CSA/ACVM NOTICE Consequential Amendments Arising from National Instrument 45-106 Prospectus and Registration Exemptions
and Repeal of National Instrument 32-101 Small Securityholder Selling and Purchase Arrangements, Multilateral Instrument 45-103 Capital Raising Exemptions, Multilateral Instrument 45-105 Trades to Employees, Senior Officers, Directors and Consultants and National Instrument 62-101 Control Block Distribution Issues
and Amendments to National Instrument 33-105 Underwriting Conflicts, National Instrument 45-101 Rights Offerings, National Instrument 62-103 The Early Warning System and Related Take-over Bid and Insider Reporting Issues and Multilateral Instrument 45-102 Resale of Securities
July 8, 2005 Implementation of NI 45-106-Related Consequential Amendments Effective September 14, 2005, the members of the Canadian Securities Administrators (CSA or we) are, in conjunction with the implementation of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106),
1. repealing • National Instrument 32-101 Small Securityholder Selling and Purchase Arrangements,
• Multilateral Instrument 45-103 Capital Raising Exemptions, • Multilateral Instrument 45-105 Trades to Employees, Senior Officers, Directors and Consultants, and
• National Instrument 62-101 Control Block Distribution Issues, 2. amending • National Instrument 33-105 Underwriting Conflicts (NI 33-105), • National Instrument 45-101 Rights Offerings (NI 45-101), and
Canadian Securities Autorités canadiennes Administrators en valeurs mobilières
-2- • National Instrument 62-103 The Early Warning System and Related Take-over Bid and Insider Reporting Issues (NI 62-103), and
3. amending and renaming Multilateral Instrument 45-102 Resale of Securities (New NI 45-102). The September 14, 2005 implementation date will permit securities regulatory authorities in British Columbia, Ontario, Nova Scotia and Saskatchewan to obtain the ministerial approvals required under their rule-making procedures before NI 45-106 and related repeals and consequential amendments to these national and multilateral instruments can come into effect.
NI 45-106 and related repeals and consequential amendments to national and multilateral instruments will be implemented as
rules in Alberta, Manitoba, Ontario, Prince Edward Island, Nova Scotia, New Brunswick and Newfoundland and Labrador,
blanket orders or rules in British Columbia, regulations in Quebec, commission regulations in Saskatchewan, and policies or codes in the Northwest Territories, Nunavut and Yukon. The text of the repeals and consequential amendments are being published concurrently with this notice and will be available on websites of CSA members, including the following: www.albertasecurities.com www.bcsc.bc.ca www.osc.gov.on.ca www.lautorite.qc.ca
Notice of amendments to local securities legislation together with a notice that identifies remaining local exemptions for each jurisdiction will be published separately in each jurisdiction.
Background The CSA published NI 45-106 together with proposed consequential repeals and amendments to certain national and multilateral instruments on December 17, 2004. The comment period ended March 17, 2005. We received 30 written submissions in response to our request for comments, most of which related to NI 45-106. The majority of comments were favourable. See “Summary of Changes” below for a description of changes made to the national and multilateral instruments listed above as a result of comments received.
NI 45-106 consolidates and harmonizes the prospectus and registration exemptions contained in various provincial statutes and national, multilateral and local instruments into a single national instrument, while related consequential amendments and repeals will facilitate the consolidation and harmonization of existing exemptions and the associated resale, disclosure and filing requirements.
At present, most jurisdictions have a similar but not identical set of exemptions. Market participants that wish to effect a multi-jurisdictional exempt distribution must familiarize
-3- themselves with the various exempt distribution regimes of the relevant jurisdictions. This typically necessitates culling through the various acts, regulations and rules of the different jurisdictions. On implementation of NI 45-106, market participants will generally have to look no further than NI 45-106 for available exemptions.
Summary of Written Comments Received by the CSA We received submissions from 19 commenters during the 90 day comment period and additional submissions from 11 commenters after the comment period ended. We have considered the comments received and thank all of the commenters. The names of commenters and a summary of their comments relating to the proposed repeals and consequential amendments, together with our responses, are contained in Appendices A and B to this notice.
After considering the comments received, we have made a number of changes to both NI 45-106 and to New NI 45-102. As these changes are not material, we are not republishing NI 45-106 or New NI 45-102 for a further comment period.
Summary of Changes to Proposed Consequential Amendments This section describes changes made to the proposed consequential amendments to various national and multilateral instruments published for comment on December 17, 2004 concurrently with NI 45-106. While the consequential amendments to NI 33-101 remain unchanged from those published previously, the CSA has made changes to New NI 45-102 in response to comments received as well as several minor drafting changes to NI 45-101 and NI 62-103.
Amendments to New NI 45-102 1. We have added wording to the Ontario-prong of the definition of private issuer to clarify that this prong is necessary to facilitate the resale of securities acquired under the “private issuer” exemption as it existed in 1998 OSC Rule 45-501 (as defined in the Ontario provisions of Appendix D of New NI 45-102).
2. We have eliminated proposed section 2.15 [Resale by Promoters in Ontario] and Appendix G [Promoters] as Ontario intends to remove the separate resale treatment for promoters that is currently contained in section 6.1 of OSC Rule 45-501.
3. We have revised the list of exemptions in Appendices D, E and F to reflect numbering and other changes (such as the elimination of the incorporation exemption) to the exemptions contained in NI 45-106.
Amendments to NI 45-101 1. We have repealed and replaced the definition of acceptance date in Part 1 to remove the Quebec-prong of the definition to reflect recent amendments to the Securities Act (Quebec) that brought the notice requirement into conformity with the 10-day notice period in all other jurisdictions.
Amendments to NI 62-103 1. We are repealing clause (f) in the definition of applicable provisions in Part 1 referring to section 2.1 of NI 62-101 as that instrument is being repealed concurrently with the implementation of NI 45-106.
-4- 2. We are repealing clause (b) in section 6.1(1) and (2) referring to transactions effected under NI 32-101 as that instrument is being repealed concurrently with the implementation of NI 45-106.
Adoption of NI 33-105 in Saskatchewan National Instrument 33-105 Underwriting Conflicts (NI 33-105) is not currently in effect in Saskatchewan. The Saskatchewan Financial Services Commission concurrently published a local notice seeking comment on NI 33-105 with proposed amendments when the CSA published NI 45-106 and related proposed repeals and consequential amendments to various national and multilateral instruments on December 17, 2004. As the Saskatchewan Financial Services Commission received no comments, NI 33-105 will come into effect in Saskatchewan concurrently with NI 45-106.
Text of Repeals and Consequential Amendments to National and Multilateral Instruments The text of the repeals and consequential amendments to the national and multilateral instruments referred to above are found following the Appendices in Schedules 1 to 6.
