54-101 - Communication With Beneficial Owners Of Securities Of A Reporting Issuer [NI Proposed - Lapsed]

NATIONAL INSTRUMENT 54-101
COMMUNICATION WITH BENEFICIAL OWNERS
OF SECURITIES OF A REPORTING ISSUER¹ 

^{1This Instrument is based on National Policy Statement No. 41 ("NP41").  This Instrument is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Newfoundland, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan, and as a policy in all other jurisdictions represented by the Canadian Securities Administrators ("CSA").}

^{Earlier versions of this Instrument (the "February 1998 Draft" and the "July 1998 Draft") and the related Forms and Companion Policy were published for comment in February 1998 and July 1998.  These versions reflect the consideration by the CSA of comments received on the February 1998 and July 1998 drafts.}

PART 1  DEFINITIONS AND INTERPRETATION²

^{2A national definition instrument has been adopted as National Instrument 14-101 Definitions.  It contains definitions of 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 a local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.}

1.1  Definitions  - In this Instrument

“affairs” means the relationship among a reporting issuer, its affiliates, and their securityholders, partners, directors and officers, other than the business carried on by the reporting issuer;

“annual report” means an annual report of a reporting issuer that includes the audited annual financial statements of the reporting issuer, and any other document required by Canadian securities legislation³ to be included in or sent with an annual report;

^{3The term "Canadian securities legislation" is defined in National Instrument 14-101 Definitions as meaning the statutes and other legislative instruments set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, rules, forms, rulings and orders relating to securities.}

“beneficial owner” means, for a security held by an intermediary in an account, the person or company that is identified as providing the instructions contained in a client response form or, if no instructions are provided, the person or company that has the authority to provide those instructions;

“beneficial ownership determination date” means, for a meeting

(a) the record date for voting, or

(b) in the absence of a record date for voting, the record date for notice⁴; 

^{4The definition "beneficial owner determination date" has been changed to "beneficial ownership determination date" to reflect the fact that this date is used to determine not just the relevant beneficial owners, but also their ownership positions.}

“business day” means a day other than a Saturday, Sunday or statutory holiday in the local jurisdiction⁵; 

^{5The term "local jurisdiction" is defined in National Instrument 14-101 Definitions and is defined to mean "in a national instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate".}

“CDS” means the Canadian Depository for Securities Limited and any successor to its depository business;

“client” means a person or company on whose behalf an intermediary directly holds a security;

“client response form” means the form of response set out in Form 54-101F1⁶;

^{6The definition of "client response card" in the July 1998 Draft National Instrument has been replaced by a definition of "client response form".  This change reflects the recognition that the response may be provided by electronic means as an alternative to a paper response.  Conforming changes have been made to sections 3.2, 3.3, 3.4 and 3.5.}

“corporate law” means, for a reporting issuer, any legislation, constating instrument or agreement that governs the affairs of the reporting issuer;

“day” means a calendar day unless express reference is made to a business day;

“depository” means CDS and any other person or company recognized as a depository by the securities regulatory authority⁷ for the purpose of this Instrument;

^{7The term "securities regulatory authority" is defined in National Instrument 14-101 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.}

“explanation to clients” means an explanation to clients set out in the form of Form 54-101F1;

“FINS” means Financial Institution Numbering System;

“intermediary” means, for a security, a person or company that, in connection with its business, holds the security on behalf of another person or company, and that is not

(a) a person or company that holds the security only as a custodian, and is not the registered securityholder of the security nor holding the security as a participant in a depository⁸, 

^{8The definition of "intermediary" has been amended by adding to paragraph (a) a reference that a custodian is excluded from the definition of "intermediary" only if it is not the registered securityholder nor holding as a participant in a depository.  A custodian that was a registered securityholder or participant could be an intermediary.}

(b) a depository, or

(c) a beneficial owner of the security;

“intermediary master list” means a list of intermediaries that a depository maintains under section 5.1;

“intermediary search request” means the request referred to in section 2.3;

“legal proxy” means a voting power of attorney, in the form of Form 54-101F8, granted to a beneficial owner by either an intermediary or a reporting issuer under a written request of the beneficial owner ⁹;

^{9This definition has been added in conjunction with the changes to section 4.5 and 2.18.  A beneficial owner that receives proxy-related materials may, under the proposed Instrument, either provide voting instructions to an intermediary (or reporting issuer where it sends proxy-related materials directly to the beneficial owner) or acquire a legal proxy and attend the meeting to vote.  The legal proxy ensures that such persons who attend a meeting have legal authority to vote the security they beneficially own.}

“meeting” means a meeting of securityholders of a reporting issuer;

“NOBO” means a non-objecting beneficial owner;

“NOBO list” means a non-objecting beneficial owner list;

“nominee” means a person or company that acts as a passive title-holder to hold securities and does not carry on business in its own right;

“non-objecting beneficial owner” means a beneficial owner of securities that

(a) has provided instructions to an intermediary holding the securities in an account on behalf of the beneficial owner that the beneficial owner does not object, for that account, to the intermediary disclosing ownership information about the beneficial owner under this Instrument, or

(b) is a non-objecting beneficial owner under subparagraph 1 or 2 of paragraph 3.3(b)¹⁰;

^{10The definition of "non-objecting beneficial owner" has been amended from the July 1998 Draft National Instrument to delete the reference to persons who fail to provide instructions.  This change has been made in conjunction with the deletion of section 3.6 of the July 1998 Draft National Instrument which provided that in the absence of instructions, a beneficial owner was deemed to be a non-objecting beneficial owner.  In light of the absolute obligation in section 3.2 to the proposed National Instrument to obtain instructions from all new clients and the changes to section 3.3 with respect to transitional instructions from existing clients, such default provisions are considered unnecessary.  The definition, like the definition of "objecting beneficial owner" has also been amended to clarify that instructions by beneficial owners are given on an account-by-account basis.}

“non-objecting beneficial owner list” means, for an intermediary, a list that includes ownership information concerning NOBOs on whose behalf the intermediary, or another intermediary holding directly or indirectly through the intermediary, holds securities and information regarding instructions from those NOBOs concerning receipt of securityholder materials and

(a) if prepared in non-electronic form, is in a clear and readable format and contains the information referred to in paragraph (b) below, or

(b) if prepared in electronic form, is prepared in the form of, and contains the information prescribed in, Form 54-101F5¹¹;

^{11The definition of "non-objecting beneficial owner list" has been amended from the July 1998 Draft National Instrument to clarify that a list prepared in non-electronic form is to contain the same information as is required by the form prescribed for a list in electronic form (Form 54-101F5).}

“notification of meeting and record dates” means the notification referred to in section 2.2;

“NP41” means National Policy Statement No. 41 or a rule based on National Policy Statement No. 41;

