47-601 - Advertising [Interim BCP - Rescinded]
| Published Date: | 2001-06-28 |
|---|---|
| Effective Date: | 2001-06-30 |
| PART | TITLE |
 | |
| PART 1 | EFFECTIVE DATE AND APPLICATION |
| 1.1 Effective date |
| 1.2 Application |
| |
| PART 2 | RESTRICTIONS ON ADVERTISING |
| 2.1 Advertising may be "trading" |
| 2.2 National Policy 42 |
| |
| PART 3 | CONTENTS OF ADVERTISEMENTS |
| 3.1 Refer to the disclosure document |
| 3.2 Avoid misrepresentations and incorrect inferences |
| 3.3 Avoid partial disclosure |
| 3.4 Historical data |
| 3.4 Follow CICA rules for financial forecasts and projections |
| |
| PART 4 | PROSPECTUS DISTRIBUTIONS |
| 4.1 Disclosure |
| 4.2 Be consistent with the prospectus |
| |
| PART 5 | ADVERTISING DURING THE WAITING PERIOD |
| 5.1 Specific matters can be communicated |
| 5.2 Identify the security |
| 5.3 Do not include commercial features |
| 5.4 Refer to preliminary prospectus |
| |
| PART 6 | MUTUAL FUNDS |
INTERIM BC POLICY 47-601
ADVERTISING
INTRODUCTION
This policy sets out guidelines about advertising intended to promote investor interest in an issuer or its securities.
PART 1 EFFECTIVE DATE AND APPLICATION
1.1 Effective date
The Commission rescinds Local Policy Statement 3-39, effective February 1, 1987 and substitutes this BC Policy, effective June 30, 2001.
1.2 Application This policy applies to advertising and similar communications made, in any form, by or on behalf of an issuer to promote investor interest in an issuer or its securities. Anyone who is paid for, or benefits from, promoting investor interest may be acting on behalf of the issuer, even if the payment or benefit is indirect.
PART 2 RESTRICTIONS ON ADVERTISING
2.1 Advertising may be “trading”
The Act defines "trade" as any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of a trade. Since anyone who trades must be registered, only those who are registered, or exempt from registration, can advertise.
2.2 National Policy 42
National Policy 42 says no one should advertise over radio or television except during a distribution of the securities under a receipted prospectus.
PART 3 CONTENTS OF ADVERTISEMENTS
3.1 Refer to the disclosure document
You should warn investors that there are risks associated with the investment and encourage them to read the relevant offering documents. Statements in advertisements should be consistent with what the investor will read in those documents.
3.2 Avoid misrepresentations and incorrect inferences
You must not make any misrepresentations. [s. 50(1)(d), Securities Act]
You should word advertisements so that a reasonable investor will not draw an incorrect inference.
Avoid words with special meanings, such as "preferred", "guaranteed", "liquid" and "indemnity", unless their special meaning applies to the securities offered. When you do use them, include relevant details.
For example, when you use "guaranteed", you should disclose what is guaranteed, the name of the guarantor, the security, if any, for the guarantee, or, if there is none, that there is no underlying security.
Similarly, "liquid" means "readily convertible into cash" and you should use it only when the investor is readily able to convert the investment into cash or to sell it in the open market.
3.3 Avoid partial disclosure
You should avoid partial disclosure. For example, if the advertisement mentions a benefit, you should also disclose its related conditions and risks so that the reader does not infer there are none. 3.4 Historical data
If you refer to historical data, generally, you should disclose it based on the previous three consecutive years. If the relevant data for the previous three years is not available, you should say why.
3.5 Follow CICA rules for financial forecasts and projections
Where there are financial forecasts or projections, they should be prepared and audited under CICA guidelines.
PART 4 PROSPECTUS DISTRIBUTIONS
4.1 Disclosure
When a distribution is made by way of a prospectus, the advertisement should tell the investor that the advertisement is not an offering and that the offering is made only by way of the prospectus. You should also disclose the name and address of a registrant who is able to provide more information and a copy of the prospectus.
4.2 Be consistent with the prospectus
Much time can pass between the decision to seek financing and the completion of the offering. The onus is on the promoters, directors, registrants and all others having an interest in the distribution to ensure that all advertisements are consistent with what is in the prospectus.
If the Executive Director is of the opinion that an advertisement is materially inconsistent with the prospectus disclosure, the Executive Director may require that the prospectus disclose the discrepancy. PART 5 ADVERTISING DURING THE WAITING PERIOD
5.1 Specific matters can be communicated
During the waiting period between the receipt for the preliminary prospectus and the receipt for the final prospectus, you can:
(a) identify the security;
(b) state the price of the security, if it is known;
(c) state the name and address of a person or company that sells the securities; and
(d) solicit expressions of interest in the securities.
5.2 Identify the security
For the purpose of identifying the security, the communication may only:
(a) indicate whether the security represents debt or a share in a company or an interest in a non-corporate entity (e.g. a unit of undivided ownership in a film property) or a partnership interest;
(b) name the issuer, if the issuer is a reporting issuer, or name the issuer and describe briefly its business, if the issuer is not already a reporting issuer. The description of the business should be in general terms and should not summarize the proposed use of the proceeds of the offering;
(c) indicate, without giving details, whether the security qualifies the holder for special tax treatment; and
(d) indicate how many securities will be made available in the offering.
5.3 Do not include commercial features
You should not include a summary of the commercial features of the offering in the advertisement. Those details are set out in the preliminary prospectus, which is intended to be the main disclosure document until the Executive Director issues the receipt for the final prospectus. The purpose of advertising during the waiting period is to alert the public that the preliminary prospectus is available.
5.4 Refer to preliminary prospectus
Advertisements used during the waiting period should include in bold face type as large as that used in the body of the text, words to the following effect:
A preliminary prospectus relating to these securities has been filed with the British Columbia Securities Commission but it has not yet become final for the purpose of a distribution to the public. This advertisement does not constitute an offer to sell or a solicitation of an offer to buy the securities. There will not be any sale or any acceptance of an offer to buy the securities in British Columbia (where the offering is made solely in BC) or any province of Canada (where the offering is made nationally) before the Executive Director (or the relevant Commission) has issued a receipt for the final prospectus or given some other authorization.
PART 6 MUTUAL FUNDS
Mutual fund advertising is covered in Part 15 of National Instrument 81-102 Mutual Funds and is not subject to this Policy.
June 27, 2001
Brent W. Aitken
Member