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Securities Law

NIN 94/13 - Summary of Legislative and Policy Initiatives [NIN - Rescinded]

Published Date: 1994-10-07
Effective Date: 1994-10-05
The Commission is publishing a series of legislative and policy initiatives to implement part of the Government's response to the Matkin Report as announced by The Honourable Elizabeth Cull, Minister of Finance and Corporate Relations as well as other initiatives that are intended to address regulatory issues not raised in the Matkin Report. These initiatives are intended to strengthen and update British Columbia's securities regulatory system and improve its efficiency and effectiveness.


Proposed amendments to the Securities Act, Securities Regulation and Local Policy Statement 3-22, and new Local Policy Statement 3-17, Form 12A and Form 12A Summary Prospectus are being published in a special supplement to the Weekly Summary.

Proposed Amendments to the Act

The Commission is publishing for comment a significant package of proposed amendments to the Act for introduction in the Spring 1995 legislative session. Certain of the proposed amendments implement part of the Government's response to the Matkin Report. These proposed amendments strengthen the regulation of underwriting and promotional activity and authorize the Commission to conduct compliance reviews of self regulatory bodies. See NIN#94/14.

Proposed Amendments to the Regulation

The Commission is also publishing for comment a significant package of proposed amendments to the Regulation. Certain of these proposed amendments implement part of the Government's policy to strengthen the regulation of underwriting and promotional activity in response to the Matkin Report. In particular, the dealer and underwriter registration categories are separated to facilitate the imposition of specific requirements on underwriters. The Commission is publishing a draft amended policy regarding registration requirements and an interim policy regarding registrant due diligence that reflect these amendments. Other amendments being proposed by the Commission are consequential to the Securities Amendment Act, 1990 and Securities Amendment Act, 1992; address abuses and inequities in the market; simplify the regulatory regime through reorganizing some provisions and repealing others; codify existing practices; and incorporate plain language. The amendments focus on exchange contracts (which are currently regulated under the Commodity Contract Act), financial reporting, registration requirements, prospectus renewals, exempt market transactions, electronic filing of records, and other miscellaneous amendments. See NIN#94/15, NIN#94/16 and NIN#94/17.

Draft Amended Local Policy Statement 3-22 - Registration Requirements

The Commission is publishing for comment draft amended Local Policy Statement 3-22, which sets out, in plain language and convenient form, the principal educational and experience requirements for registration in British Columbia as a dealer, underwriter or adviser and for registration as an individual acting on behalf of a dealer or adviser. The requirements for underwriters have been significantly revised. LPS#3-22 also sets out the requirements for a new category of registrant, an "exchange contracts dealer" who, together with mutual fund dealers, security issuers, real estate securities dealers and scholarship plan dealers, are grouped under the new general category "limited dealer". See NIN#94/16.

Interim Local Policy Statement 3-17 - Registrant Due Diligence

Interim Local Policy Statement 3-17 provides guidelines and reporting requirements for due diligence conducted by registrants that underwrite public offerings by junior issuers. This Policy will replace Local Policy Statement 3-04 effective January 6, 1995. Interim LPS#3-17 continues the requirement that an independent qualified consultant investigate and review the junior industrial issuer's business, including the risks associated with the business, as well as the management of the issuer. However, Interim LPS#3-17 requires the underwriter, not the issuer, to retain the independent consultant to prepare the assessment report. The assessment report is intended to assist the underwriter in determining whether to proceed with the distribution and in assessing the proposed disclosure in the preliminary prospectus. See NIN#94/17.

Form 12A - Prospectus for a Junior Industrial Issuer

Form 12A is introduced effective January 6, 1995, as the required form of prospectus for a junior industrial issuer. It is expected to reduce the time and expense to issuers for staff's review of prospectuses by providing a comprehensive guide to the disclosure requirements. The new form incorporates in the prospectus more complete disclosure about the issuer's business, replacing disclosure previously contained in technical reports, and provides guidance on deficiencies in disclosure that staff routinely raise. See NIN#94/17 and NIN#94/18.

Form 12A Summary Prospectus

The Form 12A Summary Prospectus Disclosure System, is being introduced to make available to junior issuers certain features of the proposed Junior POP System. Effective January 6, 1995, the System provides investors with a shorter, easy-to-read prospectus and aims to make investors more informed about an issuer and its securities. The Form 12A Summary Prospectus is a verbatim extract of a limited number of sections from the base disclosure document that contain the essential information necessary to make an investment decision. The System will be brought into force by an amendment to Local Policy Statement 3-02 and a blanket order. See NIN#94/17.


Over the next six to nine months, the Commission will be publishing further policy initiatives related to the current initiatives as announced by the Government and the Commission.

Policy Statements

LPS#3-02 - Prospectus Filing Requirements

An amendment is required to implement the Form 12A Summary Prospectus Disclosure System.

LPS#3-24 - Statutory and Discretionary Exemptions

LPS#3-24 will be substantially amended and updated to provide guidance to market participants about the use of statutory exemptions from the registration and prospectus requirements of the legislation that staff believes require interpretation. It will also set out how to apply for discretionary orders from the Superintendent and the Commission.

National Policy Statements

The Commission anticipates issuing for comment several national policies over the next few months relating to security holder communication, advertising, and expedited registration of advisers. The Commission also anticipates publishing in final form a procedure for expedited review of short form prospectuses and renewal annual information forms.


Blanket order - Form 12A Summary Prospectus Disclosure System

A blanket order will be issued to implement the Form 12A Summary Prospectus Disclosure System.


Form 14A - Prospectus for a Natural Resource Issuer

Form 14A will be based on Form 12A and modified to recognize the different business of a natural resource issuer.

Form 30 - Information Circular

Amendments will be made to ensure that prospectus-level disclosure is provided for certain transactions requiring security holder approval, including amalgamations, mergers, arrangements, reorganisations and reverse take-overs.

Consideration will be given to whether amendments are necessary to other policies and forms to ensure that prospectus level disclosure will be required for all reverse take-overs.

Form 61 - Quarterly Report

Amendments will be made to require an ongoing reconciliation of corporate operations to the issuer's stated business objectives and proposed use of proceeds, and to require the Management Discussion and Analysis section of the report to provide enhanced discussion of investor relations activities.

Exchange Offering Prospectus and Delegation Agreement

The Securities Amendment Act, l992 repeals the exemption for a statement of material facts contained in section 58(1)(c). This amendment will be brought into force once a form of exchange offering prospectus and a related policy, which will replace LPS#3-26, are finalized for junior issuers. The delegation to the Exchange of the review of exchange offering prospectuses will be governed by a new delegation agreement.

Interpretation Notes

As part of the Commission's program to attack promotional abuses, the Commission will issue Interpretation Notes setting out the disclosure and registration requirements applicable to promotional and investor relations activities and setting out fair trading practices that should be followed by all market participants.

Enhanced Insider Trading Reporting

The Commission will be taking several steps to enhance the reporting and disclosure of trading by insiders. The Commission proposes to offer electronic access to insider reports via commercial information systems and will issue a request for proposal. The Commission has developed, in conjunction with other jurisdictions, a new insider reporting form to correct deficiencies in the existing national form. Finally, the Commission will issue a notice to stimulate discussion and analysis of options for accelerating the reporting of trading by insiders through the use of electronic systems.

Additional Copies

Additional copies of the Weekly Summary supplement are available from the Commission's 11th floor receptionist.

DATED at Vancouver, British Columbia, on October 5, 1994.

"Douglas M. Hyndman"

REF: NIN#94/14