BCN 2002/51 - Request for Comment - Notice of Proposed Amendments to NI55-102 System for Electronic Disclosure by Insiders (SEDI) Forms 55-102F1, 55-102F2, 55-102F3, and 55-102F6, and CP Statement 55-102CP [BCN - Rescinded]
| Published Date: | 2002-12-20 |
|---|---|
| Effective Date: | 2002-12-20 |
The Commission, together with the other members of the Canadian Securities Administrators (CSA), is publishing proposed amendments to National Instrument 55-102 System For Electronic Disclosure By Insiders (SEDI) (the National Instrument), Forms 55-102F1, 55-102F2, 55-102F3 and 55-102F6 (the Forms), and Companion Policy Statement 55-102CP (the Policy).
The Commission is seeking public comment on the proposed amendments to the National Instrument, the Forms, and the Policy. Due the different rule-making requirements in each jurisdiction, only British Columbia, Saskatchewan, and Quebec will publish these amendments for comment.
Each member of the CSA is expected to amend the National Instrument, the Forms, and the Policy. The amendments to the National Instrument and the Forms will be implemented as a rule, commission regulation, or policy in all jurisdictions with insider reporting requirements represented by the CSA.
In this Notice, the National Instrument, the Forms and the Policy are referred to collectively as the Instruments.
Notice of Amendments
The amendments to the Instruments are consequential housekeeping amendments resulting from a further review of SEDI after SEDI was suspended in January 2002 due to technical difficulties. These amendments do not materially change the Instruments.
The amendments to the Instruments may become effective on different dates in the various jurisdictions, depending on local rule and policy-making procedures. Therefore, each jurisdiction will announce their effective date of the amendments when they publish their notice of final approval of the amended Instruments and the final amended Instruments after they receive their respective regulatory approval.
In BC, the earliest possible effective date of the amendments will be after the 60-day public comment period and final approval of the Minister and the Commission.
Substance and Purpose of Amendments
SEDI is the insider trade reporting system to be available over the Internet at www.sedi.ca once the CSA announces that SEDI is again operational. It will replace paper-based reporting of insider trading data for insiders of SEDI issuers. SEDI will require insiders to file electronically their insider reports, and issuers to file electronically certain information, over the Internet, using the SEDI website. The public will also be able to search for and look at public information filed on SEDI over the same website.
SEDI was operational from October 29, 2001 to January 31, 2002 (Initial Period), but SEDI then had to be suspended due to technical difficulties. The Canadian Securities Administrators (CSA) in conjunction with CDS INC., the SEDI system developer and operator, plan to re-launch SEDI in stages once SEDI is ready to be again operational. The CSA intend to publish a staff notice that will advise market participants about the SEDI re-launch and notify insiders and issuers of the steps they should take to resume filing on SEDI.
Because of the technical difficulties during the Initial Period, data filed and collected during this period is not available for public inspection. SEDI issuers and their insiders (or their agents) who filed data on SEDI during the Initial Period will need to register again and file new and current issuer profile supplements or insider profiles on SEDI once SEDI is again operational. SEDI issuers and their insiders need to do this in order for insiders to meet their insider reporting obligations of filing their reports on SEDI.
The legal requirements for SEDI are contained in the National Instrument, six related Forms, 55-102F1 through F6, and the Policy. The purpose of the amendments to the Instruments is to implement changes made to SEDI as a result of the suspension of SEDI on January 31, 2002 and subsequent review of SEDI in light of the technical difficulties experienced at that time.
Summary of Amendments
In summary, the amendments:
- Add a new issuer profile supplement filing requirement for issuers that filed an issuer profile supplement on SEDI on or before January 31, 2002
- Expand the temporary hardship exemption
- Reduce the issuer profile supplement securities designation requirements by requiring issuers to designate only their outstanding securities that are held by insiders
- Make other minor changes to the Instruments.
National Instrument 55-102
1. Issuer Profile Supplement Filing Requirement
Section 7.3 is added to Part 7 and requires a SEDI issuer that filed an issuer profile supplement on or before January 31, 2002 to file a new and current issuer profile supplement not later than the date specified by the securities regulators in a public notice and published in a press release (the ‘Specified Date’).
‘Specified Date’, a new definition in section 1.1, means the date the regulator may specify in subsection 8.1(3). Subsection 8.1(3) is added to state that the Specified Date shall be the date set out in the securities regulators’ public notice and summarized in a press release. Such date shall not be less than eighteen days from the date of such public notice.
