45-501CP - Mortgages [CP - Rescinded]
| Published Date: | 2002-04-03 |
|---|---|
| Effective Date: | 2002-04-03 |
| Rescinded Date: | 2009-09-28 |
1.1 Background
A mortgage is a security. Sections 46(e) and 75(a) of the Securities Act exempt distributions of mortgages and other encumbrances of property from the registration and prospectus requirements of the Act. Neither the exemption nor the Mortgage Brokers Act was intended to cover mortgage syndications, where a single mortgage is sold to a number of investors. Syndicated mortgages, particularly on commercial property and development property, are complex and risky securities similar to other real estate based securities that are subject to the general requirements of the Securities Act.
1.2 Purpose
The purpose of the Commission Rule 45-501(BC) is to
(1) remove the mortgage exemption in the Securities Act for syndicated mortgages or for mortgages on property that is not real property, except where the purchaser is an institutional investor, and
(2) provide a new exemption from the registration and prospectus requirements of the Act for relatively simple syndicated mortgages, called “qualified syndicated mortgages”.
A qualified syndicated mortgage is defined to be a syndicated mortgage on property that is used solely for residential purposes, that contains no more than four residential dwelling units, that is not under construction and that meets other conditions set out in the Commission Rule. Qualified syndicated mortgages would continue to be governed by the Mortgage Brokers Act.
PART 2 STATUTORY EXEMPTIONS
2.1 General - The Commission Rule is not intended to restrict the use of other exemptions that are available to issuers in general. These are described in BC Policy 45-601 Statutory and Discretionary Exemptions, Multilateral Instrument 45-103 Capital Raising Exemptions and Companion Policy 45-103 (CP). Where an offering memorandum is required for the use of an exemption, Interim Form 45-901F is the required form of offering memorandum when mortgages are sold under these exemptions.
Amended April 3, 2002