More corporate executives are using Automatic Securities Dispositions/Purchase plans (ASDPs) to potentially turn their risks into rewards with respect to trading company stock. Under NA 55-101, these plans allow corporate insiders to preclude trading liability and more easily access their personal wealth held in stock.

Background
Insider Trading Rules prohibit the purchase or sale of a security on the basis of material nonpublic information in breach of a duty of trust or confidence.  In simple terms, it limits an executive's ability to sell corporate stock based upon his or her frequent possession of insider information.

Benefits
Automatic Securities Disposition Plans effectively serve as a safe harbour from Insider Trading Rule liability. These plans set forth a written contract for the sale of securities based upon a systematic plan or formula designed by an executive and his or her legal and financial advisors. With an Automatic Securities Sales Plan put in place during an open trading window, insiders have the ability to sell or buy stock pursuant to the written plan, even if they are in possession of material nonpublic information.

The plan is intended to:

• Alleviate concerns about violating insider trading laws
• Allow the insider to trade through black-outs
• Lessen pressure on the stock price when the traditional stock trading window opens
• Assist in the explanation of insider transactions and the reasons behind them to the public

For more information regarding ASDP/ASPPs, please contact our Corporate Services Coordinator at 604-643-7052.