The Lawyers Weekly - May 11, 2012

Canadian connection at issue
Penalties

Class action against
NASDAQ listed company
gets Ontario green light

D’ARCY JENISH

with drug couriers

A group of disgruntled shareholders will be allowed to proceed with a class action lawsuit against Canadian Solar Inc., after a recent ruling by the Ontario Court of Appeal.

The shareholders alleged that the Guelph, Ont.-based company made false and misleading statements about its financial results in public statements and various documents filed with securities regulators in the United States.

The Court of Appeal in its ruling in Abdula v. Canadian Solar Inc. 2012 ONCA 211, rejected the company’s arguments that the lawsuit should be quashed because it is not a “reporting issuer” of publicly-traded shares under the terms of the Ontario Securities Act, nor is it a “ responsible issuer” because its stock is traded on the NASDAQ exchange in New York City.

“The company argued that because it is only listed on a U.S. stock exchange only U.S. securities law should be applied,” said Dimitri Lascaris, a partner with London, Ont.-based Siskinds LLP, and the lawyer for Tajdin Abdula and several hundred shareholders who have sued Canadian Solar. “They said the dispute is a matter for U.S. securities regulators and should not be of any concern to regulators up here.

“The Court of Appeal has said very clearly that even if their shares are traded on a foreign stock exchange, Ontario law will apply if the company has a real and substantial connection to Ontario, as this company unquestionably does,” Lascaris said.

Canadian Solar was established in Ontario in 2001 and touts itself as one of the largest manufacturers of solar panels in the world with sales in 2010 of $.1.5 billion (U.S.). The federally-incorporated company operates in nine countries, including the United States, Germany, South Korea and Australia, and owns seven manufacturing subsidiaries, most of them located in the People’s Republic of China.

The company went public in 2006 with a stock offering issued through the NASDAQ, where its shares currently trade. Abdula, a resident of Markham, Ont., purchased some of that initial offering through his discount brokerage. According to the appeal court ruling, there were 1,253 Canadian Solar shareholders residing in the province as of

Sentences
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BREAKERS / DREAMSTIME.COM

Canadian Solar Inc. is traded on the NASDAQ, but it was found to have a ‘real and substantial connection’ to Ontario.

The Court of Appeal has said very clearly that even if their shares are traded on a foreign stock exchange, Ontario law will apply if the company has a real and substantial connection to Ontario, as this company unquestionably does.

“

Dimitri Lascaris, Siskinds LLP

August 26, 2010 and, cumulatively, they owned over one million shares.

“The action arises,” according
to the decision written by Justice
Alexandra Hoy, “out of alleged
misrepresentation contained in
press releases, financial state-
ments and an annual report
released or presented by Can-
adian Solar in Ontario and made
in the course of investor confer-
ence calls. Mr. Abdula alleges
that Canadian Solar materially
overstated its financial results.”
The company is not required
to meet the filing and disclosure
requirements of a “reporting
issuer” under the Ontario Secur-
ities Act since its shares are
traded on an American exchange.
The question before the court
was whether Canadian Solar
could be considered a “respon-
sible issuer,” which is defined
under Section 138.3 of the act as
any issuer of publicly-traded
stocks with “a real and substan-
tial connection to Ontario.”
Lawyers for Canadian Solar
argued that the definition of a
responsible issuer only covers
companies whose stock is traded
in Canada and in other provinces
with securities legislation that
parallels Ontario law.

in addition to random road stops, which is already in place in countries such as Australia.

Jennifer Penman, who represented Luskin, suggested the sentence imposed by Justice Trotter was appropriate. “If you look at Kummer, the facts are virtually on par,” said Penman, a partner at Derstine Penman. She suggested it reflects the “moral blameworthiness” that courts have attached to this offence.

While Penman and other defence lawyers agree that impaired driving sentences are on the rise, even with multiple deaths they tend to be no more than what drug couriers receive and lower than for many people convicted of manslaughter.

The same month Luskin was sentenced, Ontario Superior Court Justice Susanne Goodman imposed an eight-year term against a 37-year-old Jamaican woman convicted of trying to smuggle 3.5 kilograms of cocaine into Canada. The woman had a past conviction for “dealing in ganga [sic] and taking steps preparatory to export ganga,” noted the judge in R. v. Robinson, 2012 ONSC 1613.

In a high-profile Toronto case, John Magno was convicted of manslaughter and sentenced to 12 years last August by Justice Todd Ducharme for orchestrating a plan to burn down the family’s building supply store. The arson was botched and Magno was convicted in the death of the person he hired to set the fire, who died when the building exploded prematurely.

Jonathan Rosenthal, a Toronto
director of the Ontario Criminal
Lawyers Association, pointed out
that in Magno there was a pre-
meditated plan to burn down a
building, while there is no crim-
inal intent by an drunk driver. “No
one says I am going to go out and
get drunk and commit a criminal
offence [of impaired driving].”
The reason sentences may be
lower than for other offences is
that the “moral blameworthi-
ness” is the same for an impaired
driver stopped at a RIDE check
and one who ends up in a fatal
accident, Rosenthal said. “You
get a fine for one, you go to the
penitentiary for the other.” n