Proposed National Instrument: NI - 55-101 - Insider Reporting Exemptions

 

NATIONAL INSTRUMENT 55-101
EXEMPTION FROM CERTAIN INSIDER
REPORTING REQUIREMENTS
TABLE OF CONTENTS

PART    TITLE PAGE

PART 1 DEFINITIONS 1

1.1 Definitions 1

PART 2 EXEMPTION FROM INSIDER REPORTING FORDIRECTORS AND SENIOR OFFICERS OF CERTAINSUBSIDIARIES 2

2.1 Reporting Exemption 2

2.2 Limitation 2

PART 3 EXEMPTION FROM INSIDER REPORTING FORDIRECTORS AND SENIOR OFFICERS OF AFFILIATES OFINSIDERS OF A REPORTING ISSUER 3

3.1 Québec 3

3.2 Reporting Exemption 3

3.3 Limitation 3

PART 4 REPORTING OF PURCHASES UNDER AUTOMATICSECURITIES PURCHASE PLAN 4

4.1 Reporting Exemption 4

4.2 Limitation 4

4.3 Reporting Requirement 4

PART 5 LIST OF EXEMPTED INSIDERS 5

5.1 List of Exempted Insiders 5

PART 6 EFFECTIVE DATE 5

6.1 Effective Date 5

 

NATIONAL INSTRUMENT 55-101

EXEMPTION FROM CERTAIN INSIDER

REPORTING REQUIREMENTS⁽¹⁾

 

PART 1 DEFINITIONS⁽²⁾

1.1 Definitions - In this Instrument

"automatic securities purchase plan" means a plan of a reporting issuer tofacilitate the acquisition of its securities if the timing of acquisitions ofsecurities, the number of securities acquired by each director or seniorofficer of the reporting issuer under the plan and the price paid for securitiesare established by formula or criteria set out in the plan; and

"significant subsidiary"⁽³⁾ means a subsidiary of a reporting issuer if

(a) the value of the assets of the subsidiary, on a consolidated basis withits subsidiaries, as reflected in the most recent annual auditedbalance sheet of the reporting issuer that the reporting issuer hasfiled, are 10 percent or more of the consolidated assets of thereporting issuer shown on that balance sheet, or

(b) the revenues of the subsidiary, on a consolidated basis with itssubsidiaries, as reflected in the most recent annual audited statementof income and loss of the reporting issuer that the reporting issuerhas filed, are 10 percent or more of the consolidated revenues of thereporting issuer shown on that statement of income and loss.

PART 2 EXEMPTION FROM INSIDER REPORTING FOR DIRECTORS ANDSENIOR OFFICERS OF CERTAIN SUBSIDIARIES

2.1 Reporting Exemption - Subject to section 2.2, the insider reportingrequirement⁽⁴⁾ does not apply to a director or senior officer of a subsidiary ofthe reporting issuer in respect of securities of the reporting issuer.

2.2 Limitation - The exemption in section 2.1 is not available if the director orsenior officer

(a) receives, in the ordinary course, information as to material facts ormaterial changes concerning the reporting issuer before the materialfacts or material changes are generally disclosed;

(b) is a director or senior officer of a significant subsidiary; or

(c) is also an insider of the reporting issuer in a capacity other than as adirector or senior officer of the subsidiary and is not otherwiseexempted from the insider reporting requirement.

PART 3 EXEMPTION FROM INSIDER REPORTING FOR DIRECTORS ANDSENIOR OFFICERS OF AFFILIATES OF INSIDERS OF A REPORTINGISSUER

3.1 Québec - This Part does not apply in Quebec.⁽⁵⁾

3.2 Reporting Exemption - Subject to section 3.3, the insider reportingrequirement does not apply to a director or senior officer of an affiliate of aninsider of the reporting issuer in respect of securities of the reporting issuer.

3.3 Limitation - The exemption in section 3.2 is not available if the director orsenior officer

(a) receives, in the ordinary course, information as to material facts ormaterial changes concerning the reporting issuer before the materialfacts or material changes are generally disclosed;

(b) is also an insider of the reporting issuer in a capacity other than as adirector or senior officer of an affiliate of an insider of the reportingissuer and is not otherwise exempted from the insider reportingrequirement; or

(c) is a director or senior officer of a company that supplies goods orservices to the reporting issuer or to a subsidiary of the reportingissuer or has contractual arrangements with the reporting issuer or asubsidiary of the reporting issuer, and the nature and scale of thesupply or the contractual arrangements could reasonably be expectedto have a significant effect on the market price or value of thesecurities of the reporting issuer.⁽⁶⁾

PART 4 REPORTING OF PURCHASES UNDER AUTOMATIC SECURITIESPURCHASE PLANS

4.1 Reporting Exemption - Subject to sections 4.2 and 4.3, the insiderreporting requirement does not apply to the acquisition by a director orsenior officer of a reporting issuer of securities of the reporting issuerthrough an automatic securities purchase plan.