Currently, Part 7 requires an issuer that is a SEDI issuer on October 29, 2001 to file an issuer profile supplement within five days after that date. However, it does not contain a requirement to re-file this information if necessary. For the proposed re-launch of SEDI, this becomes a problem because during the period SEDI was operational from October 29, 2001 to January 31, 2002, the data filed and collected on SEDI is not available because of the technical difficulties SEDI experienced. Therefore, even if SEDI issuers registered and filed issuer profile information on SEDI during this period, they will have to register and file an issuer profile supplement once SEDI is again operational.
These proposed amendments to the National Instrument are designed to implement this requirement within a set period after the date of the notice of the re-launch. We decided to set the deadline for filing the issuer profile supplement this way, rather than by inserting a set date in the National Instrument itself, because it provides a flexible approach of specifying the deadline for filing. We decided this flexibility was necessary in case the proposed re-launch date is revised or the necessity to re-file another issuer profile supplement occurs after the proposed amended Instruments become effective.
Filing of Insider Profile
We determined that it was not necessary to include in the NI 55-102, as a legal obligation, a requirement to again register or file an insider profile for those who filed this data on SEDI during the Initial Period. These are only pre-conditions to meeting the legal obligations of filing an insider profile supplement or insider report. It will, however, be necessary to again register and file an insider profile after SEDI is re-launched.
2. Expansion of the Temporary Hardship Exemption
Subsection (6) is added to section 4.1 to create a new temporary hardship exemption if unanticipated technical difficulties prevent the timely filing of an amended insider profile, issuer profile supplement, amended issuer profile supplement, or issuer event report, provided such documents are filed as soon as practicable after the unanticipated technical difficulties have been resolved.
We believe that the temporary hardship exemption should be available for SEDI issuers, and not just insiders, in the event issuers have unanticipated technical difficulties, such as SEDI being unavailable due to a system failure. Therefore, the proposed amendments provide the exemption should be available if the unanticipated technical difficulties prevent SEDI issuers from making timely filings of an issuer profile supplement, amended issuer profile supplement, or issuer event report. In these cases as well as for an amended insider profile, an interim paper filing of the report is not required.
In addition, subsection 4.1(3) is amended to remove the requirement for an insider to file a power of attorney with any insider report filed in paper format by the agent of an individual insider using the temporary hardship exemption. However, for any insider that is not required to use SEDI for filings and files in paper format, the agent of an individual insider is still required to file a power of attorney with the insider report, as required in the instructions to Form 55-102F6. We believe that this requirement is not appropriate for use in connection with the temporary hardship exemption when all such insiders (or their agents) must then later re-file their insider report on SEDI. Their agency relationship should already be registered on SEDI from their initial SEDI registration requirements.
3. Designation of Issuer’s Securities Held by Insiders
The proposed amendments to paragraph (a) of subsection 2.3(3) will require a SEDI issuer to file an amended issuer profile supplement in SEDI format to add a security it has not previously designated only if an insider is a holder of that security. The rule currently requires SEDI issuers to amend its issuer profile supplement every time it issues a new security even if an insider does not hold it.
We are proposing this change because we feel that it is unnecessary and too onerous for SEDI issuers to designate all their outstanding securities if insiders do not hold them. This change also assists insiders by reducing the number of types of securities on the issuer’s list they have to choose from to select the appropriate security for reporting on the insider report form. However, for SEDI issuers to avoid continually amending their security designation list, we recommend that SEDI issuers designate all their publicly traded securities.
Form 55-102F3 is also amended to reflect this change when a SEDI issuer designates its securities in its issuer profile supplement. See the section below on changes to Form 55-102F3.
Form 55-102F1 Insider Profile
Item 11 - Date the insider became an insider or date of previous paper filing
Item 11 of Form 55-102F1 is amended to change the requirement that an insider provide either the date the insider became an insider or the date of the insider’s last paper filing in respect of the reporting issuer, and instead provide either the date the insider became an insider or the opening balance date. This opening balance date will be used as the date for all opening balances of securities of this reporting issuer. The opening balance date should be a date prior to the date of any transactions that will be reported for this reporting issuer on SEDI. The change is proposed to address the situation where a transaction is filed on SEDI with an earlier date than the transaction date reflected in the opening balance and SEDI’s balance calculation formula provides an incorrect balance.
Notice - Collection and Use of Personal Information
The street address of the Saskatchewan Securities Commission is amended to reflect a change of address. This change has also been made to the same address listed in the Notice - Collection and Use of Personal Information in Forms 55-102F2 and 55-102F3, and at the bottom of the Instructions to Form 55-102F6.
