Securities Regulation

Securities Regulation, M.R. 491/88 R The Securities Act , C.C.S.M. c. S50 Regulation 491/88 R Registered November 17, 1988 bilingual version (HTML) This regulation includes Manitoba Regulation 348/88 R which has been renumbered and included in Schedule A. Table of Contents Section 1 Definitions PART I REGISTRATION 2-5 Repealed 6-7 Registration PART II PRELIMINARY PROSPECTUS AND PROSPECTUS 8-13 Repealed 14-15 Preliminary Prospectus and Prospectus 16-37 Repealed PART III Repealed 38-42 Repealed PART IV INSIDER TRADING 43-44 Repealed 44.1 Insider Trading PARTS V and VI  Repealed 45-59 Repealed PART VII BENEFICIAL OWNERSHIP OF SECURITIES 60 Beneficial Ownership of Securities PARTS VIII and IX  Repealed 61-72 Repealed PART X SUMMONS AND NOTICE TO WITNESSES 73 Summons and Notice to Witnesses PARTS XI and XII  Repealed 74-87 Repealed PART XIII ADDITIONAL EXEMPTIONS 88-93 Additional Exemptions PART XIV Repealed 94-115 Repealed Schedule A Fees B Forms Definitions 1(1) The following definitions apply in this regulation. "Act" means The Securities Act . («  Loi  ») "trustee" means a person or company named as trustee under the terms of a trust indenture, whether or not the person or company is a trust company authorized to carry on business in Manitoba. (« fiduciaire ») 1(2) The forms referred to in this regulation are those set out in Schedule B. M.R. 154/2009 PART I REGISTRATION 2 to 5 [Repealed] M.R. 37/93; 154/2009 Exempt purchaser 6(1) Every application for recognition by the commission as an exempt purchaser under clause 19(1)⁠(b) of the Act, shall be made in writing in Form 6, and shall be accompanied by the prescribed fee. 6(2) Where the commission recognizes an applicant as an exempt purchaser under clause 19(1)⁠(b) of the Act, it shall direct the director to notify the applicant of that recognition. M.R. 154/2009 Trade exempt from section 37 of the Act 7(1) When a trade is claimed to be exempt or excluded from section 37 of the Act because the purchaser or proposed purchaser is a person or company referred to in clause 19(1)⁠(b) of the Act, the vendor of the security, or the vendor's agent, shall make a written report to the commission about the trade. 7(2) The report required under subsection (1) shall be in Form 8, completed in accordance with the instructions set out in that form, and shall be filed with the commission within 10 days after the sale of the security resulting from the trade. 7(3) Before the report is filed, the "Certificate of Purchaser" in Form 8 shall be completed by the purchaser. 7(4) A purchaser who is required, under subsection (3), to complete the "Certificate of Purchaser" in a Form 8 report to be filed with the commission, shall complete and file with the commission a report in Form 8A as and when required by the terms of that certificate. 7(5) Where a trade that is required under this section to be reported to the commission is not so reported, the vendor is not entitled, with respect to that trade, to the benefit of any exemption from registration conferred by clause 19(1)⁠(b) of the Act. M.R. 154/2009 7(6) [Repealed] M.R. 154/2009 PART II PRELIMINARY PROSPECTUS AND PROSPECTUS 8 to 13 [Repealed] M.R. 159/89; 154/2009 Inferences not to be drawn 14 No inference shall be drawn from the items of disclosure called for by the various prospectus forms that in any way qualifies or limits the discretion granted to the director or the commission by the Act. 15 No inference shall be drawn from the items of disclosure called for by the various prospectus forms that in any way qualifies or limits the obligation to provide full, true, and plain disclosure of all material facts relating to the security proposed to be offered. 16 to 37 [Repealed] M.R. 154/2009 PART III 38 to 42 [Repealed] M.R. 154/2009 PART IV INSIDER TRADING 43 and 44 [Repealed] M.R. 64/2010 Exemption 44.1(1) A person or company that purchases or sells securities of a corporation with knowledge of a material fact or material change with respect to the corporation that has not been generally disclosed is exempt from subsection 112(1) of the Act and from liability under section 113 of the Act, where the person or company proves that, (a) no director, officer, partner, employee or agent of the person or company who made or participated in making the decision to purchase or sell the securities of the corporation had actual knowledge of the material fact or material change; and (b) no advice was given with respect to the purchase or sale of the securities to the director, officer, partner, employee or agent of the person or company who made or participated in making the decision to purchase or sell the securities by a director, partner, officer, employee or agent of the person or company who had actual knowledge of the material fact or the material change; but this exemption is not available to an individual who had actual knowledge of the material fact or change. 