4.2 Limitation

(1) The exemption in section 4.1 is not available to an insider thatbeneficially owns, directly or indirectly, voting securities of thereporting issuer, or exercises control or direction over votingsecurities of the reporting issuer, or a combination of both, that carrymore than 10 percent of the voting rights attaching to all outstandingvoting securities of the reporting issuer.

(2) In Quebec, subsection (1) does not apply.

(3) In Quebec, the exemption in section 4.1 is not available to a personwho exercises control over more than 10 percent of a class of sharesof a reporting issuer to which are attached voting rights or anunlimited right to a share of the profits of the reporting issuer and inits assets in case of winding-up.

4.3 Reporting Requirement - An insider that is exempt from the insiderreporting requirement under section 4.1 shall report, in the form prescribedfor insider trading reports under securities legislation, all acquisitions ofsecurities under the automatic securities purchase plan that have notpreviously been reported by or on behalf of the insider

(a) if any securities acquired under the automatic securities purchaseplan during any financial year of the reporting issuer are disposed ofor transferred during the financial year, within the time required bysecurities legislation for reporting the disposition or transfer; and

(b) if any securities acquired under the automatic securities purchaseplan during any financial year of the reporting issuer are not disposedof or transferred during the financial year, within 90 days of the endof the financial year of the reporting issuer.

PART 5 LIST OF EXEMPTED INSIDERS

5.1 List of Exempted Insiders - A reporting issuer shall maintain a list of allinsiders of the reporting issuer exempted by Parts 2 and 3 of this Instrumentand the basis on which each insider comes within the exemption.

PART 6 EFFECTIVE DATE

6.1 Effective Date - This National Instrument comes into force on .

¹ This proposed National Instrument is derived from Ontario Securities Commission PolicyStatement 10.1, British Columbia Local Policy Statement 3-14 and Policy Statement No. Q-10of the Commission des valeurs mobilières du Québec which set out guidelines for applicationsfor exemptions from insider reporting obligations. The proposed National Instrument isexpected to be adopted as a rule in British Columbia, Alberta, Manitoba, Nova Scotia andOntario, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictionsrepresented by the CSA.

² A national definition instrument has been adopted as National Instrument 14-101 Definitions. Itcontains definitions of certain terms used in more than one national instrument. NationalInstrument 14-101 also provides that a term used in a national instrument and defined in thestatute relating to securities of the applicable jurisdiction, the definition of which is notrestricted to a specific portion of the statute, will have the meaning given to it in that statute,unless the context otherwise requires. National Instrument 14-101 also provides that a provisionor a reference within a provision in a national instrument that specifically refers by name to ajurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction,unless otherwise stated in the provision.

³ This definition is consistent with the comparable definitions in the British Columbia and Quebecpolicies referred to in note 1. It differs from the Ontario policy in one important respect. Amajor subsidiary in the Ontario policy included a subsidiary whose directors and senior officers,in the ordinary course, received notice of material facts or changes with respect to a reportingissuer before public disclosure. As a result, if some or all of the directors and senior officersreceived such information in any capacity, the subsidiary would constitute a major subsidiaryand all of the directors and officers would be denied the exemption notwithstanding that certaindirectors and officers would not have been privy to the information. It has been decided thatonly those directors and senior officers who actually receive this type of information should bedenied the exemption. This has been dealt with in section 2.2 of this Instrument.

⁴ The term "insider reporting requirement" is defined in the proposed amendment to NationalInstrument 14-101 Definitions as "the requirement in securities legislation for an insider of areporting issuer to file reports disclosing the insider's direct or indirect beneficial ownership of,or control or direction over, securities of the reporting issuer."

⁵ A director or senior officer of an affiliate of an insider of the reporting issuer is not an insiderunder the Securities Act (Québec).

⁶ This is an expansion of the provision in the British Columbia and Ontario policies referred to innote 1 as it goes beyond the supply of goods and services to cover other contractualarrangements and removes the reference to factors affecting the supply of goods or services andinstead refers to the nature and scale of the supply or the contractual arrangements.