NIN 96/24 - Proposed National Instrument 14-101- Definitions [NIN - Rescinded]
| Published Date: | 1996-08-02 |
|---|---|
| Effective Date: | 1996-08-01 |
The proposed National Instrument is intended to provide a national approach to interpretation of national instruments and increase the level of consistency in both interpretation and application of national instruments. The proposed National Instrument is also intended to provide a framework of terms the definitions of which the Canadian Securities Administrators (the "CSA") have agreed upon for use in future national instruments.
The proposed National Instrument sets out definitions for commonly used terms such as "Canadian GAAP", definitions of terms necessary to provide local application of a national instrument such as "securities regulatory authority" and definitions of terms used in more than one national instrument, although not used as frequently as some of the more general terms. This proposed National Instrument is expected to be amended from time to time to add definitions of new terms that meet any of these three criteria.
The proposed National Instrument will also provide that a term used in a national instrument and defined in the statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will, for the purposes of that jurisdiction, have the meaning given to it in the statute relating to securities of that jurisdiction, unless the context otherwise requires.
The proposed National Instrument implements, in part, the recommendation of the CSA Task Force on Operational Efficiencies that Canadian securities regulatory authorities increase the co-ordination of regulation, including standardization of requirements.
The proposed National Instrument is an initiative of the CSA. The National Instrument is expected to be adopted as a rule in each of British Columbia, Alberta and Ontario, as a Commission regulation in Saskatchewan and as a policy in each of the other jurisdictions represented by the CSA.
Summary of Proposed National Instrument
The proposed National Instrument sets forth definitions of terms used in more than one national instrument for the purpose of interpretation of all such instruments.
By setting out standardized terms in a generic fashion, the proposed National Instrument permits a user applying a national instrument to matters in a particular province or territory to read "securities legislation" to mean the statute, regulations, rules and blanket rulings and orders, if any, in that jurisdiction, "securities regulatory authority" to mean the securities regulatory authority in that jurisdiction and "local jurisdiction" to mean that province or territory. Generally, a national instrument will not refer to "distributing securities in the local jurisdiction" or "filing in the local jurisdiction". Instead, it will refer to "distributing securities" or "filing". In that regard, a national instrument should be read the same way as a user reads a statute, regulation or rule adopted locally that generally do not refer to the jurisdiction making them but apply based on activity in or a connection to the jurisdiction.
Unpublished Materials
In proposing the National Instrument, the CSA have not relied on any significant unpublished study, report or other written materials.
Alternatives Considered
In developing the proposed National Instrument the CSA also considered having each national instrument contain definitions for all terms used in that instrument. However, the CSA believe that the approach adopted in the proposed National Instrument avoids duplication and inconsistencies both at this time and on a going forward basis.
Anticipated Costs and Benefits
The proposed National Instrument is not anticipated to impose any costs. It is expected to provide a benefit to investors, industry participants and others by providing more certainty on the application and interpretation of terms used in national instruments by the Canadian securities regulatory authorities.
Consequential Amendments
Consequential amendments will be made to section 1 of the Securities Rules by creating a new subsection 1(2) and
1. including in the new subsection a definition of the following new terms: "Canadian GAAP", "Canadian GAAS", "Canadian auditor's report", "Canadian public accountant's report", "foreign GAAP", "foreign GAAS", "foreign auditor's report" and "foreign public accountant's report", 2. moving the definition of the terms "auditor", "Handbook", "public accountant" and "public accountant's report" currently in section 1 of the Securities Rules to the new subsection, 3. defining the terms "generally accepted accounting principles", "generally accepted auditing standards", "auditor's report", "notice to reader" and "review engagement report", which will replace the interpretation of the terms currently in subsections 2(2) and (3) of the Securities Rules , and
4. making the new subsection apply to all commission rules.
This will create a framework whereby, if the need arises, other definitions currently set out in section 1 of the Securities Rules can be made to apply to all commission rules by moving them to new subsection 1(2).
