. 33, Sched. Z.5, s. 16 (1, 2). Forward-looking information (9) A person or company is not liable in an action under section 138.3 for a misrepresentation in forward-looking information if the person or company proves all of the following things: 1. The document or public oral statement containing the forward-looking information contained, proximate to that information, i. reasonable cautionary language identifying the forward-looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information, and ii. a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information. 2. The person or company had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward-looking information.  2004, c. 31, Sched. 34, s. 13 (10). Same (9.1) The person or company shall be deemed to have satisfied the requirements of paragraph 1 of subsection (9) with respect to a public oral statement containing forward‑looking information if the person who made the public oral statement, (a) made a cautionary statement that the oral statement contains forward‑looking information; (b) stated that, (i) the actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information; and (c) stated that additional information about, (i) the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and (ii) the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, is contained in a readily-available document or in a portion of such a document and has identified that document or that portion of the document.  2004, c. 31, Sched. 34, s. 13 (10). Same (9.2) For the purposes of clause (9.1) (c), a document filed with the Commission or otherwise generally disclosed shall be deemed to be readily available.  2004, c. 31, Sched. 34, s. 13 (10). Exception (10) Subsection (9) does not relieve a person or company of liability respecting forward-looking information in a financial statement required to be filed under this Act or the regulations or forward-looking information in a document released in connection with an initial public offering.  2004, c. 31, Sched. 34, s. 13 (10); 2006, c. 33, Sched. Z.5, s. 16 (3). Expert report, statement or opinion (11) A person or company, other than an expert, is not liable in an action under section 138.3 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert in respect of which the responsible issuer obtained the written consent of the expert to the use of the report, statement or opinion, if the consent had not been withdrawn in writing before the document was released or the public oral statement was made, if the person or company proves that, (a) the person or company did not know and had no reasonable grounds to believe that there had been a misrepresentation in the part of the document or public oral statement made on the authority of the expert; and (b) the part of the document or oral public statement fairly represented the report, statement or opinion made by the expert.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (11). Same (12) An expert is not liable in an action under section 138.3 with respect to any part of a document or public oral statement that includes, summarizes or quotes from a report, statement or opinion made by the expert, if the expert proves that the written consent previously provided was withdrawn in writing before the document was released or the public oral statement was made.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (12). Release of documents (13) A person or company is not liable in an action under section 138.3 in respect of a misrepresentation in a document, other than a document required to be filed with the Commission, if the person or company proves that, at the time of release of the document, the person or company did not know and had no reasonable grounds to believe that the document would be released.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (13). Derivative information (14) A person or company is not liable in an action under section 138.3 for a misrepresentation in a document or a public oral statement, if the person or company proves that, (a) the misrepresentation was also contained in a document filed by or on behalf of another person or company, other than the responsible issuer, with the Commission or any other securities regulatory authority in Canada or an exchange and was not corrected in another document filed by or on behalf of that other person or company with the Commission or that other securities regulatory authority in Canada or exchange before the release of the document or the public oral statement made by or on behalf of the responsible issuer; (b) the document or public oral statement contained a reference identifying the document that was the source of the misrepresentation; and (c) when the document was released or the public oral statement was made, the person or company did not know and had no reasonable grounds to believe that the document or public oral statement contained a misrepresentation.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (14); 2010, c. 26, Sched. 18, s. 39. Where corrective action taken (15) A person or company, other than the responsible issuer, is not liable in an action under section 138.3 if the misrepresentation or failure to make timely disclosure was made without the knowledge or consent of the person or company and, if, after the person or company became aware of the misrepresentation before it was corrected, or the failure to make timely disclosure before it was disclosed in the manner required under this Act or the regulations, (a) the person or company promptly notified the board of directors of the responsible issuer or other persons acting in a similar capacity of the misrepresentation or the failure to make timely disclosure; and (b) if no correction of the misrepresentation or no subsequent disclosure of the material change in the manner required under this Act or the regulations was made by the responsible issuer within two business days after the notification under clause (a), the person or company, unless prohibited by law or by professional confidentiality rules, promptly and in writing notified the Commission of the misrepresentation or failure to make timely disclosure.  2002, c. 22, s. 185; 2004, c. 31, Sched. 34, s. 13 (15); 2006, c. 33, Sched. Z.5, s. 16 (4). Section Amendments with date in force (d/m/y) 2002, c. 22, s. 185 - 31/12/2005 2004, c. 31, Sched. 34, s. 13 (1-15) - 31/12/2005 2006, c. 33, Sched. Z.5, s. 16 (1-4) - 20/12/2006 2010, c. 26, Sched. 18, s. 39 - 08/12/2010 Damages