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Securities Law

NIN 98/67 - Adoption of National Instrument 71-101, Companion Policy 71-101CP, Rule 71-801, Rule 71-802 and BOR#98/14 The Multijurisdictional Disclosure System and Revocation of National Policy Statement No. 45 and Certain Blanket Orders [NIN - Rescinded]

Published Date: 1998-10-23
Effective Date: 1998-10-21

On October 19, 1998 the Commission made, effective November 1, 1998, a rule referred to as National Instrument 71-101 and entitled "The Multijurisdictional Disclosure System" ("NI 71-101"), and two local rules implementing NI 71-101. NI 71-101 includes a form known as Form 71-101F (the "Form"). The two local rules are known as Rule 71-801 and Rule 71-802, entitled "Implementing the Multijurisdictional Disclosure System under National Instrument 71-101" and "Distributions Outside of British Columbia Under the United States Multijurisdictional Disclosure System", respectively (together, the "Local Rules"). The Commission has also, effective November 1, 1998, adopted Companion Policy 71-101CP to National Instrument 71-101 (the "Companion Policy"). Effective November 1, 1998 the executive director has adopted BOR#98/14, which provides an exemption from the trust indenture provisions of the British Columbia Company Act for certain distributions of debt securities under NI 71-101. NI 71-101, the Local Rules, the Companion Policy and BOR#98/14 deal with the multijurisdictional disclosure system (the "MJDS").

The text of NI 71-101 (B.C. Reg. 343/98), including the Form, and the Local Rules (B.C. Reg. 344/98 and B.C. Reg. 345/98, respectively), the Companion Policy and BOR#98/14 are being published in the Weekly Summary of October 23, 1998.

Effective November 1, 1998, National Policy Statement No. 45 ("NP 45"), BOR#91/7 and BOR#93/3, all relating to the MJDS, will be revoked. NI 71-101, including the Form, will take effect as rules in Alberta, British Columbia, Ontario and Nova Scotia, as Commission regulations in Saskatchewan and as policies in each of the other jurisdictions represented by the Canadian Securities Administrators ("CSA"). The Companion Policy will take effect as a policy in each of the jurisdictions represented by the CSA.

NI 71-101 (including the Form), the Companion Policy, the Local Rules and BOR#98/14 reformulate the MJDS, a joint initiative implemented in 1991 by the CSA through NP 45 and by the Securities and Exchange Commission of the United States ("SEC") to reduce duplicative regulation in cross-border offerings, issuer bids, take-over bids, business combinations, continuous disclosure and other filings.

The MJDS permits public distributions of securities of U.S. issuers that meet specified eligibility criteria to be made in Canada on the basis of disclosure documents prepared in accordance with U.S. federal securities laws (with certain additional Canadian disclosure).

The MJDS also reduces disincentives to the extension to Canadian securityholders of rights offerings by U.S. issuers by permitting such rights offering to be made in Canada on the basis of U.S. disclosure documents. Similarly, it facilitates the extension to Canadian securityholders of U.S. issuers of take-over bids, issuer bids and business combinations in the circumstances contemplated by the NI 71-101. The MJDS permits such transactions to be made in Canada generally in the same manner as in the U.S. and on the basis of U.S. disclosure documents.

Further, the MJDS permits U.S. issuers to use U.S. continuous disclosure documents in Canada in lieu of Canadian documents and exempts insiders of U.S. issuers from the requirement to file insider reports, provided the required filings are made with the SEC.

The CSA are of the view that the regulatory regime established by NP 45 has operated efficiently and with minimal difficulty since its inception. Therefore, NI 71-101 and the Companion Policy and related documents are generally consistent with the existing MJDS regulatory regime for issuers eligible to use the MJDS. The substance of the existing MJDS has not been materially altered other than to remove a current alternative for certain reconciliations of financial statements and, in the Companion Policy, to clarify the procedures for U.S. only offerings under the U.S. multijurisdictional disclosure system.

The Commission made NI 71-101, the Companion Policy and related documents following publication on December 5, 1997 (NIN#97/51) of a proposed national instrument, companion policy and local rule (since split into the two Local Rules) and the subsequent review of written comments received during the comment period. A brief summary of the substance and purpose of NI 71-101, the Companion Policy and related documents, and of the comments received on the MJDS documents that were published for comment, is provided in the Commission’s advance notice published August 14, 1998 (NIN#98/50).

Terms used in the Companion Policy that are defined or interpreted in NI 71-101 or a definition instrument in force in a jurisdiction and not otherwise defined in the Companion Policy should be read in accordance with NI 71-101 or the definition instrument, unless the context otherwise requires.

DATED at Vancouver, British Columbia on October 21, 1998

Joyce C. Maykut, Q.C.
Vice Chair

Ref: NIN#98/50
NI 71-101