44.1(2) A person or company that purchases or sells securities of a corporation with knowledge of a material fact or material change with respect to the corporation that has not been generally disclosed is exempt from subsection 112(1) of the Act and from liability under section 113 of the Act, where the person or company proves that, (a) that purchase or sale was entered into as agent for another person or company pursuant to a specific unsolicited order from that other person or company to purchase or sell; (b) the purchase or sale was made pursuant to participation in an automatic dividend reinvestment plan, share purchase plan or other similar automatic plan that was entered into by the person or company prior to the acquisition of knowledge of the material fact or material change; or (c) the purchase or sale was made to fulfil a legally binding obligation entered into by the person or company prior to the acquisition of knowledge of the material fact or material change. M.R. 159/89 44.1(3) In determining whether a person or company has sustained the burden of proof under subsection (1), it shall be relevant whether and to what extent the person or company has implemented and maintained reasonable policies and procedures to prevent contraventions of subsection 112(1) of the Act by persons making or influencing investment decisions on its behalf and to prevent transmission of information concerning a material fact or material change contrary to subsection 112(2) or (3) of the Act. 44.1(4) A person or company who purchases or sells a security of a corporation as agent or trustee for a person or company who is exempt from subsection 112(1) of the Act and from liability under section 113 of the Act by reason of clause (2)⁠(b) or (c), is also exempt from subsection 112(1) of the Act and from liability under section 113 of the Act. 44.1(5) A person or company is exempt from subsections 112(1), (2) and (3) of the Act where the person or company proves that such person or company reasonably believed that, (a) the other party to a purchase or sale of securities; or (b) the person or company informed of the material fact or material change; as the case may be, had knowledge of the material fact or material change. M.R. 159/89 PARTS V and VI 45 to 59 [Repealed] M.R. 154/2009 PART VII BENEFICIAL OWNERSHIP OF SECURITIES Filings required 60(1) For the purposes of section 109 of the Act, a report filed by a company that includes capital securities beneficially owned by a subsidiary, or deemed to be beneficially owned by that subsidiary by virtue of subsection 1(7) of the Act, or that includes changes in the subsidiary's beneficial ownership of capital securities, shall be deemed to be a report filed by that subsidiary, and the subsidiary need not file a separate report. 60(2) For the purposes of section 109 of the Act, a report filed by a person that includes capital securities beneficially owned, or deemed to be beneficially owned, under subsection 1(6) of the Act, by a company controlled by that person or by an affiliate, if any, of that controlled company, or that includes changes in the beneficial ownership of those capital securities by that controlled company or affiliate, shall be deemed to be a report filed by that controlled company, or by that affiliate, and that controlled company and affiliate need not file a separate report. 60(3) Where the Act or this regulation requires the disclosure of the number or percentage of securities beneficially owned by a person and, under subsection 1(6) of the Act, one or more companies will also have to be shown as beneficially owning those securities, a statement disclosing all the securities beneficially owned or deemed to be beneficially owned by that person, and indicating whether the ownership is direct or indirect, and if indirect indicating the name of the controlled company, or company affiliated with the controlled company, through which those securities are indirectly owned, and the number or percentage of those securities so owned by that company, shall be sufficient disclosure without disclosing the name of any other company that is deemed to beneficially own the same securities. 60(4) Where the Act or this regulation requires the disclosure of the number or percentage of securities beneficially owned by a company and, under subsection 1(7) of the Act, one or more other companies will also have to be shown as beneficially owning those securities, a statement disclosing all the securities beneficially owned, or deemed to be beneficially owned, by the parent company, and indicating whether the ownership is direct or indirect, and if indirect indicating the name of the subsidiary through which the securities are indirectly owned, and the number or percentage of those securities so owned, shall be sufficient disclosure, without disclosing the name of any other company that is deemed to beneficially own the same securities. PARTS VIII and IX 61 to 72 [Repealed] M.R. 154/2009 PART X SUMMONS AND NOTICE TO WITNESSES Rules of hearings and investigations 73 In hearings or investigations conducted under the Act the following rules apply: (a) where the commission or its delegate issues a summons to a witness pursuant to clause 5(1)⁠(b) of the Act, the party requesting