BCN 2011/22 - Form 45-106F6 British Columbia Report of Exempt Distribution and amendments to National Instrument 45-106 Prospectus and Registration Exemptions [BCN - Lapsed]
- 13-502CP - Electronic filing of reports of exempt distribution [CP Amendment Advance Notice - Lapsed]
- 45-106 - Prospectus and Registration Exemptions [NI Amendment Advance Notice - Lapsed]
- 45-106CP - Prospectus and Registration Exemptions [CP Amendment Advance Notice - Lapsed]
- 45-106F6 - British Columbia Report of Exempt Distribution [F Advance Notice - Lapsed]
- 45-529 - Bonus or Finder’s Fee [BCI Advance Notice - Lapsed]
- 72-503 - Distribution of Securities outside British Columbia [BCI Advance Notice - Lapsed]
- 72-504 - Distribution of Eurobonds [BCI Advance Notice - Lapsed]
Effective October 3, 2011, the Commission is adopting
- Form 45-106F6 British Columbia Report of Exempt Distribution (the BC form)
- amendments to National Instrument 45-106 Prospectus and Registration Exemptions (the rule amendments)
- amendments to Companion Policy 45-106CP (the policy amendments)
- consequential amendments to
- BC Companion Policy 13-502CP Electronic filing of reports of exempt distribution
- BC Instrument 45-529 Bonus or finder’s fee
- BC Instrument 72-503 Distribution of securities outside British Columbia
- BC Instrument 72-504 Distribution of Eurobonds
The BC form replaces the existing form, Form 45-106F1 Report of Exempt Distribution, for distributions in British Columbia that occur on or after October 3, 2011.
We published the BC form, rule amendments and policy amendments for comment on September 9, 2010 (BCN 2010/26). On July 7, 2011, the Minister consented to adopt the BC form and rule amendments.
Until October 3, 2011, when an issuer sells securities under certain exemptions in NI 45-106, it must file an exempt distribution report using the existing form.
Reports filed by issuers using the existing form are available on our website, except for Schedule I that includes the names of purchasers, their contact information and particulars of their purchases, including the exemption relied on.
The BC form and rule amendments
The BC form differs from the existing form in the following ways:
- non-reporting issuers will be required to disclose the following information about each insider and promoter of the issuer:
- name, municipality and country of residence
- positions held with the issuer (e.g., director, officer or holder of more than 10% of voting securities)
- number and type of securities owned or controlled
- total price paid for the securities
- issuers will be required to provide information about whether purchasers or finders are registrants or insiders of the issuer
- investment funds that are managed by an investment fund manager registered in a jurisdiction of Canada will not be required to provide information about their insiders, promoters or purchasers
- the Commission will publish BC forms filed by issuers on our website, including information about non-individual purchasers
- the Commission will make certain information about individual purchasers available for inspection at the Commission’s office, including
- the name of the individual purchaser
- the number of securities purchased
- whether the individual purchaser is an insider of the issuer or a registrant
- the price paid for the securities
The rule amendments include a new section that restricts the use of information about individual purchasers accessed at the Commission’s office to research for investment purposes only (the prohibition).
Significant issues raised by the comments
We received 39 comments. The commenters’ names and a summary of their comments, together with our responses, are in Schedule A to this notice. We received support for more disclosure, confirming our view that increasing transparency in the exempt market would help investors by
- providing them with information that would assist them in performing due diligence on an issuer
- leveling the playing field between ordinary investors and insiders and promoters
Some commenters expressed concern that because personal privacy was not sufficiently protected, capital raising in BC would be impaired. Recognizing there are legitimate personal privacy concerns, we concluded that individual purchaser information will only be available at our office and use of the information will be limited through the prohibition. The media will have an exemption from the prohibition to allow them to use the information for legitimate publications.
Summary of key changes to BC form since publication for comment
After considering the comments, we made the following changes to the BC form and the rule amendments:
- to allay personal privacy concerns, we did two things – individual purchaser information will be available only at our offices and will be subject to the prohibition
- all non-individual purchaser information, including their contact information, which is available under the Freedom of Information and Protection of Privacy Act, will be disclosed on our website
- investment funds that are managed by registered managers will not be required to disclose information about their insiders, promoters or purchasers
- consistent with the requirement that issuers identify whether purchasers are insiders or registrants, we will also require issuers to identify whether finders are insiders or registrants
Summary of rule, policy and consequential amendments
- The rule amendments impose the prohibition and require an issuer to use the BC form for reporting distributions made using exemptions in British Columbia.
- The policy amendments clarify how issuers would report a distribution in both British Columbia and another jurisdiction.
- The consequential amendments recognize the adoption of the BC form and clarify that the BC form is also required when relying on exemptions from the prospectus requirement set out in certain local instruments.
In September the BCSC will host a free E-Services webinar training session to review changes to the form and on-line filing procedures. Please watch for registration and details of the web session in early September.
Timing and transition
An issuer distributing securities in British Columbia under prospectus exemptions on or after October 3, 2011 will be required to use the BC form.
Investment funds that report their exempt distributions on an annual basis may continue to use the existing form until their next financial year.
You may refer questions to:
Senior Legal Counsel
British Columbia Securities Commission
(800) 373-6393 (toll free across Canada)
August 10, 2011
Brenda M. Leong