Questions Questions relating to the repeals and consequential amendments outlined in this notice may be referred to:
Leslie Rose Senior Legal Counsel, Capital Markets Regulation British Columbia Securities Commission (604) 899- 6654 lrose@bcsc.bc.ca
Marsha Manolescu Deputy Director, Legislation Alberta Securities Commission (403) 297-2091 marsha.manolescu@seccom.ab.ca
Dean Murrison Deputy Director, Legal/Registration Securities Division Saskatchewan Financial Services Commission (306) 787-5879 dmurrison@sfsc.gov.sk.ca
Chris Besko Legal Counsel -Deputy Director The Manitoba Securities Commission (204) 945-2561 cbesko@gov.mb.ca
Jo-Anne Matear Senior Legal Counsel, Corporate Finance Branch Ontario Securities Commission (416) 593-2388 jmatear@osc.gov.on.ca
-5- Ilana Singer Legal Counsel, Corporate Finance Branch Ontario Securities Commission (416) 593-2388 isinger@osc.gov.on.ca
David Chasson Legal Counsel, Corporate Finance Ontario Securities Commission (416) 595-8945 dchasson@osc.gov.on.ca
Rosetta Gagliardi Conseillère en réglementation Autorité des marchés financiers (514) 395-0558, poste 4462 rosetta.gagliardi@lautorite.qc.ca
Sylvie Lalonde Conseillère en réglementation Autorité des marchés financiers (514) 395-0558, poste 4398 sylvie.lalonde@lautorite.qc.ca
Shirley Lee Staff Solicitor Nova Scotia Securities Commission (902) 424-5441 leesp@gov.ns.ca
Christina Taylor New Brunswick Securities Commission (506) 658-3117 christina.taylor@nbsc-cvmnb.ca
Katharine Tummon Legal Counsel Prince Edward Island Securities Office (902) 368-4542 kptummon@gov.pe.ca
Susan W. Powell Program & Policy Development Securities Commission of Newfoundland and Labrador Government of Newfoundland and Labrador (709) 729-4875 spowell@gov.nl.ca
-6- Tony S. K. Wong, Registrar, Securities & Corporate Registries Northwest Territories Securities Registry (867) 920-3318 tony_wong@gov.nt.ca
Gary Crowe, Registrar of Securities Government of Nunavut, Justice Department (867) 975-6190 gcrowe@gov.nu.ca
Richard Roberts, Registrar of Securities Government of Yukon (867) 667-5225 richard.roberts@gov.yk.ca
-7- Appendix A to Notice
List of Commenters on NI 45-106 Related Repeals and Consequential Amendments to Various National and Multilateral Instruments
1. Simon Romano (Stikeman Elliott) letter dated December 20, 2004 2. Securities Transfer Association of Canada letter dated February 21, 2005 3. Borden Ladner Gervais letter dated March 21, 2005
-8- Appendix B to Notice
Summary of Comments Received on Proposed Repeals and Consequential Amendments to Various National and Multilateral Instruments and Response of the Canadian Securities Administrators
A. Introductions On December 17, 2004, the CSA concurrently published NI 45-106 and related repeals and consequential amendments to various national and multilateral instruments for comment.
The CSA received 30 submissions on NI 45-106 and related repeals and consequential amendments. We have considered the comments received and thank all of the commenters for providing their comments. The following is a summary of the comments relating to the proposed repeals and consequential amendments to various national and multilateral instruments, together with the CSA’s responses.
Instrument and Section Summary of Issues Private One commenter indicates a preference Issuer - for the private issuer definition for section Ontario to “return to its roots” and refer 2.4(1) to registered, rather than beneficial, holders. The same commenter questions why joint registered holders are deemed to be a single beneficial owner, as they may be jointly held (as in a trust situation) for a number of beneficial owners.
Accordingly, the CSA do not intend to revise the Ontario-prong of the definition of private issuer in the manner suggested by the commenter.
“Ordinary One commenter thinks it is inappropriate The CSA acknowledge the comment Course” from a policy perspective for public Resale security holders following a merger
CSA Responses The Ontario-prong of the definition of private issuer in New NI 45-102 mirrors the definition of private issuer as it existed in 1998 OSC Rule 45-501 (as that term is defined in the Ontario transitional provisions of Appendix D to New NI 45-102) prior to its repeal in November, 2001. The Ontario-prong of the definition is a necessary transitional provision to facilitate the resale of securities acquired under the “old” private issuer exemption in 1998 OSC Rule 45-501.
We have added wording to the Ontario-prong of the definition of private issuer to clarify the limited circumstances in which this prong will apply. but note that the “ordinary course” resale restrictions found in items 5.
-9- Instrument and Section Summary of Issues Restrictions transaction (such as the amalgamation - sections of two issuers) to be subject to “ordinary 2.5(2) and course” resale restrictions such as those New NI 45-102. These resale 2.5(3) of contained in items 5 and 6 of section New NI 45- 2.5(2) of New NI 45-102. 102 Resale of Securities (NI 45-102)
Pledgees - One commenter suggests that a section clarification be added to item 5. of 2.8(2) of section 2.8(2) of New NI 45-102 that the New NI 45- reference to selling security holder does 102 not apply to pledgees as the term selling to apply to a selling securityholder. If security holder can sometimes be used to describe pledgees. Underwriters One commenter questions what will Transitional happen to the resale restrictions that provisions - apply to underwriters who took options Appendices or other securities under the accredited D & F of investor exemption in effect today. New NI 45- 102
Resale by One commenter questions the need to Promoters in maintain the status quo for promoters Ontario - who may have previously acquired section 2.15 securities with the expectation that they of New NI would be subject to control block type 45-102 restrictions (under s. 6.1 of current OSC
CSA Responses and 6. of section 2.5(2) and items 3. and 4. of section 2.6(3) are not new to restrictions have been part of Multilateral Instrument 45-102 Resale of Securities since its inception in November 2001 and were carried-over from statutory resale provisions in the securities legislation of most jurisdictions.
We also note that securities exchanged in connection with a merger transaction in reliance on the exemption in section 2.11 of NI 45-106 would be subject to the resale restrictions in section 2.6 of New NI 45-102. We do not believe that item 5 of section 2.8(2) is confusing as currently worded or that it requires clarification. Item 5 is intended only item 5 was intended to apply to lenders, pledgees, mortgagees or other encumbrancers, pledgees would have been specifically included as is the case in item 2 of section 2.8(2). Underwriters who acquired options or other securities under the accredited investor exemption in section 5.1 of Multilateral Instrument 45-103 Capital Raising Exemptions (MI 45-103) will look to the transitional provisions listed in Appendix D of New NI 45-102 for applicable resale restrictions. These securities will continue to be subject to a 4 month restricted and seasoning period under section 2.5 of NI 45-102.
We acknowledge the comment. We intend to remove the separate resale treatment for promoters that is contained in section 6.1 of current OSC Rule 45-501. This will mean proposed section 2.15 and Appendix
-10- Instrument and Section Summary of Issues Rule 45-501) in light of the decision not to impose these additional restrictions on promoters in the future.
CSA Responses G in the December 2004 publication draft of New NI 45-102 will be eliminated from the final version of New NI 45-102.
-11- SCHEDULE 1 REPEAL OF NATIONAL INSTRUMENT 32-101 Small Securityholder Selling and Purchase Arrangements and NATIONAL INSTRUMENT 62-101 Control Block Distribution Issues and MULTILATERAL INSTRUMENT 45-103 Capital Raising Exemptions and MULTILATERAL INSTRUMENT 45-105 Trades to Employees, Senior Officers, Directors, and Consultants
PART 1 REPEAL OF NATIONAL INSTRUMENT 32-101 1.1 Repeal - National Instrument 32-101 Small Securityholder Selling and Purchase Arrangements is repealed.
