BCN 2001/79 - Adoption of Multilateral Instrument 45-102 Resale of Securities [BCN - Rescinded]
Effective November 30, 2001 the Commission, together with other members of the Canadian Securities Administrators (CSA), has adopted Multilateral Instrument 45-102 Resale of Securities, Forms 45-102F1, 45-102F2 and 45-102F3, and Companion Policy 45-102CP (collectively, the documents). The text of the documents (B.C. Reg. 269/2001) is attached.
We published for comment drafts of the documents on September 8, 2000 (NIN 2000/39). On April 20, 2001, we published advance notice that, subject to government approval, we expected to make the instrument and forms as rules on or before June 29, 2001 (see BCN 2001/22). We later withdrew them to deal with some implementation issues (see BCN 2001/34). On September 11, 2001, we published advance notice that we had finalized and resubmitted the documents and expected to adopt them effective November 30, 2001 (BCN 2001/63).
Substance and purpose
MI 45-102 prescribes when a purchaser of securities under exemptions from the prospectus requirement can resell those securities. It also prescribes when a distribution of securities from a control block can be made. MI 45-102 harmonizes these resale provisions in the adopting jurisdictions and reduces the restricted period where a reporting issuer provides the market with current information concerning its affairs.
The resale restrictions will vary depending on a number of factors including:
- the prospectus exemption under which the securities were distributed,
- if the securities were distributed under a prospectus exemption in an open jurisdiction,
- if the issuer is a qualifying issuer under MI 45-102,
- if the issuer is a SEDAR filer,
- if the issuer is a reporting issuer in the jurisdiction of the purchaser, and
- if the resale is being made by a control person.
We made consequential amendments to the Securities Rules to ensure consistency with MI 45-102. The amendments include repealing sections 127, 128(d), 132 and 140 to 143 and Form 23 Notice of Intention to Distribute Securities, which is replaced by Form 45-102F3. The text of the amendments is attached.
We will shortly publish for comment further consequential amendments to National Instrument 62-101 Control Block Distribution Issues.
Other Documents Affected
Effective November 30, 2001, we have rescinded or revoked the following:
- BOR 95/17 The Legending of Certificates as it provides an exemption from the legending requirements in section 132 of the Rules, which will be repealed.
- BOR 95/21 Trades in Securities of Non-Reporting Issuers as it provides an exemption from section 140 of the Rules, which will be repealed.
- BOR 72-501 Prospectus Exemptions for Trades in Securities of a Non-Reporting Issuer over a market outside Canada as it provides an exemption from resale that will be replaced by an exemption in section 2.14 of MI 45-102.
- BCI 45-506 In the Matter of the System for Shorter Hold Periods with an Annual Information Form as it implements the current SHAIF system that will be replaced by MI 45-102.
- Local Policy Statement 3-27 System for Shorter Hold Periods with an Annual Information Form and Exemption for Certain Distributions Outside British Columbia as it relates to BCI 45-506, which will be revoked. As it discusses the predecessor instruments to BCI 72-503 and BCI 72-504, it will continue to be available in the Historical Documents database on the website.
We have also revised the following instruments to ensure consistency with and incorporate the resale provisions under MI 45-102:
- BCI 45-504 Trades to Trust Companies, Insurers and Portfolio Managers outside British Columbia
- BCI 45-507 Trades to Employees, Executives and Consultants
- BCI 45-509 Short Form of Offerings of Listed Securities and Units by Qualifying Issuers
- BCI 45-514 The Employment Investment Act
- BCI 72-503 A Distribution of Securities Outside BC
- BCI 72-504 Distribution of Eurobonds
BCI 45-507 Trades to Employees, Executives and Consultants was also revised to parallel proposed changes to be made by the Ontario Securities Commission to OSC Rule 45-503.
BCI 45-508 Hold Period for Securities Issued by an Exchange Issuer under Section 74(2)(18) was revised to permit the resale restrictions in this instrument to continue to be available to sellers who acquired securities under section 74(2)(18) of the Securities Act before November 30, 2001.
New BC Instruments
The following new instruments will address certain exchanged securities and transitional issues for current SHAIF issuers and exchange issuers:
- BCI 45-516 Amendments to MI 45-102 amends Appendix D to MI 45-102 to add a reference to section 74(2)(11)(iii) of the Act and Appendix H to include section 74(2)(8) or 74(2)(11)(iii) of the Act if the security acquired by the underwriter was initially acquired under section 74(2)(15) of the Act.
- BCI 45-517 Transitional Resale Relief for certain Securities of SHAIF Issuers allows a SHAIF Issuer to distribute underlying securities with a four month hold period even if the issuer may not have been a qualifying issuer at the date of distribution of the convertible securities. If an issuer distributed convertible securities and was a qualifying issuer under BCI 45-506 before November 30, 2001, the securities issued on conversion will be subject to a four month hold period from the date of distribution of the convertible securities. Under MI 45-102, a four month hold period is only available to issuers who are qualifying issuers at the distribution date of the convertible securities.
- BCI 45-518 Transitional Resale Relief for certain Securities of Exchange Issuers permits exchange issuers to continue to be able to rely on the hold period provisions set out in section 142(2) of the Rules for distributions made before November 30, 2001. Distributions made under prospectus exemption on or after November 30, 2001 by exchange issuers will be subject to the resale provisions in MI 45-102.
Application of MI 45-102 to Certain Resource Issuers
Technical Report Filing Requirement - The definition of qualifying issuer in section 1.1 of MI 45-102 sets out certain conditions that must be satisfied for an issuer to avail itself of certain provisions of MI 45-102. Among the conditions is that the issuer have a current AIF filed on SEDAR.
Paragraph (e) of the definition sets out a condition applicable to issuers that have a mineral project or oil and gas producing activities (including exploration). If the issuer is not qualified to file a short form prospectus under National Instrument 44-101 Short Form Prospectus Distributions, paragraph (e) requires that the issuer's current AIF be supported by a technical report under National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) or National Policy Statement No. 2-B Guide for Engineers and Geologists Submitting Oil and Gas Reports to Canadian Provincial Securities Administrators (NP 2B).
In the case of an oil and gas issuer, this result is achieved by the requirement that a report and certificate prepared in accordance with NP 2B be filed with its current AIF "as if the current AIF were a prospectus." This means that the report must be filed even though there is no requirement under NP 2B to file a report with an AIF. In the case of an issuer with a mineral project that has complied with NI 43-101 when filing its current AIF, there are no additional obligations under paragraph (e).
SEDAR Project Number - Resource issuers should, in the notice filed under subsection 3.1(2) of MI 45-102, identify the SEDAR project number under which it has filed the technical report referred to in paragraph (e) of the definition of "qualifying issuer".
The Index of Forms attached to BC Policy 13-601 Required Forms is amended to include Forms 45-102F1, 45-102F2 and 45-102F3. A copy of the amended Index, which is effective November 30, 2001, is attached to this notice and can also be found on the Commission’s website at www.bcsc.bc.ca.
Questions may be referred to:
Senior Legal Counsel, Legal and Market Initiatives
British Columbia Securities Commission
or (800) 373-6393 (in B.C. and Alberta)
November 23, 2001
Douglas M. Hyndman
Ref: NIN 2000/39
This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.ca in the Commission Documents database or the Historical Documents database.