BOR 99/01 - Short Form Offerings By Qualifying Issuers [Rescinded]

IN THE MATTER OF THE SECURITIES ACT R.S.B.C. 1996, c. 418 AND

IN THE MATTER OF SHORT FORM OFFERINGS BY QUALIFYING ISSUERS 

WHEREAS section 61 of the Securities Act, R.S.B.C. 1996, c. 418, states that a person must not distribute a security unless a preliminary prospectus and a prospectus respecting that security, have been filed with, and receipts obtained for them from, the Executive Director;

AND WHEREAS for the purpose of this order:

"Current AIF" means a current AIF as defined in the SHAIF Policy;

"Designated Hold Purchaser" means a purchaser that is an insider or promoter of the issuer, the issuer’s underwriter or a member of the Professional Group of that underwriter;

"Designated Threshold Purchaser" means a purchaser who either would be entitled to purchase securities of the issuer pursuant to the prospectus exemptions contained in sections 74(2)(1) or 74(2)(3) of the Act or is a "sophisticated purchaser" as defined in the Securities Rules, R.B.C. Reg. 194/97, other than a member of the Professional Group;

"Exchange" means the Vancouver Stock Exchange or any successor entity;

"Exchange Policy" means Part 6 of Policy No. 14 of the Exchange, relating to the conduct of an Offering, subject to any amendment that has been filed with the Commission and not objected to by the Commission within 30 days of filing;

"Offering" means an offering of securities by a Qualifying Issuer that, under this order, is exempt from section 61 of the Act;

"Professional Group" means a group of persons as defined in proposed Multi-Jurisdictional Instrument 33-105 entitled "Underwriting Conflicts" in its most recently published form or in the form adopted by the Commission from time to time;

"Qualifying Issuer" means an issuer that meets the requirements of a Qualifying Issuer as set out in the SHAIF BOR and SHAIF Policy;

"SHAIF BOR" means BOR #98/7 of the Commission or any successor instrument;

"SHAIF Policy" means Local Policy Statement 3-27 of the Commission or any successor instrument;

"Short Form Offering Document" means the form of offering document prescribed in the Exchange Policy for the purposes of conducting an Offering, including any waiver or variation the Exchange permits;

"Subsequently Triggered Report" means a material change report that must be filed no later than 10 days after a material change under section 85(1)(b) of the Act as a result of a material change that occurs after the date of the certification of the Short Form Offering Document but before an agreement of purchase and sale is entered into with a purchaser; and

"Threshold Amount" means the greater of $10,000 and 2% of the value of securities distributed under an Offering;

AND WHEREAS the Commission considers that it would not be prejudicial to the public interest to provide an exemption from section 61 of the Act for certain limited distributions of securities provided that the issuer distributing the securities meets the specified criteria and complies with the specified disclosure requirements in this order;

IT IS ORDERED, effective May 3, 1999:

1. under section 76 of the Act, that section 61 of the Act does not apply to a distribution by a Qualifying Issuer of securities of its own issue provided that the distribution meets all of the following conditions:

(a) the issuer has filed with the Commission a Current AIF;

(b) the issuer has filed:

(i) all documents that it is required to file under Part 12 of the Act and the Rules, including annual and interim financial information and annual reports, press releases disclosing material changes and material change reports; and

(ii) any Subsequently Triggered Report;

(c) the distribution is of a class of securities that are listed for trading on the Exchange;

(d) the issuer has filed with the Exchange, and the Exchange has accepted, a Short Form Offering Document in respect of the Offering, prepared by the issuer in accordance with the requirements of the Exchange and which:

(i) incorporates by reference the following documents filed with the Commission: the issuer’s Current AIF, its most recent audited annual financial statements, and all unaudited quarterly financial statements, quarterly reports and material change reports filed subsequent to the date of its Current AIF but before or on the date of the Short Form Offering Document;

(ii) deems any Subsequently Triggered Report required to be delivered to a purchaser under this order to be incorporated by reference;

(iii) grants to purchasers contractual rights of action in the event of a misrepresentation against the issuer and directors, officers and promoters of the issuer in the form required by the Exchange Policy;

(iv) grants to purchasers contractual rights of withdrawal against the issuer or the issuer’s underwriter from an agreement of purchase and sale, in the form required by the Exchange Policy; and

(v) contains certificates of the issuer, directors, officers and promoters of the issuer, and a registered underwriter, all in the form required by the Exchange Policy;

(e) the offering is conducted in accordance with the rules and procedures set out in the Exchange Policy, including any waiver or variation the Exchange permits;

(f) the issuer or its agent delivers the Short Form Offering Document and any Subsequently Triggered Report to the purchaser either:

(i) before the issuer or its agent enters into the written confirmation of purchase and sale resulting from an order or subscription for securities being distributed under the Offering; or

(ii) not later than midnight on the second business day after the agreement of purchase and sale is entered into;

(g) the gross proceeds to the issuer from securities distributed under the Short Form Offering Document, when added to the gross proceeds to the issuer from securities distributed under this order during the twelve month period immediately preceding the date of the Short Form Offering Document, do not exceed $1 million;

(h) the number of securities distributed under the Short Form Offering Document, when added to the number of securities of the same class distributed under this order during the twelve month period immediately preceding the date of the Short Form Offering Document, does not exceed the number of securities of the same class outstanding at the later of the following dates:

(i) the date the issuer first distributed securities of the same class under this order; and

(ii) the date that is twelve months prior to the date of the Short Form Offering Document;

(i) the aggregate acquisition cost to a purchaser, other than a Designated Threshold Purchaser or Designated Hold Purchaser, is no more than the Threshold Amount;

(j) no purchaser acquires more than 20% of the securities distributed pursuant to the Offering;

(k) no more than 50% of the securities distributed pursuant to the Offering are subject to the four month hold period imposed pursuant to this order; and

(l) the issuer files a report in the form required under section 139 of the Rules on or before the 10th day after the distribution;

2. under section 76 of the Act, that any trade in a security acquired under this order:

(a) where the seller was, at the time the seller acquired the security, a Designated Hold Purchaser; or

(b) in excess of the Threshold Amount by a Designated Threshold Purchaser; is deemed to be a distribution unless

(c) a four month period has elapsed from the date that the seller acquired the securities under the Offering; and

(d) the resale requirements of section 142(3)(d) to (i) of the Rules are complied with; and

3. under section 171 of the Act, that this order shall terminate on January 1, 2001.

DATED at Vancouver, British Columbia, on April 28, 1999.

Reference: BOR#98/7
Local Policy Statement 3-27
Proposed Multi-Jurisdictional Instrument 33-105