BCN 2005/03 - Request for Comment Consequential Amendments Arising from the Proposed Repeal and Replacement of National Instrument 44-101 Short Form Prospectus Distributions, Form 44-101F3 Short Form Prospectus, and Companion Policy 44-101CP Short Form Prospectus Distributions [BCN - Lapsed]

Concurrently Published:

• 43-201 - Mutual Reliance Review System for Prospectuses and Annual Information Forms [NP Proposed - Lapsed]
• 44-102 - Shelf Distributions [NI Proposed - Lapsed]
• 44-102CP - Proposed Amendments to Companion Policy 44-102CP to National Instrument 44-102 Shelf Distributions [CP Proposed - Lapsed]
• 44-103 - Post-Receipt Pricing [NI Proposed - Lapsed]
• 44-103CP - Post-Receipt Pricing [CP Proposed - Lapsed]
• 51-101 - Standards of Disclosure for Oil and Gas Activities [NI Amendment Proposed - Lapsed]
• 51-101CP - Standards of Disclosure for Oil and Gas Activities [CP Proposed - Lapsed]

The Canadian Securities Administrators are publishing proposed National Instrument 44-101 Short Form Prospectus Distributions (new NI 44-101), Form 44-101F1 Short Form Prospectus, and Companion Policy 44-101CP for comment. If adopted, these instruments would replace National Instrument 44-101, Form 44-101F3 and Companion Policy 44-101CP that are currently in force.

In the attached notice, the CSA are also publishing for comment consequential amendments that would be necessary if new NI 44-101 is adopted. In British Columbia, amendments would be necessary to BC Implementing Rule 44-801 Implementing National Instrument 44-101 Short Form Prospectus Distributions if new NI 44-101 is adopted. The amendments to BC Implementing Rule 44-801 are set out in Schedule A to this Notice.

The CSA notice describes where your comments and questions relating to the proposed amendments can be directed. All comments received by April 8, 2005 will be considered.

January 7, 2005

Douglas M. Hyndman
Chair

Ref:      National Instrument 44-101 Short Form Prospectus Distributions
             Form 44-101F3 Short Form Prospectus
             Companion Policy 44-101CP Short Form Prospectus Distributions
             BC Implementing Rule 44-801 Implementing National Instrument 44-101 Short Form Prospectus Distributions

This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.bc.ca in the Policies & Instruments or Historical Policies & Instruments sections of the website.

Schedule A

Amendment to
Implementing Rule 44-801
Implementing National Instrument 44-101 Short Form Prospectus Distributions

1.1        Implementing Rule 44-801 is amended by

(a)        striking out “2,” in section 4(1); and

(b)       repealing section 4(2).

Notice and Request for Comment

Consequential Amendments Arising from the
Proposed Repeal and Replacement of
National Instrument 44-101 Short Form Prospectus Distributions

Proposed Amendments to National Instrument 44-102 Shelf Distributions,
National Instrument 44-103 Post-Receipt Pricing,
National Policy 43-201 Mutual Reliance Review System for Prospectuses
and Annual Information Forms and
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities

January 7, 2005

Overview

We, the Canadian Securities Administrators (CSA), are publishing this notice in conjunction with the Notice and Request for Comment on the proposed repeal and replacement of National Instrument 44-101 Short Form Prospectus Distributions, Form 44-101F3 Short Form Prospectus and Companion Policy 44-101CP (collectively, the “Proposed Short Form Rule”).  The Proposed Short Form Rule is intended to replace the current short form prospectus distribution rule and related forms and companion policy (collectively, the “Current Short Form Rule”) that came into effect in all CSA jurisdictions on December 31, 2000.  It will more fully integrate the disclosure regimes for the primary and secondary securities markets, and will address deficiencies or ambiguities in the Current Short Form Rule that we have identified over the past four years.  Finally, we have proposed revisions to the qualification criteria that would broaden issuer access to the short form system. 

