Canadian technology firm Constellation Software Inc. saw a surge in insider selling in June, driven by a senior executive’s move to unload $102.6 million of shares ahead of a hike to the nation’s capital-gains tax.

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Mark Miller, chief operating officer of the Toronto-based firm, sold a combined 27,000 shares in three transactions in the middle of June, marking his first dispositions of Constellation stock since 2019, according to data on Canada’s System for Electronic Disclosure by Insiders. He had about 252,000 shares as of June 19, data compiled by Bloomberg show. Other executives sold as well, but in smaller amounts.

The business-software company’s stock has climbed about 220 per cent since the end of 2019, compared with a roughly 28 per cent advance for the S&P/TSX Composite Index. Its 20 per cent gain this year through last week is around five times that of the nation’s equities benchmark.

Constellation didn’t respond to multiple requests for comment.

Miller’s sales came in the days before an increase in Canada’s capital gains tax inclusion rate. As of June 25, individuals must pay income tax on two-thirds of any gains over $250,000 in a year. Previously, only half of gains were taxable. The change applies to all gains made by companies.

Finance Minister Chrystia Freeland announced the measure in her April budget, giving investors a little more than two months to sell shares at the lower rate. The government projected the tax boost would generate $6.9 billion this fiscal year, partly because some investors and businesses would rush to sell before June 25. Freeland has pledged to keep the deficit — expected to be $39.8 billion in 2024-25 — under control while spending billions on housing and social programs.

The tax increase has sparked criticism from the country’s growing tech sector. Shopify Inc. president Harley Finkelstein has been one of most vocal executives in Canada to oppose the higher levy on social media, calling it “divisive and political” in a post on X.

The executive has been active in Shopify’s stock since late last year. SEDI trading records show he sold more than a net 1,000 shares between public dispositions and sales in an ownership plan since the tax announcement. He held over 200,000 shares as of June 28, data compiled by Bloomberg show.

The Canadian e-commerce company didn’t respond to multiple requests for comment.

The tech sector is one of the industries most likely to be impacted by the tax changes, partly because of its heavy use of share-based compensation, said Christine Poole, chief executive officer of Toronto-based GlobeInvest Capital Management Inc.

“Technology is one to point at because they have certainly done quite well and have a lot of stock options,” she said.

Bloomberg.com