NIN 92/15 - Securities Amendment Act, 1992 [NIN - Rescinded]

The Securities Amendment Act, 1992, S.B.C. 1992, c. 52 (the "Amendment Act") received royal assent on June 23, 1992.

Amendments

The Amendment Act makes several substantive and a number of miscellaneous and technical amendments to the Securities Act (the "Act") and consequential amendments to the Securities Amendment Act, 1990 and the Company Act. A copy of the Amendment Act is attached to this Notice.

1. Major Amendments

Section 5(a) of the Amendment Act amends section 32(g) of the Act by requiring that a specified form of information statement be delivered to purchasers and filed with the Commission not later than 10 days after the trade. Prior to bringing this amendment into force, the Commission must develop a form of information statement for use in these circumstances. A draft of the proposed form will be published for comment.

Section 7 of the Amendment Act amends section 51 of the Act by permitting many substantive, and particularly timing, requirements relating to the lapse date of a prospectus and to the continuation of a distribution under a new prospectus to be prescribed in the Securities Regulation (the "Regulation"). Section 51 has been substantially restructured into two new sections, 50.1 and 51. The new sections will not be brought into force until the corresponding Regulation amendments are ready to be introduced. The Corporate Finance Committee of the Canadian Securities Administrators has recommended that all jurisdictions move substantive and timing requirements relating to continuous distributions into their regulations. The Committee has also recommended that the procedure for continuous distributions be streamlined. However, because most continuous distributions are done on a national basis and because jurisdictions are not able to coordinate changes to their legislation, this streamlining can only be done once all Canadian jurisdictions have moved the substantive procedures into their regulations and after consultation with the Investment Funds Institute of Canada and other interested parties. Therefore, although the Act and Regulation are being restructured at this time, there will be no change in the actual procedure for continuous distributions until such time as the other jurisdictions are ready to proceed.

Section 9 of the Amendment Act repeals the statement of material facts ("SMF") exemption in section 58 of the Act. The Commission recommended this amendment due to the technical problems associated with the use of the exemption, particularly when the exemption is used to qualify shares acquired on a private placement for resale. The SMF exemption will be replaced by administrative arrangements that will permit a distribution under section 42 by means of an exchange offering prospectus ("EOP"). The repeal of the SMF exemption will not be brought into force until the new form of EOP and the circumstances in which it may be used have been finalized. Criteria for use of an EOP, such as the length of time an issuer must have had its securities listed on the Vancouver Stock Exchange (the "Exchange") and the maximum size of the offering, will be determined in consultation with the Exchange and published for comment prior to implementation. As is currently the case with an SMF, the primary review of an EOP would be conducted by the Exchange.

Section 11 of the Amendment Act narrows the wording of the certificate issued under section 60 of the Act to refer to not being in default of filing financial statements and fees. This amendment will not be brought into force until consequential changes have been made to certain sections of the Regulation that refer to the issuer not being in default of any requirement of the Act or Regulation, such as sections 133 and 134 of the Regulation;

Section 14 of the Amendment Act facilitates the implementation of the Multijurisdictional Disclosure System (the "MJDS") by providing the Commission with the power to exempt an issuer from Part 10 of the Act and Part 10 of the Regulation, dealing with continuous disclosure. Though the Commission and Superintendent currently have the power to exempt from some of the continuous disclosure requirements, a more comprehensive exempting power was required.

Section 29 of the Amendment Act provides the Commission with the power to apply to the British Columbia Supreme Court to get the assistance of a court outside of British Columbia to compel a person in that jurisdiction to give evidence for use in an enforcement proceeding before the Commission. The Amendment Act also provides that a court outside of British Columbia can seek the assistance of the British Columbia Supreme Court in examining witnesses in a securities enforcement proceeding started in another jurisdiction. It is anticipated that other Canadian securities regulators will propose similar amendments to the securities legislation in their provinces and territories.

Sections 30 and 32 of the Amendment Act provide issuers with cost savings in respect of the sending of material to security holders. An issuer is required by various sections of the Act and Regulation, including section 101 of the Act and section 141 of the Regulation, to continue to send records to security holders even when those records have been repeatedly returned to the issuer because the security holder no longer lives at the last address shown on the records of the issuer. The Amendment Act relieves an issuer from this obligation by providing that the issuer is no longer required to send records to security holders where the records have been returned to the issuer on three separate occasions. A similar amendment is made to the Company Act.

Section 31(c) of the Amendment Act permits the establishment of fees for activities carried out by the Commission or Superintendent under policy statements or legislation other than the Act. Currently, the Commission and Superintendent are required to make decisions on applications under policy statements, such as National Policy Statements No. 33, 39 and 41, and other legislation, such as the Company Act, but do not recover the costs of these activities. Fees for these applications will be set by regulation.

2. Miscellaneous Amendments

The Amendment Act also makes miscellaneous amendments to:

1. clarify the delegation and exercise of powers by the Commission and Superintendent: see sections 1, 2, 27(a) and 28;

2. expand the Commission's and an investigator's power to compel production of classes of records and things: see sections 3 and 22(a);

3. clarify the circumstances in which trades in securities on an amalgamation or other reorganization, under a dividend reinvestment plan or on a share exchange issuer bid are exempt from the registration and prospectus requirements of the Act: see sections 4 and 8;

4. clarify that the exemption in section 32(n) of the Act for securities of a cooperative corporation is available whether a disclosure statement or prospectus is filed under the Real Estate Act: see section 5(b);

5. harmonize the wording of discretionary exempting powers, establish consistent thresholds for granting exemptions and allow the Commission and Superintendent to specify the individual requirements of the Act or the Regulation that should be waived in particular circumstances: see sections 6, 10, 14, 15, 16(b), 18 and 26(a);

6. correct drafting or technical errors: see sections 12, 13, 17, 21, 22(b), 23 and 26;

7. clarify how the proxy requirements of the Act may be satisfied: see section 16;

8. provide a right of action for a misrepresentation in, and for failure to deliver, a notice of change or notice of variation in a take over bid or issuer bid: see sections 19 and 20;

9. improve administrative efficiency in respect of the issuance of cease trade orders for failure to file records completed in accordance with the Act or Regulation: see section 25; and

10. remove a requirement that is redundant in light of the Court of Appeal Rules: see section 27(b).

Proclamation

The Amendment Act is not yet in effect, but the Commission anticipates that the majority of the amendments will be proclaimed in force within the next few months. Certain of the amendments, discussed above, will require the preparation of supporting material such as Regulation amendments or forms, and will not be proclaimed until that material has been completed. The Commission will issue a notice advising of these proclamations.

Additional Copies

Additional copies of the Amendment Act are available at a cost of $3.58 per copy (including G.S.T.) from

Crown Publications
546 Yates Street
Victoria, B.C.
V8W 1K8
Tel: (604) 386-4636
Fax: (604) 386-0221

DATED at Vancouver, British Columbia, on June 25, 1992.

Douglas M. Hyndman
Chairman