A number of other national instruments build on the foundation of the Current Short Form Rule, or make reference to some of its requirements.  As a consequence of the proposed repeal of the Current Short Form Rule and its replacement with the Proposed Short Form Rule, the CSA also propose to amend the following national instruments:

• National Instrument 44-102 Shelf Distributions (“NI 44-102”) and the related Companion Policy 44‑102CP;
• National Instrument 44-103 Post-Receipt Pricing (“NI 44-103”) and the related Companion Policy 44‑103CP;
• National Policy 43-201 Mutual Reliance Review System for Prospectuses and Annual Information Forms (“NP 43-201”); and
• National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).

The proposed consequential amendments are summarized below.  With this notice, we are publishing a version of each of NI 44-102, NI 44-103 and NP 43-201, marked to indicate the proposed consequential amendments. These documents can be obtained from websites of CSA members, including the following:

      www.albertasecurities.com
      www.bcsc.bc.ca
      www.msc.gov.mb.ca
      www.gov.ns.ca/nssc/
      www.osc.gov.on.ca
      www.lautorite.qc.ca
      www.sfsc.gov.sk.ca

Summary of Proposed Consequential Amendments

NI 44-102

We propose to amend NI 44-102 to update cross-references and definitions to be consistent with the Proposed Short Form Rule and to make a few other minor changes.    The more significant proposed amendments to NI 44-102 are as follows: 

• Amending the eligibility criteria contained in Part 2 to clarify that an issuer must be eligible to use the short form prospectus system established under the Proposed Short Form Rule in order to file and use a shelf prospectus.
• Amending subsection 6.4(1) to require that a shelf prospectus supplement be filed only in the jurisdictions in which securities are being distributed under the supplement.
• Deleting section 7.3, which addresses the filing of auditors’ comfort letters, consistent with the elimination from the Proposed Short Form Rule of any requirement for auditors’ comfort letters.
• Deleting Part 10 Transitional Shelf Procedures as it is no long necessary to address transitional issues concerning NI 44-102’s predecessor, National Policy 44.

We also propose to make corresponding changes to the related Companion Policy, including:

• Amending section 2.4 to provide additional guidance to issuers who propose to use the shelf procedures to distribute novel derivatives or asset-backed securities.
• Adding a new section 2.7 to provide additional guidance with respect to when an expert’s consent must be filed under NI 44-102.
• Adding subsection (4) to section 3.1 to provide guidance as to how an issuer can increase the amount of securities that can be distributed under a previously filed shelf prospectus.

NI 44-103

We propose to amend NI 44-103 to update cross-references and definitions to be consistent with the Proposed Short Form Rule, to make other minor changes and to remove outdated transitional provisions.  We also propose to make corresponding changes to the related companion policy. 

NP 43-201

We propose to amend NP 43-201 to remove the provisions relating to the review and acceptance of annual information forms, and to make other minor changes to the policy. Annual information forms filed under National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”) will be subject to the national continuous disclosure review program.

NI 51-101

We propose to amend the definition of “annual information form” in NI 51-101 so that it refers to the definition of “annual information form” in NI 51-102.   We also propose to make corresponding changes to the guidance given in the related companion policy about annual information forms.

Local Instruments

In addition to the amendments to the national instruments discussed above, consequential amendments may also be required for local instruments in some jurisdictions. Securities regulatory authorities in those jurisdictions will publish amendments to local instruments separately.

Anticipated Costs and Benefits

We expect that the adoption of the Proposed Short Form Rule and the related consequential amendments will further enhance the efficiency of accessing capital for short form eligible reporting issuers.   Harmonizing the short form system and related systems with the continuous disclosure rules will reduce costs of public securities offerings.   There will be greater clarity regarding the application of the Proposed Short Form Rule and related instruments, including NI 44-102, and reduced circumstances requiring exemptive relief.  To the extent that the amendments require additional disclosure, this disclosure will benefit investors to an extent that the benefit will outweigh the costs of these new requirements. 

