Securities Law & Instruments



NOTICE OF AMENDMENT TO

ONTARIO SECURITIES COMMISSION RULE 51-501 AIF AND MD&A

Amendment to OSC Rule 51-501 AIF & MD&A

The Ontario Securities Commission (the "Commission") has, under section 143 of the Securities Act (Ontario) (the "Act"), amended Commission Rule 51-501 AIF and MD&A ("Rule 51-501").

The amendment and the material required by the Act to be delivered to the Minister of Finance were delivered on October 12, 2001. If the Minister does not reject the amendment or return it to the Commission for further consideration by December 11, 2001, or if the Minister approves the amendment, the amendment to Rule 51-501 will come into force on December 31, 2001.

Substance and Purpose of the Amendment

Rule 51-501, which came into force on January 1, 2001, reformulated Ontario Securities Commission Policy 5.10 Annual Information Form and Management's Discussion and Analysis of Financial Condition and Results of Operations. Rule 51-501 also introduced a requirement for MD&A to be provided in relation to interim financial statements. The purpose of Rule 51-501 is to enhance investor understanding of an issuer's business by providing supplemental analysis and background material to allow a fuller understanding of the nature of the issuer, its operations and known prospects for the future.

Subsection 2.1(1) of Rule 51-501 requires an issuer to file an AIF prepared in accordance with Form 44-101F1 within 140 days after the end of its financial year. Subsection 2.1(3) permits certain issuers to file an AIF in the form of a current annual report on Form 10-K or on Form 20-F instead of Form 44-101F1. Subsection 2.1(4) states that where an issuer files an AIF prepared in accordance with Form 10-K or Form 20-F, the AIF must be filed as nearly as practicable contemporaneously with the filing of the form with the SEC.

Subsection 2.1(4) of Rule 51-501 was intended to ensure that, if an issuer filed a Form 10-K or Form 20-F with the SEC within 140 days after the end of the financial year, the issuer would file the applicable U.S. form with the Commission at approximately the same time as it made its filing with the SEC. Subsection 2.1(4) was not intended to be an exception to the general requirement set out in subsection 2.1(1) to file an AIF, regardless of its form, within 140 days after the end of the financial year.

Since the implementation of Rule 51-501, the Commission has become concerned that a small number of Canadian issuers are interpreting subsection 2.1(4) of Rule 51-501 incorrectly. Accordingly, the Commission has amended subsection 2.1(4) to remove any uncertainty about when an AIF must be filed under the Rule 51-501.

The Commission notes, however, that it intends to propose a limited exemption from the 140 day filing requirement under Rule 51-501 for certain issuers. This exemption is set out in proposed Ontario Securities Commission Rule 72-502 Continuous Disclosure and Other Exemptions relating to Foreign Issuers ("Rule 72-502") which is being published concurrently with the amendment. Rule 72-502 would provide a "foreign issuer" (as defined in Rule 72-502), among other things, with an exemption from the requirement to file an AIF under Rule 51-501 within 140 days after the end of the financial year. Under Rule 72-502, it is proposed that a foreign issuer be permitted to file its home jurisdiction continuous disclosure documents according to home jurisdiction timing requirements, in place of Ontario continuous disclosure documents and timelines. For example, a foreign issuer that is also a "foreign private issuer" under the SEC's definition must file its Form 20-F with the SEC within six months of the end of the fiscal year covered by the report. Other than the limited exemption proposed in Rule 72-502 for foreign issuers, all other reporting issuers will be expected to comply with the 140 day time period set out in Rule 51-501.

Amendment

The text of the amendment follows.

DATED: October 12, 2001.

AMENDMENT TO ONTARIO SECURITIES COMMISSION
RULE 51-501 AIF AND MD&A

PART 1 AMENDMENT

1.1 Amendment - Rule 51-501 AIF and MD&A is amended by deleting subsection 2.1(4) and substituting for that subsection

"(4) Despite subsection (1), an issuer that files an AIF under subsection (3) shall file the AIF by the earlier of

(i) within 140 days after the end of its financial year, and

(ii) as nearly as practicable contemporaneously with the filing of the Form 10-K or Form 20-F with the SEC."

PART 2 EFFECTIVE DATE

2.1 Effective Date - This Amendment comes into force on December 31, 2001.