51-502CP - Transitional Orders Relating To Former Alberta Stock Exchange Issuers [CP - Rescinded]

PART 1 BACKGROUND AND PURPOSE

1.1 Background - Effective November 26, 1999 (the “Merger Date”), the VSE and the ASE merged to form CDNX.  CDNX has been recognized by the Commission as an exchange in British Columbia and for various other specific purposes under the Act and Rules.

On the Merger Date, the Commission issued BOR#51-501 (BC) to provide transitional relief to issuers formerly listed on the ASE that became reporting issuers in British Columbia as a result of the Merger and having their securities listed and posted for trading on CDNX.  BOR#51-501 (BC) preserved the “status quo” for these issuers after the Merger Date by exempting them and certain other persons (e.g. insiders) from certain filing obligations and excluding them from certain benefits of being a reporting issuer.  In addition, former ASE-listed issuers that would have become exchange issuers on the Merger Date were excluded from the definition of “exchange issuer” under the Act and were therefore exempt from certain filing obligations and excluded from certain benefits of being an exchange issuer that would have otherwise applied to them.

However, to take advantage of the benefits removed by BOR#51-501 (BC), an issuer could irrevocably elect not to be subject to BOR#51-501 (BC) by filing a notice electing to be treated as a reporting issuer or as an exchange issuer.  Unfortunately, it appears that BOR#51-501 (BC) was sufficiently complicated that it was misunderstood, and some issuers mistakenly relied on exemptions in the Act or Rules that were unavailable to them because they had not filed the appropriate notice.  Issuers in this circumstance are encouraged to consult with their legal counsel.  BOR#51-502 (BC) does not have retroactive effect and therefore cannot cure a past act that was not in compliance with the Act or Rules.

BOR#51-501 (BC) continued the exemption from seasoning requirements for securities subject to the VSE resale matrix on an interim basis for the benefit of existing securityholders of issuers formerly listed on the VSE.

This matter was subsequently addressed in NIN#2000/09 which, among other things, continued the same interim relief for those securityholders.  Because the relief is now provided through NIN#2000/09, BOR#51-502 (BC) does not contain the provision continued in BOR#51-501 (BC) relating to the resale matrix.

1.2 Purpose - The purpose of BOR#51-502 (BC) is to replace BOR#51-501 (BC) with a simpler regime of transitional relief for issuers that were subject to BOR#51-501 (BC) and did not file a notice pursuant to BOR#51-501 (BC) irrevocably electing to be treated as a reporting issuer or as an exchange issuer.  (Note, these issuers are defined as “New Reporting Issuers” under BOR#51-502 (BC)).

BOR#51-502 (BC) simplifies and improves the transitional relief provided to New Reporting Issuers during the New Transition Period.  Under BOR#51-502 (BC), all the benefits of being a reporting issuer are extended to New Reporting Issuers and they are not required to file a notice to obtain these benefits.  Provided they comply with the equivalent requirements under Alberta Securities Laws and modified filing requirements specified in BOR#51-502 (BC), New Reporting Issuers and certain other persons (e.g. insiders) continue to be exempt from certain filing obligations and the requirement to pay related filing fees during the New Transition Period.  In addition, persons that acquired securities of New Reporting Issuers in exempt transactions may now take advantage of the resale rules in sections 140, 141, 142 and 143 of the Rules if the conditions set out in the resale rules are met.

Also, New Reporting Issuers that would have been exchange issuers but for BOR#51-501 (BC) are no longer excluded from the definition of “exchange issuer” under the Act and are now entitled to the benefits available to exchange issuers (e.g. additional registration and prospectus exemptions).  They are not required to file a notice to obtain these benefits.  These issuers will still be exempt from certain obligations (e.g. filing Form 61 Quarterly Reports and paying the associated filing fees) during the New Transition Period that would otherwise apply to an exchange issuer.

BOR#51-502 (BC) provides additional exemptions to New Reporting Issuers and other persons relating to the filing of annual financial statements, interim financial statements, proxy materials, control person notices and reports and personal information forms during the New Transition Period that were not contained in BOR#51-501 (BC).

BOR#51-502 (BC) also clarifies the obligations on persons and issuers in the proxy solicitation context by expressly requiring persons to send Equivalent Alberta Documents to securityholders in British Columbia and New Reporting Issuers to file Equivalent Alberta Documents in British Columbia.  In addition, offerors of New Reporting Issuers are expressly required to comply with all provisions of the Equivalent Alberta Requirements relating to acquisition reporting (e.g. the “cooling off” periods equivalent to sections 111(3) and (4) of the Act).  However, a control person of a New Reporting Issuer that relies on the exemption in section 128(d) of the Rules must comply with the applicable hold periods under both Alberta and British Columbia law.

1.3 Availability of Relief - The simplified regime created by BOR#51-502 (BC) is not available to any former ASE-listed issuer that filed either or both of the notices referred to in BOR#51-501 (BC) irrevocably electing to be treated as a reporting issuer or as an exchange issuer.

The relief provided under BOR#51-502 (BC) will be available until June 30, 2001.  After that time, New Reporting Issuers will be subject to all requirements associated with having reporting issuer status and, if applicable, exchange issuer status in British Columbia, and will be expected to comply with all applicable provisions of British Columbia securities law.

PART 2 DEFINITIONS AND INTERPRETATION

2.1 Interpretation of defined terms - Terms used in this Companion Policy that are defined or used in BOR#51-502 (BC) should be read in accordance with BOR#51-502 (BC).

2.2 Interpretation of “in the same manner” - Where they relate specifically to the filing obligations of an issuer or other person under BOR#51-502 (BC), the words “in the same manner” have been used to clarify that Equivalent Alberta Documents that are filed with the Alberta Securities Commission via SEDAR must also be filed with the Commission via SEDAR. 

2.3 Interpretation of “listed” - BOR#51-502 (BC) applies to New Reporting Issuers that have issued securities that are “listed on CDNX and were listed on the ASE on November 26, 1999”.  By not requiring that the New

Reporting Issuer’s securities also be “posted for trading”, BOR#51-502 (BC) will apply to a New Reporting Issuer that has its securities suspended from trading on CDNX.

2.4 Definition of Alberta Securities Laws - Under the Securities Act (Alberta), “Alberta Securities Laws” means:

(a) the Securities Act (Alberta);

(b) the regulations made under the Securities Act (Alberta) and, unless the context otherwise indicates, includes the rules made by the ASC under section 196.1 of the Securities Act (Alberta); and

(c) any decisions made by the ASC or the Executive Director of the ASC.