Securities Law

LPS 3-14 - Applications for Insider Reporting Exemptions [Rescinded]

Published Date: 1993-09-10
Effective Date: 1993-09-09
Rescinded Date: 2001-05-15

PART 1 IMPLEMENTATION AND APPLICATION OF POLICY

1.1        Effective date - This local policy statement comes into effect on September 9, 1993.

1.2        Jurisdiction - The Commission and the Superintendent are each empowered to make orders under section 152.2(b) of the Regulation.  Any reference in this local policy statement to the Commission shall also be deemed to be a reference to the Superintendent.

1.3        Terms of Reference - Section l(l) of the Act includes as insiders of a reporting issuer the directors and senior officers of

(a)        the reporting issuer;

(b)        subsidiaries of the reporting issuer; and

(c)        corporations that are insiders of the reporting issuer.

As a result of the combined application of section 1(4) of the Act and paragraphs (b) and (c) of the definition of insider in section l(l) of the Act, the directors and senior officers of the following issuers are also deemed to be insiders of the reporting issuer:

(a)        affiliates of the reporting issuer; and

(b)        affiliates of a non-control insider.

1.4        Application of policy - This local policy statement sets out guidelines for applications under section 152.2(b) of the Regulation requesting exemptions from the requirements of section 70 of the Act to file insider reports with respect to the securities of a reporting issuer, for the directors and senior officers of

(a)        any affiliate of the reporting issuer; and

(b)        any affiliate of a non-control insider of the reporting issuer.

PART 2 DEFINITIONS

2.1        Defined terms - In this Policy Statement,

"Act" means the Securities Act, S.B.C. 1985, c.83;

"major affiliate" means, in relation to a reporting issuer

(a)        a  subsidiary of the reporting issuer that represents, on a consolidated basis together with its own subsidiaries, 10% or more of the consolidated assets or 10% or more of the consolidated sales or operating revenues of the reporting issuer;

(b)        a non-subsidiary affiliate of the reporting issuer that supplies to the reporting issuer or any of the reporting issuer's subsidiaries materials or services, the essential nature and scale of which are such that factors affecting that supply would, or would reasonably be expected to, have a significant effect on the market price or value of the securities of the reporting issuer; or

(c)        an affiliate of the reporting issuer that, either alone or in concert with

(i)         any other affiliate of the reporting issuer,

(ii)         any non-control insider of the reporting issuer, or

(iii)        any affiliate of any non-control insider of the reporting issuer,

controls the reporting issuer;

"major insider affiliate" means an affiliate of a non-control insider of a reporting issuer that

(a)        supplies to the reporting issuer or any of the reporting issuer's subsidiaries materials or services, the essential nature and scale of which are such that factors affecting that supply would, or would reasonably be expected to, have a significant effect on the market price or value of the securities of the reporting issuer; or

(b)        either alone or in concert with

(i)         any affiliate of the reporting issuer,

(ii)         any non-control insider of the reporting issuer, or

(iii)        any affiliate of any non-control insider of the reporting issuer

controls the reporting issuer;

"major individual insider" means a director or senior officer of an affiliate of a reporting issuer or an affiliate of any non-control insider of a reporting issuer that

(a)        is a director or senior officer of the reporting issuer;

(b)        receives, in the ordinary course, knowledge of material facts or material changes with respect to the reporting issuer prior to general disclosure of these facts or changes; or

(c)        has direct or indirect beneficial ownership of, or control or direction over, or a combination of that ownership of and control or direction over, securities of the reporting issuer extending to securities carrying more than 10% of the voting rights attached to all of the reporting issuer's outstanding voting securities;

"non-control insider" means any corporate insider of the reporting issuer that is not an affiliate of the reporting issuer;

"non-subsidiary affiliate" means an affiliate of a reporting issuer that is not a subsidiary of the reporting issuer; and

"Regulation" means the Securities Regulation, B.C. Reg. 270/86.

2.2        Terms defined in legislation - Terms defined in the Act, the Regulation and the Interpretation Act, R.S.B.C., 1979, c. 206, and used in this local policy statement have the same meaning as in the Act, the Regulation and the Interpretation Act.

PART 3 APPLICATION FOR EXEMPTION

3.1        Scope of application - An application may be made under this local policy statement for an order exempting the directors and senior officers of

(a)        the subsidiaries of a reporting issuer, as a group;

(b)        the non-subsidiary affiliates of a reporting issuer, as a group;

(c)        the affiliates of the reporting issuer, as a group; or

(d)        the affiliates of a non-control insider of a reporting issuer, as a group.

3.2        Scope of order - The Commission will generally issue an order exempting the directors and senior officers of

(a)        an affiliate of a reporting issuer, other than a major affiliate, and

(b)        an affiliate of a non-control insider of the reporting issuer, other than a major insider affiliate,

from the insider reporting requirements of section of section 70 of the Act.  Notwithstanding the foregoing, no director or senior officer of

(a)        an affiliate of a reporting issuer, and

(b)        an affiliate of a non-control insider of the reporting issuer

shall be exempt from the insider reporting requirements of section 70 of the Act if the director or senior officer is a major individual insider.

PART 4 PROCEDURE

4.1        Addressee - Applications under this local policy statement should be addressed to the Deputy Superintendent, Exemptions and Orders.

4.2        Procedure - The application should include:

(a)        particulars relevant to the type of order requested concerning the corporate structure of the reporting issuer, its affiliates and the affiliates of any of its non-control insiders, showing the relevant percentages of voting rights controlled by or of each by way of

(i)         narrative description, and

(ii)         organization chart;

(b)        a list relevant to the type of order requested of

(i)         each affiliate of the reporting issuer that is a major affiliate, and

(ii)         each affiliate of a non-control insider of the reporting issuer that is a major insider affiliate; and

(c)        an undertaking by the applicant to the Commission that, in the event an order is issued under section 152.2(b) of the Regulation, the applicant will

(i)         maintain a continuous review of the directors and senior officers exempted by the order,

(ii)         file promptly with the Information and Records branch of the Commission an amended list of each major affiliate and major insider affiliate, as the case may be, whenever a change to the list occurs, and

(iii)        furnish, upon the request of the Commission any information reasonably necessary to determine whether any director or senior officer is exempted by the order.

PART 5 OTHER CIRCUMSTANCES

5.1        General - Part 3 should enable the Commission to deal with most of the applications contemplated under this local policy statement.  The Commission however, is prepared to apply the general principles of  this local policy statement in other circumstances. In these circumstances, applicants should include all relevant facts and arguments in their applications.

PART 6 EFFECT OF ORDER

6.1        Effect of order - Any order issued under section 152.2(b) of the Regulation pursuant to this local policy statement is an exemption only from the requirement to file insider reports concerning trading by the exempted insider in securities of the reporting issuer and does not exempt the exempted insider from:

(a)        compliance with section 68 of the Act (trading or informing where undisclosed change) and section 119 of the Act (liability in special relationship where material fact or change undisclosed);

(b)        any insider reporting requirement under section 70 of the Act that arises by reason of the exempted insider having some other relationship with the reporting issuer that is not exempted by the order; and

(c)        any other applicable provision of the Act or the Regulation.

 

DATED at Vancouver, British Columbia, on September 9, 1993.

 

Douglas M. Hyndman
Chair