51-102 - Continuous Disclosure Obligations [NI Proposed - Lapsed]

Table of Contents

PART 1 DEFINITIONS AND INTERPRETATION
1.1 Definitions and Interpretation

PART 2 APPLICATION & TRANSITION
2.1 Application
2.2 Transition

PART 3 LANGUAGE OF DOCUMENTS
3.1 French or English

PART 4 FINANCIAL STATEMENTS
4.1 Annual Financial Statements and Auditor’s Report
4.2 Filing Deadline for Annual Financial Statements
4.3 Approval of Audited Financial Statements
4.4 Interim Financial Statements
4.5 Filing Deadline for Interim Financial Statements
4.6 Review of Interim Financial Statements
4.7 Generally Accepted Accounting Principles
4.8 Auditor’s Report
4.9 Balance Sheet Line Items
4.10 Additional Information for Development-Stage Issuers
4.11 Disclosure of Outstanding Share Data
4.12 Delivery of Financial Statements
4.13 Filing of Financial Statements After Becoming a Reporting Issuer
4.14 Change of Auditor

PART 5 ANNUAL INFORMATION FORM
5.1 Requirement to file an AIF
5.2 Filing Deadline for an AIF
5.3 Additional / Supporting Documents

PART 6 ANNUAL & INTERIM MD&A
6.1 Filing of Annual and Interim MD&A
6.2 Alternative Filing of Annual and Interim MD&A and Supplement for Reporting Issuers Filing with the SEC
6.3 Disclosure of Outstanding Share Data
6.4 Review of Annual and Interim MD&A
6.5 Delivery of Annual and Interim MD&A

PART 7 MATERIAL CHANGE REPORTS
7.1 Publication of Material Change

PART 8 BUSINESS ACQUISITION REPORT AND DISCLOSURE OF SIGNIFICANT DISPOSITIONS
8.1 Obligation to File a Business Acquisition Report
8.2 Determination of Significance
8.3 Modified Significance Tests for Small Businesses
8.4 Financial Statement Disclosure for Significant Acquisitions
8.5 Reporting Periods
8.6 Generally Accepted Accounting Principles
8.7 Reporting Currency
8.8 Auditor’s Report
8.9 Balance Sheet Line Items and Additional Information for Development-stage Issuers
8.10 Exemption from Disclosure Requirements for Significant Acquisitions Accounted for Using the Equity Method
8.11 Exemptions from Disclosure Requirements for Significant Acquisitions if More Recent Statements Included
8.12 Exemption from Disclosure Requirements for Significant Acquisitions if Financial Year End Changed
8.13 Exemption from Audit Requirement for Financial Statements of a Small Business
8.14 Exemption Where Financial Statements Not Previously Prepared
8.15 Exemption for Acquisition of an Interest in an Oil and Gas Property
8.16 Significant Dispositions
8.17 Pro Forma Financial Statement Disclosure for Significant Dispositions

PART 9 PROXY SOLICITATION AND INFORMATION CIRCULARS
9.1 Sending of Proxies and Information Circulars
9.2 Exemption
9.3 Filing of Information Circulars and Proxy-Related Material
9.4 Content of Form of Proxy

PART 10 RESTRICTED SHARE DISCLOSURE REQUIREMENTS
10.1 Content and Dissemination of Disclosure Documentation
10.2 Exemptions for Certain Reporting Issuers

PART 11 ADDITIONAL FILING REQUIREMENTS
11.1 Additional Filing Requirements

PART 12 FILING OF MATERIAL DOCUMENTS
12.1 Filing of Certain Material Documents

PART 13 EXEMPTIONS
13.1 Exemptions from this Instrument
13.2 Existing Exemptions

PART 14 EFFECTIVE DATE
14.1 Effective Date

¹National Instrument 14-101 Definitions defines certain terms that are used in more than one national or multilateral instrument.

(1) A term used in this Instrument and defined in the securities statute of the local jurisdiction has the meaning given to it in that statute unless: (a) the definition in that statute is restricted to a specific portion of the statute that does not govern continuous disclosure, proxy solicitation or financial disclosure matters; or (b) the context otherwise requires.

(2) Subject to subsection (1), in this Instrument:

“acquisition of related businesses” means the acquisition of two or more businesses if:

(a) the businesses were under common control or management before the acquisitions were completed;

(b) each acquisition was conditional upon the completion of each other acquisition; or

(c) the acquisitions were contingent upon a single common event;

“aggregate market value” means the aggregate of the market value of each class of an issuer’s equity securities for which there is a published market, calculated for each class, by multiplying:

(a) the simple average of the closing prices of the class of equity securities, on the published market on which that class is principally traded, for each of the 20 most recent trading days up to and including the last day of the issuer’s financial year on which there was a closing price; by

(b) the simple average number of equity securities of the class outstanding over the 20 day trading period;

“AIF” means a completed Form 51-102F1 AIF or, in the case of an SEC issuer, either a completed Form 51-102F1 or a current annual report on Form 10-K, or on Form 20-F, under the 1934 Act;

“asset-backed security” means a security that is primarily serviced by the cash flows of a discrete pool of mortgages, receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite period and any rights or other assets designed to assure the servicing or timely distribution of proceeds to securityholders;

“board of directors” means, for a person or company that does not have a board of directors, a person or group of persons that performs similar functions;

“business acquisition report” means a completed Form 51-102F4Business Acquisition Report;

“class” includes a series of a class;

“common share” means an equity share to which is attached voting rights exercisable in all circumstances, irrespective of the number or percentage of shares owned, that are not less, on a per share basis, than the voting rights attached to any other shares of an outstanding class of shares of the reporting issuer;

“date of acquisition” means the date of acquisition as determined for accounting purposes pursuant to the Handbook;

“development-stage issuer” means a reporting issuer that is devoting substantially all of its efforts to establishing a new business and planned principal operations have not commenced;

“equity security” or “equity share” means any security or share, as the case may be, of a reporting issuer that carries a residual right to participate in earnings of the reporting issuer and, on the liquidation or winding-up of the reporting issuer, in its assets;

“exchange-traded security” means a security that is listed on a recognized exchange or is quoted on a recognized quotation and trade reporting system or is listed on an exchange or quoted on a quotation and trade reporting system that is recognized for the purposes of National Instrument 21-101 Marketplace Operation and National Instrument 23-101 Trading Rules;

“exchangeable security” means a security of a reporting issuer that is exchangeable for, or carries the right of the holder to acquire, or of the reporting issuer to cause the acquisition of, a security of another reporting issuer;

“executive officer” of a reporting issuer for a financial year, means an individual who at any time during the year was:

(a) a chair of the reporting issuer, if that individual performed the functions of the office on a full-time basis;

(b) a vice-chair of the reporting issuer, if that individual performed the functions of the office on a full-time basis;

(c) the president of the reporting issuer;

(d) a vice-president of the reporting issuer in charge of a principal business unit, division or function including sales, finance or production;

(e) an officer of the reporting issuer or any of its subsidiaries who performed a policy-making function in respect of the reporting issuer; or

(f) any other person who performed a policy-making function in respect of the reporting issuer;

“form of proxy” means a document in written, printed or, if permitted under the legislation of the reporting issuer’s jurisdiction of incorporation, electronic form containing the content required under section 9.4 that, on completion and execution by or on behalf of a securityholder, becomes a proxy;

“group scholarship plan” means a scholarship plan the securities of which entitle the beneficiaries, who are designated in connection with the acquisition of the securities that have the same year of maturity, to a scholarship award proportionate to the value of the securities in respect of which they are designated, on or after maturity of the securities;

“income from continuing operations” means income or loss, adjusted to exclude discontinued operations, extraordinary items, and net income taxes;

“insider” means:

(a) every director or executive officer of a reporting issuer;

(b) every director or executiveofficer of a company that is itself an insider or subsidiary of a reporting issuer;

(c) any person or company who beneficially owns, directly or indirectly, voting securities of a reporting issuer or who exercises control or direction over voting securities of a reporting issuer or a combination of both carrying more than 10 percent of the voting rights attached to all voting securities of the reporting issuer for the time being outstanding other than voting securities held by the person or company as underwriter in the course of a distribution; and

(d) a reporting issuer where it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities;

“inter-dealer bond broker” means a person or company that is approved by the IDA under IDA By-Law No. 36 Inter-Dealer Bond Brokerage Systems, as amended, and is subject to IDA By-law No. 36 and IDA Regulation 2100 Inter-Dealer Bond Brokerage Systems, as amended;

“interim period” means a period commencing with the beginning of a financial year and ending nine, six or three months before the end of the financial year;

“investee” means an entity that the Handbook recommends that a reporting issuer account for by the equity method or the proportionate consolidation method;

“investment fund” means a mutual fund, a non-redeemable investment fund or a group scholarship plan;

“marketplace” means

(a) an exchange,

(b) a quotation and trade reporting system,

(c) a person or company not included in paragraph (a) or (b) that

(i) constitutes, maintains or provides a market or facility for bringing together buyers and sellers of securities,

(ii) brings together the orders for securities of multiple buyers and sellers, and

(iii) uses established, non-discretionary methods under which the orders interact with each other, and the buyers and sellers entering the orders agree to the terms of a trade, or

(d) a dealer that executes a trade of an exchange-traded security outside of a marketplace,  but does not include an inter-dealer bond broker;

