Securities Regulations (ss2 & 53 amended by 2014 cC-10.1 s74)

CONSOLIDATED NEWFOUNDLAND AND LABRADOR REGULATION 805/96 Securities Regulations under the Securities Act (O.C. 96-286) Amended by: 87/01 2001 c42 14/06 2014 cC-10.1 s74 CONSOLIDATED NEWFOUNDLAND AND LABRADOR REGULATION 805/96 Securities Regulations under the Securities Act (O.C. 96-286) Under the authority of the Securities Act and the Subordinate Legislation Revision and Consolidation Act , the Lieutenant-Governor in Council makes the following regulations. REGULATIONS Analysis PART I GENERAL INTERPRETATION 1. Short title 2. Interpretation 3. Financial statements PART II CONTINUOUS DISCLOSURE FOR ISSUERS OTHER THAN MUTUAL FUNDS 4. Non-financial matters 5. Confidential filing 6. Other disclosure 7. Reporting issuer filing 8. Interim financial statement 9. Content of statement 10. Exclusion from statement 11. Annual financial disclosure 12. Statement to be approved 13. Finance companies 14. Miscellaneous PART III PROSPECTUS REQUIREMENTS 15. Further exemptions 16. Application of exemptions 17. Acquisition cost 18. Restrictions of exemptions 19. Exemption not applicable 20. Exemption not applicable 21. Filing requirements 22. Consent filing 23. Preliminary prospectus change 24. Requirements for filing 25. Interpretation 26. Rules 27. Finance companies 28. Industrial company prospectus 29. Finance company prospectus 30. Resource company prospectus 31. Issuer bid prospectus 32. Mutual fund prospectus 33. Compliance by issuer 34. Type of prospectus 35. Unnecessary reference 36. Wrong inference 37. Form of information 38. Preliminary prospectus 39. Preliminary prospectus 40. Pro forma prospectus 41. Content of prospectus - financial matters 42. Mutual fund prospectus 43. Pro forma balance sheet 44. Business acquisition prospectus 45. Foreign issuer 46. Exercise of option 47. Debt securities prospectus 48. Inclusion of forecast 49. Acquired business statement 50. Subsidiary's statements 51. Unconsolidated financial statements 52. Review by audit committee 53. Financial statement 54. Auditor's letter 55. Reporting requirements 56. Reporting requirements 57. Reporting requirements 58. Notice of intention 59. Statement of material facts 60. Application of sections 61. Statement of material facts 62. Statement of material facts 63. Underwriter's certificate 64. Material change 65. Exemption from compliance 66. Options 67. Escrow agreement 68. Certificate - portion of distribution underwritten 69. Prospectus requirements - variation permitted 70. Restriction in use of terms PART IV MUTUAL FUNDS 71. Financial disclosure requirements 72. Statement of changes in net assets 73. Balance sheet 74. Statement of investment portfolio 75. Statement of portfolio transactions 76. Additions to financial statement 77. Interim financial statement 78. Interim financial statement 79. Auditor's report 80. Financial statement of mutual fund 81. Approval of statement 82. Omission from statement 83. Confirmation of trade PART V REGISTRATION REQUIREMENTS 84. Definitions 85. Determination of market value 86. Categories of registration 87. Categories of advisers 88. Registration as underwriter 89. Where portfolio manager is a broker 90. Conditions of registration - general 91. Registrant 92. Notice of registrant 93. Conditions of registration 94. Registered dealer 95. Conditions of registration - capital requirements 96. Bonding or insurance 97. Notice to superintendent 98. Compensation fund 99. Subordination agreement 100. Report on statements 101. Conditions of registration - record keeping 102. Conditions of registration - new accounts and supervision 103. Investment counsel standards 104. Conditions of registration - segregation of funds and securities 105. Where registrant holds securities 106. Credit balances 107. Subscriptions or prepayments 108. Securities account 108A. Transfer from accounts 109. Exemption for registrants 110. Conditions of registration - statements of account and portfolio 111. Conditions of registration - proficiency requirements 112. Registration prohibited 113. Equivalent qualifications 114. Registration as salesperson 114A. Conditions of registration - listed and posted securities 115. Application for registration 116. Renewals of registration 116A. Expiry of registration 117. Renewal of registration 118. Renewal of registration 119. Examination 120. Amendments to registration 121. Notice to superintendent 122. Escrow agreement 123. Shares subject to escrow 124. Reporting to superintendent 125. Financial statement 126. End of year report 127. End of year report 128. Guideline 129. Audit of report 130. Auditors instructions 131. Focus of audit 132. Report of auditor 133. Further exemptions from registration requirements 134. Exempt purchaser 135. Certain banks PART V OVER-THE-COUNTER TRADING 136. General 137. Trade reporting PART VI PROCEDURE AND RELATED MATTERS 138. Endorsement of warrants 139. Execution and certification of documents 140. Failure of material to comply 141. Investigations PART VII INSIDER TRADING 142. Disclosure requirement 143. Form of report 144. Filing not required 145. Time of filing 146. Preparation of report 147. Preparation of report 148. Affiliate report 149. Report re: estate 149A. Rep. by NLR 87/01 149B. Report outside jurisdiction 149C. Facsimile signature 149D. Exemption from liability PART VIII PROXIES AND PROXY SOLICITATION 150. Contents of circular 151. Form of proxy 152. Effect of proxy 153. Limit on proxy 154. Copy of proxy 155. Certification of circular PART IX TAKE-OVER BIDS AND ISSUER BIDS 156. Interpretation 157. Market price 158. Take-over bid 159. Subsection 95(2) of Act 160. Subsection 95(5) of Act 161. Form of notice 162. Press release 163. Take-over bid circular 164. Issuer bid circular 165. Directors' circular 166. Director's circular 167. Notice of change 168. Description of change required 168A. Bid variation 168B. Consent of solicitor, et al 168C. Press release authorization 168D. Press release authorization 168E. Joint action 168F. Statement of rights 168G. Presentation of information 168H. Alternative signature 168I. Triplicate filing PART X UNIVERSAL REGISTRATION 169. Interpretation 170. Indirect trade prohibited 171. Limited market dealer registration 172. International dealer registration 173. Financial intermediary dealer registration 174. Foreign dealer registration 175. Exemption PART XI DEALER OWNERSHIP RESTRICTIONS 176. Interpretation 177. Non-resident ownership 178. Ownership of securities 179. Regulations may be varied 180. Right to be heard 181. Notice of ownership 182. Miscellaneous PART XII CONFLICTS OF INTEREST 183. Interpretation 184. Provisions may be varied 185. General duties 186. Treatment of customers 187. Statement of policies 188. Limitations on underwriting 189. Limitations on trading 190. Confirmation and reporting of trades 191. Limitations on advising 192. Limitations on recommendations 193. Limitations on networking 194. Exceptions 195. Miscellaneous 196. Compliance conditions 197. Exemption of registrant 198. Offering memorandum prospectus 199. Repeal PART I GENERAL INTERPRETATION Short title 1. These regulations may be cited as the Securities Regulations. 