Additional consequential amendments will be made to section 2 of the Securities Rules to reflect the new definitions included in subsection 1(2) and to clarify when an issuer is required to obtain consent from the Executive Director to use foreign GAAP and foreign GAAS. The consequential amendments are intended to ensure that there is no inconsistency between the Securities Rules and the proposed National Instrument. They are not intended to result in substantive changes to the requirements currently set out in sections 1 and 2 of the Securities Rules.
Comments
Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by November 4, 1996 will be considered.
Submissions should be sent to all of the Canadian securities regulatory authorities listed below in care of the Ontario Securities Commission in duplicate, as indicated below.
British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
The Manitoba Securities Commission
Ontario Securities Commission
Office of the Administrator, New Brunswick
Registrar of Securities, Prince Edward Island
Nova Scotia Securities Commission
Securities Commission of Newfoundland
Securities Registry, Government of the Northwest Territories
Registrar of Securities, Government of the Yukon Territory
c/o Daniel P. Iggers, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8
Submissions should also be addressed to the Commission des valeurs mobilières du Québec as follows:
Jacques Labelle, General Secretary
Commission des valeurs mobilières du Québec
800 Victoria Square, Stock Exchange Tower
P.O. Box 246, 17th Floor
Montréal, Québec H4Z 1G3
A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted. As securities legislation in certain provinces requires that a summary of written comments received during the comment period be published, confidentiality of submissions cannot be maintained.
Questions may be referred to any of the following:
Louyse Gauvin
Policy Advisor
British Columbia Securities Commission
(604) 660-4800
Glenn Roy
Legal Counsel
Alberta Securities Commission
(403) 422-1816
Barbara Shourounis
Director
Saskatchewan Securities Commission
(306) 787-5645
Randee Pavalow
Policy Co-ordinator/Advisor
Ontario Securities Commission
(416) 593-8257
Antoni Dandonneau
Legal Counsel
Commission des valeurs mobilières du Québec
(514) 873-5326
Documents Published for Comment
The Commission is publishing for comment the following documents:
- draft consequential amendments to the Securities Rules
- the text of the proposed National Instrument, together with footnotes that are not part of the proposed National Instrument but have been included to provide background and explanation.
DATED at Vancouver, British Columbia, on August 1, 1996.
Duglas M. Hyndman
Chair
Proposed Consequential amendments to Sections 1 and 2 of the Securities Rules
1. Section 1 is amended
(a) by striking out "1." and substituting "1.(1)";
(b) by repealing the definitions of "auditor", "Handbook", "public accountant" and "public accountant's report"
(c) by adding the following sub-section:
(2) In a commission rule, including these rules,:"auditor" means a person that is qualified under section 3(5) to make an auditor's report referred to in section 3(4);
"auditor's report" means a Canadian auditor's report except, in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada, where it may mean either a:
(a) Canadian auditor's report, or
(b) foreign auditor's report, if the issuer complies with section 2(1);
"Canadian auditor's report" means an auditor's report prepared in accordance with Canadian GAAS;
"Canadian GAAP" means the generally accepted accounting principles determined with reference to the Handbook;
"Canadian GAAS" means the generally accepted auditing standards determined with reference to the Handbook;
"Canadian public accountant's report" means a review engagement report or a notice to reader;
"foreign auditor's report" means, where an issuer is incorporated or organized in a jurisdiction other than Canada or a province of Canada, an auditor's report that is required in the incorporating or organizing jurisdiction under the applicable legislation, and, subject to the requirements dealing with auditor's reports in such legislation, where a recommendation has been made by an association in the incorporating or organizing jurisdiction that is the equivalent of the Canadian Institute of Chartered Accountants, the report recommended by that equivalent association;
"foreign GAAP" means, where an issuer is incorporated or organized in a jurisdiction other than Canada or a province of Canada, the generally accepted accounting principles that are required in the incorporating or organizing jurisdiction under the applicable legislation, and, subject to the requirements dealing with generally accepted accounting principles in such legislation, where a recommendation has been made by an association in the incorporating or organizing jurisdiction that is the equivalent of the Canadian Institute of Chartered Accountants, the principles recommended by that equivalent association;