“material change” means, if used in relation to the affairs of a reporting issuer, a change in the business, operations or capital of the reporting issuer that would reasonably be expected to have a significant effect on the market price or value of any of the securities of the reporting issuer and includes a decision to implement such a change made by the board of directors of the reporting issuer or by senior management of the reporting issuer who believe that confirmation of the decision by the board of directors is probable;

“MD&A” means a completed Form 51-102F2 Management Discussion & Analysis or, in the case of an SEC issuer, either a completed Form 51-102F2 or management discussion and analysis prepared in accordance with Item 303 of Regulation S-K under the 1934 Act;

“mineral project” means any exploration, development or production activity in respect of natural, solid, inorganic or fossilized organic material including base and precious metals, coal and industrial minerals;

“non-voting shares” means restricted shares that do not carry the right to vote generally, except for a right to vote that is mandated, in special circumstances, by law;

“non-redeemable investment fund” means, an issuer

(a) whose primary purpose is to invest money provided by its securityholders;

(b) that does not invest for the purpose of exercising effective control, seeking to exercise effective control or being actively involved in the management of the issuers in which it invests, other than mutual funds or other non-redeemable investment funds; and

(c) that is not a mutual fund;

“preference shares” means shares to which are attached a preference or right over the shares of any class of equity shares of the reporting issuer, but do not include equity shares;

“principal obligor” means, for any asset-backed security, a person or company that is obligated to make payments, has guaranteed payments, or has provided alternative credit support for payments, on financial assets that represent a third or more of the aggregate amount owing on all of the financial assets underlying the asset-backed security;

“proxy” means a completed and executed form of proxy by which a securityholder has appointed a person or company as the securityholder’s nominee to attend and act for the securityholder and on the securityholder’s behalf at a meeting of securityholders;

“published market” means, for a class of securities, a marketplace on which the securities have traded that discloses regularly in a publication of general and regular paid circulation or in a form that is broadly distributed by electronic means the prices at which those securities have traded;

“recognized exchange” means

(a) in Ontario, an exchange recognized by the securities regulatory authority to carry on business as a stock exchange,

(b) in Québec, an exchange recognized by the securities regulatory authority as a self-regulatory organization; and

(c) in every other jurisdiction, an exchange recognized by the securities regulatory authority as an exchange, self-regulatory organization or self-regulatory body;

“recognized quotation and trade reporting system” means

(a) in every jurisdiction other than British Columbia, a quotation and trade reporting system recognized by the securities regulatory authority under securities legislation to carry on business as a quotation and trade reporting system; and

(b) in British Columbia, a quotation and trade reporting system recognized by the securities regulatory authority under securities legislation as a quotation and trade reporting system or as an exchange;

“restricted share term” means each of the terms “non-voting shares”, “subordinate voting shares” and “restricted voting shares”;

“restricted shares” means:

(a) equity shares that are not common shares; and

(b) equity shares, if any of the following apply:

(i) there is another class of shares that, to a reasonable person, appears to carry a disproportionate vote per share relative to the equity shares;

(ii) the conditions of a class of equity shares, the conditions of other classes of shares, or the reporting issuer’s constating documents have provisions that nullify or, to a reasonable person, appear to significantly restrict the voting rights of another class of equity shares; or

(iii) there is a second class of equity shares that, to a reasonable person, appears to entitle the owner of equity shares of that second class to participate in the earnings or assets of the reporting issuer disproportionately relative to the first class of equity shares;

“restricted voting shares” means restricted shares that carry a right to vote subject to a restriction on the number or percentage of shares that may be voted by one or more persons or companies, except to the extent the restriction is permitted or prescribed by statute and is applicable only to persons or companies that are not citizens or residents of Canada or that are otherwise considered as a result of any law applicable to the reporting issuer to be non-Canadians;

“SEC issuer” means a reporting issuer that:

(a) has a class of securities registered under section 12 of the 1934 Act or is required to file reports under section 15(d) of the 1934 Act; and

(b) is not registered or required to be registered as an investment company under the Investment Company Act of 1940 of the United States of America;

“senior issuer” means a reporting issuer that, as at the end of its most recently completed financial year or as at the end of any previous financial year ending after ● was listed on the Toronto Stock Exchange and did not qualify as, or if the reporting issuer had been listed on the Toronto Stock Exchange at any of these times would not have qualified as, a ônon-exempt companyö under the rules and policies of that exchange;

“significance tests” means the tests set out in subsection 8.2(l);

“small business” means a business that satisfies both of the following criteria:

(a) the consolidated assets of the business as at the specified date are less than $10,000,000; and

(b) the consolidated revenue of the business for a financial year ending on the specified date is less than $10,000,000;

“solicit”, in connection with a proxy, includes:

(a) requesting a proxy whether or not the request is accompanied by or included in a form of proxy;

(b) requesting a holder of voting securities to execute or not to execute a form of proxy or to revoke a proxy;

(c) sending a form of proxy or other communication to a holder of voting securities under circumstances that to a reasonable person will likely result in the procurement, withholding or revocation of a proxy of that holder of voting securities; or

(d) sending, along with a notice of a meeting, a form of proxy to a holder of voting securities by management of a reporting issuer;

but does not include:

(e) sending a form of proxy to a holder of securities in response to a unsolicited request made by or on behalf of the holder of securities; or

(f) performing administrative acts or professional services on behalf of a person or company soliciting a proxy; or

(g) making a public announcement as to how a person or company intends to vote and the reasons for that decision;

“subject securities” means shares that, if and when issued, will result in an existing class of outstanding equity shares being considered, for the purposes of this Instrument, restricted shares;

“subordinate voting shares” means restricted shares that carry a right to vote, if there are shares of another class of shares outstanding that carry a greater right to vote on a per share basis;

“US GAAP” means generally accepted accounting principles in the United States of America that the SEC has identified as having substantial authoritative support and as supplemented by Regulation S-X and Regulation S-B under the 1934 Act; and

“US GAAS” means generally accepted auditing standards in the United States of America as supplemented by the SEC’s rules on auditor independence.

This Instrument does not apply to investment funds unless otherwise expressly stated.

2.2 Transition

Unless otherwise stated, the provisions of this Instrument concerning:

(a) annual financial statements and MD&A, apply for financial years beginning on or after ●, 2003²

²The date this Instrument is expected to become effective.;

(b) interim financial statements and MD&A, apply for interim periods in financial years beginning on or after ●, 2003;

(c) AIFs, apply in respect of financial years beginning on or after ●, 2003, and

(d) all other disclosure obligations under this Instrument, apply from and after ●, 2003.

(1) A person or company must file a document required to be filed under this Instrument in French or in English or both.

(2) Notwithstanding subsection (1), if a person or company files a document only in French or only in English but delivers to securityholders a version of the document in the other language, the person or company must file that other version not later than when it is first delivered to securityholders.

(3) In Québec, linguistic obligations and rights prescribed by Québec law must be complied with.

(1) A reporting issuer must file comparative annual financial statements that include:

(a) an income statement, a statement of retained earnings, and a cash flow statement for:

(i) the period that commenced on the date of incorporation or organization of the reporting issuer and ended as at the close of the first financial year or, if the reporting issuer has completed a financial year, the period covered by the most recently completed financial year, as the case may be; and

(ii) the period covered by the financial year immediately preceding the most recently completed financial year, if any;

(b) a balance sheet as at the end of each of the periods referred to in paragraph (a); and

(c) notes to the financial statements.

(2) A reporting issuer must, at the same time, file an auditor’s report on the financial statements filed under subsection (1).

4.2 Filing Deadline for Annual Financial Statements

(1) The comparative financial statements and auditor’s report required to be filed under section 4.1 must be filed:

(a) in the case of a senior issuer, on or before the earlier of:

(i) the 90th day after the end of its most recently completed financial year; and

(ii) the date of filing annual financial statements for its most recently completed financial year in a foreign jurisdiction, or

(b) in the case of a reporting issuer other than a senior issuer, on or before the earlier of:

(i) the 120th day after the end of its most recently completed financial year; and

(ii) the date of filing annual financial statements for its most recently completed financial year in a foreign jurisdiction.

4.3 Approval of Audited Financial Statements

The comparative financial statements required to be filed under section 4.1 must be reviewed by the audit committee, if any, of the board of directors and must be approved by the board of directors before the statements are filed.

4.4 Interim Financial Statements

(1) A reporting issuer must file:

(a) if it has not completed its first financial year, interim financial statements for all of the interim periods of the reporting issuer’s current financial year other than a period that is less than three months in length; or

(b) if it has completed its first financial year, interim financial statements for all of the interim periods of the reporting issuer’s current financial year.

(2) Subject to 4.13(2), the financial statements required to be filed under subsection (1) must include:

(a) a balance sheet as at the end of the interim period for which the financial statements are prepared and a balance sheet as at the end of the immediately preceding financial year;

(b) an income statement, a statement of retained earnings and a cash flow statement, all for the year-to-date interim period for which the financial statements are prepared and comparative financial information for the corresponding interim period in the immediately preceding financial year;

(c) an income statement and cash flow statement for the three-month period for which financial statements are prepared and comparative financial information for the corresponding period in the preceding financial year; and

(d) notes to the financial statements.

