Securities Law & Instruments

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ONTARIO SECURITIES COMMISSION

RULE 13-502

FEES

PART 1 DEFINITIONS

1.1 Definitions

(1) In this Instrument,

"capitalization" means, for a reporting issuer, the capitalization determined in accordance with section 2.5, 2.6 or 2.7;

"capital markets activities" means

(a) activities for which registration under the Act or an exemption from registration is required, and

(b) investment fund management and administration;

"Class 1 reporting issuer" means a reporting issuer that is incorporated or that exists under the laws of Canada or a jurisdiction and that has a class of equity securities listed and posted for trading, or quoted on, a marketplace in either or both of Canada or the United States of America;

"Class 2 reporting issuer" means a reporting issuer that is incorporated or that exists under the laws of Canada or a jurisdiction other than a Class 1 reporting issuer;

"Class 3 reporting issuer" means a reporting issuer that is not incorporated and that does not exist under the laws of Canada or a jurisdiction;

"corporate debt" means debt issued in Canada by a company or corporation that has a remaining term to maturity of one year or more;

"education savings plan" means an agreement between one or more persons and another person or organization, in which the other person or organization agrees to pay or cause to be paid, to or for one or more beneficiaries designated in connection with the agreement, scholarship awards to further the beneficiaries' education;

"entity" means a company, syndicate, partnership, trust or unincorporated organization;

"equity security" has the meaning ascribed to that term in subsection 89(1) of the Act;

"IDA" means the Investment Dealers' Association of Canada;

"investment fund" means a mutual fund, a non-redeemable investment fund or a scholarship plan;

"investment fund family" means two or more investment funds that have

(a) the same manager, or

(b) managers that are affiliated entities of each other;

"investment fund manager" means the person or company that directs the business, operations and affairs of an investment fund;

"marketplace" has the meaning ascribed to that term in National Instrument 21-101 Market Operation;

"MFDA" means the Mutual Fund Dealers Association of Canada;

"Ontario percentage" means, for the financial year of a person or company

(a) that has a permanent establishment in Ontario, the percentage of the income of the person or company allocated to Ontario for the financial year in the corporate tax filings made for the person or company under the ITA, or

(b) that does not have a permanent establishment in Ontario, the percentage of the total revenues of the person or company attributable to capital markets activities in Ontario;

"registrant firm" means a person or company registered as one or both of a dealer or an adviser under the Act;

"scholarship plan" means an issuer of a document constituting, or representing an interest in, an education savings plan and that issues securities that are related to discrete pools of assets referable to more than one education savings plan;

"specified Ontario revenues" means, for a registrant firm or an unregistered investment fund manager, the revenues determined in accordance with section 3.4, 3.5 or 3.6;

"subsidiary entity" has the meaning ascribed to "subsidiary" under GAAP; and

"unregistered investment fund manager" means an investment fund manager that is not registered under the Act.

(2) In this Rule, the person or company of which another person or company is a subsidiary entity is considered to be a parent of the subsidiary entity.

PART 2 CORPORATE FINANCE PARTICIPATION FEES

2.1 Application - This Part does not apply to an investment fund other than an investment fund that does not have an investment fund manager.

2.2 Participation Fee

(1) A reporting issuer shall pay, for each of its financial years, the participation fee shown in Appendix A that applies to the reporting issuer according to the capitalization of the reporting issuer, as determined under section 2.5, 2.6 or 2.7, as at the end of its previous financial year.

(2) Subsection (1) does not apply to a reporting issuer that is a subsidiary entity for a financial year of the subsidiary entity, if

(a) the parent of the subsidiary entity is a reporting issuer;

(b) the parent of the subsidiary entity has paid the participation fee required for itself by subsection (1) for the financial year; and

(c) the net assets and gross revenues of the subsidiary entity represent more than 90 percent of the net assets and gross revenues of the parent for the previous financial year of the parent of the subsidiary entity.

2.3 Time of Payment

(1) A reporting issuer shall pay the participation fee no later than the date on which its annual financial statements are required to be filed.

(2) If the financial statements of a Class 2 reporting issuer or a Class 3 reporting issuer that calculates its participation fee under paragraph 2.7(b) are not available by the date referred to in subsection (1), the Class 2 reporting issuer or Class 3 reporting issuer shall pay the participation fee for a financial year on the basis on a good faith estimate of its capitalization as at the end of that financial year.

(3) A Class 2 reporting issuer or Class 3 reporting issuer that paid a participation fee under subsection (2) shall, when it files its annual financial statements for the applicable financial year, calculate the participation fee on the basis of those financial statements, and

(a) pay any amount of the participation fee not paid under subsection (2); or

(b) be entitled to receive from the Commission a refund of any amount paid under subsection (2) in excess of the participation fee payable for that financial year.

2.4 Form Requirements

(1) A reporting issuer shall file a Form 13-502F1, completed in accordance with its terms, at the time that it pays the participation fee required by this Part.

(2) A Class 2 reporting issuer or Class 3 reporting issuer shall file a Form 13-502F2, completed in accordance with its terms, in connection with the adjustment of a payment made under subsection 2.3(2) in accordance with subsection 2.3(3).

2.5 Calculation of Capitalization for Class 1 Reporting Issuers - The capitalization of a Class 1 reporting issuer at the end of a financial year of the Class 1 reporting issuer is the aggregate of

(a) the market value of each class or series of equity securities of the reporting issuer outstanding on that date, calculated by multiplying

(i) the total number of securities of the class or series outstanding on that date; and

(ii) the simple average of the closing price of the class or series of securities as of the last trading day of each of the months of the financial year of the reporting issuer on

(A) the marketplace in Canada on which the highest volume of the class or series of securities were traded in that financial year, or

(B) if none of the class or series of securities were traded on a marketplace in Canada, the marketplace in the United States of America on which the highest volume of the class or series of securities were traded in that financial year, and

(b) as determined by the reporting issuer, the market value, at the end of the financial year, of each class or series of corporate debt or preferred shares

(i) of the reporting issuer, and

(ii) a subsidiary entity of the reporting issuer that is exempt from the requirement to pay a participation fee under subsection 2.2(2).

2.6 Calculation of Capitalization for Class 2 Reporting Issuers - The capitalization of a Class 2 reporting issuer at the end of a financial year of the reporting issuer is the aggregate of each of the following items, as shown in its audited balance sheet as at the end of the financial year,

(a) retained earnings or deficit;

(b) contributed surplus;

(c) share capital or owners' equity, options, warrants and preferred shares;

(d) long term debt, including the current portion;

(e) capital leases, including the current portion;

(f) minority or non-controlling interest;

(g) items classified on the balance sheet between current liabilities and shareholders' equity, and not otherwise referred to in this subsection (1); and

(h) any other item forming part of shareholders' equity not otherwise referred to in this subsection (1).

2.7 Calculation of Capitalization for Class 3 Reporting Issuers - The capitalization of a Class 3 reporting issuer at the end of a financial year of the Class 3 reporting issuer is

(a) if the Class 3 reporting issuer has any debt or equity securities listed or traded on a marketplace located anywhere in the world, the aggregate of the value of each class or series of securities so listed or traded, calculated by multiplying

(i) the number of securities of the class or series outstanding on the date,

(ii) the simple average of the closing price of the class or series of securities as of the last trading day of each of the months of the financial year of the reporting issuer on the marketplace on which the highest volume of the class or series of securities were traded in that financial year, and

(iii) the percentage of the class or series registered in the name of, or held beneficially by, an Ontario person; or

(b) if the Class 3 reporting issuer has no debt or equity securities listed or traded on a marketplace located anywhere in the world, calculated by multiplying

(i) the amount determined under section 2.6 for the Class 3 reporting issuer, as if its capitalization were determined under that section, and

(ii) the percentage of outstanding equity securities of the Class 3 reporting issuer registered in the name of, or held beneficially by, Ontario persons.

