LPS 3-24 - (Interim) Statutory and Discretionary Exemptions [Rescinded]
1.1 Effective Date
Local Policy Statement 3-24 dated February 1, 1987, is rescinded and the following substituted, effective January 1, 1996.
1.2 Terms Defined in Legislation
Terms defined in the Securities Act, S.B.C. 1985, c. 83 (the "Act") and the Securities Rules, B.C. Reg. 479/95 (the "Rules") and used in this policy have the same meaning as in the Act and Rules.
2.1 Registration and Prospectus Requirements
The Act applies to any trade of a security in British Columbia, whether or not the issuer of the security is a reporting issuer under the Act. Section 20 of the Act prohibits a person from, among other things, trading in a security unless that person is registered. Section 42 of the Act requires the use of a prospectus for any distribution of securities in British Columbia.
2.2 Exemptions from Registration and Prospectus Requirements
Parts 5 and 8 of the Act and Rules provide exemptions from the registration and prospectus requirements of the Act. Sections 33 and 59 of the Act also give the Commission and the Executive Director the power to issue discretionary orders to exempt trades, intended trades, securities and persons from the registration and prospectus requirements of the Act when it is not prejudicial to the public interest to do so.
In most cases, each prospectus exemption has a corresponding registration exemption and, in using this policy, the principles stated for a particular prospectus exemption should also be applied to its corresponding registration exemption.
2.3 Multi-Jurisdictional Trades and Distributions
A trade or distribution can occur in more than one jurisdiction and, if it does, the issuer must comply with the rules of each jurisdiction in which the trade or distribution occurs. For example, where an issuer resident in British Columbia distributes securities to a purchaser who resides in California, the issuer must comply with the laws of British Columbia, California and the United States. If neither party to a trade is located in British Columbia and no acts in furtherance of the trade occur in British Columbia, B.C. laws do not apply to the trade. Since "trade" is defined broadly in the Act and includes any act, advertisement, solicitation, conduct or negotiation in furtherance of a trade, an issuer or other person engaged in a trade should consider consulting legal counsel regarding compliance with the laws of all applicable jurisdictions.
2.4 Scope of Policy
This policy sets out guidelines for using certain statutory exemptions from the registration and prospectus requirements of the legislation.
This policy also describes how to apply for discretionary orders from the Commission and the Executive Director and, where indicated in italics, discusses some examples of how the Commission and the Executive Director may exercise their discretion in certain circumstances.
3. STATUTORY EXEMPTIONS - GENERAL
3.1 Responsibility for Compliance
It is the responsibility of the person using an exemption to determine that the exemption relied on is available in the circumstances. It is also the responsibility of the person using the exemption to retain the documents necessary to show that the person properly relied on an exemption. Where a person improperly relies on an exemption, the trade or distribution may be illegal and could expose those involved to prosecution, administrative sanctions or civil proceedings for damages or rescission.
3.2 Cease Trade Orders
When an issuer's securities are subject to a cease trade order issued under the Act, the statutory exemptions cannot be used to trade those securities.
3.3 Filing and Other Requirements
In connection with the use of an exemption, the legislation may require the filing of an offering memorandum or a report of the distribution, or the obtaining of an acknowledgment from the purchaser. Please see Part 19 of this policy for a discussion of these requirements.
3.4 Meaning of Exchange Issuer
The Rules contain several exemptions that are available only to exchange issuers. An exchange issuer is an issuer whose securities are listed on the Vancouver Stock Exchange (the "VSE") but on no other exchange or trading or quotation system in Canada. For example, an issuer that is listed on both the VSE and The Toronto Stock Exchange is not an exchange issuer. However, an issuer that is listed on the VSE and whose securities are quoted on NASDAQ is an exchange issuer. An issuer remains an exchange issuer even if trading in its securities has been halted or suspended. It does not remain an exchange issuer if its securities have been delisted from the VSE. (Refer to section 1 of the Act, Local Policy Statement 3-44 and BOR#88/20.)
3.5 Use of Multiple Exemptions
An issuer may use more than one exemption in connection with the distribution of its securities to purchasers on the same date. For example, an issuer may use section 55(2)(4) of the Act for some purchasers and section 128(b) of the Rules for others. Where more than one exemption is being used, the issuer must ensure that the statutory exemptions are compatible. For example, the concurrent use of section 128(a) of the Rules, which prohibits advertising, with section 128(b), which permits advertising, would be inappropriate where the offering under section 128(b) is advertised. A distribution under section 128(b), where the offering has been advertised, would preclude the issuer from using the exemption under section 128(a) for a period sufficient to ensure that the advertising did not influence purchasers or potential purchasers for the offering under section 128(a).
3.6 Baskets of Securities
An issuer may wish to distribute to a purchaser more than one security of its own issue, such as shares and debt, under an exemption that requires the securities being distributed to have a prescribed minimum acquisition cost, such as the $97,000 exemption in section 55(2)(4) of the Act. So long as the shares and debt are sold in units that have an aggregate acquisition cost of not less than $97,000, the exemption in section 55(2)(4) can be used, notwithstanding that the shares and debt, taken separately, have an acquisition cost of less than $97,000.
The same rationale applies where the issuer is using another exemption that requires the acquisition cost of the securities or the fair value of purchased assets to be of a minimum prescribed amount, such as the $25,000 exemptions in sections 128(b) and 128(c) of the Rules, and the $100,000 asset exemption in section 55(2)(5) of the Act.
A discretionary order has been issued in the following circumstances:
(a) a purchaser is purchasing the securities of more than one issuer for an aggregate acquisition cost that is not less than $97,000;
(b) one or more of the issuers is issuing securities for an acquisition cost of less than $97,000; and
(c) the proceeds of the distribution will be used in a single business enterprise where the management of each of the issuers is substantially the same.
3.7 Portfolio Manager and Others Purchasing as Principal
Under sections 29(l) and 55(l) of the Act, a trust company, an insurer or a portfolio manager is deemed to be acting as principal when purchasing for accounts that are fully managed by it. As a consequence, an issuer may distribute securities under sections 31(2)(5) and 55(2)(4) of the Act to a trust company, an insurer or a portfolio manager that purchases securities having a cost of less than $97,000 for each of several accounts fully managed by it, so long as the aggregate acquisition cost of the securities purchased for all the accounts is not less than $97,000.
