Securities Law

BCN 2003/10 - Proposed Amendments to Securities Rules and other Instruments to Reduce Regulatory Burden [BCN - Rescinded]

Published Date: 2003-03-28
Effective Date: 2003-03-28

Background
The British Columbia Securities Commission has established a two-year deregulation project to ensure we impose the minimum regulatory burden necessary to protect investors and market integrity. The project’s publications to date are available on our website at www.bcsc.bc.ca/bcproposals.

As part of our goal of reducing regulatory burden, the Commission has completed a detailed review of all securities regulation. We will publish comprehensive draft legislation based on this work in April of this year.

In the meantime, we have identified a number of rules and other instruments that can be eliminated now. These amendments will reduce the regulatory burden on BC market participants, reduce the number of regulatory requirements under BC securities legislation, and clean-up outdated provisions without compromising market integrity and investor protection.

Securities Rules Amendments
We propose to repeal the following Securities Rules because they are unnecessary or redundant:

  • the definition of “finance issuer” in section 1,
  • section 46 Investment Dealer’s and Mutual Fund Dealer’s Guidelines,
  • section 63 Salespersons Employed other than Fulltime, and
  • section 150 Financial Statements - Finance Issuer.

We propose to amend the following Securities Rules:

  • Section 7 Underwriter Membership in a Self-Regulatory Body or Exchange, to eliminate the alternative that an underwriter be a member of an exchange.  All underwriters must be members of the IDA.
  • Section 86 Investment Dealer Acting as Portfolio Manager, to provide that investment dealers do not have to register as underwriters under section 34(1)(b) or as portfolio managers (if they follow the IDA’s portfolio manager requirements) under section 34(1)(c) of the Securities Act.
  • Section 139 Report on Distribution, to eliminate the requirement to file a report where the exemption used for the distribution is not a capital raising distribution. We will also extend the filing deadline for mutual fund issuers distributing securities under section 74(2)(19) of the Securities Act from 10 days after the calendar year end to 30 days after the issuer’s financial year-end as the Commission routinely grants this relief on a discretionary basis.

The proposed amendments to the Securities Rules are attached to this notice.

Registration Transfer Rules Amendments
We are proposing to amend the Registration Transfer Rules to eliminate all references to the Vancouver Stock Exchange. We are also proposing to amend section 4, which sets out the process for registration applications to the IDA to eliminate duplication between IDA requirements and Securities Act requirements, and to eliminate the reference to a “non-objection” for IDA rule approval. The proposed amendments to the Registration Transfer Rules are attached to this notice.

BC Instruments
We have eliminated the following outdated BC instruments:

  • BC Instrument 31-501 Registration of Brokers and Investment Dealers,
  • BC Instrument 52-506 Exemption for Finance Issuers from the Requirement to Report, and
  • BC Instrument 81-501 MER Transitional Relief.

BC Policies
We have amended the following BC Policies:

  • BC Policy 12-603 Reactivation of Dormant Issuers, to delete reference to Form 51-902F (formerly Form 4B) Personal Information for Directors, Officers, Promoters, and Control Persons as it has been eliminated;
  • BC Policy 13-601 Required Forms, to delete reference in the policy and attached Index of BC Forms to:
    • Form 43-901F Technical Report on Oil and Gas Properties;
    • Form 45-905F Offering Memorandum - Immigrant Investor Program;
    • Form 51-902F Personal Information for Directors, Officers, Promoters, and Control Persons; and
    • Form 51-903F Annual Filing of Reporting Issuer as these have been eliminated; and
  • BC Policy 41-601 Prospectus Filing Requirements, to delete reference to Form 51-902F (formerly Form 4B) Personal Information for Directors, Officers, Promoters, and Control Persons as it has been eliminated.

BC Forms
We have eliminated the following forms:

  • Form 43-901F Technical Report on Oil and Gas Properties,
  • Form 45-905F Offering Memorandum - Immigrant Investor Program,
  • Form 51-902F Personal Information for Directors, Officers, Promoters, and Control Persons (formerly Form 4B), and
  • Form 51-903F - Annual Filing of Reporting Issuer. We have published BCI 51-506, which provides relief for all reporting issuers from section 184(2) of the Securities Rules, which requires reporting issuers to file Form 51-903F.

BC Policy 12-603 and BC Policy 41-601 have been amended to explain that issuers are now required to file with the Commission the Personal Information Form filed with the exchange on which the issuer is listed.  If the issuer is not listed, then the issuer must file the form required by the TSX Venture Exchange for its listed companies. 

National Policies
We have rescinded the following outdated National Policies in British Columbia:

  • National Policy 14 Acceptability of Currencies in Material Filed with Securities Regulatory Authorities; and
  • National Policy 27 Canadian GAAP.

These National Policies will remain available on our website under Historical Commission Documents. We have also published BCIN 52-703, which provides streamlined guidance for issuers on currencies.

CSA Notices and Staff Notices
We have rescinded the following outdated CSA Notices and Staff Notices in British Columbia:

  • CSA Notice 33-304 CSA Distribution Structures Paper,
  • CSA Staff Notice 51-301 Conversion of Corporate Issuers to Trusts,
  • CSA Notice 52-401 CSA Discussion Paper - Financial Reporting in Canada’s Capital Markets,
  • CSA Notice 81-306 Disclosure by Mutual Funds of in Expenses in Calculation of MER,
  • CSA Notice 90/01 Audit Committees,
  • CSA Notice 92/01 Soft Dollar Transactions,
  • CSA Notice 92/03 Bought Deal Financings,
  • CSA Notice 93/02 Bought Deals,
  • CSA Notice 93/03 Pre-Marketing Activities in the Context of a Bought Deal, and
  • CSA Notice 93/04 Bought Deals.

