NIN 2000/37 - Syndicated Mortgages Interim Form of Offering Memorandum and Transitional Relief [NIN - Rescinded]

The Commission adopted Rule 45-501 (BC) Mortgages (the “Rule”) and its Companion Policy 45-501CP (BC) (the “Companion Policy”) on June 8, 2000. The Rule limits the exemptions in sections 46(e) and 75(a) of the Securities Act to non-syndicated mortgages on real property and mortgages sold to institutional investors. The Rule also provides an exemption for simple syndicated mortgages on residential property with no more than four existing units. The Companion Policy discusses various exemptions from the registration and prospectus requirements that are generally available to issuers.

Form of Offering Memorandum

An offering memorandum sets out the information that must be provided to investors where a prospectus is not being used. This information is intended to assist investors in making an informed investment decision and to let them know what rights and protections the Securities Act provides to them.

The Companion Policy refers to Form 43C as the required form of offering memorandum when an exemption other than the exemptions in section 75(a) of the Act and the Rule is being used. In NIN#2000/21, published on June 8, 2000, the Commission advised that staff intended to revise Form 43C and would ask the Executive Director to specify a new form before September 1, 2000, the effective date of the Rule. The Executive Director is specifying Interim Form 45-901F (BC). It is the form to be used where an issuer that trades in syndicated mortgages is relying upon an exemption from the registration and prospectus requirements under the Act and the exemption requires the use of an offering memorandum.

The Companion Policy is amended to replace the reference to Form 43C with a reference to Interim Form 45-901F (BC). A blacklined copy of the amended Companion Policy is attached.


Comments

As the form is being specified on an interim basis, the Executive Director is interested in receiving comments on the form. If you have any comments, please send them in writing before October 13, 2000, to:

Brenda J. Benham
Director, Policy and Legislation
British Columbia Securities Commission
200 - 865 Hornby Street
Vancouver, BC V6Z 2H4
bbenham@bcsc.bc.ca

Transitional Relief for Existing Transactions in Syndicated Mortgages

The Commission is issuing Blanket Order 45-503 (BC) to provide transitional relief for certain existing transactions in syndicated mortgages that do not qualify for the exemptions contained in the Rule. The relief is available for transactions where a mortgage broker has committed, before the date of the order, to advancing funds to a borrower under the security of a mortgage, subject to certain conditions. Where a mortgage broker has not committed, before the date of the order, to advancing funds to a borrower, the mortgage broker must comply fully with all provisions of securities legislation in respect of a trade in or distribution of interests in syndicated mortgages. The relief will be available until September 30, 2001. Where interests in syndicated mortgages are traded or distributed after September 30, 2001, the mortgage broker must comply fully with all provisions of securities legislation in respect of the trade or distribution.

The conditions for the transitional relief are:

1. the mortgage broker must file with the Commission a list of all existing syndicated mortgage projects as set out in the order; and
   
2. the mortgage broker must provide to all prospective investors in the syndicated mortgage a written warning on the terms set out in the order.

Questions may be referred to:

Veronica Armstrong
Senior Policy Adviser
Policy and Legislation
Telephone: (604) 899-6738 or
(800) 373-6393 (in B.C.)
email: varmstrong@bcsc.bc.ca

DATED at Vancouver, British Columbia, on August 14, 2000.

Douglas M. Hyndman Chair

Steve Wilson Executive Director