PART 2 REPEAL OF NATIONAL INSTRUMENT 62-101 2.1 Repeal - National Instrument 62-101 Control Block Distribution Issues is repealed. PART 3 REPEAL OF MULTILATERAL INSTRUMENT 45-103 3.1 Repeal - Multilateral Instrument 45-103 Capital Raising Exemptions is repealed. PART 4 REPEAL OF MULTILATERAL INSTRUMENT 45-105 4.1 Repeal - Multilateral Instrument 45-105 Trades to Employees, Senior Officers, Directors, and Consultants is repealed.
PART 5 EFFECTIVE DATE 5.1 Effective Date - These repeals are effective September 14, 2005.
-12- SCHEDULE 2 AMENDMENTS TO NATIONAL INSTRUMENT 33-105 Underwriting Conflicts PART 1 AMENDMENTS TO NATIONAL INSTRUMENT 33-105 1.1 Amendments - National Instrument 33-105 Underwriting Conflicts (NI 33-105) is amended by:
(a) in clause (b) of section 3.1, striking and replacing “a provision listed in Appendix B” with:
“section 2.8 of National Instrument 45-102 Resale of Securities”; (b) repealing and replacing Appendix A with: Appendix A - Exempt Securities Jurisdiction All
Alberta Section 87(h), (h.1) and (h.2) of the Securities Act (Alberta)
British Columbia Section 46 of the Securities Act (British Columbia)
Manitoba Subsection 19(2)(g) and (h) of the Securities Act (Manitoba)
Newfoundland and Labrador Subsections 36(2)(h) and (i) of the Securities Act (Newfoundland and Labrador)
Nova Scotia Clause 41(2)(i) of the Securities Act (Nova Scotia)
Ontario Sections 2.4 to 2.6 of OSC Rule 45-501 Prince Edward Island Subsection 2(4)(f) and (g) of the Securities Act (Prince Edward Island)
Quebec Section 41 of the Securities Act (Quebec) Saskatchewan Subsection 39(2)(i) and (j) of The Securities Act, 1988 (Saskatchewan)
Securities Legislation Reference Sections 2.20, 2.21 and 2.34 to 2.39 of National Instrument 45-106 Prospectus and Registration Exemptions
-13- (c) repealing Appendix B. PART 2 EFFECTIVE DATE 2.1 Effective Date - This amendment is effective September 14, 2005.
-14- SCHEDULE 3 AMENDMENTS TO NATIONAL INSTRUMENT 45-101 Rights Offerings PART 1 AMENDMENTS TO NATIONAL INSTRUMENT 45-101 1.1 Amendment - National Instrument 45-101 Rights Offerings is amended by (a) repealing the definition of acceptance date in Part 1 and substituting: "acceptance date" means (i) the date that is 10 days after the date the issuer gives the notice referred to in the rights offering prospectus exemption, or
(ii) if the reviewing authority has objected to the proposed trade under the rights offering prospectus exemption, the date the reviewing authority notifies the issuer by written notice that it no longer objects to the use of the rights offering prospectus exemption;
(b) repealing the definition of “rights offering” in Part 1 and substituting: “rights offering” means the issuance by an issuer to existing security holders of a right to purchase additional securities of the issuer’s own issue.
PART 2 EFFECTIVE DATE 2.1 Effective Date - This amendment is effective September 14, 2005.
-15- SCHEDULE 4 AMENDMENTS TO NATIONAL INSTRUMENT 62-103 The Early Warning System and Related Take-over Bid and Insider Reporting Issues
PART 1 AMENDMENTS TO NATIONAL INSTRUMENT 62-103 1.1 Amendment - National Instrument 62-103 The Early Warning System and Related Take-over Bid and Insider Reporting Issues is amended by:
(a) in the definition of “applicable provisions” in section 1.1, striking clause (f); (b) repealing subsection (1) of section 6.1 and substituting: (1) An entity is exempt from the early warning requirements and the obligation to report under Part 4 in connection with an increase in the securityholding percentage of the entity in a class of securities of a reporting issuer that arises without any action being taken by the entity and solely from a reduction in outstanding securities that occurs as a result of redemptions, retractions or other repurchases by the reporting issuer, that affect or are offered to all security holders of the relevant class.
(c) repealing subsection (2) of section 6.1 and substituting: (2) An entity is exempt from the early warning requirements and the obligation to report under Part 4 in connection with a decrease in the securityholding percentage of the entity in a class of securities of a reporting issuer that arises without any action being taken by the entity and solely from an increase in outstanding securities that occurs as a result of treasury issuances of securities by the reporting issuer.
(d) in Appendix A (i) under the Alberta securities legislative reference, striking and replacing “Clause 1(f)(iii) of the Securities Act (Alberta)” with:
“Clause 1(p)(iii) of the Securities Act (Alberta)” (ii) under the New Brunswick securities legislative reference, striking and replacing “Paragraph (b) of the definition of “primary distribution to the public” contained in section 1 of the Securities Frauds Prevention Act (New Brunswick)” with:
“Paragraph (c) of the definition of “distribution” contained in section 1(1) of the Securities Act (New Brunswick)” and
-16- (iii) adding the following jurisdiction and securities legislative reference after Ontario:
“Quebec Subparagraph 9 of the definition of “distribution” contained in section 5 of the Securities Act (Quebec)”
(e) in Appendix B (i) under the Alberta securities legislative reference, striking and replacing “Subsections 141(1), 141(2) and 141(3) of the Securities Act (Alberta)” with:
“Subsections 176(1), 176(2) and 176(3) of the Securities Act (Alberta)” (ii) adding the following jurisdiction and securities legislative reference after Manitoba:
“New Brunswick Subsection 126(1) and (2) of the Securities Act (New Brunswick)”
PART 2 EFFECTIVE DATE 2.1 Effective Date - These amendments are effective September 14, 2005.
-17- SCHEDULE 5 Amendments to Multilateral Instrument 45-102 Resale of Securities PART 1 AMENDMENTS TO MULTILATERAL INSTRUMENT 45-102 1.1 Amendment - Multilateral Instrument 45-102 Resale of Securities (MI 45-102) is amended by:
(a) in MI 45-102, striking “Multilateral Instrument 45-102” and substituting “National Instrument 45-102” as follows:
(i) in the title of the instrument, and (ii) in the title of Appendix B and C; (b) in section 1.1, (i) repealing the definition of “former MI 45-102”, (ii) repealing and replacing the definition of “MI 45-102” with: “MI 45-102” means Multilateral Instrument 45-102 Resale of Securities that came into force on March 30, 2004;
(iii) repealing and replacing the definition of “MI 45-103” with: “MI 45-103” means Multilateral Instrument 45-103 Capital Raising Exemptions that came into force on June 6, 2003;
(iv) repealing and replacing the definition of “MI 45-105” with the following: “MI 45-105” means Multilateral Instrument 45-105 Trades to Employees, Senior Officers, Directors and Consultants that came into force on August 15, 2003;
(v) adding the following after the definition of “multiple convertible security”: “NI 45-106” means National Instrument 45-106 Prospectus and Registration Exemptions;
(vi) repealing and replacing the definition of “private company” with the following:
“private company” has the same meaning as in securities legislation; (vii) repealing and replacing the definition of “private issuer” with: “private issuer” means, as the context requires, (a) a private issuer as defined in securities legislation,
-18- (b) a private issuer as defined in NI 45-106, or (c) in Ontario, for purposes of the definition of private issuer as it existed in 1998 OSC Rule 45-501 (as defined in the Ontario transitional provisions in Appendix D) prior to its repeal on November 30, 2001, a person that
(i) is not a reporting issuer or a mutual fund, (ii) is an issuer all of whose issued and outstanding shares (A) are subject to restrictions on transfer contained in the constating documents of the issuer or one or more agreements among the issuer and the holders of its securities; and
(B) are beneficially owned, directly or indirectly, by not more than 50 persons or companies counting any two or more joint registered holders as one beneficial owner, exclusive of persons
(I) that are employed by the issuer or an affiliated entity of the issuer, or
(II) that beneficially owned, directly or indirectly, shares of the issuer while employed by it or an affiliated entity of it and at all times since ceasing to be so employed have continued to beneficially own, directly or indirectly, at least one share of the issuer, and
(iii) has not distributed any securities to the public; (viii) repealing and replacing the definition of “SEDAR” with: “SEDAR” has the same meaning as in National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR);
(ix) adding the following after the definition of “SEDAR”: “trade”, in Quebec, has the same meaning as in NI 45-106; and (c) amending section 2.1 by striking “New Brunswick and the Yukon Territory” and substituting “and Yukon”;
(d) amending item 3. of section 2.5 (2) by adding “ or on or after [insert effective date of NI 45-106] in Quebec,” after “ March 30, 2004,”
(e) amending item 3.(a) and (b) by adding “and, in Quebec, the securities regulatory authority,” after “regulator”,
-19- (f) amending section 2.5(3) by adding “and, in Quebec, the securities regulatory authority,” after “regulator”,
(g) repealing and replacing section 2.7 with: 2.7 Exemption for a Trade if the Issuer Becomes a Reporting Issuer After the Distribution Date - Item 1 of subsection 2.5(2), 2.6(3) or 2.8(2) does not apply if the issuer became a reporting issuer after the distribution date by filing a prospectus in a jurisdiction listed in Appendix B and is a reporting issuer in a jurisdiction of Canada at the time of the trade.
