Securities Law

71-502 - Exemptions for Foreign Market Participants [BCI Proposed - Lapsed]

Published Date: 2004-06-21
Rescinded Date: 2006-05-31

Concurrently Published:

BC Instrument 71-502

Exemptions for Foreign Market Participants

Order under section 151 of theSecurities Act

Part 1 - Interpretation


Definitions

1 In this order:

“Act” means the Securities Act;

“BCI 62-502” means British Columbia Instrument 62-502 Takeover Bids and Issuer Bids;

“designated foreign jurisdiction” of an issuer means

(a) Australia,

(b) the United Kingdom, or

(c) the United States, if the issuer has a class of securities listed on the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market;

“exempt foreign issuer” means a foreign issuer that is a public issuer and has reporting obligations in a designated foreign jurisdiction substantially similar to those of a public issuer;

“foreign adviser” means an adviser based outside Canada that is authorized to act as an adviser by a foreign regulator;

“foreign dealer” means a dealer based outside Canada that is authorized to act as a dealer by a foreign regulator;

“foreign fund manager” means a fund manager that manages a foreign mutual fund and is regulated by a foreign regulator;

“foreign mutual fund” means a mutual fund whose securities are traded primarily outside Canada;

“foreign issuer” means an issuer, other than a mutual fund,

(a) whose principal market is outside Canada, if the issuer’s securities trade on a marketplace, or

(b) that is based in a jurisdiction outside Canada;

“foreign regulator” means an entity empowered by the laws of a jurisdiction outside Canada to regulate trading in securities or to regulate the securities industry;

“limited connection foreign issuer” means a foreign issuer that is not an exempt foreign issuer and that has less than 10% of its equity securities owned by residents of Canada;

“principal market” means,

(a) for an issuer based in Canada whose securities trade on a marketplace in Canada,

(i) Canada, or

(ii) a jurisdiction outside Canada whose marketplaces accounted for more than 60% of the annual trading volume of the issuer's securities over each of its two most recent financial years, and

(b) for an issuer not referred to in paragraph (a), the jurisdiction whose marketplaces accounted for the largest annual trading volume in the issuer's securities averaged over its two most recent financial years.

“rules” means the Securities Rules.

Part 2 - Foreign Dealers and Advisers

Exemption for foreign dealers

2 Section 14 of the Act [Registration requirement] does not apply to a foreign dealer if the trade is subject to the securities laws in the jurisdiction of its foreign regulator and complies with those laws as if the trade were being made to a person in that jurisdiction, and if

(a) the trade is with or on behalf of a person who is a resident of British Columbia and who was the dealer's client before the person became a resident of British Columbia, or

(b) the foreign dealer provides disclosure in the required form to a person who is a resident of British Columbia before the first time the dealer executes a trade with or on behalf of the person and does not

(i) advertise or engage in promotional activity that is directed to persons in British Columbia during the 6 months preceding the trade, or

(ii) pay any consideration to a person, other than to a client or purchaser or to a representative of the dealer outside British Columbia, in connection with a trade in a security in British Columbia.

Exemption for foreign advisers

3 Section 14 of the Act [Registration requirement] does not apply to a foreign adviser if it is subject to the securities laws in the jurisdiction of its foreign regulator and complies with those laws as if the advice were given to a person in that jurisdiction, and it

(a) advises a person who is a resident of British Columbia and who was the adviser's client before the person became a resident of British Columbia,

(b) advises a registered dealer or registered adviser, or

(c) provides disclosure in the required form to a person who is a resident of British Columbia before the first time the adviser advises the person and does not

(i) advertise or engage in promotional activity that is directed to persons in British Columbia during the 6 months before providing the advice, or

(ii) pay any consideration to a person, other than to a client or purchaser or to a representative of the adviser outside British Columbia, in connection with advice provided to a person in British Columbia.

Exemptions for foreign dealer or adviser registered in BC

4 A foreign dealer or foreign adviser that is also registered under the Act is exempt from sections 34 to 36 and sections 38 to 45 of the rules if it is subject to, and complies with, requirements relating to the same subject matter in the jurisdiction of a foreign regulator designated by the Commission.


Part 3 - Foreign Issuers

Exemptions for exempt foreign issuers

5 (1) An exempt foreign issuer is not required to comply with Part 4 of the Act [Offerings] or related rules with respect to an offering if it

(a) conducts the offering in accordance with the securities laws in a designated foreign jurisdiction or a province, as if the offering were being made to purchasers in that jurisdiction or province,

(b) sends any disclosure record in connection with the offering to purchasers in British Columbia at the same time and in the same manner as would be required if the offering were being made in that jurisdiction or province;

(c) files any disclosure record sent to purchasers in British Columbia, and

(d) includes in any disclosure record sent to purchasers in British Columbia a notice in the required form.