58/91 s1 Back to Top Interpretation 2. (1) Every term used in these regulations that is (a) defined in section 2 of the Act is used in these regulations as so defined unless it is otherwise defined in these regulations or the context otherwise requires; (b) defined in a Part of the Act for purposes of that Part is used as so defined in those sections of these regulations that relate to the subject matter of that Part; and (c) defined only for a Part or section of these regulations is, unless otherwise provided, so defined only for the purposes of such Part or section. (2) In these regulations (a) "debt security" means a bond, debenture, note or similar instrument representing indebtedness, whether secured or unsecured; (b) "finance company" means an issuer, its subsidiaries and affiliates that (i) has issued securities on or after April 1, 1991 , in respect of which a prospectus was filed and a receipt therefor obtained under a predecessor of this Act, or (ii) distributes its securities in the province without filing a prospectus in respect thereof, in reliance on paragraph 36(2)(d) of the Act, and is (iii) an issuer, or a subsidiary or affiliate of an issuer, a material business activity of which involves (A) purchasing, discounting or otherwise acquiring promissory notes, acceptances, accounts receivable, bills of sale, chattel mortgages, conditional sales contracts, drafts and other obligations representing part or all of the sales price or merchandise, or services, (B) factoring or purchasing and leasing personal property as part of a hire purchase or similar business, or (C) making secured and unsecured loans, but does not include, (iv) a bank to which the Bank Act ( Canada ) applies, the Federal Business Development Bank, a loan company or trust company licensed under the Trust and Loan Companies Licensing Act or an insurance company licensed under the Insurance Companies Act, (v) a credit union or co-operative society registered under the Co-operative Societies Act, (vi) an underwriter or dealer, or (vii) an issuer that, in the opinion of the superintendent, carries on operations making it more appropriate that the issuer be designated as an industrial company or natural resource company; (c) "industrial company" means an issuer designated by the superintendent as an industrial company; (d) "insurance company" means an issuer licensed under the Insurance Companies Act; (e) "natural resource company" means a mining, gas, oil or exploration issuer designated by the superintendent as a natural resource company; and (f) "variable insurance contract" means a contract of life insurance under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets. (3) Subject to subsection (4), for the purposes of the Act and these regulations, where a recommendation has been made in the Handbook of the Chartered Professional Accountants of Canada which is applicable in the circumstances, the terms "generally accepted accounting principles", "auditor's report" and "generally accepted auditing standards" mean the principles, report and standards, respectively, recommended in the handbook. (4) Subject to section 46, where an issuer is incorporated or organized in a jurisdiction other than Canada or a province or territory thereof, "generally accepted accounting principles" may, at the option of the issuer, mean the principles as prescribed in the incorporating jurisdiction by or pursuant to applicable legislation or where a recommendation has been made by an association in that jurisdiction equivalent to the Chartered Professional Accountants of Canada, the principles recommended by that association, but where an option is exercised under this subsection, the notes to the financial statements shall state which option has been applied in the choice of generally accepted accounting principles. (5) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a person and, by virtue of subsection 2(5) of the Act, one or more companies will also have to be shown as beneficially owning the securities, a statement disclosing all the securities beneficially owned by the person or deemed to be beneficially owned, 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 the securities are indirectly owned and the number or percentage of the securities so owned by the company, shall be deemed sufficient disclosure without disclosing the name of another company which is deemed to beneficially own the same securities. (6) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a company, and by virtue of subsection 2(6) of the Act, one or more other companies will also have to be shown as beneficially owning the securities, a statement disclosing all 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 the securities so owned, shall be deemed sufficient disclosure without disclosing the name of another company which is deemed to beneficially own the same securities. (7) A company shall be considered to be another's holding company or parent company if that other is its subsidiary. (8) A reference to a form in these regulations means the form approved by the minister for the purpose of these regulations. 