Securities Law

44-102 - Shelf Distributions [NI Proposed - Lapsed]

Published Date:	1998-10-02

National Instrument 44-102¹

^{1 This proposed National Instrument, together with Companion Policy 44-102CP (the "Policy") and any local implementing rules, reformulates the shelf provisions of National Policy Statement No. 44 ("NP44"). The Policy contains those parts of NP44 that are not operative or mandatory, but rather interpretative or explanatory. This 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 jurisdictions represented by the Canadian Securities Administrators (the "CSA"), other than Quebec. The Commission des valeurs mobilières du Québec (the "CVMQ") agrees with the purpose and intent of this Instrument, but will not be adopting it at this time as its securities legislation provides for accessibility to a shelf prospectus procedure. Proposed amendments to the Securities Act (Quebec) (the "proposed amendments") will give the CVMQ the authority to make rules and, on the coming into force of the proposed amendments, the CVMQ will be conducting a review of its securities legislation to determine what changes are advisable in order to implement this Instrument. If the proposed amendments are not in force at the time of implementation of this Instrument, the CVMQ will consider all measures available, including a blanket order, in order to enable issuers to efficiently access the shelf prospectus system in Quebec. The proposed Policy is expected to be adopted as a policy in all jurisdictions represented by the CSA, other than Quebec, and implementing rules are expected to be adopted in those jurisdictions in which it is necessary to do so and may take the form of blanket rulings or orders in some jurisdictions.}
^{This Instrument avoids repetition of provisions contained in proposed National Instrument 44-101 Prompt Offering Qualification System ("NI44-101") which reformulates National Policy Statement No. 47 ("NP47") and other provisions of Canadian securities legislation. NI44-101 was published for comment by the CSA on February 20, 1998 (in Ontario, at (1998), 21 OSCB 1138). The normal POP rules apply to shelf distributions and, except as supplemented or varied by this Instrument, Canadian securities legislation applies to distributions under this Instrument. This Instrument only deals with the aspects of shelf distributions that are specific to that type of distribution. As a result, many of the provisions of NP44 that state requirements generally applicable to POP distributions or that are applicable under Canadian securities legislation have been omitted. Those situations are identified in the concordance that has been provided with this Instrument.}

PART 1 DEFINITIONS AND INTERPRETATION²

^{2 A national definition instrument has been adopted as National Instrument 14-101 Definitions ("NI14-101"). It contains definitions of certain terms used in more than one national instrument. NI14-101 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. NI14-101 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.}

1.1 Definitions

(1) In this Instrument

"acting jointly or in concert" has the meaning ascribed to that phrase in securities legislation³

^{3 The term "securities legislation" is defined in NI14-101 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.}

"at-the-market distribution" means a non-fixed price distribution of equity securities⁴

^{4 The term "equity security" is defined in NI44-101 as meaning "any security of an issuer that carries a residual right to participate in the earnings of the issuer and, upon the liquidation or winding up of the issuer, in its assets".}

under the shelf procedures into a pre-existing trading market in which securities of the same class are traded;⁵

^{5 This definition is based on paragraph 2.1(d) of NP44; the references to stock exchange and market maker have been omitted.}

"base shelf prospectus" means a short form prospectus that is prepared in the form required by National Instrument 44-101 Prompt Offering Qualification, as varied in accordance with this Instrument;⁶

^{6 This definition is new.}

"clearing corporation" has the meaning ascribed to that term in National Instrument 81-102 Mutual Funds;⁷

^{7 The term "clearing corporation" is defined in proposed National Instrument 81-102 Mutual Funds ("NI81-102") as meaning "an organization through which trades in options or standardized futures are cleared and settled".}

"conventional convertible security" means a security of an issuer that is convertible into, or exchangeable for, other securities of the issuer, or of an affiliate of the issuer;⁸

^{8 This definition is based on section 1.1 of NI81-102.}

"conventional warrant or right" means a security of an issuer, other than a clearing corporation, that gives the holder the right to purchase securities of the issuer or of an affiliate of the issuer;⁹

^{9 This definition is based on section 1.1 of NI81-102.}

"index participation unit" means a unit of an interest traded on and sponsored by a stock exchange in Canada and issued by a special purpose entity the only undertaking of which is to hold the securities that are included in a specified widely published market index in substantially the same proportion as those securities are reflected in the index;¹⁰

^{10 This definition is based on section 1.1 of NI81-102}

"method 1" means the method described in Appendix A of providing forward looking prospectus certificates in a base shelf prospectus or in a shelf prospectus supplement that establishes an MTN program or continuous distribution;¹¹

^{11 This definition is based on paragraph 2.1(g) of NP44.}

"method 2" means the method described in Appendix B of providing non-forward looking prospectus certificates in a base shelf prospectus and a shelf prospectus supplement;¹²

^{12 This definition is based on paragraph 2.1(h) of NP44.}

"MTN program" means a continuous distribution of debt securities in which the specific variable terms of the individual debt securities and the method of distribution of those securities are determined at the time of the distribution;¹³

^{13 This definition is based on paragraph 2.1(i) of NP44.}

"novel" means

(a) for a specified derivative proposed to be distributed using the shelf procedures
(i) a derivative of a type that has not been distributed by way of prospectus in at least one jurisdiction¹⁴
^{14 The term "jurisdiction" is defined in NI14-101 as meaning a province or territory of Canada except when used in the term foreign jurisdiction.}
before the proposed distribution, or
(ii) a derivative of a type that has been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, but
(A) the attributes of the derivative differ materially from the attributes of derivatives of the same type previously distributed by way of prospectus,
(B) the structure and contractual arrangements underlying the derivative differ materially from the structure and contractual arrangements underlying derivatives of the same type previously distributed by way of prospectus, or
(C) the type of the underlying interest¹⁵
^{15 The term "underlying interest" is defined in NI44-101 as meaning, for a cash settled derivative, "the security, commodity, financial instrument, currency, interest rate, foreign exchange rate, economic indicator, index, basket, agreement or benchmark or any other financial reference, interest or variable, and, if applicable, the relationship between any of the foregoing, from, to or on which the market price, value or any payment obligation of the derivative is derived, referenced or based".}
for the derivative differs materially from the type of underlying interest for derivatives of the same type previously distributed by way of prospectus, and
(b) for an asset-backed security¹⁶
^{16 The term "asset-backed security" is defined in NI44-101 as meaning a "security that is primarily serviced by the cash flows of a discrete pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period, and any rights or other assets designed to assure the servicing or timely distribution of proceeds to securityholders".}
proposed to be distributed using the shelf procedures
(i) a security of a type that has not been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, or
(ii) a security of a type that has been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, but
(A) the attributes of the security differ materially from the attributes of securities of the same type previously distributed by way of prospectus,
(B) the structure and contractual arrangements underlying the security differ materially from the structure and contractual arrangements underlying securities of the same type previously distributed by way of prospectus, or
(C) the type of financial assets servicing the security differ materially from the type of financial assets servicing securities of the same type previously distributed by way of prospectus;¹⁷
^{17 This definition is new.}

"pricing supplement" means a shelf prospectus supplement that contains the price of securities distributed under an MTN program or other continuous distribution using the shelf procedures;¹⁸

^{18 This definition is based on paragraph 2.1(q) of NP44. This definition has been modified to omit the reference contained in NP44 that pricing supplements "may" be used in MTN offerings, as this Instrument clarifies in section 8.1 that, regardless of whether an MTN program is established by a shelf prospectus or a shelf prospectus supplement, a pricing supplement is always used to disclose the specific terms of MTN securities sold.}

