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Securities Law

NIN 96/29 - Trades in Options to Consultants [NIN - Rescinded]

Published Date: 1996-08-30
Effective Date: 1996-08-29

The Executive Director is issuing Blanket Order #96/15 that provides exemptions from the registration and prospectus requirements of the Securities Act for trades made by an issuer in its options to consultants. This notice provides background on the issuance of BOR#96/15 and requests comments on the relief provided.

Sections 31(2)(10) and 55(2)(9) of the Securities Act provide exemptions from the registration and prospectus requirements for trades made by an issuer in its securities with its employees. An independent contractor is not considered an employee. (See LPS 3-24) The Executive Director has issued a number of individual orders exempting trades in options to independent consultants that provide technical, business or management expertise to the issuer. Issuers and consultants that are entitled to rely on BOR#96/15 will not need to apply for individual orders.

The relief provided under BOR#96/15 is restricted to incentive options and is subject to a number of conditions, including a condition that the exercise price of the option not be less than the market price of the underlying securities on the date the option is granted to the consultant. Options may not be transferable. Sections 31(2)(12)(iii) and 55(2)(11)(iii) of the Securities Act provide registration and prospectus exemptions for the issuance of the securities upon the exercise of the options granted under BOR#96/15. The trades in these securities are subject to resale restrictions set out in sections 140 and 142 of the Securities Rules.

BOR#96/15 is effective immediately. Staff is, however, requesting comments on the blanket order and, in particular, on the definition of the term "consultant", the restriction on the relief to incentive options and the applicable conditions.

Comment letters should be submitted by October 31, 1996 to:

Brenda J. Benham
Director, Policy & Legislation
British Columbia Securities Commission
1100 - 865 Hornby Street
Vancouver BC V6Z 2H4

Comment letters submitted in response to Requests for Comment are placed on the public file and form part of the public record, unless confidentiality is requested. Although comment letters requesting confidentiality will not be placed on the public file, freedom of information legislation may require the Commission to make comment letters available. Persons submitting comment letters should therefore be aware that the press and members of the public may be able to obtain access to any comment letter.

DATED at Vancouver, British Columbia, on August 29, 1996

Dean E. Holley
Executive Director

References: BOR#96/15
LPS 3-24