News Release

Calgary – Canadian securities regulators today approved a rule that will require insiders to disclose the existence and material terms of insider transactions involving derivatives, including so-called “equity monetization” transactions.

The Canadian Securities Administrators (CSA) have developed Multilateral Instrument 55-103 Insider Reporting for Certain Derivative Transactions (Equity Monetization) to respond to concerns that the existing insider reporting requirements in Canadian securities legislation may not cover certain derivative-based transactions, including equity monetization transactions. Subject to ministerial approvals, the rule is scheduled to come into force on February 28, 2004.

Equity monetization transactions are derivative-based transactions that allow an investor to “cash out” an equity position without formally selling the securities that make up the position. The rule does not prohibit insiders from entering into monetization transactions, but does require that insiders disclose them to the public, so that investors can make their own determination as to their significance.

“While the current rules capture most of these types of transactions, this rule removes any doubt that may have existed,” said Stephen Sibold, Chair of the CSA and of the Alberta Securities Commission. “If you are an insider, and you cash out an equity position through an equity monetization transaction, you need to disclose that transaction. If these kinds of transactions are not disclosed, an insider’s publicly disclosed holdings do not accurately reflect the insider’s “true” economic position in the company.”

In certain circumstances, the instrument will also require that insiders disclose monetization arrangements entered into before the instrument comes into effect which continue to have an impact on an insider’s publicly reported holdings.

The rule and related materials are available on most provincial securities commission websites, and is expected to be adopted by all jurisdictions of the CSA, other than British Columbia. The British Columbia Securities Commission has participated in the development of the rule, but has decided to implement similar requirements by proclaiming amendments to the British Columbia Securities Act and providing exemptions in a BC Instrument instead.