58/91 s2; 14/06 s1 ; 2014 cC-10.1 s74 Back to Top Financial statements 3. (1) Subject to subsections (3) and (4), the financial statements permitted or required by the Act or these regulations shall be prepared in accordance with generally accepted accounting principles and with an applicable provision of the Act or these regulations. (2) Where an auditor reports on a financial statement required by the Act or these regulations, the report shall be prepared in accordance with generally accepted auditing standards and with an applicable provision of the Act or these regulations. (3) Where the issuer is (a) a bank to which the Bank Act ( Canada ) applies; or (b) a company undertaking and transacting life insurance licensed under the Insurance Companies Act, the financial statements of the bank or insurance company are not required to comply with subsection (1) if the financial statements are prepared in accordance with a statute incorporating, continuing or governing the bank or insurance company and any applicable generally accepted accounting principles. (4) Notwithstanding subsection (1), where a financial statement is not prepared in accordance with generally accepted accounting principles, (a) the superintendent may accept the financial statement for the purposes for which it is to be filed, (i) where the superintendent is satisfied that it is not reasonably practicable for the issuer to revise the presentation in the financial statement to conform to generally accepted accounting principles, or (ii) where the superintendent by his or her order under paragraph (b) has previously accepted a financial statement of the same issuer with a corresponding variation from generally accepted accounting principles and the superintendent is satisfied that there has been no material change in the circumstances upon which his or her previous decision was based; or (b) the superintendent may, by his or her order, accept the financial statement after giving interested parties an opportunity to be heard if the superintendent is satisfied in all the circumstances of the particular case that the variation from generally accepted accounting principles is supported or justified by considerations that outweigh the desirability of uniform adherence to generally accepted accounting principles. (5) Except where expressly provided otherwise in the Act or in sections 10, 40, 53, 79 and 82, each financial statement prepared under a requirement of the Act or these regulations shall include an auditor's report on the statement. (6) It is not necessary to designate the financial statements referred to in the Act or these regulations as the income statement, statement of surplus, statement of changes in financial position, balance sheet, statement of investment portfolio, statement of portfolio transactions, or statement of changes in net assets. (7) Notwithstanding anything in this Part, it is not necessary to state in a financial statement any matter that in all the circumstances is of relative insignificance. 58/91 s3; 14/06 s2 PART II CONTINUOUS DISCLOSURE FOR ISSUERS OTHER THAN MUTUAL FUNDS Back to Top Non-financial matters 4. Every report required to be filed under subsection 76(2) of the Act (a) shall be prepared in accordance with Form 26; and (b) subject to section 5, shall be delivered to the superintendent in an envelope addressed to the superintendent and marked "Continuous Disclosure". 58/91 s4; 14/06 s3 Back to Top Confidential filing 5. Where the reporting issuer files (a) the report required by subsection 76(2) of the Act in reliance on (i) subsection 76(3) of the Act, or (ii) item 7 of Form 26; or (b) the notification required by subsection 76(4) of the Act, everything that is required to be filed thereby shall be marked "Confidential" and placed in an envelope addressed to the superintendent marked "Confidential". 58/91 s5; 14/06 s4 Back to Top Other disclosure 6. (1) Every report required to be filed under subsection 82(2) of the Act shall be prepared in accordance with Form 27. (2) The information contained in a report required to be filed under subsection 82(2) of the Act shall be clearly presented and the statements made therein shall be divided into groups according to subject matter and the various groups of statements shall be preceded by appropriate headings. (3) The order of items set out in Form 27 need not be followed. (4) Where practicable and appropriate, information required by Form 27 shall be presented in tabular form. (5) All amounts required by Form 27 shall be stated in figures. (6) Information required by more than one applicable item in Form 27 need not be repeated. (7) No statement need be made in response to an item in Form 27 which is inapplicable and negative answers to an item may be omitted. 58/91 s6 Back to Top Reporting issuer filing 7. (1) Every reporting issuer shall file, in duplicate, (a) a copy of all material sent by the reporting issuer to its security holders; and (b) subject to subsection (2), all information not already filed with the superintendent, whether in the same or a different form, that it files with a government of another jurisdiction, or an agency thereof, or with a stock exchange of another jurisdiction, under the securities or corporation law of that jurisdiction or under the by-laws, rules or regulations of the stock exchange, on the basis that it is material to investors although the information is not specifically required to be filed by the terms of the applicable statute or regulation, or of the applicable by-laws, rules or regulations of the stock exchange. (2) Information is not required to be filed with the superintendent under paragraph (1)(b) where the information filed in the other jurisdiction is information that is specifically required to be filed in the other jurisdiction by the terms of the applicable statute, regulation or of the by-laws, rules or regulations of the stock exchange. (3) Information required to be filed with the superintendent under subsection (1) shall be sent to the superintendent within 24 hours of (a) sending the information referred to in paragraph (1)(a) to its security holders; or (b) filing in another jurisdiction the information referred to in paragraph (1)(b). (4) Information that is filed with the superintendent under paragraph (1)(b) and that has been filed on a confidential basis in all other jurisdictions in which it is filed shall be kept confidential so long as it remains confidential in all those other jurisdictions. 58/91 s7; 14/06 s5 Back to Top Interim financial statement 8. (1) The interim financial statements required to be filed under subsection 78(1) of the Act shall include (a) subject to subsection (2), a statement of changes in financial position; and (b) an income statement. (2) Every issuer primarily engaged in the business of investing shall file a statement of changes in net assets for each period instead of a statement of changes in financial position. 58/91 s8 Back to Top Content of statement 9. The interim financial statements under subsection 78(1) of the Act shall present financial information for the current fiscal year to the date to which the financial statements are prepared and may include as additional information financial information for the most recent 3 month period to the date to which the financial statements are prepared, and which may be comparative for the corresponding 3 month period in the last financial year. 58/91 s9 Back to Top Exclusion from statement 10. The interim financial statements under section 78 of the Act need not include an auditor's report. 