(2) Subsection (1) does not apply to an exempt foreign issuer that offers securities concurrently in British Columbia and under a prospectus in another province, if the commission is the principal regulator for the offering.

(3) An exempt foreign issuer is not required to comply with Part 5 of the Act [Continuous Disclosure], or related rules except sections 136, 138 and 139 of the rules [proxy requirements], if it

(a) is subject to, and complies with, the continuous disclosure requirements in its designated foreign jurisdiction,

(b) files a notice in the required form and either

(i) the continuous disclosure records it is required to file under the securities laws of its designated foreign jurisdiction, or

(ii) a document stating that the records referred to in subparagraph (i) are being filed with the foreign regulator in its designated foreign jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records, and

(c) sends without charge any continuous disclosure record to securityholders in British Columbia at the same time and in the same manner as it is required to send it to securityholders in the designated foreign jurisdiction.

(4) An exempt foreign issuer is not required to comply with Part 1C of the rules [Accounting and Auditing Principles and Standards] if the issuer is subject to, and complies with, the requirements in its designated foreign jurisdiction relating to the same subject matter.

(5) An exempt foreign issuer is not required to comply with Part 1D of the rules [Corporate Governance] if the issuer is subject to, and complies with, the requirements in its designated foreign jurisdiction relating to the same subject matter.

(6) A securityholder of an exempt foreign issuer is not required to comply with Division 2 of Part 5 of the Act [Insiders of Public Issuers] and related rules if the securityholder is subject to, and complies with, the insider reporting requirements in the exempt foreign issuer’s designated foreign jurisdiction.

(7) A person making a takeover bid for an exempt foreign issuer is not required to comply with BCI 62-502 if it

(a) is subject to, and complies with, the takeover bid requirements in the exempt foreign issuer's designated foreign jurisdiction as if it were a takeover bid in that jurisdiction,

(b) files a notice in the required form and either

(i) the records required to be filed under the requirements in paragraph (a), or

(ii) a document stating that the records referred to in subparagraph (i) have been filed with the foreign regulator in the issuer’s designated foreign jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records, and

(c) applies the takeover bid requirements in the issuer's designated foreign jurisdiction as if securityholders resident in British Columbia were resident in the designated jurisdiction.

(8) A person that solicits proxies from securityholders of an exempt foreign issuer is not required to comply with sections 136, 138 and 139 of the rules if it

(a) is subject to, and complies with, the requirements in the issuer’s designated foreign jurisdiction relating to information circulars, proxies and proxy solicitation,

(b) files a notice in the required form and either

(i) the records required to be filed under the requirements in paragraph (a), or

(ii) a document stating that the records referred to in subparagraph (i) have been filed with the foreign regulator in the issuer’s designated foreign jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records, and

(c) applies the requirements in the issuer's designated foreign jurisdiction as if securityholders resident in British Columbia were resident in the jurisdiction.

Multiple designated jurisdictions

6 For the purposes of this order, if an exempt foreign issuer has reporting obligations in more than one designated foreign jurisdiction that are substantially similar to those of a public issuer, it may choose which jurisdiction will be its designated foreign jurisdiction.

Exemptions for limited connection foreign issuers

7 (1) For the purposes of this section, the relevant jurisdiction for a limited connection foreign issuer is the jurisdiction of its principal marketplace or, if the issuer’s securities are not traded on a marketplace, the jurisdiction of its head office.

(2) A limited connection foreign issuer that is a public issuer is not required to comply with Part 5 of the Act [Continuous Disclosure], or related rules except sections 136, 138 and 139 [proxy requirements], if it

(a) is subject to, and complies with, the continuous disclosure requirements in its relevant jurisdiction,

(b) files a notice in the required form and either

(i) the continuous disclosure records it is required to file under the securities laws in its relevant jurisdiction, or

(ii) a document stating that the records referred to in subparagraph (i) are being filed with the foreign regulator in its relevant jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records , together with a notice in the required form, and

(c) sends without charge any continuous disclosure record to securityholders in British Columbia at the same time and in the same manner as it is required to send it to securityholders in its relevant jurisdiction.

(3) A limited connection foreign issuer is not required to comply with Part 1C of the rules [Accounting and Auditing Principles and Standards] if the issuer is subject to, and complies with, the requirements in its relevant jurisdiction relating to the same subject matter.

(4) A limited connection foreign issuer is not required to comply with Part 1D of the rules [Corporate Governance] if the issuer is subject to, and complies with, the requirements in its relevant jurisdiction relating to the same subject matter.

