NIN 98/51 - Consequential Amendments to the Securities Rules Relating to Insider Reports and Take Over Bids - Request for Comments [NIN - Rescinded]

The Commission is publishing for comment proposed consequential amendments to the Securities Rules. The proposed rules set out prescribed time periods relating to the filing of insider reports and the conduct of takeover bids.

Background

On May 13, 1998, royal assent was given to the Finance and Corporate Relations Statutes Amendment Act, 1998, S.B.C. 1998, c. 7 (the “Amendment Act”), which amended three statutes, including the Securities Act. The amendments to the SecuritiesAct relating to insider bids are discussed in NIN#98/28. These amendments have not yet come into force. Consequential changes to the Securities Rules are being published by way of this Notice so that the amendments to both the Securities Act and the Securities Rules can come into effect at the same time.

Proposed Amendments relating to Insider Reports

The proposed amendments to the Securities Rules specify the prescribed time periods within which insider reports must be filed. The proposed amendments, when read with section 87 of the SecuritiesAct, as amended by the Amendment Act, provide that insider reports must be filed within 10 days after the occurrence of any of the following events: a person becomes an insider; a director or senior officer is deemed to be an insider under sections 2(2) or 2(3) of the Securities Act; or, a change takes place in the insider’s direct or indirect beneficial ownership of, control or direction over, securities of a reporting issuer. These amendments alter current time limits in just one respect, namely, there will be a shorter time period within which insider reports must be filed after a change occurs in the insider’s beneficial ownership, control, or direction over securities.

Proposed Amendments relating to Take Over Bids

The proposed amendments to the SecuritiesRules, which should be read in conjunction with sections 105 and 110 of the Securities Act as amended by the Amendment Act, also address the time periods affecting take over bids. The minimum deposit period, and the corresponding period of time when an offeror cannot take up securities, are extended to 35 days. If there is a change to the information in a bid circular, or if there is a variation in the terms of the bid, security holders will have 10 days within which to withdraw their securities, calculated from the date of the notice of change or variation under section 108 of the Securities Act. Securities that are taken up should be paid for within 3 business days; otherwise the depositing security holder acquires the right to withdraw the securities. All securities must be taken up and paid for within 10 days after the expiry of the bid, provided that all terms and conditions have been complied with or waived.

In addition, a director’s circular must be delivered within 15 days after a take over bid is received. If the board of directors is considering whether to recommend acceptance or rejection of a bid at the time the director’s circular is delivered, the board’s recommendation must be delivered to security holders 7 days before the scheduled expiry of the period when securities may be deposited under the bid. Finally, offerors who commence their bid by publishing an advertisement in a daily newspaper must request a list of security holders from the target offeree company, and deliver the bid to these security holders, within 2 business days after receiving the list.

These amendments implement the recommendations of the Investment Dealers’ Association of Canada’s Committee on Take Over Bid Time Limits (the Zimmerman Committee). They give issuers which are the subject of take over bids, and holders of securities of such offerees, more time to consider bids and to seek alternatives, if they so choose.

Comments

The Commission is interested in receiving comments on the above-proposed amendments to the rules. Interested parties are encouraged to send written comments by October 20, 1998 to:

Brenda J. Benham
Director
Policy and Legislation
British Columbia Securities Commission
200 - 865 Hornby Street
Vancouver, BC V6Z 2H4
(604) 899-6635
(800) 373-6393 (in B.C.)
email: bbenham@bcsc.bc.ca

Comment letters submitted in response to Requests for Comment are placed in the public file, and form part of the public record, unless confidentiality is requested. Although comment letters requesting confidentiality will not be placed in 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 August 20, 1998.

Joyce C. Maykut, Q.C.
Vice Chair

1.The Securities Rules, R.B.C. Reg. 194/97, are amended by adding the following section:

Prescribed time periods for filing insider report

155.1 (1) For the purpose of subsection 87 (2) of the Act, the prescribed period
is 10 days after becoming an insider.

(2) For the purpose of subsection 87 (4) of the Act, the prescribed period
is 10 days after the change takes place.

(3) For the purpose of subsection 87 (5) of the Act, the prescribed period
is 10 days after the date on which the deeming occurs.

2.Section 180 is repealed and the following substituted:

Prescribed time periods

180 For the purpose of

(a) both of paragraphs (b) and (c) of section 105 of the Act, the prescribed period is 35 days from the date of the bid,

(b) section 105(d)(ii) of the Act, the prescribed period from the date of a notice of change or variation under section 108 of the Act is 10 days,

(c) section 105(d)(iii) of the Act, the prescribed period is 3 business days after having been taken up,

(d) section 105(i) of the Act, the prescribed period after the expiry of the bid is 10 days,

(e) section 105(j) of the Act, the prescribed period after the taking up of the securities deposited under the bid is 3 business days,

(f) section 105(k) of the Act, the prescribed period after the deposit of the securities under the bid is 10 days,

(g) section 108(5) of the Act, the prescribed period after the notice of variation has been delivered is 10 days,

(h) section 109(1) of the Act, the prescribed period after the date of the bid is 15 days,

(i) section 109(5) of the Act, the prescribed number of days before the scheduled expiry of the period during which securities may be deposited under the bid is 7 days, and

(j) section 110(7)(c) of the Act, the prescribed period after the offeror’s receipt of the list of the holders of securities referred to in section 105(a) is 2 business days.