2.8 Participation Fee for a New Reporting Issuer

(1) Despite sections 2.2 and 2.3, a person or company that becomes a reporting issuer by filing a prospectus that relates to a distribution of securities shall pay a participation fee at the time that the person or company becomes a reporting issuer, calculated by multiplying

(a) the participation fee for the person or company based on a capitalization determined under subsection (2); and

(b) the number of entire months remaining in the financial year of the person or company after it becomes a reporting issuer, divided by 12.

(2) The capitalization of a reporting issuer referred to in subsection (1) for the purpose of calculating the participation fee shall be determined as provided under section 2.5, 2.6 or 2.7, adjusted by

(a) assuming the completion of all distributions contemplated by the prospectus as at the date of filing of the prospectus;

(b) for a Class 1 reporting issuer or a Class 3 reporting issuer, using the issue price of the securities being distributed under the prospectus, as disclosed in the prospectus, as the amount required to be calculated under subparagraph 2.5(a)(ii), paragraph 2.5(b) or paragraph 2.7(a)(ii); and

(c) for a Class 2 reporting issuer; basing its capitalization on the audited financial statements for the most recent financial year contained in the prospectus, adjusted as provided in paragraph (a).

(3) Despite sections 2.2 and 2.3, a person or company that becomes a reporting issuer by filing a non-offering prospectus shall pay a participation fee at the time that the person or company becomes a reporting issuer, calculated by multiplying

(a) the participation fee for the person or company based on a capitalization determined under section 2.6, based on the audited financial statements for the most recent financial year contained in the prospectus; and

(b) the number of entire months remaining in the financial year of the person or company after it becomes a reporting issuer, divided by 12.

(4) Despite sections 2.2 and 2.3, a person or company that becomes a reporting issuer as the result of being deemed to be a reporting issuer by the Commission shall pay a participation fee at the time that the person or company becomes a reporting issuer, calculated by multiplying

(a) for

(i) a Class 1 reporting issuer, the participation fee based on a capitalization determined under section 2.5,

(ii) a Class 2 reporting issuer, the participation fee based on a capitalization determined under section 2.6, and

(iii) a Class 3 reporting issuer, the participation fee based on a capitalization determined under section 2.7, and

(b) the number of entire months remaining in the financial year of the person or company after it becomes a reporting issuer, divided by 12.

(5) The section does not apply to a reporting issuer formed from a statutory amalgamation or arrangement, or a person or company continuing from a transaction to which clause 72(1)(i) of the Act applies.

2.9 Late Fee

(1) Subject to subsection (2), a reporting issuer that is late in paying a participation fee under this Part shall pay an additional fee of one percent of the participation fee payable apart from this section for each business day on which the participation fee remains due and unpaid.

(2) A reporting issuer is not required to pay a fee under this section in excess of 25 percent of the participation fee otherwise payable under this Part.

2.10 Reliance on Published Information

(1) Subject to subsection (2), in determining its capitalization for purposes of this Part, a reporting issuer may rely upon information made available by a marketplace on which securities of the reporting issuer trade.

(2) Subsection (1) does not apply if the reporting issuer has knowledge both

(a) that the information made available by the marketplace is inaccurate; and

(b) of the correct information.

PART 3 CAPITAL MARKETS PARTICIPATION FEES

3.1 Participation Fee - A person or company that is a registrant firm shall pay, for each calendar year, and an unregistered investment fund manager shall pay, for each of its financial years, the participation fee shown in Appendix B that applies to the registrant firm or unregistered investment fund manager according to the specified Ontario revenues of the registrant firm or unregistered investment fund manager for its previous financial year earned from capital markets activities.

3.2 Time of Payment

(1) A registrant firm shall pay the participation fee referred in section 3.1 by December 31 of each year.

(2) An unregistered investment fund manager shall pay the participation fee referred in section 3.1 no later than 90 days after the end of each financial year of the unregistered investment fund manager.

3.3 Form Requirement

(1) A registrant firm shall file a Form 13-502F3, completed in accordance with its terms, by December 1 of each year.

(2) An unregistered fund manager shall file a Form 13-502F3, completed in accordance with its terms, at the time that it pays the participation fee required by this Part.

(3) If the annual financial statements of a registrant firm have not been completed by December 1 in a year, the registrant firm shall

(a) file the Form 13-502F3 due on that date on the basis of a good faith estimate of its specified Ontario revenues as at the end of its previous financial year, and

(b) pay its participation fee by December 31 based on the estimate of the Ontario specified revenues contained in the Form 13-502F3.

(4) A registrant firm that filed its Form 13-502F3 under subsection (3) shall, when its annual financial statements for the applicable financial year have been completed,

(a) file a revised Form 13-502F3 reflecting the annual financial statements;

(b) calculate the participation fee on the basis of those financial statements; and

(c) either

(i) pay any amount of the participation fee not paid under subsection (3), or

(ii) be entitled to receive from the Commission a refund of any amount paid under subsection (3) in excess of the participation fee payable.

(5) A registrant firm shall file a Form 13-502F4, completed in accordance with its terms, in connection with the adjustment in accordance with subsection 3.3(4).

3.4 Calculation of Specified Ontario Revenue for a Member of the IDA - The specified Ontario revenue for a financial year of a registrant firm that is a member of the IDA is calculated by multiplying

(a) the amount indicated by the registrant firm as the Total Revenue on the Summary statement of income contained in the Joint Regulatory Financial Questionnaire and Report of the IDA for the financial year; and

(b) the Ontario percentage of the member of the IDA for the financial year.

3.5 Calculation of Specified Ontario Revenues for a Member of the MFDA - The specified Ontario revenues for a financial year of a registrant firm that is a member of the MFDA is calculated by multiplying

(a) the amount indicated by the registrant firm as its Total Revenue on the Summary statement of the Financial Questionnaire and Report of the MFDA for the financial year; and

(b) the Ontario percentage of the member of the MFDA for the financial year.

3.6 Calculation of Specified Ontario Revenues for Others

(1) The specified Ontario revenues for a financial year of a registrant firm that is not a member of the IDA or the MFDA or of an unregistered investment fund manager is calculated by multiplying

(a) the gross revenues earned from capital markets activities of the registrant firm or unregistered investment fund manager contained in its audited financial statements for the financial year, less the reductions of that amount taken under subsections (2) and (3); and

(b) the Ontario percentage of the registrant firm or unregistered investment fund manager for the financial year.

(2) A person or company may reduce the amount referred to in subsection (1) by deducting the following items otherwise included in total revenue:

(a) redemption fees earned on the redemption of investment fund securities sold on a deferred sales charge basis; and

(b) administration fees relating to the recovery of costs from investment funds managed by the person or company for operating expenses paid on behalf of the investment fund by the person or company.

(3) A person or company may reduce the amount referred to in subsection (1) by deducting the following expenses incurred by the person or company in the applicable financial year:

(a) advisory or sub-advisory fees paid by the person or company to another registrant firm in Ontario; and

(b) trailing commissions paid by the person or company to another registrant firm in Ontario.

3.7 Late Fee

(1) Subject to subsection (2), a person or company that is late in paying a participation fee under this Part shall pay an additional fee of one percent of the participation fee payable apart from this section for each business day on which the participation fee remains due and unpaid.

(2) A person or company is not required to pay a fee under subsection (1) in excess of 25 percent of the participation fee otherwise payable under this Part.

PART 4 ACTIVITY FEES

4.1 Activity Fees - A person or company that files a document or takes an action listed in Appendix C shall, concurrently with the filing of the document or taking of the action, pay the activity fee shown in Appendix C beside the description of the document or action.

4.2 Investment Fund Families - Despite section 4.1, only one activity fee need be paid for an application made by or on behalf of investment funds in an investment fund family, if the application pertains to each investment fund.

PART 5 CURRENCY CALCULATIONS

5.1 Currency Calculations - Any calculation of money required to be made under this Rule that results in a currency other than Canadian dollars shall be translated into a Canadian dollar amount at the daily noon exchange rate posted by the Bank of Canada website on the date for which the calculation is made.