"foreign GAAS" means where an issuer is incorporated or organized in a jurisdiction other than Canada or a province of Canada, the generally accepted auditing standards that are required in the incorporating or organizing jurisdiction under the applicable legislation, and, subject to the requirements dealing with generally accepted auditing standards in such legislation, where a recommendation has been made by an association in the incorporating or organizing jurisdiction that is the equivalent of the Canadian Institute of Chartered Accountants, the standards recommended by that equivalent association;
"foreign public accountant's report" means where an issuer is incorporated or organized in a jurisdiction other than Canada or a province of Canada, the public accountant's report that is equivalent to a Canadian public accountant's report and is required in the incorporating or organizing jurisdiction under the applicable legislation, and, subject to the requirements dealing with a public accountant's report in such legislation, where a recommendation has been made by an association in the incorporating or organizing jurisdiction that is the equivalent of the Canadian Institute of Chartered Accountants, the report recommended by that equivalent association;
"generally accepted accounting principles" mean Canadian GAAP except, in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada, where it may mean either:
(a) Canadian GAAP, or
(b) foreign GAAP, if the issuer complies with section 2(1);
"generally accepted auditing standards" mean Canadian GAAS except, in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada, where it may mean either:
(a) Canadian GAAS, or
(b) foreign GAAS, if the issuer complies with section 2(1);
"Handbook" means the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time;
"notice to reader" means a notice to reader prepared in accordance with the Handbook;
"public accountant" means a person that is qualified under section 3(5) to make a public accountant's report;
"public accountant's report" means a Canadian public accountant's report except, in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada, where it may mean either a:
(a) Canadian public accountant's report, or
(b) foreign public accountant's report, if the issuer complies with section 2(1);
"review engagement report" means a review engagement report prepared in accordance with the Handbook.
2. Section 2 is repealed and the following substituted:
Foreign financial statements and reports
(1) Except for an issuer incorporated or organized under the laws of the United States of America or of a political division of the United States of America, an issuer that is incorporated or organized in a jurisdiction other than Canada or a province of Canada must obtain the written consent of the executive director and comply with any conditions the executive director may impose before the issuer may file financial statements
(a) prepared in accordance with foreign GAAP, or
(b) accompanied by a
(i) foreign auditor's report, or
(ii) foreign public accountant's report.
(2) If financial statements are prepared in accordance with foreign GAAP, the notes to the financial statements must state which accounting principles have been applied and explain and quantify any significant differences between the foreign GAAP and Canadian GAAP.
(3) If an audit is performed on an issuer's financial statements and the auditor's report on those financial statements is prepared in accordance with foreign GAAS, the auditor's report must explain any significant differences between the foreign GAAS and Canadian GAAS.
(4) If a public accountant performs the procedures necessary to issue a foreign public accountant's report on an issuer's financial statements, the public accountant's report must explain any significant differences between the procedures performed to issue the foreign public accountant's report and the procedures necessary to prepare a Canadian public accountant's report.
NATIONAL INSTRUMENT 14-101 - DEFINITIONS1
1 At a later date some jurisdictions will publish local definition rules. In Ontario, the proposed local definition rule will provide, among other things, that terms defined in this Instrument and used in a rule of the local jurisdiction will have the same meaning in the local rule if not specifically defined in the rule.
(1) Every term that is defined or interpreted in the statute of the local jurisdiction referred to in Appendix B, the definition or interpretation of which is not restricted to a specific portion of the statute, has, if used in a national instrument, the meaning ascribed to it in the statute unless the context otherwise requires.