A "portfolio manager" in sections 29(1) and 55(1) of the Act must be a portfolio manager in British Columbia and thus must either be registered or exempted from registration under the Act. Similarly, in accordance with the definitions in the Interpretation Act, a "trust company" or "insurer" (insurance company) in section 55(1) of the Act must be a trust company or insurer authorized to carry on business in British Columbia. BOR#95/12 provides a parallel discretionary exemption for a portfolio manager registered or exempted from registration in another Canadian province or territory and a trust company or insurer authorized to carry on business in another Canadian province or territory, where the portfolio manager, trust company or insurer is purchasing securities for accounts that are fully managed by it.
3.8 "Persons" Created Solely to Use Exemptions
Under section 1(1) of the Act, a "person" includes a corporation, partnership, trust, fund, association and any other organized group of persons. The Commission takes the position that it would be abusive for a "person" to be created solely, or used primarily, to permit a group of individuals to purchase securities without a prospectus unless the issuer could use an exemption to distribute its securities to each individual.
For example, if the person was created solely, or used primarily, to purchase securities without a prospectus, then in order for the person to use an exemption each of the individuals who form part of the group must:
(a) where the issuer is using the $97,000 exemption in sections 31(2)(5) and 55(2)(4) of the Act, purchase securities having an aggregate acquisition cost of at least $97,000;
(b) where the issuer is using the $25,000 exemptions in sections 89(b) and 128(b) and (c) of the Rules, purchase securities having an aggregate acquisition cost of at least $25,000;
(c) where the issuer is using the asset exemption in sections 31(2)(6) and 55(2)(5) of the Act, contribute assets having a fair market value of at least $100,000; and
(d) where the issuer is using the 50 purchasers exemption under sections 89(a) and 128(a) of the Rules, be counted separately in calculating whether sales have been made to not more than 49 different purchasers during the 12 month period preceding the trade.
Where purchases are being made on behalf of family members, the family can be counted as a single purchaser only where there is a single investment decision being made and the investment is made from a single pool of funds. In that case, the person making the investment decision must meet all the requirements of the exemption. Where each member of a family is making a separate investment decision, each member of the family must meet all the requirements of the exemption.
3.9 Transfer of Securities Into RRSP
A transfer of securities into the transferor's registered retirement savings plan ("RRSP") is not a trade as it involves no change of beneficial ownership. Accordingly, the transfer does not require the use of a statutory exemption or discretionary order. However, a transfer of securities into a spousal RRSP is a trade and therefore a registrant must be used or a registration exemption found.
3.10 Reliance on Registration Exemption
Certain exemptions from the registration requirement in section 20(1)(a) of the Act, such as that set out in section 89(b) of the Rules, are available to an issuer making a trade in a security of its own issue. Where an issuer is relying on such a registration exemption, persons acting on behalf of the issuer in connection with that trade (such as directors, officers, employees and agents) may also rely on the issuer's registration exemption, as long as they have not had their ability to rely on that exemption restricted under sections 22(1)(c) or 144 of the Act. However, the issuer and persons acting on its behalf should note that the exemptions are only from the requirement to be registered to trade in securities and not from the requirement to be registered to act as an adviser. Section 30 of the Act and BOR#95/15 contain certain limited exemptions from the requirements to register as an adviser.
4. PRIVATE ISSUER EXEMPTION: SECTIONS 32(j) AND 58(1)(a) OF THE ACT
4.1 Statutory Framework
Sections 32(j) and 58(l)(a) of the Act provide registration and prospectus exemptions where the trade is in securities of a private issuer and the securities are not offered for sale to the public. In order for an issuer to be a private issuer it must meet the requirements of the definition of private issuer in section 1(1) of the Act. These exemptions allow both the private issuer and a holder of its securities to trade without registration or a prospectus.
4.2 Meaning of "The Public"
The common law interpretation of the public, in the context of securities trading, is very broad. Whether a person is a member of the public must be determined on the facts of each case based on the "need to know" and "common bonds" tests that have developed in the common law. Without limiting the circumstances in which a person would not be a member of the public, the Commission takes the position that, for the purposes of the definition of private issuer in section 1(1) of the Act and the exemption in section 32(j) of the Act, the following persons are not considered members of the public:
(a) a person already holding the issuer's securities on the date of the trade,
(b) a spouse, parent, brother, sister or child of the person making the trade,
(c) a director, officer or employee of the issuer,
(d) a spouse, parent, brother, sister or child of a director or officer of the issuer, and
(e) a company, all of the voting securities of which are beneficially owned by any combination of persons referred to in (a), (b), (c) or (d).
Further, the Commission takes the position that a distribution of securities by a private issuer, in an amalgamation or merger of two or more private issuers, to holders of securities of those private issuers, is not a distribution to the public.
4.3 Distribution of Debt Securities
A private issuer may distribute any securities under section 32(j) as long as the sales are not made to the public. Further, a private issuer may distribute non-voting debt securities to the public under another available exemption without losing its status as a private issuer, because debt securities are not "designated securities" as defined in the Act.
5. TRADE BY SECURITY HOLDER EXEMPTION: SECTIONS 89(h) AND 128(i) OF THE RULE
5.1 Statutory Framework
Sections 89(h) and 128(i) of the Rules provide registration and prospectus exemptions where the trade is made in a security of an issuer that is neither a reporting issuer nor a mutual fund by a person other than the issuer where the security is not offered for sale to the public and, immediately upon completion of the trade, the issuers designated securities are beneficially owned by not more than 50 persons, excluding employees. These exemptions allow the holders of securities of an issuer that is not a private issuer, a reporting issuer or a mutual fund to trade the securities of the issuer under circumstances similar to those under which holders are allowed to trade the securities of a private issuer under sections 32(j) and 58(1)(a) of the Act.
6. ISOLATED TRADE EXEMPTION: SECTIONS 31(2)(3) AND 55(2)(2) OF THE ACT
6.1 Statutory Framework
Section 31(2)(3) of the Act provides an issuer or an owner of a security with a registration exemption and section 55(2)(2) of the Act provides an issuer with a prospectus exemption for an isolated trade.
6.2 Inappropriate Use of the Isolated Trade Exemption
The isolated trade exemption is intended to be relied on rarely and is not available for registrants or others whose usual business is trading in securities. Reliance on this exemption might be appropriate, for example, when an individual who is not involved in the business of trading wishes to make a single trade of a security that the individual owns to another person. The exemption would not be available to the individual for any subsequent trades for a period of time adequate to ensure that each transaction was truly isolated and unconnected.