PART 6 EXEMPTIONS

6.1 Exemptions - The Director may grant an exemption from the provisions of this Rule, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

PART 7 EFFECTIVE DATE AND TRANSITIONAL

7.1 Effective Date - This Rule comes into force on March 31, 2003.

7.2 Transitional

(1) Each reporting issuer to whom Part 2 will apply shall pay an initial participation fee, no later than 90 days after this Rule came into force, for the remainder of its current financial year.

(2) The fee referred to in subsection (1) shall be calculated by multiplying

(a) the participation fee provided for under Appendix A applicable to the capitalization of the reporting issuer, as determined under section 2.5, 2.6 or 2.7, as at the end of the previous financial year of the reporting issuer, and

(b) the number of entire months remaining in the current financial year of the reporting issuer after the date that this Rule comes into force, divided by 12.

(3) Each unregistered investment fund manager shall pay an initial participation fee, no later than 90 days after this Rule came into force, for the remainder of its current financial year.

(4) The fee referred to in subsection (3) shall be calculated by multiplying

(a) the participation fee provided for under Appendix B applicable to the specified Ontario revenues of the unregistered investment fund manager, as determined under section 3.6, as at the end of the previous financial year of the unregistered investment fund manager; and

(b) the number of entire months remaining in the current financial year of the unregistered investment fund manager after the date that this Rule came into force, divided by 12.

(5) An investment fund the securities of which are in continuous distribution shall pay any fees owing to the Commission based on the amount of securities distributed in Ontario up to the date that this Rule came into force, as determined under the fee requirements that existed before this Rule came into force, on the earlier of

(a) 90 days after this Rule came into force; and

(b) the time of filing of the pro forma prospectus of the investment fund after this Rule came into force.

 

APPENDIX A - CORPORATE FINANCE PARTICIPATION FEES

Capitalization

Participation Fee

$0 to under $25 million

$1,000

$25 million to under $50 million

$2,500

$50 million to under $100 million

$7,500

$100 million to under $250 million

$15,000

$250 million to under $500 million

$25,000

$500 million to under $1 billion

$35,000

$1 billion to under $5 billion

$50,000

$5 billion to under $10 billion

$65,000

$10 billion to under $25 billion

$75,000

Over $25 billion

$85,000

 

APPENDIX B - CAPITAL MARKETS PARTICIPATION FEES

Specified Ontario Revenues

Participation Fee

$0 to under $500,000

$1,000

$500,000 to under $1 million

$5,000

$1 million to under $5 million

$10,000

$5 million to under $10 million

$25,000

$10 million to under $25 million

$50,000

$25 million to under $50 million

$75,000

$50 million to under $100 million

$150,000

$100 million to under $200 million

$250,000

$200 million to under $500 million

$500,000

$500 million to under $1 billion

$650,000

Over $1 billion

$850,000

 

APPENDIX C - ACTIVITY FEES

Document or Activity

Fee

A.

Prospectus Filing

 

1)

Preliminary or Pro Forma Prospectus in Form 41-501F1, (including if PREP procedures are used)

 

 

a)

with Canadian gross proceeds of $5 million or less, or if no proceeds are disclosed

$1,000

 

b)

with Canadian gross proceeds of more than $5 million to $20 million

$5,500

 

c)

with Canadian gross proceeds of more than $20 million

$7,500

 

d)

non-offering prospectus

$2,000

 

Notes:

 

 

 

 

(i)

This applies to most issuers, including investment funds that prepare prospectuses in accordance with Form 41-501F1; investment funds that prepare prospectuses in accordance with Form 81-101F1, Form 15 or Form 45 will pay the fees shown in item 5 below.

 

 

 

(ii)

In calculating gross proceeds, include any "green shoe" options and underwriters' over-allotment options.

 

 

 

(iii)

These filing fees and calculation of gross proceeds are applicable to a preliminary prospectus in Form 41-501F1 filed in connection with special warrant offerings.

 

 

 

(iv)

Where a single prospectus document is filed on behalf of one or more investment funds or issuers, the applicable fee is payable for each investment fund or issuer.

 

2)

Additional fee for Preliminary or Pro Forma Prospectus in Form 41-501F1 of a resource issuer that is accompanied by engineering reports

$2,000

3)

Final Prospectus in Form 41-501F1 showing gross proceeds, or supplemented PREP prospectus showing gross proceeds, if the corresponding preliminary prospectus did not disclose gross proceeds, or pricing supplement to a PREP prospectus in Form 41-501F1, filed by any person or company, including an investment fund

The fee is the amount appropriate to the gross proceeds of the distribution stated in this column opposite item A.1(a), (b) or (c), less $1,000

 

 

Note:

Where a single prospectus document is filed on behalf of one or more investment funds, the applicable fee is payable for each investment fund

 

4)

Preliminary Short Form Prospectus in Form 44-101F3 (including if shelf or PREP procedures are used) or a Registration Statement on Form F-9 or F-10 filed by an issuer that is incorporated or that exists under the laws of Canada or a jurisdiction in connection with a distribution solely in the United States under MJDS as described in 71-101CP.

$2,000

5)

Prospectus Filing by or on behalf of Certain Investment Funds

 

 

a)

Preliminary or Pro Forma Simplified Prospectus and Annual Information Form in Form 81-101F1 and Form 81-101F2

$600

 

b)

Preliminary or Pro Forma Prospectus in Form 15

$600

 

c)

Preliminary or Pro Forma Prospectus in Form 45

$600

 

d)

Final Simplified Prospectus and Annual Information Form in Form 81-101F1 and Form 81-101F2, Final Prospectus in Form 15, and Final Prospectus in Form 45

None

 

Note:

Where a single prospectus document is filed on behalf of one or more investment funds, the applicable fee is payable for each investment fund.

 

B.

Fees relating to Rule 45-501 Exempt Distributions

 

1.

Application for recognition, or renewal of recognition, as an accredited investor

$500

C.

Filing of Rights Offering Circular in Form 45-101F

$2,000

D.

Filing of Prospecting Syndicate Agreement

$500

E.

Applications for Discretionary Relief

 

1)

Application under clause 72(1)(m), sections 74, 104, and 127, subsection 140(2), or section 147 of the Act (not including an application under section 3.1 of Rule 31-503 Limited Market Dealers)

$5,500

 

 

 

(plus $2,000 if the applicant does not pay a participation fee)

2)

Application for exemption from Multilateral Instrument 45-102, OSC Rule 45-501, OSC Rule 45-502, OSC Rule 45-503, National Instrument 51-101, OSC Rule 56-501, OSC Rule 61-501, National Instrument 62-101, National Instrument 62-103, or OSC Rule 62-501

$5,500

 

 

 

(plus $2,000 if the applicant does not pay a participation fee)

3)

Except as provided in items 1 and 2 above, application for discretionary relief from, or regulatory approval under, any other section of the Act, Regulation and any Rule of the Commission, excluding the following applications for which no fee is required:

$1,500 per section up to a maximum of $5,500

 

 

(plus $2,000 if the applicant does not pay a participation fee)

 

 

Note:

Note: Where an application is made by or on behalf of one or more investment funds in an investment fund family, see section 4.2 of the Rule.

 

 

i)

application under subsection 38(3), subsection 72(8) or section 83 of the Act

 

 

ii)

application under section 144 of the Act for an order revoking a cease-trade order to permit trades solely for the purpose of establishing a tax loss in accordance with OSC Policy 57-602

 

 

(iii)

relief from section 213 of the Loan and Trust Corporations Act (Ontario)

 

 

(iv)

application for waiver of the requirements of OSC Rule 51-501

 

 

(v)

application where the discretionary relief or regulatory approval is evidenced by the issuance of a receipt for the applicant's final prospectus{1}

 

F.

Pre-Filings

the lower of $2,000 and the amount that would have been payable pursuant to this Appendix if the formal filing were made without the pre-filing

 

 

Note:

The fee for a pre-filing shall be credited against the applicable fee payable if and when the formal filing is actually proceeded with; otherwise, the fee is non-refundable.