(2) In a national instrument
"1933 Act" means the Securities Act of 1933 of the United States of America;
"1934 Act" means the Securities Exchange Act of 1934 of the United States of America;
"blanket rulings and orders" mean rulings and orders issued under Canadian securities legislation in certain jurisdictions that are applicable to a class of persons, trades, intended trades, securities, exchange contracts or transactions;
"Canadian auditor's report" means an auditor's report prepared in accordance with Canadian GAAS;
"Canadian financial institution" means a bank, loan corporation, trust company, insurance company, treasury branch, credit union or caisse populaire that, in each case, is authorized to carry on business in Canada or a jurisdiction and that carries on business through a branch network, the Confédération des caisses populaires et d'économie Desjardins du Québec, a caisse populaire in Quebec, and, in all jurisdictions other than Quebec, a credit union that is a member of a credit union central of a jurisdiction that is a member of Credit Union Central of Canada;
"Canadian GAAP" means generally accepted accounting principles determined with reference to the Handbook;
"Canadian GAAS" means generally accepted auditing standards determined with reference to the Handbook;
"Canadian securities directions" means the instruments listed in Appendix C;
"Canadian securities legislation" means the statutes and the other instruments listed in Appendix B;
"Canadian securities regulatory authorities" means the securities commissions and similar regulatory authorities listed in Appendix D;
"CIPF" means the Canadian Investor Protection Fund;
"CSA" means the Canadian Securities Administrators;
"foreign jurisdiction" means a country, or political subdivision of a country, other than Canada;
"Handbook" means the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time;
"implementing law of a jurisdiction" means, for a local jurisdiction, a regulation, rule, ruling or order of the Canadian securities regulatory authority that implements a national instrument in the local jurisdiction;
"ITA" means the Income Tax Act (Canada);
"jurisdiction" means a province or territory of Canada except when used in the term foreign jurisdiction;
"local jurisdiction" means, in a national instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate;
"national instrument" means an instrument described by the CSA as a national instrument, and adopted or made by the securities regulatory authority;
"person or company" means, for the purpose of a national instrument as it applies in British Columbia, "person" as that term is defined in section 1 of the Securities Act (British Columbia);
"regulator" means, for a local jurisdiction, a person referred to opposite the name of the local jurisdiction in Appendix A;
"SEC" means the Securities and Exchange Commission of the United States of America;
"securities directions" means, for the local jurisdiction, the instruments listed in Appendix C opposite the name of the local jurisdiction;
"securities legislation" means, for the local jurisdiction, the statute and other instruments listed in Appendix B opposite the name of the local jurisdiction;
"securities regulatory authority" means, for the local jurisdiction, the securities commission or similar regulatory authority listed in Appendix D opposite the name of the local jurisdiction; and
"SRO" means a self-regulatory organization, a self-regulatory body or an exchange.
NATIONAL INSTRUMENT 14-101 - DEFINITIONS
APPENDIX A
REGULATOR2
LOCAL2 The title set out for each jurisdiction generally refers to the most senior official of the applicable Canadian securities regulatory authority. However, in some cases that official may delegate the power under specific National Instruments to another official and in other circumstances, the particular Canadian securities legislation in the jurisdiction provides for more than one official to be included within the title.
JURISDICTION REGULATOR
ALBERTA Executive Director, as defined under section 1 of the Securities Act (Alberta).
BRITISH COLUMBIA Executive Director, as defined under section 1 of the Securities Act (British Columbia).
MANITOBA Director, as defined under subsection 4(1) of the Securities Act (Manitoba).
NEW BRUNSWICK Administrator of Securities, as defined under section 1 of the Security Frauds Prevention Act (New Brunswick).
NEWFOUNDLAND Director of Securities, designated under section 7 of the Securities Act (Newfoundland).
NORTHWEST TERRITORIES Registrar of Securities, as defined under section 1 of the Securities Act (Northwest Territories).
NOVA SCOTIA Director of Securities, as defined under section 1
of the Securities Act (Nova Scotia).