58/91 s10 Back to Top Annual financial disclosure 11. (1) The financial statements required to be filed under section 79 of the Act by an issuer that is not a mutual fund in the province shall include (a) an income statement; (b) a statement of surplus; (c) subject to subsection (2), a statement of changes in financial position; and (d) a balance sheet prepared for or as at the end of the period as applicable. (2) Every issuer primarily engaged in the business of investing shall file a statement of changes in net assets for each period instead of a statement of changes in financial position. 58/91 s11 Back to Top Statement to be approved 12. Every financial statement required to be filed under section 79 of the Act shall be approved by the board of directors of the reporting issuer and the approval shall be evidenced by the manual or facsimile signatures of 2 directors duly authorized to signify the approval. 58/91 s12 Back to Top Finance companies 13. (1) Each finance company not otherwise required to file financial statements in accordance with sections 78 and 79 of the Act shall file, in duplicate, the financial statements required under subsections 78(1) and 79(1), as appropriate, as though the finance company were subject to those subsections. (2) Subject to subsection (3), each finance company, whether or not otherwise required to file financial statements in accordance with sections 78 and 79 of the Act, shall file, annually, within 140 days after the end of its financial year, (a) a report prepared in accordance with Form 28; and (b) other forms as are deemed appropriate by the superintendent. (3) A finance company shall not be required to comply with subsection (2) where (a) the Association of Canadian Financial Corporations, after consultation with the Investment Dealers' Association of Canada, has passed a by-law setting a standard of continuous disclosure for its members deemed by the superintendent to be an appropriate alternative to the disclosure required by subsection (2); (b) the finance company, whether it is a member of the Association of Canadian Financial Corporations or an agreeing non-member, (i) complies with the by-law referred to in paragraph (a), (ii) files copies of each report required by the by-law with the Association of Canadian Financial Corporations in accordance with the by-law, with the superintendent and a stock exchange as required by subsection (8), and (iii) agrees that it will, immediately upon the request of the Association of Canadian Financial Corporations or of an interested party, add the name of an interested party to its mailing list for distribution of the reports until the interested party requests or agrees to the removal of his or her name from the mailing list. (4) For the purpose of subsection (3), an "agreeing non-member" is a finance company that is not a member of the Association of Canadian Financial Corporations but has filed an undertaking with the superintendent that it will comply with the by-law of the Association of Canadian Financial Corporations relating to continuous disclosure. (5) Where the superintendent, upon application by a finance company, is of the opinion that the mode of operation of the applicant is such that some or all of the reporting requirements of subsection (1) or (2) are not appropriate, the superintendent may order, on the terms and conditions as he or she considers necessary, that some or all of the reporting requirements of subsection (1) or (2) do not apply to the finance company. (6) Every report filed under subsection (2) shall be accompanied by a report of the auditor of the finance company stating that he or she has read the report and that he or she has no reason to believe that there are misrepresentations in the information contained therein that is derived from the financial statements upon which he or she reported or that is within his or her knowledge as a result of his or her audit of the financial statements. (7) Copies of the report required by subsection (2) or prepared in accordance with subsection (3), including exhibits and all papers and documents required in support thereof, shall be filed with the superintendent and, where any security of the finance company is listed on a stock exchange, a copy of the report shall be filed with the stock exchange. (8) The reports filed with the superintendent and a stock exchange shall be manually signed by a senior financial officer of the finance company. (9) Every finance company shall, upon the request of a debt security holder of the finance company, provide the debt security holder with a copy of its financial statements most recently filed under section 78 or 79 of the Act or under subsection (1). 58/91 s13; 14/06 s6 Back to Top Miscellaneous 14. Where applicable, and where the period or date reported on is a financial year or financial year end, the following additional matters shall be referred to in the financial statements or by way of a note to the financial statements: (a) in the case of a finance company or an issuer engaged primarily in investing, an analysis of shares, bonds, debentures and other investments showing separately (i) the name of each issuer of the securities owned by the company, (ii) the class or designation of each security held, (iii) the number of each class of shares or aggregate face value of each class of other securities held, and (iv) the cost and market value of each class of securities held and, if the carrying value is other than average cost, the basis of valuation; (b) in the case of an industrial or natural resource company that is in the promotional, exploratory or developmental stage, an analysis, if material, of shares, bonds, debentures and other investments owned by the company showing separately (i) the name of each issuer of the securities held, (ii) the class or designation of each security held, (iii) the number of each class of shares or aggregate face value of each class of other securities held, and (iv) the cost and market value of each class of securities held and, if the carrying value is other than average cost, the basis of valuation; (c) in the case of an industrial or natural resource company that is in the promotional, exploratory or developmental stage, an analysis of deferred charges, if material, for the period covered by the income statement or statement of changes in financial position, segregating year by year, expenditures for development and exploration from expenditures for administration and showing the total for each. 58/91 s14 PART III PROSPECTUS REQUIREMENTS Back to Top Further exemptions 15. (1) Subject to subsection (2), section 54 of the Act does not apply to a