NIN 95/40 - Amendments to the Securities Act [NIN - Rescinded]

A large number of amendments to the Securities Act will be brought into force on January 1, 1996 by B.C. Reg. 479/95 and B.C. Reg. 480/95. The amendments to the Securities Act are contained in the Securities Amendment Act, 1989, S.B.C. 1989 c. 78, Securities Amendment Act, 1990, S.B.C. 1990, c. 25, Securities Amendment Act, 1992, S.B.C. 1992, c. 52 and Securities Amendment Act (No. 2), 1995, S.B.C. 1995 c. 45. All amendments have been previously published in the Weekly Summary. B.C. Reg. 479/95 and 480/95 and the relevant sections of the amendment acts, together with explanatory notes, are attached to this Notice.

The amendments include:

Securities Amendment Act, 1989

• repealing section 19 of the Act as the provisions will be incorporated into the Rules (see Division (5) of Part 4 and sections 69 and 70 of the Rules)

Securities Amendment Act, 1990

• repealing the Commodity Contract Act and incorporating exchange contracts into the Securities Act (Part 6.1 and certain other sections of the Act and numerous sections of the Rules)

Securities Amendment Act, 1992

• revising provisions relating to lapsing of a prospectus (sections 50.1 and 51 and Division (4) of Part 7 of the Rules)
• repealing the prospectus exemption for distributions using a statement of material facts, which will be replaced by an exchange offering prospectus (repeal of section 58(1)(c))
• providing the Commission or executive director with the power to exempt from the provisions of Part 10 (section 73.2)

Securities Amendment Act (No. 2), 1995

• strengthening the regulation of investor relations activities by defining investor relations activities and extending existing prohibitions against certain representations to those made during investor relations activities, requiring increased disclosure, and permitting the Commission to prohibit a person from engaging in investor relations activities (sections 1, 35, 36.1 and 144)
• providing the power to conduct on-site examinations of self-regulatory organizations and registrants (sections 15.1 and 24.1)
• clarifying that the exemption from adviser registration does not apply if the advising business is advertised (section 30(3)(a)(ii))
• clarifying that the exemptions from registration are exemptions only from the requirement to register as a dealer or as a salesperson, partner, director or officer of a dealer and not the requirement to register as an underwriter or adviser (sections 31 and 32)
• repealing the exemption from the registration requirements of the Act for the sale of short term promissory notes and commercial paper to individuals (repeal of section 32(d)(ii)) 
• tightening the rules for related party transactions of mutual funds by prohibiting a number of types of transactions between mutual funds and a broad range of related parties (section 110.1)
• providing the executive director, and investigators appointed by the Commission under section 126 of the Act, with additional powers to compel production of documents and to conduct searches (sections 125.1 and 127)
• providing the Commission with rule making power (sections 159.1 - 159.6)

Transition

The Commission is prepared to consider relief, on a blanket basis, concerning the repeal of section 32(d)(ii), the commercial paper exemption for sales to individuals, if it can be demonstrated that the relief is necessary and appropriate. Proposals for relief should address the concerns raised by the Ombudsman in the Report on the Sale of Promissory Notes by Principal Group Ltd. The Commission is also prepared to consider blanket relief from the non-application of the exemption to register as an adviser where the advising is advertised (section 30) if it can be demonstrated that the relief is necessary and appropriate. Proposals for this blanket exemptive relief should be addressed to Brenda Benham, Director, Policy and Legislation.

The Commission contemplates providing transitional relief for the new prohibitions on related party transactions of mutual funds (section 110.1). A mutual fund and responsible person will not be subject to new restrictions on related party transactions for transactions entered into before April 1, 1996. In addition, the Commission will issue blanket relief for principal trading, as discussed in NIN#95/11, and for mortgage transactions that address concerns relating to quality of the securities traded and independent pricing in other ways.

In light of the amendments contained in the Securities Amendment Act (No. 2), 1995 that change superintendent of brokers to executive director, any references in existing policies, orders and forms to superintendent of brokers should be read as references to the executive director. Similarly, any references to deputy superintendent should be read as references to director. The Commission will amend its policies, orders and forms to correct the references in due course.

Carswell Annotation

The Special Supplement to the Weekly Summary is the authoritative source for the amendments to the Act. However, Carswells British Columbia Securities Act and Regulation Annotated, 1996 contains the amendments to the Securities Act in shaded print following the provisions that they will replace. To obtain a copy contact:

Carswell
710-815 West Hastings Street
Vancouver, British Columbia
V6C 1B4

Tel. (604) 685-8171
Fax. (604) 685-5343

DATED at Vancouver, British Columbia, on November 23, 1995.

Douglas M. Hyndman
Chair

REF: NIN#89/22 NIN#94/25
NIN#89/28 NIN#94/28
NIN#90/27 NIN#95/10
NIN#91/8 NIN#95/11
NIN#92/15 NIN#95/23
NIN#92/24 NIN#95/28
NIN#94/9 NIN#95/30
NIN#94/13 NIN#95/33
NIN#94/14

Attachment