ONTARIO Director, as defined under section 1 of the Securities Act (Ontario).
PRINCE EDWARD ISLAND Registrar of Securities, as defined under section 1 of the Securities Act (Prince Edward Island).
QUEBEC la Commission des valeurs mobilières du Québec continued under the Securities Act (Québec ).
SASKATCHEWAN Director, as defined in section 1 of the Securities Act (Saskatchewan).
YUKON TERRITORY Registrar of Securities, as defined under section 1 of the Securities Act (Yukon Territory).
NATIONAL INSTRUMENT 14-101 - DEFINITIONS
APPENDIX B
CANADIAN SECURITIES LEGISLATION
LOCAL
JURISDICTION STATUTE AND OTHER INSTRUMENTS
ALBERTA Securities Act and the regulations and rules under that Act and the blanket rulings and orders issued by the securities regulatory authority.
BRITISH COLUMBIA Securities Act and the regulations and rules under that Act and the blanket rulings and orders issued by the securities regulatory authority.
MANITOBA The Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
NEW BRUNSWICK Security Frauds Prevention Act and the regulations under that Act and the orders issued by the securities regulatory authority.
NEWFOUNDLAND The Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
NORTHWEST TERRITORIES Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
NOVA SCOTIA Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
ONTARIO Securities Act and the regulations and rules under that Act.
PRINCE EDWARD ISLAND Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
QUEBEC Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
SASKATCHEWAN The Securities Act and the regulations and rules under that Act and the blanket rulings and orders issued by the securities regulatory authority.
YUKON TERRITORY Securities Act and the regulations under that Act and the blanket rulings and orders issued by the securities regulatory authority.
NATIONAL INSTRUMENT 14-101 - DEFINITIONS
APPENDIX C
CANADIAN SECURITIES DIRECTIONS
LOCAL
JURISDICTION INSTRUMENTS
ALBERTA The policy statements and the written interpretations issued by the securities regulatory authority.
BRITISH COLUMBIA The policy statements and the written interpretations issued by the securities regulatory authority.
MANITOBA The policy statements and the written interpretations issued by the securities regulatory authority.
NEW BRUNSWICK The policy statements and the written interpretations issued by the securities regulatory authority.
NEWFOUNDLAND The policy statements and the written interpretations issued by the securities regulatory authority.
NORTHWEST TERRITORIES The policy statements and the written interpretations issued by the securities regulatory authority.
NOVA SCOTIA The policy statements and the written interpretations issued by the securities regulatory authority.
ONTARIO None.
PRINCE EDWARD ISLAND The policy statements and the written interpretations issued by the securities regulatory authority.
QUEBEC The policy statements and the written interpretations issued by the securities regulatory authority.
SASKATCHEWAN The policy statements and the written interpretations issued by the securities regulatory authority.
YUKON TERRITORY The policy statements and the written interpretations issued by the securities regulatory authority.
NATIONAL INSTRUMENT 14-101 - DEFINITIONS
APPENDIX D
CANADIAN SECURITIES REGULATORY AUTHORITIES
LOCAL
JURISDICTION SECURITIES REGULATORY AUTHORITY
ALBERTA Alberta Securities Commission
BRITISH COLUMBIA British Columbia Securities Commission
MANITOBA The Manitoba Securities Commission
NEW BRUNSWICK Office of the Administrator, New Brunswick
NEWFOUNDLAND Securities Commission of Newfoundland
NORTHWEST TERRITORIES Securities Registry, Government of the Northwest
Territories
NOVA SCOTIA Nova Scotia Securities Commission
ONTARIO Ontario Securities Commission
PRINCE EDWARD ISLAND Registrar of Securities, Prince Edward Island
QUEBEC Commission des valeurs mobilières du Québec
SASKATCHEWAN Saskatchewan Securities Commission
YUKON TERRITORY Registrar of Securities, Government of the Yukon Territory