Issuers, particularly reporting issuers, that are regularly accessing the capital markets will seldom find the isolated trade exemption available. The isolated trade exemption is not available when a trade or distribution is made to more than one person, even if the other transactions are carried out under different exemptions or in different jurisdictions. Similarly, an issuer conducting a public offering of securities under a prospectus in one jurisdiction may not concurrently use the isolated trade exemption to issue securities in another jurisdiction, as that would indicate continued or successive transactions of a like nature. The Commission also takes the position that it is abusive to rely on the isolated trade exemption to distribute securities to persons, such as unsophisticated individuals, who under the Act are intended to have the full benefit of regulatory protections.
7. EXEMPT PURCHASER EXEMPTION: SECTIONS 31(2)(4) AND 55(2)(3) OF THE ACT
7.1 Statutory Framework
Sections 31(2)(4) and 55(2)(3) of the Act provide registration and prospectus exemptions where the purchaser is designated as an exempt purchaser in an order by the Executive Director. Section 88 of the Rules deals with applications for designation as an exempt purchaser. See Local Policy Statement 3-15, "Exempt Purchaser Status" for guidelines to follow in applying for exempt purchaser status.
8. $97,000 EXEMPTION: SECTIONS 31(2)(5) AND 55(2)(4) OF THE ACT
8.1 Statutory Framework
Sections 31(2)(5) and 55(2)(4) of the Act provide registration and prospectus exemptions where the purchaser purchases as principal and the trade is in a security that has an aggregate acquisition cost to the purchaser of not less than the prescribed amount. The prescribed amount is $97,000 under sections 90 and 129 of the Rules.
Section 130 of the Rules requires an issuer that distributes a security under section 55(2)(4) of the Act to obtain an acknowledgment from the purchaser if the purchaser is an individual. See section 19.2 of this policy for a discussion of the required form.
Section 134(2) of the Rules requires that, if a person advertises in connection with a distribution of a security under section 55(2)(4) of the Act, the person must deliver to each purchaser an offering memorandum in compliance with section 133 of the Rules. See section 19.3 of this policy for a discussion of the offering memorandum and filing requirements.
Limited advertising is permitted in connection with a distribution under section 55(2)(4) of the Act without giving rise to the requirement to prepare an offering memorandum. Section 134(3) of the Rules provides that an offering memorandum is not required where a person's advertisement is not part of a general solicitation, is made only to specific institutional purchasers (as defined in section 134(1) of the Rules) or sophisticated purchasers and consists only of a limited range of activities. The Commission expects to propose a new rule to regulate advertising of securities, based on draft National Policy Statement No. 43, which will apply to all forms of advertising.
8.4 Type of Consideration
Where permitted under applicable corporate or other governing legislation, consideration for a distribution under section 55(2)(4) may include a promise to pay (e.g. a promissory note). Payment by way of promissory notes is not permitted for shares issued under the corporate legislation of British Columbia, Ontario or Canada, which require that shares be fully paid prior to issuance. For those issuers not precluded from accepting promissory notes, such as limited partnerships, the Commission takes the position that consideration may include a promise to pay only if the purchaser is certain, or virtually certain, to be called upon to make payment. This would disqualify commitments under various tax oriented arrangements where the issuer or promoter has held out to the investor a hope or expectation that payment of a promissory note will be waived.
The $97,000 exemption cannot be used to settle outstanding debt of an issuer owed to a purchaser.
8.5 Where the Consideration Includes a Promise to Pay
Where consideration includes a promise to pay, the present value of the consideration must exceed $97,000. The interest rate to be used in the present value calculation is:
(a) the actual rate of interest charged on the promissory note, provided that the rate was at least equal to the prime rate plus 1% at the date of the subscription agreement, was on commercially reasonable terms, and the security is issued within 90 days of the date of the subscription agreement; or
(b) the higher of the actual rate of interest charged on the promissory note and the prime rate at the date of issue of the security plus 1%.
On commercially reasonable terms means on terms no more favourable than those that would be available from a lender that is at arms length to the purchaser. It is the responsibility of the issuer to retain documents to demonstrate that the interest rate was on commercially reasonable terms.
If the promise to pay is on demand, a reasonable maturity date must be assumed for the present value calculation based on the most probable payment date.
Any guarantees or non-recourse financing arrangements of the issuer to repay certain amounts to the purchaser must be quantified on a present value basis and deducted from the purchase price of the securities for the purpose of computing the aggregate acquisition cost. For example, in an offering of real estate securities, guarantees would include, but would not be limited to, rental revenue, cash flow or repurchase guarantees.
9. ASSET AND RESOURCE PROPERTY EXEMPTIONS: SECTIONS 31(2)(6), 31(2)(21), 55(2)(5) AND 55(2)(18) OF THE ACT
9.1 Statutory Framework
Asset exemption. Sections 31(2)(6) and 55(2)(5) of the Act provide registration and prospectus exemptions where the trade is by an issuer in a security of its own issue as consideration for part or all of another person's assets, so long as the fair value of the other person's assets is not less than the prescribed amount. The prescribed amount is $100,000, under sections 90 and 129 of the Rules.
Resource property exemption. Sections 31(2)(21) and 55(2)(18) of the Act provide registration and prospectus exemptions where the trade is by an issuer in a security of its own issue as consideration for the acquisition of mining, petroleum or natural gas properties or any interest in them.
The inclusion of the term "interest" recognizes that transactions dealing with the exploration of natural resources may not involve the transfer of 100% of the property to one person. Rather, transactions may involve the acquisition of an interest in a natural resource property, including the profits derived from the property.
9.2 Fair Value
When issuing securities, issuers must comply with the requirements under applicable corporate or other governing legislation that the securities be issued for fair value. Where securities are issued for non-cash consideration such as assets or resource properties, it is the responsibility of the issuer and its board of directors to determine the fair market value of the assets or resource properties and to retain records to demonstrate how that fair market value was determined.
9.3 Direct and Indirect Acquisitions Under the Asset and Resource Property Exemptions
Asset exemption. The asset exemption is available where the asset is acquired directly by the issuer of the securities. The asset exemption is not available for the distribution of securities of an issuer as consideration for an acquisition:
(a) by a subsidiary of the issuer, whether the subsidiary is wholly-owned or not; or
(b) by the parent of the issuer.
Discretionary orders have been granted for the distribution of securities of an issuer as consideration for the acquisition by the issuer's wholly-owned subsidiary of assets having a fair value of not less than $100,000.