 

G.

G. Take-Over Bid and Issuer Bid Documents

 

1)

Filing of a take-over bid or issuer bid circular under section 98 of the Act

$5,500

 

 

 

(plus $2,000 if the filer or an affiliate of the filer does not pay a participation fee)

2)

Filing of a notice of change or variation under subsection 98(2) or subsection 98(4) of the Act

$500

H.

Filing an initial annual information form under National Instrument 44-101

$2,000

I.

Registration-Related Activity

 

1.

New registration of a firm in any category of registration

$800

 

 

Note:

If a firm is registering as both a dealer and an adviser, it will be required to pay two activity fees.

 

2.

Change in registration category

$800

 

Note:

This would include a dealer becoming an adviser or vice versa, or changing a category of registration within the general categories of dealer or adviser. A dealer adding a category of registration, such as a dealer becoming both a dealer and an adviser, would be covered in the preceding section.

 

3.

Registration of a new director, officer or partner (trading and/or advising), salesperson or representative

$400 per person

 

 

Note:

Registration of a new non-trading or non-advising director, officer or partner does not trigger an activity fee.

 

 

 

Note:

If an individual is registering as both a dealer and an adviser, they will be required to pay two activity fees

 

4.

Change in status from a non-trading and/or non-advising capacity to a trading and/or advising capacity

$400 per person

5.

Registration of a new registrant firm, or the continuation of registration of an existing registrant firm, resulting from or following an amalgamation of registrant firms

$6,000

6.

Application for amending terms and conditions of registration

$1,500

J.

Notice to Director under section 104 of the Regulation

$1,500

K.

Request for certified statement from the Commission or the Director under section 139 of the Act

$500

L.

Commission Requests

 

1)

Request for a photocopy of Commission records

$0.50 per page

2)

Request for a search of Commission records

$10

M.

Late Filing

 

1)

Fee for late filing of any of the following documents:

 

 

a)

Annual financial statements and interim financial statements

$100 per business day

 

b)

Renewal annual information form filed in accordance with National Instrument 44-101 ("Renewal AIF")

(Subject to a maximum of $5,000 for all documents within one financial year)

 

c)

Annual information form, other than Renewal AIF,

 

 

(d)

Annual management report of fund performance and quarterly management report of fund performance

 

 

(e)

Management's discussion and analysis

 

 

(f)

Material change report

 

 

(g)

Report on Form 45-501F1 under subsection 72(3)

 

 

(h)

Report of distributions under OSC Rule 45-503

 

 

(i)

Strip bond information statement under subsection 4.2(3) of OSC Rule 91-501

 

 

(j)

Report on Form 38 under subsection 117(1) of the Act

 

 

(k)

any other notice, document, report or form required by Ontario securities law to be filed or submitted within a prescribed period

 

2)

Fee for late filing of insider report on Form 55-102F2

$50 per business day, per issuer (subject to a maximum of $1,000 per issuer within one financial year)

{1} For example, an application for relief from OSC Rule 41-501 or NI81-101.

FEE RULE

 

FORM 13-502F1

ANNUAL PARTICIPATION FEE FOR REPORTING ISSUERS

_________________________

Reporting Issuer Name:

_________________________

 

Participation Fee for the Financial Year Ending:

_________________________

Complete Only One of 1, 2 or 3:

1. Class 1 Reporting Issuers (Canadian Issuers - Listed in Canada and/or the U.S.)

Market value of equity securities:

 

 

 

_________________________________

 

 

 

Total number of equity securities of a class or series outstanding at the end of the issuer's most recent financial year

 

__________

 

Simple average of the closing price of that class or series as of the last trading day of each of the months of the financial year (under paragraph 2.5(a)(ii)(A) or (B) of the Rule)

X

__________

 

Market value of class or series

=

__________

 

 

 

 

 

 

__________(A)

(Repeat the above calculation for each class or series of equity securities of the reporting issuer that are listed and posted for trading, or quoted on a marketplace in Canada or the United States of America at the end of the financial year)

 

 

__________(A)

 

Market value of corporate debt or preferred shares of Reporting Issuer or Subsidiary Entity referred to in Paragraph 2.5(b)(ii):

 

 

 

[Provide details of how determination was made.]

 

 

__________(B)

 

(Repeat for each class or series of corporate debt or preferred shares)

 

 

__________(B)

 

Total Capitalization (add market value of all classes and series of equity securities and market value of debt and preferred shares) (A) + (B) =

 

 

__________

 

Total fee payable in accordance with Appendix A of the Rule

 

 

__________

 

Reduced fee for new Reporting Issuers (see section 2.8 of the Rule)

 

 

__________

 

Total Fee Payable

×

Number of months remaining in financial year

 

 

 

 

 

year or elapsed since most recent financial year

 

 

 

 

 

____________________________________

 

 

 

 

 

12

 

 

 

Late Fee, if applicable

 

 

 

 

__________

(please include the calculation pursuant to section 2.9 of the Rule)

 

 

 

2. Class 2 Reporting Issuers (Other Canadian Issuers)

Financial Statement Values (use stated values from the audited financial statements of the reporting issuer as at its most recent audited year end):

 

 

Retained earnings or deficit

__________

 

Contributed surplus

__________

 

Share capital or owners' equity, options, warrants and preferred shares (whether such shares are classified as debt or equity for financial reporting purposes)

__________

 

Long term debt (including the current portion)

__________

 

Capital leases (including the current portion)

__________

 

Minority or non-controlling interest

__________

 

Items classified on the balance sheet between current liabilities and shareholders' equity (and not otherwise listed above)

__________

 

Any other item forming part of shareholders' equity and not set out specifically above

__________

 

Total Capitalization

__________

 

Total Fee payable pursuant to Appendix A of the Rule

__________

 

Reduced fee for new Reporting Issuers (see section 2.8 of the Rule)

__________

 

Total Fee Payable

×

Number of months remaining in financial year

 

 

 

year or elapsed since most recent financial year

 

 

 

____________________________________

__________

 

 

12

 

Late Fee, if applicable (please include the calculation pursuant to section 2.9 of the Rule)

__________

3. Class 3 Reporting Issuers (Foreign Issuers)

Market value of securities:

 

 

 

__________________________

 

 

 

If the issuer has debt or equity securities listed or traded on a marketplace located anywhere in the world (see paragraph 2.7(a) of the Rule):

 

 

 

Total number of the equity or debt securities outstanding at the end of the reporting issuer's most recent financial year

 

__________

 

 

Simple average of the published closing market price of that class or series of equity or debt securities as of the last trading day of each of the months of the financial year on the marketplace on which the highest volume of the class or series of securities were traded in that financial year.

X

__________

 

 

Percentage of the class registered in the name of, or held beneficially by, an Ontario person

X

__________

 

 

(Repeat the above calculation for each class or series of equity or debt securities of the reporting issuer)

=

 

__________

 

Capitalization (add market value of all classes and series of securities)

 

 

__________

 

Or, if the issuer has no debt or equity securities listed or traded on a marketplace located anywhere in the world (see paragraph 2.7(b) of the Rule):

 

 

 

 

Financial Statement Values (use stated values from the audited financial statements of the reporting issuer as at its most recent audited year end):

 

 

 

 

Retained earnings or deficit

 

 

__________

 

Contributed surplus

 

 

__________

 

Share capital or owners' equity, options, warrants and preferred shares (whether such shares are classified as debt or equity for financial reporting purposes)

 

 

__________

 

Long term debt (including the current portion)

 

 

__________

 

Capital leases (including the current portion)

 

 

__________

 

Minority or non-controlling interest

 

 

__________

 

Items classified on the balance sheet between current liabilities and shareholders' equity (and not otherwise listed above)

 

 

__________

Any other item forming part of shareholders' equity and not set out specifically above

 

 

__________

 

Percentage of the outstanding equity securities registered in the name of, or held beneficially by, an Ontario person

X

 

__________

 

Capitalization

 

 

__________

 

Total Fee payable pursuant to Appendix A of the Rule

 

 

__________

 

Reduced fee for new Reporting Issuers (see section 2.8 of the Rule)

 

 

__________

 

Total Fee Payable

×

Number of months remaining in financial year

 

 

 

 

 

year or elapsed since most recent financial year

 

 

 

 

 

____________________________________

 

 

__________

 

 

12

 

 

 

Late Fee, if applicable

 

 

 

 

 

(please include the calculation pursuant to section 2.9 of the Rule)

 

 

__________

Notes and Instructions

1. This participation fee is payable by reporting issuers other than investment funds that do not have an unregistered investment fund manager.

