Securities Law & Instruments

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NATIONAL INSTRUMENT 71-102

CONTINUOUS DISCLOSURE AND OTHER EXEMPTIONS RELATING

TO FOREIGN ISSUERS

PART 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions and Interpretation{1}

(1) A term used in this Instrument and defined in the securities statute of the local jurisdiction has the meaning given to it in that statute unless: (a) the definition in that statute is restricted to a specific portion of the statute that does not govern insider reporting or take-over and issuer bids; or (b) the context otherwise requires.

(2) Subject to subsection (1), in this Instrument:

"AIF" means a completed Form 51-102F1 Annual Information Form or, in the case of an SEC foreign issuer, either a completed Form 51-102F1 or an annual report or transition report under the 1934 Act on Form 10-K or Form 10-KSB, or on Form 20-F;

"board of directors" means, for a person or company that does not have a board of directors, an individual or group that acts in a capacity similar to a board of directors;

"business acquisition report" means a completed Form 51-102F4 Business Acquisition Report;

"class", in respect of a security, includes a series of a class;

"convertible security" means a security of an issuer that is convertible into, or carries the right of the holder to acquire, or of the issuer to cause the acquisition of, a security of the same issuer;

"designated foreign issuer" means an eligible foreign reporting issuer:

(a) that does not have a class of securities registered under section 12 of the 1934 Act and is not required to file reports under section 15(d) of the 1934 Act;

(b) that is subject to foreign disclosure requirements; and

(c) for which the total number of equity securities owned, directly or indirectly, by residents of Canada does not exceed 10 per cent, on a fully-diluted basis, of the total number of equity securities of the issuer, calculated in accordance with sections 1.2 and 1.3;

"designated foreign jurisdiction" means Australia, France, Germany, Hong Kong, Italy, Japan, Mexico, The Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden, Switzerland or the United Kingdom of Great Britain and Northern Ireland;

"eligible foreign reporting issuer" means a reporting issuer, other than an investment fund, that is not incorporated or organized under the laws of Canada or a jurisdiction of Canada, except an issuer that satisfies the following conditions:

(a) outstanding voting securities carrying more than 50 per cent of the votes for the election of directors are owned, directly or indirectly, by residents of Canada; and

(b) any one or more of the following is true:

(i) the majority of the executive officers or directors of the issuer are residents of Canada;

(ii) more than 50 per cent of the assets of the issuer are located in Canada; or

(iii) the business of the issuer is administered principally in Canada;

"equity security" means any security of an issuer that carries a residual right to participate in earnings of the issuer and, on the liquidation or winding-up of the issuer, in its assets;

"exchangeable security" means a security of an issuer that is exchangeable for, or carries the right of the holder to acquire, or of the issuer to cause the acquisition of, a security of another issuer;

"exchange-traded security" means a security that is listed on a recognized exchange or is quoted on a recognized quotation and trade reporting system or is listed on an exchange or quoted on a quotation and trade reporting system that is recognized for the purposes of National Instrument 21-101 Marketplace Operation and National Instrument 23-101 Trading Rules;

"executive officer" of a reporting issuer means an individual who at any time during the year was:

(a) a chair of the reporting issuer, if that individual performed the functions of the office on a full-time basis;

(b) a vice-chair of the reporting issuer, if that individual performed the functions of the office on a full-time basis;

(c) the president of the reporting issuer;

(d) a vice-president of the reporting issuer in charge of a principal business unit, division or function including sales, finance or production;

(e) an officer of the reporting issuer or any of its subsidiaries who performed a policy-making function in respect of the reporting issuer; or

(f) any other person who performed a policy-making function in respect of the reporting issuer;

"foreign disclosure requirements" means the requirements to which an eligible foreign reporting issuer is subject concerning the disclosure made to the public, to securityholders of the issuer or to a foreign regulatory authority:

(a) relating to the eligible foreign reporting issuer and the trading in its securities; and

(b) that is made publicly available in the foreign jurisdiction under:

(i) the securities laws of the foreign jurisdiction in which the principal trading market of the eligible foreign reporting issuer is located; or

(ii) the rules of the marketplace that is the principal trading market of the eligible foreign reporting issuer;

"foreign regulatory authority" means a securities commission, exchange or other securities market regulatory authority in a designated foreign jurisdiction;

"group scholarship plan" means a scholarship plan the securities of which entitle the beneficiaries, who are designated in connection with the acquisition of the securities that have the same year of maturity, to a scholarship award proportionate to the value of the securities in respect of which they are designated, on or after maturity of the securities;