Resource property exemption. The resource property exemption is available where the resource property interest is acquired directly by the issuer of the securities. The exemption is not available for the distribution of securities of an issuer as consideration for:
(a) an acquisition by a subsidiary of the issuer, whether the subsidiary is wholly-owned or not;
(b) an acquisition by the parent of the issuer; or
(c) an acquisition of securities of another issuer that owns a resource property interest.
The Commission would consider granting a discretionary order for the distribution of securities of an issuer as consideration for an acquisition by a wholly-owned subsidiary of the issuer of a 100% interest in a resource property.
10. STATUTORY TRANSACTION EXEMPTION: SECTIONS 31(2)(9) AND 55(2)(8) OF THE ACT
10.1 Statutory Framework
Sections 31(2)(9) and 55(2)(8) of the Act provide registration and prospectus exemptions where a trade is made in connection with an amalgamation, merger, reorganization or arrangement where:
(a) a disclosure record, as described in section 55(2)(8) of the Act, is prepared and delivered to each security holder whose approval is required under applicable legislation, and
(b) the transaction is approved by the security holders in accordance with the requirements of applicable legislation.
10.2 Types of Transactions
The statutory transaction exemption may be used for trades of securities by issuers and security holders in connection with an amalgamation, merger, reorganization or arrangement involving two or more issuers. To the extent the trade occurs as a consequence of the security holder approval required under the exemption, there is no offer to acquire securities and therefore no take over bid or issuer bid.
10.3 Security Holder Approval
The statutory transaction exemption is only available where security holder approval is required under applicable legislation. The exemption cannot be used where security holder approval is required only under a listing agreement with an exchange, or under another agreement, even if security holder approval is obtained in accordance with the procedures of applicable legislation.
Discretionary orders have been issued in circumstances where security holder approval was not required under applicable legislation, but the remaining requirements of the statutory transaction exemption were met. The circumstances have included statutory transactions under financial services legislation.
10.4 Disclosure Record
The statutory transaction exemption requires that an information circular in the required form (Form 30) be delivered to the security holders whose approval is required under applicable legislation. The information circular must contain prospectus level disclosure about each issuer whose securities are being issued.
10.5 Resale Rules
One of the resale rules attaching to securities issued under the statutory transaction exemption is that "the issuer of the security is a reporting issuer and has been a reporting issuer for the 12 months preceding the trade".
Discretionary orders have been issued relieving security holders of that resale rule, where the issuer of the securities was a reporting issuer in another jurisdiction that had continuous disclosure rules similar to those in British Columbia and the issuer had complied with those rules for more than 12 months. However, where an issuer has sufficient connection to British Columbia, the Commission, as a condition of granting the relief, may require the issuer to become a reporting issuer in British Columbia.
11. EMPLOYEE AND MANAGEMENT COMPANY EXEMPTIONS: SECTIONS 31(2)(10) AND 55(2)(9) OF THE ACT AND SECTIONS 89(f) AND 128(g) OF THE RULES
11.1 Statutory Framework
Employee exemption. Sections 31(2)(10) and 55(2)(9) of the Act provide registration and prospectus exemptions where the trade is by an issuer in a security of its own issue with an employee, senior officer or director of the issuer or an affiliate of the issuer, or a trustee on behalf of such a person, or an issuer all of whose voting securities are owned by one or more of the persons, so long as the person is not induced to purchase by expectation of employment or continued employment.
Management company exemption. Sections 89(f) and 128(g) of the Rules provide registration and prospectus exemptions where the trade is by an exchange issuer to an individual employed by a person providing management services to the exchange issuer, so long as the individual is not induced to purchase by expectation of employment or continued employment with either the exchange issuer or the person providing the management services.
11.2 Meaning of "Employee"
The employee exemption is available to an issuer for a trade to a bona fide employee. The following persons would be considered bona fide employees:
(a) an individual who is considered an employee under the Income Tax Act, (i.e. for whom deductions must be made at source);
(b) an individual who is a full-time dependent contractor, that is one who works full-time for an issuer providing services normally provided by an employee and is subject to the same control and direction by the issuer over the detail and methods of work as an employee of the issuer, but for whom income tax deductions are not made at source;
(c) a part-time dependent contractor, that is an individual who works for an issuer on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and is subject to the same control and direction by the issuer over the details and methods of work as an employee of the issuer, but for whom income tax deductions are not made at source.
11.3 Management Services
Management services referred to under the management company exemption are narrowly interpreted by the Commission as being limited to administrative or operational services required for the ongoing successful operation of the business enterprise of the exchange issuer. Management services do not include promotional or investor relations services.
12. TAKE OVER BID AND ISSUER BID EXEMPTIONS: SECTIONS 31(2)(25), 31(2)(28), 55(2)(22) AND 55(2)(25) THROUGH 55(2)(27) OF THE ACT
12.1 Statutory Framework
Trades by a holder. Sections 31(2)(25) and 55(2)(22) of the Act provide registration and prospectus exemptions to a holder of a security of an offeree issuer to trade a security of the offeree issuer to the offeror under a take over bid or issuer bid. The registration exemption allows holders to tender into the bid directly without having to go through a registrant. The prospectus exemption allows a control person or a person holding securities subject to resale rules to tender into the bid. The exemptions are available both for bids that comply with the disclosure and procedural requirements of sections 87 to 92 of the Act, including the preparation and delivery of a take over bid or issuer bid circular ("non-exempt bids"), and bids that are exempt from such requirements ("exempt bids").
Trades by offeror in non-exempt bid. Sections 31(2)(28) and 55(2)(27) of the Act provide registration and prospectus exemptions for a trade made in a security of an offeror under a take over bid or issuer bid where a securities exchange take over bid circular or securities exchange issuer bid circular was filed by the offeror. No prospectus is required since the bid circulars are required to contain prospectus level disclosure.
Trades by offeror in exempt take over bid. Sections 31(2)(28), 55(2)(25) and 55(2)(26) of the Act provide registration and prospectus exemptions for a trade made in a security of an offeror with the security holders of an offeree issuer under an exempt take over bid. Given the nature of the take over bids that have been exempted, exemptions from the prospectus requirements have also been provided.
Resale rules. The resale rules applicable, under sections 140 to 143 of the Rules, to securities traded by an offeror to the security holders of an offeree issuer may vary depending upon which prospectus exemption is used and whether the issuer is a reporting issuer at the time of the trade. Security holders who acquire securities under an exempt take over bid pursuant to section 55(2)(26) of the Act are subject to resale requirements that include a 12 month hold period.
