LPS 3-43 - (Interim) Government Strip Bonds [Rescinded]
PART 1 IMPLEMENTATION
(a) Effective date - Local Policy Statement 3-43 dated February 1, 1987 (the "Former Policy") is hereby rescinded and the following substituted therefor, effective December 12, 1991.
(b) Defined terms - Terms defined in the Securities Act, S.B.C. 1985, 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
(a) Government Strip Bond Offerings in British Columbia - This local policy statement applies to offerings of Government Strip Bonds as defined in section 2.2.
(b) Meaning of Government Strip Bonds - For purposes of this local policy statement, "Government Strip Bonds" mean:
(i) actual individual interest coupons and residues arising from the physical separation of bonds, debentures or other evidence of indebtedness issued or guaranteed by the Government of Canada or by a province of Canada or by a country or political division of a country recognized by the British Columbia Securities Commission (the "Commission") in an order made under section 32(a)(i.1) of the Act, and
(ii) deposit receipts or other certificates representing an interest in certain specific instruments of the type referred to in (a), ("alter ego receipts") or an undivided interest in a pool of these instruments ("non-alter ego receipts"), where the purchaser's sole entitlement is to receive a fixed amount of money at a specific future date.
PART 3 INFORMATION STATEMENT
(a) Attributes of Government Strip Bonds - There are certain investment attributes of Government Strip Bonds that are unusual and may not be generally understood by the investing public. The Commission is particularly concerned about the following attributes:
(i) the fluctuation in the value of Government Strip Bonds resulting from fluctuations in prevailing interest rates;
(ii) the income tax consequences of investing and trading in Government Strip Bonds;
(iii) the anticipated secondary market environment; and
(iv) the custodial arrangements relating to Government Strip Bonds.
(b) Informing Purchasers - Vendors and their agents must provide all first-time purchasers of Government Strip Bonds with an information statement that sets out, in a form approved by the Commission or the Superintendent of Brokers (the "Superintendent"), the investment attributes of Government Strip Bonds, including, without limitation, the investment attributes referred to in section 3.1. Persons selling Government Strip Bonds must be knowledgeable about the investment attributes of Government Strip Bonds.
(c) Vendors of Government Strip Bonds - In order to be permitted to distribute and trade Government Strip Bonds under this local policy statement persons, other than those registered under the Act, must provide an information statement approved by the Commission or the Superintendent to first-time purchasers who must acknowledge having received the statement prior to the distribution or trade. In order to distribute or trade Government Strip Bonds under this local policy statement, registrants must provide an information statement approved by the Commission or the Superintendent to first-time purchasers not later than with confirmation of the trade. In the course of discharging their obligations under the suitability rule, registrants must inform purchasers of the contents of the information statement.
PART 4 APPROVED INFORMATION STATEMENT
(a) Form of Information Statement prepared by IDA - Subject to section 4.2, the Commission has approved the Information Statement prepared by the Investment Dealers Association of Canada, attached as Appendix A to this local policy statement, for the purposes of this local policy statement.
(b) Other Approved Form of Information Statement - Where a vendor proposes to use an information statement that differs in any material way from the Information Statement in Appendix A, the vendor must obtain the prior written approval of the Commission or the Superintendent to use that information statement in British Columbia. Where a vendor proposes to trade or distribute Government Strip Bonds that differ in any material way from those described in the Information Statement in Appendix A ("Novel Government Strip Bonds"), the vendor must obtain the prior written approval of the Commission or the Superintendent to use in British Columbia an information statement describing the investment attributes of the Novel Government Strip Bonds including, without limitation, those referred to in section 3.1. Until such approval is obtained, a vendor may not trade or distribute in British Columbia Novel Government Strip Bonds. Where another securities regulatory authority in Canada has approved an information statement differing materially from the Information Statement set out in Appendix A or describing Novel Government Strip Bonds, the vendor must provide evidence of that approval to the Commission or the Superintendent.
PART 5 BLANKET ORDER
(a) The Commission has issued a blanket order under sections 33 and 59 of the Act, attached as Appendix B, exempting from the registration and prospectus requirements of the Act, trades and distributions of Government Strip Bonds made in compliance with this local policy statement. The Commission will deny the registration exemptions contained in sections 32(a)(i) or (i.1) of the Act and the prospectus exemption contained in section 58(1)(a) of the Act in connection with any trade in Government Strip Bonds that is not made in compliance with this local policy statement.
PART 6 TRANSITION
a) Approved Information Statement During Transitional Period - Subject to section 4.2, in addition to the form of information statement attached as Appendix A, the Commission has approved the Information Statement attached as Appendix A to the Former Policy for delivery to first-time purchasers of Government Strip Bonds that are not Novel Government Strip Bonds. This approval is effective only until February 1, 1992.
(b) First-Time Purchasers - A person who, prior to the effective date of this local policy statement, has purchased Government Strip Bonds that are not Novel Government Strip Bonds, and received a form of information statement approved pursuant to the Former Policy, is not a "first-time purchaser" for the purpose of purchasing Government Strip Bonds that are not Novel Government Strip Bonds pursuant to this local policy statement.
DATED at Vancouver, British Columbia, on December 12, 1991.
Douglas M. Hyndman