Alternatives Considered

No other alternatives were considered.

Unpublished Materials

No unpublished study, report or other written materials were relied on in proposing these amendments to existing national instruments.

Request for Comment

We request your comments on the proposed amendments to NI 44-102, NI 44-103, NP 43-201 and NI 51-101.

How to Provide Your Comments

Please provide your comments by April 8, 2005 by addressing your submission to the securities regulatory authorities listed below:

British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Financial Services Commission
Manitoba Securities Commission
Ontario Securities Commission
Autorité des marchés financiers
Nova Scotia Securities Commission

You do not need to deliver your comments to all of the CSA member commissions.  Please deliver your comments to the three addresses that follow, and they will be distributed to all other jurisdictions by CSA staff.

Jo-Anne Bund, Co-Chair of the Prospectus Systems Committee
Alberta Securities Commission
4^th Floor, 300 - 5^th Avenue S.W.
Calgary, Alberta  T2P 3C4
Fax:  (403) 297-6156
e-mail: joanne.bund@seccom.ab.ca 

Charlie MacCready, Co-Chair of the Prospectus Systems Committee
Ontario Securities Commission
20 Queen Street West, Suite 1903, Box 55
Toronto, Ontario M5H 3S8
Fax:  (416) 593-3683
e-mail: cmaccready@osc.gov.on.ca 

Anne-Marie Beaudoin
Directrice du secrétariat
Autorité des marchés financiers
Tour de la Bourse
800, square Victoria
C.P. 246, 22^e étage
Montréal, Québec H4Z 1G3
Fax:  (514) 864-6381
e-mail: consultation-en-cours@autorite.qc.ca 

If you are not sending your comments by e-mail, please send a diskette containing your comments (in DOS or Windows format, preferably Word).

We cannot keep submissions confidential because securities legislation in certain provinces requires that a summary of the written comments received during the comment period be published. 

Questions

Please refer your questions to any of:

Michael Moretto
Manager, Corporate Finance
British Columbia Securities Commission
(604) 899-6767
mmoretto@bcsc.bc.ca 

Kathy Tang
Securities Analyst
British Columbia Securities Commission
(604) 899-6711
ktang@bcsc.bc.ca 

Charlotte Howdle
Securities Analyst
Alberta Securities Commission
(403) 297-2990
charlotte.howdle@seccom.ab.ca 

Mavis Legg
Manager, Securities Analysis
Alberta Securities Commission
(403) 297-2663
mavis.legg@seccom.ab.ca 

Elizabeth Osler
Legal Counsel
Alberta Securities Commission
(403) 297-5167
elizabeth.osler@seccom.ab.ca 

Ian McIntosh
Deputy Director, Corporate Finance
Saskatchewan Financial Services Commission
(306) 787-5867
imcintosh@sfsc.gov.sk.ca 

Bob Bouchard
Director, Corporate Finance
Manitoba Securities Commission
(204) 945-2555
bbouchard@gov.mb.ca 

Sonny Randhawa
Accountant, Corporate Finance
Ontario Securities Commission
(416) 593-2380
srandhawa@osc.gov.on.ca 

Michael Tang
Legal Counsel, Corporate Finance
Ontario Securities Commission
(416) 593-2330
mtang@osc.gov.on.ca 

Marcel Tillie
Senior Accountant, Corporate Finance
Ontario Securities Commission
(416) 593-8078
mtillie@osc.gov.on.ca 

Rosetta Gagliardi
Conseillère en réglementation
Autorité des marchés financiers
(514) 940-2199 ext. 2405
rosetta.gagliardi@lautorite.qc.ca 

Bill Slattery
Deputy Director, Corporate Finance and Administration
Nova Scotia Securities Commission
(902) 424-7355
slattejw@gov.ns.ca