"shelf information" means the information permitted by this Instrument to be omitted from a base shelf prospectus;¹⁹

^{19 This definition is based on paragraph 2.1(s) of NP44.}

"shelf procedures" means the requirements in this Instrument for the distribution of securities under a base shelf prospectus and a shelf prospectus supplement;²⁰

^{20 This definition is based on paragraph 2.1(t) of NP44; the reference to "a continuous or delayed basis" has been omitted.}

"shelf prospectus supplement" means a supplement to a base shelf prospectus, containing some or all of the information omitted from the base shelf prospectus as permitted by this Instrument;²¹

^{21 This definition is new.}

"special warrant" means a security

(a) that entitles or requires the holder to acquire another security without payment of material additional consideration, and
(b) the issuer of which, or the issuer of the other security that the holder is entitled or required to acquire, is obliged to undertake efforts to file a prospectus to qualify the distribution of the other security;²²
^{22 This definition is new.}

"specified derivative" means an instrument, agreement or security, the market price, value or payment obligations of which are derived from, referenced to, or based on an underlying interest, other than one that is also

(a) a conventional convertible security,
(b) an index participation unit,
(c) a strip bond,
(d) a listed equity capital or dividend share or a subdivided equity or fixed income security,
(e) a conventional warrant or right, or
(f) a special warrant;²³ and
^{23 This definition is based on section 1.1 of NI81-102.}

"stabilization provisions" means those provisions of securities legislation that prohibit an issuer, selling securityholder, underwriter or dealer, or an affiliate of any of the foregoing persons or companies, or any person or company acting jointly or in concert with any of them from trading in securities being distributed by way of prospectus during the period of distribution.²⁴

^{24 This definition is new.}

(2) All terms defined in National Instrument 44-101 and used, but not defined, in this Instrument have the respective meanings ascribed to them in National Instrument 44--101.²⁵

^{25 This subsection is new.}

1.2 Interpretation

(1) References in this Instrument, other than in Appendix A and Appendix B, to an amendment to a prospectus include both a separate amending document and an amended and restated prospectus.

(2) For the purposes of this Instrument, the aggregate market value of an issuer's equity securities on a day shall be calculated in accordance with section 2.9 of National Instrument 44-101.²⁶

^{26 This section is new.}

PART 2 SHELF ELIGIBILITY AND PERIOD OF RECEIPT EFFECTIVENESS

2.1 General - Subject to the requirements of this Instrument, an issuer that wishes to use the shelf procedures, or enable a selling securityholder to use the shelf procedures, to distribute securities for which the issuer is eligible to participate in the POP system under National Instrument 44-101 may file a short form prospectus that is a base shelf prospectus.²⁷

^{27 This section is based on paragraph 2.2(a) and subparagraph 3.1(a)(1) of NP44.}

2.2 Shelf Eligibility for Distributions made under Section 2.2 (Basic) or 2.8 (Following Reorganizations) of National Instrument 44-101

(1) An issuer may file a preliminary base shelf prospectus if, at the time of filing, the issuer is eligible to participate in the POP system under section 2.2 or 2.8 of National Instrument 44-101.²⁸

^{28 This subsection is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect sections 2.2 and 2.8 of NI44-101.}

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.2 or 2.8 of National Instrument 44-101 may file the corresponding base shelf prospectus if the issuer is not in default of any requirement of securities legislation at the time of the filing of the base shelf prospectus.²⁹

^{29 This subsection is based on subparagraph 3.1(a)(1) of NP44.}

(3) A receipt issued for a base shelf prospectus of an issuer filed under subsection (2) is effective until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, if at that time
(i) the issuer does not have a current AIF,³⁰
^{30 The term "current AIF" is defined in NI44-101 to mean "(a) for an issuer subsisting under the laws of a foreign jurisdiction that has filed an AIF in the form of a current annual report on Form 20-F under subsection 3.4(1), (i) during the period of 180 days following the issuer's most recently completed financial year (A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or (B) the AIF of the issuer for its financial year immediately preceding its most recently completed financial year, if that AIF has been accepted for filing under this Instrument and the issuer's AIF for its most recently completed financial year has not been accepted for filing under this Instrument, (ii) at any time after 180 days following the issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year if that AIF has been accepted for filing under this Instrument, or (iv) AIF of the issuer filed before this Instrument came into force that would constitute a "current AIF" for the purposes of National Policy Statement No. 47 if that policy were in force, or (b) for all other issuers (i) during the period of 140 days following the issuer's most recently completed financial year, (A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or (B) the AIF of the issuer for its financial year immediately preceding its most recently completed financial year, if that AIF has been accepted for filing under this Instrument and the issuer's AIF for its most recently completed financial year has not been accepted for filing under this Instrument, (ii) at any time after 140 days following an issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year if that AIF has been accepted for filing under this Instrument, or (iii) an AIF of the issuer filed before this Instrument came into force that would constitute a "current AIF" for the purposes of National Policy Statement No. 47 if that policy were in force".}

(ii) the aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, has not been $75,000,000 or more on a date within 60 days before the date of the agreement, or
(iii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.³¹
^{31 This subsection is new and provides for three alternate events that can cause a receipt issued for a base shelf prospectus to expire. The third event, referred to in paragraph 2.2(3)(c), is the lapse date, if any, under securities legislation if no relief has been granted to the issuer other than through a blanket ruling or on application by the issuer. Sections 2.3 through 2.7 contain similar provisions.}

2.3 Shelf Eligibility for Distributions made under Section 2.3 of National Instrument 44-101 (Substantial Canadian Issuers)³²

^{32 This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.3 of NI44-101.}

(1) An issuer may file a preliminary base shelf prospectus if, at the time of filing, the issuer is eligible to participate in the POP system under section 2.3 of National Instrument 44-101.

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.3 of National Instrument 44-101 may file the corresponding base shelf prospectus if the issuer is not in default of any requirement of securities legislation at the time of the filing of the base shelf prospectus.

(3) A receipt issued for a base shelf prospectus of an issuer filed under subsection (2) is effective until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, if at that time
(i) the issuer does not have a current AIF,
(ii) the aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, has not been $300,000,000 or more on a date within 60 days before the date of the agreement, or
(iii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.

2.4 Shelf Eligibility for Distributions made under Section 2.4 of National Instrument 44-101 (Approved Rating)³³

^{33 This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.4 of NI44-101.}

(1) An issuer eligible to participate in the POP system under section 2.4 of National Instrument 44-101 may file a preliminary base shelf prospectus for approved rating non-convertible³⁴

^{34 The term "non-convertible" is defined in NI44-101, if used to describe debt securities or preferred shares, as meaning "securities that are not convertible". The term "convertible" is defined in NI44-101, if used to describe debt securities or preferred shares, as meaning "that the rights and attributes attaching to those securities include the right or option to purchase, convert into or exchange for or otherwise acquire equity securities of an issuer, or any other security that itself includes the right or option to purchase, convert into or exchange for or otherwise acquire equity securities of an issuer".}

securities if, at the time of filing, the issuer has reasonable grounds for believing that, if it were to distribute securities under the base shelf prospectus, the securities distributed would receive an approved rating³⁵

^{35 The term "approved rating" is defined in NI44-101 as meaning "a rating from an approved rating organization that falls within one of the following generic rating categories of the approved rating organization or a rating category that replaces a category" listed in that Instrument.}

from at least one approved rating organization³⁶

^{36 The term "approved rating organization" is defined in NI44-101 as meaning "each of CBRS Inc., Dominion Bond Rating Service Limited, Moody's Investors Service, Inc. and Standard & Poor's Corporation and any of their successors".}

and would not receive a rating lower than an approved rating from any approved rating organization.

