51-505CP - Transitional exemptions for Bourse de Montréal issuers [CP - Rescinded]

BC COMPANION POLICY 51-505CP

Transitional exemptions for Bourse de Montréal issuers

1. Background
Under an arrangement between the Bourse de Montréal and CDNX, the Bourse will transfer its junior equity listing and trading activities to CDNX, effective on the close of business September 28, 2001. 

CDNX invited to list each issuer that, as of August 31, 2001, was listed on the Bourse or had submitted a complete application to list on the Bourse that was approved for listing.  Once these invited issuers are posted for trading on CDNX, they will become exchange issuers and, if not so already, reporting issuers in British Columbia. 

2. Substance
BCI 51-505 gives an invited issuer that is a “New Reporting Issuer” or a “New Exchange Issuer” temporary relief from continuous disclosure filing obligations and fees under BC securities law. 

The Instrument also exempts New Reporting Issuers from section 4.1(1) of National Instrument 43-101 Standards of Disclosure for Mineral Projects.  That section requires an issuer to file a technical report for each of its material properties when it first becomes a reporting issuer in a Canadian jurisdiction (in this case, BC).  This obligation normally applies even if the issuer already has reporting obligations in another province or territory. 

In addition, BCI 51-505 relieves insiders, directors and officers, offerors, and persons soliciting proxies, from various BC disclosure requirements. 

3. Availability of the relief
The continuous disclosure relief under BCI 51-505 expires on May 31, 2002.  After that time, New Reporting Issuers and New Exchange Issuers must comply with all applicable filing and fee requirements imposed on reporting and exchange issuers in BC. 

If, after becoming listed on CDNX, a New Reporting Issuer does anything that would have otherwise made it a reporting issuer in BC (e.g. files a prospectus and obtains a final receipt for it), that issuer and persons involved with it (e.g. insiders) may no longer rely on BCI 51-505.

The exemption from NI 43-101 also expires May 31, 2002.  Since the filing obligation under section 4.1(1) of that National Instrument arises only once (at the moment the issuer becomes a reporting issuer in BC), it is not necessary to provide continuing relief from this obligation.  However, issuers must be listed on CDNX by May 31, 2002 to get this relief.

4. Nature of the relief
Most of the exemptions in BCI 51-505 are only available if the issuer or other person complies with the equivalent provisions of Québec securities law and the filing requirements under the Instrument.  For example, an issuer will be exempt from the requirements relating to annual financial statements under section 145 of the Rules if it files with the commission, on SEDAR, the financial statements it is required to file in Québec, at the same time that it files those statements with the CVMQ.  To benefit from this relief from section 145, the issuer must file its financial statements in BC within the period of time prescribed by Québec securities law.

A few of the exemptions under the Instrument are available without the issuer having to make alternate filings.  For example, a New Exchange Issuer need not file anything with the commission to be exempt from the quarterly report requirement under section 152 of the Rules.
 

5. Effect of expiry of the relief
Any filing that an issuer makes after May 31, 2002, other than the quarterly report, personal information and insider filings discussed below, must satisfy all applicable BC requirements.  If an issuer is eligible for relief under BCI 51-505, it must meet the filing obligations under the Instrument by May 31, 2002 to get that relief.  After that date, it must comply with the generally applicable disclosure obligations under BC securities law and pay the appropriate fee, if any. 

For example, a former Bourse issuer with a period end date of May 31, 2002 or earlier that does not comply by May 31, 2002 with the provisions in BCI 51-505 relating to interim financial statements must comply with sections 144 and 149 of the Rules.  (There is no fee payable for this particular filing if it is made within the required period.)

However, an issuer with a period end date of May 31, 2002 or earlier will not have to file a BC Form 51-901F Quarterly and Year End Report (formerly Form 61) for that period.  For example, an issuer with a May 31 period end will first have to file a quarterly report for the period ending August 31, 2002. 

Similarly, a person that, absent BCI 51-505, would be required to file a BC Form 51-902F Personal Information for Directors, Officers, Promoters & Control Persons or an initial BC Form 55-901F Insider Report is not required to make this filing once the Instrument expires on May 31, 2002.

6. Filings made in other jurisdictions
The Instrument does not exempt an issuer from the requirement in section 153 of the Rules to file with the commission a copy of any document it sends to securityholders or files with another commission or exchange, so long as that document has not already been filed in BC and is material to investors.  For example, under section 153, an issuer must file with the commission a copy of the annual report it is required to file with the CVMQ under section 77 of the Québec Securities Act.

7. Meaning of “listed”
An invited issuer will not need the relief under BCI 51-505 until it becomes a reporting issuer in BC.  To become a reporting issuer in BC, an issuer must have its securities “listed and posted for trading” on CDNX. 

Once an invited issuer becomes a reporting issuer in BC, it may continue to rely on BCI 51-505, even if its securities are suspended from trading on CDNX.  This is because the Instrument applies to New Reporting Issuers that have securities “listed” on CDNX.  Because BCI 51-505 does not require that a New Reporting Issuer’s securities also be “posted for trading”, it applies to New Reporting Issuers whose securities are suspended from trading.

8. Defined terms
Terms used in this Policy that are defined in BCI 51-505 have the meanings given to them in BCI 51-505.