trade by a person or company referred to in subparagraph 2(1)(l)(iii) of the Act in a security that was acquired pursuant to a take-over bid that is a formal bid as defined in subsection 90(1) of the Act if (a) the offeree issuer had been a reporting issuer for at least 12 months at the date of the bid; (b) the intention to make the trade was disclosed in the take-over bid circular in respect of the take-over bid; (c) the trade is made within the period commencing on the day of the expiry of the bid and ending 20 days thereafter; (d) a notice of intention and a declaration in Form 22 are filed before the trade; (e) a report of the trade is filed within 5 days after the completion of the trade; and (f) no unusual effort is made to prepare the market or to create a demand for the security and no extraordinary commission is paid in respect of the trade. (2) Where an offeror referred to in subsection (1) sells the securities acquired pursuant to a formal bid to another person or company that made a competing formal bid for securities of the same issuer, for not greater than the same consideration than that offered by that other person or company in its take-over bid, the offeror need not comply with paragraph (1)(b). 58/91 s15 Back to Top Application of exemptions 16. (1) The exemptions contained in paragraph 36(2)(j), subsection 73(5) and paragraph 74(1)(a) of the Act apply where the securities being traded are those of a company that (a) is incorporated but not continued under the British Columbia Companies Act, S.B.C. 1973, c.18, as amended; (b) is not a reporting company within the meaning of section 2 of the British Columbia Securities Act, S.B.C. 1967, c.45, as amended; and (c) does not offer its securities for sale to the public as if the company were a private company as defined in the Act. (2) The exemptions contained in subparagraph 36(2)(a)(ii) and paragraph 74(1)(a) of the Act apply, where the securities being traded are bonds, debentures or other evidence of indebtedness of Conseil scolaire de l'ile de Montreal. 58/91 s16 Back to Top Acquisition cost 17. (1) For the purpose of paragraph 36(1)(e) of the Act and paragraph 73(1)(d) of the Act, the aggregate acquisition cost is not less than $97,000. (2) For the purpose of paragraph 36(1)(r) of the Act and paragraph 73(1)(l) of the Act, the fair value of the assets is not less than $100,000. 58/91 s17 Back to Top Restrictions of exemptions 18. (1) Subsection (1) does not affect the exemption contained in paragraph 36(2)(h) and paragraph 74(1)(a) of the Act for securities issued by co-operative societies to which the Co-operative Societies Act applies. (2) The superintendent may, upon the application of an interested person or company, rule that a trade, intended trade, person or company is not subject to subsection (1) where the superintendent is satisfied (a) that a party effecting the conversion of a multiple unit residential property to establish the occupancy rights referred to in subsection (1) has prior to the day this section comes into force materially altered his or her position to his or her detriment in reliance on the law as it existed prior to that day; or (b) that to do so would not be prejudicial to the public interest, and the superintendent may impose the terms and conditions that he or she considers necessary. 58/91 s18; 14/06 s7 Back to Top Exemption not applicable 19. The exemption contained in paragraph 36(1)(e) of the Act and the corresponding exemption contained in paragraph 73(1)(d) of the Act are unavailable where the trade is in a security which has an aggregate acquisition cost to the purchaser of less than $100,000. 58/91 s19 Back to Top Exemption not applicable 20. The exemption contained in paragraph 36(1)(r) of the Act and the corresponding exemption contained in paragraph 73(1)(l) of the Act are unavailable where the value of the assets purchased is less than $100,000. 58/91 s20 Back to Top Filing requirements 21. A mutual fund may file a summary statement as a separate document in the form prescribed in this Part together with a prospectus filed under section 54 or 63 of the Act. 58/91 s21 Back to Top Consent filing 22. (1) Where a solicitor, auditor, accountant, engineer, appraiser or another person or company whose profession gives authority to a statement made by him or her is named as having prepared or certified a part of a prospectus, summary statement or documents prepared in connection with a summary statement, or is named as having prepared or certified a report or valuation used in or in connection with a prospectus or summary statement, the written consent of the person or company to being so named and to the use of the report or valuation shall be filed not later than the time the prospectus is filed. (2) The superintendent may dispense with the filing of a consent required by subsection (1) if, in his or her opinion, the filing is impracticable or involves undue hardship. (3) The consent of the auditor or accountant referred to in subsection (1) shall refer to his or her report stating the date thereof and the dates of the financial statements on which the reports are made, and shall contain a statement that he or she has read the prospectus and he or she has no reason to believe that there are any misrepresentations in the information contained therein that is derived from the financial statements upon which he or she reported or that is within his or her knowledge as a result of his or her audit of the financial statements. (4) Where a solicitor, auditor, accountant, engineer, appraiser or other person or company referred to in subsection (1) (a) has received or expects to receive any interest, whether direct or indirect, in the property of the issuer or an associate or affiliate of the issuer; or (b) beneficially owns, directly or indirectly, any securities of the issuer or an associate or affiliate of the issuer, the interest or ownership shall be disclosed in the prospectus. (5) Where a person or company referred to in subsection (1) is or is expected to be elected, appointed or employed as a director, officer or employee of the issuer or an associate or affiliate of the issuer, the fact or expectation shall be disclosed in the prospectus. 58/91 s22; 14/06 s8 Back to Top Preliminary prospectus change 23. Where a change is proposed to be made in a preliminary prospectus or prospectus that in the opinion of the superintendent materially affects a consent required by section 22, the superintendent may require that a further consent be filed before an amendment to the preliminary prospectus or prospectus is accepted. 