(h) amending section 2.8 by repealing subsection (5); (i) amending section 2.9 by repealing and replacing subsection (1) with: (1) In determining the period of time that an issuer was a reporting issuer in a jurisdiction of Canada for the purposes of section 2.5, 2.6 or 2.8, if the issuer was a party to an amalgamation, merger, continuation or arrangement, the selling security holder may include the period of time that one of the parties to the amalgamation, merger, continuation or arrangement was a reporting issuer in a jurisdiction of Canada immediately before the amalgamation, merger, continuation or arrangement.
(j) in Form 45-102F1, (A) striking “MI 45-102” and substituting “NI 45-102” in the title and in the Notice to selling security holders - collection and use of personal information, and
(B) adding the following Quebec contact information to the Notice to selling security holders - collection and use of personal information:
Autorité des marchés financiers Tour de la Bourse 800 square Victoria C.P. 246, 22e étage Montréal, Québec H4Z 1G3 Attention: Responsable de l'accès à l'information
(k) repealing Appendices A, D, E and F and replacing them with the appendices (new Appendices A, D, E and F) in the attached Schedule 4.
PART 2 EFFECTIVE DATE 2.1 Effective Date - These amendments are effective September 14, 2005.
-20- APPENDIX A TO NATIONAL INSTRUMENT 45-102 RESALE OF SECURITIES
CONTROL DISTRIBUTIONS JURISDICTION SECURITIES LEGISLATION REFERENCE Alberta Definition of "control person" in section 1(l) and subclause (iii) of the definition of "distribution" contained in section 1(p) of the Securities Act (Alberta)
British Columbia Paragraph (c) of the definition of "distribution" contained in section 1(1) of the Securities Act (British Columbia)
Manitoba Paragraph (b) of the definition of "primary distribution to the public" contained in subsection 1(1) of the Securities Act (Manitoba)
Newfoundland and Clause 2(1)(l)(iii) of the Securities Act (Newfoundland and Labrador Labrador) New Brunswick Definition of “control person” and clause (c) of the definition of “distribution” contained in subsection 1(1) of the Securities Act (New Brunswick)
Northwest Definition of "control person" and paragraph (iii) of the Territories definition of "distribution" contained in subsection 1(1) of Blanket Order No. 1 of the Registrar of Securities.
Nova Scotia Clause 2(1)(l)(iii) of the Securities Act (Nova Scotia) Nunavut Definition of "control person" and paragraph (iii) of the definition of "distribution" contained in subsection 1(1) of Blanket Order No. 1 of the Registrar of Securities.
Ontario Paragraph (c) of the definition of "distribution" contained in subsection 1(1) of the Securities Act (Ontario)
Prince Edward Island Clause (iii) of the definition of "distribution" in section 1 of the Securities Act (Prince Edward Island)
Quebec Paragraph 9 of the definition of “distribution” contained in section 5 of the Securities Act (Quebec)
Saskatchewan Subclauses 2(1)(r)(iii), (iv) and (v) of The Securities Act, 1988 (Saskatchewan)
-21- APPENDIX D TO NATIONAL INSTRUMENT 45-102 RESALE OF SECURITIES
RESTRICTED PERIOD TRADES (Section 2.3)
Except in Manitoba and the Yukon, the following exemptions from the prospectus requirement in NI 45-106: • subsection 2.3(2) [Accredited investor] • subsection 2.5(2) [Family, friends and business associates] (except in Ontario) • subsection 2.7(2) [Founder, control person and family] (Ontario) • subsection 2.8(2) [Affiliates] • subsection 2.9(3) [Offering memorandum] (in British Columbia, New Brunswick, Nova Scotia, and Newfoundland and Labrador) • subsection 2.9(5) [Offering memorandum] (in Alberta, Manitoba, Northwest Territories, Nunavut, Prince Edward Island, Quebec and Saskatchewan) • subsection 2.10(2) [Minimum amount investment] • subsection 2.12(2) [Asset acquisition] • subsection 2.13(2) [Petroleum, natural gas and mining properties] • subsection 2.14(2) [Securities for debt] • subsection 2.19(2) [Additional investment in investment funds] • subsection 2.30(2) [Isolated trade by issuer] • subsection 2.40(2) [RRSP/RRIF], if the security acquired under section 2.40 was initially acquired by an individual or an associate of the individual or an RRSP or RRIF established for or by that individual or under which that individual is a beneficiary under (a) one of the exemptions listed above, (b) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of this Instrument, or (c) an exemption from the prospectus requirement that specified prior to the [insert effective date of NI 45-106] that the first trade was subject to section 2.5 of MI 45-102 • subsection 2.42(3) [Conversion, exchange or exercise] if the security acquired in the circumstances referred to in clause (a) of subsection 2.42 (1) was acquired in accordance with the terms and conditions of a previously issued security under (a) one of the exemptions listed above, (b) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of this Instrument, or (c) an exemption from the prospectus requirement that specified prior to the [insert effective date of NI 45-106] that the first trade was subject to section 2.5 of MI 45-102 • section 5.2 [TSX Venture exchange offering], if the security acquired under section 5.2 was acquired by (a) a purchaser that, at the time the security was acquired, was an insider or promoter of the issuer of the security, the issuer’s underwriter, or a member of the underwriter’s “professional group” (as defined in National Instrument 33-105 Underwriting Conflicts), or
(b) any other purchaser who purchases securities in excess of $40,000.