"inter-dealer bond broker" means a person or company that is approved by the Investment Dealers Association under its By-Law No. 36 Inter-Dealer Bond Brokerage Systems, as amended, and is subject to its By-Law No. 36 and its Regulation 2100 Inter-Dealer Bond Brokerage Systems, as amended;

"interim period" means:

(a) a period commencing on the first day of a financial year and ending nine, six or three months before the end of a financial year; or

(b) in the case of a reporting issuer's transition year, a period commencing on the first day of the transition year and ending either:

(i) three, six, nine or twelve months, if applicable, after the end of its old financial year; or

(ii) twelve, nine, six or three months, if applicable, before the end of the transition year,

and in the case of (b)(ii), the first interim period must not exceed four months;

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

"marketplace" means:

(a) an exchange;

(b) a quotation and trade reporting system;

(c) a person or company not included in paragraph (a) or (b) that:

(i) constitutes, maintains or provides a market or facility for bringing together buyers and sellers of securities;

(ii) brings together the orders for securities of multiple buyers and sellers, and

(iii) uses established, non-discretionary methods under which the orders interact with each other, and the buyers and sellers entering the orders agree to the terms of a trade, or

(d) a dealer that executes a trade of an exchange-traded security outside of a marketplace,

but does not include an inter-dealer bond broker;

"MD&A" means a completed Form 51-102F2 Management's Discussion & Analysis or, in the case of an SEC foreign issuer, either a completed Form 51-102F2 or management's discussion and analysis prepared in accordance with Item 303 of Regulation S-K or Item 303 of Regulation S-B under the 1934 Act;

"multiple convertible security" means a security of an issuer that is convertible into, or exchangeable for, or carries the right of the holder to acquire, or of the issuer to cause the acquisition of, a convertible security, an exchangeable security or another multiple convertible security;

"Nasdaq" means Nasdaq National Market and Nasdaq SmallCap Market;

"NI 52-107" means National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency;

"non-redeemable investment fund" means an issuer:

(a) whose primary purpose is to invest money provided by its securityholders;

(b) that does not invest for the purpose of exercising effective control, seeking to exercise effective control or being actively involved in the management of the issuers in which it invests, other than mutual funds or other non-redeemable investment funds; and

(c) that is not a mutual fund;

"old financial year" means the financial year of a reporting issuer that immediately precedes its transition year;

"principal trading market" means the published market on which the largest trading volume in the equity securities of the issuer occurred during the issuer's most recent financial year that ended before the date the determination is being made;

"published market" means, for a class of securities, a marketplace on which the securities have traded that discloses regularly in a publication of general and regular paid circulation or in a form that is broadly distributed by electronic means the prices at which those securities have traded;

"recognized exchange" means:

(a) in Ontario, an exchange recognized by the securities regulatory authority to carry on business as a stock exchange; and

(b) in every other jurisdiction, an exchange recognized by the securities regulatory authority as an exchange, self-regulatory organization or self-regulatory body;

"recognized quotation and trade reporting system" means:

(a) in every jurisdiction other than British Columbia, a quotation and trade reporting system recognized by the securities regulatory authority under securities legislation to carry on business as a quotation and trade reporting system; and

(b) in British Columbia, a quotation and trade reporting system recognized by the securities regulatory authority under securities legislation as a quotation and trade reporting system or as an exchange;

"SEC foreign issuer" means an eligible foreign reporting issuer that:

(a) has a class of securities registered under section 12 of the 1934 Act or is required to file reports under section 15(d) of the 1934 Act; and

(b) is not registered or required to be registered as an investment company under the Investment Company Act of 1940 of the United States of America;

"SEDI issuer" has the meaning ascribed to that term in National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI);

"transition year" means the financial year of reporting issuer in which a change of year-end occurs;

"TSX" means the Toronto Stock Exchange;

"underlying security" means a security issued or transferred, or to be issued or transferred, in accordance with the terms of a convertible security, an exchangeable security or a multiple convertible security; and

"US market requirements" means the requirements of the United States exchange on which the reporting issuer's securities are listed or Nasdaq, as applicable.

1.2 Determination of Canadian Shareholders

(1) For the purposes of section 4.11 and paragraph (c) of the definition of "designated foreign issuer", a reference to equity securities owned, directly or indirectly, by residents of Canada, includes:

(a) the underlying securities that are equity securities of the eligible foreign reporting issuer; and

(b) the equity securities of the eligible foreign reporting issuer represented by an American depositary receipt or an American depositary share issued by a depositary holding equity securities of the eligible foreign reporting issuer.

