Securities Law

LPS 3-25 - Natural Resource Issuer - "Best Efforts" Prospectus and Amendments to Prospectus Arising From Market Conditions [Rescinded]

Published Date: 1987-01-16
Effective Date: 1987-02-01
Rescinded Date: 1999-06-24

1.0       Implementation

1.1          This Local Policy Statement has been revised solely to conform with the Securities Act S.B.C. 1985 c.83 and the Regulations thereto.  Other than consequential amendments, there have been no changes of a substantive nature to this policy.  It becomes effective upon proclamation of the Act on February 1, 1987. 

2.0       An Amendment to a "Best Efforts" Prospectus Offering Involving a Change in the Price and/or the Number of Units of the Security Offered

2.1          The introduction in Part 7 of the Act of the system of filing a preliminary prospectus should drastically reduce the number of instances where an amendment is sought to a "best efforts" prospectus offering in order to change the price and/or the number of units of the security offered.  Section 47 of the Act provides for an amendment to be made to a preliminary prospectus, and it is appropriate that price and volume amendments be made at the preliminary prospectus stage.

2.2          For the time being, provided management can retain a feasible plan for financing a program(s) of merit and overhead for a current period, the Superintendent will give favourable consideration to an amendment filed under Section 48 of the Act involving a change in the price and/or the number of units or the security offered.

3.0       An Amendment Where No Sale Has Yet Been Made from a "Best Efforts" Prospectus Offering

3.1          An amendment to reduce the offering price of the shares and increase the number of shares to be offered is acceptable.

3.2          An amendment to reduce the offering price of the shares, to retain the number of shares offered, and to reduce the programs set out in the use of proceeds is acceptable, provided:

3.2.1       The reduced financing is sufficient to carry out a program(s) of merit and overhead for the current period.

3.2.2       The diminished program(s) is still deemed appropriate by the issuer's independent expert and by the Commission's consultant.

3.3          An amendment to reduce the number of shares offered, whether at the original price or at a reduced price will be accepted under the same conditions as outlined in 3.2 above.

4.0       An Amendment Where a Sale Has Been Made from a "Best Efforts" Prospectus Offered

4.1          Where a sale has been made from a prospectus offering and an amendment changing the terms of the offering is found acceptable for receipting, each existing subscriber should be furnished with a copy of the amendment.  The subscriber should further be afforded an appropriate form granting him 15 days from the date of acceptance of the amendment to either rescind or consent to the changed conditions of the subscription.  Where such subscriber does not complete and return such a form, his subscription is to be deemed as rescinded and his subscription is to be refunded to him.

4.2          As soon as is practicable after the receipting of the amendment, the issuer or his agent shall file an affidavit with the Superintendent attesting to the following:

4.2.1       Number of subscribers canvassed under 4.1 above.

4.2.2       Number of subscribers rescinding and total amount refunded or credited to those rescinding.

4.2.3       Number of subscribers consenting and total amount of subscription retained.

4.3          The following will usually be deemed acceptable proposals for an amendment:

4.3.1       An amendment to reduce the offering price and to increase the number of units of the security offered.  Under such conditions, the form sent to the existing subscriber should permit him:

4.3.1.1.   to rescind; or

4.3.1.2    to take down at the reduced price the number of units originally subscribed for; or

4.3.1.3    to take down at the reduced price a greater of units than he originally subscribed for.

4.3.2       An amendment to reduce the offering price but to retain the number of units of the security originally offered.  Where such an amendment is found acceptable, the same opportunity as in 4.2.1 above should be afforded the existing subscriber.

4.3.3       An amendment to reduce the number of units of the security offered and also to reduce the price.  Where such an amendment is found acceptable, the existing subscriber should be enabled:

4.3.3.1    to rescind; or

4.3.3.2    to take down at the reduced price the number of units originally subscribed for.

This Local Policy Statement 3-25 does not attempt to deal with other types of amendments which may arise during the period of a distribution to the public of a security.

 

DATED at Vancouver, B.C. this               day of                , 19 .

 

Jill Bodkin
Chairman
B.C. Securities Commission

LOCAL POLICY STATEMENT 3-25

SAMPLE FORM

 

To:  _______________________________________

 

The undersigned subscriber to _____________ of  ___________________________________
                                                           (No. of units)                      (description of security)

offered on the _______________________ 198__  prospectus of ________________________________

acknowledges receipt of the ________________________________________ 198__  amendment to said prospectus, and hereby:

(___)      confirms that he will take down ______________________  of  _________________________   at a price of $ ____________ per units.

(___)      rescinds his subscription and requests a refund or credit for the amount  of the subscription rescinded.

 

_______________________ , 19___ .             _________________________________
(Date)                                                                          (Signature)

 

___________________________________________
(Typewritten name of the Subscriber)

 

___________________________________________
(Address of the Subscriber)

 

___________________________________________
(City)                              (Province)

 

_______________
(Postal Code)