-22- as well as the following local exemptions from the prospectus requirement: • section 3.1 of Alberta Securities Commission Rule 72-501 Distributions to Purchasers Outside Alberta
• clauses 77(1)(u) and (w) and subclauses 77(1)(ab)(ii) and (iii) of the Securities Act (Nova Scotia)
• an exemption from the prospectus requirement in a jurisdiction of Canada that specifies that the first trade is subject to section 2.5 of NI 45-102
Transitional Provisions 1. General: An exemption from the prospectus requirement listed in Appendix D of MI 45-102 in effect on March 30, 2004 or an exemption from the prospectus requirement that specified prior to [insert effective date of NI 45-106] that the first trade was subject to section 2.5 of MI 45-102. The exemptions listed in Appendix D on March 30, 2004 were:
♦ Sections 131(1)(b), (c), (l), and (m) of the Securities Act (Alberta) ♦ Section 122(d) and 122.2 of the Alberta Securities Commission Rules, section 3.1 of Alberta Securities Commission Rule 72-501 Distributions to Purchasers Outside Alberta, subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103 or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Section 131(1)(f)(iii) of the Securities Act (Alberta), if the right to purchase, convert or exchange was previously acquired under one of the above-listed exemptions under the Securities Act (Alberta), the Alberta Securities Commission Rules or MI 45-103, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Sections 74(2)(1) to (6), (16), (18), (19), (23) and (25) of the Securities Act (British Columbia) ♦ Sections 128(a), (b), (c), (e), (f) and (h) of the Securities Rules (British Columbia) and subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103 or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Sections 74(2)(11)(ii), 74(2)(11)(iii) and 74(2)(13) of the Securities Act (British Columbia) if the security acquired by the selling security holder or the right to purchase, convert or exchange or otherwise acquire, was initially acquired by a person or company under any of the sections of the Securities Act (British Columbia), the Securities Rules (British Columbia) or MI 45-103 referred to in this Appendix, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Section 74(2)(12) of the Securities Act (British Columbia) if the security acquired by the selling security holder under the realization on collateral was initially acquired by a person or company under any of the sections of the Securities Act (British Columbia), the Securities Rules (British Columbia) or MI 45-103 referred to in this Appendix, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
-23- ♦ Clauses 54(3)(f) and (g) and 73(1)(a), (b), (c), (d), (h), (l), (m), (p) and (q) of the Securities Act (Newfoundland and Labrador), subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103, or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subclause 73(1)(f)(iii) of the Securities Act (Newfoundland and Labrador) if the right to purchase, convert or exchange was previously acquired under one of the above listed exemptions under the Securities Act (Newfoundland and Labrador) or MI 45-103, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Paragraphs 3(a), (b), (c), (k), (l), (m), (r), (s), (t), (u), (w) and (z) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories), subsections 3.1(2), 4.1(2), 4.1(4), 5.1(2) of MI 45-103 or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subparagraph 3(e)(iii) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories) if the right to purchase, convert or exchange was previously acquired under one of the above-listed exemptions under Blanket Order No. 1 of the Registrar of Securities (Northwest Territories) or MI 45-103, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Clauses 77(1)(a), (b), (c), (d), (l), (m), (p), (q), (u), (w), (y), (ab) and (ad) of the Securities Act (Nova Scotia), subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103 or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subclause 77(1)(f)(iii) of the Securities Act (Nova Scotia) if the right to purchase, convert or exchange was previously acquired under one of the above listed exemptions under the Securities Act (Nova Scotia) or MI 45-103, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Paragraphs 3(a), (b), (c), (k), (l), (m), (r), (s), (t), (u), (w) and (z) of Blanket Order No.1 of the Registrar of Securities (Nunavut), subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103 or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subparagraph 3(e)(iii) of Blanket Order No.1 of the Registrar of Securities (Nunavut) if the right to purchase, convert or exchange was previously acquired under one of the above-listed exemptions under Blanket Order No. 1 of the Registrar of Securities (Nunavut) or MI 45-103, or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Clauses 13(1)(a), (b), (c), (g) and (i) of the Securities Act (Prince Edward Island), subsections 3.1(2), 4.1(2), 4.1(4), and 5.1(2) of MI 45-103 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subclause 13(1)(e)(iii) of the Securities Act (Prince Edward Island) if the right to purchase, convert or exchange was previously acquired under one the above-listed exemptions under
-24- the Securities Act (Prince Edward Island) or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Subclauses 81(1)(f)(iii) and (iv) of The Securities Act, 1988 (Saskatchewan) if the convertible security, exchangeable security or multiple convertible security was acquired under one of the exemptions of The Securities Act, 1988 (Saskatchewan) or MI 45-103 referred to in this Appendix or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
♦ Clause 81(1)(e) of The Securities Act, 1988 (Saskatchewan) if the person or company from whom the securities were acquired obtained the securities under one of the exemptions of The Securities Act, 1988 (Saskatchewan) referred to in this Appendix
2. Quebec Provisions ♦ Sections 43, 47, 48 and 51 of the Securities Act (Quebec) as they read prior to their amendment or repeal by section 7 and 8 of An Act to amend the Securities Act and other legislative provisions
♦ Prospectus and registration exemptions granted pursuant to section 263 of the Securities Act (Quebec) before March 30, 2004 if the exemption included as a condition a restricted period of 12 months
3. Ontario Provisions Definitions In this Appendix “1998 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on December 22, 1998;
“2001 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on November 30, 2001;
“2004 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on January 12, 2004;
“2005 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions that came into force on September 14, 2005;
“convertible security” means, in Ontario, a security of an issuer that is convertible into, or carries the right of the holder to purchase, or of the issuer to cause the purchase of, a security of the same issuer;
“exchangeable security” means, in Ontario, a security of an issuer that is exchangeable for, or carries the right of the holder to purchase, or the right of the issuer to cause the purchase of, a security of another issuer;
“exchange issuer” means, in Ontario, an issuer that distributes securities of a reporting issuer held by it in accordance with the terms of an exchangeable security of its own issue;
-25- “multiple convertible security” means, in Ontario, a security of an issuer that is convertible into or exchangeable for, or carries the right of the holder to purchase, or of the issuer or exchange issuer to cause the purchase of, a convertible security, an exchangeable security or another multiple convertible security;
“OSC Rule 45-502” means Ontario Securities Commission Rule 45-502 Dividend or Interest Reinvestment and Stock Dividend Plans;
“Type 1 trade” means, in Ontario, a distribution in a security under an exemption from the prospectus requirement in:
(a) clause 72(1)(a), (b), (c), (d), (l), (m), (p) or (q) of the Securities Act (Ontario); (b) section 2.4, 2.5 or 2.11 of the 1998 OSC Rule 45-501; (c) section 2.3, 2.12, 2.13 or 2.14 of the 2001 OSC Rule 45-501; or (d) section 2.3, 2.12, 2.13, 2.14 or 2.16 of the 2004 OSC Rule 45-501; and “underlying security” means, in Ontario, a security issued or transferred, or to be issued or transferred, in accordance with the terms of a convertible security, an exchangeable security or a multiple convertible security.
(a) Securities Act (Ontario) Clauses 72(1)(a), (b), (c), (d), (l), (m), (p) and (q) of the Securities Act (Ontario) and subclause 72(1)(f)(iii) of the Securities Act (Ontario) if the right to purchase, convert or exchange was previously acquired under one of the above-listed exemptions under the Securities Act (Ontario), or an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.5 of MI 45-102
(b) 2005 OSC Rule 45-501 Section 2.1 of the 2005 OSC Rule 45-501
Section 2.2 of the 2005 OSC Rule 45-501 (c) 2001 OSC Rule 45-501 and 2004 OSC Rule 45-501 Section 2.3 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 Section 2.11 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 if section 2.5 of MI 45-102 would have been applicable to a first trade in that security by the person making the exempt distribution under section 2.11 of the 2001 OSC Rule 45-501 or the 2004 OSC Rule 45-501.