(2) For the purposes of paragraph (a) of the definition of "eligible foreign reporting issuer", securities represented by American depositary receipts or American depositary shares issued by a depositary holding voting securities of the eligible foreign reporting issuer must be included as outstanding in determining both the number of votes attached to securities owned, directly or indirectly, by residents of Canada and the number of votes attached to all of the issuer's outstanding voting securities.

1.3 Timing for Calculation of Designated Foreign Issuer and Eligible Foreign Reporting Issuer

For the purposes of paragraph (c) of the definition of "designated foreign issuer", paragraph (a) of the definition of "eligible foreign reporting issuer" and section 4.11, the calculation is made:

(a) if the issuer has not completed a financial year since becoming a reporting issuer, at the date that the issuer became a reporting issuer; and

(b) for all other issuers,

(i) for the purpose of financial statement and MD&A filings under this Instrument, on the first day of the most recent financial year or year-to-date interim period for which operating results are presented in the financial statements or MD&A; and

(ii) for the purpose of other continuous disclosure filing obligations under this Instrument, on the first day of the issuer's current financial year.

PART 2

LANGUAGE OF DOCUMENTS

2.1 French or English

(1) A person or company must file a document required to be filed under this Instrument in either French or English.

(2) Notwithstanding subsection (1), if a person or company files a document only in French or only in English but delivers to securityholders of an issuer a version of the document in the other language, the person or company must file that other version not later than when it is first delivered to securityholders.

(3) In Québec, a reporting issuer must comply with linguistic obligations and rights prescribed by Québec law.

2.2 Filings Prepared in a Language other than French or English

(1) If a person or company files a document that is required to be filed under this Instrument that is a translation of a document prepared in a language other than French or English, the person or company must file the document upon which the translation was based.

(2) An eligible foreign reporting issuer filing a document upon which the translation was based under subsection (1) must attach to the document a certificate as to the accuracy of the translation.

PART 3

FILING AND SENDING OF DOCUMENTS

3.1 Timing of Filing of Documents

A person or company filing a document under this Instrument must file the document at the same time as, or as soon as practicable after, the filing or furnishing of the document to the SEC or to a foreign regulatory authority.

3.2 Sending of Documents to Canadian Securityholders

If a person or company sends a document to holders of securities of any class under US federal securities law, or the laws or requirements of a designated foreign jurisdiction, and that document is required to be filed under this Instrument, then such document must be sent at the same time to holders of securities of that class in the local jurisdiction.

PART 4

SEC FOREIGN ISSUERS

4.1 Amendments and Supplements

Any amendments or supplements to disclosure documents filed by an SEC foreign issuer under this Instrument must also be filed.

4.2 Material Change Reporting

An SEC foreign issuer is exempt from securities legislation requirements relating to disclosure of material changes if the issuer:

(a) complies with the US market requirements for making public disclosure of material information on a timely basis;

(b) complies with foreign disclosure requirements for making public disclosure of material information on a timely basis, if securities of the issuer are not listed on a US exchange or quoted on Nasdaq;

(c) promptly issues in Canada and files each news release issued by it for the purpose of complying with the requirements referred to in paragraph (a) or (b);

(d) complies with the requirements of US federal securities law for filing or furnishing current reports to the SEC; and

(e) files the current reports filed with or furnished to the SEC.

4.3 Financial Statements

An SEC foreign issuer satisfies securities legislation requirements relating to the preparation, filing and delivery of its interim financial statements, and annual financial statements and auditor's reports on annual financial statements if it:

(a) complies with the requirements of US federal securities law relating to interim financial statements, annual financial statements and auditor's reports on annual financial statements;

(b) in the case where securities of the issuer are listed on a US exchange or quoted on Nasdaq, complies with the US market requirements relating to interim financial statements and annual financial statements;

(c) files the interim financial statements, annual financial statements and auditor's reports on annual financial statements filed with or furnished to the SEC, a US exchange or Nasdaq;

(d) sends each document filed under paragraph (c) to securityholders in the local jurisdiction, in the manner and at the time such documents are required to be sent to securityholders of the issuer by US federal securities law; and

(e) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (c).