“objecting beneficial owner” means a beneficial owner of securities that

(a) has provided instructions to an intermediary holding the securities in an account on behalf of the beneficial owner that the beneficial owner objects, for that account, to the intermediary disclosing ownership information about the beneficial owner under this Instrument, or

(b) is an objecting beneficial owner under subparagraph 3 of paragraph 3.3(b)¹²; 

^{12The definition of "objecting beneficial owner" has been amended from the July 1998 Draft National Instrument to clarify that instructions by beneficial owners are given an account-by-account basis.}

“OBO” means an objecting beneficial owner;

“omnibus proxy” means, for a meeting

(a) for a depository, a proxy in the form of Form 54-101F3, and

(b) for an intermediary, a proxy in the form of Form 54-101F4;

“ownership information” means, for a beneficial owner of securities that holds the securities through an intermediary in an account of the intermediary, the beneficial owner’s name, address, holdings of the securities in the account, preferred language of communication, if known, the electronic mail address of the beneficial owner, and whether the beneficial owner has given to the intermediary a currently valid consent to the electronic delivery of documents from the intermediary;¹³ 

^{13Whether the beneficial owner has consented to the electronic delivery of documents from an intermediary may be of interest to a reporting issuer in connection with the reporting issuer's decision on whether to send materials directly to NOBOs and whether electronic delivery should be used for the sending.  Any consent of a beneficial owner restricted to its intermediary cannot be used by a reporting issuer.}

“participant in a depository” means a person or company for whom a depository maintains an account in which entries may be made to effect a transfer or pledge of a security;

“preferred language of communication” means either the English language or the French language;

“proximate intermediary” means, for a security

(a) a participant in a depository holding the security, or

(b) an intermediary that is the registered holder of the security;

“proxy-related materials” means securityholder material relating to a meeting that the reporting issuer is required under corporate law or securities legislation¹⁴ to send to the registered holders of the securities;

^{14The term "securities legislation" is defined in National Instrument 14-101 Definitions as meaning the particular statute and legislative instruments of the local jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, the rules, forms, rulings and orders relating to securities in the local jurisdiction.}

“record date for notice” means, for a meeting, the date established in accordance with corporate law for the determination of the registered holders of securities that are entitled to receive notice of the meeting;

“record date for voting” means, for a meeting, the date, if any, established in accordance with corporate law for the determination of the registered holders of securities that are entitled to vote at the meeting;

“registered holder” means, for a security, the person or company shown as the holder of the security on the books or records of the reporting issuer;

“request for beneficial ownership information” means, for a security, a request for beneficial ownership information in the form of Form 54-101F2 sent by a reporting issuer to a proximate intermediary holding the security;

“request for voting instructions” means, for a security that carries the right to vote at a meeting,

(a) if the request is made by the reporting issuer, a request for voting instructions from a beneficial owner of the security that is a NOBO, set out in the form of Form 54-101F6, and

(b) if the request is made by an intermediary, a request for voting instructions from the beneficial owner of the security on whose behalf the intermediary holds the security set out in the form of Form 54-101F7;

“routine business” means, for a meeting

(a) consideration of the minutes of an earlier meeting,

(b) consideration of the financial statements of the reporting issuer or an auditor’s report on the financial statements of the reporting issuer,

(c) election of directors of the reporting issuer,

(d) setting or changing of the number of directors to be elected within a range permitted by corporate law, if no change to the constating documents of the reporting issuer is required in connection with that action, and

(e) reappointment of an incumbent auditor of the reporting issuer;

“security” means a security of a reporting issuer;

“securityholder” means, for a security, the registered holder of the security, the beneficial owner of the security, or both, depending upon the context;

“securityholder materials” means, for a reporting issuer, materials that are sent to registered holders of securities of the reporting issuer;

“send” means to deliver, send or forward or arrange to deliver, send or forward in any manner, including by prepaid mail, courier or by electronic means¹⁵; and 

^{15The July 1998 Draft required that delivery by electronic means could be made only with the consent of the recipient.  The reference to this consent has been deleted in this draft, so that the principles contained in National Policy 11-201 Delivery of Documents by Electronic Means can apply to any such delivery.}

“transfer agent” means a person or company that carries on the business of a transfer agent.¹⁶ 

^{16The definition of a "transfer agent" has been added since the July 1998 Draft National Instrument in conjunction with the addition of the new requirement in subsection 2.5(4) that requires those seeking beneficial ownership information to do so through a transfer agent.}

1.2  Agents and Nominees

(1) A reference in this Instrument to a depository, intermediary or reporting issuer includes a nominee or agent of the depository, intermediary or reporting issuer.

(2) A person or company that uses an agent remains fully responsible for its compliance with the requirements of this Instrument.

1.3 Holding of Security by Intermediary  - In this Instrument, an intermediary is considered to hold a security if the security is held

(a) by the intermediary directly; or
(b) by the intermediary indirectly through another person or company on behalf of the intermediary.

1.4  Use of Required Forms

(1) A person or company required to send or use a required form under this Instrument may substitute another form or document or combine the required form with another form or document, so long as the form or document used requests or includes the same information contemplated by the required form.

(2) Subsection (1) does not apply to a NOBO list in the form of Form 54-101F5 unless both the party requesting and the party providing the NOBO list agree to an alternative form.¹⁷ 

 ^{17Subsection 1.4(2) has been amended from the July 1998 Draft National Instrument to permit an alternative form of electronic NOBO list to be used where both the party requesting and the party receiving the list agree.  This will allow parties who mutually agree to adopt a form that takes advantage of improvements in technology without awaiting an amendment to the proposed National Instrument.}

1.5 Fees  - Each fee payable under this Instrument shall be

(a) an amount prescribed by the regulator¹⁸ or securities regulatory authority; or 

^{18The 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.}

(b) a reasonable amount, if the regulator or securities regulatory authority has not prescribed an amount.¹⁹ 

 ^{19This section has been changed and the Appendix that was in the July 1998 Draft National Instrument has been eliminated.  These changes remove the reference to the specific fees that were contemplated by British Columbia in the July 1998 Draft National Instrument.  The section permits fees to be prescribed, if desired and permitted, by individual jurisdictions.  It continues to require fees to be reasonable in jurisdictions where no fees have been prescribed.}

PART 2  REPORTING ISSUERS

2.1 Establishment of Meeting and Record Dates  - A reporting issuer that is required to give notice of a meeting to the registered holders of any of its securities shall fix

(a) a date for the meeting;

(b) a record date for notice of the meeting, which shall be no fewer than 30 and no more than 60 days before the meeting date²⁰; and 

^{20The minimum time between the record date for notice of a meeting and the meeting date has been reduced from 35 days, as provided for in the July 1998 Draft National Instrument, to 30 days.  This reflects the shorter time period for sending now contained in sections 2.9 and 2.12 as compared to NP41.  The change has been made to facilitate the calling of meetings on a more expedited basis than under NP41 and to conform more closely to timing requirements for sending to registered shareholders under corporate law.}

(c) if required or permitted by corporate law, a record date for voting at the meeting.

