LPS 3-15 - Exempt Purchaser Status [Rescinded]
PART 1 IMPLEMENTATION
1.1 Local Policy Statement 3-15 dated February 1, 1987 is rescinded and the following substituted therefor, effective July 15, 1989.
1.2 The terms defined in the Securities Act, S.B.C. l985, c.83 (the "Act") and the Securities Regulation, B.C. Reg. 270/86 (the "Regulation"), and used in this local policy statement have the same meaning as in the Act and the Regulation.
PART 2 APPLICATION
2.1 This local policy statement sets out guidelines for an application to the Superintendent of Brokers (the "Superintendent") for designation as an exempt purchaser.
2.2 Sections 31(2)(4) and 55(2)(3) of the Act provide exemptions from the registration and prospectus requirements contained in sections 20 and 42 of the Act in connection with a trade in securities where a person
(a) is purchasing as principal,
(b) is not an individual, and
(c) is designated as an exempt purchaser in an order of the Superintendent made for the purpose of sections 31(2)(4) and 55(2)(3).
For the purposes of the exempt purchaser exemption, a person is deemed to purchase as principal when it makes purchases either for its own account or for managed accounts over which it has absolute discretion as to purchasing and selling, and in respect of which it receives no specific instructions from any person beneficially interested in such accounts, or from any other person.
2.3 The exempt purchaser exemption is intended to enable issuers to distribute securities on an exempt basis to persons who do not fall within the categories of purchasers contained in sections 31(2)(2) and 55(2)(1) of the Act, but who are able to make investment decisions on their own behalf and do not require the information contained in and the protection provided by a prospectus.
2.4 Under the exempt purchaser exemption, the issuer is not required to provide a disclosure document to the exempt purchaser and no minimum dollar amount or number of securities are required to be purchased. However, the securities are subject to a 12 month hold period pursuant to sections 133(2) and 134(2) of the Regulation.
PART 3 CRITERIA FOR DESIGNATION AS AN EXEMPT PURCHASER
3.1 All applicants for exempt purchaser status will be required to meet the requirements of this local policy statement, both in the case of an initial application and an application for renewal.
3.2 In order for an applicant to be designated as an exempt purchaser, the Superintendent must be satisfied that the applicant is a financial institution that carries on the business of investing in securities on its own behalf or on behalf of others on a discretionary basis.
3.3 For the purposes of paragraph 3.2, a financial institution includes a bank, trust company, credit union, insurer, mutual fund, pension fund or investment fund.
3.4 In certain instances, banks, trust companies, credit unions and insurers conduct their investment activities through subsidiaries. In these situations, application for exempt purchaser status may be made by the subsidiary, provided it is wholly owned by one or more financial institutions.
3.5 In the case of a mutual fund, pension fund or investment fund, application for exempt purchaser status may be made by the fund. Exempt purchaser status will not be granted to the fund manager.
PART 4 APPLICATION PROCEDURE
4.1 The application should be addressed as follows:
Deputy Superintendent, Exemptions and Orders
British Columbia Securities Commission
1100-865 Hornby Street
4.2 The following documents must be filed in support of an application for exempt purchaser status or renewal of exempt purchaser status:
(a) a completed and signed Application for Exempt Purchaser Status (Form 11), in the form attached to this local policy statement;
(b) an annual report relating to the applicant's most recently completed fiscal year, such report to include:
(i) audited financial statements,
(ii) a description of the applicant's business,
(iii) a directors' report or management report on the business of the applicant, and
(iv) a list of the applicant's senior officers or executives, detailing their current functions, provided that where the applicant is a subsidiary of a financial institution, the annual report of the parent of the applicant should also be filed;
(c) the application fee prescribed in section l83 of the Regulation by way of a cheque made payable to the "Minister of Finance"; and
(d) a completed Fee Checklist in the prescribed form.
4.3 To avoid delay, an English translation of all documents required by paragraph 4.2 should accompany any documents that are not in English.
4.4 Where any of the documents required under paragraph 4.2 are not being submitted, a covering letter should describe the documents and explain why they are not being submitted.
4.5 Designation as an exempt purchaser remains in effect for 12 months. In order to maintain continuous designation as an exempt purchaser, exempt purchasers seeking to renew their status are encouraged to submit the documents referred to in paragraph 4.2 at least six weeks before the expiry date of their current designation.
DATED at Vancouver, British Columbia, this 7th day of July 1989.
Douglas M. Hyndman