4.4 Annual Reports, AIFs, Business Acquisition Reports and MD&A

An SEC foreign issuer satisfies securities legislation requirements relating to the preparation, filing and delivery of annual reports, AIFs, business acquisition reports and MD&A if it:

(a) complies with the requirements of US federal securities law relating to annual reports, quarterly reports, current reports and management's discussion and analysis;

(b) files each annual report, quarterly report, current report and management's discussion and analysis filed with or furnished to the SEC;

(c) sends each document filed under paragraph (b) to securityholders in the local jurisdiction, in the manner and at the time such documents are required to be sent to securityholders of the issuer by US federal securities law; and

(d) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (b).

4.5 Proxies and Proxy Solicitation by the Issuer and Information Circulars

(1) An SEC foreign issuer that has a class of securities registered under section 12 of the 1934 Act satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation if it:

(a) complies with the requirements of US federal securities law relating to proxy statements, proxies and proxy solicitation;

(b) files all material relating to a meeting of securityholders that is filed with or furnished to the SEC;

(c) sends each document filed under paragraph (b) to securityholders in the local jurisdiction in the manner and at the time required by US federal securities law and US market requirements; and

(d) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (b).

(2) An SEC foreign issuer that:

(a) is a foreign private issuer as defined under Rule 3b-4 under the 1934 Act; and

(b) is required to file reports under section 15(d) of the 1934 Act

satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation if it complies with the requirements of subsection (1).

4.6 Proxy Solicitation by Another Person or Company

(1) A person or company, other than the SEC foreign issuer, satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation with respect to an SEC foreign issuer that has a class of securities registered under section 12 of the 1934 Act if the person or company complies with the requirements of subsection 4.5(1).

(2) A person or company, other than the SEC foreign issuer, satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation with respect to an SEC foreign issuer that meets the requirements of paragraphs 4.5(2)(a) and (b) if the person or company complies with subsection 4.5(1).

(3) If a proxy solicitation is made with respect to an SEC foreign issuer by a person or company other than the SEC foreign issuer and the person or company soliciting proxies lacks access to the relevant list of securityholders of the SEC foreign issuer, the exemption in subsection (1) or (2) is not available, if:

(a) the aggregate published trading volume of the class on the TSX and the TSX Venture Exchange exceeded the aggregate published trading volume of the class on national securities exchanges in the United States of America and Nasdaq:

(i) for the 12 calendar month period before commencement of the proxy solicitation, if there is no other proxy solicitation for securities of the same class in progress, or

(ii) for the 12 calendar month period before commencement of the first proxy solicitation, if another proxy solicitation for securities of the same class is already in progress;

(b) the information disclosed by the SEC foreign issuer in its most recent Form 10-K or Form 10-KSB or Form 20-F filed with the SEC under the 1934 Act demonstrated that paragraph (a) of the definition of "eligible foreign reporting issuer" applied to the SEC foreign issuer; or

(c) the person or company soliciting proxies reasonably believes that paragraph (a) of the definition of "eligible foreign reporting issuer" applies to the SEC foreign issuer.

4.7 Disclosure of Outstanding Share Data

An SEC foreign issuer is exempt from securities legislation requirements relating to disclosure of outstanding share data if the issuer:

(a) reports outstanding share information in compliance with the 1934 Act; and

(b) files a copy of all disclosure of outstanding share data made under the 1934 Act that has not previously been filed.

4.8 Early Warning

A person or company is exempt from the early warning requirements and acquisition announcement provisions of securities legislation in respect of securities of an SEC foreign issuer that has a class of securities registered under section 12 of the 1934 Act if the person or company:

(a) complies with the requirements of US federal securities law relating to the reporting of beneficial ownership of equity securities of the SEC foreign issuer; and

(b) files each report of beneficial ownership that is filed with the SEC.

4.9 Insider Reporting

The insider reporting requirement does not apply to an insider of an SEC foreign issuer that has a class of securities registered under section 12 of the 1934 Act if:

(a) the SEC foreign issuer is not a SEDI issuer;

(b) the insider complies with the requirements of US federal securities law relating to insider reporting; and

(c) the insider files each insider report that is filed with the SEC.

4.10 Communication with Beneficial Owners of Securities

An SEC foreign issuer that has a class of securities registered under section 12 of the 1934 Act satisfies securities legislation requirements relating to communications with, delivery of materials to and conferring voting rights upon non-registered holders of its securities who hold their interests in the securities through one or more intermediaries if the issuer:

(a) complies with the requirements of Rule 14a-13 under the 1934 Act for any depositary and any intermediary whose last address as shown on the books of the issuer is in Canada; and

(b) complies with the requirements of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer with respect to fees payable to intermediaries, for any depositary and any intermediary whose last address as shown on the books of the issuer is in Canada.