The exemptions in sections 31(2)(28) and 55(2)(25), (26) and (27) are not available for a take over bid where none of the offeree security holders are in British Columbia. Discretionary orders have been granted to exempt trades by an offeror issuer in these circumstances.
13. 50 PURCHASERS EXEMPTION: SECTIONS 89(a) AND 128(a) OF THE RULES
13.1 Statutory Framework
Sections 89(a) and 128(a) of the Rules provide registration and prospectus exemptions for a trade by an issuer in a security of its own issue to no more than 50 purchasers in a 12 month period. The purchaser must be a sophisticated purchaser or have one of the relationships specified in section 128(a) of the Rules. The offer and sale may not be accompanied by an advertisement, and no selling or promotional expenses may be paid or incurred in connection with the offer and sale, except as permitted under section 128(a) of the Rules. An offering memorandum must be delivered to the purchaser in compliance with section 133 of the Rules. See section 19.3 of this policy for a discussion of the offering memorandum and filing requirements.
13.2 Definition of Sophisticated Purchaser
Under section 1 of the Rules, sophisticated purchasers include individuals, corporations, partnerships and trusts who meet minimum net worth or net asset levels or minimum income levels. They also include corporations, partnerships and trusts that are wholly owned by sophisticated purchasers, in which the majority of management (e.g. directors, general partners or trustees) are sophisticated purchasers, or in which all of the beneficiaries are sophisticated purchasers.
To qualify as a sophisticated purchaser, a person must be able, on the basis of information about the investment furnished by the issuer, to evaluate the risks and merits of the prospective investment either because of the purchasers financial, business or investment experience, or because of advice the purchaser receives from a person registered to advise, or exempted from the requirement to be registered to advise, in respect of the relevant security, and who is not an insider of, or in a special relationship with, the issuer of the security.
To qualify as a sophisticated purchaser, the purchaser must also sign an acknowledgment in the required form. See section 19.2 of this policy for a discussion of the required form. An issuer may only rely on the exemptions in sections 89(a) and 128(a) of the Rules if the issuer does not believe, and has no reasonable grounds to believe, that the acknowledgment signed by the potential purchaser is false.
13.3 Selling and Promotional Expenses
Sections 89(a)(v) and 128(a)(iv) of the Rules preclude an issuer from paying or incurring, selling or promotional expenses in connection with the offer and sale of the security, except for expenses incurred for professional services, services performed by a registered dealer, and services performed by a person ("finder") who is not an insider or an associate of an insider of the issuer and who provides services in connection with a distribution by the issuer to persons not resident in British Columbia.
The Commission takes the view that "professional services" do not include promotional services of any kind, and are limited to legal, accounting or like services that are directly related to the distribution.
14. $25,000 EXEMPTIONS: SECTIONS 89(b), 128(b) AND 128(c) OF THE RULES
14.1 Statutory Framework
Sections 128(b) and (c) of the Rules each set out a $25,000 exemption from prospectus requirements for a trade by an issuer of a security of its own issue. Both exemptions require that the purchaser purchase as principal, the aggregate acquisition cost to the purchaser be not less than $25,000 and an offering memorandum be delivered to the purchaser in compliance with section 133 of the Rules.
Section 128(b) of the Rules can be used only where the purchaser is a sophisticated purchaser who signs an acknowledgment in the required form. There is a corresponding registration exemption found in section 89(b) of the Rules. See section 13.2 of this policy for a discussion of the definition of sophisticated purchaser.
Section 128(c) of the Rules has no corresponding registration exemption. It can therefore be used only where the trade is made through an appropriately qualified registered dealer, who would advise the purchaser in accordance with the know your client and suitability rules. The purchaser is not required to be a sophisticated purchaser but is required to sign an acknowledgment in accordance with section 135 of the Rules, naming the registrant who provided advice to the purchaser. See section 19.2 of this Policy for a discussion of the form of acknowledgment.
The discussion of consideration in sections 8.4 and 8.5 of this policy dealing with the $97,000 exemption applies to an issuer using the $25,000 exemptions.
15. CONTROL PERSON EXEMPTIONS
15.1 Statutory Framework
Under section 1(1) of the Act, a trade in a previously issued security from the holdings of a control person is a distribution. Therefore, in order to trade a security a control person must file a prospectus, unless an exemption is available. The following are some of the exemptions that may be available to control persons:
(a) Sections 31(2)(2) and 55(2)(1) of the Act provide registration and prospectus exemptions where the purchaser is a savings institution, an insurer, or a federal, provincial or municipal government.
(b) Sections 31(2)(5) and 55(2)(4) of the Act provide registration and prospectus exemptions where the securities have an acquisition cost of not less than $97,000 and the purchaser is purchasing as principal.
(c) Sections 31(2)(17)(ii) and 55(2)(16)(ii) of the Act provide registration and prospectus exemptions where each party to the trade is, prior to making the trade, a promoter of the issuer (available only where the control person is also a promoter of the issuer).
(d) Sections 31(2)(18) and 55(2)(17) of the Act provide registration and prospectus exemptions where each party to the trade is, prior to making the trade, a control person of the issuer.
(e) Section 128(d) of the Rules provides a prospectus exemption to a control person where a number of conditions have been met. The conditions require compliance with hold periods, including a minimum hold period of six months. Since there is no corresponding registration exemption, a trade under this exemption must be through a registered dealer unless it is a trade of escrowed shares (see paragraph (f) below).
(f) Section 89(d) of the Rules provides a registration exemption for a trade of escrowed shares made in accordance with the terms of an escrow agreement that is in the form required by the Commission or an exchange recognized by the Commission for the purpose of this section. The Commission has recognized the VSE under Local Policy Statement 3-44, "Recognition of Self Regulatory Bodies, Exchanges and Jurisdictions".
Effective January 1, 1996, the "5% free trading" prospectus exemption for control persons found in section 117(e) of B.C. Reg. 270/86 is repealed. However, BOR#95/7 provides an interim exemption for trades made by control persons through disclosed market-making accounts.