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.4 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus

(a) the issuer has reasonable grounds for believing that, if it were to distribute non-convertible securities under the base shelf prospectus, the securities distributed would receive an approved rating from at least one approved rating organization and would not receive a rating lower than an approved rating from any approved rating organization; and
(b) the issuer is not in default of any requirement of securities legislation.

(3) A receipt issued for a base shelf prospectus of an issuer filed under subsection (2) is effective until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, if at that time
(i) the issuer does not have a current AIF,
(ii) the securities to which the agreement relates
(A) have not received a final approved rating from at least one approved rating organization, or
(B) have received a provisional or final rating lower than an approved rating from any approved rating organization, or
(iii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.

2.5 Shelf Eligibility for Distributions made under Section 2.5 of National Instrument 44-101 (Guaranteed Non-Convertible)³⁷

^{37 This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.5 of NI44-101.}

(1) An issuer eligible to participate in the POP system under section 2.5 of National Instrument 44-101 may file a preliminary base shelf prospectus for the types of securities referred to in that section.

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.5 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus, each of the issuer and the credit supporter³⁸

^{38 The term "credit supporter" is defined in NI44-101 as meaning "an issuer that provides a guarantee or alternative credit support under paragraph 2.5(1)1 or paragraph 1 of section 2.6" of that instrument.}

of the securities to be distributed under the base shelf prospectus is not in default of any requirement of securities legislation.

(3) A receipt issued for a base shelf prospectus of an issuer filed under subsection (2) is effective until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, if at that time
(i) another issuer has not provided a guarantee or alternative credit support for the securities to which the shelf prospectus supplement relates that satisfies the criteria in paragraph 1 of subsection 2.5(1) of National Instrument 44-101,
(ii) the credit supporter referred to in subparagraph (i) is not a reporting issuer, does not have a current AIF or is in default of any requirement of securities legislation,
(iii) the aggregate market value of the credit supporter's equity securities listed and posted for trading on an exchange in Canada has not been more than $75,000,000 on a date within 60 days before the date of the agreement, and
(A) the credit supporter does not have issued and outstanding non-convertible securities that have received an approved rating from at least one approved rating organization and that have not received a rating lower than an approved rating from any approved rating organization, or
(B) the securities to which the agreement relates have not received a final approved rating from at least one approved rating organization or have received a provisional or final rating lower than an approved rating from any approved rating organization, or
(iv) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.

2.6 Shelf Eligibility for Distributions made under Section 2.6 of National Instrument 44-101 (Guaranteed Convertible)³⁹

^{39 This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.6 of NI44-101.}

(1) An issuer eligible to participate in the POP system under section 2.6 of National Instrument 44-101 may file a preliminary base shelf prospectus for the types of securities referred to in that section.

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.6 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus, each of the issuer and the credit supporter of the securities to be distributed under the base shelf prospectus is not in default of any requirement of securities legislation.

(3) A receipt issued for a base shelf prospectus filed under subsection (2) is effective until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, if at that time
(i) the issuer of the securities into which the securities to which the agreement relates are convertible has not provided a guarantee or alternative credit support that satisfies the criteria in paragraph 1 of section 2.6 of National Instrument 44-101,
(ii) the credit supporter referred to in subparagraph (i)
(A) is not a reporting issuer,
(B) does not have a current AIF,
(C) does not have equity securities listed and posted for trading on an exchange in Canada, the aggregate market value of which has been more than $75,000,000 on a date within 60 days before the date of the agreement, or
(D) is in default of any requirement of securities legislation, or
(iii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.

2.7 Shelf Eligibility for Distributions made under Section 2.7 of National Instrument 44-101 (Asset-backed)⁴⁰

^{40 This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.7 of NI44-101.}

(1) An issuer eligible to participate in the POP system under section 2.7 of National Instrument 44-101 may file a preliminary base shelf prospectus for asset-backed securities if, at the time of filing, the issuer has reasonable grounds for believing that

(a) all asset-backed securities that it may distribute under the base shelf prospectus will receive an approved rating from at least one approved rating organization; and
(b) no asset-backed securities that it may distribute under the base shelf prospectus will receive a rating lower than an approved rating from any approved rating organization.

(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.7 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus

(a) the issuer has reasonable grounds for believing that
(i) all asset-backed securities that it may distribute under the base shelf prospectus will receive an approved rating from at least one approved rating organization, and
(ii) no asset-backed securities that it may distribute under the base shelf prospectus will receive a rating lower than an approved rating from any approved rating organization; and
(b) the issuer is not in default of any requirement of securities legislation.

(3) A receipt issued for a base shelf prospectus filed under subsection (2) is effective for a distribution of asset-backed securities until the earliest of

(a) the second anniversary of its issue;
(b) the time immediately before the entering into of an agreement of purchase and sale for an asset-backed security to be sold under the base shelf prospectus, unless at that time
(i) the asset-backed securities to which the agreement relates
(A) have not received a final approved rating from at least one approved rating organization, or
(B) have received a provisional or final rating lower than an approved rating from any approved rating organization, or
(ii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.⁴¹
^{41 This section is new and reflects section 2.7 of NI44-101.}

2.8 Prohibited Offerings - Despite the other provisions of this Instrument, the shelf procedures shall not be used for a distribution of rights under a rights offering.⁴²

^{42 This section is based on paragraph 3.2(b) of NP44. The restriction in paragraph 3.2(c) of NP44 on using the shelf procedures for distributions of derivatives has been omitted.}

PART 3 UNALLOCATED SHELF

3.1 Unallocated Shelf Permitted - A base shelf prospectus may pertain to more than one type of security for which the issuer is eligible to participate in the POP system.⁴³

^{43 This section is new and replaces paragraph 3.2(a) of NP44. In a departure from NP44, the CSA are proposing to permit the use of an unallocated shelf prospectus. NP44 prohibits unallocated shelf prospectuses by requiring shelf prospectuses to pertain to only one basic type of security (i.e. debt, preferred shares or common shares).}

3.2 Distributions of Equity Securities Under Unallocated Shelf

(1) An issuer or selling securityholder that intends to distribute a tranche of equity securities under a base shelf prospectus that is not specifically restricted to equity securities shall issue, promptly upon having discussions of the nature described in subsection (2), a news release that announces the intention to proceed with the distribution.

(2) The discussions referred to in subsection (1) are discussions of an issuer or a selling securityholder with one or more underwriters concerning the distribution of a tranche of equity securities under the base shelf prospectus of sufficient specificity that it is reasonable to expect that the distribution will proceed.44

^{44 This section is new.}

PART 4 DISTRIBUTIONS OF NOVEL DERIVATIVES OR ASSET-BACKED SECURITIES UNDER SHELF

4.1 Distributions of Novel Derivatives or Asset-backed Securities Under Shelf

(1) If a base shelf prospectus pertains to specified derivatives or asset-backed securities, the issuer or the selling securityholder, as the case may be, shall file before or concurrently with the base shelf prospectus an undertaking that it will not distribute under the base shelf prospectus specified derivatives or asset-backed securities, as the case may be, in the local jurisdiction⁴⁵

^{45 The term "local jurisdiction" is defined in NI14-101. 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".}

that, at the time of distribution, are novel without pre-clearing with the regulator⁴⁶

^{46 The term "regulator" is defined in NI14-101 as meaning, in a local jurisdiction, the person set out in an appendix to that instrument opposite the name of the local jurisdiction.}

in accordance with subsection (2) the disclosure to be contained in a shelf prospectus supplement pertaining to the distribution of the novel specified derivatives or asset-backed securities.

