BCN 2000/62 - Adoption of National Instrument 44-103 Post-Receipt Pricing and Related Documents and Rescission of National Policy No. 44 [BCN - Rescinded]

The Commission, together with other members of the Canadian Securities Administrators, has adopted National Instrument 44-103 Post-Receipt Pricing (“NI 44-103”) and Companion Policy 44-103CP (the “Policy”).  The Commission has also made local implementing rule 44-803.  NI 44-103 and the Policy establish a regulatory regime for the post-receipt pricing of offerings.  Together with National Instrument 44-102 Shelf Distributions, these documents replace National Policy No. 44 Rules for Shelf Prospectus Offerings and for Pricing Offerings After the Final Prospectus is Receipted.

The full texts of NI 44-103 (B.C. Reg 426/2000), the Policy and the implementing rule (B.C. Reg 429/2000) are attached to this notice.  NI 44-103, the Policy and the implementing rule will be effective on December 31, 2000. 

NI 44-103 is an initiative of the CSA and has been or will be adopted as a rule in each of British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, as a commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA.  The Policy is expected to be implemented as a policy in all CSA jurisdictions by December  31, 2000.

Effective December 31, 2000, NP 44 is rescinded and superseded by NI 44-103, the Policy, National Instrument 44-102 and Companion Policy 44-102CP. The Commission has also revoked BOR#91/2 effective December 31, 2000 pursuant to the revocation order attached to BCN#2000/60.

Background

The Commission, in conjunction with other members of the CSA, published drafts of NI 44-103, the Policy and the implementing rule for comment on October 2, 1998¹.  The CSA received no comment letters on any of the published drafts.
^1NIN#98/61

The Commission provided advance notice of NI 44-103, the Policy and the implementing rule on October 12, 2000².  Minor drafting changes have been made to the implementing rule since it was published for information purposes with that notice.
^2NIN#2000/45

Substance and Purpose
NI 44-103, the Policy and the implementing rule set out procedures that permit the receipting of a final prospectus before details of pricing and certain other terms of the offering are determined.  Together with the Policy, NI 44-103 will reformulate and replace the provisions of NP 44 relating to post-receipt pricing (or “PREP”), maintaining the substance of the PREP procedures while adding clarity, operational efficiency and enhanced access to the PREP procedures.

The local implementing rule provides to issuers that comply with NI 44-103 relief from certain provisions of the Securities Act.

Summary of Changes from NP 44
The PREP regime under NI 44-103 is largely consistent with that under NP 44 with the following exceptions:

• Availability - NP 44 restricts the PREP procedures to issuers (i) eligible to distribute securities using a short form prospectus or (ii) that have securities listed on a specified exchange. Under NI 44-103 and the Policy, the PREP procedures are available to all issuers, not only those listed on an exchange, and may be used for any distribution other than a distribution of rights.
• Base PREP Prospectus Disclosure - PREP disclosure requirements have been clarified under NI 44-103.  NI 44-103 permits the omission from a base PREP prospectus of such information as the offering price but requires that the aggregate offering size be specified.  The base PREP prospectus need not identify non-lead underwriters nor include any information that can be derived mathematically from the pricing information included in the PREP prospectus.
• Extension of Period for Filing of Supplement - Under NP 44, a supplemented PREP prospectus must be filed within five business days of the date of the base PREP prospectus receipt.  Under NI 44-103, this period is extended to 20 days.  If no supplemented PREP prospectus is filed within that 20 day period, the distribution can proceed only if the base PREP prospectus is updated by a filed amendment.  To preclude use of the amendment procedure to extend a receipt indefinitely, NI 44-103 provides that the receipt for a base PREP prospectus expires 90 days after the issuance of the receipt unless a supplemented PREP prospectus is filed.

Summary of Changes to NI 44-103 and the Policy from the 1998 Drafts

The changes made to the drafts of NI 44-103 and the Policy published in 1998 are not material.  Accordingly, the Commission has not republished NI 44-103 and the Policy for comment.

Changes have been made to conform the substance, terminology and drafting style of NI 44-103 to National Instrument 44-101 Short Form Prospectus Distributions and National Instrument 44-102.  Additional changes of a minor nature have been made for clarification or drafting purposes.

Related National Instruments

Concurrent with the adoption of NI 44-103, the Commission has also adopted National Instrument 44-102, Companion Policy 44-102CP and a local implementing rule.  BCN#2000/61 provides additional information.

DATED at Vancouver, British Columbia, on December 20, 2000.

Douglas M. Hyndman
Chair

Ref: NI 44-102  NI 44-101
NP 44   44-101CP
44-102CP  BCN#2000/61
BOR#91/2  
BCN#2000/60   
NIN#98/61  
NIN#2000/45

This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.bc.ca in the Commission Documents database or the Historical Documents database.