58/91 s23; 14/06 s9 Back to Top Requirements for filing 24. There shall be filed at the time of the filing of a preliminary prospectus for a natural resource company, or at the time of the filing of a prospectus for a natural resource company under section 63 of the Act, a full and up-to-date report on the property of the natural resource company referred to in paragraph (b) or (c) of item 9 in Form 14 and the development thereof, made by an individual who is a mining engineer, geologist or other qualified individual acceptable to the superintendent, accompanied by a certificate on the report which certificate shall state (a) the address and occupation of the individual; (b) the qualifications of the individual; (c) whether or not the report is based on personal examination; (d) the date of the examination; (e) where the report is not based on personal examination, the source of the information contained in the report; and (f) whether or not the individual has, directly or indirectly, received or expects to receive any interest, direct or indirect, in the property of the person or company or an associate or affiliate of the person or company, or beneficially owns, directly or indirectly, any securities of the person or company or an associate or affiliate of the person or company and, if so, the particulars of the interest or beneficial ownership. 58/91 s24; 14/06 s9 Back to Top Interpretation 25. (1) In sections 26 and 27, (a) "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 the province; (b) "trust indenture" means a deed, indenture or document, including a supplement or amendment to a deed, indenture or document by the terms of which a person or company issues securities and in which a trustee is named as trustee for the holders of the securities issued thereunder; (c) "underwriter" means an underwriter that has signed a certificate included in a prospectus under section 60 of the Act. (2) For the purposes of the reports required under section 24 and for references to the property of an issuer contained in Form 14, where the report or reference relates to the property of a natural resource company, (a) "commercial production" means output from a well of the quantity of crude oil, liquid hydrocarbons, natural gas and natural gas liquids as, having regard to the cost of drilling and production and the price, kind and quality of the production, would justify from a commercial and economic standpoint the drilling of a similar well in the immediate surroundings; (b) "crude oil" means a mixture that consists mainly of pentanes and heavier hydrocarbons which may contain sulphur compounds and that is recoverable at a well from an underground reservoir and that is liquid at the conditions under which its volume is measured or estimated and includes all other liquid hydrocarbons so recoverable except natural gas liquids; (c) "indicated ore" has the same meaning as "probable ore"; (d) "inferred ore" has the same meaning as "possible ore"; (e) "measured ore" has the same meaning as "proven ore"; (f) "natural gas" means a mixture, consisting principally of hydrocarbons that may contain non-hydrocarbon gases such as carbon dioxide, hydrogen sulphide, nitrogen or other elements, which mixture is recoverable from an underground reservoir and is in the gaseous phase or in solution with crude oil in the reservoir; (g) "natural gas liquids" means the hydrocarbon components propane, butanes, and pentanes plus, or a combination of them, which hydrocarbon components are subject to recovery from raw gas as liquids by the processes of condensation or absorption, which recovery takes place in field separators, scrubbers, gas processing and reprocessing plants or cycling plants; (h) "ore" means a natural aggregate of one or more minerals which, at a specified time and place, may be mined and sold at a profit or from which some part may be profitably separated; (i) "possible ore" means that material for which quantitative estimates are based largely on broad knowledge of the geologic character of the deposit and for which there are few samples or measurements and for which the estimates are based on an assumed continuity or repetition for which there are reasonable geological indications, which indications may include comparison with deposits of similar type and bodies that are completely concealed may be included if there is specific evidence of their presence, and (i) estimates of possible ore shall include a statement of conditions within which the possible material occurs, and (ii) since the arithmetical average of an amount of sampling is not necessarily representative, unless the distribution of values and number of samples are properly taken into account, a statement of how samples were taken shall be given and, where mineralization is erratic, the method of treating erratic values shall be given in the narrative of the report; (j) "probable additional reserves" of crude oil, natural gas and natural gas liquids means an estimate of reserves not included in an estimate of the proven reserves that may be recovered from the known reservoir or from that portion underlying the properties, provided (i) the estimates of probable additional reserves are as realistic as can be determined on the basis of the information available, (ii) the reserve considered probable additional shall be the estimated ultimate recoverable content of the reservoir less the proven reserve, or of that portion underlying the properties, and shall be based on a realistic interpretation of the geological, geophysical and well test data available at the time the estimate is made, (iii) probable additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that recognized in the proven category which can be realistically estimated to be ultimately economically recovered from the pool or the portions that underlie properties; (k) "probable ore" means that material for which tonnage and grade are computed partly from specific measurements partly from either or both sample data or production data and partly from projection for a reasonable distance on geologic evidence and for which the sites available for inspection, measurement and sampling are too widely or otherwise inappropriately spaced to outline the material completely or to establish its grade throughout; (l) "proven developed reserves" means those proven reserves which will be produced from existing wells or facilities; (m) "proven ore" means that material for which tonnage is computed from dimensions revealed in outcrops or trenches or underground workings or drill holes and for which the grade is computed from the results of adequate sampling and for which the sites for