(2) The undertaking referred to in subsection (1) shall state that the issuer or the selling securityholder, as the case may be, shall not distribute specified derivatives or asset-backed securities in the local jurisdiction that, at the time of distribution, are novel, unless

(a) the draft shelf prospectus supplement or, if more than one shelf prospectus supplement is to be used, the draft shelf prospectus supplements pertaining to the distribution of the novel specified derivatives or asset-backed securities have been delivered to the regulator in substantially final form; and
(b) either
(i) the regulator has confirmed his or her acceptance of each draft shelf prospectus supplement in substantially final form or each shelf prospectus supplement in final form, or
(ii) 21 days have elapsed since the date of delivery of each draft shelf prospectus supplement in substantially final form to the regulator and the regulator has not provided written comments on the draft shelf prospectus supplement.⁴⁷
^{47 This section is new.}

PART 5 BASE SHELF PROSPECTUSES

5.1 Opting out of the Shelf Procedures After a Preliminary Prospectus has been Receipted - If a receipt for a preliminary base shelf prospectus for a distribution of securities has been issued and the issuer or the selling securityholder no longer wishes to use the shelf procedures for the distribution, the issuer shall file

(a) either
(i) an amended preliminary short form prospectus in accordance with National Instrument 44-101 that is not a preliminary base shelf prospectus, or
(ii) a new preliminary short form prospectus that is not a preliminary base shelf prospectus; and
(b) a covering letter stating that the issuer or the selling securityholder, as the case may be, has decided not to use the shelf procedures for the distribution.⁴⁸
^{48 This section is based on paragraph 2.2(b) of NP44 and has been modified to clarify that an issuer has a choice of filing either an amendment or a new preliminary short form prospectus.}

5.2 Opting into the Shelf Procedures After a Preliminary Prospectus has been Receipted - If a receipt for a preliminary short form prospectus that is not a preliminary base shelf prospectus for a distribution of securities has been issued and the issuer or selling securityholder wishes to use the shelf procedures for the distribution, the issuer shall file

(a) either
(i) an amended preliminary base shelf prospectus in accordance with this Instrument, or
(ii) a new preliminary short form prospectus that is a preliminary base shelf prospectus in accordance with this Instrument; and
(b) a covering letter stating that the issuer or the selling securityholder, as the case may be, has decided to use the shelf procedures for the distribution.⁴⁹
^{49 This section is new and has been added to clarify how an issuer may opt into the shelf procedures.}

5.3 Form of Base Shelf Prospectus - A base shelf prospectus may vary from the required form of short form prospectus under National Instrument 44-101 to the extent provided for in this Instrument.⁵⁰

^{50 This section is based on paragraph 2.3(a) of NP44 and has been modified to expressly permit changes from the required form of short form prospectus.}

5.4 Dollar Value of Securities - A base shelf prospectus shall pertain to no more than the dollar value of securities that the person or company proposing to distribute securities under the base shelf prospectus reasonably expects, at the time the base shelf prospectus is filed, to distribute within 24 months after the date of the receipt for the base shelf prospectus.⁵¹

^{51 This section is based on paragraph 3.2(d) of NP44. The timing has been changed from the date of filing of the base shelf prospectus to the date of receipt for the base prospectus.}

5.5 Required Disclosure - A base shelf prospectus shall contain the following:

1. A statement at the top of the cover page identifying the short form prospectus as a base shelf prospectus.⁵²

^{52 This paragraph is new.}

2. The following statement in red ink in italics on the cover page:

"This short form prospectus has been filed under procedures in [insert names of the jurisdictions where qualified] that permit certain information about these securities to be determined after this prospectus has become final and that permit the omission from this prospectus of the information. The procedures require the delivery to purchasers of a prospectus supplement containing this omitted information within a specified period of time after agreeing to purchase any of these securities. " ⁵³

^{53 This paragraph is based on paragraph 2.3(b) of NP44.}

3. A statement that all shelf information omitted from the base shelf prospectus will be contained in one or more shelf prospectus supplements that will be delivered to purchasers together with the base shelf prospectus.⁵⁴

^{54 This paragraph is based on paragraph 3.3(d) of NP44.}

4. A statement that each shelf prospectus supplement will be incorporated by reference into the base shelf prospectus as of the date of the shelf prospectus supplement and only for the purposes of the distribution of the securities to which the shelf prospectus supplement pertains.⁵⁵

^{55 This paragraph is based on paragraph 3.4(c) of NP44.}

5. A statement of the aggregate dollar amount of securities that may be raised under the base shelf prospectus.⁵⁶

^{56 This paragraph is based on the first sentence of paragraph 3.3(a) of NP44; the reference to "all other non-variable information" has been omitted. It has been modified to refer to the "aggregate dollar amount of securities".}

6. Disclosure of the types of securities that may be distributed under the base shelf prospectus.⁵⁷

^{57 This paragraph is new and reflects the introduction of the unallocated shelf.}

7. If an undertaking is required to be filed under subsection 4.1(1), a statement that the issuer or the selling securityholder, as the case may be, has filed an undertaking that it will not distribute specified derivatives or asset-backed securities, as the case may be, that, at the time of distribution, are novel without pre-clearing with the regulator the disclosure to be contained in the shelf prospectus supplement pertaining to the distribution of the novel specified derivatives or asset-backed securities.⁵⁸

^{58 This paragraph is new and reflects the introduction of shelf distributions of specified derivatives and asset-backed securities in that the securities regulatory authorities want to be able to review the disclosure in supplements for "novel" products.}

8. The prospectus certificates prescribed by method 1, if

(a) the base shelf prospectus is being used to establish an MTN program or other continuous distribution; or
(b) method 2 has not been elected.⁵⁹
^{59 This paragraph is based on section 3.9 of NP44.}

5.6 Disclosure that may be Omitted - A base shelf prospectus may omit the following:

1. The variable terms of the securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.⁶⁰

^{60 This paragraph is based on subparagraph 3.3(c)(1) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(1) of the proposed Policy.}

2. The dollar amount, size and other specific terms of each tranche of securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.⁶¹

^{61 This paragraph is based on subparagraph 3.3(c)(1) of NP44.}

3. The variable terms of the plans of distribution for the securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.⁶²

^{62 This paragraph is based on subparagraph 3.3(c)(2) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(2) of the proposed Policy.}

4. The name and prospectus certificate of an underwriter if, at the time of the filing of the base shelf prospectus, no underwriter is, and it is not known that a particular underwriter will be, in a contractual relationship with the issuer or selling securityholder for any of the securities to be distributed under the base shelf prospectus.⁶³

^{63 This paragraph is based on subparagraph 3.3(c)(3) of NP44.}

5. If one or more underwriters have agreed to purchase the securities to be distributed under the base shelf prospectus at a specified price,⁶⁴

^{64 The words "that have agreed to purchase the securities at a specified price" have replaced the reference to a "firm underwriting" in a manner consistent with the terminology in Ontario Rule 41-501 General Prospectus Requirements and NI44-101.}

the statement required by securities legislation that the securities are to be taken up by the underwriters, if at all, on or before a specified date.⁶⁵

