12-602 - Exempt Purchaser Status (Previously Local Policy Statement 3-15) [BCP - Rescinded]

BC POLICY 12-602

EXEMPT PURCHASER STATUS (Previously Local Policy Statement 3-15)

INTRODUCTION

This Policy sets out guidelines for an application to the Executive Director for designation as an exempt purchaser, for the purposes of sections 45(2)(4) and 74(2)(3) of the SecuritiesAct.

PART 1 IMPLEMENTATION

1.1 The Commission is rescinding Local Policy Statement 3-15 dated July 7, 1989 and substituting this BC Policy, effective May 30, 2001.

1.2 Terms defined or interpreted in the Securities Act, Securities Regulation or Securities Rules have the same meaning in this Policy.

PART 2 APPLICATION

2.1 The exempt purchaser exemption is intended to enable issuers to distribute securities on an exempt basis to persons who do not fall within the categories of purchasers contained in sections 45(2)(2) and 74(2)(1) of the Act, but who are able to make investment decisions on their own behalf and do not require the information contained in, and the protection provided by, a prospectus.

2.2 Under the exempt purchaser exemption, the issuer is not required to provide a disclosure document to the exempt purchaser and no minimum dollar amount or number of securities are required to be purchased. However, the securities are subject to a hold period under the Securities Rules (and Multilateral Instrument 45-102 Resale of Securities, once it is brought into effect).

PART 3 CRITERIA FOR DESIGNATION AS AN EXEMPT PURCHASER

3.1 All applicants for exempt purchaser status will be required to meet the requirements of this Policy, both in the case of an initial application and an application for renewal.

3.2 In order for an applicant to be designated as an exempt purchaser, the Executive Director must be satisfied that the applicant is a financial institution that carries on the business of investing in securities on its own behalf or on behalf of others on a discretionary basis.

3.3 For the purposes of paragraph 3.2, a financial institution includes a bank, trust company, credit union, insurer, mutual fund, pension fund or investment fund.

3.4 In certain instances, banks, trust companies, credit unions and insurers conduct their investment activities through subsidiaries. In these situations, application for exempt purchaser status may be made by the subsidiary, provided it is wholly owned by one or more financial institutions.

3.5 In the case of a mutual fund, pension fund or investment fund, application for exempt purchaser status may be made by the fund. Exempt purchaser status will not be granted to the fund manager.

PART 4 APPLICATION PROCEDURE

4.1 The application should be addressed as follows:

Director, Exemptions & Orders
British Columbia Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, B.C.
V7Y 1L2

4.2 The following documents must be filed in support of an application for exempt purchaser status or renewal of exempt purchaser status:

(a) a completed and signed Application for Exempt Purchaser Status (BC Form 12-602F); and

(b) an annual report relating to the applicant's most recently completed fiscal year, including:

(i) audited financial statements,

(ii) a description of the applicant's business,

(iii) a directors' report or management report on the business of the applicant, and

(iv) a list of the applicant's senior officers or executives, detailing their current functions, provided that where the applicant is a subsidiary of a financial institution, the annual report of the parent of the applicant should also be filed.

4.3 To avoid delay, an English translation of all documents required by paragraph 4.2 should accompany any documents that are not in English.

4.4 If any of the documents required under paragraph 4.2 are not being submitted, a covering letter should describe the documents and explain why they are not being submitted.

4.5 Designation as an exempt purchaser remains in effect for 12 months. In order to maintain continuous designation as an exempt purchaser, exempt purchasers seeking to renew their status are encouraged to submit the documents referred to in paragraph 4.2 at least six weeks before the expiry date of their current designation.

May 30, 2001

Brent W. Aitken
Member