BCN 2002/26 - Notice of Adoption of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 54-102 Interim Financial Statement and Report Exemption (the Instruments) [BCN - Rescinded]
Effective July 1, 2002, the Commission and the other members of the Canadian Securities Administrators have rescinded National Policy 41 Shareholder Communication and have replaced it with two new National Instruments:
- NI 54-101 Communication with Beneficial Owners of Securities of a Reporting Issue and
- NI 54-102 Interim Financial Statement and Report Exemption.
Substance and purpose of the Instruments
NI 54-101 improves the communication process between reporting issuers and their securityholders. It requires reporting issuers to send proxy-related materials to the beneficial owners of its securities, provides a procedure for sending proxy-related materials and other securityholder material to beneficial owners and imposes obligations on various parties in the securityholder communication process.
NI 54-102 removes the need to send interim financial statements to securityholders who do not want them. It exempts reporting issuers from the requirement to send interim financial statements to registered securityholders if the issuer:
- releases and files a news release containing a summary of the information contained in the statement or report (if the reporting issuer is not a mutual fund),
- files the statement with the securities regulatory authority,
- files the statement or report on all exchanges on which securities of the reporting issuer are listed, and
- sends the statement or report to persons or companies on a supplemental list that is established by the reporting issuer in accordance with NI 54-102.
The text of NI 54-101 and NI 54-102 is in the attached BC Reg. 154/2002 and BC Reg. 155/2002. NI 54-101 includes the following related forms: 54-101F1, 54-101F2, 54-101F3, 54-101F4, 54-101F5, 54-101F6, 54-101F7, 54-101F8 and 54-101F9. These forms are included in the attached Regulations or can be found at www.bcsc.bc.ca under Forms in Effect or under item 5 of Instruments/Notices/Policy Documents in our Commission Documents Database.
NI 54-101’s related Companion Policy, NI 54-101CP, describes the CSA’s views for the interpretation and application of NI 54-101.
Effective July 1, 2002, we revoke BCI 52-505 Exemption from the Requirement to Send Interim Financial Statements and Quarterly Reports to Security Holders of a Reporting Issuer and BCN 54-701 National Policy Statement 41 Shareholder Communication - Removal of Exemption lapses.
Staged Implementation of NI 54-101
The CSA decided to stage the implementation of the provisions of NI 54-101 to enable market participants to identify and resolve any difficulties that they may encounter in establishing the necessary systems and administrative infrastructure to fully comply with NI 54-101. The CSA will continue to consult with and monitor the ability of market participants to:
- generate and transmit lists of beneficial owners who do not object to their information being disclosed to reporting issuers (NOBO lists), before reporting issuers can send proxy-related materials directly; and
- negotiate reasonable fees for services, particularly fees payable to intermediaries for NOBO lists.
The CSA will also monitor related developments in the regulation of securityholder communication, including any developments in the United States.
If it becomes apparent that direct sending of proxy-related materials should be accelerated or delayed, the CSA may change the implementation period by making appropriate amendments to NI 54-101. To facilitate consultation and monitoring, the CSA intends to establish an advisory committee, led by the Ontario Securities Commission, comprised of representatives of market participants.
We published for comment previous versions of NI 54-101 in February 1998 (NIN 98/12), July 1998 (NIN 98/40) and September 2000 (NIN 2000/38). We published for comment a previous version of NI 54-102 in February 1998 (NIN 98/13). On April 5, 2002, we published advance notice that, subject to government approval, we expected to adopt the Instruments as rules effective July 1, 2002 (BCN 2002/17 and BCN 2002/18).
We made consequential amendments to section 182 of the Securities Rules, to ensure consistency with NI 54-101. The text of the amendments (BC Reg. 154/2002) is attached.
Questions may be referred to:
Senior Policy Advisor
Legal and Market Initiatives
British Columbia Securities Commission
(800) 373-6393 (in B.C.)
June 27, 2002
Joyce C. Maykut
Ref: NI 54-102
S. 182 Securities Rules
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.