the attendance of the witness is responsible for the service of that witness and the payment of witness fees and allowances; (b) the rules of practice of the Court of King's Bench relating to the service of witnesses, and the payment of witness fees and allowances for the trial of civil actions, apply, with such modifications as the circumstances require, to the service and payment of witnesses; (c) the summons to a witness to appear before the commission or its delegate, issued pursuant to clause 5(1)⁠(b) of the Act shall be prepared in accordance with Form 19; (d) the summons to a witness to appear before a person appointed to make an investigation to which section 22 of the Act applies shall be prepared in accordance with Form 20; (e) the notice issued under section 12 of the Act to an applicant or a registrant or any partner, officer, director, or employee of an applicant or a registrant, to submit to examination under oath by a person designated by the director, shall be prepared in accordance with Form 21; and (f) the affidavit of service, where personal service of a summons or notice to a witness is effected, shall be prepared in accordance with Form 22. PARTS XI and XII 74 to 87 [Repealed] M.R. 154/2009 PART XIII ADDITIONAL EXEMPTIONS Application 88 This Part applies to certain trades in a security of an issuer where the trade would otherwise be a trade in the course of primary distribution to the public. Definitions 89 In this Part, "eligible purchaser" means, (a) a related purchaser, (b) a sophisticated purchaser, or (c) an informed purchaser; (« acheteur admissible ») "expert advice" means advice with respect to the merits or risks of an investment in securities obtained from a lawyer or accountant who is not currently engaged by the issuer or a promoter of the issuer, or a registered broker, broker-dealer, investment counsel or investment dealer who is not a sales agent of the issuer; (« conseils d'experts ») "informed purchaser" means, (a) a purchaser that has obtained expert advice with respect to the merits and risks of an investment in securities, including the ability of the purchaser to discharge any continuing commitments associated with the investments and to bear the economic impact of any loss of the investment, or (b) a purchaser that has the knowledge, experience and sophistication to assess an investment in securities as a result of previous experience with investments in like securities and, by reason of a previous relationship or association with the issuer or any promoter of the issuer, has access to or is able to obtain sufficient information concerning the business and affairs of the issuer to enable the purchaser to evaluate the merits and risks of an investment in the securities of the issuer, and as a result does not require the information and protection that would otherwise be provided under the Act; (« acheteur informé ») "issuer" means a person or company that has outstanding, issues or proposes to issue, a security; (« émetteur ») "offering memorandum" means a document describing the business and affairs of an issuer that has been prepared primarily for delivery to and review by purchasers to assist them in making investment decisions; (« notice d'offre ») "purchaser" means a purchaser of a security through a trade that is made under section 90 or 91; (« acheteur ») "qualifying liability" means any indebtedness assumed by a purchaser of a security as consideration in whole or in part for the aggregate acquisition cost to the purchaser of the security, if, (a) the indebtedness is evidenced in writing and constitutes a real and direct obligation of the purchaser to make payment of any unpaid balance of the aggregate acquisition cost of the securities, (b) no commitment or expectation is held out to the purchaser that payment under such evidence of the indebtedness shall or may be waived by the holder thereof or that any portion of the acquisition cost of the security shall or may be remitted or loaned back to the purchaser, and (c) the amount of the indebtedness is calculated on a present value basis (assuming a reasonable maturity date if none is stipulated or if the indebtedness is payable on demand) at the higher of the rate of interest per annum payable under such evidence of indebtedness and the rate of interest per annum published and charged from time to time as its prime rate of interest by a bank to which the Bank Act (Canada) applies, plus one percentage point; (« dette admissible ») "related purchaser" means, (a) a purchaser that is a general partner of the issuer, a promoter of the issuer or a senior officer or director of either of them or of the issuer, or (b) a purchaser that is a parent, brother, sister, or child of a person described in clause (a), or the spouse of any of them, or (c) a purchaser that is a close friend or close business associate of a person described in clause (a), or (d) a corporation all of the equity shares of which are owned by persons described in clause (a), (b) or (c); (« acheteur apparenté ») "sophisticated purchaser" means a purchaser who has the financial