NIN 97/04 - Proposed National Instrument 32-101 Small Securityholder Selling and Purchase Arrangements [NIN - Rescinded]

Substance and Purpose of Proposed National Instrument

The proposed National Instrument provides an exemption to an issuer and its agents from adviser and dealer registration requirements in Canadian securities legislation for certain activities relating to arrangements that permit holders of small amounts of securities of the issuer to sell those securities or to acquire additional securities. The proposed National Instrument is derived from blanket orders and rulings issued by the Canadian securities regulatory authorities.

The proposed National Instrument is an initiative of the Canadian Securities Administrators (the "CSA") and is expected to be adopted as a rule in each of British Columbia, Alberta and Ontario, as a Commission regulation in Saskatchewan, and as a policy in all the other jurisdictions represented by the CSA. The proposed National Instrument may be implemented by a blanket order or ruling in certain jurisdictions.

In those jurisdictions in which the National Instrument is to be adopted or made as a rule or regulation, the securities legislation in each of those jurisdictions provides the securities regulatory authority with rule-making or regulation-making authority in respect of the subject matter of the proposed National Instrument.

The proposed 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 Proposed National Instrument

The proposed National Instrument provides an exemption from the adviser and dealer registration requirements under Canadian securities legislation for trades by an issuer or its agent in furtherance of participation by existing holders of the issuer's securities in small securityholder selling and purchase arrangements in accordance with the policy of certain stock exchanges.

The exemption is subject to the condition that neither the issuer nor its agent provide advice on participation by a securityholder in an arrangement, other than a description of the operation of the arrangement, procedures for participation in the arrangement, or both. This condition is consistent with the manner in which small securityholder selling and purchase arrangements are currently conducted.

In the proposed National Instrument, the Canadian securities regulatory authorities recognize the policies of The Toronto Stock Exchange, The Montreal Exchange and The Alberta Stock Exchange, and provision is made for the Canadian securities regulatory authorities to designate other stock exchanges that have policies substantially similar to the policy of The Toronto Stock Exchange.

The proposed National Instrument also expands current exemptions available in several jurisdictions by allowing any agent of the company to use the exemption, instead of limiting the exemption to agents that are transfer agents.

Alternatives Considered

The proposed National Instrument replaces blanket rulings and orders issued by the Canadian securities regulatory authorities. The CSA did not consider any alternatives to implementing this exemption as a National Instrument.

Anticipated Costs and Benefits

The proposed National Instrument benefits small securityholders by facilitating arrangements that provide holders of less than a board lot of securities with liquidity or an ability to accumulate a board lot, which might not otherwise be economical as a result of minimum brokerage commissions. The proposed National Instrument also provides an incremental benefit to agents of a company that are not transfer agents by providing an exemption for their activities related to small securityholder selling or purchase arrangements.

As the proposed National Instrument provides an exemption from requirements, there are no costs imposed by the proposed National Instrument.

Comments

Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by April 18, 1997 will be considered.

Submissions should be sent to all of the Canadian securities regulatory authorities listed below in care of the Ontario Commission, in duplicate, as indicated below:

British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
The Manitoba Securities Commission
Ontario Securities Commission
Office of the Administrator, New Brunswick
Registrar of Securities, Prince Edward Island
Nova Scotia Securities Commission
Securities Commission of Newfoundland
Securities Registry, Government of the Northwest Territories
Registrar of Securities, Government of the Yukon Territory

c/o Daniel P. Iggers, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8

Submissions should also be addressed to the Commission des valeurs mobilières du Québec as follows:

Jacques Labelle, General Secretary
Commission des valeurs mobilières du Québec
800 Victoria Square
Stock Exchange Tower
P.O. Box 246, 17th Floor
Montréal, Québec H4Z 1G3

A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted. As securities legislation in certain provinces requires that a summary of written comments received during the comment period be published, confidentiality of submissions cannot be maintained.

Questions may be referred to any of:

Ross McLennan
Director, Registration
British Columbia Securities Commission
(604) 660-4800

David Sheridan
Legal Counsel
Alberta Securities Commission
(403) 297-2630

Robert F. Kohl
Legal Counsel, Market Operations
Ontario Securities Commission
(416) 593-8233

Antoni Dandonneau
Conseiller juridique
Commission des valeurs mobilières du Québec
(514) 873-5326

Documents Published for Comment

The Commission is publishing for comment the text of the proposed National Instrument, together with footnotes that are not part of the proposed National Instrument but have been included to provide background and explanation.

DATED at Vancouver, British Columbia, on January 16, 1997.

Douglas M. Hyndman
Chair