41-101 - Prospectus Disclosure Requirements [NI Proposed - Lapsed]
NATIONAL INSTRUMENT 41-101
PROSPECTUS DISCLOSURE REQUIREMENTS1,2
1 This Instrument is based on National Policy Statement Nos. 12, 13, 32 and 35. The proposed National Instrument is expected to be adopted as a rule in each of British Columbia, Alberta and Ontario, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA.
2 A national definition instrument has been adopted as National Instrument 14-101 Definitions. It contains definitions of certain terms used in more than one national instrument. National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in that statute, unless the context otherwise requires. National Instrument 14-101 also provides that a provision or a reference within a provision of a national instrument that specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.
PART 1 APPLICATION AND INTERPRETATION
1.1 Application - Except as otherwise provided in securities legislation,3
3 The term "securities legislation" is defined in National Instrument 14-101 Definitions as meaning the particular statute and legislative instruments of the local jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, the rules, forms, rulings and orders relating to securities in the local jurisdiction.
this Instrument applies to a preliminary prospectus and a prospectus used to distribute a security in a local jurisdiction.4
4 The term "local jurisdiction" is defined in National Instrument 14-101 Definitions. The definition is "in a national instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate". The term "Canadian securities regulatory authorities" is defined in National Instrument 14-101 Definitions as meaning the securities commissions or similar regulatory authorities set out in an appendix to that instrument.
1.2 Preliminary Prospectus - The statements required by this Rule to be included in a prospectus shall also be included in a preliminary prospectus.
1.3 Variations - The statements required by this Rule to be included in a preliminary prospectus or a prospectus may be modified to reflect the terms and conditions of a distribution.
PART 2 FRONT PAGE DISCLOSURE
2.1 Prospectus Warning5
5 NP 32 currently is limited in its application to offerings in more than one province of Canada. There does not appear to be any policy rationale for this result. Accordingly, in the reformatted instrument, the disclosure requirement applies in all cases.
and Disclaimer Clause6
6 As the accepted practice is to have the language required by NP 13 appear at the top of the first page following the language prescribed by NP 32, the two provisions have been collapsed into this section, which applies in all cases.
- The following statement shall be included in italics7
7 Neither NP 32 nor NP 13 currently requires that the prescribed language be printed in italics. As it is accepted practice to use italics, this has been made an express requirement. NP 13 suggests that the disclaimer clause should be printed in capital letters. As this practice is generally not followed, the required disclosure appears in the normal upper and lower case format.
at the top of the front page of a prospectus:
"The securities described in this prospectus may only be distributed where it is legal to sell them, by people who are legally permitted to sell them. No securities regulatory authority8
8 The term "securities regulatory authority" is defined in National Instrument 14-101 Definitions as meaning, for a local jurisdiction, the securities commission or similar regulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction.
has expressed an opinion about these securities and it is an offence to claim otherwise."
2.2 Preliminary Prospectus Disclosure - The following legend shall be included in red ink on the left hand side of the front page of a preliminary prospectus:
"This preliminary prospectus relating to the securities described in it has been filed in [each of/certain of] the [provinces/provinces and territories of Canada] but has not yet become final for the purpose of a distribution. Information contained in this preliminary prospectus may not be complete and may have to be amended. The securities may not be distributed until a receipt is obtained for the prospectus."
PART 3 PLAN OF DISTRIBUTION DISCLOSURE
3.1 Plan of Distribution Disclosure - If securities are distributed under a prospectus by an underwriter that has agreed to purchase a specified number or principal amount of the securities at a specified price and the underwriter's obligations are subject to conditions, the following statements shall be included in the prospectus:
(1) On the front page of the prospectus:
"We, as principals, conditionally offer these securities9,
9 Reference to "Debentures" in NP 12 has been deleted as the disclosure applies to all securities. The price of the securities has been left blank, unlike the current language of NP 12.
subject to prior sale, if, as and when issued by [issuer] and accepted by us in accordance with the conditions contained in the underwriting agreement referred to under Plan of Distribution."
(2) In the section of the prospectus that describes the plan of distribution of the securities:
"Under an agreement dated [insert date of agreement] between [issuer] and [insert name of underwriter[s]] as underwriter[s], [issuer] has agreed to sell and the underwriter[s] [has/have] agreed to purchase on [insert closing date] the securities at a price of [insert offering price] payable in cash to [issuer] against delivery. The obligations of the underwriter[s] under the agreement may be terminated at [its/their] discretion on the basis of [its/their] assessment of the state of the financial markets and may also be terminated upon the occurrence of certain stated events. The underwriter[s] [is/are], however, obligated to take up and pay for all the securities if any of the securities are purchased under the agreement."
PART 4 PURCHASERS' STATUTORY RIGHTS
4.1 Purchasers' Statutory Rights - A statement in substantially the following form shall appear in a prospectus:
"Securities legislation in [certain of the provinces [and territories] of Canada/the Province of [insert name of local jurisdiction, if applicable] provides purchasers with the right to withdraw from an agreement to purchase securities within two business days after receipt or deemed receipt of a prospectus and any amendment. [In several of the provinces/provinces and territories], [T/t]he securities legislation further provides a purchaser with remedies for rescission [or [, in some jurisdictions,] damages] if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission [or damages] are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province [or territory]. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province [or territory] for the particulars of these rights or consult with a legal adviser."
PART 5 EXEMPTION
(A) The regulator10
10 The term "regulator" is defined in National Instrument 14-101 Definitions as meaning, in a local jurisdiction, the person set out in an appendix to that instrument opposite the name of the local jurisdiction.
or the securities regulatory authority may grant an exemption to this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.
(B) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.
5.2 Evidence of Exemption - Without limiting the manner in which an exemption under section 5.1 may be evidenced, the issuance by the regulator of a receipt for a prospectus or an amendment to a prospectus is evidence of the granting of the exemption if
(a) the person or company that sought the exemption has delivered to the regulator on or before the date that the preliminary prospectus was filed, a letter or memorandum describing the matters relating to the exemption, and indicating why consideration should be given to the granting of the exemption; and
(b) the regulator has not sent written notice to the contrary to the person or company that sought the exemption before the issuance of the receipt.