2.2  Notification of Meeting and Record Dates

(1) Subject to section 2.20, at least 25 days before the record date for notice of a meeting, the reporting issuer shall send a notification of meeting and record date for notice and for voting to

(a) all depositories;

(b) the securities regulatory authority in each jurisdiction²¹ in which the reporting issuer is a reporting issuer; and  

^{21The 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.}

(c) each stock exchange in Canada on which securities of the reporting issuer are listed.²² 

^{22Section 2.2 has been amended from the July 1998 Draft National Instrument to specify the time for providing notification of a meeting.  Subject to the provisions of section 2.20, this section requires that the notification be given at least 25 days before the record date for notice of a meeting.  This is a return to the requirement contained in NP41.}

Section 2.20 is new, and has been added to provide a mechanism for the shortening of some of the time    periods contained in this Instrument.  See the footnote to that section.

(2) The notification of meeting and record date referred to in subsection (1) shall specify

(a) the name of the reporting issuer;

(b) the date fixed for the meeting;

(c) the record date for notice;

(d) the record date for voting, if any;

(e) the beneficial ownership determination date;

(f) the classes or series of securities that entitle the holder to receive notice of the meeting;

(g) the classes or series of securities that entitle the holder to vote at the meeting; and

(h) whether only routine business is to be conducted at the meeting.

2.3  Intermediary Search Request - Request to Depository

(1) At the same time as a reporting issuer sends a notification of meeting and record dates for a meeting to a depository, the reporting issuer shall request the depository to send to the reporting issuer

(a) subject to section 2.4, a report that specifies the number of securities of the reporting issuer of each class or series that entitle the holder to receive notice of the meeting or to vote at the meeting that are currently registered in the name of the depository, the identity of any other person or company that holds securities of the reporting issuer of the series or class specified in the request on behalf of the depository and the number of those securities held by that other person or company;²³ 

^{23Section 2.3 has been amended since the July 1998 Draft National Instrument to conform with section 5.3 by adding paragraph (a) to specify that the intermediary search request shall include a request for the identity of each entity that holds the specified securities on behalf of the depository and the respective holdings of each such entity.  Conforming changes have been made to subsection 2.3(2) and section 2.4.}

(b) subject to section 2.4, a list of all intermediaries and their nominees shown on the intermediary master list;

(c) subject to section 2.4, a list setting out the names, addresses, telephone numbers, fax numbers, any electronic mail addresses and respective holdings of participants in the depository of each class or series of securities that entitle the holder to receive notice of the meeting or to vote at the meeting; and

(d) the omnibus proxy required to be sent under subsection 5.4(1).

(2) In addition to making the request referred to in subsection (1) in connection with a meeting, a reporting issuer may request, at any time, a depository to send the information referred to in any or all of paragraphs (1)(a), (1)(b) and (1)(c) for any class or series of securities of the reporting issuer, and as of a date, specified by the reporting issuer in the request.

2.4 No Intermediary Search Request if Reporting Issuer has Electronic Access  - A reporting issuer shall not request from the depository information referred to in paragraphs 2.3(1)(a), 2.3(1)(b) or 2.3(1)(c) if the information is included on a file maintained by the depository in electronic format and the reporting issuer has access to the file.

2.5  Request for Beneficial Ownership Information

(1) Subject to section 2.20, at least 20 days before the record date for notice of a meeting, the reporting issuer, using information provided by depositories under section 5.3 or referred to in section 2.4, shall complete Part 1 of a request for beneficial ownership information and send it to all proximate intermediaries identified by the depositories as holding the securities that entitle the holder to receive notice of the meeting or to vote at the meeting.²⁴ 

^{24Section 2.5 has been amended from the July 1998 Draft National Instrument to specify the time within which reporting issuers are required to send requests for beneficial ownership information to proximate intermediaries.  Subject to the provisions of section 2.20, this section requires that the request be sent at least 20 days before the record dates for notice of a meeting.}

(2) In addition to making the request referred to in subsection (1) in connection with a meeting, a reporting issuer, using information provided by depositories under section 5.3 or referred to in section 2.4, may make for any class or series of securities of the reporting issuer, at any time, a request for beneficial ownership information by completing Part 1 of a request for beneficial ownership information and sending it to any proximate intermediary identified as holding any securities of the reporting issuer.²⁵ 

^{25Subsection 2.5(2) has been amended from the July 1998 Draft National Instrument to clarify that a request for beneficial ownership information that is not in connection with a meeting may be for any class or series of securities (not just those carrying a right to receive notice of a meeting or to vote) and need not necessarily be addressed to all proximate intermediaries holding that class of securities.}

(3) A reporting issuer that makes a request for beneficial ownership information under either subsection (1) or subsection (2) that includes a request for NOBO lists shall provide a written undertaking to the proximate intermediary in the form of Form 54-101F9.²⁶ 

^{26The CSA, in response to further consideration of comments received on both the February 1998 and July 1998 Drafts, have proposed that an undertaking be used to confirm the obligations of persons or companies with respect to beneficial owner lists, rather than a statutory declaration as contemplated in the July 1998 Draft.  This is a return to the proposal in the February 1998 Draft.  This change recognizes that a statutory declaration is not the most appropriate means of addressing promises with respect to future conduct as distinct from statements of existing fact.}

(4) A reporting issuer that requests beneficial ownership information under this section shall do so through a transfer agent and shall be deemed to authorize the response to such request to be provided to the transfer agent.²⁷ 

^{27Subsection 2.5(4) is new and requires that requests for beneficial ownership information be made through a transfer agent.  Transfer agent is defined in section 1.1.  This change has been made to ensure that proximate intermediaries need deal with only a limited number of entities with respect to requests for beneficial ownership information.  By limiting the number of parties requesting and receiving this information from proximate intermediaries greater efficiencies and economies of scale may be realized.}

2.6 No Depositories or Intermediaries are Registered Holders  - A reporting issuer is not subject to section 2.3 or 2.5 if none of the registered holders of its securities are depositories or intermediaries identified on the intermediary master list or if all of the information provided for in Part 2 of the request for beneficial ownership information is known to the reporting issuer.²⁸ 

^{28Section 2.6 in the July 1998 Draft National Instrument referred to an "intermediary master register".  This has been changed to refer to the "intermediary master list" to be consistent with the terminology used elsewhere in the proposed Instrument.  Section 2.6 has also been amended to excuse reporting issuers from having to make intermediary search requests and requests for beneficial ownership information where they already have all of the information which would be provided in response to a request for beneficial ownership information.  This amendment will, for example, excuse mutual fund issuers that maintain such information from complying with sections 2.3 and 2.5.}

2.7 Sending Proxy-Related Materials to Beneficial Owners  - A reporting issuer that is required by Canadian securities legislation to send proxy-related materials to the registered holders of any class or series of its securities shall, subject to section 2.10 and subsection 2.12(3) send the proxy-related materials to beneficial owners of the securities, by either sending

(a) directly to NOBOs, and indirectly under section 2.12 to OBOs; or

(b) indirectly under section 2.12 to beneficial owners.

