Canadian Securities Administrators

Abstract

Proposed National Instrument 43-101 consolidates and expands on the current disclosure and reporting requirements for mineral exploration and development and mining properties. The proposed document establishes standards for all oral and written disclosure concerning mineral exploration and development and mining properties made by or on behalf of an issuer and reasonably likely to be made available to the public. Proposed Companion Policy 43-101CP sets forth the views of the CSA as to the manner in which the proposed National Instrument is to be interpreted and applied.

The Proposed National Instrument originated with the reformulation of National Policy Statements 2-A, "Guide For Engineers, Geologists and Prospectors Submitting Reports on Mining Properties to Canadian Provincial Securities Administrators", and 22, "Use of Information and Opinion Re Mining and Oil Properties by Registrants and Others". It is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Nova Scotia, and Ontario, as a Commission regulation in Saskatchewan, and as a policy in all other CSA jurisdictions.

The proposed National Instrument, Forms and Companion Policy are initiatives of the CSA. The proposed National Instrument is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, as a Commission Regulation in Saskatchewan and as a Policy in all other jurisdictions represented by the CSA, other than Quebec. The proposed Forms will be adopted as rules in Ontario. The proposed Companion Policy is expected to be implemented as a policy in all of the jurisdictions of the CSA.

Should Uniform Act Policies Be Rescinded?

The CSA are proposing to rescind the following Uniform Act Policies:

- 2-01, "Undertakings -- Extra-Provincial Companies": UAP 2-01 states that the Director will refuse to issue a receipt for a prospectus until the issuer proposing to distribute the equity securities being qualified by the prospectus has delivered certain undertakings. The CSA considers the subject matter of the policy to be obsolete. The provisions relating to undertakings have not been carried forward into the current versions of the securities legislation of Ontario, Alberta, B.C., Manitoba, and Saskatchewan.

- 2-02, "Prospectuses -- Annual Re-Filings": UAP 2-02 deals with the lapse date of prospectuses and the steps can be followed to minimize the possibility of a break in primary distribution. According to the CSA, the subject matter of UAP 2-02 is generally covered by the securities legislation of the provinces mentioned above.

- 2-06, "Use of Shareholders' Lists by Registrants": The policy requires that certain corporate legislation restrict the use of a list of all or any shareholders of a corporation to purposes connected with that corporation. The conduct described by the Policy is now generally an offence under most Canadian corporate legislation.

- 2-08, "Declaration as to Short Position -- Listed and Unlisted Securities": UAP 2-08 reminds registrants and the public of the securities legislation provisions that require a declaration from a person or company who places an order for the sale of a security through an agent that is a registrant if at the time of placing the order, the person or company does not own the security, or, if acting as agent, the person or company knows that his, her, or its principal does not own the security. The majority of the provisions in UAP 2-08 are now set out in provincial securities legislation.

- 2-09, "Insider Trading Reports -- Loan and Trust Companies": The policy provides notice to insiders of loan and trust companies that guaranteed deposit receipts or certificates of trust companies and deposit or savings accounts that are evidenced by a passbook are not considered by the Canadian securities regulatory authorities to be capital securities for the purposes of insider trading reports. The CSA consider UAP 2-09 to be obsolete. In almost all cases, the definition of "security" in securities legislation excludes evidence of deposits issued by a registered loan corporation or trust corporation.

For further information, please refer to the July 24, 1998 OSC Bulletin.

Disclosure Requirements Beefed Up for Mining and Exploration Securities

Proposed National Instrument 43-101 consolidates and expands on the current disclosure and reporting requirements for mineral exploration and development and mining properties. The proposed document establishes standards for all oral and written disclosure concerning mineral exploration and development and mining properties made by or on behalf of an issuer and reasonably likely to be made available to the public. Proposed Companion Policy 43-101CP sets forth the views of the CSA as to the manner in which the proposed National Instrument is to be interpreted and applied.

The Proposed National Instrument originated with the reformulation of National Policy Statements 2-A, "Guide For Engineers, Geologists and Prospectors Submitting Reports on Mining Properties to Canadian Provincial Securities Administrators", and 22, "Use of Information and Opinion Re Mining and Oil Properties by Registrants and Others". It is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Nova Scotia, and Ontario, as a Commission regulation in Saskatchewan, and as a policy in all other CSA jurisdictions.

For further information, please refer to the July 3, 1998 OSC Bulletin.

National Application System Still Being Tested

In January, the CSA published a request for comments relating to the National Application System that included a concept proposal. At that time, the CSA said that it would immediately start testing the system based on the proposal.

The comment period ended on June 1 but the CSA has extended testing until further notice. Testing of the system was also extended to all types of applications for exemptive relief on June 15, 1998. As of that date, law firms participating in testing the system may make any application for relief under the system except those applications where the granting of a registration certificate or the issuing of a prospectus receipt has traditionally granted the relief.

The CSA National Application System Committee will review the comments received and the test results and report to the CSA. A policy for the system is expected to be prepared and published for comment in September.

For further information, please refer to the July 3, 1998 OSC Bulletin.

Changes Proposed to Proposed National Instrument 54-101

On February 27, 1998, the CSA published for comment proposed National Instrument 54-101, "Communication With Beneficial Owners of Securities of a Reporting Issuer", along with related forms, a proposed Companion Policy and, in Ontario, proposed Implementing Rule 54-801. The comment period expired on May 29, 1998. The purpose of the proposed documents is to provide a procedure to enable a reporting issuer to send securityholder materials, including proxy-related materials and annual reports, to beneficial owners of its securities who are not registered securityholders and to impose obligations on various parties in the securityholder communication process.

The Commission has since issued proposed changes to the proposed documents. For further information, please refer to the July 17, 1998 OSC Bulletin.

Proposed National Instrument to Replace National Policy 36

Proposed National Instrument 81-101, Forms 81-101F1 and 81-101F2 and Companion Policy 81-101CP are intended to replace National Policy Statement No. 36. Through these proposed instruments, the Canadian Securities Administrators seek to implement a new regulatory regime governing the disclosure provided by mutual funds in satisfaction of the prospectus requirements of securities legislation.

The proposed National Instrument, Forms and Companion Policy are initiatives of the CSA. The proposed National Instrument is expected to be adopted as a rule in British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, as a Commission Regulation in Saskatchewan and as a Policy in all other jurisdictions represented by the CSA, other than Quebec. The proposed Forms will be adopted as rules in Ontario. The proposed Companion Policy is expected to be implemented as a policy in all of the jurisdictions of the CSA.

For further information, please refer to the July 31, 1998 OSC Bulletin.

Visit the OSC's Web Site!

The Ontario Securities Commission web site is located at http:///www.osc.gov.on.ca. It includes the following information:

- News and events

- Publications

- OSC and CSA information for investors

- Rule making and notices

- Orders and rulings

- Compliance

- Scheduled proceedings

- Notices of hearings

- Statement of allegations

- Decisions, settlement agreements, and reasons

- Reporting issuers

- Other information

For further information, please contact:

Monica Zeller Tel.: [phone] Fax: [phone] E-mail: [email protected]