4.5 Filing Deadline for Interim Financial Statements

(1) The financial statements required to be filed under section 4.4 must be filed:

(a) in the case of a senior issuer, on or before the earlier of:

(i) the 45th day after the end of the interim period, and

(ii) the date of filing interim financial statements for a period ending on the last day of the interim period in a foreign jurisdiction; or

(b) in the case of a reporting issuer other than a senior issuer, on or before the earlier of:

(i) the 60th day after the end of the interim period; and

(ii) the date of filing interim financial statements for a period ending on the last day of the interim period in a foreign jurisdiction.

4.6 Review of Interim Financial Statements

(1) The board of directors of a reporting issuer must review the financial statements required to be filed under section 4.4 before filing the statements.

(2) The board of directors may delegate the review required by subsection (1) to an audit committee of the board.

4.7 Generally Accepted Accounting Principles

(1) Subject to subsection (2) and section 8.6, the financial statements required to be filed under sections 4.1 and 4.4 and any other financial statements included in a document required by this Instrument must be prepared in accordance with Canadian GAAP but may not be prepared in accordance with differential reporting options set out in the Handbook.

(2) Subject to subsection (3), an SEC issuer may prepare the financial statements referred to in subsection (1) in accordance with US GAAP.

(3) If an SEC issuer that previously filed financial statements prepared in accordance with Canadian GAAP chooses to file financial statements under subsection (2), the reporting issuer must, in the notes to the first two sets of annual comparative financial statements required by section 4.1, after the change from Canadian GAAP to US GAAP and in the notes to the interim financial statements for interim periods during those two years filed under this Instrument:

(a) explain the material differences between Canadian GAAP and US GAAP that relate to measurement in the reporting issuer’s financial statements;

(b) quantify the effect of material differences between Canadian GAAP and US GAAP that relate to measurement in the reporting issuer’s financial statements, including a tabular reconciliation between net income reported in the financial statements and net income computed in accordance with Canadian GAAP; and

(c) provide disclosure consistent with Canadian GAAP requirements to the extent not already reflected in the financial statements.

(4) Subject to subsection (5), a reporting issuer must use the same accounting principles for all the periods presented in the financial statements referred to in subsection (1) except where a reporting issuer previously used Canadian GAAP and has used US GAAP to prepare the financial information for the most recent period presented in the financial statements, in which case the reporting issuer must present financial information for the comparative periods as follows:

(a) as previously reported in accordance with Canadian GAAP; and

(b) the comparative information in paragraph (a) adjusted for differences between Canadian GAAP and US GAAP and supported by accompanying notes that set out the reconciling items in the manner specified in subsection (3).

(5) The comparative information specified in paragraphs (a) and (b) of subsection (4) must be presented on the face of the balance sheet and statements of income, retained earnings, and cash flow except that in the case of interim financial statements, the comparative information specified in paragraph (a) of subsection (4) may be presented in the notes to the financial statements.

(6) The notes to the financial statements referred to in subsection (1) must state which accounting principles the financial statements have been prepared in accordance with.

4.8 Auditor’s Report

(1) An auditor’s report required by section 4.1 must be prepared by a person or company that is authorized, by the laws and professional standards of the jurisdiction or foreign jurisdiction in which the report is signed, to sign an auditor’s report.

(2) Subject to subsection (3), for the purposes of section 4.1, a reporting issuer must file an auditor’s report that is prepared in accordance with Canadian GAAS and does not contain a reservation.

(3) An SEC issuer may file an auditor’s report prepared in accordance with US GAAS if:

(a) the auditor’s report contains an unqualified opinion; and

(b) where the SEC issuer must comply with subsection 4.7(3), the auditor’s report on those financial statements referred to in subsection 4.7(3) is accompanied by a statement by the auditor disclosing any material differences in the form and content of the auditor’s report as compared to an auditor’s report prepared in accordance with Canadian GAAS.

(4) An auditor’s report required under section 4.1 must identify all audited financial periods presented for which the auditor has issued an auditor’s report. If the reporting issuer has changed its auditor and comparative periods presented in the financial statements were audited by a different auditor, the auditor’s report must refer to the former auditor’s report on the comparative periods.

4.9 Balance Sheet Line Items

(1) Subject to subsection (2), a reporting issuer must present separately in the balance sheets that form part of the annual and interim financial statements required under sections 4.1 and 4.4 at least the following items:

(a) cash and cash equivalents;

(b) temporary investments;

(c) long-term investments;

(d) accounts and notes receivable;

(e) investments accounted for using the equity method;

(f) inventories;

(g) property, plant and equipment;

(h) goodwill;

(i) intangible assets excluding goodwill;

(j) accounts payable;

(k) current interest-bearing liabilities;

(l) long-term debt;

(m) non-controlling interest(s);

(n) share capital;

(o) contributed surplus;

(p) retained earnings; and

(q) deferred expenses.

(2) A reporting issuer is not required to present separately an item listed in paragraphs (1)(a) through (l) of subsection (1) if the item represents less than 5 percent of the total assets of the reporting issuer as at the balance sheet date unless otherwise required by the Handbook.

4.10 Additional Information for Development-Stage Issuers

A development-stage issuer must include, as a schedule or note to the financial statements required under sections 4.1 and 4.4, for each period covered by those financial statements, a breakdown of material components of:

(a) exploration and development expenses;

(b) research and development expenses;

(c) administration expenses;

(d) any material expenses not referred to in paragraphs (a) through (c); and

(e) additions to deferred expenditures,

and, if the reporting issuer is a natural resource issuer (other than an oil and gas issuer), a breakdown of material components for each material property of the reporting issuer.

4.11 Disclosure of Outstanding Share Data

(1) A reporting issuer must include the disclosure required by this section in its annual and interim financial statements required under sections 4.1 and 4.4 or in its annual and interim MD&A required under section 6.1 or its MD&A supplement, if one is required under section 6.2.

(2) The disclosure prepared by a reporting issuer under this section must be prepared as of the latest practicable date.

(3) The disclosure prepared by a reporting issuer under this section must consist of the designation and number or principal amount of:

(a) each class and series of voting or equity securities of the reporting issuer that is outstanding;

(b) each class and series of securities of the reporting issuer that is outstanding and that are convertible into, or exercisable or exchangeable for, voting or equity securities of the reporting issuer; and

(c) to the extent determinable upon reasonable inquiry, each class and series of voting or equity securities of the reporting issuer into which, or for which, any outstanding securities of the reporting issuer are convertible, exercisable or exchangeable.

4.12 Delivery of Financial Statements

(1) A reporting issuer must send, as soon as practicable and without charge to any securityholder of the reporting issuer who requests them, a copy of any annual or interim financial statements that have been filed under this Instrument.

(2) A reporting issuer must disclose at least annually in its AIF and information circular that the annual and interim financial statements are available without charge to securityholders and how those financial statements may be obtained.

4.13 Filing of Financial Statements After Becoming a Reporting Issuer

(1) Despite any other provision of this Part except subsections (2) and (3), a reporting issuer must commence filing, in accordance with the filing deadlines set out in sections 4.2 and 4.5, the annual and interim financial statements required by sections 4.1 and 4.4, the filing deadline for which occurs after the date it becomes a reporting issuer.

(2) Unless otherwise required by the accounting principles used to prepare the reporting issuer’s financial statements, a reporting issuer is not required to provide comparative figures for interim financial statements for comparative periods in which it was not a reporting issuer and did not prepare interim financial statements.

(3) Subsection (1) does not apply to a reporting issuer in respect of an issuer’s first financial statements required to be filed after it becomes a reporting issuer if the financial statements were previously filed with a regulator or securities regulatory authority in another Canadian jurisdiction and the reporting issuer files a letter with the applicable regulator or securities regulatory authority indicating where and when the financial statements were previously filed.

4.14 Change of Auditor

(1) In this section:

“appointment” means, in relation to a reporting issuer, the earlier to occur of

(a) the appointment as its auditor of a different person or company than its former auditor; and

(b) the decision by the board of directors of the reporting issuer to propose to holders of qualified securities to appoint as its auditor a different person or company than its former auditor;

“consultation” means advice provided, whether or not in writing, to a reporting issuer during the relevant period by a successor auditor which the successor auditor concluded was an important factor considered by the reporting issuer in reaching a decision concerning:

(a) the application of accounting principles or policies to a transaction, whether or not the transaction is completed;

(b) an auditor’s report on the reporting issuer’s financial statements;

(c) a matter of audit scope or procedure; or

(d) a matter of financial statement disclosure;

“disagreement” means a difference of opinion between personnel of a reporting issuer responsible for the finalization of the reporting issuer’s financial statements and the personnel of a former auditor responsible for authorizing the issuance of audit reports with respect to the reporting issuer, if the difference of opinion:

(a) resulted in a reservation in the former auditor’s report on the reporting issuer’s financial statements for any period during the relevant period; or

(b) would have resulted in a reservation in the former auditor’s report on the reporting issuer’s financial statements for any period during the relevant period if the difference of opinion had not been resolved to the former auditor’s satisfaction, not including a difference of opinion based on incomplete or preliminary information that was resolved to the satisfaction of the former auditor upon the receipt of further information;

“former auditor” means the auditor of a reporting issuer that is the subject of the most recent termination or resignation;