2. The capitalization of income trusts or investment funds that have no investment fund manager, which are listed or posting for trading, or quoted on, a marketplace in either or both of Canada or the U.S. should be determined with reference to the formula for Class 1 Reporting Issuers. The capitalization of any other investment fund that has no investment fund manager should be determined with reference to the formula for Class 2 Reporting Issuers.

3. All monetary figures should be expressed in Canadian dollars and rounded to the nearest thousand. Closing market prices for securities of Class 1 and Class 3 Reporting Issuers should be converted to Canadian dollars at the [daily noon] in effect at the end of the issuer's last financial year, if applicable.

4. A reporting issuer shall pay the appropriate participation fee no later than the date on which it is required to file its annual financial statements.

5. The number of listed securities and published market closing prices of such listed securities of a reporting issuer may be based upon the information made available by a marketplace upon which securities of the reporting issuer trade, unless the issuer has knowledge that such information is inaccurate and the issuer has knowledge of the correct information.

6. Where the securities of a class or series of a Class 1 Reporting Issuer have traded on more than one marketplace in Canada, the published closing market prices shall be those on the marketplace upon which the highest volume of the class or series of securities were traded in that financial year. If none of the class or series of securities were traded on a marketplace in Canada, reference should be made to the marketplace in the United States on which the highest volume of that class or series were traded.

7. Where the securities of a class or series of securities of a Class 3 Reporting Issuer are listed on more than one exchange, the published closing market prices shall be those on the marketplace on which the highest volume of the class or series of securities were traded in the relevant financial year.

FEES RULE

FORM 13-502F2

 

ADJUSTMENT OF FEE PAYMENT

UNDER SUBSECTION 2.4(2) OF RULE 13-502

_________________________

Reporting Issuer Name:

_________________________

 

Participation Fee for the Financial Year Ending:

_________________________

 

8.

State the amount paid under subsection 2.3(3) of Rule 13-502:

____________________

9.

Show calculation of actual capitalization based on audited financial statements:

 

Financial Statement Values (use stated values from the audited financial statements of the reporting issuer as at its most recent audited year end):

Retained earnings or deficit

 

__________

 

Contributed surplus

 

__________

 

Share capital or owners' equity, options, warrants and preferred shares (whether such shares are classified as debt or equity for financial reporting purposes)

__________

 

Long term debt (including the current portion)

 

__________

 

Capital leases (including the current portion)

 

__________

 

Minority or non-controlling interest

 

__________

 

Items classified on the balance sheet between current liabilities and shareholders' equity (and not otherwise listed above)

__________

 

Any other item forming part of shareholders' equity and not set out specifically above

__________

 

Total Capitalization

 

__________

 

Total Fee payable:

 

____________________

10. Difference between 1 and 2:

__________

 

11. Indicate refund due (balance owing):

__________

 

FEES RULE

FORM 13-502 F3

 

PARTICIPATION FEE CALCULATION

FOR REGISTRANT FIRMS

AND UNREGISTERED FUND MANAGERS

_________________________

Notes and Instructions

1. Registrant firms are required to complete each Part that applies to their particular category of registration. Firms may have multiple registration categories and will be required to complete each relevant part as outlined below:

Part I - Investment Dealers Association of Canada members

Part II - Mutual Fund Dealers Association of Canada members

Part III - Advisers,{1} other Dealers{2} and unregistered Investment Fund Managers

2. The components of revenue reported in each Part should be based on the same principles as the comparative statement of income which is prepared in accordance with generally accepted accounting principles ("GAAP"), or such equivalent principles applicable to the audited financial statements of international dealers and advisers and foreign investment fund managers, except that revenues should be reported on an unconsolidated basis. It is recognized that the components of the revenue classification may vary between firms. However, it is important that each firm be consistent between periods.

3. Each Part should be read in conjunction with the related notes and instructions of that section where applicable.

4. Members of the Investment Dealers Association of Canada may refer to Statement E of the Joint Regulatory Financial Questionnaire and Report for guidance.

5. Members of the Mutual Fund Dealers Association of Canada may refer to Statement D of the MFDA Financial Questionnaire and Report for guidance.

6. Comparative figures are required for the registrant firms' and unregistered investment fund managers' year end date.

7. Participation fee revenue will be based on the portion of total revenue that can be attributed to Ontario. The percentage attributable to Ontario for the reported year end should be the provincial allocation rate used in the corporate tax return for the same fiscal period. For firms that do not have a permanent establishment in Ontario, the percentage attributable to Ontario will be based on the proportion of total revenues generated from capital markets activities in Ontario. Refer to Part IV.

8. All figures should be expressed in Canadian dollars and rounded to the nearest thousand.

9. Information reported on this questionnaire must be certified by two members of senior management in Part V to attest to its completeness and accuracy.

Revenue for Participation Fee

_________________________

Firm Name:

_________________________

 

Participation Fee for the Calendar Year:

_________________________

 

Part I - Investment Dealers Association of Canada Members

 

 

Current Year

Prior Year

 

$

$

REVENUE SUBJECT TO PARTICIPATION FEE

 

 

 

1. Line 18 of Statement E of the Joint Regulatory Financial Questionnaire and Report

__________

__________

 

Part II - Mutual Fund Dealers

 

REVENUE SUBJECT TO PARTICIPATION FEE

 

 

 

1. Line 12 of Statement D of the MFDA Financial Questionnaire and Report

__________

__________

 

Part III - Advisers, Other Dealers, and Unregistered Investment Fund Managers

 

1. Gross Revenue as per the audited financial statements (note 1)

__________

__________

Less the following items:

 

 

 

2. Redemption Fees (note 2)

__________

__________

3. Administration Fees (note 3)

__________

__________

4. Advisory or Sub-Advisory fees paid to other Ontario registrant firms (note 4)

__________

__________

5. Trailer fees paid to other Ontario registrant firms (note 5)

__________

__________

6. Line 12 of Statement D (reported above if dually registered) (note 6)

__________

__________

7. Total Deductions - sum of lines 2 to 6

__________

__________

8. REVENUE SUBJECT TO PARTICIPATION FEE (line 1 less line 7)

__________

__________

[See Notes and Instructions for Part III]

Notes and Instructions - Part III

1. Gross Revenue is defined as the sum of all revenues reported on a gross basis as per the audited financial statements prepared in accordance with GAAP, or such equivalent principles applicable to the audited financial statements of international dealers and advisers and foreign investment fund managers, except that revenues should be reported on an unconsolidated basis. Items reported on a net basis must be adjusted for purposes of the fee calculation.

2. Redemption fees earned upon the redemption of investment fund units sold on a deferred sales charge basis are permitted as a deduction from total revenue on this line.

3. Administration fees permitted as a deduction from line 1 are limited solely to those that represent the recovery of costs from the mutual funds for operating expenses paid on their behalf by the registrant firm or unregistered investment fund manager. Operating expenses include legal, audit, trustee, custodial and safekeeping fees, registrar and transfer agent charges, taxes, rent, advertising, unitholder services and financial reporting costs.

4. Where the advisory services of another Ontario registrant firm are used by the registrant firm to advise on a portion of its assets under management, such sub-advisory costs are permitted as a deduction on this line.