^{65 This paragraph is based on subparagraph 2.7(b)(1) of NP44.}

6. If the securities to be distributed under the base shelf prospectus are underwritten on a best efforts basis for which a minimum amount of funds are required by an issuer, the disclosure required by securities legislation concerning the maximum length of time for which the distribution may continue and concerning the disposition of subscription funds.⁶⁶

^{66 This paragraph is based on paragraph 2.7(c)(1) of NP44.}

7. Other information that pertains only to a specific distribution of securities under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.⁶⁷

^{67 This paragraph is based on subparagraph 3.3(c)(4) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(3) of the proposed Policy.}

8. Other information required under National Instrument 44-101 or other securities legislation that is not known and cannot be ascertained at the time of filing of the base shelf prospectus.⁶⁸

^{68 This paragraph is based on subparagraph 3.3(c)(4) of NP44.}

5.7 Issue of Receipt - Despite the omission of shelf information, the regulator may issue a receipt for a base shelf prospectus.⁶⁹

^{69 This section is new.}

5.8 Amendments

(1) If a material change occurs at a time when no securities are being distributed under a base shelf prospectus, the provisions of securities legislation that require the filing of an amendment to a prospectus if a material change occurs may be satisfied, despite subsection 2.1(4) of National Instrument 44-101, by

(a) the filing of a material change report; and
(b) the incorporation by reference in the base shelf prospectus of the material change report.⁷⁰

^{70 This subsection is based on subparagraph 3.8(b)(1) of NP44.}

(2) If a material change occurs at the time when securities are being distributed under a base shelf prospectus, the provisions of securities legislation that require the filing of an amendment to a prospectus if a material change occurs may be satisfied by filing a material change report that

(a) states that the base shelf prospectus is amended and supplemented by the contents of the material change report; and
(b) contains the certificates required to be contained in an amendment.⁷¹
^{71 This subsection is based on subparagraph 3.8(b)(2) of NP44.}

PART 6 SHELF PROSPECTUS SUPPLEMENTS

6.1 Requirement to Use Shelf Prospectus Supplements - An issuer or selling securityholder proposing to distribute securities under a base shelf prospectus shall use a shelf prospectus supplement, and may use more than one shelf prospectus supplement, to supplement the disclosure in the base shelf prospectus pertaining to the distribution in order to comply with the requirement in securities legislation that a prospectus contain full, true and plain disclosure of all material facts relating to the securities offered under the prospectus.⁷²

^{72 This section is new.}

6.2 Incorporation by Reference - A shelf prospectus supplement is incorporated by reference, as of the date of the shelf prospectus supplement, in the corresponding base shelf prospectus only for purposes of the distribution to which the shelf prospectus supplement pertains.⁷³

^{73 This section is based on the first and third sentences of paragraph 3.4(c) of NP44.}

6.3 Shelf Prospectus Supplement Disclosure

(1) A shelf prospectus supplement shall contain the following:

1. The name of the issuer on the cover page.⁷⁴
^{74 This paragraph is based on the third sentence of paragraph 3.4(a) of NP44.}
2. The dates of the corresponding base shelf prospectus and of each previously filed shelf prospectus supplement corresponding to the same base shelf prospectus and pertaining to the same distribution, on the cover page.⁷⁵
^{75 This paragraph is based on the third sentence of paragraph 3.4(a) of NP44.}
3. The prospectus certificates prescribed by
(a) method 1, if the shelf prospectus supplement establishes an MTN program or other continuous distribution; or
(b) method 2, if the prospectus certificates prescribed by method 1 have not been included in the corresponding base shelf prospectus and if method 1 is not mandatory under paragraph (a).⁷⁶
^{76 This paragraph is based on subparagraph 3.4(a)(2) and section 3.9 of NP44.}
4. A list of each document that is incorporated by reference into the corresponding base shelf prospectus as of the date of the shelf prospectus supplement and provides disclosure pertaining to the securities being distributed under the shelf prospectus supplement.⁷⁷
^{77 This paragraph is based on subparagraph 3.4(a)(7) of NP44. The list required has been changed to a cumulative list of documents then incorporated by reference into the base shelf prospectus and the requirement to provide a description of those documents has been omitted.}

(2) If only one shelf prospectus supplement is used to supplement the disclosure in the corresponding base shelf prospectus pertaining to a distribution of securities, that shelf prospectus supplement shall contain the following, and if more than one shelf prospectus supplement is used to supplement the disclosure in the corresponding base shelf prospectus pertaining to a distribution of securities, the shelf prospectus supplements used shall, together, contain the following:

1. All of the shelf information pertaining to the distribution of securities that was omitted from the corresponding base shelf prospectus.
2. All material facts relating to the securities to be distributed and all other information required by securities legislation to be disclosed in a short form prospectus that is not disclosed, either directly or through incorporation by reference, in the corresponding base shelf prospectus.⁷⁸
^{78 This subsection is based on subparagraph 3.4(a)(1) of NP44 and has been modified to clarify that all omitted shelf information as well as all information required to be in a short form prospectus must appear in one or more shelf prospectus supplements.}

6.4 Time For Filing Shelf Prospectus Supplements - A shelf prospectus supplement shall be filed in each jurisdiction in which the corresponding base shelf prospectus was filed

(a) if the shelf prospectus supplement pertains to a distribution of securities, other than an MTN program or other continuous distribution, on the earlier of
(i) the date two days after the date the shelf prospectus supplement was first used, and
(ii) the date the offering price of the securities to which it pertains is determined;⁷⁹ and
^{79 This paragraph is based on paragraph 3.4(a) of NP44 and has been modified to require more prompt filing which is feasible in light of SEDAR.}
(b) otherwise within two days after the date the shelf prospectus supplement was first used.⁸⁰
^{80 This paragraph is based on the sentence after subparagraph 3.4(b)(6) of NP44.}

6.5 Underwriters' Conflicts of Interest - For a distribution of securities under a base shelf prospectus, the provisions of securities legislation that regulate conflicts of interest in connection with a distribution of securities of a registrant, a connected issuer of a registrant or a related issuer of a registrant

(a) concerning the participation of independent underwriters shall be satisfied
(i) on a tranche-by-tranche basis for a distribution other than an MTN program or other continuous distribution, or
(ii) on the basis of the total dollar amount of securities that are being distributed under the program or distribution for a distribution of securities under an MTN program or other continuous distribution; and
(b) concerning disclosure, to the extent not previously satisfied in the base shelf prospectus, shall be satisfied by including the prescribed disclosure in a shelf prospectus supplement pertaining to the distribution.⁸¹
^{81 This section is based on paragraph 3.12(b) of NP44 and has been modified for greater precision.}

6.6 Market Stabilization - The stabilization provisions shall be satisfied on a tranche-by-tranche basis for a non-continuous distribution of securities under a base shelf prospectus.⁸²

^{82 This section is new and has been added to reflect local regulation concerning market stabilization. In Ontario, this refers to paragraph 26(c) of OSC Policy 5.1.}

6.7 Delivery Requirement - The shelf prospectus supplement or the shelf prospectus supplements that, together with the corresponding base shelf prospectus, contain full, true and plain disclosure of all material facts relating to the securities being distributed shall be sent by prepaid mail or delivered to a purchaser of the securities concurrently with the base shelf prospectus.⁸³

^{83 This section is based on the second sentence of paragraph 3.4(d) of NP44.}

PART 7 SHELF SUPPORTING DOCUMENTS

7.1 General - To the extent varied in this Part, the provisions of National Instrument 44-101 requiring the filing of documents with a preliminary short form prospectus, a short form prospectus and a prospectus amendment under the POP system do not apply to filings under the shelf procedures.⁸⁴

^{84 This section is based on section 3.11 of NP44.}

7.2 Consents - A consent required to be filed by securities legislation of an expert named in a document that is incorporated by reference into a base shelf prospectus but filed after the base shelf prospectus shall be filed in accordance with the following:

1. If the document is incorporated by reference into the base shelf prospectus by the terms of the base shelf prospectus, the consent shall be filed

(a) no later than the time the document is filed, if the base shelf prospectus establishes an MTN program or other continuous distribution; and
(b) otherwise, no later than the time of the next filing of a shelf prospectus supplement corresponding to the base shelf prospectus.

