NIN 99/51 - National Policy 11-201 Delivery of Documents by Electronic Means [NIN - Rescinded]

The Commission has adopted and, together with the other members of the Canadian Securities Administrators (the "CSA"), is publishing National Policy 11-201 Delivery of Documents by Electronic Means ("NP 11-201").

NP 11-201 is an initiative of the CSA, and is being published concurrently with National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means. Both policies come into effect on January 1, 2000.

Background

On June 13, 1997, the CSA published for comment a Concept Proposal on "Delivery of Documents by Issuers Using Electronic Media" (CSA Request for Comments 11-401). As a result of their consideration of the comments received on the Concept Proposal, the CSA published for comment proposed NP 11-201¹

¹ NIN#98/71

and National Policy 47-201²

² NIN#98/72

(the "1998 Draft Policies") on December 31, 1998.

During the comment period on the 1998 Draft Policies, which expired on February 17, 1999, the CSA received a number of submissions. After reviewing the comment letters received in connection with the request for comments, the CSA made a number of minor changes to NP 11-201. These changes were not material and, as a result, the CSA are not republishing NP 11-201 for comment.

A summary of the comments received, and the response of the CSA to those comments, may be found as an Appendix to the Ontario Securities Commission Notice relating to NP 11-201 on their website at www.osc.gov.on.ca.

Purpose of NP 11-201

The CSA recognize that the use of electronic communications technology is an important tool for market participants, and can enable market participants to disseminate information in a more timely, cost-efficient, user-friendly and widespread manner than the current paper-based regime. The CSA also recognize that the regulatory structure should facilitate developments that encourage innovation. At the same time, however, innovation should not be supported by compromising investor protection or investor confidence in the integrity of the markets.

The purpose of NP 11-201 is to state the views of the CSA on how the obligations to deliver documents imposed under Canadian securities legislation can be satisfied by electronic means. NP 11-201 does not have the effect of imposing either higher standards or added regulatory burdens on the deliverer of information than are applicable under the current system.

Summary of NP 11-201

NP 11-201 provides that, as a general principle, the delivery requirements of Canadian securities legislation may be satisfied by electronic means. In British Columbia, this is already made clear by section 180 of the Securities Act, which provides that records that are sent or required to be sent under the Actor regulations, including the SecuritiesRules, must be personally delivered, mailed or transmitted by electronic means.

NP 11-201 applies to all documents required to be delivered under Canadian securities legislation (e.g., proxy-related materials, financial statements, prospectuses, trade confirmations and account statements), except deliveries by or to the securities regulatory authorities and deliveries where the method of delivery is mandated by legislation and that mandated method does not include electronic delivery (e.g., any prepaid mail requirements for the delivery of proxy-related materials).

NP 11-201 sets out the view of the CSA that there are four basic components to electronic delivery that should be satisfied in order to effect good delivery:

• the recipient receives notice that the document has been or will be sent electronically, or otherwise made available electronically
• the recipient has easy access to the document
• the deliverer has evidence that the document has been delivered or otherwise made available to the recipient
• the document is not corrupted or altered in the delivery process.

If any one of these components were absent, the effectiveness of a delivery would be uncertain. A deliverer generally may satisfy the first three components by obtaining the informed consent of an intended recipient to the electronic delivery of a document, and then delivering the document in accordance with that consent. A deliverer may effect electronic delivery without the benefit of consent, but does so at the risk of bearing a more difficult evidentiary burden of proving that the statutory delivery requirements have been met. A sample form of consent is attached as an Appendix to NP 11-201.

NP 11-201 also sets out the CSA’s views on various miscellaneous electronic delivery issues, including formatting of documents, confidentiality and the use of hyperlinks and multimedia communications.

The CSA intend to consider several issues arising from the comment letters received, and which are not dealt with in the Policy, including the following:

• the establishment of a mechanism by which issuers and other market participants can obtain relief from certain provisions that currently preclude electronic delivery
• permitting the use of electronic media for the proxy-solicitation and voting process
• the use of authentication technologies such as "digital signatures".

Further Information

Questions may be referred to:

Simon Millner
Senior Legal Counsel, Policy & Legislation
British Columbia Securities Commission
(604) 899-6642 or (800) 373-6393 (in B.C.)
E-mail: smillner@bcsc.bc.ca

DATED at Vancouver, British Columbia, on December 15, 1999.

Douglas M. Hyndman
Chair
Ref: NP 47-201
CSA RC 11-401
NIN#98/71
NIN#98/72

This NIN refers to other documents. These documents can be found at the B.C. Securities Commission public website atwww.bcsc.bc.cain the Policy Documents Database.