Multilateral Instrument 52-109 and Bill 198

October 17, 2006 from Horwath Orenstein LLP – “In a noteworthy development, separate statements of claim have recently been filed by Marvin Neil Silver and Cliff Cohen, both would-be plaintiffs in a proposed class action against Imax Corporation and certain directors and officers of the company. Silver’s claim is the first (by a day – Cohen’s followed hard on its heels) to invoke the secondary- market liability provisions that were recently added to the Securities Act (Ontario) under Bill 198...

Multilateral Instrument 52-109 and proposed amendments setting out reporting criteria required for 2006, 2007, and beyond, combined with Bill 198, has significant implications for Audit Committees, Directors and senior management of reporting issuers. The intent of these new rules and regulations is to improve governance and rebuild corporate credibility through accurate, reliable, and timely communication of information to shareholders. The announcement of the above class action is evidence that Bill 198 is a reality, and public issuers must ensure that they have exercised due diligence with respect to the company’s “Disclosure Controls and Procedures” and “Internal Controls over Financial Reporting”, under the certification requirements of Multilateral Instrument 52-109.

Multilateral Instrument 52-109 requires CEOs and CFOs of all Canadian publicly listed companies to certify:
a) The design and implementation of “Disclosure Controls and Procedures” for both interim and annual filings on or after March 31, 2005
b) The design and implementation of “Internal Control over Financial Reporting” for both interim and annual filings on or after June 30, 2006 (subject to transitional rules)
c) The evaluation of the effectiveness of “Disclosure Controls and Procedures” and have concluded on their effectiveness in the Management Discussion and Analysis accompanying their annual report for year ends ending on or after March 31, 2005
d) The disclosure of material changes in the “Internal Control over Financial Reporting” that occurred during the most recent interim period in the Management Discussion and Analysis accompanying their interim or annual report for periods ending on or after June 30, 2006

In addition, for years ending on or after December 31, 2007, CEOs and CFOs are required to certify on the evaluation of “Internal Controls over Financial Reporting”, and provide their conclusions on their effectiveness, including a discussion on the method for evaluating their effectiveness in the Management Discussion and Analysis accompanying the annual report...”