NIN 97/10 - Trust Companies, Insurers and Portfolio Managers in Other Provinces and Territories of Canada, and Foreign Portfolio Managers [NIN - Rescinded]

The Commission is, concurrently with this Notice, publishing BOR#97/4, BOR#97/5 and NIN#97/11.

BOR#97/4 is an interim blanket order that provides certain exemptions from the registration and prospectus requirements of the Securities Act where a trust company, insurer or portfolio manager in another province or territory of Canada, or a foreign portfolio manager, purchases securities on behalf of fully managed accounts. NIN#97/11 is an interpretation note that provides guidance on the meaning of "fully managed" in sections 29(1) and 55(1) of the Securities Act and in BOR#97/4. BOR#97/5 revokes an earlier blanket order that provided limited registration and prospectus exemptions where a trust company, insurer or portfolio manager in another province or territory purchased securities on behalf of fully managed accounts.

This Notice provides background to, and summarizes the contents of, BOR#97/4, BOR#97/5 and NIN#97/11.

Background

Sections 31(2)(5) and 55(2)(4) of the Securities Act and sections 89(a), 128(a), 89(b) and 128(b) of the Securities Rules provide exemptions from the registration and prospectus requirements of the Securities Act where a purchaser purchases as principal and the trade otherwise complies with the requirements of those sections (the "$97,000", "50 purchaser" and "$25,000" exemptions, respectively).

Sections 29(1)(a) and 55(1)(a) of the Securities Act deem a trust company or insurer to be acting as principal when it purchases or sells a security as an agent or trustee for accounts that are fully managed by it. Similarly, sections 29(1)(b) and 55(1)(b) of the Securities Act deem a portfolio manager to be acting as principal when it purchases or sells a security for accounts that are fully managed by it.

Section 29 of the Interpretation Act (British Columbia) defines a trust company and an insurance company as a trust company and insurance company authorized to carry on business in British Columbia under the Financial Institutions Act (British Columbia). The Commission likewise interprets "portfolio manager" in sections 29(1) and 55(1) of the Securities Act as a portfolio manager that carries on business in British Columbia (either registered or exempted from registration as a portfolio manager under the Securities Act).

As a result of the above, the $97,000, 50 purchaser and $25,000 exemptions are available where a trust company or insurer authorized to carry on business in British Columbia, or a portfolio manager registered or exempted from registration under the Securities Act, purchases securities on behalf of fully managed accounts. The exemptions are not, however, available where a trust company or insurer authorized to carry on business, or a portfolio manager registered or exempted from registration, under the laws of a province or territory of Canada other than British Columbia ("Canadian trust company", "Canadian insurer" and "Canadian portfolio manager", respectively), purchases for fully managed accounts. The exemptions are also not available where a foreign trust company, insurer or portfolio manager purchases a security on behalf of fully managed accounts.

BOR#97/4

BOR#97/4 provides registration and prospectus exemptions parallel to the $97,000, 50 purchaser and $25,000 exemptions where a Canadian trust company, Canadian insurer or Canadian portfolio manager purchases a security as an agent or, in the case of a Canadian trust company or Canadian insurer, as a trustee, for accounts that are fully managed by it. BOR#97/4 also provides exemptions parallel to the $97,000, 50 purchaser and $25,000 exemptions where a person that carries on business as a portfolio manager in a jurisdiction other than Canada ("foreign portfolio manager") purchases a security as an agent for fully managed accounts, provided that

(a) the total value of the investment portfolios that the foreign portfolio manager manages (whether on a fully managed basis or otherwise) on behalf of clients is not less than $20,000,000, and

(b) the "Certification by Foreign Portfolio Manager" Form attached as a schedule to BOR#97/4, or the Vancouver Stock Exchange "Private Placement Questionnaire and Undertaking" Form, is filed with the Commission no later than 10 days after the distribution.

The Form attached to BOR#97/4 is a certification by the foreign portfolio manager that, among other things, the issuer has provided it with a list of the issuer's insiders and the persons that carry on investor relations activities for the issuer, and that it does not believe that any of those persons has a beneficial interest in any of the managed accounts for which it is purchasing. The Vancouver Stock Exchange "Private Placement and Undertaking" Form is being amended to require similar representations. Once the Vancouver Stock Exchange Form has been amended, the Commission will accept either Form; until that time, the Form attached to BOR#97/4 must be filed.

BOR#97/4 is being issued on an interim basis, pending comments concerning its approach and terms regarding foreign portfolio managers. The Commission specifically invites comments concerning this issue. Refer to "Request for Comments" below for instructions on forwarding comments to the Commission.

NIN#97/11

NIN#97/11 provides guidance on the meaning of the term "fully managed" in sections 29(1) and 55(1) of the Securities Act and in BOR#97/4. It clarifies that an account is "fully managed" only where the trust company, insurer or portfolio manager has absolute discretion as to purchasing and selling, where all investment decisions are made by it, and where it receives no instructions respecting purchasing or selling from any person beneficially interested in the account or any other person.

BOR#97/5

BOR#97/5 revokes BOR#95/12, issued in December, 1995. BOR#95/12 provided limited registration and prospectus exemptions where a trust company, insurer or portfolio manager in another province or territory purchased securities on behalf of fully managed accounts. This relief is continued in BOR#97/4.

Request for Comments

The Commission is requesting comments on BOR#97/4. Interested persons are invited to provide comments concerning BOR#97/4 and, more specifically, its approach and terms regarding foreign portfolio managers. Comment letters should be submitted by June 1, 1997 to:

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

Comment letters submitted in response to Requests for Comments 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 March 4, 1997.

Douglas M. Hyndman
Chair