2. If the document is incorporated by reference into the base shelf prospectus by the terms of a shelf prospectus supplement and the document is filed before or concurrently with the shelf prospectus supplement, the consent shall be filed no later than the time the shelf prospectus supplement is filed.

3. If the document is incorporated by reference into the base shelf prospectus by the terms of a shelf prospectus supplement and the document in which the expert is named is filed after the shelf prospectus supplement is filed, the consent shall be filed no later than the time the document is filed.⁸⁵

^{85 This section is based on subparagraph 3.11(c)(2) of NP44 and has been modified for greater precision.}

7.3 Auditor's Comfort Letters - An auditor's comfort letter for unaudited financial statements incorporated by reference into a base shelf prospectus but filed after the date of filing of the base shelf prospectus shall be filed in accordance with the following:

1. Concurrently with the unaudited financial statements, if the base shelf prospectus establishes an MTN program or other continuous distribution.

2. Otherwise, no later than the time of the next filing of a shelf prospectus supplement corresponding to the base shelf prospectus.⁸⁶

^{86 This section is based on subparagraph 3.11(d)(3) of NP44 and has been modified for greater precision.}

7.4 Underwriting Agreements

(1) If, at the time of the filing of a base shelf prospectus of an issuer, no underwriter is in a contractual relationship with the issuer or selling securityholder for the securities to be distributed under the base shelf prospectus, the issuer is not required to file a signed copy of an underwriting agreement with the base shelf prospectus.⁸⁷

^{87 This subsection is new and has been added for greater clarity.}

(2) If an underwriter enters into a contractual relationship with an issuer or selling securityholder for a distribution of securities under a base shelf prospectus after the base shelf prospectus is filed, the issuer shall file a signed copy of the underwriting agreement pertaining to the distribution concurrently with the next shelf prospectus supplement filed pertaining to that distribution.⁸⁸

^{88 This subsection is based on paragraph 3.11(e) of NP44; the reference to agency agreements or other material contacts has been omitted as unnecessary.}

PART 8 MTN PROGRAMS AND OTHER CONTINUOUS DISTRIBUTIONS UNDER SHELF

8.1 General - Securities for which an issuer may file a base shelf prospectus under Part 2 may be distributed under an MTN program or other continuous distribution by using

(a) either a base shelf prospectus or a shelf prospectus supplement to establish the program or distribution;⁸⁹ and
^{89 This paragraph is based on the first sentence of paragraph 3.4(f) and subparagraph 3.4(b)(1) of NP44.}
(b) a pricing supplement.⁹⁰
^{90 This paragraph is new.}

8.2 Additional Disclosure Requirements

(1) Despite section 5.5, a base shelf prospectus or shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain the following:

1. A description of the method of distribution, including the name of any underwriter involved in the distribution and the amount of any underwriting fee, discount or commission.⁹¹
^{91 This paragraph is based on subparagraph 3.4(f)(2) of NP44.}
2. A description of the intended parameters of the terms of the MTN program or other continuous distribution.⁹²
^{92 This paragraph is based on subparagraph 3.4(f)(1) of NP44; references to "options" and the examples have been omitted.}
3. At the option of the issuer or selling securityholder proposing to distribute securities under the MTN program or other continuous distribution, a statement that the issuer or selling securityholder, as the case may be, reserves the ability to issue securities under the MTN program or other continuous distribution on terms outside the intended parameters disclosed under paragraph 2.⁹³
^{93 This paragraph is based on the footnote to subparagraph 3.4(f)(1) of NP44.}

(2) A pricing supplement used for an MTN program or other continuous distribution under the shelf procedures shall contain the following:

1. The terms of the securities distributed that are not disclosed in the base shelf prospectus or shelf prospectus supplement establishing the MTN program or other continuous distribution.⁹⁴
^{94 This paragraph is based on subparagraph 3.4(f)(4) of NP44; the reference to "MTN Terms" has been omitted as that term is not defined in this Instrument.}
2. A list of each document that is incorporated by reference into the corresponding base shelf prospectus as of the date of the pricing supplement and provides disclosure pertaining to the securities being distributed under the MTN program or other continuous distribution.⁹⁵
^{95 This paragraph is based on subparagraph 3.4(f)(5) of NP44. However, the list required has been changed to a cumulative list, the requirement to include a description has been omitted and the exemption contained in the second paragraph has been omitted.}

8.3 Filing Requirement - If an issuer has distributed securities in the local jurisdiction under a pricing supplement using the shelf procedures in a particular month, the issuer shall, despite section 6.4, file within seven days after the end of the month

(a) a copy of each pricing supplement used for the first time in the month for the distribution of securities;⁹⁶ or
^{96 This paragraph is based on the last sentence of paragraph 3.4(b) of NP44.}
(b) a summary of the information contained in each pricing supplement used in the month, including
(i) a list of the pricing supplements used for the first time in the month,
(ii) the terms of the securities distributed under each pricing supplement used during the month, and
(iii) the aggregate amount of securities distributed under each pricing supplement used during the month.⁹⁷
^{97 This paragraph is new and has been modified to reflect industry practice.}

8.4 Requirement to Update Earnings Coverage Ratios

(1) An issuer distributing securities under an MTN program or other continuous distribution under a base shelf prospectus shall

(a) calculate updated earnings coverage ratios for the ratios contained in its base shelf prospectus each time the issuer prepares interim or audited annual financial statements, using the 12 month period ended on the last day of the most recently completed financial period; and
(b) file the updated earnings coverage ratios, concurrently with the filing of its financial statements, either
(i) as an exhibit to the financial statements, or
(ii) as a shelf prospectus supplement corresponding to the base shelf prospectus.⁹⁸
^{98 This subsection is based on the second sentence of paragraph 3.6(b) of NP44; the reference to updating asset coverage ratios has been omitted.}

(2) The updated earnings coverage ratios filed under subsection (1) need not be audited.⁹⁹

^{99 This subsection is based on the third sentence of paragraph 3.6(b) of NP44.}

PART 9 NON-FIXED PRICE OFFERINGS UNDER SHELF

9.1 Restriction on Non-fixed Price Offerings Under Shelf - A security shall only be distributed at a non-fixed price using the shelf procedures if that security may be distributed at a non-fixed price under National Instrument 44-101.¹⁰⁰

^{100 This section is new and has been added to clarify that non-fixed price offerings are prohibited unless expressly permitted.}