ability to withstand a loss that might occur as a result of an investment in a security by reason of the fact that, (a) if the purchaser is an individual, he or she has either, (i) a minimum net worth of $250,000., exclusive of home, car and furnishings, or (ii) a minimum net worth of $50,000., exclusive of home, car and furnishings and some income in the last taxation year that would have been taxed at the highest marginal rate applicable to individuals under The Income Tax Act had it not been for his or her use of tax shelters; or (b) if the purchaser is a corporation, it (i) has shareholder equity (paid-up capital plus retained earnings) in excess of $50,000., or (ii) had net income in the last taxation year of at least $50,000., and the purchaser has the knowledge, experience and sophistication to assess an investment in the securities, either from previous investments in like securities or from expert advice, as a result of which the purchaser does not require the information and protection that would otherwise be provided under the Act. (« acheteur averti ») M.R. 154/2009 90 [Repealed] M.R. 154/2009 Exempt trades 91 Subject to section 92 of this regulation, sections 6 and 37 of the Act do not apply to the following trades, (a) a trade made by an issuer with a view to the sale of a security of its own issue, where (i) sales are made to, (A) related purchasers, (B) not more than 15 informed purchasers in all jurisdictions including Manitoba, or (C) purchasers referred to in paragraph (A) and purchasers referred to in paragraph (B), and the issuer obtains from each purchaser in Manitoba a declaration prepared and executed in accordance with Form 24 and, in the case of an informed purchaser, each declaration so obtained has attached thereto a certificate in either of the prescribed forms and executed by any person who has provided expert advice to the purchaser, (ii) all sales are completed within a period of 180 days after the date of filing with the commission of the notice required by subsection 92(1), except that subsequent sales by the issuer to the same purchasers may be carried out if made pursuant to written agreements entered into during that 180 day period, (iii) the offer and sale of the security is not accompanied by an advertisement and no selling or promotional expenses have been paid or incurred in connection therewith, except for professional services or for services performed by a registered broker, broker-dealer or investment dealer, and (iv) no security of the issuer's own issue, (A) has previously been issued under this section, (B) is being or will be offered or distributed in reliance upon any other exemption in the Act or the regulations made thereunder during the 180 day period referred to in subclause (ii), and no other issuer is or will be making a primary distribution to the public during that 180 day period in respect of the financing of the same property, project, program or acquisition being financed by the issuer under this clause; (b) a trade made by an issuer with a view to the sale of a security of its own issue, where (i) sales are made to (A) related purchasers, (B) not more than 50 sophisticated purchasers in all jurisdictions, including Manitoba, or (C) purchasers referred to in paragraph (A) and purchasers referred to in paragraph (B), and the issuer obtains from each purchaser in Manitoba a declaration prepared and executed in accordance with Form 25, (ii) all sales are completed within a period of 180 days after the date of filing with the commission of the notice required by subsection 92(1), except that subsequent sales by the issuer to the same purchasers may be carried out if made pursuant to written agreements entered into during that 180 day period, (iii) before an agreement of purchase and sale is entered into, each purchaser receives an offering memorandum which complies with the requirements of Form 26 and is executed by the issuer, any promoter of the issuer, and any principal broker, broker-dealer or investment dealer engaged by the issuer or promoter in connection with the sale of the securities, (iv) each subscription agreement entered into with a purchaser in Manitoba contains contractual rights of rescission and damage to the same effect as are required to be described in Form 26, (v) the proceeds of sale of the securities are sufficient either alone or with the proceeds of any concurrent financing of the issuer disclosed in the offering memorandum, and related to the property, project program or other acquisition proposed to be financed by the issuer under this clause, to acquire or complete the property, project, program or other acquisition, (vi) a period of at least 180 days has elapsed since the date of the filing of the issuer of a report as to a previous distribution of the issuer as required by subsection 92(2) of a security of the issuer's own issue, and (vii) no security of the issuer's own issue is being or will be offered or distributed in reliance upon any other exemption in the Act or the regulations thereunder during the 180 day period referred to in subclause (ii), and no other issuer is or will be making a primary distribution to the public during that 180 day period in respect of the financing of the same property, project, program or acquisition being financed by the issuer under this clause. Notices and reports to commission 92(1) No person or company shall trade in a security that is exempt under clauses 91(a) or (b) until that person or company or the agent of that person or company has paid the prescribed fee and has filed with the commission a notice in writing of intention to trade, prepared and executed in accordance with Form 23. 