15.2 Special Requirements for Control Persons
Form 23. It is in the public interest for the market to know in advance that a control person intends to sell securities. (There are some exceptions, such as when the control person is tendering into a take over bid). The exemptions contained in sections 55(2)(1),(3),(4), (6) and (16)(ii) of the Act and section 128(d) of the Rules may not be used by a control person unless the control person complies with the requirements of section 136 of the Rules. Section 136 of the Rules requires the filing of a Form 23, "Notice of Intention to Sell". Form 23 must be signed by the control person not more than 24 hours before it is filed. It must be filed with the Commission and each exchange where the securities are listed at least 7 days before the initial trade, and periodically refiled until the securities are no longer for sale.
Accelerated Insider Report Requirement. Section 137 of the Rules requires a report in Form 36 (insider report) to be filed within 3 days of the sale by a control person of securities under any exemption under section 55(2) of the Act. This includes the exemptions set out in the Rules, which fall under section 55(2)(29) of the Act.
16. SHARES FOR DEBT EXEMPTION: SECTIONS 89(c) AND 128(e) OF THE RULES
16.1 Statutory Framework
Sections 89(c) and 128(e) of the Rules provide registration and prospectus exemptions to an exchange issuer where the trade is in a security of its own issue to settle a bona fide debt.
16.2 Interpretation of "Bona Fide"
The term "bona fide" in sections 89(c) and 128(e) of the Rules is interpreted by the Commission to mean that the debt was incurred for value, on commercially reasonable terms, and that, on the date the debt was incurred, the issuer had a reasonable belief that it would repay the debt in cash.
16.3 Settlement of Debt
An issuer may distribute securities to settle a debt only after the debt becomes due, as evidenced by the creditor issuing an invoice, demand letter or other written statement to the issuer indicating that the debt is due. The shares for debt exemption may not be relied on for the issuance of securities by an issuer to secure a debt that will remain outstanding after the issuance.
This exemption is available only to exchange issuers. Discretionary exemption orders have been issued to non-exchange issuers in circumstances where the issuers are in severe financial distress, propose to settle all outstanding debts with creditors as part of a restructuring of their business and affairs, and provide adequate disclosure regarding the debt settlement to creditors and the market. Discretionary orders have also been issued where the principal jurisdiction in which the issuer carries on business has issued an order and there are a small number of creditors situated in British Columbia holding a small amount of the issuer's debt.
17. BONUS OR FINDER'S FEE EXEMPTION: SECTIONS 89(e) AND 128(f) OF THE RULES
17.1 Statutory Framework
Sections 89(e) and 128(f) of the Rules provide registration and prospectus exemptions to an exchange issuer where the trade is in a security of its own issue as consideration for a loan or loan guarantee, or for services performed by a person ("finder") who is not an insider of the issuer, in connection with arranging a loan or loan guarantee, the issuer acquiring or disposing of assets, other than proceeds of a distribution, or the issuer making a distribution under section 55(2) of the Act to persons not resident in British Columbia. The finder may be resident in British Columbia or elsewhere.
18. FRIENDS AND RELATIVES EXEMPTION: SECTIONS 89(g) AND 128(h) OF THE RULES
18.1 Statutory Framework
Section 89(g) and 128(h) of the Rules provide registration and prospectus exemptions where the trade is made by an exchange issuer in a security of its own issue to a purchaser who purchases as principal and is either a relative (as specified in the section), close personal friend of a senior officer or director of the issuer or an affiliate of the issuer, or a company all of whose voting securities are owned by one or more such persons. An acknowledgment in the required form must be obtained from the purchasers. See section 19.2 of this policy for a discussion of the required form.
The issuer may only use this exemption to trade to 25 different purchasers during each 12 month period and the amount paid for such securities cannot exceed $250,000 in each 12 month period. No advertising, selling or promotional expenses are permitted. If an offering memorandum is used, it must be delivered in compliance with section 133 of the Rules. See section 19.3 of this policy for a discussion of the requirements for preparation and filing of an offering memorandum.
18.2 Interpretation of "Close Personal Friend"
A "close personal friend" is not expressly defined in the legislation but, for the purposes of these statutory exemptions, is a person who has known the officer or director for a number of years and who, through personal knowledge and friendship, is in a position to assess the capabilities and the trustworthiness of the officer or director, and is likely to receive the same moral commitment from the officer or director as would a family member of the officer or director.
A "close personal friend" does not include a casual business associate or a person introduced or solicited for the purpose of purchasing securities.
19. FILING AND OTHER REQUIREMENTS
19.1 Filing of Required Forms
Section 158(1) of the Act authorizes the Executive Director to specify the form, content and other particulars of a record required to be prepared, filed, furnished, or sent in a required form under the Act, the Regulation or the Rules. The person filing the form is responsible for ensuring that the form is filed in the required form. Except as permitted by this section, certain forms (such as Forms 20, 23 and 37) must be completed and filed without additions, deletions or modifications. Where this type of required form contains inapplicable sections, lines may be drawn through the inapplicable sections or "N/A" may be inserted next to or beneath them. Where deletions are made for reasons other than to cross out inapplicable alternatives set out in the form, the reasons for the deletions must be set out in an accompanying letter. Information that is not submitted in the required form will not be considered to be "filed" under the Act.
19.2 Form 20A
An issuer distributing securities to an individual under section 55(2)(4) of the Act is required under sections 130 and 135 of the Rules to obtain a Form 20A from the individual purchaser. An issuer distributing securities under sections 128(a), (b), (c) or (h) of the Rules must obtain a Form 20A from every purchaser. In either case, under section 135 of the Rules, the issuer is not required to file the Form 20A with the Commission, but rather must retain it on file for a minimum of six years from the date of distribution of the security.
There are two types of Forms 20A, the "IP" form which is for use by an individual purchaser, and the "NIP" form which is for use by purchasers that are corporations, partnerships or trusts.
Forms 20A require the purchaser to acknowledge that it has limited rights and that it satisfies the requirements for the exemption (e.g. it is a sophisticated purchaser, has made the minimum investment required, has the required relationship to the issuer, or has received advice from a qualified person that the investment is suitable for the purchaser).
19.3 Offering Memorandum
Section 134 of the Rules requires that an issuer prepare an offering memorandum when a distribution of securities under section 55(2)(4) of the Act is advertised. However, no offering memorandum is required where the advertisement is not part of a general solicitation, is made only to a specific institutional purchaser (as defined in section 134(1) of the Rules) or sophisticated purchasers and consists only of a limited range of activities. If an issuer does not advertise in connection with a distribution under this section, a document used in connection with the distribution is not an offering memorandum for the purposes of the Act and need not be in the required form, filed with the Commission (unless filing is required under section 153 of the Rules) nor contain a contractual right of action.
