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Securities Law

12-602 - Exempt Purchaser Status [BCP - Rescinded]

Published Date: 2005-09-12
Effective Date: 2005-09-14
Rescinded Date: 2009-09-28

Concurrently Published:

Introduction

This Policy sets out guidelines for an application to the Executive Director for designation as an exempt purchaser, for the purposes of sections 45(2)(4) and 74(2)(3) of the Securities Act and section 2.3 of National Instrument 45-106 Prospectus and Registration Exemptions. 

Part 1 Interpretation

1.1    Terms defined or interpreted in the Securities Act, Securities Regulation or Securities Rules have the same meaning in this Policy.

Part 2  Application

2.1    The exempt purchaser exemption is intended to enable issuers to distribute securities on an exempt basis to persons who do not fall within the definition of accredited investor in National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106), but who are sufficiently knowledgeable or experienced to make investment decisions on their own behalf and consequently do not require the information contained in, and the protection provided by, a prospectus.

2.2    Under the exempt purchaser exemption, the issuer is not required to provide a disclosure document to the exempt purchaser and no minimum dollar amount or number of securities are required to be purchased. However, the securities are subject to a hold period under National Instrument 45-102 Resale of Securities.

2.3    The definition of accredited investor in NI 45-106 includes a person who is recognized or designated by the Executive Director as an exempt purchaser in British Columbia after NI 45-106 comes into effect. This means that two exemptions will be available for trades to exempt purchasers in British Columbia: the exempt purchaser exemption in sections 45(2)(4) and 74(2)(3) of the Act and the accredited investor exemption in section 2.3 of NI 45-106. 

Part 3  Criteria for designation as an exempt purchaser

3.1    All applicants for exempt purchaser status will be required to meet the requirements of this Policy, both in the case of an initial application and an application for renewal.

3.2    In order for an applicant to be designated as an exempt purchaser, the Executive Director must be satisfied that the applicant is a an investor that does not meet the criteria for accredited investor status under NI 45-106, but nevertheless has the requisite sophistication or financial resources such that the investor does not require the information contained in, or the protections provided by, the registration and prospectus requirements under the Act.

The Executive Director has not established any specific criteria for granting exempt purchaser status, as the Executive Director believes that the “accredited investor” definition generally covers all of the types of investors that do not require the protection of the registration and prospectus requirements under the Act. If the Executive Director considers it appropriate, the Executive Director may grant exempt purchaser status to an investor with certain terms and conditions attached.

Part 4  Application procedure

4.1    The application should be addressed as follows:

Director, Corporate Finance
British Columbia Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, B.C.
V7Y 1L2

4.2    The applicant should file the following documents in support of an application for exempt purchaser status or renewal of exempt purchaser status:

(a)  a completed and signed Application for Exempt Purchaser Status (BC Form 12-602F); and
(b)  any other documents that may support its application. These additional documents could include:

(i) audited financial statements,
(ii) an annual report relating to the applicant’s most recently completed fiscal year,
(iii) a description of the applicant’s business, or
(iv) a directors’ report or management report on the business of the applicant.

4.3   To avoid delay, an English translation of all documents submitted under paragraph 4.2 should accompany any documents that are not in English.

4.4       Designation as an exempt purchaser remains in effect for 12 months. In order to maintain continuous designation as an exempt purchaser, exempt purchasers seeking to renew their status are encouraged to submit the documents referred to in paragraph 4.2 at least six weeks before the expiry date of their current designation.

September 8, 2005

Douglas M. Hyndman
Chair