Section 2.12 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 Section 2.13 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 Section 2.14 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 Section 2.16 of the 2004 OSC Rule 45-501
-26- (d) 1998 OSC Rule 45-501 Section 2.4 of the 1998 OSC Rule 45-501
Section 2.5 of the 1998 OSC Rule 45-501 Section 2.11 of the 1998 OSC Rule 45-501 (e) Other Any provision under which an underlying security was distributed on conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired in a Type 1 trade or in a trade under section 2.4, 2.5 or 2.11 of the 1998 OSC Rule 45-501.
-27- APPENDIX E TO NATIONAL INSTRUMENT 45-102 RESALE OF SECURITIES
SEASONING PERIOD TRADES (Section 2.4)
Except in Manitoba and the Yukon, the following exemptions from the prospectus requirement in NI 45-106: • subsection 2.1(2) [Rights offering] • subsection 2.2(4) [Reinvestment plan] • subsection 2.4(2) [Private issuer] • subsection 2.11(2) [Business combination and reorganization] • subsection 2.16(2) [Take-over bid and issuer bid] • subsection 2.17(2) [Offer to acquire to security holder outside local jurisdiction] • subsection 2.18(6) [Investment fund reinvestment] • subsection 2.20(2) [Private investment club] • subsection 2.21(3) [Private investment fund - loan and trust pools] • subsection 2.24(4) [Employee, executive officer, director and consultant] • subsection 2.26(3) [Trades among current or former employees, executive officers, directors or consultants of non-reporting issuer] • subsection 2.27(4) [Permitted transferees] • subsection 2.31(3) [Dividends and distributions] • subsection 2.40(2) [RRSP/RRIF], if the security acquired under section 2.40 was initially acquired by an individual or an associate of the individual or an RRSP or RRIF established for or by that individual or under which that individual is a beneficiary under (a) one of the exemptions listed above, (b) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of this Instrument, or (c) an exemption from the prospectus requirement that specified prior to the [insert effective date of NI 45-106] that the first trade was subject to section 2.6 of MI 45-102 • subsection 2.42(3) [Conversion, exchange or exercise - security of own issue] if the security acquired in the circumstances referred to in clause (a) of subsection 2.42 (1) was acquired in accordance with the terms and conditions of a previously issued security under (a) one of the exemptions listed above, (b) an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of this Instrument, or (c) an exemption from the prospectus requirement that specified prior to the [insert effective date of NI 45-106] that the first trade was subject to section 2.6 of this Instrument • subsection 2.42 (3) [Conversion, exchange or exercise - security of a reporting issuer] for a security being traded in the circumstances referred to in clause (b) of subsection 2.42 (1)
as well as the following local exemptions from the prospectus requirement: • Alberta Securities Commission Rule 45-502 Trade with RESP, if not included in Appendix D
-28- • Nova Scotia Securities Commission Blanket Order No. 46 • Prince Edward Island Local Rule 45-510 - Exempt Distributions - Exemptions for Trades Pursuant to Take-over Bids and Issuer Bids.
• An exemption from the prospectus requirement in a jurisdiction of Canada that specifies that the first trade is subject to section 2.6 of NI 45-102
Transitional Provisions 1. General: An exemption from the prospectus requirement listed in Appendix E of MI 45-102 Resale of Securities in effect on March 30, 2004 or an exemption from the prospectus requirement that specified prior to [insert effective date of NI 45-106] that the first trade was subject to section 2.6 of MI 45-102. The exemptions listed in Appendix E of MI 45-102 on March 30, 2004 were:
♦ Section 131(1)(f) if not included in Appendix D of this Instrument, sections 131(1)(h), (i), (j), (k), and (y) of the Securities Act (Alberta) and sections 107(1) (j.1) and (k.1) prior to their repeal by section 5 of the Securities Amendment Act, 1989 (Alberta), subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Section 74(2)(11)(iii) if not included in Appendix D or F and sections 74(2)(7), (8) if not included in Appendix F, (9) to (11), (13), (22) and (24) of the Securities Act (British Columbia)
♦ Section 128(g) of the Securities Rules (British Columbia), section 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Section 74(2)(12) of the Securities Act (British Columbia), if the security acquired by the selling security holder under the realization on collateral was initially acquired by a person or company under any of the sections of the Securities Act (British Columbia), the Securities Rules (British Columbia) or a multilateral instrument referred to in this Appendix or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Clauses 54(3) and 73(1)(f) if not included in Appendix D or F of this Instrument, (i) if not included in Appendix F, (j), (k) and (n) of the Securities Act (Newfoundland and Labrador), subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Paragraphs 3(e), (f), (g), (h), (i), (n), (x), (y) and (mm) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories), except for a trade made under subparagraph 3(e)(iii) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories) that is included in Appendix D or F of this Instrument or a trade made under paragraph 3(g) that is included in Appendix F of this Instrument, subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
-29- ♦ Clause 77(1)(f) of the Securities Act (Nova Scotia) if not included in Appendix D or F of this Instrument, and clauses 77(1)(h), (i) if not included in Appendix F, (j), (k), (n), (v), (va), (ac), (ae) and (af) of the Securities Act (Nova Scotia), and clause 78(1)(a) of the Securities Act (Nova Scotia) as it relates to clause 41(2)(j) of the Securities Act (Nova Scotia) and Blanket Order No. 37, 38 if not included in Appendix F, 46 and 45-503 if not included in Appendix F, subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Paragraphs 3(e), (f), (g), (h), (i), (n), (x), (y) and (mm) of Blanket Order No. 1 of the Registrar of Securities (Nunavut), except for a trade made under subparagraph 3(e)(iii) of Blanket Order No. 1 of the Registrar of Securities (Nunavut) that is included in Appendix D or F of this Instrument or a trade made under paragraph 3(g) that is included in Appendix F of this Instrument, subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Clauses 13(1)(e) if not included in Appendix D or F of this Instrument, (f) if not included in Appendix F, (h) and (k) of the Securities Act (Prince Edward Island) or section 3.1 or 3.2 of Rule 45-501, section 1.1 of Prince Edward Island Rule 45-502, section 2.1 or 2.2 of Prince Edward Island Rule 45-506 or section 2.1 or 2.2 of Prince Edward Island Rule 45-510, subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