inspection, sampling and measurement are so spaced and the geological character so well defined that the size, shape and mineral content are established and for which the computed tonnage and grade are judged to be accurate within limits which shall be stated and for which it shall be stated whether the tonnage and grade or proven ore or measured ore are in situ or extractable, with dilution factors shown and reasons for the use of these dilution factors clearly explained; (n) "proven reserves underlying a property" means the estimated economically recoverable quantities of crude oil, natural gas and natural gas liquids, including the reserves to be obtained by enhanced recovery processes demonstrated to be successful, from that portion of an area delineated by gas-oil or oil-water or gas-water contacts in drilled wells or which can be reasonably evaluated as economically productive, on the basis of drilling, geological, geophysical and engineering data, but reserves in undrilled prospects cannot be classed as proven reserves; (o) "proven undeveloped reserves" means proven reserves which are not recoverable from existing wells or facilities or from which those zones in existing wells which have been cased off, but which can be recovered through the drilling of additional wells. 58/91 s25 Back to Top Rules 26. (1) Subject to subsection (2), the following general rules apply: (a) a receipt for a prospectus will not be issued if the superintendent is aware that the issuer is in default in filing a document required to be filed by it under the Act or these regulations or under the statute under which it is incorporated or organized; (b) where a receipt for a prospectus is not issued within 75 days after the date of a receipt for a preliminary prospectus due to the inaction of the person or company filing the preliminary prospectus, then no final receipt shall be issued for that prospectus; (c) where an escrow agreement is required for an industrial company before a receipt for a prospectus is issued, the promoters may receive, free of escrow, that number of shares whose value at the offering price is equivalent to the aggregate of the cash and the fair market value of the tangible assets as are acceptable to the superintendent that they have transferred to the issuer; (d) where a preliminary prospectus names an underwriter of the issuer who proposes to act as underwriter in the province and who is not a registrant or the distribution is to be effected by the issuer and the issuer is not a registrant then the receipt for the preliminary prospectus shall not be issued until an application for registration has been received and the receipt for the prospectus shall only be issued concurrently with or after the granting of registration; (e) the receipt for a prospectus relating to securities underwritten on a firm commitment basis, other than securities to be distributed continuously, shall not be issued unless the prospectus indicates that the securities are to be taken up by the underwriter, if at all, on or before a date not later than 6 weeks after the date of the final receipt; (f) where there is no trading market for the securities offered, and none is expected to develop as a consequence of the distribution, except for mutual funds, a notice to this effect must be included on the cover page of the prospectus together with a statement that purchasers may not be able to resell securities purchased pursuant to the prospectus; (g) where a minimum amount of funds are required by an issuer, the receipt for a prospectus relating to securities proposed to be distributed on a best efforts basis, other than securities to be distributed continuously, shall not issue unless the prospectus indicates that the offering may not continue for more than 60 days where the minimum amount of funds are not subscribed within 60 days, without the consent of the superintendent and those persons or companies who subscribed within the 60 days. (2) Where the superintendent is satisfied that there is sufficient justification he or she may permit or require that the provisions of subsection (1) be amended or waived. 58/91 s26; 14/06 s9 Back to Top Finance companies 27. A receipt shall not be issued for a prospectus of a finance company relating to a debt security not issued under a trust indenture unless it is clearly stated on the outside front cover page of the prospectus that the debt security is not issued under a trust indenture. 58/91 s27 Back to Top Industrial company prospectus 28. The prospectus of an industrial company shall be prepared in accordance with Form 12. 58/91 s28 Back to Top Finance company prospectus 29. The prospectus of a finance company shall be prepared in accordance with Form 13. 58/91 s29 Back to Top Resource company prospectus 30. The prospectus of a natural resource company shall be prepared in accordance with Form 14. 58/91 s30 Back to Top Issuer bid prospectus 31. Where a prospectus is required to be filed in respect of an issuer bid, the information prescribed in Form 32, except the certificate in item 30, shall be included in the prospectus. 58/91 s31 Back to Top Mutual fund prospectus 32. (1) The prospectus of a mutual fund shall be prepared in accordance with Form 15. (2) The summary statement of a mutual fund shall be prepared in accordance with Form 15A. 58/91 s32 Back to Top Compliance by issuer 33. Where the disclosure called for by a prospectus form or an item in a prospectus form could, in the opinion of the superintendent, properly be made applicable to an issuer, the superintendent may require the issuer to comply with the prospectus form or the item. 58/91 s33; 14/06 s10 Back to Top Type of prospectus 34. Unless the superintendent otherwise permits or requires, (a) the body of a printed prospectus shall be in roman type at least as large as 10-point modern type, except that, to the extent necessary for convenient presentation, financial statements and other statistical or tabular data and the notes thereto may be in roman type at least as large as 8-point modern type; (b) the type in a printed prospectus shall be leaded at least 2 points; and (c) unless the superintendent determines that to permit the inclusion of specific graphs, photographs or maps would be misleading or detract from the readability of the prospectus, the prospectus may contain (i) graphs that are relevant to matters dealt with in the text of the prospectus, (ii) photographs, if they include only the product of the issuer, and (iii) maps for the purpose of indicating the locations of property or operations, present and proposed, of the issuer. 58/91 s34; 14/06 s10 Back to Top Unnecessary reference 35. A reference need not be made in a prospectus to inapplicable items contained in the forms and negative answers to any items contained in the forms may be omitted. 58/91 s35 Back to Top Wrong inference 36. (1) An inference shall not 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 superintendent by the Act.