92(2) An issuer of a security or its agent shall, within 15 days after termination of trading in the security or 180 days after the date on which notice is filed with the commission under subsection (1), whichever is earlier, file with the commission a written report prepared and executed in accordance with Form 27 and, if an offering memorandum has been required, a copy of the offering memorandum shall be filed with the commission either before or concurrently therewith. 92(3) Where the notice required by subsection (1) or the report required by subsection (2) or both of them are not filed with the commission with respect to trades sought to be exempted under clause 91(a) or (b), the issuer of the security is not entitled to the benefit of any exemption conferred by that clause with respect to those trades. 92(4) A contract for the sale of a security to which section 91 applies, which contract was obtained by trading with the public in Manitoba in contravention of or without complying with the requirements of that section, is voidable at the election of the purchaser, and if the purchaser elects to void it, the purchaser is entitled to recover any monies paid thereunder; but no action to enforce the right to void the contract may be commenced by a purchaser after the expiration of one year from the date that the report required by subsection (2) was filed, or if not filed within the required time, the last date that the report should have been filed, whichever is later. Holding periods 93(1) A security acquired under an exemption provided by clause 91(a) or (b) shall not be traded without the prior consent in writing of the Director, unless (a) the security has been held for a period of at least 12 months; (b) the issuer of the security has filed a prospectus with the commission with respect to the security and has obtained a receipt therefor; (c) the proposed purchaser of the security is one of the original purchasers of a security of the same class as the security previously acquired under an exemption provided by clause 91(a) or (b); or (d) the proposed trade in a security is to a corporation all of the equity shares of which are owned by original purchasers of a security of the same class as the security proposed to be traded. 93(2) The Director shall consent to a trade referred to in subsection (1) if the Director is of the opinion that it would not be prejudicial to the public interest to do so. PART XIV 94 to 115 [Repealed] M.R. 159/89; 154/2009 SCHEDULE A FEES 1(1) The following definitions apply in subsection (2). "ETF Facts" means a document prepared in accordance with Form 41-101F4 Information Required in an ETF Facts Document . (« aperçu du FNB ») "Fund Facts" means a document prepared in accordance with Form 81-101F3 Contents of Fund Facts Document . (« aperçu du fonds ») "unit offering" means two or more classes of securities offered for sale as a unit. (« offre d'unité ») 1(2) The fee that shall be paid to the commission (a) for (i) registration as a dealer, adviser or investment fund manager is SCHEDULE B FORMS Form Title 1 Application for registration as broker, investment dealer, broker-dealer, underwriter, security issuer, investment counsel, securities advisor or mineral interest broker 2 – 5 [Repealed] M.R. 154/2009 6 Application for recognition as an exempt purchaser under clause 19(1)⁠(b) of The Securities Act 7 [There is no Form 7.] 8 Report of a trade made under clause 19(1)⁠(b) of The Securities Act 8A Report of resale of securities purchased under clause 19(1)⁠(b) of The Securities Act 9 – 13 [Repealed] M.R. 154/2009 14 – 15 [Repealed] M.R. 64/2010 16 – 18 [Repealed] M.R. 154/2009 19 Summons to a witness to attend before the Manitoba Securities Commission 20 Summons to a witness to attend before a person appointed to make an investigation 21 Notice to submit to examination under section 12 of the Act 22 Affidavit of service 23 Notice of intention to trade in a security under clause 91(a) or 91(b) of the Securities Regulation 24 Declaration respecting a trade in a security under clause 91(a) of the Securities Regulation 25 Declaration respecting a trade in a security under clause 91(b) of the Securities Regulation 26 Requirements for an offering memorandum to be used in conjunction with the exemption contained in clause 91(b) of the Securities Regulation 27 Report of termination of trades made pursuant to exemptions contained in clause 91(a) or 91(b) of the Securities Regulation 28 – 32 [Repealed] M.R. 159/89; 154/2009