News Release

Vancouver - The British Columbia Securities Commission today published its new rule for companies quoted in the U.S. over-the-counter markets.

Under BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets, most B.C.-connected companies quoted in the U.S. OTC markets are designated as reporting issuers in British Columbia. The rule also discourages the manufacture and sale of shell companies that are often used for abusive purposes. The rule takes effect on Sept. 15, 2008.

A notice published on June 25, 2007 outlined how the BCSC planned to deal with those that engage in abusive activities in the U.S. OTC markets and have connections to the province. The new rule is a key element of this plan.

On Oct. 29, 2007, the BCSC published for comment changes it was considering to apply to U.S. OTC companies with significant connections to the province. The comment period ended on Dec. 31, 2007. The BCSC then published the rule changes and opened a second comment period that ended June 13, 2008. The new rule reflects the comments received throughout the process.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the new rule by visiting the Securities Law and Policy section on our website at www.bcsc.bc.ca. If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website: www.investright.org .

Backgrounder
BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets

What is the U.S. OTC securities market?

• The OTC market is composed of OTC Bulletin Board (OTC BB) and the Pink Sheets. These markets are legal and are home to legitimate businesses, but they are vulnerable to abuse because the level of regulatory scrutiny is very low.

Why is the BCSC concerned about the U.S. OTC securities market?

• A disproportionate number of players in the U.S. OTC markets who engage in abusive activities have visible connections to B.C. Their activities damage the reputation of the province's capital markets, harming the interests of legitimate issuers, investment dealers, and other market participants.

How does the Securities Act define an OTC issuer?

• Recent B.C. government amendments to the Securities Act allow the BCSC to designate OTC issuers as reporting issuers. The new instrument designates OTC issuers that have one or more of the substantial connections listed in
  BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets as reporting issuers, and imposes substantive requirements, benefits and restrictions on these issuers.

Under BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets

• issuers not cross-listed on another North American exchange or quotation system listed in the rule are subject to the instrument
• an OTC issuer that becomes a reporting issuer must remain a reporting issuer for at least one year after it no longer has a substantial connection to B.C.
• most foreign issuer and multi-jurisdictional disclosure system (MJDS) exemptions apply, with the exception of the exemption regarding material change reporting
• securities that OTC reporting issuers distribute under exemptions must contain a specified statement about restrictions on resale
• insiders of OTC issuers have to file insider reports and personal information forms