5. Trailer fees paid to other Ontario registrant firms are permitted as a deduction on this line.

6. To the extent that a registrant firm is also registered under the category of a mutual fund dealer defined in subsection 98(7) of the Regulations in the Securities Act (Ontario) and to the extent that revenues attributable to this category of registration were already reported in Part II, this amount may be deducted from total revenue on this line.

Part IV - Calculation of Revenue Attributable to Ontario

_________________________

Firm Name:

_________________________

 

Participation Fee for the Financial Year Ending:

_________________________

 

Gross Revenue subject to Participation Fee:

$

 

Line 1 from Part I

__________

Line 1 from Part II

__________

Line 8 from Part III

__________

 

Total

__________

 

Percentage attributable to Ontario

 

Percentage attributable to Ontario (based on most recent tax return)

_________%

 

Specified Revenue attributed to Ontario

__________

 

Total Fee payable (refer to Appendix B of the Rule)

__________

Part V - Management Certification

_________________________

Registrant Firm Name:

_________________________

We have examined the attached statements and certify that, to the best of our knowledge, they present fairly the revenues of the firm for the period ended __________ and are prepared in agreement with the books of the firm.

We certify that the reported revenues of the firm are complete and accurate and in accordance with generally accepted accounting principles.

Name and Title

Signature

Date

 

1. ____________________

____________________

____________________

____________________

 

 

2. ____________________

____________________

____________________

____________________

 

 

FEES RULE

FORM 13-502F4

 

ADJUSTMENT OF FILING OR FEE PAYMENT

UNDER SUBSECTION 3.3(4) OF RULE 13-502

_________________________

Registrant Firm Name:

_________________________

 

Participation Fee for the Calendar Year:

_________________________

1. State the amount of the participation fee estimated under the filing of Form 13-502F3 previously made: __________

2. Show the amount of the participation fee based on the audited financial statements for the last completed financial year: __________

3. [Include revised and completed Form 13-502F3.]

4. Difference between 1 and 2: __________

5. Indicate refund due (balance owing): __________

ONTARIO SECURITIES COMMISSION

COMPANION POLICY 13-502CP

FEES

PART 1 PURPOSE OF COMPANION POLICY

1.1 Purpose of Companion Policy - The purpose of this Companion Policy is to state the views of the Commission on various matters relating to Rule 13-502 Fees (the "Rule"), including

(a) an explanation of the overall approach of the Rule;

(b) explanation and discussion of various parts of the Rule; and

(c) examples of some matters described in the Rule.

PART 2 PURPOSE AND GENERAL APPROACH OF THE RULE

2.1 Purpose and General Approach of the Rule

(1) The general approach of the Rule is to establish a fee regime that accomplishes three primary purposes - to reduce the overall fees charged to market participants from what existed previously in Ontario, to create a clear and streamlined fee structure and to adopt fees that accurately reflect the Commission's costs of providing services.

(2) The fee regime implemented by the Rule is based on the concept of "participation fees" and "activity fees".

2.2 Participation Fees

(1) Participation fees generally are designed to represent the benefit derived by market participants from participating in Ontario's capital markets. Reporting issuers, registrant firms and unregistered investment fund managers are required to pay participation fees annually. The participation fee is based on a measure of the market participant's size, which is intended to serve as a proxy for the market participant's use of the Ontario capital markets. The amounts of the participation fees have been based on the cost of a broad range of regulatory services that cannot be practically or easily attributed to individual activities or entities. Participation fees replace most of the continuous disclosure filing fees and other activity fees formerly charged to market participants under the previous fees regime.

(2) The Rule provides for

(a) corporate finance participation fees, which are applicable to reporting issuers other than most investment funds; and

(b) capital markets participation fees, which are applicable to registrant firms and unregistered investment fund managers.

2.3 Activity Fees - Activity fees are designed to represent the direct cost of Commission staff resources expended in undertaking certain activities requested of staff by market participants, for example in connection with the review of prospectuses, applications for discretionary relief or the processing of registration documents. Market participants are charged activity fees only for activities undertaken by staff at the request of the market participant. Activity fees are charged for a limited number of activities only and are flat rate fees based on the average cost to the Commission of providing the service.

2.4 No Refunds

(1) Generally speaking, a person or company that pays a fee under the Rule is not entitled to a refund of that fee. For example, there is no refund available for an activity fee paid in connection with an action that is subsequently abandoned by the payor of the fee. Also, there is no refund available for a participation fee paid by a reporting issuer, registrant firm or unregistered investment fund manager that loses that status later in the financial year for which the fee was paid.

(2) An exception to the principle discussed in subsection (1) is provided for in subsection 2.3(3) of the Rule. This provision allows for the adjustment of a participation fee paid by a Class 2 or some Class 3 reporting issuers based on a good faith estimate of its capitalization as at the end of a financial year if its financial statements are not available.

(3) The Commission will also consider requests for adjustments to fees paid in the case of incorrect calculations made by fee payors.

2.5 Indirect Avoidance of Rule -The Commission may examine arrangements or structures implemented by market participants and their affiliates that raise the suspicion of being structured for the purpose of reducing the fees payable under the Rule. In particular, the Commission will be interested in circumstances in which revenues from registrable activities carried on by a corporate group are not treated as revenues of a registrant firm, thereby possibly artificially reducing the specified Ontario revenue calculations used in determining fees payable under the Rule.

PART 3 CORPORATE FINANCE PARTICIPATION FEES

3.1 Application to Investment Funds - Section 2.1 of the Rule excludes investment funds from the application of Part 2 of the Rule, except if they do not have an investment fund manager. An investment fund that has an investment fund manager does not have to pay corporate finance participation fees because its manager will be paying the capital markets participation fees in respect of revenues generated from managing the investment fund. However, if the investment fund does not have an investment fund manager, the fund is made subject to the corporate finance participation fees to ensure that it does not have an unfair advantage over other reporting issuers that are required to pay such fees.

3.2 Fees Payable in Advance

(1) Section 2.2 of the Rule prescribes the annual payment of a participation fee by each reporting issuer other than those that are exempt from this fee under section 2.1 of the Rule. Subsection 2.2(1) of the Rule requires the payment of a fee, for each of its financial years, to be based on the capitalization of the reporting issuer as at the end of its previous financial year. Subsection 2.3(1) of the Rule requires the payment of this participation fee to be no later than the date on which the reporting issuer's annual financial statements are required to be filed.

(2) The Commission notes that the effect of sections 2.2 and 2.3 of the Rule is that a participation fee is payable in advance by a reporting issuer for its current financial year, even though the fee is based on the capitalization of the reporting issuer at the end of its previous financial year.

(3) Section 2.8 of the Rule pertains to the payment of a participation fee for a new reporting issuer. This section is consistent with the principle that a participation fee is payable in advance. A new reporting issuer is required to pay a participation fee when it becomes a reporting issuer for the remainder of its current financial year; the reporting issuer is required to calculate an annual participation fee in accordance with the requirements of section 2.8 of the Rule, and pay a proportionate amount based on the number of months left in the financial year.

(4) A person or company that ceases to be a reporting issuer in a financial year is not entitled to any refund of the participation fee payable for that financial year, as discussed in subsection 2.4(1) of this Policy.

3.3 Determination of Corporate Debt Market Value

(1) Section 2.5 of the Rule requires the calculation of the capitalization of a Class 1 reporting issuer to include the market value, at the end of the financial year for which a participation fee is being calculated, of each class or series or corporate debt or preferred shares of the reporting issuer or, if applicable, a subsidiary entity of the reporting issuer. It is noted that the requirement that corporate debt or preferred shares be valued in accordance with market value excludes from the calculation corporate debt or preferred shares that are not traded in a market and that therefore do not have a market. For instance, corporate debt of an issuer to its bankers generally would have no market value and would not be included in these calculations.

(2) The Commission recognizes that the determination of the market value of corporate debt or preferred shares is a more difficult task than the determination of the market value of equity securities, which are usually listed and for which trading prices are generally readily available. Therefore, the Commission wishes to allow reporting issuers to use the best available source for pricing its corporate debt and preferred shares. The Commission notes that, at the time of this Policy, the best available source may be one or more of

(a) pricing services;

(b) quotations from one or more dealers; or

(c) transaction prices on recent transactions.

