Securities Law

LPS 3-41 - Lawyer's Conflict of Interest [Rescinded]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Rescinded Date: 1999-06-24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 Securities Act on February 1, 1987.

2.0       TERMS OF REFERENCE

2.1          This Local Policy Statement addresses the questions of disclosure concerning lawyers' shareholding on reporting issuers for which they act as solicitors and provides legal opinions.  It was developed after numerous meetings between the Superintendent and the Natural Resources and Business Law Subsection of the British Columbia branch of the Canadian Bar Association and with the assistance of special committees set up by the Law Society of British Columbia.  The Law Society is considering guidelines as to the circumtances in which, as a matter of professional ethics, such a conflict would make it improper for a solicitor to act at all.

3.0       DISCLOSURE GUIDELINES

3.1          In all disclosure documents submitted for filing by or on behalf of an issuer with the Commission or the Vancouver Stock Exchange the following matters shall be disclosed:

3.1.1       the nature and extent of any material beneficial interest, direct or indirect, in any securities or property, of the issuer or any holding company or major subsidiary thereof, held by:

3.1.1.1    the responsible solicitor, or

3.1.1.2    Where known by the responsible solicitor after reasonable inquiry, any partner of the responsible solicitor's firm or any person related to the responsible solicitor or any such partner.

It is sufficient if the interests of the responsible solicitor, all partners of the responsible solicitor's firm and all persons related to the responsible solicitor or any such partner, are shown in the aggregate.

3.1.2       whether:

3.1.2.1    the responsible solicitor, or

3.1.2.2    where by the responsible solicitor after reasonable inquiry, any partner of the responsible solicitor's firm or any person related to the responsible solicitor or any such partner is a director or senior officer in the issuer or in any holding company or major subsidiary thereof or is a promoter of the issuer.

3.2.         Where the disclosure document is:

3.2.1       a takeover bid circular or a directors' circular, the disclosure required in Paragraph 3 hereof shall relate to both the offerer issuer and the offeree issuer; and

3.2.2       an information circular sent to members in connection with an amalgamation, merger or other business combination or in connection with the sale of the whole or substantially the whole of the undertaking of the issuer, the disclosure required in Paragraph 3 hereof shall relate to each of the issuers involved in such amalgamation, merger, combination or sale.

4.0          Where an opinion is provided to the Commission or the Vancouver Stock Exchange on behalf of an issuer, the solicitor signing the same shall certify in such opinion or in a separate memorandum delivered contemporaneously therewith, that neither such solicitor nor to the knowledge of such solicitor after reasonable inquiry, any partner of the solicitor's firm or any person related to such solicitor or any such partner has any material beneficial interest, direct or indirect, in any securities or in the property of the issuer or of any holding company or major subsidiary thereof.

5.0       INTERPRETATION

5.1          "materiality"

While disclosure is required pursuant to this Policy Statement of a "material" beneficial interest held by a solicitor, it is recognized that no standard of materiality can be applied with certainty.  For the purposes hereof the holding of the responsible solicitor, taken together with the holdings of any partners, and any person related to such solicitor or partner of a greater than 5% interest in the issued and outstanding shares or shares under option of any class or more than 50,000 shares (including options to purchase shares) of any class shall be deemed a material interest.

5.2          "disclosure"

Disclosure means any of the following documents issued by an issuer, other than a document filed in British Columbia with the Commission and/or the Vancouver Stock Exchange and, in addition, with the Securities Commission in the province of Alberta, Saskatchewan, Manitoba, Ontario or Quebec pursuant to the laws of the said province:

5.2.1       a prospectus;

5.2.2       a statement of material facts;

5.2.3       a takeover bid circular;

5.2.4       a directors' circular;

5.2.5       an information circular sent to members in connection with an amalgamation, merger or other business combination or in connection with a sale of the whole or substantially the whole of the undertaking of the issuer; and

5.2.6       an offering memorandum or similar document distributed to investors pursuant to an order, determination or ruling under Sections 33 or 59 of the Act.

5.3          "responsible solicitor"

Responsible solicitor means the solicitor who is primarily responsible for the preparation of or for advice to the corporation or an underwriter of the corporation with respect to the contents of any disclosure document.

5.4          "person related"

Person related means, with respect to any person, a relative of such person, including his spouse, or of the spouse of such person, who in either case has the same home as such person.

5.5          "major subsidiary"

Major subsidiary means a subsidiary, either the assets or the sales and operating revenues of which, represent greater than 10% of the assets or the sales and operating revenues respectively of the holding company and the holding company's subsidiaries on a consolidated basis, according to the financial statements for its own most recently completed fiscal year.

5.6          "holding company"

A company is the holding company of a company if the last mentioned company is its subsidiary.

6.0          While the obligation to comply with this Local Policy Statetment rests on the corporation concerned, and its underwriters or agents, except for Section 4 hereof, where the obligation is that of the responsible solicitor, the Commission and the Vancouver Stock Exchange will continue to rely on solicitors to exercise due diligence in the preparation of disclosure documents.  If it should come to the attention of the Commission that the non-disclosure appears to have been occasioned by the failure of a solicitor to exercise such due diligence, the Commission will, in an appropriate case, refer the matter to the Law Society exercising jurisdiction over the solicitor concerned.

 

DATED at Vancouver, B.C., this ________________ day of _____ 19__.

 

Jill Bodkin
Chairman
B.C. Securities Commission