An offering memorandum delivered in connection with a distribution under section 128(a), (b), (c) or (h) of the Rules or section 55(2)(4) of the Act, must be prepared in accordance with Form 43 unless the offering is being carried out under the Immigrant Investor Program, in which case it must be prepared in accordance with Form 43A. Under section 133 of the Rules, the issuer must deliver an offering memorandum to a purchaser before the purchaser enters into an agreement to purchase the securities. Under section 138 of the Rules, a copy of the offering memorandum must be filed with the Commission within 10 days of the distribution.
19.4 Form 20
Section 139 of the Rules requires an issuer to file a report in Form 20 for distributions under certain prospectus exemptions. A Form 20 must be filed within 10 days of the distribution. In the event of a continuous offering where subscription funds are held in trust pending a closing of the offering, a Form 20 must be filed within 10 days of each closing.
An issuer conducting a continuous offering may wish to set fixed closing dates in a manner that would avoid the issuer having to file a Form 20 several days in a row or every few days. Where an issuer conducting a continuous offering has more than one closing within a 10 day period, it is acceptable to file one Form 20 disclosing all distributions within the 10 day period.
20. RESALE RULES
20.1 Statutory Framework
A security issued in reliance on an exemption is usually subject to restrictions on its resale. Any trade that is not made in accordance with the applicable resale rules is deemed to be a distribution and therefore can only be done under a prospectus or a prospectus exemption.
To determine the applicable resale rules, refer to section 1(1) of the Act (see the definition of "distribution"), section 128(d), and sections 140 to 143 of the Rules. The determination of which resale rules apply depends on the status of the issuer and the selling shareholder, and the exemption that was relied on to issue the security. Refer to section 132 of the Rules and BOR#95/17 to determine whether a legend is required to be placed on a certificate representing securities issued under an exemption.
In certain circumstances, a purchaser of securities may be able to rely on registration and prospectus exemptions to effect a resale instead of waiting until the resale rules have been satisfied. For example, where a person subject to resale restrictions wants to sell securities of an issuer worth at least $97,000 to a single purchaser, this sale can be made under the exemption in section 55(2)(4) of the Act at any time without regard to the resale restrictions in sections 140 to 143 of the Rules.
20.2 Term of Hold Period
Hold periods start on different dates. In a shares for debt settlement under section 128(e) of the Rules, the hold period starts from the date the debt becomes due. Under certain exemptions available to exchange issuers, the hold period starts from the date on which the subscriber has irrevocably committed to purchase the securities and placed the subscription funds in trust. Under most prospectus exemptions, the hold period starts from the date of issuance of the securities. Refer to the resale provisions of the Rules to determine when the applicable hold period starts.
21. DISCRETIONARY ORDERS
21.1 Types of Applications
The procedures described in this Part apply to all applications made to the Commission or the Executive Director for a decision under the following sections of the Act, the Rules, the Company Act or Commission policy statements:
Section of the Act Section of the Rules
Section of the Act Section of the Rules
Section of the Company Act National Policy Statements
For those sections and policies not referred to above, applicants should refer to the particular section or policy to see if a different application process is specified.
Applications under Section 153 of the Act
Where an application under section 153 of the Act relates to a decision or order made under sections 135, 144, 144.1 or 154.2 of the Act (a "Compliance Application"), the application should be sent with the applicable fee to:
Secretary to the Commission
British Columbia Securities Commission
1100 - 865 Hornby Street
Vancouver, British Columbia
Section 21.3 of this Policy does not apply to a Compliance Application.
Where an application under section 153 of the Act relates to revocation or variation of a cease trade order issued under section 146 of the Act (such as for a reactivation under Local Policy Statement 3-35), the applicant must follow all of the procedures set out in the remainder of this Part.
Applications under Sections 33 and 59 of the Act
If an issuer or other person wishes to trade or distribute securities and cannot use any of the statutory exemptions set out in the Act or Rules, the issuer or other person must either meet the requirements of sections 20 and 42 of the Act, as appropriate, or obtain a discretionary order under sections 33 and 59 of the Act. Where a statutory exemption can be relied on for any part of a proposed transaction, an exemption order for that part of the transaction should not be sought.
The Commission and the Executive Director may only issue discretionary orders under sections 33 and 59 of the Act if they consider that it would not be prejudicial to the public interest to do so.
21.2 Applications in More than One Jurisdiction
Where an application for a discretionary order is made in more than one Canadian jurisdiction, that application should be made simultaneously in all the jurisdictions in which relief is required (see CSA Notice #92/2). The covering letter should identify all the Canadian jurisdictions in which applications are being made.
21.3 Submission of Applications
Applications (other than Compliance Applications) should be addressed to:
Director, Exemptions and Orders
British Columbia Securities Commission
1100 - 865 Hornby Street
Applications should be submitted well in advance of the proposed transaction for which an order or decision is sought as neither the Commission nor the Executive Director will issue orders that have a retroactive effect. Applications must be complete when submitted and should consist of:
(a) two copies of an application letter setting out the information described in section 21.4 of this Policy, either originally signed by the applicant or, if submitted by the applicant's agent, accompanied by a verification described in section 21.4 of this Policy;
(b) two copies of all supporting material;
(c) two copies of the draft order or decision in the form described in section 21.5 of this Policy and, at the applicant's option, a computer disk containing the draft order in Microsoft Word 6.0 for Windows; and
(d) the applicable filing fee as described in section 21.6 of this Policy.
Follow-up material filed in respect of an application should be addressed to the staff member reviewing the application and the envelope and covering letter should be marked "Follow-up Material". Any revised draft order or waiver submitted as follow-up material should be accompanied by a black-lined copy indicating the amendments made by the applicant.
21.4 Required Elements of the Application
Each application should be divided into sections and include, where relevant, the following information:
Applications by or on Behalf of Issuers
(i) the name of the issuer;
(ii) the name of the applicant (if different from the issuer);
(iii) the section of the Act, Rules, Company Act, or National or Local Policy Statement under which the application is made; and
(iv) the nature of the relief sought
(b) The Issuer
(i) the name of the issuer;
(ii) jurisdiction and date of incorporation, organization or continuation;
(iii) capital structure - authorized and issued capital and debt obligations;
(iv) whether the issuer is a reporting issuer;
(v) whether the issuer is an exchange issuer;
(vi) the name of any exchange or quotation system on which the issuer's securities are listed;
(vii) recent trading price and volume data for any class of securities involved in the application; and
(vii) a statement from the issuer as to whether the issuer, if it is a reporting issuer, is in default of any requirement of the Act, Regulation or Rules and if so, describing the circumstances of the default.