♦ Clauses 81(1)(a.1), (e) if not included in Appendix D of this Instrument, (f) if not included in Appendix D or F of this Instrument, (f.1), (g), (h), (i) if not included in Appendix F, (i.1), (j), (k), (o), (cc) and (dd) of The Securities Act, 1988 (Saskatchewan), subsection 2.1(2) of MI 45-103 and sections 2.1, 2.2, 2.3 and 2.4 of MI 45-105 or under an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
2. Quebec Provisions ♦ Sections 50 and 52 of the Securities Act (Quebec) as they read prior to their repeal by section 8 of An Act to amend the Securities Act and other legislative provisions
♦ Prospectus and registration exemptions granted pursuant to section 263 of the Securities Act (Quebec) before March 30, 2004 if the exemption included as a condition a seasoning period of 12 months
3. Ontario provisions Definitions In this Appendix “1998 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on December 22, 1998;
“2001 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on November 30, 2001;
-30- “2004 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on January 12, 2004;
“2005 OSC Rule 45-501” means the Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions that came into force on September 14, 2005;
“convertible security” means, in Ontario, a security of an issuer that is convertible into, or carries the right of the holder to purchase, or of the issuer to cause the purchase of, a security of the same issuer;
“exchangeable security” means, in Ontario, a security of an issuer that is exchangeable for, or carries the right of the holder to purchase, or the right of the issuer to cause the purchase of, a security of another issuer;
“exchange issuer” means, in Ontario, an issuer that distributes securities of a reporting issuer held by it in accordance with the terms of an exchangeable security of its own issue;
“multiple convertible security” means, in Ontario, a security of an issuer that is convertible into or exchangeable for, or carries the right of the holder to purchase, or of the issuer or exchange issuer to cause the purchase of, a convertible security, an exchangeable security or another multiple convertible security;
“OSC Rule 45-502” means Ontario Securities Commission Rule 45-502 Dividend or Interest Reinvestment and Stock Dividend Plans;
“OSC Rule 45-503” means Ontario Securities Commission Rule 45-503 Trades to Employees, Executives and Consultants;
“Type 1 trade” means, in Ontario, a distribution in a security under an exemption from the prospectus requirement in:
(a) clause 72(1)(a), (b), (c), (d), (l), (m), (p) or (q) of the Securities Act (Ontario); (b) section 2.4, 2.5 or 2.11 of the 1998 OSC Rule 45-501; (c) section 2.3, 2.12, 2.13 or 2.14 of the 2001 OSC Rule 45-501; or (d) section 2.3, 2.12, 2.13, 2.14 or 2.16 of the 2004 OSC Rule 45-501; and “Type 2 trade” means, in Ontario, a distribution in a security under an exemption from the prospectus requirement in:
(a) clause 72(1)(f) of the Securities Act (Ontario) other than a distribution to an associated consultant or investor consultant as defined in OSC Rule 45-503 or a distribution to an associated consultant or investor relations person as defined in MI 45-105;
(b) clause 72(1)(h), (i), (j), (k) or (n) of the Securities Act (Ontario); or (c) section 2.5, 2.8 or 2.15 of the 2001 OSC Rule 45-501; or
-31- (d) section 2.5, 2.8 or 2.15 of the 2004 OSC Rule 45-501; and “underlying security” means, in Ontario, a security issued or transferred, or to be issued or transferred, in accordance with the terms of a convertible security, an exchangeable security or a multiple convertible security.
(a) Securities Act (Ontario) Clauses 72(1)(f), (i) if not included in Appendix F, (j), (k) and (n) of the Securities Act (Ontario), except for a trade made under 72(1)(f)(iii) of the Securities Act (Ontario) that is:
(i) included in Appendix D or F of this Instrument, or (ii) contemplated by section 6.5 of Ontario Securities Commission Rule 45-501 Exempt Distributions; and
an exemption from the prospectus requirement that specifies that the first trade is subject to section 2.6 of MI 45-102
Clause 72(1)(h) of the Securities Act (Ontario) except for a distribution under clause 72(1)(h) of the Securities Act (Ontario) of an underlying security that was distributed on conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired in a Type 1 trade
(b) 2001 OSC Rule 45-501 and 2004 OSC Rule 45-501 Section 2.1 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501
Section 2.5 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501. Section 2.6 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 if an underlying security was distributed under section 2.6 of the 2001 OSC Rule 45-501 or the 2004 OSC Rule 45-501 on a forced conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired: (a) in a Type 2 trade; (b) under section 2.2, 3.1, 3.2, 3.3, 5.1 or 8.1 of OSC Rule 45-503, other than a trade by an associated consultant or investor consultant as defined in OSC Rule 45-503; or (c) under a provision in Part 2 of MI 45-105. Section 2.7 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 if an underlying security was distributed under section 2.7 of the 2001 OSC Rule 45-501 or the 2004 OSC Rule 45-501 on a forced conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired: (a) in a Type 2 trade; (b) under section 2.2, 3.1, 3.2, 3.3, 5.1 or 8.1 of OSC Rule 45-503, other than a trade by an associated consultant or investor consultant as defined in OSC Rule 45-503; or (c) under a provision in Part 2 of MI 45-105. Section 2.8 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501. Section 2.11 of the 2001 OSC Rule 45-501 and the 2004 OSC Rule 45-501 if section 2.6 of MI 45-102 would have been applicable to a first trade in that security by the person making the exempt distribution under section 2.11 of the 2001 OSC Rule 45-501 or the 2004 OSC Rule 45-501.
-32- Section 2.15 of the 2004 OSC Rule 45-501 (c) 1998 OSC Rule 45-501 Section 2.7 of the 1998 OSC Rule 45-501
Section 2.8 of the 1998 OSC Rule 45-501 Section 2.9 of the 1998 OSC Rule 45-501 if an underlying security was distributed under section 2.9 of the 1998 OSC Rule 45-501 on a forced conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired by the holder in a Type 2 trade
Section 2.10 of the 1998 OSC Rule 45-501 if an underlying security was distributed under section 2.10 of the 1998 OSC Rule 45-501 on a forced conversion or exchange of a multiple convertible security, convertible security or exchangeable security acquired by the holder in a Type 2 trade Section 2.17 of the 1998 OSC Rule 45-501
Subsection 2.18(1) of the 1998 OSC Rule 45-501 after the issuer had ceased to be a private issuer for the purposes of the Securities Act (British Columbia)
(d) Other Sections 2.1 and 3.1 of Ontario Securities Commission Rule 45-502.