“qualified securities” means securities of a reporting issuer that carry the right to participate in voting on the appointment or removal of the reporting issuer’s auditor;

“relevant information circular” means:

(a) if a reporting issuer’s constating documents or applicable law require holders of qualified securities to take action in order to remove the reporting issuer’s auditor or to appoint a successor auditor:

(i) the information circular required to accompany or form part of every notice of meeting at which that action is proposed to be taken; or

(ii) the disclosure document accompanying the text of the written resolution provided to holders of qualified securities, or

(b) if paragraph (a) does not apply, the information circular required to accompany or form part of the first notice of meeting to be sent to holders of qualified securities following the preparation of a reporting package concerning a termination or resignation;

“relevant period” means the period:

(a) commencing at the beginning of the reporting issuer’s two most recently completed financial years; and

(b) ending on the date of termination;

“reportable event” means a disagreement, a consultation, or an unresolved issue;

“reporting package” means

(a) the documents referred to in clauses (4)(a)(i) and (b)(i);

(b) the letter referred to in paragraph (8)(b), if received by the reporting issuer; and,

(c) the letter referred to in paragraph (9)(b), if received by the reporting issuer;

“successor auditor” means the person or company:

(a) appointed;

(b) that the board of directors have proposed to holders of qualified securities be appointed; or

(c) that the board of directors have decided to propose to holders of qualified securities be appointed; as the reporting issuer’s auditor after the termination or resignation of the reporting issuer’s former auditor;

“termination” means, in relation to a reporting issuer, the earlier to occur of:

(a) the removal of its auditor before the expiration of the auditor’s term of appointment, the expiration of its auditor’s term of appointment without reappointment, or the appointment of a different person or company as its auditor upon expiration of its auditor’s term of appointment; and

(b) the decision by the board of directors of the reporting issuer to propose to holders of its qualified securities that its auditor be removed before, or that a different person or company be appointed as its auditor upon, the expiration of its auditor’s term of appointment;

“unresolved issue” means any matter that, in the former auditor’s opinion, has, or could have, a material impact on the financial statements or audit reports of any financial period during the relevant period, and about which the former auditor has advised the reporting issuer if:

(a) the former auditor was unable to reach a conclusion as to the matter’s implications before the date of termination;

(b) the matter was not resolved to the former auditor’s satisfaction before the date of termination; or

(c) the former auditor is no longer willing to be associated with any of these financial statements;

(2) For the purposes of this section, the term “material” has a meaning consistent with the discussion of the term “materiality” in the Handbook.

(3) This section applies to a change of auditor of a reporting issuer, unless: 

(a) the change of auditor is required by the legislation under which the reporting issuer exists or carries on its activities; or

(b) the change of auditor arises from an amalgamation, merger or other reorganization of the auditor.

(4) Upon a termination or resignation of its auditor, a reporting issuer must:

(a) within 10 days after the date of termination:

(i) prepare a change of auditor notice in accordance with subsection (6) and deliver a copy of it to the former auditor; and

(ii) make the request of the former auditor specified in subsection (8);

(b) within 30 days after the date of termination:

(i) obtain from the audit committee of its board of directors or, in the absence of such a committee, its board of directors, written confirmation that the committee or board, as the case may be, has reviewed the change of auditor notice and any auditor response;

(ii) deliver a copy of the reporting package to the applicable regulator or securities regulatory authority;

(iii) deliver a copy of the reporting package to the former auditor;

(iv) if there are any reportable events, issue and file a news release describing the information in the reporting package; and

(c) include with each relevant information circular:

(i) a copy of the reporting package as an appendix; and

(ii) a summary of the contents of the reporting package with a cross-reference to the appendix.

(5) Upon an appointment of a successor auditor, a reporting issuer must:

(a) within 10 days after the date of appointment:

(i) deliver a copy of the change of auditor notice prepared in accordance with subsection (6) to the successor auditor; and

(ii) make the request of the successor auditor specified in subsection (9); and

(b) within 30 days after the date of appointment:

(i) obtain from the audit committee of its board of directors or, in the absence of such a committee, its board of directors, written confirmation that the committee or board, as the case may be, has reviewed the change of auditor notice and any auditor response;

(ii) deliver a copy of the reporting package to the applicable regulator or securities regulatory authority;

(iii) deliver a copy of the reporting package to the successor auditor; and

(iv) if there are any reportable events, issue and file a news release disclosing the appointment of the successor auditor.

(6) A change of auditor notice must state:

(a) the date of termination;

(b) whether the former auditor:

(i) resigned on the former auditor’s own initiative or at the reporting issuer’s request;

(ii) was removed or is proposed to holders of qualified securities to be removed during the former auditor’s term of appointment; or

(iii) was not reappointed or has not been proposed for reappointment;

(c) whether the termination or resignation of the former auditor and any appointment of the successor auditor were considered or approved by the audit committee of the reporting issuer’s board of directors or the reporting issuer's board of directors if the reporting issuer does not have an audit committee;

(d) whether the former auditor’s report on any of the reporting issuer’s financial statements relating to the relevant period contained any reservation and, if so, a description of each reservation;

(e) if there is a reportable event, the following information:

(i) for a disagreement:

(A) a description of the disagreement;

(B) whether the audit committee of the reporting issuer’s board of directors or the reporting issuer’s board of directors discussed the disagreement with the former auditor; and

(C) whether the reporting issuer authorized the former auditor to respond fully to inquiries by any successor auditor concerning the disagreement and, if not, a description of and reasons for any limitation;

(ii) for a consultation:

(A) a description of the issue that was the subject of the consultation;

(B) a summary of the successor auditor’s oral advice, if any, provided to the reporting issuer concerning the issue;

(C) a copy of the successor auditor’s written advice, if any, received by the reporting issuer concerning the issue; and

(D) whether the reporting issuer consulted with the former auditor concerning the issue and, if so, a summary of the former auditor's advice concerning the issue;

(iii) for an unresolved issue:

(A) a description of the issue;

(B) whether the audit committee of the reporting issuer’s board of directors or the reporting issuer’s board of directors discussed the issue with the former auditor; and

(C) whether the reporting issuer authorized the former auditor to respond fully to inquiries by any successor auditor concerning the issue and, if not, a description of and reasons for any limitation; and

(f) if there are no reportable events, a statement to that effect.

(8) For the purposes of clause (4)(a)(ii), the reporting issuer must request the former auditor to:

(a) review the reporting issuer’s change of auditor notice;

(b) prepare a letter, addressed to the applicable regulator or securities regulatory authority, stating, to the former auditor’s knowledge, whether or not the change of auditor notice states correctly all information required under subsection (6) and, if not, the information required under subsection (6) that has not been stated correctly; and

(c) deliver the letter to the reporting issuer within 20 days after the date of termination.

(9) For the purposes of clause (5)(a)(ii), the reporting issuer must request the successor auditor to:

(a) review the reporting issuer’s change of auditor notice;

(b) prepare a letter that:

(i) is addressed to the securities regulatory authority;

(ii) states, to the successor auditor’s knowledge, whether or not the change of auditor notice states correctly, all information required under subsection (6) and, if not, the information required under subsection (6) that has not been stated correctly;

(c) deliver that letter to the reporting issuer and a copy of the letter to the former auditor within 20 days after the date of appointment.

(11) A reporting issuer is not required to comply with this section if:

(a) a termination, or resignation, and appointment occur in connection with an amalgamation, arrangement, take-over or similar transaction involving the reporting issuer or a reorganization of the reporting issuer;

(b) the termination, or resignation, and appointment have been disclosed in a news release that has been filed or in a disclosure document that has been delivered to holders of qualified securities and filed; and

(c) no reportable event has occurred.

(12) An SEC issuer is not required to comply with this section if it:

(a) complies with the requirements of Item 304 of Regulation S-K; and

(b) at the same time that the information is provided to the SEC:

(i) files the information with the applicable regulator or securities regulatory authority; and

(ii) issues and files with the applicable regulator or securities regulatory authority the news release required under clause (4)(b)(iv) or (5)(b)(iv), if any, and

(c) includes the information with each relevant information circular.

(1) Subject to subsection (2), a reporting issuer must file an AIF.

(2) A reporting issuer that is a small business as at the end of the reporting issuer’s most recently completed financial year, and that has an aggregate market value of less than $75 million is exempt from the requirements of subsection (1) if the reporting issuer:

(a) has never been required to file an AIF under this Instrument; or

(b) (i) was previously required to file an AIF under this Instrument solely by virtue of having aggregate market value exceeding $75 million;

(ii) had an aggregate market value of less than $75 million as at the end of each of its two most recently completed financial years; and

(iii) prior to the date the AIF would otherwise have to be filed under section 5.2, notifies the applicable securities regulatory authority or regulator in writing that the reporting issuer is relying on this paragraph 5.1(2)(b).

5.2 Filing Deadline for an AIF

(1) An AIF required to be filed under section 5.1 must be filed:

(a) subject to paragraph (b), in the case of a senior issuer, on or before the 90th day after the end of its most recently completed financial year;

(b) in the case of a senior issuer that is an SEC issuer filing its AIF in Form 10-K or Form 20-F, on or before the earlier of:

(i) the date the reporting issuer would be required to file an AIF under paragraph (a); and

(ii) the date the reporting issuer files its Form 10-K or Form 20-F with the SEC;

(c) subject to paragraph (d), in the case of a reporting issuer other than a senior issuer, on or before the 120th day after the end of the reporting issuer’s most recently completed financial year; and

(d) in the case of a reporting issuer, other than a senior issuer, that is an SEC issuer filing its AIF in Form 10-K or Form 20-F, on or before the earlier of:

(i) the date the reporting issuer would be required to file an AIF under paragraph (c); and

(ii) the date the reporting issuer files its Form 10-K or Form 20-F with the SEC.