9.2 At-the-Market Distributions of Equity Securities Under Shelf

(1) Despite section 9.1 and the provisions of National Instrument 44-101, the shelf procedures may be used for an at-the-market distribution of equity securities if the market value of equity securities distributed in the at-the-market distribution does not exceed 10 percent of the aggregate market value of the issuer's outstanding equity securities of the same class as the class of securities distributed, calculated in accordance with section 2.9 of National Instrument 44-101 as at the last trading day of the month before the month in which the first trade under the at-the-market distribution is made.¹⁰¹

^{101 This subsection is based on subparagraph 3.5(b)(1) of NP44; the calculation timing has been modified.}

(2) No underwriter or dealer involved in an at-the-market distribution, or any affiliate of such an underwriter or dealer, or any person or company acting jointly or in concert with such an underwriter or dealer, shall, in connection with the distribution, over-allot the securities or effect any other transactions that are intended to stabilize or maintain the market price of the securities.¹⁰²

^{102 In addition to the disclosure requirement in subsection (3) of this section, this subsection imposes a prohibition}

(3) A base shelf prospectus or shelf prospectus supplement pertaining to an at-the-market distribution shall disclose that no underwriter or dealer involved in the distribution, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer has over-allotted, or will over-allot, securities in connection with the distribution or effect any other transactions that are intended to stabilize or maintain the market price of the securities.¹⁰³

^{103 This subsection is based on subparagraph 3.5(b)(4) of NP44.}

PART 10 TRANSITIONAL SHELF PROCEDURES¹⁰⁴

^{104 This part is new.}

10.1 Transitional Shelf Procedures

(1) A receipt issued for a shelf prospectus filed under NP44 is considered to be a receipt issued for a base shelf prospectus under this Instrument.

(2) An issuer that has filed a preliminary shelf prospectus under NP44 is considered to have filed a preliminary base shelf prospectus under this Instrument.

(3) A receipt issued for a shelf prospectus filed under NP44 after National Instrument 44-101 came into force shall expire

(a) if the issuer relied on section 2.2 or 2.8 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.2 of this Instrument;
(b) if the issuer relied on section 2.3 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.3 of this Instrument;
(c) if the issuer relied on section 2.4 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.4 of this Instrument;
(d) if the issuer relied on section 2.5 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.5 of this Instrument;
(e) if the issuer relied on section 2.6 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.6 of this Instrument; and
(f) if the issuer relied on section 2.7 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.7 of this Instrument.

(4) A receipt issued for a shelf prospectus filed under NP44 before National Instrument 44-101 came into force shall expire

(a) if the issuer relied on section 4.1 or 4.4 of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.2 of this Instrument;
(b) if the issuer relied on section 4.2 of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.3 of this Instrument;
(c) if the issuer relied on paragraph 4.3(1)(a) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.4 of this Instrument;
(d) if the issuer relied on paragraph 4.3(1)(b) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.5 of this Instrument; and
(e) if the issuer relied on subsection 4.3(2) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.6 of this Instrument.

PART 11 EXEMPTIONS¹⁰⁵

^{105 This part is new.}

11.1 Exemption

(1) The regulator or the securities regulatory authority¹⁰⁶

^{106 The term "securities regulatory authority" is defined in NI14-101 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.}

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.

(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.

(3) Despite subsection (1), in Alberta, only the regulator may grant such an exemption.

(4) An application made to the securities regulatory authority or regulator for an exemption from this Instrument shall include a letter or memorandum describing the matters relating to the exemption, and indicating why consideration should be given to the granting of the exemption.

11.2 Evidence of Exemption¹⁰⁷

^{107 This section may be deleted from the National Instrument if it becomes unnecessary in light of the proposed National Policy on Mutual Reliance for Prospectuses.}

(1) Except in respect of an application for an exemption from the provisions of Part 2 of this Instrument, subject to subsection (2) and without limiting the manner in which an exemption under this Part may be evidenced,

(a) if a jurisdiction, other than the local jurisdiction, has been assigned to act as designated jurisdiction in the review of a base shelf prospectus under the expedited review system¹⁰⁸,
^{108 The term "expedited review system" is defined in NI44-101 as meaning "the system established by the Memorandum of Understanding for Expedited Review of Short Form Prospectuses and Renewal AIFs dated December 18, 1996 of the Canadian securities regulatory authorities".}
the issuance of a final expedited review receipt document for a prospectus or an amendment to a prospectus by the designated jurisdiction is evidence of the granting of the exemption in the local jurisdiction if the final expedited review receipt document confirms the issuance of a final receipt for the prospectus or the amendment to the prospectus in the local jurisdiction;
(b) if a jurisdiction, other than the local jurisdiction, has agreed to act as principal jurisdiction in the review of a base shelf prospectus, the issuance of a National Instrument 44-101 Receipt for the prospectus or an amendment to the prospectus is evidence of the granting of the exemption in the local jurisdiction if the National Instrument 44-101 Receipt evidences the issuance of a final receipt for the prospectus or the amendment to the prospectus in the local jurisdiction; and
(c) the issuance of a receipt for a base shelf prospectus or an amendment to a base shelf prospectus by the regulator is evidence of the granting of the exemption by the regulator.

(2) An exemption under this Part may be evidenced in the manner set out in subsection (1) only if

(a) the person or company that sought the exemption
(i) sent to the regulator the letter or memorandum referred to in subsection 11.1(4) on or before the date of filing of the preliminary prospectus, or
(ii) sent to the regulator the letter or memorandum referred to in subsection 11.1(4) after the date of filing of the preliminary prospectus and received a written acknowledgement from the regulator that the exemption may be evidenced in the manner set out in subsection (1); and
(b) the regulator has not sent notice to the contrary to the person or company that sought the exemption before, or concurrent with, the issuance of the receipt.

NATIONAL INSTRUMENT 44-102

SHELF DISTRIBUTIONS

APPENDIX A¹⁰⁹

^{109 This appendix is based on Appendix B of NP44.}

METHOD 1 FOR SHELF PROSPECTUS CERTIFICATES

METHOD 1: FORWARD LOOKING CERTIFICATES TO BE INCLUDED IN BASE SHELF PROSPECTUSES OR SUPPLEMENTS ESTABLISHING AN MTN PROGRAM OR OTHER CONTINUOUS DISTRIBUTION

PART 1 Base Shelf Prospectuses

1.1 Certificate of Issuer and Promoter - If a base shelf prospectus establishes an MTN program or other continuous distribution, or if method 2 has not been elected by an issuer, the preliminary base shelf prospectus and the base shelf prospectus shall contain a certificate in the following form signed by

(a) the chief executive officer and the chief financial officer of the issuer;
(b) on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chief executive officer or chief financial officer, duly authorized to sign; and
(c) any person or company who is a promoter of the issuer:
"This short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of each supplement to this prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."

1.2 Underwriters' Certificates - A preliminary base shelf prospectus and a base shelf prospectus shall contain an underwriter's certificate in the following form signed by each underwriter who, at the time of filing, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus, if

(a) the base shelf prospectus establishes an MTN program or other continuous distribution; or
(b) method 2 has not been elected by the underwriter:
"To the best of our knowledge, information and belief, this short form prospectus, together with the documents incorporated in this prospectus by reference will, as of the date of each supplement to this prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under this prospectus and the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".

1.3 Credit Supporter's Certificate - A preliminary base shelf prospectus and a base shelf prospectus shall contain a certificate in the form described in section 1.1 signed by a credit supporter of the securities to be distributed under the base shelf prospectus, if

(a) National Instrument 44-101 requires a prospectus certificate of the credit supporter; and
(b) either
(i) the base shelf prospectus establishes an MTN program or other continuous distribution, or
(ii) method 2 has not been elected by the credit supporter.