4.11 Going Private Transactions and Related Party Transactions

Securities legislation requirements relating to going private transactions and related party transactions, as those terms are used in securities legislation of the local jurisdiction, do not apply to an SEC foreign issuer carrying out a going private transaction or related party transaction if the total number of equity securities of the SEC foreign issuer owned, directly or indirectly, by residents of Canada, does not exceed 20 per cent, on a diluted basis, of the total number of equity securities of the SEC foreign issuer.

4.12 Restricted Shares

(1) Securities legislation continuous disclosure requirements relating to restricted shares do not apply in respect of SEC foreign issuers.

(2) Securities legislation minority approval requirements relating to restricted shares do not apply in respect of SEC foreign issuers.

PART 5

DESIGNATED FOREIGN ISSUERS

5.1 Amendments and Supplements

Any amendments or supplements to disclosure documents filed by a designated foreign issuer under this Instrument must also be filed.

5.2 Mandatory Annual Disclosure by Designated Foreign Issuer

In order for a designated foreign issuer to rely on this Part, it must, at least once a year, disclose in, or as an appendix to, a document that it is required by foreign disclosure requirements to send to its securityholders and that it sends to its securityholders in Canada:

(a) that it is a designated foreign issuer as defined in this Instrument;

(b) that it is subject to the foreign regulatory requirements of a foreign regulatory authority; and

(c) the name of the foreign regulatory authority referred to in paragraph (b).

5.3 Material Change Reporting

A designated foreign issuer is exempt from securities legislation requirements relating to disclosure of material changes if the issuer:

(a) complies with foreign disclosure requirements for making public disclosure of material information on a timely basis;

(b) promptly issues in Canada and files each news release issued by it for the purpose of complying with the requirements referred to in paragraph (a); and

(c) files the documents disclosing the material information filed with or furnished to the foreign regulatory authority or disseminated to the public or securityholders of the issuer.

5.4 Financial Statements

A designated foreign issuer satisfies securities legislation requirements relating to the preparation, filing and delivery of its interim financial statements, annual financial statements and auditor's reports on annual financial statements if it:

(a) complies with the foreign disclosure requirements relating to interim financial statements, annual financial statements and auditor's reports on annual financial statements;

(b) files the interim financial statements, annual financial statements and auditor's reports on annual financial statements required to be filed with or furnished to the foreign regulatory authority;

(c) sends each document filed under paragraph (b) to securityholders in the local jurisdiction, in the manner and at the time such documents are required to be sent to securityholders of the issuer by the foreign disclosure requirements; and

(d) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (b).

5.5 Annual Reports, AIFs, Business Acquisition Reports & MD&A

A designated foreign issuer satisfies securities legislation requirements relating to the preparation, filing and delivery of annual reports, AIFs, business acquisition reports and MD&A if it:

(a) complies with the foreign disclosure requirements relating to annual reports, quarterly reports, business acquisitions and management's discussion and analysis;

(b) files each annual report, quarterly report, report in respect of a business acquisition and management's discussion and analysis required to be filed with the foreign regulatory authority;

(c) sends each document filed under paragraph (b) to securityholders in the local jurisdiction, in the manner and at the time such documents are required to be sent to securityholders of the issuer by the foreign disclosure requirements; and

(d) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (b).

5.6 Proxies and Proxy Solicitation by the Issuer and Information Circulars

A designated foreign issuer satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation if it:

(a) complies with the foreign disclosure requirements relating to proxy statements, proxies and proxy solicitation;

(b) files all material relating to a meeting of securityholders that is filed with the foreign regulatory authority;

(c) sends each document filed under paragraph (b) to each securityholder in the local jurisdiction, in the manner and at the time required by the foreign disclosure requirements; and

(d) complies with NI 52-107 as it relates to financial statements of the issuer that are included in any documents specified in paragraph (b).

5.7 Proxy Solicitation by Another Person or Company

(1) A person or company, other than the designated foreign issuer, satisfies securities legislation requirements relating to information circulars, proxies and proxy solicitation with respect to a designated foreign issuer if the person or company satisfies the requirements of section 5.6.