5.3 Additional / Supporting Documents

A reporting issuer that files an AIF must at the same time file copies of all material incorporated by reference in the AIF and not previously filed.

Subject to section 6.2, a reporting issuer must file annual or interim MD&A at the same time as it files its annual or interim financial statements (or a letter under subsection 4.13(3) referring to its financial statements), as applicable.

6.2 Alternative Filing of Annual and Interim MD&A and Supplement for Reporting Issuers Filing with the SEC

(1) A reporting issuer that is an SEC issuer filing its annual or interim MD&A prepared in accordance with Item 303 of Regulation S-K under the 1934 Act must file:

(a) that document on or before the earlier of:

(i) the date the reporting issuer would be required to file that document under section 6.1; and

(ii) the date the reporting issuer files that document with the SEC; and

(b) at the same time, a supplement prepared in accordance with subsection (2) if the reporting issuer:

(i) has based the discussion in the MD&A on financial statements prepared in accordance with US GAAP; and

(ii) is required to comply with subsection 4.7(3) with respect to the financial statements on which the MD&A is based.

(2) A supplement required under subsection (1) must restate, based on financial information of the reporting issuer prepared in accordance with or reconciled to Canadian GAAP, those parts of the MD&A that:

(a) are based on financial statements of the reporting issuer prepared in accordance with US GAAP; and

(b) would contain material differences if they were based on financial statements of the reporting issuer prepared in accordance with Canadian GAAP.

If a reporting issuer has not included the disclosure required by section 4.11 in its financial statements, it must include that disclosure in its MD&A or in its MD&A supplement if one is required under section 6.2.

6.4 Review of Annual and Interim MD&A

(1) The board of directors of a reporting issuer must review the annual and interim MD&A required by this Part before it is filed.

(2) The board of directors may delegate the review required by subsection (1) to an audit committee of the board.

6.5 Delivery of Annual and Interim MD&A

(1) A reporting issuer must send, as soon as practicable and without charge, a copy of any annual or interim MD&A and any MD&A supplement required by this Part to any securityholder of the reporting issuer who requests it.

(2) The reporting issuer must disclose at least annually in the reporting issuer’s AIF and information circular that annual and interim MD&A is available without charge to securityholders and how the MD&A may be obtained.

(1) If a material change occurs in the affairs of a reporting issuer, the reporting issuer must:

(a) promptly issue and file a news release that is authorized by an executive officer and that discloses the nature and substance of the change; and

(b) file a completed Form 51-102F3 Material Change Report, as soon as practicable, but in any event no later than 10 days after the date on which the change occurs.

(2) The requirements of paragraph (1)(a) do not apply to reporting issuers that immediately file a completed Form 51-102F3 marked “Confidential” together with written reasons why a news release under paragraph (1)(a) should not be issued, so long as:

(a) in the opinion of the reporting issuer, the issuance of a news release required by paragraph (1)(a) will be unduly detrimental to its interest; or

(b) a material change in the affairs of the reporting issuer:

(i) consists of a decision to implement a change made by senior management of the reporting issuer who believe that confirmation of the decision by the directors is probable; and

(ii) senior management of the reporting issuer has no reason to believe that persons with knowledge of the material change have made use of that knowledge in purchasing or selling securities of the reporting issuer.

(3) The requirements of subsection (1) do not apply in Québec if senior management of the reporting issuer has reasonable grounds to believe that disclosure would be seriously prejudicial to the interests of the issuer and that no transaction in the securities of the issuer has been or will be carried out on the basis of the information not generally known. The reporting issuer must comply with subsection (1) when the circumstances that justify non-disclosure have ceased to exist.

(4) If a report has been filed under subsection (2), the reporting issuer must advise the applicable regulator or securities regulatory authority by letter marked ‘Confidential’, within 10 days after the date of filing the initial report and every 10 days thereafter, that it believes that the report should continue to remain confidential until:

(a) the material change is generally disclosed in the manner referred to in subsection (1); or

(b) if the material change consists of a decision of the type referred to in clause (2)(b)(i), that decision has been rejected by the directors of the reporting issuer.

(1) In addition to any obligations of reporting issuers under Part 7 of this Instrument, if a reporting issuer completes a significant acquisition it must file a completed Form 51-102F4 Business Acquisition Report within 75 days after the date of acquisition.

(2) In this Part, the term “acquisition” includes an acquisition of an interest in a business accounted for using the equity method or an acquisition of an interest in a joint venture.

(3) In this Part, and in the definition of “acquisition of related businesses” in subsection 1.1(2), the term “business” or “businesses” includes an interest in an oil and gas property.

(4) This Part does not apply to significant acquisitions or dispositions if the initial legally binding agreement relating to the acquisition or disposition was entered into prior to the date of this Instrument.

8.2 Determination of Significance

(1) For the purposes of this Instrument, an acquisition of a business or related businesses is a significant acquisition if it satisfies any of the following three significance tests:

(a) The Asset Test. The reporting issuer’s proportionate share as at the date of acquisition of the consolidated assets of the business or related businesses exceeds 20 percent of the consolidated assets of the reporting issuer calculated using the audited financial statements of each of the reporting issuer and the business or the related businesses for the most recently completed financial year of each that ended before the date of the acquisition.

(b) The Investment Test. The reporting issuer’s consolidated investments in and advances to the business or the related businesses as at the date of the acquisition exceeds 20 percent of the consolidated assets of the reporting issuer as at the last day of the most recently completed financial year of the reporting issuer ended before the date of the acquisition, excluding any investments in or advances to the business or the related businesses as at that date.

(c) The Income Test. The reporting issuer’s proportionate share as at the date of acquisition of the consolidated income from continuing operations of the business or related businesses exceeds 20 percent of the consolidated income from continuing operations of the reporting issuer calculated using the audited financial statements of each of the reporting issuer and the business or related businesses for the most recently completed financial year of each ended before the date of acquisition.

(2) For the purposes of paragraph (1)(c), if any of the reporting issuer, the business or the related businesses has incurred a loss, the significance test must be applied using the absolute value of the loss.

(3) For the purposes of paragraph (1)(c), if the reporting issuer’s consolidated income from continuing operations for the most recently completed financial year was:

(a) positive; and

(b) lower by 20 percent or more than the average consolidated income from continuing operations of the reporting issuer for the three most recently completed financial years,

then, the average consolidated income for the three most recently completed financial years may, subject to subsection (4), be substituted in determining whether the significance test set out in paragraph (1)(c) is satisfied.

(4) If the reporting issuer’s consolidated income from continuing operations for either of the two earlier financial years referred to in subsection (3) is a loss, the reporting issuer’s income from continuing operations for that period is considered to be zero for the purposes of calculating the average consolidated income for the three financial years.

(5) In determining whether an acquisition of related businesses is a significant acquisition, related businesses acquired after the ending date of the most recently filed annual audited financial statements of the reporting issuer must be considered on a combined basis.

(6) For the purposes of the significance tests in subsection (1), if the financial statements of the business or related business are prepared using accounting principles other than those used to prepare the reporting issuer’s financial statements, and the reporting issuer’s financial statements are prepared in accordance with:

(a) Canadian GAAP, then the financial statements for a business or related businesses must be prepared in accordance with, or reconciled to, Canadian GAAP and the significance tests must be applied using financial information for both the reporting issuer and the business or related businesses based on Canadian GAAP;

(b) US GAAP, then the financial statements of the business or related businesses must be prepared in accordance with, or reconciled to, US GAAP and the significance tests must be applied using financial information for both the reporting issuer and the business or related businesses based on US GAAP; or

(c) US GAAP reconciled to Canadian GAAP in a manner specified by subsection 4.7(3), then financial statements for a business or related businesses must be prepared in accordance with, or reconciled to, either US GAAP or Canadian GAAP and the significance tests must be applied using financial information for both the reporting issuer and the business or the related businesses based on the same accounting principles; and

(7) For the purposes of the significance tests in subsection (1), if the financial statements of the business or related business are denominated in a currency other than the currency used in the reporting issuer’s financial statements, then the significance tests must be applied using financial information for both the reporting issuer and the business or related businesses, based on the currency used in the reporting issuer’s financial statements.

(8) For the purposes of the significance tests in subsection (1), the financial information used in the tests for the business or related businesses must be adjusted for any material differences between the accounting policies used to prepare the financial statements of the business or related businesses and the accounting policies used to prepare the reporting issuer’s financial statements.

(9) Despite subsection (1), the significance of an acquisition of a business or an acquisition of related businesses may be calculated using unaudited financial statements of the business or related businesses that comply with subsection (6) if the financial statements of the business or related businesses for the most recently completed financial year prior to the date of acquisition have not been audited.