2.8 Other Securityholder Materials  - A reporting issuer may, but is not required by this Instrument to, send securityholder materials other than proxy-related materials to beneficial owners of its securities, by either sending

(a) directly to NOBOs, and indirectly under section 2.12 to OBOs; or

(b) indirectly under section 2.12 to beneficial owners.

2.9 Direct Sending of Proxy-Related Materials to NOBOs by Reporting Issuer  - A reporting issuer that has stated in its request for beneficial ownership information sent in connection with a meeting that it will send proxy-related materials to, and seek voting instructions from, NOBOs shall, subject to section 2.10 and subsection 2.12(3), send, at its expense, at least 21 days before the date fixed for the meeting, the proxy-related materials for the meeting directly to the NOBOs on the NOBO lists received in response to the request.

2.10 Sending Securityholder Materials Against Instructions  - Except as required by securities legislation, no reporting issuer that uses a NOBO list to send securityholder materials directly to NOBOs on the NOBO list shall send the securityholder materials to NOBOs that are identified on the NOBO list as having declined to receive those materials unless the reporting issuer has specified in the request for beneficial ownership information sent under section 2.5 in connection with the sending of materials that the securityholder materials will be sent to all beneficial owners of securities.²⁹ 

^{29The CSA are proposing to continue the approach contained in NP41 whereby reporting issuers may override the election of securityholders not to receive certain materials.  A reporting issuer would state its intention in that regard in the request for beneficial ownership information sent in connection with the meeting.}

2.11 Disclose How Information Obtained  - A reporting issuer that uses a NOBO list to send securityholder materials directly to NOBOs on the NOBO list shall include in the materials the following statement:

“These securityholder materials are being sent to both registered and non-registered owners of the securities.  The names and addresses of owners of the securities that are not registered holders, and information about their holdings of securities, have been obtained from intermediaries holding on behalf of those owners in accordance with applicable securities regulatory requirements.”

2.12  Indirect Sending of Securityholder Materials by Reporting Issuer

(1) A reporting issuer sending securityholder materials indirectly to beneficial owners shall send to each proximate intermediary that responded to the applicable request for beneficial ownership information the number of sets of those materials specified by that proximate intermediary

(a) at least four business days before the twenty-first day before the date fixed for the meeting, in the case of proxy-related materials that are to be sent on by the proximate intermediary by prepaid mail other than first class mail³⁰;

^{30Paragraph 2.12(1)(a) has been added in conjunction with a change to section 4.2(2) in response to a comment received.  It requires a reporting issuer that wishes to indirectly send proxy-related material by prepaid mail other than first-class mail to send the material to the proximate intermediary one day earlier than would be the case if the material is to be sent by other means.  This change is intended to provide proximate intermediaries one extra day to complete the extra steps required when securityholder materials are to be sent by mail other than first-class mail.}

(b) at least three business days before the twenty-first day before the date fixed for the meeting, in the case of all other proxy-related materials that are to be sent on by the proximate intermediary; or

(c) on the day specified in the request for beneficial ownership information, in the case of securityholder materials that are not proxy-related materials that are to be sent on by the proximate intermediary.

(2) A reporting issuer may satisfy its obligation to send securityholder materials to an intermediary under this section by sending the securityholder materials to a person or company designated by the intermediary.

(3) If a proximate intermediary in a foreign jurisdiction³¹ holds securities on behalf of NOBOs and 

^{31The term "foreign jurisdiction" is defined in National Instrument 14-101 Definitions.  The definition is "a country other than Canada, or political subdivision of a country other than Canada".}

(a) the law of the foreign jurisdiction prohibits the reporting issuer from sending securityholder materials directly to NOBOs; or

(b) the proximate intermediary has stated in response to a request for beneficial ownership information that the law in the foreign jurisdiction requires the proximate intermediary to deliver securityholder materials to beneficial owners³², 

^{32This section has been amended since the July 1998 Draft National Instrument to indicate that it applies not only where the law of a foreign jurisdiction prohibits the reporting issuer from sending securityholder material directly to NOBOs but also where the proximate intermediary has stated in response to a request for beneficial ownership information that the law in the foreign jurisdiction requires the proximate intermediary to deliver securityholder materials to beneficial owners.  The section also has been amended to clarify that if the conditions in the section apply, the reporting issuer shall not send securityholder materials directly to the NOBOs.}

the reporting issuer shall not, in either case, send securityholder materials to those NOBOs and shall send to that proximate intermediary the number of sets of securityholder materials requested by the proximate intermediary in the response.

2.13 Fee for Search  - A reporting issuer shall pay a fee to a proximate intermediary for furnishing the information requested in a request for beneficial ownership information made by the reporting issuer.

2.14  Fee for Sending Materials Indirectly 

(1) A reporting issuer that sends securityholder materials indirectly to NOBOs through a proximate intermediary shall pay to the proximate intermediary, upon receipt by the reporting issuer of a certificate of sending to NOBOs in accordance with the instructions specified by the reporting issuer in the request for beneficial ownership information

(a) a fee for sending the securityholder materials to the NOBOs³³; 

^{33An intermediary that sends documents electronically will be entitled to this fee, but not any charges referred to in paragraph (b).  As provided by section 1.5, the fee must be reasonable.}

(b) the actual cost of any postage incurred by the proximate intermediary in sending the securityholder materials to the NOBOs in accordance with any mailing instructions specified by the reporting issuer in the request for beneficial ownership information; and

(c) if the securityholder materials were sent by mail other than first class mail in accordance with the mailing instructions specified by the reporting issuer in the request for beneficial ownership information, the reasonable additional handling costs associated with the preparation by the proximate intermediary of the securityholder materials for mailing to NOBOs.