Form 55-102F2 Insider Report
Item 8 - Opening balance of securities (initial SEDI report only)
The second sentence of the second paragraph is deleted and a new sentence added. Therefore, rather than providing the “date of transaction” on this form, the insider will provide the date the insider became an insider or the date the insider entered for all opening balances for securities of this issuer. This change corresponds to the change made to item 11 of Form 55-102F1 Insider Profile.
Form 55-102F3 Issuer Profile Supplement
Item 7 - Security Designations
Item 7 is amended to require a SEDI issuer to designate only those securities held by an insider, not all outstanding securities. Insiders do not hold all securities of an issuer. Designating all outstanding securities, not just the ones held by insiders, is onerous and of limited additional value. Therefore, we believe it is appropriate to limit the requirement to require the issuer to designate only those outstanding securities held by insiders.
Form 55-102F6 Insider Report (Paper)
List of Codes
The list of codes is amended to add the following nature of transaction codes:
- Exercise for cash - 59 is added after “Expiration of rights - 58”
- Correction of information - 99 is added after “Other - 97”.
Code 59 is added to clarify that these options were not exercised for securities but for cash. Code 99 is added to clarify on the published summaries of reports that the insider report is a corrected one. Without the code 99, insiders either use code 97 (Other) or repeat the same transaction code and indicate the correction elsewhere on the form. This is misleading.
Companion Policy Statement 55-102CP
Schedule A
Schedule A is amended to indicate that the street address, postal code, facsimile and telephone number, and choice of correspondence in English or French of an insider, as reported on Form 55-102F6 (Insider Report - Paper), will not be made available to the public.
The securities regulatory authority or regulator, as applicable, determined to keep confidential this type of personal and certain other information reported on SEDI. Therefore, this proposed amendment to the Policy is to ensure that the protection of this type of information is provided for paper filings as well so that it is consistent the protection provided for SEDI filings.
Text of Amendments
The text of the amendments is attached.
How to Provide Your Comments
Please provide your comments by February 18, 2003. Please send your submissions to the British Columbia Securities Commission at the following address:
Pamela Egger
Senior Legal Counsel, Corporate Finance
British Columbia Securities Commission
PO Box 10142, Pacific Centre
701 West Georgia Street
Vancouver BC V7Y 1L2
Tel: (604) 899-6867
E-mail: pegger@bcsc.bc.ca
If you are not sending your comments by e-mail, please send a diskette containing your comments (in DOS or Windows format, preferable Word).
We cannot keep submissions confidential because securities legislation in certain provinces requires that a summary of the written comments received during the comment period be published.
For questions, please refer to any of:
Kathy Blevins
Legal Counsel
Alberta Securities Commission
Telephone: (403) 297-3308
E-mail: kathleen.blevins@seccom.ab.ca
Agnes Lau
Deputy Director, Capital Markets
Alberta Securities Commission
Telephone: (780) 422-2191
E-mail: agnes.lau@seccom.ab.ca
Andrew Richardson
Manager, Finance and Corporate Analysis
British Columbia Securities Commission
Telephone: (604) 899-6730
or (800) 373-6393 (in B.C. and Alberta)
E-mail: arichardson@bcsc.bc.ca
Pamela Egger
Senior Legal Counsel, Corporate Finance
British Columbia Securities Commission
Telephone: (604) 899-6867
or (800) 373-6393 (in B.C. and Alberta)
E-mail: pegger@bcsc.bc.ca
Cynthia Rogers
Senior Legal Counsel, Corporate Finance
Ontario Securities Commission
Telephone: (416) 593-8261
E-mail: crogers@osc.gov.on.ca
Winnie Sanjoto
Legal Counsel, Corporate Finance
Ontario Securities Commission
Telephone: (416) 593-8119
E-mail: wsanjoto@osc.gov.on.ca
Kelly Gorman
Senior Accountant
Ontario Securities Commission
Telephone: (416) 593-8251
E-mail: kgorman@osc.gov.on.ca
Sylvie Lalonde
Conseillere en reglementation
Commission des valeurs mobilieres du Quebec
Telephone: (514) 940-2199 ext. 4555
E-mail: sylvie.lalonde@cvmq.com
Elyse Turgeon
Conseillere juridique
Commission des valeurs mobilieres du Quebec
Telephone: (514) 940-2199 ext. 4523
E-mail: elyse.turgeon@cvmq.com
December 20, 2002
Douglas M. Hyndman
Chair
Ref: National Instrument 55-102 System For Electronic Disclosure By Insiders
Forms 55-102F1 Insider Profile
Forms 55-102F2 Insider Report
Forms 55-102F3 Issuer Profile Supplement
Forms 55-102F4 Issuer Event Report
Forms 55-102F5 SEDI User Registration Form
Forms 55-102F6 Insider Report
Companion Policy Statement 55-102CP System For Electronic Disclosure By Insiders
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.