8.3 Modified Significance Tests for Small Businesses

An acquisition of a business or related businesses by a reporting issuer that is a small business (determined as at the end of the reporting issuer’s most recently completed financial year) is a significant acquisition only if it satisfies either of the significance tests set out in paragraphs 8.2(1)(a) and (b).

8.4 Financial Statement Disclosure for Significant Acquisitions

(1) Annual Financial Statements

Subject to sections 8.10 through 8.15, a business acquisition report must include the following financial statements of each business or related business acquired that is a significant acquisition:

(a) an income statement, a statement of retained earnings and a cash flow statement for at least the periods specified in section 8.5;

(b) a balance sheet as at the date on which each of the periods specified in section 8.5 ended, except that, if section 8.5 specifies that separate financial statements of the business are to be included for three financial years, a balance sheet as at the end of the earliest of the three financial years is not required;

(c) notes to the financial statements; and

(d) an auditor’s report on the financial statements for each of the periods specified in section 8.5.

(2) Interim Financial Statements

Subject to sections 8.10 through 8.15, if a reporting issuer must include financial statements in a business acquisition report under subsection (1), the business acquisition report must include interim financial statements for:

(a) either:

(i) the most recently completed interim period of the business that started the day after the balance sheet date specified in paragraph (1)(b) and ended before the date of acquisition; or

(ii) the period that started the day after the balance sheet date specified in paragraph (1)(b) and ended on a day that is more recent than the ending date of the period in paragraph (i) and is not later than the date of acquisition; and

(b) the comparable period in the preceding financial year of the business.

(3) Pro Forma Financial Statements

(a) If a reporting issuer must include financial statements in a business acquisition report under subsection (1) or (2), the business acquisition report must include:

(i) a pro formabalance sheet of the reporting issuer as at the date of the reporting issuer’s most recent balance sheet filed that gives effect, as if they had taken place as at the date of the pro forma balance sheet, to significant acquisitions that have been completed, but are not reflected in the reporting issuer’s most recent annual or interim balance sheet;

(ii) a pro formaincome statement of the reporting issuer that gives effect to significant acquisitions completed after the ending date of the reporting issuer’s most recently completed financial year of the reporting issuer for which financial statements are required to have been filed, as if they had taken place at the beginning of that financial year, for each of the following financial periods:

(A) the reporting issuer’s most recently completed financial year for which financial statements are required to have been filed; and

(B) the reporting issuer’s most recently completed interim period that ended after the period in (A) for which financial statements are required to have been filed;

(iii) pro formaearnings per share based on the pro formafinancial statements referred to in clause (ii);

(iv) a compilation report accompanying the pro forma financial statements required under (i) and (ii) signed by the reporting issuer’s auditor and prepared in accordance with the Handbook;

(b) where a reporting issuer must include pro forma financial statements in a business acquisition report under subsection (a), the following provisions apply:

(i) if the pro forma financial statements give effect to more than one significant acquisition, the pro formafinancial statement must separately identify each significant acquisition;

(ii) the reporting issuer must include in the pro forma financial statements a description of the underlying assumptions on which the pro formafinancial statements are prepared, cross-referenced to each related pro formaadjustment;

(iii) if the financial year-end of the business differs from the reporting issuer’s year-end by more than 93 days, then for purposes of preparing the pro formaincome statement for the reporting issuer’s most recently completed financial year, an income statement of the business must be constructed for a period of 12 consecutive months ending no more than 93 days before or after from the reporting issuer’s year-end, by adding the results for a subsequent interim period to the most recent financial year of the business and deducting the comparable interim results for the immediately preceding year;

(iv) no audit report is required for a constructed period referred to in (iii);

(v) where a constructed period is required under (iii), the pro forma financial statements must clearly disclose the constructed period on the face of the pro forma financial statements and must include a note stating that the financial statements of the business used to prepare the pro forma financial statements were prepared for the purpose of the pro formas and do not conform with the financial statements for the business included elsewhere in the business acquisition report;

(vi) if a reporting issuer is required to prepare a pro formaincome statement for an interim period required by clause (3)(a)(ii)(B), and the pro formaincome statement for the most recently completed financial year includes results of the business which are also included in the pro formaincome statement for the interim period, a note to the pro formafinancial statements must disclose the revenue, expenses, gross profit and income from continuing operations included in each pro formaincome statement for the overlapping period.

If a reporting issuer is required under subsection (1) to include financial statements in the business acquisition report for more than one business because the significant acquisition involves an acquisition of related businesses, the financial statements required under subsection (1) must be presented separately for each business, except for the periods during which the businesses have been under common control or management, in which case the reporting issuer may present the financial statements of the businesses on a combined basis.

8.5 Reporting Periods

Subject to sections 8.11 and 8.12, the periods for which the financial statements are required under paragraph 8.4(1) must be determined by reference to the significance tests set out in subsection 8.2(1) as follows:

(a) if none of the significance tests is satisfied if “20 percent” is read as “40 percent”, financial statements must be included for:

(i) the most recently completed financial year of the business ended more than 45 days before the date of acquisition; or

(ii) if the business has not completed one financial year, or the business has completed its first financial year that ended 45 or fewer days before the date of acquisition, the financial period commencing on the date of formation and ending on a date not more than 45 days before the date of acquisition.

(b) if any of the significance tests are satisfied if “20 percent” is read as “40 percent” but none of the tests are satisfied if “20 percent” is read as “50 percent”, financial statements must be included for:

(i) each of the two most recently completed financial years of the business ended more than 45 days before the date of acquisition;

(ii) if the business has not completed two financial years, any completed financial year ended more than 45 days before the date of acquisition; or

(iii) if the business has not completed one financial year, or the business has completed its first financial year that ended 45 or fewer days before the date of acquisition, a financial period commencing on the date of formation and ending on a date not more than 45 days before the date of acquisition;

(c) if any of the significance tests are satisfied if “20 percent” is read as “50 percent”, financial statements must be included for:

(1) Financial statements required to be filed under subsections 8.4(1) and (2) must be prepared in accordance with:

(a) Canadian GAAP but may not be prepared in accordance with differential reporting options as set out in section 1300 of the Handbook; or

(b) accounting principles that cover substantially the same core subject matter as Canadian GAAP including recognition and measurement principles and disclosure requirements;

(2) The notes to the financial statements required to be filed under subsections 8.4(1) and (2) must state which accounting principles the financial statements have been prepared in accordance with.

(3) Financial statements required to be filed under subsections 8.4(1) and (2) must be prepared in accordance with the same accounting principles for each period presented.

(4) If the financial statements required to be filed under subsections 8.4(1) and (2) are prepared in accordance with accounting principles that are different than the accounting principles used to prepare the reporting issuer’s most recent financial statements filed, then the notes to the most recent financial statements required under subsection 8.4(1) and the notes to the financial statements required under subsection 8.4(2) must:

(a) explain the nature of material differences that relate to measurement, between the accounting principles used to prepare the financial statements of the business acquired and the accounting principles used to prepare the reporting issuer’s most recent financial statements filed;

(b) quantify the effect of material differences that relate to measurement, between the accounting principles used to prepare the financial statements of the business acquired and the accounting principles used to prepare the reporting issuer’s most recent financial statements filed, including a tabular reconciliation between net income reported in the financial statements of the business acquired and net income computed in accordance with the accounting principles used to prepare the reporting issuer’s most recent financial statements filed; and

(c) provide disclosure consistent with the accounting principles used to prepare the reporting issuer’s most recent financial statements filed, to the extent such disclosure is not already reflected in the financial statements.

(5) Pro forma financial statements required to be filed under subsection 8.4(3) and section 8.17 must be prepared as follows:

(a) if the reporting issuer’s financial statements are prepared in accordance with Canadian GAAP, then the pro forma financial statements must be prepared in accordance with Canadian GAAP;

(b) if the reporting issuer’s financial statements are prepared in accordance with US GAAP and are not reconciled to Canadian GAAP in the manner specified by subsection 4.7(3), then the pro forma financial statements must be prepared in accordance with US GAAP; or

(c) if the reporting issuer’s financial statements are prepared in accordance with US GAAP and are reconciled to Canadian GAAP in the manner specified by subsection 4.7(3), then the pro forma financial statements may be prepared in accordance with US GAAP or Canadian GAAP.

8.7 Reporting Currency

Financial statements for the business or related businesses required to be filed under section 8.4 must be presented in the same currency as used in the reporting issuer’s financial statements.

8.8 Auditor’s Report

(1) An auditor’s report required by subsection 8.4(1) must be prepared by a person or company that is expressly permitted to sign an auditor’s report under the laws of the jurisdiction or foreign jurisdiction in which the report is signed.

(2) The auditor’s report accompanying the financial statements required by subsection 8.4(1) must be prepared in accordance with either:

(a) Canadian GAAS; or

(b) auditing standards that are substantially equivalent to Canadian GAAS.

(3) The auditor’s report must:

(a) identify the auditing standards applied,

(b) not contain a reservation except where the financial statements are for a small business in which case, the auditor’s report may contain a reservation relating to inventory if:

(i) the auditor’s report does not contain a qualification relating to closing inventory; or

(ii) the reporting issuer includes in the business acquisition report a balance sheet for the business that is:

(A) for a date that is subsequent to the ending date of the financial statements accompanied by the auditor’s report containing the reservation; and

(B) the subsequent balance sheet referred to in (A) is accompanied by an auditor’s report that does not contain a qualification relating to closing inventory;

(c) be accompanied by statements from the auditor:

(i) that describe any material differences in the form and content of the auditor’s report as compared to an auditor’s report prepared in accordance with the auditing standards used to audit the reporting issuer’s most recent audited financial statement filed, and

(ii) if auditing standards other than Canadian GAAS or US GAAS are used, that the auditing standards used are substantially equivalent to Canadian GAAS.