(2) A reporting issuer that sends securityholder materials, indirectly through a proximate intermediary, to OBOs that have declined in accordance with this Instrument to receive those materials, shall pay to the proximate intermediary, upon receipt by the reporting issuer of a certificate of sending to OBOs in accordance with the instructions specified by the reporting issuer in the request for beneficial information

(a) a fee for sending the securityholder materials to the OBOs;

(b) the actual cost of any postage incurred by the proximate intermediary in sending the securityholder materials to the OBOs in accordance with any mailing instructions specified by the reporting issuer in the request for beneficial ownership information; and

(c) if the securityholder materials were sent by mail other than first class mail in accordance with the mailing instructions specified by the reporting issuer in the request for beneficial information, the reasonable additional handling costs associated with the preparation by the proximate intermediary of the securityholder materials for mailing to OBOs.

2.15 Adjournment or Change in Meeting  - A reporting issuer that is required to give a notice of adjournment or other change for a meeting to registered holders of its securities shall immediately send a notice of the adjournment or change, including any change in the beneficial ownership determination date, to

(a) each of the persons or companies referred to in subsection 2.2(1) and to the proximate intermediaries for the securities; and

(b) any other person or company to whom the reporting issuer sent the original notification of meeting and record dates under this Instrument.³⁴ 

^{34See section 3.2 of the proposed Companion Policy.}

2.16 Explanation of Voting Rights  - Proxy-related materials for a meeting sent to a beneficial owner of securities shall explain, in plain language, how the beneficial owner may exercise voting rights attached to the securities, including the right of the beneficial owner to attend and vote the securities directly at the meeting³⁵. 

^{35This section has been amended since the July 1998 Draft National Instrument to provide that the proxy-related material provided must include an explanation of the right of the beneficial owner to attend and vote the securities directly at the meeting and a description of how those rights may be exercised.}

2.17 Request for Voting Instructions  - A reporting issuer that sends proxy-related materials that solicit votes or voting instructions directly to a NOBO shall prepare and include with the proxy-related materials, in substitution for the proxy otherwise contained in the proxy-related materials, a request for voting instructions for the matters to which the proxy-related materials relate for return to the reporting issuer.

2.18 Request for Legal Proxy - If a reporting issuer that has sent directly to a NOBO proxy-related materials for a meeting that solicit voting instructions receives a written request from the NOBO for a legal proxy for the meeting, the reporting issuer will arrange at no cost to the NOBO to deliver to the NOBO a legal proxy to the extent that the reporting issuer’s management holds a proxy given directly by the registered holder or indirectly given by

the registered holder through one or more other proxy holders in respect of the securities beneficially owned by the NOBO.³⁶ 

^{36Form 54-101F8.  Section 2.18 is a new section.  It confirms that a NOBO that receives proxy-related material directly from a reporting issuer may request and receive a legal proxy and exercise its right to vote at a meeting.  The legal proxy ensures that such persons who attend a meeting have legal authority to vote the securities that they beneficially own and to change any voting instructions previously given.  This provision implements, in relation to reporting issuers that deal directly with NOBOs for a meeting, an obligation analogous to that imposed on registrants or custodians by Canadian securities legislation of some jurisdictions (including subsection 49(5) of the Securities Act (Ontario)).}

2.19 Tabulation and Execution of Voting Instructions - A reporting issuer shall

(a) tabulate the voting instructions received from NOBOs in response to a request for voting instructions referred to in section 2.17; and

(b) through the actions of management of the reporting issuer, execute the voting instructions as instructed by the NOBOs, to the extent that the management of the reporting issuer holds the corresponding proxy.

2.20 Abridging Time  - A reporting issuer may abridge the time prescribed in either or both of subsections 2.2(1) and 2.5(1) if the reporting issuer

(a) arranges

(i) to have proxy-related materials for the meeting sent in compliance with this Instrument to all beneficial owners at least 21 days before the date fixed for the meeting; and

(ii) to have carried out all of the requirements of this Instrument in addition to those described in subparagraph (i); and

(b) files at the time it files the proxy-related materials, a certificate of one of its officers reporting that it made the arrangements described in paragraph (a) and that the reporting issuer is relying upon this section³⁷. 

^{37The changes to subsections 2.2(1) and 2.5(1) prescribe minimum periods for providing notification of a meeting and requesting beneficial ownership information.  Section 2.20 is new.  It allows the time frames in subsections 2.2(1) and 2.5(1) to be abridged where a reporting issuer files a certificate of one of its officers certifying that it has arranged to have carried out all of the requirements of the proposed National Instrument and to have proxy-related materials for the meeting sent to all beneficial owners at least 21 days before the date fixed for the meeting.  Such arrangements must ensure that adequate time is allowed for intermediaries to receive, sort and send materials so that the materials are sent to the beneficial owners no later than 21 days before the relevant meeting.}

PART 3 INTERMEDIARIES’ OBLIGATIONS CONCERNING THE OBTAINING OF BENEFICIAL OWNER INSTRUCTIONS

3.1  Intermediary Information to Depository

(1) An intermediary shall send, by the later of the date the intermediary commences business and the date this Instrument comes into force, notice to each depository of

(a) the intermediary’s name and address;

(b) the name and address of each nominee of the intermediary in whose name the intermediary holds securities on behalf of beneficial owners; and

(c) the name, address, telephone number, fax number and any electronic mail address of a representative of the intermediary.

(2) An intermediary shall send notice to each depository of a change in the information contained in a notice given under this section within five business days after the change.

3.2 Instructions from New Clients  - Subject to section 3.4, an intermediary that opens an account for a client shall, before the intermediary holds securities on behalf of the client in the account,

(a) send to the client an explanation to clients and a client response form and obtain instructions from the client on the matters to which the client response form pertains;

(b) obtain the electronic mail address of the client, if available; and

(c) enquire whether the client wishes to consent and if so, obtain consent of the client, to electronic delivery of documents³⁸. 

^{38The CSA expect that intermediaries will review with their clients the costs and consequences associated with the options referred to in the client response from.  Section 3.2 creates an obligation to seek instructions from all new clients.  The default provisions in section 3.6 of the July 1998 Draft National Instrument that addressed the possibility that instructions might in some cases not be given have been deleted.  In light of the absolute obligation in section 3.2 to obtain instructions for all new client accounts and the changes to section 3.3 with respect to transitional instructions for existing client accounts, such default provisions are considered unnecessary.}

3.3 Transitional - Instructions from Existing Clients - An intermediary that holds securities on behalf of a client in an account that was opened before this Instrument comes into force

(a) may seek new instructions from its client in relation to the matters to which the client response form pertains; and

(b) in the absence of new instructions from the client, shall rely on the instructions previously given or deemed to have been given by the client under NP41 in respect of that account, on the following basis:

1. If the client chose under NP41 to permit the intermediary to disclose the client’s name and security holdings to the issuer of the security or other sender of material, the client is a NOBO under this Instrument.

2. If the intermediary was permitted under NP41 to disclose the client’s name and security holdings to the issuer of the security or other sender of material, the client is a NOBO under this Instrument until the third anniversary of the date that this Instrument came into force.