These CSA Notices and Staff Notice will remain available on our website under Historical Commission Documents.

Documents Published for Comment
We invite you to comment on the proposed amendments to the Securities Rules and Registration Transfer Rules.

Please submit your comments in writing on or before May 27, 2003 to:

Leslie Rose
Senior Legal Counsel, Legal & Market Initiatives
British Columbia Securities Commission
PO Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, BC  V7Y 1L2
Fax: (604) 899-6814
E-mail: lrose@bcsc.bc.ca

Comment letters will be placed in a public file and form part of the public record, unless you request confidentiality. Although we will not place comment letters requesting confidentiality in the public file, freedom of information legislation may require us to make comment letters available. If you submit a comment letter you should be aware that the press and members of the public may be able to obtain access to your letter.

If you have any questions, please contact:

Leslie Rose
Senior Legal Counsel, Legal & Market Initiatives
British Columbia Securities Commission
Telephone: (604) 899-6654
E-mail: lrose@bcsc.bc.ca

Sandy Jakab-Hancock
Senior Legal Counsel, Deregulation Project
British Columbia Securities Commission
Telephone: (604) 899-6869
E-mail: shancock@bcsc.bc.ca


March 28, 2003

 


Douglas M. Hyndman
Chair


Ref: BCI 31-501
BCI 51-506
BCI 52-506
BCI 81-501
BCP 12-603
BCP 13-601
BCP 41-601
BCIN 52-703
Form 43-901F
Form 45-905F
Form 51-902F (formerly Form 4B)
Form 51-903F
NP 14
NP 27
CSA Notice 33-304
CSA Staff Notice 51-301
CSA Notice 52-401
CSA Notice 81-306
CSA Notice 90/01
CSA Notice 92/01
CSA Notice 92/03
CSA Notice 93/02
CSA Notice 93/03
CSA Notice 93/04


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.


Appendix A

Proposed Amendments to the Securities Rules


PART 1
Interpretation

Amend section 1(1)
by repealing the following definition:
“finance issuer”


PART 5
Registration

Repeal section 7 and replace it with:
Investment dealer is an underwriter

7. An underwriter must be a member of the Investment Dealers Association of Canada.

Repeal section 46

Repeal section 63


PART 6
Exemption from Registration Requirements

Repeal section 86 and replace it with:
Registration exemptions for IDA members

86. (1) An investment dealer is exempt from the requirement to register under section 34(1)(b) of the Act.
(2) An investment dealer or a partner, director, officer or salesperson of the investment dealer is exempt from registration as an adviser under section 34 (1) (c) of the Act if that person follows the portfolio manager or discretionary account management bylaws, regulations, policies, or other regulatory instruments, or both, of the Investment Dealers Association of Canada.


PART 10
Exemptions from Prospectus Requirements

Repeal subsection 139 and replace it with:
Report on distribution

139  (1) In this section, “financial institution” means a savings institution or a trust company, loan company or credit union carrying on business in Canada.
(2) Subject to subsections (3) and (4), if an issuer distributes a security under section 74 (2) (2) to (5), (16) (i), (18) or (23)) of the Act or section 128 (e) to (f) of these rules, the issuer must file a report in the required form on or before the 10th day after the distribution.
(3) An issuer is not required to file the report required under subsection (2) if the issuer distributes, under section 74 (2) (4) of the Act, an evidence of indebtedness to a financial institution as security for a loan made by the financial institution to the issuer.
(4) An issuer that distributes a security under section 74 (2) (19) of the Act must file a report in the required form not later than 30 days after the end of the issuer’s financial year in which the distribution took place.


PART 12
Continuous Disclosure

Repeal section 150

 

Proposed Amendments to the Registration Transfer Rules


Repeal section 3 and replace it with:
Application
3. A person must apply to the designated organization for registration or renewal of, reinstatement of, or amendment to registration as
(a) an investment dealer,
(b) a trading partner, director or officer of an investment dealer, or
(c) a salesperson of an investment dealer.


Repeal section 4 and replace it with:
4. (1) If a member of the designated organization applies and pays the prescribed fee, the designated organization may, subject to subsection (2),
(a) register an investment dealer or a trading partner, director, or officer or salesperson of an investment dealer,
(b) renew, reinstate, or amend a registration,
(c) restrict a registration or a renewal, reinstatement, or amendment of registration by imposing terms and conditions on the registration.

(2) Before granting a registration or renewal, reinstatement, or amendment application, the designated organization must be satisfied that the applicant
(a) meets the proficiency and other qualification requirements in the designated organization’s by-laws, regulations, policies, and other regulatory instruments, and
(b) is suitable for the registration.

(3) The designated organization may refuse an application if it is not satisfied that the applicant meets the requirements in subsection (2).

(4) The designated organization must not exercise a power under subsection (1)(c) or (3) without giving the applicant an opportunity to be heard.

 

 


Revocation Order

Revocation of BCI 31-501, BCI 52-506 and BCI 81-501


The British Columbia Securities Commission orders that BCI 31-501 Registration of Brokers and Investment Dealers, BCI 52-506 Exemption for Finance Issuers from the Requirement to Report, and BCI 81-501 MER Transitional Relief  issued under the Securities Act are revoked effective March 27, 2003.


March 27, 2003

 


Douglas M. Hyndman
Chair

 

 

 

 


(This part for administrative purposes only and is not part of the Order)

Authority under which Order is made:
Act and sections:- Securities Act, section 171
Other (specify):