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Securities Law

NIN 98/13 - Notice of Proposed National Instrument 54-102 Supplemental Mailing List and Interim Financial Statement Exemption [NIN - Rescinded]

Published Date: 1998-02-27
Effective Date: 1998-02-25

The Commission, together with other members of the Canadian Securities Administrators ("CSA"), is publishing for comment the text of proposed National Instrument 54-102. The National Instrument deals with the sending of interim financial statements by a reporting issuer to registered and beneficial owners of its securities and is a reformulation of the portions of National Policy Statement No. 41 ("NP41") that pertain to supplemental mailing lists and, in British Columbia, BOR#96/3, both of which the National Instrument will replace. The National Instrument contains footnotes that are not part of the proposed instrument, but which have been included to provide background and explanation.

The proposed National Instrument is an initiative of 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 all the other jurisdictions represented by the CSA.

The CSA are publishing, concurrently with this Notice, proposed National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer, proposed Forms 54-101F1 through 54-101F8, proposed Companion Policy 54-101CP and proposed consequential amendments to the Securities Rules which, subject to this Instrument, collectively replace the provisions of NP41 pertaining to communication with beneficial owners of securities of a reporting issuer.

Substance and Purpose of Proposed National Instrument

The proposed National Instrument provides rules for establishing and maintaining a supplemental mailing list and provides an exemption, for a reporting issuer that establishes and maintains a supplemental mailing list, from the requirement to send interim financial statements to registered holders of the issuer's securities.

Summary of Proposed National Instrument

The proposed National Instrument provides an exemption to a reporting issuer from the requirement of securities legislation to deliver interim financial statements1

1 Section 144 of the Securities Rules, R.B.C. Reg. 194/97.

and, where the issuer is an exchange issuer, quarterly reports (Form 61)2

2 Section 152 of the Securities Rules, R.B.C. Reg. 194/97.

to its securityholders.

In order to rely upon the exemption, a reporting issuer must establish and maintain a supplemental mailing list; send its interim financial statements (and quarterly reports) to the persons on the supplemental mailing list; file the interim financial statements (and quarterly reports) with securities regulatory authorities and with exchanges upon which securities of the issuer are listed; and issue a press release with the highlights of the information contained in the interim financial statement (and quarterly report).

To establish a supplemental mailing list, a reporting issuer is required to send the form of request with its proxy-related materials annually or, if the issuer does not have an annual meeting, with its audited annual financial statements or annual report, to the issuer’s securityholders asking if they wish to receive the interim financial statements (and quarterly reports).

Alternatives Considered

No significant alternatives were considered. The exemption in the proposed National Instrument is substantially similar to the arrangement currently in place under NP41 and its related blanket rulings, deemed rules and other exemptions.

Anticipated Costs and Benefits

The exemption provided in the proposed National Instrument will maintain the cost savings for reporting issuers associated with not having to send interim financial statements to securityholders who do not wish to receive such material. Reporting issuers will continue to incur a small additional cost for including with their annual proxy-related materials the form of request for interim financial statements, but based on experience to date under NP41, the CSA believe that the benefits of the proposed National Instrument justify its costs.


Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by May 29, 1998 will be considered.

Submissions should be sent to all of the Canadian securities regulatory authorities listed below in care of the Ontario Securities 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
Registrar of Securities, 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

Claude St Pierre, 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:

Diane Joly
Commission des valeurs mobilières du Québec
(514) 873-5326

Glenda A. Campbell
Alberta Securities Commission
(403) 297-6454

Robert Hudson
British Columbia Securities Commission
(604) 899-6691
or 1-800-373-6393 (in B.C.)

Robert F. Kohl
Ontario Securities Commission
(416) 593-8233

DATED at Vancouver, British Columbia, on February 25, 1998

Douglas M. Hyndman