As the Commission and Executive Director will generally not grant orders to an issuer that is in default of a requirement of the Act, Regulation or Rules, the applicant should ensure that the issuer is not in default prior to making an application for discretionary relief.
(c) Applicant Applying on Behalf of the Issuer
If the applicant is a person applying on behalf of the issuer, include those items in paragraph (b) that are relevant to the applicant and explain the applicant's relationship to the issuer.
Applications by Non-Issuers
Applications by non-issuers, such as an application by a registrant for an exemption order under section 33 of the Act, or by a non-issuer on a Compliance Application, should include information similar to that itemized in sections 21.4 (a), (b) and (c) above, that is relevant to the application.
(a) Order or Decision Sought
Applications should clearly set out all relevant information and arguments in support of the request for the order or decision. The submission should clearly describe how the relief sought would fall within the spirit and intent of the securities and corporate legislation. The information and argument should include:
(i) the facts on which the application is based;
(ii) the reasons for making the application; and
(iii) other relevant considerations including:
- case law;
- prior decisions of the Commission or Executive Director in similar circumstances;
- parallels between existing statutory exemptions and the discretionary exemption sought;
- related decisions of other regulatory agencies;
- similar applications pending in other jurisdictions; and
- supporting documents (these may be included as schedules or exhibits to the application, and references in the application may be made to them).
Each application must be signed by the party submitting it and must contain a statement certifying the truth of the facts it contains. If the application is made by an agent for the applicant and not signed by the applicant, this certification may be omitted if the application is accompanied by a separate written statement signed by the applicant authorizing the agent to prepare and file the application and confirming the truth of the facts contained in the application. Sample language might include:
"We authorize ______ to make and file the attached application and confirm the truth of the facts contained in it.
DATED on ________, 19__.
Authorized Officer "
21.5 Conventions for Drafting Orders or Decisions
Applicants should refer to Chapter 3 of the Commission's Weekly Summary for examples of orders or decisions that the Commission and the Executive Director have granted. Draft orders or decisions should not be submitted in the format used by other jurisdictions. The use of formats other than British Columbias will result in unnecessary delays as the applicant will be asked to resubmit the draft order before the application is assigned to an analyst for review.
(i) Every draft order should have a heading that:
(ii) refers to the Act, Rules, Company Act, or Local or National Policy Statement under which the order or decision is requested; and
(iii) sets out the name of the issuer, if applicable, and the name of any party seeking the order or decision.
The draft order should also have a subheading that refers to the section of the Act, Rules, Company Act, or Local or National Policy Statement under which the order or decision is requested.
The first recital should start with the word "WHEREAS" and all subsequent recitals should start with the words "AND WHEREAS".
The first recital should state the name of the applicant, whether the application is being made to the Commission or the Executive Director, the section of the legislation or policy under which the order or decision is requested, and the specific requirements from which the applicant is seeking relief.
Subsequent recitals should set out the relevant facts and provide the background information necessary to show what transactions are contemplated and why the order or decision sought should be granted. These recitals, in the form of representations by the applicant, should also demonstrate that the applicant falls within the spirit and intent of the securities or corporate legislation and that the granting of the order or decision would not be prejudicial to the public interest.
The last recital should confirm that the specific requirements of the legislation or policy have been satisfied. For example, the last recital for orders under section 59 of the Act should read:
"AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;"
(c) Operative Part of the Order or Decision
The operative part of the order or decision should begin with the words "IT IS ORDERED" and should then set out, in point form, the specific statutory or policy relief sought.
The wording should reflect the discretionary power granted to the Commission or the Executive Director under the section authorizing the relief sought.
In most cases, conditions, such as filing requirements and resale restrictions, that would have applied had the applicant been able to rely on a parallel statutory exemption will be incorporated as part of the order or decision. If the applicant feels that certain conditions are inappropriate in the particular circumstances of the case, reasons should be given in the application.
21.6 Filing Fees
Each application must be accompanied by the filing fee prescribed in section 22 of the Regulation. Applications will not be assigned for review until the fee is received. Fees should be paid by cheque payable to the "British Columbia Securities Commission".
An additional fee is prescribed in the Regulation for expedited or complex applications. The additional fee for complex applications will normally be requested by the Commission when the staff time required to evaluate and process an application is significantly longer than usual due to the complexity of the transaction, the complexity of the legal issues involved, or the quality of the application.
Due to resource limitations and the large number of expedited applications which are received, staff may be unable to review on an expedited basis every application for which applicants are prepared to pay expedited fees. As a result, applicants who seek expedited review should provide evidence that immediate attention to the application is necessary and reasonable under the circumstances. If staff are unable to begin their review of the application promptly, staff will advise the applicant that the application will be dealt with in the normal course. The applicant will be entitled to request a refund of the expedited fees paid, provided that the application is not subject to extra fees for complexity.
21.7 Procedure For Processing Applications
On receipt of a complete application, a member of the Commission's staff will be assigned to review the application and recommend disposition. The staff member may contact the applicant if further information or clarification is required. Where the applicant does not provide this information or clarification within a reasonable period of time, the Commission or Executive Director, on its or his own motion or on the recommendation of the staff member, may decide to treat the application as abandoned.
Orders and decisions are, as a matter of course, filed in public files and published in the Weekly Summary. Materials filed in support of applications (including denied or withdrawn applications) may be accessible to the public under the Freedom of Information and Protection of Privacy Act, S.B.C. 1992, c.61.
Applicants who wish to maintain confidential treatment of an order, a decision or materials filed in support of an application must make a separate submission to the Commission seeking confidentiality under section 151(3) of the Act. The Commission will not grant an application for confidential treatment of material under section 151(3) unless it considers that the material discloses intimate financial, personal or other information, and the desirability of avoiding disclosure of the information in the interests of any affected person outweighs the desirability of adhering to the principle of public disclosure.
Where the Commission accedes to a request for confidentiality, the material will not be published or placed in the public file. However, the Commission may still be obliged to make materials available to the public should an application be made under the Freedom of Information and Protection of Privacy Act.
DATED at Vancouver, British Columbia, on December 21, 1995.
Douglas M. Hyndman