3. If the client chose under NP41 not to permit the intermediary to disclose the client’s name and security holdings to the issuer of the security or other sender of material, the client is an OBO under this Instrument.

4. If the client chose under NP41 not to receive material relating to annual or special meetings of securityholders or audited financial statements, or if the intermediary was permitted under NP41 not to provide that material to the client, the client is considered to have declined under this Instrument to receive

(a) proxy-related materials for meetings at which only routine business is to be conducted;

(b) annual reports and financial statements that are part of proxy-related materials for meetings referred to in paragraph (a); and

(c) materials sent to securityholders that are not required by corporate or securities law to be sent to registered securityholders.

5. If the client chose under NP41 to receive material relating to annual or special meetings of securityholders or audited financial statements, the client is considered to have chosen under this Instrument to receive all securityholder materials sent to beneficial owners of securities.

6. The client is considered to have chosen under this Instrument as the client’s preferred language of communication the language that has been customarily used by the intermediary to communicate with the client; and

(c) shall obtain new instructions on the matters to which a client response form pertains from any client that is a NOBO under subparagraph 2 of paragraph (b) in sufficient time to obtain new instructions from the client before the third anniversary of the date that this Instrument came into force³⁹. 

^{39Section 3.3 has been amended since the July 1998 Draft National Instrument.  The July 1998 Draft National Instrument contemplated that a proximate intermediary that wished to seek new instructions from existing clients would do so using Form 54-101F1.  This section has been changed to delete the requirement that Form 54-101F1 be used when new instructions are sought so as to allow proximate intermediaries greater flexibility in seeking new instructions from existing clients.  This is in conformity with the new provisions in section 3.4 that address the ability of a client to change at any time the choices it made, or was deemed to have made, in the client response form.  An existing client that does not respond to a new request for instructions will continue to be governed by the instructions previously given or deemed to have been given under NP41.  This is a change from the July 1998 Draft National Instrument in which a failure to respond to a new request for instructions would have resulted in the client having been deemed to have made the default elections set out in section 3.6 of the July 1998 Draft National Instrument.}

^{This section has also been amended from the July 1998 Draft National Instrument to clarify that a securityholder that is deemed to have elected pursuant to NP41 not to receive all security holder materials will not receive annual reports or financial statements that are part of proxy-related materials for meetings at which only routine business is to be conducted.}

^{This section has also been changed to provide that a person that is deemed to be a NOBO under subparagraph 2 of paragraph 3.3(b) (i.e. the person did not respond to a client response card provided under NP41) will be deemed   to be a NOBO for three years after this Instrument came into force.  Paragraph 3.3(c) provides that the intermediary shall seek new instructions from that client before the expiry of the three year period.  This change has been made   to ensure that the Instrument conforms with the spirit of the Personal Information Protection and Electronic} Documents Act (Canada) by placing limits on the extent to which personal information may be provided without explicit instructions from the relevant person.

3.4 Amending Client Instructions - A client may at any time change the instructions it has given or is deemed to have given in connection with any of the choices provided for in the client response form by advising the intermediary that holds securities on the client’s behalf of the change⁴⁰. 

^{40Section 3.4 is new.  It makes explicit the ability of a client to change the instructions it has previously given or is deemed to have given with respect to the matters addressed in the client response form.}

3.5 Application of Instructions to Accounts - The instructions given to an intermediary by a beneficial owner under this Part apply in respect of all securities held by the beneficial owner in the account of the intermediary identified in the client response form.

PART 4  INTERMEDIARIES’ OTHER OBLIGATIONS

4.1  Request for Beneficial Ownership Information - Response

(1) A proximate intermediary that receives a request for beneficial ownership information from a reporting issuer, that pertains to a meeting, shall send to the reporting issuer, through the transfer agent of the reporting issuer that sent the request

(a) within three business days of receiving the request, the information referred to in Part 2 of the request for beneficial ownership information⁴¹ other than Item 7; and

^{41Form 54-101F2.} 

(b) if the request contains a request for a NOBO list, within three business days after the beneficial ownership determination date for the meeting specified in the request, the NOBO list and other information required in accordance with Item 7 of Part 2 of the request for beneficial ownership information as at the beneficial ownership determination date of the meeting⁴²; and 

^{42The requirement in the July 1998 Draft National Instrument that a NOBO list requested in connection with a meeting be in electronic form has been deleted.  Amendments to the request for beneficial ownership information form, however, now specify that if a proximate intermediary is able to do so, it must respond to requests for a NOBO list by providing the list in electronic format.}

(c) within three business days after the beneficial ownership determination date for the meeting specified in the request, if the request stated that the reporting issuer will send proxy-related materials to, and seek voting instructions from, NOBOs, a form of omnibus proxy that appoints management of the reporting issuer as the proximate intermediary’s proxy holder for the securities held, as of the beneficial ownership determination date, on behalf of each NOBO identified on the NOBO list, in respect of which the proximate intermediary is either the registered holder or proxy holder.

(2) A proximate intermediary that receives a request for beneficial ownership information from a reporting issuer that pertains to the sending of securityholder materials other than in connection with a meeting shall, within three business days of receiving the request, send to the reporting issuer, through the transfer agent of the reporting issuer that sent the request, the NOBO lists if applicable and the other information referred to in Part 2 of the request for beneficial ownership information.

(3) A proximate intermediary that receives a request for beneficial ownership information from a reporting issuer that contains a request for a NOBO list but does not pertain to a meeting or the sending of securityholder materials shall, within three business days of receiving the request, send to the reporting issuer, through the transfer agent of the reporting issuer that sent the request, the

NOBO lists if applicable and the other information referred to in Part 2 of the request for beneficial ownership information.⁴³ 

^{43Subsection 4.1(3) has been amended to clarify that it pertains to requests that pertain to neither a meeting nor the sending of securityholder materials.  The July 1998 Draft National Instrument indicated that this subsection only applied to requests that did not relate to a meeting.}

(4) The response of a proximate intermediary to a reporting issuer given under this section shall be a consolidated response relating to all beneficial owners of each class and series of securities, specified in the request for beneficial ownership information, that hold, directly or indirectly, through the proximate intermediary.

(5) An intermediary holding securities, directly or indirectly, through a proximate intermediary, shall take all necessary steps to ensure that the proximate intermediary is provided with the information required to enable it to satisfy its obligations under this section within the times required by this section.

(6) An intermediary is not required under this Instrument to provide ownership information concerning an OBO to any person or company.