8.9 Balance Sheet Line Items and Additional Information for Development-stage Issuers

Financial statement required by subsections 8.4(1) and (2) must include:

(a) the balance sheet line items set out in section 4.9; and

(b) for a development-stage issuer or a business that is in the development-stage, the additional information set out in section 4.10.

(1) A reporting issuer is exempt from the requirements in section 8.4 to include in its business acquisition report financial statements of a business and the pro formafinancial statements if:

(a) the acquisition is, or will be, an investment accounted for using the equity method, as that term is defined in the Handbook;

(b) disclosure is included in the business acquisition report for the periods for which financial statements are otherwise required under subsection 8.4(1) that:

(i) summarizes information as to the assets, liabilities and results of operations of the business; and

(ii) describes the reporting issuer’s proportionate interest in the business and any contingent issuance of securities by the business that might significantly affect the reporting issuer’s share of earnings;

(c) the financial information provided under paragraph (b) for any completed financial year:

(i) has been derived from audited financial statements of the business; or

(ii) has been audited; and

(d) the business acquisition report:

(i) identifies the financial statements referred to in subparagraph (c)(i) from which the disclosure provided under paragraph (b) has been derived; or

(ii) discloses that the financial information provided under paragraph (b), if not derived from audited financial statements, has been audited; and

(iii) discloses that the audit opinion with respect to the financial statements referred to in subparagraph (i), or the financial information referred to in subparagraph (ii), was issued without a reservation.

8.11 Exemptions from Disclosure Requirements for Significant Acquisitions if More Recent Statements Included

(1) If under section 8.5 a reporting issuer is required to file financial statements of a business for more than one completed financial year, a reporting issuer may omit the financial statements for the oldest financial year, if audited financial statements of the business are included in the business acquisition report for a financial year ended 45 days or less before the date of acquisition.

(2) If under section 8.5 a reporting issuer is required to file financial statements of a business for more than one completed financial year, a reporting issuer may omit the financial statements for the oldest financial year if:

(a) audited financial statements are included in the business acquisition report for a period of at least nine months commencing the day after the most recently completed financial year for which financial statements are required under section 8.5;

(b) the business is not seasonal; and

(c) the reporting issuer has not included audited financial statements in the business acquisition report for a period of less than 12 months using the exception set out in section 8.12.

(3) A reporting issuer is exempt from the requirement in subsection 8.4(2) to provide interim financial statements in its business acquisition report if the reporting issuer includes in the business acquisition report annual audited or unaudited financial statements of the business for a financial year ended 45 days or less before the date of acquisition.

8.12 Exemption from Disclosure Requirements for Significant Acquisitions if Financial Year End Changed

If under section 8.5, a reporting issuer is required to file financial statements of a business acquired for more than one completed financial year and the business changed its financial year end during any of the financial years required to be included, the reporting issuer may include financial statements for the transition period in satisfaction of the financial statements for one of the years, provided that the transition period is at least nine months.

8.13 Exemption from Audit Requirement for Financial Statements of a Small Business

If an acquired business was a small business(determined as at the end of its most recently completed financial year) and separate financial statements of the business are required to be included in the business acquisition report for more than one financial year, the reporting issuer may omit from its business acquisition report an auditor’s report on the financial statements of the business for financial years other than the most recently completely financial year for which audited financial statements of the business are included, if:

(a) an auditor has not issued an auditor’s report on the financial statements; and

(b) the most recently completed financial year for which audited financial statements are included in the business acquisition report is not less than 12 months.

8.14 Exemption Where Financial Statements Not Previously Prepared

Unless otherwise required by the accounting principles used to prepare the financial statements of a business, a reporting issuer is not required to provide comparative figures in its business acquisition report for interim financial statements for comparative periods in which the business acquired did not prepare interim financial statements.

8.15 Exemption for Acquisition of an Interest in an Oil and Gas Property

A reporting issuer is exempt from the requirements in section 8.4 to include in its business acquisition report financial statements in respect of a significant acquisition if:

(a) the significant acquisition is:

(i) an acquisition of a business that is an interest in an oil and gas property; or

(ii) an acquisition of related businesses that are interests in oil and gas properties;

(b) the reporting issuer is unable to provide the financial statements in respect of the significant acquisition otherwise required under this Part because those financial statements do not exist or because the reporting issuer does not have access to those financial statements;

(c) the acquisition does not constitute a reverse take-over under Canadian GAAP;

(d) the business or related businesses did not, immediately before the time of completion of the acquisition, constitute a “reportable segment” of the vendor, as defined in section 1701 of the Handbook;

(e) in respect of the business or related businesses, for each of the financial years for which financial statements would, but for this section, be required under section 8.5, the business acquisition report includes:

(i) an operating statement, accompanied by a report of an auditor, presenting for the business or related businesses at least the following:

(A) gross revenue;

(B) royalty expenses;

(C) production costs; and

(D) operating income;

(ii) a description of the property or properties and the interest acquired by the reporting issuer; and

(iii) disclosure of the annual oil and gas production volumes from the business or related businesses; and

(f) the business acquisition report discloses:

(i) the estimated reserves and related future net revenue attributable to the business or related businesses, the material assumptions used in preparing the estimates and the identity and relationship to the reporting issuer or to the vendor of the person who prepared the estimates; and

(ii) the estimated oil and gas production volumes from the business or related businesses for the first year reflected in the estimates disclosed under clause (f)(i).

(1) In sections 8.16 and 8.17, “date of disposition” means the commitment date for an exit plan as determined for accounting purposes pursuant to the Handbook.

(2) For the purposes of this Instrument, a disposition of a business or a portion of a business is a significant disposition if it satisfies either of the following conditions:

(a) the reporting issuer’s proportionate share of the total consolidated assets of the business or portion of the business exceeds 20 percent of the consolidated assets of the reporting issuer, as at the date of the most recently completed financial year end of the reporting issuer before the date of disposition, without giving effect to the disposition; or

(b) the reporting issuer’s proportionate share of the consolidated income from continuing operations of the business or portion of the business for the most recently completed financial year of the business before the date of the disposition exceeds 20 percent of the total consolidated income from continuing operations of the reporting issuer for the most recently completed financial year of the reporting issuer before the date of disposition, without giving effect to the disposition.

(3) Unless the context otherwise requires, the term “significant disposition” refers to a disposition of a business or a portion of a business that satisfies either of the two conditions in subsection (2) by sale, abandonment or distribution to shareholders, but does not include the disposition of a business segment as that term is defined in the Handbook.

8.17Pro FormaFinancial Statement Disclosure for Significant Dispositions

If a reporting issuer has made a significant disposition, the reporting issuer must include in the notes to the next financial statements filed whether for a financial year or an interim period or if such financial statements are required to be filed within 30 days of the disposition then in its next filed financial statements (either annual or interim), the following pro formafinancial statements:

(a) Pro Forma Balance Sheet - a pro formabalance sheet of the reporting issuer prepared as at the date of the reporting issuer’s most recent balance sheet filed to give effect to, as if they had taken place as at the date of the pro formabalance sheet, significant dispositions that have been completed, but are not reflected in the reporting issuer’s most recent balance sheet filed;

(b) Pro Forma Income Statement - pro formaincome statements must be prepared to give effect to significant dispositions completed:

(i) during the most recently completed financial year for which financial statements are filed as if they had taken place at the beginning of the most recently completed financial year of the reporting issuer for which audited financial statements have been filed; and

(ii) after the end of the most recently completed financial year for which financial statements are filed, for each of the financial periods referred to in clauses (A) and (B):

(A) the most recently completed financial year of the reporting issuer for which audited financial statements have been filed; and

(B) the most recently completed interim period of the reporting issuer for which financial statements have been filed, as if they had taken place at the beginning of the most recently completed financial year of the reporting issuer for which audited financial statements are filed;

(c) if a pro formafinancial statement prepared in accordance with this section gives effect to more than one significant disposition, the pro formafinancial statement must separate and identify each significant disposition;

(d) the reporting issuer must include in the pro formafinancial statements required under this section a description of the underlying assumptions upon which the pro formafinancial statements are prepared, cross-referenced to each related pro formaadjustment; and

(e) the notes to the pro forma financial statements required under this section must include pro formaearnings per share based upon the pro formafinancial statements referred to in this section.

(1) If management of a reporting issuer gives or intends to give notice of a meeting to its securityholders management must, at the same time as or before giving that notice, send to each securityholder who is entitled to notice of the meeting a form of proxy for use at the meeting.

(2) Subsection 9.1(1) applies, adapted as required, to a meeting of holders of debt securities of a reporting issuer, whether called by management of the reporting issuer or by the trustee of the debt securities.

(3) Subject to section 9.2, a person or company that solicits proxies from securityholders of a reporting issuer must:

(a) in the case of a solicitation by or on behalf of management of a reporting issuer, send with the notice of meeting to each securityholder whose proxy is solicited a completed Form 51-102F5 Information Circular; or

(b) in the case of any other solicitation, concurrently with or before the solicitation, send a completed Form 51-102F5 and a form of proxyto each securityholder whose proxy is solicited.