1.4 Amendments

(1) An amendment to a base shelf prospectus or an amended and restated base shelf prospectus shall, subject to subsection (2), contain

(a) the certificates required under section 1.1 to be included in a base shelf prospectus, if the base shelf prospectus contains an issuer's certificate in the form described in section 1.1;
(b) the certificates required under section 1.2 to be included in a base shelf prospectus, if the base shelf prospectus contains an underwriter's certificate in the form described in section 1.2; and
(c) the certificate required under section 1.3 to be included in a base shelf prospectus, if the base shelf prospectus contains a credit supporter's certificate in the form described in section 1.3.

(2) In each certificate required under subsection (1), the reference to "this short form prospectus" shall be omitted and replaced by

(a) in the case of an amendment to a base shelf prospectus, "the short form prospectus dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated base shelf prospectus, "this amended and restated short form prospectus".

PART 2 Shelf Prospectus Supplements establishing an MTN Program

2.1 Certificate of Issuer and Promoter - If an issuer's certificate in the form described in section 1.1 was not included in the corresponding base shelf prospectus, a shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the following form signed by

(a) the chief executive officer and the chief financial officer of the issuer;
(b) on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chief executive officer or chief financial officer, duly authorized to sign; and
(c) any person or company who is a promoter of the issuer:
"The short form prospectus dated together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of each supplement to the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and by the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".

2.2 Underwriters' Certificates - A shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the following form signed by each underwriter who

(a) is in a contractual relationship with the issuer for the securities being distributed under the shelf prospectus supplement; and
(b) did not sign and include in the corresponding base shelf prospectus a certificate in the form described in section 1.2:
"To the best of our knowledge, information and belief, the short form prospectus together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of each supplement to the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and by the supplement as required by [insert name of jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."

2.3 Credit Supporter's Certificate - A shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the form described in section 2.1 signed by a credit supporter of the securities being distributed under the shelf prospectus supplement, if

(a) National Instrument 44-101 requires a prospectus certificate of the credit supporter; and
(b) a prospectus certificate of the credit supporter in the form described in section 1.3 was not included in the corresponding base shelf prospectus.

2.4 Amendments

(1) An amendment to a shelf prospectus supplement or an amended and restated shelf prospectus supplement that establishes an MTN program or other continuous distribution shall, subject to subsection (2), contain

(a) the certificates required under section 2.1 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains an issuer's certificate in the form described in section 2.1;
(b) the certificates required under section 2.2 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains an underwriter's certificate in the form described in section 2.2; and
(c) the certificate required under section 2.3 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains a credit supporter's certificate in the form described in section 2.3.

(2) In each certificate required under subsection (1), the reference to "this shelf prospectus supplement" shall be omitted and replaced by

(a) in the case of an amendment to a shelf prospectus supplement, "the shelf prospectus supplement dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated shelf prospectus supplement, "this amended and restated shelf prospectus supplement".

NATIONAL INSTRUMENT 44-102

SHELF DISTRIBUTIONS

APPENDIX B¹¹⁰

^{110 This appendix is based on Appendix B of NP44.}

METHOD 2 FOR SHELF PROSPECTUS CERTIFICATES

METHOD 2: NON-FORWARD LOOKING PROSPECTUS CERTIFICATES TO BE INCLUDED IN BOTH BASE SHELF PROSPECTUSES AND SUPPLEMENTS

PART 1 Base Shelf Prospectus

1.1 Certificate of Issuer and Promoter - If method 2 is elected by an issuer, a preliminary base shelf prospectus and a base shelf prospectus shall contain a certificate in the following form signed by

(a) the chief executive officer and the chief financial officer of the issuer;
(b) on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chief executive officer or chief financial officer, duly authorized to sign; and
(c) any person or company who is a promoter of the issuer:
"This short form prospectus, together with the documents incorporated in this prospectus by reference, constitutes full, true and plain disclosure of all material facts relating to the securities as required by the securities laws of [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."

1.2 Underwriters' Certificates - A preliminary base shelf prospectus and a base shelf prospectus shall contain an underwriter's certificate in the following form signed by each underwriter who

(a) at the time of filing, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus; and
(b) elects method 2:
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, constitutes full, true and plain disclosure of all material facts relating to the securities as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."

1.3 Credit Supporter's Certificate - A base shelf prospectus shall contain a certificate in the form described in section 1.1 signed by a credit supporter of the securities to be distributed under the base shelf prospectus, if

(a) National Instrument 44-101 requires a prospectus certificate of the credit supporter; and
(b) method 2 is elected by the credit supporter.

1.4 Amendments

(1) An amendment to a base shelf prospectus or an amended and restated base shelf prospectus shall, subject to subsection (2), contain

(a) the certificates required under section 1.1 to be included in a base shelf prospectus, if the issuer has elected method 2;
(b) the certificate described in section 1.2 signed by each underwriter who
(i) at the time of filing the amendment or the amended and restated base shelf prospectus, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus, and
(ii) has elected method 2; and
(c) the certificate required under section 1.3 to be included in a base shelf prospectus, if the base shelf prospectus contains a credit supporter's certificate in the form described in section 1.3.

(2) In each certificate required under subsection (1), the reference to "this short form prospectus" shall be omitted and replaced by

(a) in the case of an amendment to a base shelf prospectus, "the short form prospectus dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated base shelf prospectus, "this amended and restated short form prospectus".

PART 2 Shelf Prospectus Supplement

2.1 Certificate of Issuer and Promoter - If method 2 is elected by an issuer, each shelf prospectus supplement shall contain a certificate in the following form signed by

(a) the chief executive officer and the chief financial officer of the issuer;
(b) on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chief executive officer or chief financial officer, duly authorized to sign; and
(c) any person or company who is a promoter of the issuer:
"The short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and this supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".

2.2 Underwriters' Certificates - Each shelf prospectus supplement shall contain a certificate in the following form signed by each underwriter who

(a) is in a contractual relationship with the issuer for the securities being distributed under the supplement; and
(b) has elected method 2:
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and this supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".

2.3 Credit Supporter's Certificate - Each shelf prospectus supplement shall contain a certificate in the form described in section 2.1 signed by a credit supporter of the securities being distributed under the shelf prospectus supplement, if

(a) National Instrument 44-101 requires a prospectus certificate of the credit supporter; and
(b) method 2 is elected by the credit supporter.

2.4 Amendments

(1) An amendment to a shelf prospectus supplement or an amended and restated shelf prospectus supplement shall, subject to subsection (2), contain

(a) the certificates required under section 2.1 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains an issuer's certificate in the form described in section 2.1;
(b) the certificate described in section 2.2 signed by each underwriter who
(i) at the time of filing the amendment or the amended and restated shelf prospectus supplement, is in a contractual relationship with the issuer for the securities being distributed under the shelf prospectus supplement, and
(ii) has elected method 2; and
(c) the certificate required under section 2.3 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains a credit supporter's certificate in the form described in section 2.3.

(2) In each certificate required under subsection (1), the reference to "this shelf prospectus supplement" shall be omitted and replaced by

(a) in the case of an amendment to a shelf prospectus supplement, "the shelf prospectus supplement dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated shelf prospectus supplement, "this amended and restated shelf prospectus supplement".

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44-102 - Shelf Distributions [NI Proposed - Lapsed]