3.4 Class 3 Reporting Issuers - Paragraph 2.7(b) of the Rule requires that the participation fee for a Class 3 reporting issuer that has no debt or equity securities listed or traded on a marketplace located anywhere in the world be determined by reference to the percentage of outstanding equity securities of any class of the Class 3 reporting issuer registered in the name of, or held beneficially by, Ontario persons. It is noted that this calculation would be made on the basis of the aggregate numbers of all outstanding equity securities of all classes of equity securities of the Class 3 reporting issuer.

3.5 "Green Shoes" and Over-Allotment Options - Paragraph 2.8(2)(b) of the Rule requires that the participation fee for Class 1 and Class 3 reporting issuers be based on the issue price of the securities being distributed under a prospectus. The Commission notes that this calculation should assume the issue of any securities under "green shoes" or over-allotment options.

PART 4 CAPITAL MARKET PARTICIPATION FEES

4.1 Fees Payable in Advance

(1) As with corporate finance participation fees, capital market participation fees are paid in advance by a registrant firm or an unregistered investment fund manager. The discussion contained in section 3.2 of this Policy is relevant to capital market participation fees as well as corporate finance participation fees.

(2) Subsections 3.2(1) and 3.3(1) of the Rule require each registrant firm to file its Form 13-502F3 respecting its participation fee by December 1, and to pay its participation fee by December 31, in each year. The fixing of one date for each of the filing and fee payment by a registrant firm is consistent with the National Registration Database ("NRD") system to be implemented by the Canadian securities regulatory authorities; the NRD system contemplates a common renewal date for all registrants of December 31 in each year. This participation fee is paid for the next calendar year, based on the specified Ontario revenues for its previous financial year, even if the financial year of the registrant firm ends on December 31. Therefore, a registrant firm with a financial year end of December 31 will, by December 1, 2002, file its Form 13-502F3, and pay its participation fee by December 31, 2002, in order to pay its participation fee for the 2003 calendar year. Even though that filing and payment will satisfy the registrant firm's obligations contained in Part 3 of the Rule for the 2003 calendar year, the calculation of the participation fee will be based on the specified Ontario revenues of the registrant firm for the financial year ended December 31, 2002.

(3) A registrant firm with a financial year end of June 30, will, for instance, file a Form 13-502F3 by December 1, 2002 and pay its participation fee by December 31, 2002. That filing and payment will satisfy the registrant firm's obligations contained in Part 3 of the Rule for the 2003 calendar year, but the calculation of the participation fee will be based on the specified Ontario revenues of the registrant firm for the financial year ended June 30, 2002.

(4) An unregistered investment fund manager must file its Form 13-502F3 and pay its participation fee within 90 days after the end of each of its financial years. The participation fee for an unregistered fund manager is for its current financial year, rather than for a calendar year, and is calculated on the basis of the audited financial statements of the unregistered investment fund manager for its previous financial year. Therefore, an unregistered investment fund manager having a financial year end of June 30, will in 2003 file its Form 13- 502F3 and pay its participation fee by September 29, 2003. That payment will satisfy the unregistered investment fund manager's obligations contained in Part 3 of the Rule for its financial year of July 1, 2003 to June 30, 2004, but the calculation of the participation fee will be based on the specified Ontario revenues of the unregistered investment fund manager firm for the financial year ended June 30, 2003.

4.2 Late Fees - Section 3.7 of the Rule prescribes the payment of additional fees in case of overdue payment of fees. The Commission notes that it will, in appropriate circumstances, consider tardiness in the payment of fees as a matter going to the fitness for registration of a registrant firm in considering the registration status of that registrant firm. The Commission may also consider other appropriate measures in the case of late payment of fees by an unregistered investment fund manager, such as prohibiting the delinquent unregistered investment fund manager from continuing to manage any investment fund or cease trading the investment funds managed by that manager.

4.3 Form of Payment of Fees - Unregistered fund managers will not be participants in the NRD, so it will be necessary for them to make filings and pay fees under Part 3 of the Rule by paper copy. The filings and payment should be sent to the Ontario Securities Commission, Investment Funds.

4.4 "Capital Market Activities" - A number of the capital market participation fees involve consideration of the capital market activities undertaken by a person or company. The term "capital market activities" is defined in Section 1.1 of the Rule to include "activities for which registration under the Act or an exemption from registration is required". The Commission is of the view that these activities would include, without limitation, trading in securities, providing securities-related advice and portfolio management services. The Commission notes that corporate advisory services may not require registration or an exemption from registration and would therefore, in those contexts, not be capital markets activities.

4.5 Owners' Equity - A Class 2 reporting issuer and a Class 3 reporting issuer that has no debt or equity securities listed or traded on a marketplace located anywhere in the world, calculate its capitalization on the basis of certain items reflected in its audited balance sheet. One such item is "share capital or owners' equity". The Commission notes that "owners' equity" is designed to describe the equivalent of share capital for non-corporate issuers, such as partnerships or trusts.

PART 5 ACTIVITY FEES

5.1 Late Filing Fee

(1) Item M.1 of Appendix C of the Rule lists the documents the late filing of which will be subject to a fee of $100 per business day, up to a maximum of $5,000 for all documents within one financial year. The last item in the list refers to "any other notice, document, report or form required by Ontario securities law to be filed or submitted within a prescribed period".

(2) It is noted that the phrase "Ontario securities law" includes "a decision of the Commission or a Director to which [a] person or company is subject". Some orders or decisions of the Commission or a Director have granted exemptions to investment funds from certain conflict-of-interest provisions of the Act or National Instrument 81-102, on the condition that reports of certain transactions are filed on SEDAR within a prescribed period. The purpose of this condition would ensure transparency in such transactions. Market participants are reminded that the fee for late filing contained in the Rule would be applicable to those filings, as well as to filings required under the Act, the Regulation or the Rules.

5.2 Permitted Deductions

(1) For the purpose of calculating specified Ontario revenues that would be the basis for determining the participation fee payable by a registrant firm that is not a member of the IDA or MFDA or an unregistered investment fund manager, subsections 3.6(2) and (3) permit certain deductions to be made. These deductions are intended to prevent "double counting" of revenues that would otherwise occur in the absence of the deductions.

(2) It is noted that the permitted deduction of administration fees is limited solely to those that represent the recovery of costs from investment funds for operating expenses paid on their behalf's by the registrant firm or unregistered investment fund manager. No registrant firm or unregistered investment fund manager may make a deduction for more than the amount of administration fees it has paid on behalf of an investment fund managed by the registrant firm or unregistered investment fund manager.

5.3 Investment Funds - Section 4.2 of the Rule provides for the payment of only one fee for an application made by or on behalf of investment funds in an investment fund family, if the application pertains to each investment fund. It is contemplated that discretionary relief required by investment funds in an investment fund family in circumstances that are the same for all of them can be sought by way of a single application.