(5) A securityholder of a limited connection foreign issuer that is a public issuer is not required to comply with Division 2 of Part 5 of the Act [Insiders of Public Issuers] and related rules if the securityholder is subject to, and complies with, the insider reporting requirements in the issuer’s relevant jurisdiction.

(6) A person making a takeover bid for a limited connection foreign issuer is not required to comply with BCI 62-502 if it

(a) is subject to, and complies with, the takeover bid requirements in the issuer’s relevant jurisdiction as if it were a takeover bid in that jurisdiction,

(b) files a record in the required form and either

(i) the records required to be filed under the requirements in paragraph (a), or

(ii) a document stating that the records referred to in subparagraph (i) have been filed with the foreign regulator in the issuer’s relevant jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records, and

(c) applies the takeover bid requirements in the issuer’s relevant jurisdiction as if securityholders resident in British Columbia were resident in that jurisdiction.

(7) A person that solicits proxies from securityholders of a limited connection foreign issuer is not required to comply with sections 136, 138 and 139 of the rules if it

(a) is subject to, and complies with, the requirements in the issuer’s relevant jurisdiction relating to information circulars, proxies and proxy solicitation,

(b) files a notice in the required form and either

(i) the records required to be filed under the requirements in paragraph (a), or

(ii) a document stating that the records referred to in subparagraph (i) have been filed with the foreign regulator in the issuer’s relevant jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the records, and

(c) applies the requirements in the issuer’s relevant jurisdiction as if securityholders resident in British Columbia were resident in that jurisdiction.


Part 4 - Foreign Mutual Funds and Foreign Fund Managers

Exemption for foreign mutual funds and foreign fund managers

8 Section 14 [Registration requirement] and section 18 [Offering of securities] of the Act do not apply to a foreign mutual fund or a foreign fund manager if the foreign fund manager

(a) provides disclosure in the required form to a person who is a resident of British Columbia before the first time the foreign fund manager executes a trade in a security of a foreign mutual fund with or on behalf of the person,

(b) is subject to, and complies with, the laws in the jurisdiction of its foreign regulator as if the trade were being made to a person in that jurisdiction, and

(c) sends any disclosure record in connection with the fund to purchasers in British Columbia at the same time and in the same manner as it would be required to send the record to purchasers in the other jurisdiction.

unless the foreign fund manager
(d) advertises or engages in promotional activity that is directed to persons in British Columbia during the 6 months preceding the trade, or

(e) pays any consideration to a person, other than to a client or purchaser or to a representative of the foreign fund manager outside British Columbia, in connection with a trade in a security in British Columbia.


Part 5 - General Conditions for Exemptions

Availability of exemptions

9 The exemptions in this order are available only to a person that complies with the conditions set out in sections 10 to 14.

Filing in English

10 If a record that is filed is not written in English, it must be accompanied by an English translation.

Filing documents that have been sent

11 (1) An exempt foreign issuer, or a limited connection foreign issuer that is a public issuer, must file a notice in the required form and a record that it

(a) sends to its securityholders, or

(b) files with a marketplace, a regulatory organization or a regulator

if the record contains material information about the issuer that is not already filed with the commission.
(2) Despite subsection (1), an issuer may file, instead of the record, a document stating that the record has been filed with a regulator in a jurisdiction using an electronic system on which records are filed and available on the Internet on a reasonably continuous basis, with instructions on how to locate the record.

When records must be filed

12 (1) A foreign issuer must file a record under section 11 on the earlier of

(a) when the issuer sends the record to its securityholders, or

(b) when the issuer files the record with a marketplace, a regulatory organization, or a regulator.

(2) If an issuer chooses to file a document stating that a record is available on the Internet, the issuer must file the document as soon as practicable after the record is filed in the other jurisdiction.

Notice of intention to rely on exemptions

13(1) An exempt foreign issuer or a limited connection foreign issuer that intends to rely on the exemptions in this order must file a notice in the required form before the first time the issuer relies on an exemption in this order.

(2) An exempt foreign issuer that intends to rely on the exemptions in this order must submit to the jurisdiction of tribunals in British Columbia and appoint an agent for service of documents in British Columbia, in the required form referred to in subsection (1).

Change in status

14 (1) An exempt foreign issuer or limited connection foreign issuer relying on an exemption in this order must file a notice in the required form if it

(a) changes its name,

(b) changes its foreign issuer category,

(c) is an exempt foreign issuer and changes its designated jurisdiction,

(d) is a limited connection foreign issuer and changes its relevant jurisdiction, or

(e) decides to cease relying on an exemption in this order.

(2) A notice under subsection (1) must be filed as soon as practicable after the occurrence of any event referred to in subsection (1)(a) to (d) or the decision referred to in subsection (1)(e) being made.