-33- APPENDIX F TO NATIONAL INSTRUMENT 45-102 RESALE OF SECURITIES
UNDERWRITERS (Section 2.13) Subsection 2.33(2) [Acting as underwriter] of NI 45-106 and subsection 2.11(2) [Business combination and reorganization] or 2.42 (3) [Conversion, exchange or exercise] of NI 45-106, if the original security was acquired under subsection 2.33(2) of NI 45-106 or one of the underwriter exemptions in the transitional provisions listed below
Transitional Provisions: An exemption from the prospectus requirement listed in Appendix F of MI 45-102 as Appendix F read on March 30, 2004. Exemptions listed in Appendix F of MI 45-102 on March 30, 2004 were:
♦ Section 74(2)(15) of the Securities Act (British Columbia) and section 74(2)(8) or 74(2)(11)(iii) of the Securities Act (British Columbia) if the original security was acquired under section 74(2)(15) of the Securities Act (British Columbia)
♦ Clause 73(1)(r) of the Securities Act (Newfoundland and Labrador) and section 73(1)(i) or 73(1)(f)(iii) of the Securities Act (Newfoundland and Labrador) if the original security was acquired under section 73(1)(r) of the Securities Act (Newfoundland and Labrador)
♦ Paragraph 3(v) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories) and paragraph 3(g) or subparagraph 3(e)(iii) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories) if the original security was acquired under paragraph 3(v) of Blanket Order No. 1 of the Registrar of Securities (Northwest Territories)
♦ Clause 77(1)(r) of the Securities Act (Nova Scotia) and clause 77(1)(i) or 77(1)(f)(iii) of the Securities Act (Nova Scotia) or Blanket Order No. 38 or 45-503 if the original security was acquired under clause 77(1)(r) of the Securities Act (Nova Scotia)
♦ Paragraph 3(v) of Blanket Order No. 1 of the Registrar of Securities (Nunavut) and paragraph 3(g) or subparagraph 3(e)(iii) of Blanket Order No. 1 of the Registrar of Securities (Nunavut) if the original security was acquired under paragraph 3(v) of Blanket Order No. 1 of the Registrar of Securities (Nunavut)
♦ Clause 72(1)(f)(iii) of the Securities Act (Ontario) if the original security was acquired under clause 72(1)(r) of the Securities Act (Ontario)
♦ Clause 72(1)(i) of the Securities Act (Ontario) if the original security was acquired under clause 72(1)(r) of the Securities Act (Ontario) ♦ Clause 72(1)(r) of the Securities Act (Ontario)
♦ Section 2.1 of Prince Edward Island Rule 45-509 and subclause 13(1)(e) (iii) or clause 13(1)(f) of the Securities Act (Prince Edward Island) or section 1.1 of Prince Edward Island Rule 45-
-34- 502 if the original security was acquired under section 2.1 of Prince Edward Island Rule 45-509 ♦ Section 55 of the Securities Act (Quebec) as it read prior to its repeal by section 8 of An Act to amend the Securities Act and other legislative provisions
♦ Clause 81(1)(u) of The Securities Act, 1988 (Saskatchewan) and clause 81(1)(i) or subclause 81(1)(f)(iii) of The Securities Act, 1988 (Saskatchewan) if the original security was acquired under clause 81(1)(u) of The Securities Act, 1988 (Saskatchewan)
-35- SCHEDULE 6 Amendments to Companion Policy 45-102CP to Multilateral Instrument 45-102 Resale of Securities
PART 1 AMENDMENTS TO COMPANION POLICY 45-102CP 1.1 Amendment - Companion Policy 45-102CP to Multilateral Instrument 45-102 Resale of Securities (the Companion Policy ) is amended by:
(a) in the Companion Policy, striking “Multilateral Instrument 45-102” and substituting “National Instrument 45-102” as follows:
(i) in the title of the Companion Policy, and (ii) in subsection 1.1(1) of the Companion Policy; (b) amending section 1.1 by (i) striking “MI 45-102” wherever it appears and substituting “NI 45-102”, (ii) in subsection (1), striking “except Quebec”, and (iii) in subsection (2); striking “Manitoba, New Brunswick and the Yukon Territory” and substituting “Manitoba and Yukon”,
(c) amending section 1.2 by (i) in subsections (1) and (3), striking “MI 45-102” wherever it appears and substituting “NI 45-102”,
(ii) repealing and replacing subsection (2) with: (1) Appendices D and E to NI 45-102 list the new harmonized exemptions in National Instrument 45-106 Registration and Prospectus Exemptions (NI 45-106) and local exemptions that are subject to the resale restrictions under section 2.5 or 2.6 of NI 45-102, while Appendix F lists the new harmonized exemptions in NI 45-106 applicable to underwriters. Each of these appendices also contains transitional provisions applicable to securities acquired under exemptions listed in the Appendices to MI 45-102 as Appendices D, E and F read on March 30, 2004. For all local exemptions that come into effect after September 14, 2005, you should look to the local instrument itself to see if it specifies that the securities acquired are subject to section 2.5 or 2.6 of NI 45-102 as well as to Appendix D and E to NI 45-102. You may also wish to consult the CSA Notice listing local registration and prospectus exemptions in place in each jurisdiction of Canada, which the CSA will update periodically.
(d) repealing and replacing section 1.3 with:
-36- 1.3 Transition (1) When Multilateral Instrument 45-102 Resale of Securities (“former MI 45-102”) came into force on November 30, 2001, that instrument imposed harmonized resale restrictions on the first trade of securities made on or after that date, even if the securities were distributed, or acquired by the selling security holder in the case of a trade that is a control distribution, prior to November 30, 2001. These securities were subject to prescribed restricted periods and seasoning periods of either four or twelve months. When MI 45-102 was implemented on March 30, 2004, the securities of all reporting issuers became subject to four month restricted and seasoning periods under section 2.5 and 2.8 or four month seasoning periods under section 2.6 of MI 45-102. This meant that any existing restricted period or seasoning period imposed under Part 2 of former MI 45-102 that exceeded four months was reduced to four months under MI 45-102. Under NI 45-102, securities of all reporting issuers continue to be subject to a four month restricted period under subsection 2.5(2) or 2.8(2) of the Instrument.
(2) Item 3. of subsection 2.5(2) of MI 45-102 required that the certificate or the ownership statement evidencing a security that is the subject of the first trade carry either a legend or a legend restriction notation disclosing the resale restrictions. This legend requirement applied only to securities distributed on or after MI 45-102 comes into effect on March 30, 2004 in all jurisdictions except Quebec. We have added language to Item 3. of subsection 2.5(2) of NI 45-102 to clarify that the legend requirement in NI 45-102 will only apply to securities distributed in Quebec on or after NI 45-106 comes into effect on September 14, 2005.
(3) Issuers may continue to replace those certificates that are legended in accordance with former MI 45-102 with a certificate (or an acceptable electronic alternative) carrying the legend (or legend restriction notation) specified in item 3. of subsection 2.5(2) of NI 45-102. As was the case under former MI 45-102, certificates representing securities distributed prior to November 30, 2001 do not have to be legended.
(e) amending section 1.4 by (i) striking “MI 45-102” and substituting “NI 45-102”, and (ii) striking “Manitoba, New Brunswick and the Yukon Territory” and substituting “Manitoba and Yukon”;
(f) amending sections 1.5 and 1.6 by striking “MI 45-102” wherever it appears and substituting “NI 45-102”;
(g) repealing and replacing section 1.7 with: 1.7 Legending of Securities - Item 3. of subsection 2.5(2) of NI 45-102 imposes a legend requirement for securities distributed under any of the provisions listed in Appendix D to NI 45-102 or another prospectus exemption of any jurisdiction subject to the resale restrictions in
-37- subsection 2.5(2) of NI 45-102. Beneficial security holders must receive either a paper certificate representing their security or an electronic alternative such as an ownership statement under a direct registration system, scheduled to be phased into operation during 2005. If a paper certificate is issued, the certificate must carry the legend specified in item 3 that notifies the beneficial security holder of the applicable resale restrictions. Similarly, an ownership statement must carry a restricted legend notation that notifies the beneficial security holder of the applicable resale restrictions. Issuers may add additional wording to that found in item 3. of subsection 2.5(2) of NI 45-102. If you supplement the specified text of the legend on the certificate or the restricted legend notation on the ownership statement, that additional wording cannot alter the meaning of the specified wording. You should also look to section 1.10 for further guidance on the legending of convertible and underlying securities.
(h) amending section 1.8 by: (i) in subsection (1) striking “MI 45-102” and substituting “NI 45-102”, and (ii) repealing subsection (2); (i) amending sections 1.9, 1.11, 1.12, 1.13, 1.14 and 1.15 by striking “MI 45-102” wherever it appears and substituting “NI 45-102”;
(j) amending section 1.16 by: (i) striking “MI 45-102” wherever it appears and substituting “NI 45-102”, and (ii) striking the last sentence. PART 2 EFFECTIVE DATE 2.1 Effective Date - These amendments are effective September 14, 2005.