NIN 96/43 - Proposed National Policy 62-201 and Rescission of National Policy Statement No. 37 Bids Made only in Certain Jurisdictions [NIN - Rescinded]

Purpose of Proposed National Policy

The purpose of the proposed National Policy is to address the policy concerns that arise from take-over bids or issuer bids that are made to all securityholders of a target company in one or more provinces or territories (referred to in the proposed National Policy and this Notice as a "jurisdiction") but that are not made to securityholders of the target company in one or more other jurisdictions. The proposed National Policy advises that the Canadian securities regulatory authorities in the jurisdictions in which the bid is made may issue cease trade orders in respect of such a bid.

The proposed National Policy is an initiative of the Canadian Securities Administrators (the "CSA") and is expected to be adopted as a policy in all the jurisdictions represented by the CSA. The proposed National Policy is substantially similar to National Policy Statement No. 37 - Take-Over Bids - Reciprocal Cease Trading Orders, which it replaces. The only change of substance is the extension of the proposed National Policy to issuer bids.

Terms used in the proposed National Policy that are defined or interpreted in securities legislation of the jurisdiction should be read in accordance with that securities legislation, unless the context otherwise requires.

Background

In the spring of 1985 the CSA published for comment a draft national policy statement on reciprocal cease trading orders. The draft policy reflected the concern of the CSA that securityholders in all jurisdictions have an equal opportunity to participate in a take-over bid. Securityholders are prejudiced and the framework for securities regulation in Canada frustrated if an offeror can avoid the Canadian securities legislation of a particular jurisdiction by making the bid in all other jurisdictions. The more sophisticated securityholders in the excluded jurisdiction are able to tender by moving their securities out of the jurisdiction while the remaining securityholders (usually those with small holdings) simply are not afforded the opportunity to tender. The offeror is thus able to avoid the securities requirements of the excluded jurisdiction without prejudice to the effectiveness of the bid as a whole.

After receiving and reviewing comments on the draft policy the CSA members adopted National Policy Statement No. 37 in the summer of 1986.

Summary of Proposed National Policy

The proposed National Policy provides that if a take-over bid or issuer bid is made to securityholders of a target company in one or more jurisdictions, but is not made to securityholders in one or more other jurisdictions, the Canadian securities regulatory authorities in the jurisdictions in which the bid is made may issue cease trade orders in respect of the bid. The Canadian securities regulatory authorities will generally not do so without providing the offeror an opportunity to address whether the bid offends the public policy considerations reflected in the National Policy and any other relevant considerations. In addition, the National Policy reminds market participants that if there is a minimal number of securityholders in a jurisdiction, the Canadian securities legislation in that jurisdiction may provide an exemption from that jurisdiction's take-over bid or issuer bid requirements, or an offeror may apply for an exemption on the basis that the bid will be made to the securityholders in accordance with requirements of another jurisdiction or foreign jurisdiction, the requirements of which are acceptable to the securities regulatory authority in the jurisdiction to whom the application is made.

Unpublished Materials

In proposing the National Policy, the CSA have not relied on any significant unpublished study, report, decision or other written materials.

Comments

Interested parties are invited to make written submissions with respect to the proposed National Policy. Submissions received by January 24, 1997 will be considered.

Submissions should be addressed 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 an electronic copy of the submission (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:

Nora Lee
Policy Advisor
British Columbia Securities Commission
604-660-3844

Joan Pitfield
Secretary
Alberta Securities Commission
403-422-1497

Barbara Shourounis
Director
Saskatchewan Securities Commission
306-787-5645

Joanne Peters
Senior Legal Counsel
Ontario Securities Commission
416-593-8134

Antoni Dandonneau
Conseiller juridique
Commission des valeurs mobilières du Québec
514-873-5326

Documents Published for Comment

The Commission is publishing for comment the text of the proposed National Policy, together with footnotes that are not part of the National Policy but have been included to provide background and explanation. National Policy Statement No. 37 will be replaced by the proposed National Policy and will be rescinded.

DATED at Vancouver, British Columbia, on November 27, 1996.

Douglas M. Hyndman
Chair