Industry FAQs
The BC Securities Commission aims to make BC a place where companies and investment funds (“issuers”) can flourish and people can invest with confidence. To do that, we set requirements and monitor compliance of issuers looking to raise money. The BCSC is the principal regulator for more than 40 per cent of all companies listed on an exchange in Canada, including more than half of all listed venture companies.
The BCSC registers securities firms and their associated individuals (“registrants”) who buy and sell securities on behalf of investors. We also oversee a diverse array of organizations that play a role in the efficient operation of investment markets.
We strive to make sure that public companies, including issuers listed on exchanges and investment funds that are publicly distributed provide accurate and complete information about their finances, strategy and operations, so investors can make sound decisions. We also require private companies and funds to abide by rules on how they raise money and whom they raise money from. Read more about capital-raising activities in BC.
Upholding a disclosure-based investment market that serves both investors and issuers requires constant vigilance. To do this, the BCSC reviews filings from public companies, monitors the private placement market and takes action against issuers, insiders, and others who fail to comply with securities law requirements.
Industry FAQs
There is a common misconception that securities laws only apply to incorporated companies listed on stock exchanges.
Securities laws apply to any company or entity (like a partnership) that is distributing securities, regardless of whether they are incorporated or listed on a stock exchange.
Public companies are required to provide timely, accurate disclosure of material information about their businesses so investors can make informed decisions. It is illegal to misstate material information, including by omission. If the BCSC has reason to believe an issuer’s disclosure is misleading or inaccurate, the BCSC could seek more information from the issuer to decide whether the issuer needs to file amended disclosure. Other steps could include issuing a cease trade order, a temporary order or a notice of hearing (an allegation that a person or entity violated the Securities Act).
It depends on what is being traded, and how it’s being traded.
There are a wide variety of blockchain-based digital assets, and new ones are being created all the time. Even though the popular term for these instruments is “cryptocurrency,” some of these instruments are more akin to securities or derivatives (both of which would fall under our securities laws), while others are more like commodities, or currencies, or even “utility tokens” that allow the user to engage in a particular kind of activity. Trading or advising in crypto-assets that are securities or derivatives is subject to the B.C. Securities Act.
Bitcoin and ether are each considered to be a commodity by many regulators, including the BCSC, and as such, are not something that would directly fall under securities laws. But trading or advising in relation to these commodity crypto-assets – even a commodity like bitcoin – might be subject to the Securities Act, depending on how the crypto-asset is being bought and sold on a particular trading platform. For example, if a platform maintains custody and control of the customers’ assets, with customers only having a contractual right to that asset, the contractual right to that crypto-asset may be a derivative, and as such is subject to the Securities Act. As another example, management of an investment fund that invests in bitcoin or ether is regulated under the Securities Act.
The BCSC regulates all issuances and trades of securities by a BC company and to BC residents and reviews mandatory disclosure filings.
The BCSC monitors trading of over-the-counter (OTC) derivatives through trade reporting requirements] and the private placement of securities by companies required to report to the BCSC.
The BCSC registers securities firms and their advisors, refusing applications from unsuitable candidates. We audit these firms routinely for compliance.
The BCSC directly oversees the TSX Venture Exchange (with the Alberta Securities Commission), and the Canadian Securities Exchange (with the Ontario Securities Commission). Together with the other members of the Canadian Securities Administrators, the umbrella group of provincial and territorial securities regulators, we oversee the Mutual Fund Dealers Association and the Investment Industry Regulatory Organization of Canada.
A company can issue securities and remain as a non-reporting issuer by using prospectus exemptions. For example, it could issue securities only to family and friends of the company’s owners, or only to accredited investors, or they can use an “offering memorandum,” which is a disclosure document that is less detailed than a prospectus. In these situations, securities laws don’t require the company to file continuous disclosure, such as financial statements, annual information forms, material change reports, information circulars, executive compensation disclosure, or business acquisition reports. But they may have to file a report of an exempt distribution of securities.
However, companies whose shares are traded on exchanges usually file a prospectus when they want to issue new securities and they must provide continuous disclosure. Sometimes these companies also use prospectus exemptions to sell securities.
You can search for current and historical registration through the National Registration Search here: https://www.securities-administrators.ca/nrs/nrsearchprep.aspx.
Under BC’s Securities Act, nobody can help another person buy, sell or advise on securities, or manage an investment fund or act as an underwriter, unless they are registered in the appropriate category.
The different categories of registration allow firms and the individuals registered through them to deal in or advise on different investment products, or manage an investment fund. For example, a firm that is registered as a mutual fund dealer sponsors individuals registered as dealing representatives who can only sell mutual funds, unless the firm and the individual are also registered in another category.
Registration helps protect investors because securities regulators will only register individuals and firms if they are properly qualified and comply with investor protection laws. Working with a registered dealer or adviser is the only way to ensure the laws governing investment advisor conduct can protect investors.
Learn more about different registration types and what they do through this guide.
Learn more about the different titles and designations here.
A reporting issuer is a company that has gone public by issuing securities under a prospectus or is otherwise listed on a recognized stock exchange.
Reporting issuers are commonly referred to as “public companies.”
They must keep their investors informed of their affairs by filing with us ongoing (continuous) disclosure like material change reports and annual and interim financial statements.
A company can be a reporting issuer in multiple jurisdictions.
A security has a broad legal meaning and includes any document that allows the holder to profit from the efforts of others.
That means that if a person provides money to another person or business, and expects to receive “interest” or “profit” in the future, that transaction may involve a security.
Securities include common and preferred shares, bonds, and mutual fund units or shares.
Promissory notes or profit-sharing agreements can also be securities.
It can also include:
- options, warrants and other convertible instruments
- debentures, notes and other instruments of indebtedness
- limited partnership units, and
- memberships in co-operative associations
Note: Guaranteed Investment Certificates (GICs) are not securities because the Securities Act has an exception for investments that involve an “evidence of deposit issued by a savings institution.”
The BCSC also regulates derivatives, which are a broad range of contracts or instruments, including options, swaps, futures contracts, forward contracts or other financial or commodity contracts or instruments whose value is based on an underlying interest. But it also includes contracts or instruments that people might not ordinarily consider to be regulated by us, including contracts related to currency and commodities. More information about derivatives can be found here.