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Securities Law

NIN 96/46 - Advance Notice National Instrument 14-101 Definitions [NIN - Rescinded]

Published Date: 1996-12-20
Effective Date: 1996-12-18

Implementation of National Instrument

National Instrument 14-101 - Definitions is an initiative of the Canadian Securities Administrators ("CSA"). The Ontario Securities Commission adopted the National Instrument as a rule on December 17, 1996 and is publishing it in the December 20, 1996 issue of the OSC Bulletin.

The Commission has not yet made National Instrument 14-101 as a rule. This Advance Notice is being published to provide notice that the Commission expects to make the rule and related consequential amendments to the Securities Rules before April 1, 1997, when both the National Instrument and the consequential amendments will become effective. A similar notice is being published in the December 20, 1996 issue of the Alberta Securities Commission Weekly Summary. When made, both the rule and the consequential amendments will be published in the Weekly Summary. The Commission anticipates publishing the rule and consequential amendments in late February or early March 1997, once it has received all necessary approvals.

The National Instrument is being adopted as a rule in each of British Columbia, Alberta and Ontario and as a policy in each of the other jurisdictions represented by the CSA, other than Saskatchewan. The National Instrument is expected to be adopted as a Commission regulation in Saskatchewan.

The National Instrument is expected to come into force in all jurisdictions on April 1, 1997. Implementation may be delayed in Saskatchewan until procedures are finalized in Saskatchewan to enable the Saskatchewan Securities Commission to exercise its regulation making power. Once procedures are in place, it is expected that the National Instrument will be adopted in Saskatchewan on the same basis as in other jurisdictions.

Substance and Purpose of the National Instrument

The National Instrument is intended to provide a national approach to interpretation of national instruments and increase the level of consistency in both interpretation and application of national instruments. The National Instrument is also intended to provide a framework of terms the definitions of which the CSA have agreed upon for use in future national instruments.

The National Instrument sets out definitions for commonly used terms such as "Canadian GAAP", definitions of terms necessary to provide local application of a national instrument such as "securities regulatory authority" and definitions of terms used in more than one national instrument, although not used as frequently as some of the more general terms. This National Instrument is expected to be amended from time to time to add definitions of new terms that meet any of these three criteria.

The National Instrument implements, in part, the recommendation of the CSA Task Force on Operational Efficiencies that Canadian securities regulatory authorities increase the co-ordination of regulation, including standardization of requirements.

Summary of Written Comments

On August 2, 1996, the Commission released for public comment an earlier draft of the National Instrument together with related consequential amendments to the Securities Rules. During the comment period that expired on November 4, 1996, the CSA received one written comment letter on the National Instrument from the Canadian Bankers Association. No written comments were received on the consequential amendments to the Securities Rules.

The Canadian Bankers Association commented that the words "and that carries on business through a branch network" should be deleted from the definition of "Canadian financial institution" on the basis that the words are not necessary to the definition and, in view of the rapid changes occurring in the financial services industry, may result in the unintentional exclusion of some financial institutions from the definition.

The Commission participated in discussions that took place to deal with this comment letter and agrees with the CSA's response. The CSA have agreed to delete the words on the basis that they are not necessary in a definition of a general nature that will be used in more than one instrument. As a result of this decision, the CSA have also decided to delete the words that follow "the Confédération des caisses populaires et d'économie Desjardins du Québec" to the end of the definition as those words qualified the concept of operating through a branch network. The CSA note that the concept of a branch network may be necessary for the purposes of some national instruments, and in those cases appropriate modifications will be made.

The Commission wishes to thank the Canadian Bankers Association for providing comments.

Summary of Changes to the National Instrument from the Proposed National Instrument

In addition to the change described above, the CSA have made a few other minor changes to the National Instrument:

1. A new subsection (2) has been added to make it clear that a provision or reference within a provision of a national instrument that specifically refers by name to a jurisdiction other than the local jurisdiction shall not have any effect in the local jurisdiction, unless otherwise stated in the national instrument.

2. The definition of "person or company" was amended to add a reference to the interpretation of that term in Quebec.

3. A reference to forms was added to the list of British Columbia statutes and other instruments in Appendix B, which sets out the Canadian securities legislation of each jurisdiction.

As, in the Commission's view, the changes to the National Instrument and the consequential amendments to the Securities Rules are not material, neither National Instrument 14-101 nor the related consequential amendments to the Securities Rules is subject to a further comment period.

DATED at Vancouver, British Columbia, on December 18, 1996.

Douglas M. Hyndman