52-102 - Use of Currencies [NI Proposed - Lapsed]

NATIONAL INSTRUMENT 52-102
USE OF CURRENCIES¹

^{1 This proposed National Instrument is derived from National Policy Statement No. 14 ("NP 14") and is expected to be adopted as a rule in British Columbia, Alberta, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in each of the other jurisdictions represented by the CSA.  The CSA also have considered the Canadian Institute of Chartered Accountants Accounting Standards Board's May 1996 Re-Exposure Draft "Foreign Currency Translation".  See footnotes 3 and 5.}

PART 1 DEFINITIONS²

^{2 A national definition instrument has been adopted as National Instrument 14-101 Definitions.  It contains definitions of certain terms used in more than one national instrument.  National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in that statute, unless the context otherwise requires.  National Instrument 14-101 also provides that a provision or a reference within a provision of a national instrument that specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.}

1.1 Definitions - In this Instrument

"bid document" means a document prepared in connection with a take-over bid, issuer bid or corporate reorganization;
"disclosure document" means a bid document, offering document or document prepared in accordance with the continuous disclosure or proxy and proxy solicitation requirements of securities legislation;

"exchange rate" means, for a currency other than the Canadian dollar or the U.S. dollar, the rate used to translate that currency into the Canadian dollar or the U.S. dollar;

"measurement currency" means, for a person or company, the primary currency of exposure of the person or company having regard to the circumstances of the person or company including its exposure to a particular currency, the volume of its transactions in a particular currency, and the currency of the jurisdiction in which its operations and securityholders are located;³ and

^{3 This definition reflects consideration of paragraph .003(b) of the Canadian Institute of Chartered Accountants Accounting Standards Board's May 1996 Re-Exposure Draft "Foreign Currency Translation", which is reproduced below:} 

^{"The measurement currency is the primary currency of exposure.  The selection of the measurement currency is based on the facts in the particular circumstances.  Factors that would be considered include the net exposure of the entity to a particular currency, the volume of transactions in a particular currency, and the currency of the country where the entity's operations and shareholders are located.  For most Canadian entities, the Canadian dollar would be the primary currency of exposure.
The currency in which the financial statements are displayed is usually the measurement currency.  However, the display currency can differ from the measurement currency.  For example, an entity whose securities are listed on a foreign stock exchange might use the domestic currency as the measurement currency but translate its financial statements into a foreign currency for display purposes.  When the display currency differs from the measurement currency additional disclosures are required (see paragraph .110).}

^{In some instances an entity may conduct significant amounts of business in two or more currencies and the measurement currency might not be clearly identifiable.  In those situations, the economic facts and circumstances would be assessed in relation to the stated objectives for foreign currency translation in paragraph 0.49.  Management's judgment will be required to determine the measurement currency in which financial results and relationships are measured with the greatest degree of relevance and reliability."}

"offering document" means a prospectus, preliminary prospectus, offering memorandum or rights offering circular, and includes any amendment to the document.

PART 2 GENERAL

2.1 General
(1) A person or company that presents financial information, including financial statements, in a disclosure document shall disclose the currency of display for that financial information in the disclosure document.

(2) A person or company that presents financial statements in a disclosure document shall use a currency of display that is

(a) the Canadian dollar;
(b) the U.S. dollar; or
(c) the measurement currency for those financial statements.

(3) A person or company that presents financial information other than financial statements in a disclosure document shall use a currency of display that is

(a) the Canadian dollar;

(b) the U.S. dollar; or

(c) the measurement currency for financial statements of that person or company disclosed in that disclosure document or, if not so disclosed, the financial statements of that person or company most recently filed.

(4) A person or company that presents financial information, including financial statements, in a disclosure document shall disclose the measurement currency for that financial information in the disclosure document if

(a) the measurement currency is other than the Canadian dollar or the U.S. dollar; or

(b) the currency of display for that financial information is not the same as the measurement currency.⁴

^{4 Subsection 2.1(4) reflects consideration of paragraphs .110 and .111 of the Canadian Institute of Chartered Accountants Accounting Standards Board's May 1996 Re-Exposure Draft "Foreign Currency Translation", which are reproduced below:}

^{".110 An entity should disclose:
(a) the measurement currency of the reporting entity if the measurement currency of the reporting entity is not the Canadian dollar;
(b)  the measurement currency and the display currency of the reporting entity if they are not the same currency.}

 ^{.111 Users of financial statements need to be alerted to the use of a measurement currency other than the Canadian dollar.  The measurement currency is the primary currency of exposure.  When management has decided that the Canadian dollar is not the primary currency of exposure, users of financial statements would need to know the measurement currency in order to evaluate the economic resources, currency risk, and performance of the entity.  In addition, when the display currency used differs from the measurement currency, users would need to know which currency is the measurement currency."}

PART 3 SUPPLEMENTARY DISCLOSURE

3.1 Face Page Disclosure - A person or company that prepares an offering document or bid document that discloses the offering price using a currency other than the Canadian dollar or the U.S. dollar shall disclose in bold face type on the face page of the offering document or bid document the exchange rate in effect at the latest practicable date.

3.2 Supplementary Disclosure - A person or company that presents financial information, including financial statements, in a disclosure document using a currency of display other than the Canadian dollar or the U.S. dollar shall disclose in the disclosure document

(a) the exchange rate in effect at the latest practicable date;

(b) average exchange rates for the periods for which any income statement or statement of changes in financial position is presented and the exchange rate for each date at which any balance sheet is presented; and

(c) if not previously disclosed in a disclosure document filed within 140 days after the end of its most recently completed financial year, a description of any legislation relating to foreign withholding taxes or foreign exchange controls.

PART 4 EXEMPTION

4.1 Exemption

(1)  The regulator⁵

^{5 The term "regulator" is defined in National Instrument 14-101 Definitions as meaning, in a local jurisdiction, the person set out in an appendix to that instrument opposite the name of the local jurisdiction.}

 or the securities regulatory authority⁶

^{6 The term "securities regulatory authority" is defined in National Instrument 140101 Definitions as meaning, for a local jurisdiction, the securities commission or similar regulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction.  The term "local jurisdiction" is defined in National Instrument 14-101 Definitions.  The definition is "in a national instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate".  The term "Canadian securities regulatory authorities" is defined in National Instrument 14-101 Definitions as meaning the securities commissions or similar regulatory authorities set out in an appendix to that instrument.  The term "jurisdiction" is defined in National Instrument 14-101 Definitions as meaning a province or territory of Canada, except when used in the term foreign jurisdiction.}

may grant an exemption to 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.

4.2 Evidence of Exemption - Without limiting the manner in which an exemption under section 4.1 may be evidenced, the issuance by the regulator of a receipt for a prospectus or an amendment to a prospectus is evidence of the granting of the exemption if

(a) the person or company that sought the exemption has delivered to the regulator, on or before the date that the preliminary prospectus or an amendment to the preliminary prospectus was filed, a letter or memorandum describing the matters relating to the exemption, and indicating why consideration should be given to the granting of the exemption; and

(b) the regulator has not sent written notice to the contrary to the person or company that sought the exemption before, or concurrent with, the issuance of the receipt.

PART 5 EFFECTIVE DATE

5.1 Effective Date - This National Instrument comes into force on      , 1998.