(2) If a proxy solicitation is made with respect to a designated foreign issuer by a person or company other than the designated foreign issuer and the person or company soliciting proxies lacks access to the relevant list of securityholders of the designated foreign issuer, the exemption in subsection (1) is not available, if:

(a) the aggregate published trading volume of the class on the TSX and the TSX Venture Exchange exceeded the aggregate trading volume on securities marketplaces outside Canada:

(i) for the 12 calendar months before commencement of the proxy solicitation, if there is no other proxy solicitation for securities of the same class in progress, or

(ii) for the 12 calendar month period before the commencement of the first proxy solicitation, if another proxy solicitation for securities of the same class is already in progress;

(b) the information disclosed by the designated foreign issuer in a document filed within the previous 12 months with a foreign regulatory authority, demonstrated that paragraph (a) of the definition of "eligible foreign reporting issuer" applied to the designated foreign issuer; or

(c) the person or company soliciting proxies reasonably believes that paragraph (a) of the definition of "eligible foreign reporting issuer" applies to the designated foreign issuer.

5.8 Disclosure of Outstanding Share Data

A designated foreign issuer is exempt from securities legislation requirements relating to disclosure of outstanding share data if the issuer:

(a) complies with the foreign disclosure requirements relating to disclosure of outstanding share data; and

(b) files each report disclosing outstanding share data that is filed with a foreign regulatory authority.

5.9 Early Warning

A person or company is exempt from the early warning requirements and acquisition announcement provisions of securities legislation in respect of securities of a designated foreign issuer if the person or company:

(a) complies with the foreign disclosure requirements relating to reporting of beneficial ownership of equity securities of the designated foreign issuer; and

(b) files each report of beneficial ownership that is filed with the foreign regulatory authority.

5.10 Insider Reporting

The insider reporting requirement does not apply to an insider of a designated foreign issuer if:

(a) the designated foreign issuer is not a SEDI issuer;

(b) the insider complies with the foreign disclosure requirements relating to insider reporting; and

(c) the insider files each insider report that is filed with the foreign regulatory authority.

5.11 Communication with Beneficial Owners of Securities

A designated foreign issuer satisfies securities legislation requirements relating to communications with, delivery of materials to and conferring voting rights upon non-registered holders of its securities who hold their interests in the securities through one or more intermediaries if the issuer:

(a) complies with foreign disclosure requirements relating to communication with beneficial owners of securities; and

(b) complies with the requirements of National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer with respect to fees payable to intermediaries, for any depositary and any intermediary whose last address as shown on the books of the issuer is in Canada.

5.12 Going Private Transactions and Related Party Transactions

Securities legislation requirements relating to going private transactions and related party transactions, as those terms are used in securities legislation of the local jurisdiction, do not apply to a designated foreign issuer carrying out a going private transaction or related party transaction.

5.13 Change in Year-End

A designated foreign issuer satisfies securities legislation requirements relating to the notice of a change in year-end if the issuer:

(a) complies with foreign disclosure requirements relating to a change in year-end; and

(b) files a copy of all filings made under foreign disclosure requirements relating to the change in year-end.

5.14 Change of Auditor

A designated foreign issuer satisfies securities legislation requirements relating to a change of auditor if the issuer:

(a) complies with foreign disclosure requirements relating to a change of auditor; and

(b) files a copy of all filings made under foreign disclosure requirements relating to the change of auditor.

5.15 Restricted Shares

(1) Securities legislation continuous disclosure requirements relating to restricted shares do not apply in respect of designated foreign issuers.

(2) Securities legislation minority approval requirements relating to restricted shares do not apply in respect of designated foreign issuers.

PART 6

FOREIGN TRANSITION ISSUERS

6.1 Application

This Part only applies in Ontario.

6.2 Definition

In this section, "foreign transition issuer" means an issuer:

(a) that is not incorporated or organized under the laws of Canada or a jurisdiction of Canada;

(b) that is not an SEC foreign issuer or a designated foreign issuer;

(c) that became a reporting issuer solely by listing securities on the TSX before *, 2004{2},

(d) of which the total number of securities of the class listed on the TSX registered in the names of residents of Canada does not exceed 5 per cent of the total number of issued and outstanding securities of the class; and

(e) of which the total number of holders of securities of the class listed on the TSX registered in the names of residents of Canada does not exceed 300.