AMENDMENTS TO NATIONAL INSTRUMENT 55-102
SYSTEM FOR ELECTRONIC DISCLOSURE BY INSIDERS
(SEDI)
PART 1 - AMENDMENTS
1.1 National Instrument 55-102 is amended by:
(a) adding the following definition to section 1.1 after the definition of “SEDI web site”:
“Specified Date” means the date the regulator may specify under subsection 8.1(3);”;
(b) adding the following to paragraph (a) of subsection 2.3(3) after the word “securities”:
“to any insider of the SEDI issuer”;
(c) adding the following to subsection 4.1(3) after the words “manual format”:
“and an agent may sign the paper format document on behalf of an insider who is an individual without filing a duly completed power of attorney”;
(d) adding the following subsection 4.1(6) after subsection 4.1(5):
“(6) If unanticipated technical difficulties prevent the timely filing of an issuer profile supplement, an amended issuer profile supplement, an issuer event report or an amended insider profile, a SEDI filer shall be exempt from filing such documents, provided that the SEDI filer files such documents as soon as practicable after the unanticipated technical difficulties have been resolved.”
(e) adding the following section 7.3 after section 7.2:
“7.3 Filing of Issuer Profile Supplement - Notwithstanding section 7.1 and subsection 2.3(1), a SEDI issuer that filed an issuer profile supplement in SEDI format on or before January 31, 2002 shall file a new and current issuer profile supplement in SEDI format not later than the Specified Date.”
(f) adding the following subsection 8.1(3) after subsection 8.1(2):
“(3) For purposes of section 7.3, the regulator shall set the Specified Date in a public notice given by the regulator and summarized in a press release, and such date shall not be less than eighteen days from the date that the regulator gives such public notice.”
1.2 Form 55-102F1 Insider Profile is amended by:
(a) deleting the title of item 11 and substituting “Date the insider became an insider or date of opening balance”;
(b) deleting the last sentence in item 11 and substituting: “Otherwise, provide an opening balance date. This opening balance date will be used as the date for all opening balances of securities of this reporting issuer. The opening balance date should be a date prior to the date of any transactions that will be reported for this reporting issuer in SEDI.”;
(c) deleting the street address for the Saskatchewan Securities Commission in the Notice - Collection and Use of Personal Information and substituting: “6th Floor, 1919 Saskatchewan Drive”.
1.3 Form 55-102F2 Insider Report is amended by:
(a) deleting the sentence that begins “The “date of the transaction” will be the date…” from the second paragraph of item 8 and substituting:
“The “Opening/initial balance date” will be the date the insider became an insider or the date the insider entered for all opening balances for securities of this issuer.”;
(b) deleting the street address for the Saskatchewan Securities Commission in the Notice - Collection and Use of Personal Information and substituting: “6th Floor, 1919 Saskatchewan Drive”.
1.4 Form 55-102F3 Issuer Profile Supplement is amended by:
(a) deleting from item 7 the words “being profiled” in the first sentence and substituting:
“that is held by an insider of the reporting issuer who has direct or indirect beneficial ownership of, or control or direction over, that security or class of security.”;
(b) deleting the street address for the Saskatchewan Securities Commission in the Notice - Collection and Use of Personal Information and substituting: “6th Floor, 1919 Saskatchewan Drive”.
1.5 Form 55-102F6 Insider Report is amended by:
(a) adding the following nature of transaction codes to the List of Codes:
(i) “Exercise for cash 59” after code 58, and
(ii) “Correction of information 99” after code 97;
(b) deleting the street address of the Saskatchewan Securities Commission at he bottom of the Instructions to Form 55-102F6 and substituting “6th Floor, 1919 Saskatchewan Drive.”
AMENDMENTS TO COMPANION POLICY 55-102CP
TO NATIONAL INSTRUMENT 55-102
SYSTEM FOR ELECTRONIC DISCLOSURE BY INSIDERS
(SEDI)
PART 1 - AMENDMENTS
1.1 Schedule A to Companion Policy 55-102CP is amended by adding the following paragraph at the end of Schedule A:
“Form 55-102F6 Insider Report
The following information filed in Form 55-102F6 Insider Report will not be made available for public inspection:
1. Insider’s address including postal code but excluding municipality (city, town, etc.), province, territory, state and/or country (Box 3)
2. Insider’s telephone number (Box 3)
3. Insider’s fax number (Box 3)
4. Correspondence in English or French”