BOR 87/18 - Certain Certificates For Government Securities And Zero Coupon Strip Bonds [Rescinded]

IN THE MATTER OF THE SECURITIES ACT S.B.C. 1985, c.83 AND

IN THE MATTER OF CERTAIN CERTIFICATES FOR GOVERNMENT SECURITIES AND IN THE MATTER OF ZERO

COUPON STRIP BONDS

EXEMPTION ORDERS UNDER SECTIONS 33 AND 59

UPON the application of certain interested parties to the Superintendent of Brokers (the "Superintendent") pursuant to Sections 33 and 59 of the Securities Act, S.B.C. 1985, c.83 (the "Act");

AND WHEREAS the Superintendent has been advised that there may be sold in British Columbia deposit receipts or other certificates ("Certificates") representing undivided interests in pools of bonds, debentures or other evidences of indebtedness of or guaranteed by the Government of Canada or a province of Canada (the "Underlying Securities") which will be held on behalf of owners of Certificates by a bank or trust company (the "Custodian");

AND WHEREAS the Superintendent has issued a ruling dated February 2, 1987 (the "Previous Ruling") exempting from the registration and prospectus requirements of the Act trades and distributions of "Strip Bonds" (as defined in the Previous Ruling);

AND WHEREAS the Previous Ruling requires that "the purchaser's sole entitlement is to receive a fixed amount of money at a specific future date";

AND WHEREAS Certificates will entitle owners thereof to receive periodic payments representing their proportionate interest in payments of principal and interest made in respect of the Underlying Securities and, therefore, trades and distributions of Certificates would not fall within the ambit of the Previous Ruling;

AND WHEREAS Certificates are to be offered on a basis whereby, if all payments of principal and interest required under the terms of the Underlying Securities are made to the Custodian in accordance with such terms, the Custodian will, at any given time, be in possession of cash or principal amounts of securities described in subparagraph 32(a)(i) of the Act sufficient in the aggregate, without reinvestment, to meet all payments which will fall due under the Certificates prior to the next date upon which the Custodian is entitled to receive a payment of principal or interest under the Underlying Securities;

AND UPON the Superintendent having determined that it is in the public interest that trades and distributions of Certificates should be exempted from the registration and prospectus requirements of the Act on the same basis as trades and distributions of Strip Bonds;

AND UPON the Superintendent being satisfied that to do so would not be prejudicial to the public interest;

IT IS RULED pursuant to Sections 33 and 59 of the Act that a trade of Certificates is not subject to Section 20 of the Act and a distribution of Certificates is not subject to Section 42 of the Act, provided that an information document satisfactory to the Superintendent describing the investment attributes of Certificates, including, without limitation, the income tax consequences of investing and trading in Certificates, the anticipated secondary market environment and custodial arrangements relating to such Certificates, is furnished to, and its receipt is acknowledged by, a first-time purchaser prior to the trade where the vendor is not registered in the categories of investment dealer or broker under the Act, and concurrently with the delivery of confirmation of the trade to first-time purchasers where the vendor is registered in the categories of investment dealer or broker under the Act.

DATED at Vancouver, British Columbia, this 23rd day of March, 1987.

Gordon D. Mulligan
Deputy Superintendent of Brokers

REF.: BOR#87/17
LPS#3-43