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Securities Law

NIN 97/15 - Proposed National Instrument 41-101 Prospectus Disclosure Requirements and Rescission of National Policy Statements Nos. 12, 13, 32, and 35 [NIN - Rescinded]

Published Date: 1997-05-16
Effective Date: 1997-05-13

Substance and Purpose of Proposed National Instrument

The purpose of the proposed National Instrument is to consolidate the prospectus disclosure requirements currently set forth in National Policy Statement No. 12 -Disclosure of "Market Out" Clauses in Underwriting Agreements in Prospectuses ("NP 12"), National Policy Statement No. 13 - Disclaimer Clause on Prospectus ("NP 13"), National Policy Statement No. 32 - Prospectus Warning Re: Scope of Distribution ("NP 32") and National Policy Statement No. 35 - Purchaser's Statutory Rights ("NP 35") as well as similar prospectus disclosure requirements of securities legislation of certain provinces.

The proposed National Instrument is an initiative of the Canadian Securities Administrators (the "CSA") and is expected to be adopted or made as a rule in each of British Columbia, Alberta and Ontario, as a commission regulation in Saskatchewan, and as a policy in each of the other jurisdictions represented by the CSA. The proposed National Instrument is similar, in substance to NP 12, NP 13, NP 32 and NP 35, which it will replace, although the required language has been simplified. It is intended that the proposed National Instrument only apply to long form prospectuses. Separate proposed national instruments implementing similar disclosure requirements for short form prospectuses will be published at a later date.

Summary of Proposed National Instrument

Part 1 of the proposed National Instrument deals with the application of the instrument. Part 2 deals with front page prospectus disclosure and is based on NP 13 and NP 32 and disclosure requirements for prospectuses in the securities legislation of certain provinces. In both sections 2.1 and 2.2 changes in the prescribed wording have been made to make the clauses easier to understand. Part 3 deals with plan of distribution disclosure and is based on NP 12. Again, non-substantive changes have been made to the prescribed language. Part 4 prescribes language to describe purchasers' statutory rights and is based on NP 35. Part 5 of the Rules contains the exemption provisions that result in the receipt for a prospectus being deemed to be evidence of approval of an exemption under the National Instrument.

Alternatives Considered

The CSA believe that the current disclosure requirements carried forward in substance in the proposed National Instrument have worked well to date. No alternatives were considered.

Unpublished Materials

In proposing the National Instrument, the CSA have not relied on any significant unpublished study, report or other written materials.

Anticipated Costs and Benefits

The benefits of the proposed National Instrument result from the maintenance of the consistent disclosure requirements now in use and their consolidation into one instrument. No material costs have been identified in connection with the proposed National Instrument.

Consequential Amendments

Consequential amendments will be made to the Securities Rules to repeal sections 96(2) and 98(1) as these sections are replaced by sections 2.1 and 2.2 of the National Instrument. The consequential amendments are intended to insure that there is no inconsistency between the Securities Rules and the proposed National Instrument. They are not intended to result in substantive changes to the requirements currently set out in the Securities Rules and prospectus forms

Impact of Proposed Rule on Prospectus Forms

The prospectus disclosure requirements found in the prospectus forms previously specified by the Executive Director under section 158 of the Securities Act (Forms 12, 13, 14, 12A, 12B, 14A and 14B) may, in some cases, be inconsistent with those found in the proposed National Instrument. In order to deal with the inconsistency between the disclosure requirements of the proposed National Instrument and those of the specified prospectus forms, the Executive Director will, once the proposed National Instrument is adopted or made as a rule and except in exceptional circumstances, waive the disclosure requirements contained in the required prospectus forms if issuers comply with the requirements of the proposed National Instrument.


Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by September 16, 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
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:

Veronica Singer
Policy Advisor
British Columbia Securities Commission
(604) 660-4780

Agnes Lau
Deputy Director, Securities Analysis
Alberta Securities Commission
(403) 422-2191

Barbara Shourounis
Saskatchewan Securities Commission
(306) 787-5645

Susan Wolburgh Jenah
Manager, Market Operations
Ontario Securities Commission
(416) 593-8245

Daniel Laurion
Deputy Director, Legislation and Market Development
Commission des valeurs mobilières du Québec
(514) 873-5009 (Ext.266)

Documents Published for Comment

The Commission is publishing for comment the following documents:
  • draft consequential amendments to the Securities Rules to accommodate National Instrument 41-101, and
  • 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. NP 12, NP 13, NP 32 and NP 35 will be replaced by the proposed National Instrument and will be rescinded.

DATED at Vancouver, British Columbia, on May 13, 1997

Douglas M. Hyndman