9.2 Exemption

(1) Subsection 9.1(3) does not apply to a solicitation by a person or company in respect of securities of which the person or company is the beneficial owner.

(2) Paragraph 9.1(3)(b) does not apply to a solicitation if the total number of securityholders whose proxies are solicited is not more than 15.

(3) For the purposes of subsection (2), two or more persons or companies who are joint registered owners of one or more securities are considered to be one securityholder.

9.3 Filing of Information Circulars and Proxy-Related Material

Every person or company that is required under this Instrument to send an information circular or form of proxy to securityholders of a reporting issuer must promptly file a copy of the information circular, form of proxy and all other material required to be sent by the person or company in connection with the meeting to which the information circular or form of proxy relates.

9.4 Content of Form of Proxy

(1) Every form of proxy sent or delivered to securityholders of a reporting issuer by a person or company soliciting proxies must indicate in bold-face type whether or not the proxy is solicited by or on behalf of the management of the reporting issuer, provide a specifically designated blank space for dating the form of proxy and specify the meeting in respect of which the proxy is solicited.

(2) Either an information circular sent to securityholders of a reporting issuer or the form of proxy to which the information circular relates must:

(a) indicate in bold-face type that the securityholder has the right to appoint a person or company to represent the securityholder at the meeting other than the person or company if any, designated in the form of proxy; and

(b) contain instructions as to the manner in which the securityholder may exercise the right referred to in paragraph (a).

(3) If a form of proxy sent to securityholders of a reporting issuer contains a designation of a named person or company as nominee, it must provide an option for the securityholder to designate in the form of proxy some other person or company as the securityholder’s nominee.

(4) A form of proxy sent to securityholders of a reporting issuer must provide an option for the securityholder to specify that the securities registered in the securityholder’s name will be voted for or against each matter or group of related matters identified in the form of proxy, in the notice of meeting or in an information circular, other than the appointment of an auditor and the election of directors.

(5) A proxy executed by a securityholder of a reporting issuer may confer discretionary authority with respect to each matter referred to in subsection (4) as to which a choice is not so specified if the form of proxy or the information circular states in bold-face type how the securities represented by the proxy will be voted in respect of each matter or group of related matters.

(6) A form of proxy must provide an option for the securityholder to specify that the securities registered in the name of the securityholder must be voted or withheld from voting in respect of the appointment of an auditor or the election of directors.

(7) Either an information circular sent to securityholders of a reporting issuer or the form of a proxy to which the information circular relates must state that:

(a) the securities represented by the proxy will be voted or withheld from voting in accordance with the instructions of the securityholder on any ballot that may be called for; and

(b) if the securityholder specifies a choice under subsection (4) or (6) with respect to any matter to be acted upon, the securities will be voted accordingly.

(8) A proxy executed by a securityholder of a reporting issuer may confer discretionary authority with respect to:

(a) amendments or variations to matters identified in the notice of meeting; and

(b) other matters which may properly come before the meeting;

if,

(c) the person or company by whom or on whose behalf the solicitation is made is not aware within a reasonable time prior to the time the solicitation is made that any such amendments, variations or other matters are to be presented for action at the meeting; and

(d) a specific statement is made in the information circular or in the form of proxy that the proxy is conferring such discretionary authority.

(9) No proxy executed by a securityholder of a reporting issuer may confer authority to vote:

(a) for the election of any person as a director of a reporting issuer unless a bona fide proposed nominee for such election is named in the information circular; or

(b) at any meeting other than the meeting specified in the notice of meeting or any adjournment thereof.

RESTRICTED SHARE DISCLOSURE REQUIREMENTS

(1) Except as otherwise provided in this Instrument, if a reporting issuer has outstanding restricted shares, or securities that are directly or indirectly convertible into or exercisable or exchangeable for restricted shares or subject securities, each document referred to in subsection (2) must:

(a) refer to restricted shares using a term or defined term that includes the appropriate restricted share term;

(b) not refer to shares by a term or defined term that includes “common”, or “preference” or “preferred”, unless the shares are common shares or preference shares, respectively;

(c) describe any restrictions on the voting rights of restricted shares;

(d) describe the rights to participate, if any, of holders of restricted shares if a takeover bid is made for securities of the reporting issuer with voting rights superior to those attached to the restricted shares;

(e) state the percentage of the aggregate voting rights attached to the reporting issuer’s securities that are represented by the class of restricted shares; and

(f) if holders of restricted shares have no right to participate if a takeover bid is made for securities of the reporting issuer with voting rights superior to those attached to the restricted shares, contain a statement to that effect in bold-face type.

(2) Subsection (1) applies to the following documents except as provided in subsections (3) and (8):

(a) a Form 51-102F5;

(b) a document required by securities legislation to be sent by a reporting issuer to any of its securityholders;

(c) a document required by this Instrument to be delivered upon request by a reporting issuer to any of its securityholders; and

(d) an AIF prepared by a reporting issuer.

(3) Despite subsection (2), interim financial statements, annual financial statements and MD&A or other accompanying discussion by management of those financial statements are not required to include the details referred to in paragraphs (1)(c), (d) and (f).

(4) Each reference to restricted shares in any document not referred to in subsection (2) that a reporting issuer sends to its securityholders must include the appropriate restricted share term.

(5) A reporting issuer must not refer, in any of the documents described in subsection (4), to shares by a term or a defined term that includes “common” or “preference” or “preferred”, unless the shares are common shares or preference shares, respectively.

(6) If a reporting issuer sends a document to all holders of any class of its equity shares the document must also be sent by the reporting issuer at the same time to the holders of its restricted shares.

(7) A reporting issuer that is required by this Instrument to arrange for, or voluntarily makes arrangements for, delivery of the documents referred to in subsection (6) to the beneficial owners of any shares of a class of equity shares registered in the name of a registrant, must make similar arrangements for delivery of the documents to the beneficial owners of shares of a class of restricted shares registered in the name of a registrant.

(8) Despite paragraph (1)(b) and subsection (5), a reporting issuer may, in one place only in a document referred to in subsection (2) or (4), describe the restricted shares by the term used in the constating documents of the reporting issuer, to the extent that term differs from the appropriate restricted share term, if the description is not on the front page of the document and is in the same type face and type size as that used generally in the document.

10.2 Exemptions for Certain Reporting Issuers

(1) The provisions of section 10.1 do not apply to:

(a) shares that carry a right to vote subject to a restriction on the number or percentage of shares that may be voted or owned by persons or companies that are not citizens or residents of Canada or that are otherwise considered as a result of any law applicable to the reporting issuer to be non-Canadians, but only to the extent of the restriction; and

(b) shares that are subject to a restriction, imposed by any law governing the reporting issuer, on the level of ownership of the shares by any person, company or combination of persons or companies, but only to the extent of the restriction.

ADDITIONAL FILING REQUIREMENTS

(1) A reporting issuer must file a copy of any material that it:

(a) sends to its securityholders; or

(b) in the case of an SEC issuer, that it files or furnishes to the SEC if the material contains information that has not been included in disclosure already filed in a jurisdiction by the SEC issuer.

(2) A reporting issuer must file the material referred to in subsection (1) on the same date as, or as soon as practicable after, the earlier of:

(a) the date on which the reporting issuer sends the material to its securityholders; or

(b) the date on which the reporting issuer files or furnishes the material to the SEC.

(1) Unless previously filed, a reporting issuer must file a copy of its articles, by-laws, memorandum, governing indenture, partnership agreement or other constating documents and any agreement or other instrument that defines or otherwise materially affects the rights of securityholders, or creates a security, and any material amendment to such constating document, agreement or other instrument:

(a) either:

(i) as an attachment to the reporting issuer’s AIF required to be filed under section 5.1, if the constating document, agreement, instrument or amendment was made or adopted prior to the date of the issuer’s AIF; or

(ii) if the reporting issuer is not required to file an AIF under section 5.1, as a separate filing to be made within 120 days after the end of the issuer’s most recently completed financial year, if the constating document, agreement, instrument or amendment was made or adopted prior to the end of the issuer’s most recently completed financial year; and

(b) as an attachment to the reporting issuer’s material change report in Form 51-102F3 if the making of the constating document, agreement, instrument or amendment constitutes a material change for the issuer.

(1) The regulator or securities regulatory authority may grant an exemption from 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.

13.2 Existing Exemptions

(1) A reporting issuer that was eligible to rely on an exemption, waiver or approval granted by a regulator or securities regulatory authority relating to continuous disclosure requirements of securities legislation or securities directions existing immediately before this Instrument came into force is exempt from any substantially similar provision of this Instrument, if any, to the same extent and on the same conditions, if any, as contained in the earlier exemption, waiver or approval.

(2) A reporting issuer must, at the time that it first intends to rely on subsection (1) in connection with a filing requirement under this Instrument, inform the securities regulatory authority in writing of:

(a) the general nature of the prior exemption, waiver or approval and the date on which it was granted; and

(b) the requirement under prior securities legislation or securities directions in respect of which the prior exemption, waiver or approval applied and the substantially similar provision of this Instrument.

This Instrument comes into force on ●, 2003.