4.2 Sending of Securityholder Materials to Beneficial Owners by Intermediaries

(1) Subject to sections 4.3 and 4.7, a proximate intermediary that receives securityholder materials from a reporting issuer for sending to beneficial owners shall send

(a) one set of the materials to each OBO of the relevant securities that is a client of the proximate intermediary;

(b) one set of the materials to each NOBO of the relevant securities if the reporting issuer stated in the applicable request for beneficial ownership information, or otherwise advised the proximate intermediary, that the reporting issuer will send the materials to NOBOs indirectly through intermediaries; and

(c) appropriate quantities of materials to all intermediaries holding securities of the relevant class or series that are clients of the proximate intermediary, for sending by them under subsection (3).

(2) A proximate intermediary shall comply with subsection (1)

(a) within at least four business days after receipt in the case of securityholder materials to be sent by prepaid mail other than first class mail;

(b) within at least three business days after receipt in the case of securityholder materials to be sent by any other means.⁴⁴ 

^{44Subsection 4.2(2) has been added in conjunction with a change to section 2.12 in response to a comment received.  It allows proximate intermediaries four business days rather than three business days to send securityholder materials where the materials are to be sent by mail other than first-class mail.  This change is intended to provide proximate intermediaries one extra day to complete the extra steps required when securityholder materials are to be sent by mail other than first-class mail.}

(3) An intermediary that receives securityholder materials from another intermediary under this section shall send, within one business day of receipt

(a) one set of the materials to each OBO that is a client of the intermediary; and

(b) appropriate quantities of the materials to all intermediaries holding securities of the relevant class or series that are clients of the intermediary for sending by them under this subsection.

(4) The persons or companies to whom securityholder materials are sent under this section shall be determined

(a) as at the beneficial ownership determination date, in the case of proxy-related materials; and

(b) as at the date specified in the relevant request for beneficial ownership information, in the case of securityholder materials not sent in connection with a meeting.

(5) An intermediary may satisfy its obligation to send securityholder materials to another intermediary under this section by sending the securityholder materials to a person or company designated by the other intermediary.

4.3 Sending Securityholder Materials Against Instructions - An intermediary that receives securityholder materials that are to be sent to a beneficial owner of securities shall not send the securityholder materials to the beneficial owner if the beneficial owner has declined in accordance with this Instrument to receive those materials unless the reporting issuer has specified in the request for beneficial ownership information sent under section 2.5 in connection with the sending of the securityholder materials that the securityholder materials shall be sent to all beneficial owners of securities.⁴⁵ 

^{45When securityholder materials are sent indirectly to beneficial owners who have declined to receive them, the reporting issuer is required to pay the costs of sending under section 2.14.}

4.4 Request for Voting Instructions - An intermediary that receives proxy-related materials that solicit votes or voting instructions from securityholders, for sending by the intermediary to beneficial owners of the securities, shall prepare and include with the proxy-related materials that it sends to the beneficial owners, in substitution for the proxy otherwise contained in the proxy-related materials, a request for voting instructions for the matters to which the proxy-related materials relate for return to the intermediary.

4.5 Request for Legal Proxy - An intermediary that receives a written request from a beneficial owner for a legal proxy for securities the intermediary holds on behalf of the beneficial owner as at the beneficial ownership determination date for a meeting shall send to the beneficial owner a legal proxy to the extent that the intermediary then holds a proxy directly given by the registered holder, or indirectly given by the registered holder through one or more other proxy holders, in connection with the securities held by the intermediary for the beneficial owner.46 

 46Form 54-101F8.  This is a new section.  It contemplates that a beneficial owner that receives proxy-related materials may, as an alternative to providing voting instructions, request a legal proxy and exercise its right to vote at the meeting.  The legal proxy ensures that such a beneficial owner who attends a meeting has legal authority to vote the securities that it beneficially owns and to change any voting instructions previously given by the beneficial owner.  Similar to section 2.18, this section imposes on intermediaries analogous obligations to those imposed on registrants and custodians by Canadian securities legislation of some jurisdictions (including subsection 49(5) of the Securities Act (Ontario)).

4.6 Tabulation and Execution of Voting Instructions - An intermediary shall

(a) tabulate voting instructions received from beneficial owners of securities in response to a request for voting instructions sent by the intermediary under section 4.4; and

(b) for each beneficial owner, execute the voting instructions received from the beneficial owner to the extent that the intermediary holds a proxy directly given by the registered holder, or indirectly given by the registered holder through one or more other proxy holders, in respect of the securities held by the intermediary for the beneficial owner.

4.7 Securities Legislation - Despite any other provision of this Part, nothing in this Part requires a person or company to send securityholder materials to a beneficial owner if securities legislation specifically permits the person or company to decline to send those materials to the beneficial owner.⁴⁷ 

^{47Section 4.7 is new, and recognizes that the provisions of the securities legislation of some jurisdictions specifically permit intermediaries to decline to forward securityholder materials to beneficial owners unless arrangements have been made for the payment to the intermediary for so doing.  The CSA do not intend to override these provisions in this Instrument.  This change is made in conjunction with the deletion of section 3.7 of the July 1998 Draft National Instrument, which provided that OBOs were required to bear the costs of confidentiality.  The CSA have resolved to be silent on that issue and permit the market to determine how the costs of delivery to OBOs will be borne where the matter is not addressed by local rule.} 

PART 5  DEPOSITORIES

5.1 Intermediary Master List - A depository shall maintain a current list of intermediaries containing the information received by the depository from intermediaries under section 3.1 and shall send a copy of that list to any new depository recognized under this Instrument.

5.2  Index of Meeting and Record Dates

(1) A depository shall maintain an index of pending meetings containing the information that it receives from reporting issuers under section 2.2.

(2) A depository shall arrange for the timely publication of the information it receives from a reporting issuer under section 2.2 in the national financial press and may charge the reporting issuer a publication fee in a reasonable amount for the publication.

5.3 Depository Response to Intermediary Search Request by Reporting Issuer  - Within two business days of its receipt of an intermediary search request from a reporting issuer, a depository shall send to the reporting issuer a report, containing information that is as current as possible⁴⁸, that 
 
^{48Section 5.3 does not specify as of what date the required report is to be accurate.  It is expected that the report will be reasonably current.}

(a) specifies the number of securities of the reporting issuer of the series or class specified in the request that are registered in the name of the depository, the identity of any other person or company that holds on behalf of the depository securities of the reporting issuer of the series or class specified in the request and the number of such securities held by that other person or company⁴⁹; 

^{49Section 5.3 has been amended since the July 1998 Draft National Instrument to clarify that the response to an intermediary search request must specify each entity that holds the specified securities on behalf of the depository and the respective holdings of each such entity.  The section has also been amended to stipulate that the response to an intermediary search request include the telephone numbers, fax numbers and electronic addresses of participants in the relevant depository.}

(b) specifies the names, addresses, telephone numbers, fax numbers, any electronic mail addresses and respective holdings of participants in the depository of securities of the series or class specified in the request, on whose behalf the depository holds securities; and

(c) contains a copy of the intermediary master list.

