NIN 98/24 - Proposed National Instrument 52-102 Use of Currencies [NIN - Rescinded]

The British Columbia Securities Commission, together with other members of the Canadian Securities Administrators (the "CSA"), is publishing for comment the text of proposed National Instrument 52-102. The proposed National Instrument contains footnotes that are not part of the proposed National Instrument, but which have been included to provide background and explanation.

Substance and Purpose of Proposed National Instrument

The proposed National Instrument regulates the use of currencies in "disclosure documents" (as defined below) filed or delivered to securities regulatory authorities and securityholders under securities legislation.

The proposed National Instrument is based on and will replace National Policy Statement No. 14: Acceptability of Currencies in Material Filed with Securities Regulatory Authorities ("NP14"). It is anticipated that NP14 will be rescinded effective upon the date that the proposed National Instrument comes into force. A Table of Concordance comparing NP14 to the proposed National Instrument is set out as Appendix A to this Notice.

In addition, the CSA have considered and reflected in the proposed National Instrument certain elements of the Canadian Institute of Chartered Accountants (the "CICA") Accounting Standards Board's May 1996 Re-Exposure Draft "Foreign Currency Translation" (the "Re-Exposure Draft"). The CICA has deferred the adoption of the Re-Exposure Draft for reasons the CSA understand are unrelated to those elements of the Re-Exposure Draft that have been reflected in the proposed National Instrument.

The proposed National Instrument is an initiative of the CSA. It is expected to be adopted as a rule in each of British Columbia, Alberta, Nova Scotia and Ontario, as a Commission regulation in Saskatchewan and as a policy in each of the other jurisdictions represented by the CSA.

Terms used in the proposed National Instrument that are defined or interpreted in a definition instrument in force in the jurisdiction should be read in accordance with that definition instrument, unless the context otherwise requires.

Summary of Proposed National Instrument

The proposed National Instrument applies to financial information including any financial statement that is presented in a bid document (any document prepared in connection with a take over bid, issuer bid or corporate reorganization), offering document (prospectus, preliminary prospectus, offering memorandum or rights offering circular), or any other document prepared in accordance with the continuous disclosure or proxy and proxy solicitation requirements that is filed or delivered to securities regulatory authorities or securityholders under securities legislation (collectively, the "disclosure documents").

The proposed National Instrument requires the currency of display of financial information to be disclosed in a disclosure document.

NP14 permits financial disclosure using any currency of display provided that the currency is reasonable in the circumstances. This reasonableness standard has caused ambiguity in the past. As a result, the reasonableness standard has been replaced in the proposed National Instrument by a requirement that the currency of display be the measurement currency, the Canadian dollar or the U.S. dollar. The proposed National Instrument reflects paragraph .003(b) of the Re-Exposure Draft by specifying factors that are to be considered in determining the appropriate measurement currency of an entity. "Measurement currency" has been defined in the proposed National Instrument as the primary currency of exposure of a person having regard to the circumstances of the person, including exposure to a particular currency, the volume of transactions in a particular currency, and the currency of the jurisdiction in which operations and securityholders are located. For most Canadian entities, the Canadian dollar would be the primary currency of exposure and therefore the measurement currency.

The proposed National Instrument establishes a new requirement for disclosure of measurement currency in two circumstances. Firstly, the measurement currency is required to be disclosed if it is other than the Canadian or U.S. dollar. Secondly, if the currency of display for financial information is not the same as the measurement currency for that financial information, the measurement currency is required to be disclosed. These requirements of the proposed National Instrument reflect consideration of paragraphs .110 and .111 of the Re-Exposure Draft.

If an offering document or bid document contains an offering price in a currency other than either the Canadian or U.S. dollar, the proposed National Instrument requires face page disclosure in bold face type of the exchange rate in effect at the latest practicable date. This disclosure requirement is consistent with the requirements of section 4.1 of NP14.

The proposed National Instrument also prescribes certain supplementary disclosure requirements applicable if a currency of display other than either the Canadian dollar or the U.S. dollar is used in a disclosure document. Under the proposed National Instrument, the disclosure document must disclose certain information relating to exchange rates, and, in certain cases, a description of any legislation relating to foreign withholding taxes or foreign exchange controls. These supplementary disclosure requirements are substantially similar to the requirements of sections 4.2 and 5.1 of NP14.

Anticipated Costs and Benefits

The proposed National Instrument provides direction for the use and disclosure of measurement currency and currency of display in disclosure documents required to be filed or delivered under securities legislation. In the CSA's view these disclosure requirements promote fair and efficient capital markets, and assist the investor in making an informed investment decision through access to financial information that is not misleading.

The costs of compliance with the proposed National Instrument relate primarily to the time required by management to consider the requirements of the proposed National Instrument and prepare disclosure that complies with those requirements. As the proposed National Instrument substantially maintains the status quo, it does not impose any significant incremental costs.

Comments

Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by August 27, 1998 will be considered.

Submissions, in duplicate, should be addressed to all of the Canadian securities regulatory authorities listed below in care of the Ontario Securities Commission:

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
Department of Government Services and Lands, Newfoundland and Labrador
Registrar of Securities, 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:

Claude St. Pierre, 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

Carla-Marie Hait
British Columbia Securities Commission
(604) 899-6726

Chris Courtland
Alberta Securities Commission
(403) 297-4223

Ram Ramachandran
Ontario Securities Commission
(416) 593-8253

Christianne LeBreux
Commission des valeurs mobilières du Québec
(514) 873-5009 Ext. 172

DATED at Vancouver, British Columbia, on May 27, 1998

Douglas M. Hyndman
Chair

REF: NP14