Standing denied: Ontario’s Capital Markets Tribunal provides guidance on private access to public enforcement

A recent decision of Ontario’s Capital Markets Tribunal (the Tribunal) reinforces the high standard that must be met for a private party to obtain standing under Ontario’s Securities Act (the Act). Importantly, the decision affirms that section 127 of the Act—which enables the Tribunal to make orders in the public interest—is not designed to resolve securities law disputes between private parties. The decision also provides useful guidance on when a private party may be “directly affected” by an issuer’s conduct, such that it may get standing before the Tribunal.

What you need to know

• The Tribunal recently denied a private party’s application for standing under section 127 of the Act. The decision reinforces the high standard that must be met for a private party to obtain standing to bring an application before the Tribunal. In refusing to grant standing, the Tribunal affirmed that section 127 of the Act—which enables the Tribunal to make orders in the public interest—is not designed to resolve securities law disputes between private parties.
• The decision provides useful guidance on when a private party may be “directly affected” by an issuer’s conduct, such that it may get standing before the Tribunal. Notably, it confirms that speculative or unsubstantiated claims will fall short of the standard necessary to obtain standing and that parties should first raise concerns directly with Staff of the Ontario Securities Commission (OSC) before commencing an application.

Background

In March 2026, the Tribunal released its decision in SLC Holdings Inc. v Stracon Group Holdings Inc (SLC)¹. The Tribunal refused to grant standing to SLC Holdings Inc. (the Applicant) to bring its application. Consequently, both the motion for standing and the application were dismissed.  

When can a private party bring an application before the Tribunal?

There are two avenues for a private party to bring an application before the Tribunal. First, a party can bring an application under section 127, which enables the Tribunal to grant orders if the Tribunal considers it to be in the public interest to do so. Second, a party can bring an application under section 104 of the Act, which allows an “interested person” to bring an application for an order where a person or company has not complied with a requirement under Part XX – Take-Over Bids and Issuer Bids of the Act.

Unlike section 104, section 127 does not expressly allow an application to be brought by an “interested person”, and past Tribunal decisions have held that persons other than Staff are not entitled as of right to bring an application under section 127. Instead, private parties must apply for standing to pursue claims under section 127².

When deciding whether to exercise its discretion to allow a private party to bring an application under section 127, the Tribunal will typically consider the following factors:  

• the application involves or relates to both past and possible future conduct regulated by Ontario securities laws;
• the application is not purely enforcement in nature;
• the relief sought by the applicant is forward-looking;
• the Tribunal has the authority to impose an appropriate remedy in the circumstances;
• the applicant is directly affected by the past and future conduct of the respondent; and
• it would be in the public interest for the Tribunal to hear the application³.

In addition, the Tribunal may consider (1) the timing of the application, since applications that are brought proximate to a “definitive event” (such as a shareholder vote) should be closely scrutinized to determine whether there was a reasonable basis for any delay⁴; and (2) whether the applicant first took steps to engage with Staff of the OSC, since failing to do so risks subverting the “nuanced and policy-based filtering, prioritization and tool selection” that form an essential part of the OSC’s processes⁵.

The Tribunal’s decision in SLC

In SLC, the Applicant was engaged in ongoing civil litigation in Peru against the Respondent’s Peruvian subsidiary. The Respondent and its Peruvian subsidiary had recently undertaken an amalgamation in which the Respondent assumed the assets and liabilities of its Peruvian subsidiary. The Applicant alleged that, as a result of the ongoing proceeding in Peru, the amalgamation had not been completed under Peruvian law.

Against this backdrop, the Applicant sought to cease trade the Respondent’s shares, which were recently listed on the Toronto Stock Exchange. The basis for the Applicant’s claim was that the Respondent falsely claimed in its prospectus that it had acquired the assets of its Peruvian subsidiary through an amalgamation that—according to the Applicant—was not complete. 

The Tribunal declined to exercise its discretion to grant SLC standing to bring its application. The Tribunal cited four significant factors:

1. The Applicant did not raise its concerns with the OSC. The Tribunal’s “primary difficulty” with the application was that the Applicant did not raise its concerns directly with the OSC before bringing its application. The Tribunal reiterated that parties should raise their concerns with the OSC before taking the “extraordinary step” of commencing a section 127 application. The benefits of first engaging with the OSC include allowing for a more policy-based, nuanced approach, as well as the availability of several tools that the Tribunal does not have, such as negotiated outcomes⁶.
2. The Applicant’s allegations did not raise a novel securities law issue. The Tribunal characterized the “highest-level issue” in the application as whether the Respondent’s prospectus disclosure contained a misrepresentation. While this issue is grounded in securities law, the Tribunal concluded there was “nothing novel about it”⁷.
3. The Tribunal was not the appropriate forum. To determine whether there was a misstatement in the Respondent’s prospectus, the Tribunal would need to decide issues that were already before the Peruvian courts, namely, whether the amalgamation was in fact completed as a matter of Peruvian law. In the Tribunal’s view, the Peruvian courts were best equipped to resolve the issues.
4. SLC was not directly affected by Stracon Canada’s conduct. The Applicant’s interest in bringing its application was to preserve the value of its claim in Peru. Its concern was that shareholders who acquired the Respondent’s shares based on misleading disclosure might later commence litigation against the Respondent that could devalue the Applicant’s claim. The Tribunal viewed this concern as “speculative and unsubstantiated” and the connection to the respondent’s prospectus as “tenuous at best”⁸. In reaching its conclusion, the Tribunal emphasized that section 127 is not designed to resolve securities law disputes between private parties⁹, nor is it a tool for private parties to backstop civil claims unrelated to questions of the public interest in Ontario’s capital markets¹⁰.

As a result, the Applicant’s motion for standing and its application were both dismissed.

Takeaways

The decision reinforces the high standard that must be met for a private party to obtain standing to bring an application before the Tribunal. First, the decision affirms that section 127 of the Act—which enables the Tribunal to make orders in the public interest—is not designed to resolve securities law disputes between private parties. Second, the decision reinforces the role of OSC Staff as the first point of contact in considering allegations of violations of Ontario securities law, including those advanced by private parties. Third, the decision affirms the requirement that a party be “directly affected” by the alleged misconduct and that speculative or unsubstantiated claims will fall short of the standard necessary to obtain standing under section 127.

As an alternative to section 127, a private party may seek standing as an “interested person” under section 104 of the Act, provided the application relates to non-compliance with Part XX – Take-Over Bids and Issuer Bids. Unlike section 127, where standing is discretionary, section 104 expressly confers on “interested persons” the right to apply for relief—but this does not necessarily mean the party will be entitled to a hearing on the merits. The Tribunal has held that applicants who meet the “interested person” threshold for standing under section 104 are not automatically entitled to a hearing on the merits. The Tribunal retains inherent authority to govern its own processes and may dismiss an application on any appropriate ground, including because of an applicant’s delay in bringing the application, even where standing has been established. Thus, while section 104 provides a more direct path to standing than section 127, this statutory entitlement is not without limits.