NIN 95/52 - Insider Reporting - Third Party Options [NIN - Rescinded]

Effective January 1, 1996, an insider is required to report options on securities of a reporting issuer that the insider acquires from or disposes to a third party. This Notice instructs how third party options should be reported.

New section 69(1)(b) of the Securities Act will require the reporting of "a security or class of securities, including a put, call option or other right or obligation to purchase or sell securities of a reporting issuer as prescribed in the regulations". Section 155 of the Securities Rules states that for the purposes of section 69(1)(b):

"where an insider of a reporting issuer acquires or disposes of a put option, call option or other right or obligation to purchase or sell securities of the reporting issuer, the insider must report the acquisition or disposition in the required form in respect of the securities of the reporting issuer".

Persons who become insiders on or after January 1, 1996

Since section 70(2) of the Act requires insider reports to be filed within 10 days of becoming an insider, the new requirement to report the acquisition and disposition of third party options will affect persons who become insiders on or after January 1, 1996 for reports filed on or after January 10, 1996. A new insider is not required to report existing holdings of third party options.

Existing insiders

Since section 70(4) requires insiders to file reports within 10 days after the end of the month in which a change in the insiders holdings takes place, the new filing requirement for third party options will apply to existing insiders who acquire or dispose of third party options on or after January 1, 1996. The first insider report of such acquisitions or dispositions is required to be filed by February 10, 1996. An insider is required to file only in respect of changes in their holdings of third party options that occur on or after January 1, 1996 and not in respect of existing holdings of third party options.

An insider is not required to report third party options acquired or disposed of before January 1, 1996. Insiders are not required to disclose the identity of the optionor or optionee, however if the identity of the optionor or optionee is disclosed, this should be done in Box 6 of Form 36 entitled "Remarks".

Third party options, which are private options, should be designated in Box 5, Section A of Form 36 as "private options" and in Box 5, Section C, Nature as code 97 (Other). Third party options, which are put or call options, should continue to be designated in Box 5, Section A of Form 36 as "put options" or "call options" and in Box 5, Section C, Nature as code 45 (acquisition or disposition of a put option) or code 40 (acquisition or disposition of a call option). Box 6 (Remarks) should be used to indicate the expiry date of the option. Options from treasury granted by the issuer should continue to be reported using code 96 (grant of options).

Insiders should be aware that the acquisition or disposition of third party options may give rise to other filing requirements under the Act, for example, material change reports required under section 67 and reports of acquisitions required under section 93.

DATED at Vancouver, British Columbia, on December 14, 1995.

Dean E. Holley
Superintendent of Brokers