6.3 Transitional Exemptions

Until January 1, 2005, a foreign transition issuer is exempt from:

(a) securities legislation requirements to file business acquisition reports, AIFs and MD&A;

(b) securities legislation requirements relating to the preparation and filing of annual financial statements and auditor's reports thereon if the annual financial statements are:

(i) prepared in compliance with the laws of the foreign jurisdiction of incorporation or organization of the issuer, and

(ii) filed not later than the earlier of:

(A) promptly after they are filed with any other governmental agency or securities market regulatory authority, and

(B) 140 days after the end of the financial year; and

(c) securities legislation requirements relating to the preparation and filing of interim financial statements, if the interim financial statements are:

(i) prepared in compliance with the laws of the foreign jurisdiction of incorporation or organization of the issuer; and

(ii) filed not later than the earlier of:

(A) promptly after they are filed with any other governmental agency or securities market regulatory authority; and

(B) 60 days after the end of the interim period.

PART 7

EFFECTIVE DATE

7.1 Effective Date

This Instrument comes into force on *, 2004.

{1} National Instrument 14-101 Definitions defines certain terms that are used in more that one national or multilateral instrument.

{2} The date this Instrument is expected to become effective.

 

COMPANION POLICY 71-102CP TO NATIONAL INSTRUMENT 71-102

CONTINUOUS DISCLOSURE AND OTHER EXEMPTIONS

RELATING TO FOREIGN ISSUERS

PART 1 -- GENERAL

1.1 Introduction and Purpose

(1) National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (the "Instrument") provides broad relief from requirements of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") for two sub-categories of eligible foreign reporting issuers -- SEC foreign issuers and designated foreign issuers -- on the condition that they comply with the continuous disclosure ("CD") requirements of the SEC or a designated foreign jurisdiction. SEC foreign issuers and designated foreign issuers are also exempted from certain other requirements of provincial and territorial securities legislation, including insider reporting and early warning, that are not contained in NI 51-102.

(2) This Companion Policy provides information about how the provincial and territorial securities regulatory authorities interpret the Instrument, and should be read in conjunction with it.

1.2 Other Relevant Legislation

In addition to the Instrument, foreign issuers should consult the following non-exhaustive list of legislation to see how it may apply to them:

(1) Implementing Legislation (the regulation, rule, ruling, order or other instrument that implements the Instrument in each applicable jurisdiction);

(2) NI 51-102;

(3) National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency ("NI 52-107"); and

(4) National Instrument 71-101 The Multijurisdictional Disclosure System ("NI 71-101").

1.3 Multijurisdictional Disclosure System

(1) NI 71-101 permits certain US incorporated issuers to satisfy specified Canadian CD requirements by using disclosure prepared in accordance with US requirements. The Instrument does not replace or alter NI 71-101. There are instances in which NI 71-101 and the Instrument offer similar relief to a reporting issuer, but other instances in which the relief available to a reporting issuer in one instrument differs from the relief available to the reporting issuer under the other instrument. Many issuers that are eligible for an exemption under the Instrument will be ineligible to rely on NI 71-101 and vice versa. For example, the Instrument defines a class of "SEC foreign issuers". Not all US issuers referred to in NI 71-101 are SEC foreign issuers and not all SEC foreign issuers are US issuers.

(2) An eligible US issuer may choose to use an exemption in the Instrument or NI 71-101. For example, section 17.1 of NI 71-101 grants an exemption from the insider reporting requirement to an insider of a US issuer that has securities registered under section 12 of the 1934 Act if the insider complies with the requirements of US federal securities law regarding insider reporting and files with the SEC any insider report required to be filed with the SEC. This relief goes beyond the exemption provided by section 4.9 of the Instrument which is not available to insiders of a SEDI issuer as defined in National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI) and requires that the insider of the SEC foreign issuer file with the applicable regulator or securities regulatory authority each insider report that is filed with the SEC.

1.4 Exemptions May Not Require Disclosure

Most of the exemptions in the Instrument are only available to a person or company that complies with a particular aspect of either US federal securities laws or the laws of a designated foreign jurisdiction. If those laws do not require the issuer to disclose, file or send any information, for example, because the issuer may rely on an exemption under those laws, then the issuer is not required to disclose, file or send any information in order to rely on the exemption contained in the Instrument.

