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Securities Law

NIN 2000/10 - Adoption of National Instrument 62-101, National Instrument 62-102 and National Instrument 62-103 Early Warning System and Related Matters [NIN - Rescinded]

Published Date: 2000-03-10
Effective Date: 2000-03-08
The Commission, together with other members of the Canadian Securities Administrators (“CSA”) has adopted National Instrument 62-101 Control Block Distribution Issues (“NI 62-101”), National Instrument 62-102 Disclosure of Outstanding Share Data (“NI 62-102”) and National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (“NI 62-103”) (collectively the “National Instruments”). The National Instruments provide limited exemptions for eligible institutional investors from the early warning, insider reporting and control block distribution requirements. The National Instruments also have a number of provisions that apply to all reporting issuers, pledgees and other market participants that are not eligible institutional investors.

The full texts of NI 62-101 (B.C. Reg. 81/2000), NI 62-102 (B.C. Reg. 82/2000) and NI 62-103 (B.C. Reg.83/2000) are attached to this notice and will be effective on March 15, 2000.

The Commission provided advance notice of the National Instruments on December 17, 1999 in NIN#99/48. The Commission adopted the National Instruments following publication for comment1

1 NIN#98/53

and after a detailed review of all comments received following the expiration of the comment period. The CSA developed a detailed Summary of Comments Received together with the CSA responses to those comments which was referred to in NIN#99/48. A full description of the comments received and the response of the CSA to the comments may be found in the Ontario Securities Commission (“OSC”) Notice dated December 17, 1999 relating to the National Instruments located on the OSC website at under Rulemaking and Notices.

Consequential Amendments

Certain consequential amendments to the Securities Rules were required to ensure consistency with the National Instruments. The consequential amendments repeal sections 173 and 175 of the Securities Rules as similar provisions are now contained in the National Instruments. The consequential amendments were published for comment on December 17, 1999 in NIN#99/48. No comments were received on the consequential amendments. The Commission has made the consequential amendments to the Securities Rules effective March 15, 2000. The full text of the consequential amendments (B.C. Reg.84/2000), is attached to this notice.

Substance and Purpose of the National Instruments

National Instrument 62-101

NI 62-101 sets out a limited exemption for eligible institutional investors from the prospectus requirements applicable to control block distributions in order to facilitate the ability of those investors to dispose of their securities of an issuer without having to comply with the provisions of the securities legislation. The exemption is premised on the investor not having knowledge of undisclosed material information concerning the issuer and the securities that are subject of the trade not being subject to any other resale restriction. To use the exemption, an eligible institutional investor would have to comply with the early warning requirements under the Securities Act or the alternative monthly reporting system set out in NI 62-103.

NI 62-101 also modifies the application of hold periods as they may apply to pledgees disposing of securities that form part of a control block. The national instrument ensures that the six month resale restriction runs from the time that the pledgor acquires the securities and that the pledgee is entitled to rely on that period of time for the purpose of complying with the securities legislation.

National Instrument 62-102

NI 62-102 provides a mechanism to ensure reliable public dissemination by reporting issuers of the designation and number or principal amount of outstanding securities of the reporting issuer. Reliable disclosure is essential for the purposes of the early warning requirements and the alternative monthly reporting system, contained in NI 62-103.

National Instrument 62-103

NI 62-103 provides limited exemptions from the early warning requirements, the insider reporting requirements, and related provisions, to eligible institutional investors that have a “passive intent” with respect to their ownership or control of securities of reporting issuers. To use the exemptions, the eligible institutional investor must comply with an alternative monthly reporting system. The national instrument also permits eligible institutional investors, in certain circumstances, not to aggregate securities held in separate business units. This relief is designed to facilitate compliance by financial institutions, pension funds, certain mutual funds, portfolio managers, underwriters in the course of a distribution and pledgees.

DATED at Vancouver, British Columbia, on March 8, 2000.

Douglas M. Hyndman

Ref: NIN#99/48
Sections 173 and 175, Securities Rules

This NIN refers to other documents. These documents can be found at the B.C. Securities Commission public website at in the Policy Documents database.