5.4 Calculation Examples - Appendices A through E contain some examples of how fees would be calculated under the Rule.

 

Appendix A

Reporting Issuer

Assume that:

  • a reporting issuer is an Ontario corporation that was not previously a reporting issuer in Ontario
  • the issuer's financial year-end is December 31
  • the issuer obtains a receipt for the prospectus in connection with its initial public offering on August 17
  • the issuer's capitalization on August 17, as determined in accordance with section 2.6 of the Rule, is $22 million, before taking into account the proceeds of an IPO
  • the issuer becomes listed on the Toronto Stock Exchange in November, and its capitalization as of December 31 as determined in accordance with section 2.5 of the Rule is $55 million

Item

Participation Fee

Activity Fee

files an application pursuant to section 74 of the Act for relief from sections 25 and 53 of the Act prior to becoming a reporting issuer

 

$7,500{1}

 

 

($5,500 plus $2,000 because issuer does not pay a participation fee)

files a preliminary prospectus in connection with initial public offering, where the preliminary prospectus shows gross proceeds of $4 million

 

$1,000{2}

files a final prospectus

 

nil

becomes a reporting issuer under the Act upon the issuance of a receipt for a prospectus on August 17

$833.33{3}

 

 

($2,500 times 4 full remaining months divided by 12)

 

files a material change report within prescribed period

 

nil

files application pursuant to section 38(3) of the Act

 

nil

files application for relief pursuant to clause 80(b)(iii) of the Act

 

$1,500

files application for relief pursuant to sections 104 and 121 of the Act

 

$5,500

files AIF pursuant to Rule 51-501

 

nil

files annual proxy materials

 

nil

timing - files annual financial statements on May 20 (within prescribed period)

 

nil

files a Notice of Intention to Make an Issuer Bid

 

nil

files a Form 42 Report of Issuer Bid

 

nil

files insider trading report within prescribed period

 

nil

files preliminary prospectus that does not disclose gross proceeds

 

$1,000{4}

files final prospectus with gross proceeds of $75 million

 

$6,500{5}

 

 

($7,500 less $1,000)

files initial AIF under National Instrument 44-101

 

$2,000{6}

files preliminary short form prospectus

 

$2,000

files short form prospectus

 

nil

files material change report 5 days late

 

$500{7}

{1} See item E.1 of Appendix C of the Rule.

{2} See item A.1(a) of Appendix C of the Rule.

{3} See subsection 2.8(1) and Appendix A of the Rule.

{4} See item A.1(a) of Appendix C of the Rule.

{5} See item A.1(c) of Appendix C of the Rule.

{6} See item H of Appendix C of the Rule.

{7} See item M.1 of Appendix C of the Rule.

Appendix B

Dealer - Member of the Investment Dealers Association of Canada

Assume that:

  • Financial year-end is December 31st
  • Firm had specified Ontario revenues of $150 million as at December 31, 2001
  • audited financial statements have to be filed

Item

Participation Fee

Activity Fee

files Form 13-502F1 stating specified Ontario revenues of $150 million

$250,000{8}

 

files annual financial statements

 

nil

1 renewal of registration

 

nil

3 appointments of new trading officers/directors

 

$400 × 3 = $1,200{9}

24 appointments of salespersons

 

$400 × 24 = $9,600{10}

28 new branches

 

Nil

4 branch closures

 

Nil

12 terminations of salespersons

 

Nil

1 termination of officer

 

Nil

2 requests for change in the status of officers from non-trading to trading

 

$400 × 2 = $800{11}

{8} See Appendix B of the Rule.

{9} See item I.3 of Appendix C of the Rule.

{10} See item I.3 of Appendix C of the Rule.

{11} See item I.4 of Appendix C of the Rule.

Appendix C

Mutual Fund Dealer ("MFD")

Assume that:

  • MFD's financial year-end is March 31st
  • MFD had specified Ontario revenues of $35 million as at March 31, 2001
  • MFD currently has 12 sales representatives and 2 branch offices
  • audited financial statements have to be filed
  • MFD is applying for discretionary relief from a registration requirement in the Act

Item

Participation Fee

Activity Fee

files Form 13-502F3 stating specified Ontario revenues of $35 million

$75,000{12}

 

files for discretionary relief of one requirement under the Act

 

$1,500{13}

files annual financial statements

 

Nil

1 renewal of registration

 

Nil

2 appointments of new officers/directors

 

$400 × 2 = $800{14}

8 appointments of new salespersons

 

$400 × 8 = $3,200{12}

3 new branches

 

Nil

change in business name

 

Nil

2 terminations of sales representatives

 

Nil

1 termination of officer

 

Nil

2 requests for change in the status of officers

 

$400 × 2 = $800{15}

{12} See Appendix B of the Rule.

{13} See item E.3 of Appendix C of the Rule.

{14} See item I.3 of Appendix C of the Rule.

{15} See item I.4 of Appendix C of the Rule.

Appendix D

Investment Counsel/Portfolio Manager ("ICPM")

Assume that:

  • ICPM's financial year-end is December 31st
  • ICPM had specified Ontario revenues of $600 million as at December 31, 2001
  • audited financial statements have to be filed

Item

Participation Fee

Activity Fee

files Form 13-502F3 stating specified Ontario revenues of $600 million

$650,000{16}

 

files annual financial statements

 

Nil

1 renewal of registration

 

Nil

5 appointments of new advising officers

 

$400 × 5 = $2,000{17}

1 appointments of new non-advising officer

 

Nil

1 application for exemption from Rule 31-502 requirements

 

$1,500{18}

{16} See Appendix B of the Rule.

{17} See item I.3 of Appendix C of the Rule.

{18} See item E.3 of Appendix C of the Rule.

Appendix E

Unregistered Investment Fund Manager ("UIFM")

Assume that:

  • UIFM's financial year-end is December 31st
  • UIFM had specified Ontario revenues of $375 million as at December 31, 2001
  • UIFM currently manages 40 investment funds, 38 (IF1-IF38) of which are in continuous distribution and subject to NI81-101, while 2 (IF39 and IF40) are listed and traded on the Toronto Stock Exchange
  • UIFM is establishing 5 new investment funds (IF41-IF45) that are all going to be in continuous distribution and are subject to NI81-101
  • IF41 and IF42 need exemption from one section of the Act
  • IF43, IF44 and IF45 need exemptions from four sections of NI81-102
  • UIFM is establishing one new investment fund (IF46) that will do a one-time offering and whose securities will be listed and traded on the Toronto Stock Exchange
  • IF46 needs exemptions from six sections of NI81-102
  • audited financial statements for IF1-IF40 have to be filed
  • material changes occurred for IF39 and IF40
  • current SP and AIF of IF1-IF38 have to be renewed

Item

Participation Fee

Activity Fee

Files Form 13-502F2 stating specified Ontario revenues of $375 million

$500,000{19}

 

Files 1 application on behalf of IF41 and IF 42 for relief from one section of the Act

 

$1,500{20}

Files 1 application on behalf of IF43, IF44 and IF45 for relief from four sections of NI81-102

 

$5,500{21}

Files preliminary SP and AIF for IF41-IF45 in a single document

 

$600 × 5=$3,000{22}

Files annual financial statements for IF1-IF40 within prescribed period

 

Nil

Files application on behalf of IF46 for relief from six sections of NI81-102

 

$5,500

Files preliminary prospectus in Form 41-501F1 for IF46, with gross proceeds bulleted

 

$1,000{23}

Files pro forma SP and AIF for IF1-IF38 in a single document

 

$600 × 38=$22,800{24}

Files final SP and AIF for IF41-IF45 in a single document

 

Nil{25}

Files amendment to SP and AIF for IF1-IF20 in a single document

 

Nil

Files final prospectus in Form 41-501F1 for IF46, with gross proceeds of $75 million

 

$7,500-$1,000=$6,500{26}

Files material change report for IF39-IF40

 

Nil

Files final SP and AIF for IF1-IF38 in a single document

 

Nil

{19} See Section 3.1 and Appendix B of the Rule.

{20} See item E.3 of Appendix C and section 4.2 of the Rule of the Rule.

{21} See item E.3 of Appendix C and section 4.2 of the Rule.

{22} See item A.5(a) of Appendix C of the Rule.

{23} See item A.1(a) of Appendix C of the Rule.

{24} See item A.5(a) of Appendix C of the Rule.

{25} See item A.5(d) of Appendix C of the Rule.

{26} See item A.3(a), in conjunction with item A.1(c), of Appendix C of the Rule.

{1} Includes all adviser categories as per section 99 of the Regulations in the Securities Act (Ontario) such as financial advisers, investment counsel, portfolio managers and securities advisers. This category also includes non- resident advisers and international advisers.

{2} Includes all dealer categories as per section 98 of the Regulations in the Securities Act (Ontario) except MFDA members which are treated separately in Part II.