Commission Approval of Amendment: Regulation 1015, R.R.O. 1990, as amended, and In the Matter of Certain International Offerings by Private Placement in Ontario

 

NOTICE OF AMENDMENT TO RULE UNDER THE SECURITIES ACT

IN THE MATTER OF REGULATION 1015, R.R.O. 1990, AS AMENDED ANDIN THE MATTER OF CERTAIN INTERNATIONAL OFFERINGS BY PRIVATE PLACEMENT IN ONTARIO

Notice of Amendment

The Commission has, under section 143 of the Securities Act (the "Act"), amendedthe rule entitled In the Matter of Regulation 1015, R.R.O. 1990, as amended andIn the Matter of Certain International Offerings by Private Placement in Ontario (1997), 20 OSCB 1219, as amended by (1998), 21 OSCB 4211 and (1999), 22OSCB 3900 (the "Rule"). The amendment extends the expiration date of the Rulefrom July 1, 2001 to July 1, 2002. This amendment, however, does not materiallychange the Rule and, accordingly, under section 143.2 of the Act, the Commissionhas not published the amendment for comment.

The amendment and the material required by the Act to be delivered to the Ministerof Finance were delivered on September 27, 2000. If the Minister does not approvethe amendment, reject the amendment or return it to the Commission for furtherconsideration by November 27, 2000, the amendment will come into force onDecember 11, 2000. If the Minister approves the amendment, it will come into force15 days after it is approved.

Substance and Purpose of Amendment

The Rule replaced the deemed rule entitled In the Matter of Regulation 1015,R.R.O. 1990, as amended and In the Matter of Certain International Offerings byPrivate Placement in Ontario (1993), 16 OSCB 5931.

The Rule provides that it will expire on the earlier of the date on which a new ruleintended to replace it comes into force and July 1, 2001. Commission staff initiallyconsulted with certain market participants as to the need for the Commission toadopt a rule to replace the Rule. Based on these consultations, Staff was of theview that a replacement rule was not required. Staff subsequently receivedadditional representations to the effect that a replacement rule would be ofconsiderable utility.

The Rule provides relief from the requirement to provide a contractual right ofaction for certain international offerings by foreign issuers made in Ontario underthe exemption contained in clause 72(1)(c) or (d) of the Act. In addition, the Ruleprovides certain ancillary relief which facilitates these offerings. Recentamendments to the Securities Act ("More Tax Cuts for Jobs, Growth and PropertyAct, 1999") introduced new section 130.1 which provides for statutory civil liabilityfor misrepresentations in offering memoranda. The Commission has decided notto reformulate the Rule as the Commission is of the view that the Rule will no longerbe required to facilitate extending offerings to Ontario investors by privateplacement when contractual rights of action are replaced by statutory rights ofaction.

The Commission has recently published for comment Proposed Rule 45-501Exempt Distributions (Revised) (the "Proposed Rule"). The Proposed Ruleaddresses the issue of statutory rights of action for misrepresentations in offeringmemoranda and accordingly, after the Proposed Rule becomes effective, the Rulewill no longer be required. It is possible, however, that the Proposed Rule will notbecome effective before the Rule expires. The purpose of the amendment is toextend the expiration date of the Rule from July 1, 2001 to July 1, 2002 in order toallow sufficient time for the enactment of the Proposed Rule, including theconsideration of that rule by the Commission, publication of the Proposed Rule forcomment, consideration of comments received and review of the Proposed Rule bythe Minister. For a more detailed explanation of the Proposed Rule, see thecorresponding Notice recently published at 23, OSCB 6205. Since an extensionof the Rule will ensure that relief from the requirement for a contractual right ofaction will continue until the enactment of the Proposed Rule, there is no need fora revision to Rule 45-501 providing for the application of a statutory right of actionas described in the Notice to the Proposed Rule at p.6208. Accordingly, the lastparagraph on p.6208 under the section "Certain International Offerings by PrivatePlacement" is moot.

Text of Amendment

The text of the amendment follows.

DATED: September 29, 2000

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AMENDMENT TO ONTARIO SECURITIES COMMISSION RULE

IN THE MATTER OF REGULATION 1015, R.R.O. 1990, AS AMENDED AND IN THE MATTER OF CERTAININTERNATIONAL OFFERINGS BY PRIVATE PLACEMENT IN ONTARIO

1.1 Amendment - The Rule entitled In the Matter of Regulation 1015, R.R.O.1990, as amended and In the Matter of Certain International Offerings byPrivate Placement in Ontario (1997), 20 OSCB 1219, as amended by (1998),21 OSCB 4211 and (1999), 22 OSCB 3900, is amended by deleting "July 1,2001" in the last sentence and replacing it with "July 1, 2002".