PART 2 -- DEFINITIONS

2.1 Calculation of Voting Securities Owned by Residents of Canada

In order to qualify for any of the exemptions contained in the Instrument, other than the relief for "foreign transition issuers" in Part 6, the issuer in question must be an "eligible foreign reporting issuer". The definition of eligible foreign reporting issuer is based upon the definition of foreign private issuer in Rule 405 of the 1933 Act and Rule 3b-4 of the 1934 Act. For the purposes of the definition of "eligible foreign reporting issuer", it is the CSA's view that, in determining the outstanding voting securities that are owned, directly or indirectly, by residents of Canada, an issuer should:

(a) use reasonable efforts to determine securities held by a broker, dealer, bank, trust company or nominee or any of them for the accounts of customers resident in Canada;

(b) count securities beneficially owned by residents of Canada as reported on reports of beneficial ownership, including insider reports and early warning reports; and

(c) assume that a customer is a resident of the jurisdiction or foreign jurisdiction in which the nominee has its principal place of business if, after reasonable inquiry, information regarding the jurisdiction or foreign jurisdiction of residence of the customer is unavailable.

The determination of the percentage of securities of the foreign issuer owned by residents of Canada should be made in the same manner for the purposes of paragraph (d) of the definition of "designated foreign issuer" and paragraph (d) of the definition of "foreign transition issuer" in section 6.2 of the Instrument. This method of calculation differs from that of NI 71-101, which only requires a calculation based on the address of record. Accordingly, some SEC foreign issuers may qualify for exemptive relief under NI 71-101 but not under the Instrument.

PART 3 -- INSIDER REPORTS

3.1 Requirement to File Insider Reports on SEDI

Insiders of foreign issuers who voluntarily file under National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) are required to file insider reports electronically under SEDI. The Instrument does not provide an exemption from filing insider reports in the form required by provincial and territorial securities legislation if the foreign issuer is a SEDI filer. However, under NI 71-101 an insider of an eligible U.S. issuer, as defined NI 71-101, is exempt from the insider reporting requirement if the insider complies with U.S. federal securities law regarding insider reporting and files with the SEC any insider report required to be filed with the SEC. Consequently, insiders of NI 71-101 eligible issuers are also exempt from the requirement to file insider reports on SEDI.

Insiders of a foreign issuer that does not file under SEDAR, and who are therefore eligible to file insider reports under section 4.9 or 5.10 of the Instrument, must file the foreign form of insider report in paper form.

PART 4 -- ELECTRONIC DELIVERY OF DOCUMENTS

4.1 Electronic Delivery of Documents

Any documents required to be sent under the Instrument may be sent by electronic delivery, as long as such delivery is made in compliance with Québec Staff Notice, The Delivery of Documents by Electronic Means, in Québec, and National Policy 11-201 Delivery of Documents by Electronic Means, in the rest of Canada.

PART 5 -- EXEMPTIONS NOT INCLUDED

5.1 Resource Issuers - Standards of Disclosure for Mineral Projects and Oil and Gas Activities

The Instrument does not provide an exemption from National Instrument 43-101 Standards of Disclosure for Mineral Projects or National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Issuers are reminded that those National Instruments apply to SEC foreign issuers and designated foreign issuers.

5.2 Designated Foreign Issuers

The Instrument does not provide an exemption for designated foreign issuers from the requirement in section 4.9 of NI 51-102. A designated foreign issuer must deliver a notice if it has been a party to an amalgamation, arrangement, merger, winding-up, reverse takeover, reorganization or other transaction that will have the effect of changing its continuous disclosure obligations under NI 51-102.

PART 6 -- EXEMPTIONS

6.1 Exemptions

(1) The exemptions contained in the Instrument are in addition to any exemptions that may be available to an issuer under any other applicable legislation.

(2) Issuers that have been given an exemption, waiver or approval by a regulator or securities regulatory authority before the Instrument and NI 51-102 came into effect, may be entitled to continue to rely on that exemption, waiver or approval. Issuers should refer to section 13.2 of NI 51-102 to determine in what circumstances the prior exemption, waiver or approval is available and what the reporting issuer must do to continue to rely on it.

(3) If an issuer wishes to seek exemptive relief from NI 51-102 or other requirements of provincial and territorial securities legislation on grounds similar but not identical to those permitted under the Instrument, the issuer should apply for this relief under the exemptive provisions of NI 51-102, or other provincial and territorial securities legislation, as the case may be.

6.2 Exemptions for SEC Foreign Issuers

NI 51-102 contains exemptions for SEC issuers from certain requirements in NI 51-102, such as change in year-end and change of auditor. SEC foreign issuers under the Instrument will also meet the definition of SEC issuers under NI 51-102, and so will be able to rely on the exemptions in NI 51-102.