NIN 96/26 - Calculation of Hold Periods Under the Securities Rules [NIN - Rescinded]
| Published Date: | 1996-08-16 |
|---|---|
| Effective Date: | 1996-08-13 |
This Notice is being issued to clarify the appropriate procedure for calculation of hold periods under section 132 of the Rules. It has come to the attention of the Commission that there is some confusion among market participants as to the precise date and time on which a hold period expires.
Section 132(2) of the Rules provides that:
Section 132(1) of the Rules defines "hold period" as any 12 month period specified in sections 128(d)(v), 142(2)(a), (b), (c), (d) or 143(e) of the Rules or specified in an order issued under section 59(1) of the Act.(2) Where a security, at the date of its issue, is subject to a hold period, the issuer must endorse the certificate representing the security
(a) with a statement that the security represented by the certificate is subject to a hold period and may not be traded in British Columbia until the expiry of the hold period except as permitted by the Securities Act (British Columbia) and regulations made under the Act, and
(b) if the issuer is a reporting issuer at the date of issue, with a statement that specifies the date the hold period expires.
Section 142(2)(a) of the Rules provides that certain trades are deemed to be a distribution unless, inter alia, a 12 month period has elapsed from the date of the issue of the security. Sections 142(2)(b), (c) and (d) contain similar wording ("12 months have elapsed from" the date of a specified event). Note that the hold periods referred to in sections 128(d)(v) and 143(e) of the Rules refer the reader back to sections 142(a), (b), (c) or (d) for specification of the applicable hold period.
The Interpretation Act, R.S.B.C. 1979, c. 206 specifies the appropriate method for calculating the hold periods set out in sections 142(2)(a), (b), (c) and (d) of the Rules. Sections 25(4) and (5) of the Interpretation Act provide as follows:
(4) In the calculation of time expressed as clear days, weeks, months or years, or as "at least" or "not less than" a number of days, weeks, months or years, the first and last days shall be excluded.
(5) In the calculation of time not referred to in subsection (4), the first day shall be excluded and the last day included.
As the calculation of time in sections 142(2)(a), (b), (c) and (d) of the Rules is not expressed as clear days, weeks, months or years, or as "at least" or "not less than" a number of days, weeks, months or years, the first day of the calculation of the 12 month period must be excluded and the last day included, in accordance with section 25(5) of the Interpretation Act.
To illustrate, section 142(2)(a) provides that certain trades are deemed to be a distribution unless, inter alia, a 12 month hold period has elapsed from the date of the issue of the security. If a security was issued on January 1, 1996, the Interpretation Act requires that January 1, 1996 be excluded from the 12 month calculation. The last day of the period would be January 1, 1997. This day would be included in the calculation.
Under this scenario, the 12 month hold period would expire at 12:00 a.m. (midnight) on January 1, 1997. Therefore trading would be permitted on January 2, 1997.
The wording commonly used in certificate legends with respect to hold periods is "the hold period expires on", with the appropriate period expressed in terms of a month, day and year. In the example above, the appropriate wording would be "the hold period expires at 12:00 a.m. (midnight) on January 1, 1997".
Market participants should note that the existence of the 3-day securities trading settlement cycle (i.e. settlement = trade date + 3 days) does not mean that securities subject to a hold period can be traded 3 days prior to the hold period expiry date. No trade transactions should occur prior to the expiry of the hold period, except where permitted by the Act and the Rules.
DATED at Vancouver, British Columbia, on August 13, 1996
Douglas M. Hyndman
Chair