5.4  Depository to send Participant Omnibus Proxy to Reporting Issuer

(1) Within two business days after the beneficial ownership determination date specified in the notification of meeting and record dates referred to in section 2.2, the depository shall send to the reporting issuer an omnibus proxy, appointing each participant, on whose behalf, and to the extent that, the depository holds, as of the beneficial ownership determination date, securities that entitle the holder to vote at the meeting, as the depository’s proxy holder in respect of the securities held by the depository on behalf of the participant.

(2) The depository shall send to each of the participants named in an omnibus proxy referred to in subsection (1), at the same time as the depository sends the omnibus proxy to the reporting issuer, confirmation of the proxy given by the depository.

PART 6  OTHER PERSONS OR COMPANIES

6.1  Requests for NOBO Lists from a Reporting Issuer

(1) Any person or company may request from a reporting issuer the most recently prepared NOBO list, for any proximate intermediary holding securities of the reporting issuer, that is in the reporting issuer’s possession.

(2) A request for a NOBO list under this section shall be accompanied by an undertaking in the form of Form 54-101F9⁵⁰ of the person or company making the request.

^{50The form has been revised to be an undertaking rather than a statutory declaration.}

(3) The person or company making a request under subsection (1) shall pay a fee to the reporting issuer for preparing the NOBO list for sending under this section.⁵¹ 

^{51Subsection 6.1(3) is new and specifically provides for the fee referred to in subsection 6.1(4).}

(4) A reporting issuer shall send any NOBO list requested under this section, within ten days of receipt of both the request and the fee for preparing the list for sending under this section.⁵² 

^{52Subsection 6.1(4) has been amended from the July 1998 Draft National Instrument to extend to ten days from three business days the time within which the reporting issuer must respond to a request for an existing NOBO list.  This is consistent with the time prescribed by the Canadian Business Corporations Act for responding to requests for a securityholder list.}

(5) A reporting issuer shall delete from any NOBO list sent under this section any reference to FINS numbers referred to in any form and any other information that would identify the intermediary through which a NOBO holds securities.⁵³ 

^{53A NOBO list with FINS numbers will only be provided under section 6.2 where the list is sought by a reporting issuer in conjunction with a meeting of its securityholders in circumstances in which the issuer is sending proxy-related materials as per paragraph 4.1(1)(c).  The FINS number should not be required in circumstances where it is not necessary to reconcile voting instructions and/or proxies.}

6.2 Other Rights and Obligations of Persons and Companies other than Reporting Issuers

(1) A person or company may take any action permitted under this Instrument to be taken by a reporting issuer and, in so doing, has all the rights, and is subject to all of the obligations, of a reporting issuer in connection with that action.

(2) In connection with actions taken under subsection (1) by a person or company, references in this Instrument and the forms referred to in this Instrument to a “reporting issuer” shall be read as references to that person or company and all other persons and companies will have the same obligations under this Instrument to that person or company as they would have if the person or company were a reporting issuer.

(3) Subsections (1) and (2) do not apply to sections 2.1, 2.2, subsections 2.3(1) and 2.5(1), section 2.18, paragraph 4.1(1)(c), section 5.4 and this Part.

(4) A person or company that sends an intermediary search request under subsection 2.3(2) or a request for beneficial ownership information under subsection 2.5(2) shall concurrently send a copy of that request to the reporting issuer of the securities to which the request relates.

(5) A person or company other than the reporting issuer to which the request relates that makes an intermediary search request under subsection 2.3(2) or a request for beneficial ownership information under subsection 2.5(2) shall provide an undertaking in the form of Form 54-101F9.⁵⁴ 

^{54The reference to statutory declaration which appeared in the July 1998 Draft National Instrument has been changed to undertaking to reflect the change made to Form 54-101F9.}

PART 7  PROHIBITED USE

7.1 Use of NOBO List  - No reporting issuer or other person or company shall use a NOBO list or a report prepared under section 5.3 relating to the reporting issuer and obtained under this Instrument, except in connection with

(a) sending securityholder materials to NOBOs in accordance with this Instrument;

(b) an effort to influence the voting of securityholders of the reporting issuer;

(c) an offer to acquire securities of the reporting issuer; or

(d) any other matter relating to the affairs of the reporting issuer.

7.2 Trafficking in Information Prohibited - Except as permitted by this Instrument, no person or company shall offer for sale or sell or purchase or otherwise traffic in any information obtained under this Instrument.

PART 8  MISCELLANEOUS

8.1 Default of Party in Communication Chain - If a person or company fails to send information or materials in accordance with the requirements of this Instrument, the person or company whose required response or action under this Instrument is dependent upon receiving the information or materials shall use reasonable efforts to obtain the information or materials from the other person or company, and in so doing is exempt from the timing provisions of this Instrument in connection with the response or action to the extent that the delay arose from the failure of the other person or company.

8.2 Right to Proxy - Nothing in this Instrument shall be interpreted to restrict in any way

(a) a beneficial owner’s right to demand and to receive from an intermediary holding securities on behalf of the beneficial owner a proxy enabling the beneficial owner to vote the securities; or

(b) the right of a depository or intermediary to vary an omnibus proxy in respect of securities to properly reflect a change in the registered or beneficial ownership of the securities.

PART 9  EXCEPTIONS AND EXEMPTIONS

9.1 Audited Annual Financial Statements or Annual Report - The time periods applicable to sending of proxy-related materials prescribed in this Instrument do not apply to the sending of proxy-related materials that are annual financial statements or an annual report if the statements or report are sent directly or indirectly in accordance with the Instrument to beneficial owners of the securities within the time limitations established in applicable corporate law and securities legislation for the sending of the statements or report to registered holders of the securities.

9.2  Exemptions

(1) The regulator⁵⁵ or the 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.

^{55The 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.}

(2) Despite subsection (1), in Ontario only the regulator may grant such an exemption.

PART 10 EFFECTIVE DATES

10.1 Effective Date of Instrument - This Instrument comes into force on July 1, 2001.

10.2  Sending of Proxy-Related Materials

(1) Proxy-related materials for a meeting held on or after July 1, 2001 and before January 1, 2002 shall be sent in accordance with NP41 as if NP41 were in force in the local jurisdiction.

(2) This Instrument applies to the sending of proxy-related materials for a meeting held on or after January 1, 2002.

10.3 Sending of Other Securityholder Materials - Subject to section 10.4, this Instrument applies to the sending of securityholder materials other than proxy-related materials on or after July 1, 2001.

10.4 NOBO Lists - No person or company shall be obliged to furnish a NOBO list under this Instrument before September 1, 2001.

Proxy Solicitation under NI 54-101