NIN 99/49 - Republication for Comment of Proposed National Instrument 44-101 and Related Documents Short Form Prospectus Distributions [NIN - Rescinded]

The Commission, together with other members of the Canadian Securities Administrators ("CSA"), is republishing for comment proposed National Instrument 44-101 Short Form Prospectus Distributions (the "National Instrument"), proposed related Forms 44-101F1 and 44-101F2 (the "Forms") and proposed Companion Policy 44-101CP (the "Companion Policy") (collectively the "Third Publication Drafts"). While the Commission intends to adopt Implementing Rule 44-801 concurrently with the adoption of the proposed National Instrument, the Commission is not republishing the Implementing Rule for further comment as it has not changed in a material way since it was originally published for comment.¹

¹ NIN#98/11.

The proposed National Instrument, Forms, Companion Policy and Implementing Rule deal with the regulatory regime applicable to short form prospectus distributions, which was formerly called the Prompt Offering Qualification System (or the "POP" System).

The proposed National Instrument, Forms and Companion Policy, which are initiatives of the CSA, are intended to replace National Policy Statement No. 47 ("NPS 47"). The proposed Implementing Rule will replace BOR#93/1. The proposed National Instrument is expected to be adopted as a rule in each of British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other CSA jurisdictions, except Québec. The proposed Companion Policy is expected to be implemented as a policy in all CSA jurisdictions, except Québec.

The Commission des Valeurs Mobilières du Québec (the "CVMQ") agrees with the purpose and intent of the proposed National Instrument and will conduct a review to determine whether changes to Québec securities legislation are advisable in connection with implementation of the proposed National Instrument outside Québec.

Terms used in the proposed Companion Policy that are defined or interpreted in the proposed National Instrument or in a definition instrument in force in the jurisdiction and not otherwise defined in the proposed Companion Policy should be read in accordance with the proposed National Instrument, or the definition instrument, unless the context otherwise requires. The proposed National Instrument, Forms and Companion Policy contain footnotes that are not part of the proposed National Instrument, Forms or Companion Policy, which have been included to provide background and explanation.

Background

In February 1998, the Commission published for comment²

² NIN#98/11.

proposed National Instrument 44-101 "Prompt Offering Qualification System", Forms 44-101F1 and 44-101F2, Companion Policy 44-101CP and implementing Rule 44-801. (collectively the "First Publication Drafts"). The comment period expired May 22, 1998.

In July 1999, the Commission republished for comment³

³ NIN#99/28.

the National Instrument, Forms and Companion Policy (collectively the "Second Publication Drafts"), which incorporated changes from the First Publication Drafts. These changes reflected the CSA’s consideration of various factors, including public comments on the First Publication Drafts, the proposal by the Ontario Securities Commission ("OSC") to reformulate general prospectus requirements⁴

⁴ OSC proposed rule 44-501.

and the anticipated adoption by CSA members of National Policy 43-201 Mutual Reliance Review System for Prospectuses and Annual Information Forms.

The Third Publication Drafts, which are being republished for comment, incorporate changes from the Second Publication Drafts. These changes reflect the CSA’s consideration of public comments received from four commenters on the Second Publication Drafts.

Details of all comments received and specific changes incorporated in the Third Publication Drafts may be found in the OSC Notice relating to the National Instrument at the OSC website at www.osc.gov.on.ca. Significant changes to the Second Publication Drafts include the following:

• The revenue test proposed in the Second Publication Drafts for determining whether an acquisition of a business by an issuer is "significant" for the purposes of determining whether financial statements of the acquired business are required has been deleted and replaced by an "investment" test. This new test measures an issuer’s investments in and advances to an acquired business against the assets of the issuer. The three significance tests are now substantially the same as the tests used by the United States Securities and Exchange Commission (the "SEC").
  
• The three tests for determining the significance of an acquisition are applied at two points in time under the revised National Instrument: first, at the time of acquisition and, again, at the time of filing the preliminary prospectus. An acquisition is "significant" only if it satisfies one of the three tests on both dates. The earlier date is new and corresponds with the SEC’s timing.

Comments

Interested parties are invited to make written submissions with respect to the proposed National Instrument, Forms and Companion Policy. Submissions received by February 16, 2000 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
Department of Government Services and Lands, Securities Division,
Government of Newfoundland and Labrador
Registrar of Securities, Government of the Northwest Territories
Registrar of Securities, Government of the Yukon Territory
Registrar of Securities, Government of Nunavut

c/o John Stevenson, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8

Submissions on the Third Publication Drafts 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 any submission (in DOS or Windows format, preferably WordPerfect) should also be submitted. As securities legislation in certain jurisdictions 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:

Agnes Lau
Deputy Director, Capital Markets
Alberta Securities Commission
(780) 422-2191
agnes.lau@seccom.ab.ca

Stephen Murison
Legal Counsel
Alberta Securities Commission
(403) 297-4233
stephen.murison@seccom.ab.ca

Cameron McInnis
Associate Chief Accountant
British Columbia Securities Commission
(604) 899-6767
or (800) 373-6393 ) (in B.C.)
cmcinnis@bcsc.bc.ca

Joanne Peters
Senior Legal Counsel
Ontario Securities Commission
(416) 593-8134
jpeters@osc.gov.on.ca

Pierre Martin
Senior Legal Counsel
Commission des valeurs mobilières du Québec
(514) 940-2199 ext. 4557
pierre.martin@cvmq.com

DATED at Vancouver, British Columbia, on December 15, 1999.

Douglas M. Hyndman
Chair

Ref: NPS 47
NP 43-201
OSC Rule 44-501
NIN#98/11
NIN#99/28
BOR#93/1

This NIN refers to other documents. These documents can be found at the B.C. Securities Commission public website atwww.bcsc.bc.cain the Policy Documents Database.