(2) An inference shall not 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 securities issued or proposed to be distributed. (3) The information required to be disclosed in answer to an item of a prospectus form or a part thereof may be omitted if the information is, in the opinion of the superintendent, immaterial. 58/91 s36; 14/06 s11 Back to Top Form of information 37. (1) The information contained in a prospectus shall be presented in narrative form. (2) The information contained in a prospectus need not follow the order of the items contained in the forms and may be expressed in a condensed or summarized manner if it does not obscure the required information or information necessary to keep the required information from being incomplete or misleading. (3) Where information is required to be presented in a prospectus in tabular form it shall be substantially presented in the tabular form specified. (4) All information contained in a prospectus shall be set out under appropriate headings or captions reasonably indicative of the principal subject matter set out thereunder. (5) Every prospectus shall contain a reasonably detailed table of contents. (6) Information required by more than one applicable item of a prospectus form need not be repeated. 58/91 s37 Back to Top Preliminary prospectus 38. Every preliminary prospectus shall have printed in red ink on the outside front cover page the following statement or the variation that the superintendent may permit: "This is a preliminary prospectus relating to these securities, a copy of which has been filed with the Superintendent of Securities but which has not yet become final for the purpose of a distribution to the public. Information contained herein is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time a receipt is obtained from the Superintendent of Securities for the final prospectus." 58/91 s38; 2001 c42 s45 ; 14/06 s12 Back to Top Preliminary prospectus 39. Every preliminary prospectus, prospectus or summary statement shall have printed on the outside front cover page the following statement: "No securities commission or similar authority in Canada has in any way passed upon the merits of the securities offered hereunder and any representation to the contrary is an offence." 58/91 s39 Back to Top Pro forma prospectus 40. (1) Subject to subsection (2), every pro forma prospectus shall substantially comply with the requirements of the Act and these regulations relating to the form and content of a prospectus. (2) A certificate required by section 59 or 60 of the Act and a report of an auditor otherwise required by these regulations may be omitted from a pro forma prospectus. 58/91 s40 Back to Top Content of prospectus - financial matters 41. (1) Every prospectus of an issuer, other than a mutual fund, shall contain (a) an income statement of the issuer for (i) each of the last 5 financial years or such shorter period as the superintendent permits or requires, and (ii) a part of a subsequent financial year to the date at which the balance sheet required by paragraph (d) is made up; (b) a statement of surplus of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); (c) subject to subsection (3), a statement of changes in financial position of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); and (d) a balance sheet of the issuer (i) as at a date not more than 120 days before the date of the issuance of a receipt for the preliminary prospectus or the date of a new prospectus referred to in section 63 of the Act, or as at such other date as the superintendent may permit or require, and (ii) subject to subsection (2), as at the corresponding date of the previous financial year. (2) Where the balance sheet included under subparagraph (1)(d)(i) is as at a date other than a financial year end, the balance sheet referred to in subparagraph (1)(d)(ii) may be omitted if the prospectus contains a balance sheet as at the most recent financial year end and as at the immediately preceding financial year end. (3) Every prospectus of an issuer engaged primarily in the business of investing shall include a statement of changes in net assets instead of a statement of changes in financial position. (4) Where the securities to which a prospectus relates are debt securities and the payment of principal or interest is guaranteed, the prospectus shall contain, with respect to the guarantor, the financial statements referred to in subsection (1). (5) Where the financial statements required by subsection (1) relate to part of a financial year, the prospectus shall contain an income statement, a statement of surplus, and a statement of changes in financial position for the comparable period in the preceding financial year. (6) Where the superintendent is satisfied that there is sufficient justification, he or she may permit the omission of a financial statement required by this section. 58/91 s41; 14/06 s13 Back to Top Mutual fund prospectus 42. (1) Every prospectus of a mutual fund and every summary statement of a mutual fund shall contain (a) an income statement; (b) a balance sheet; (c) a statement of investment portfolio; (d) a statement of portfolio transactions; and (e) a statement of changes in net assets of the mutual fund, each for or as at the end of, as appropriate, its last financial year or for a period permitted or required by the superintendent. (2) Notwithstanding subsection (1) but subject to subsections (3) and (4), where a summary statement of a mutual fund is filed together with a prospectus, the financial statements described in subsection (1) may be omitted from the prospectus of the mutual fund and from the summary statement if a copy of the financial statements that would otherwise be required to be included therein is filed concurrently with the filing of the prospectus and summary statement or has previously been filed under section 79 of the Act. (3) Where, under subsection (2), a prospectus of a mutual fund and a summary statement do not contain the financial statements described in subsection (1), a prospectus or a summary statement sent or delivered to a purchaser of securities under section 72 or subsection 64(5) of the Act shall be accompanied by (a) a copy of the financial statements that would otherwise be required to be included in the prospectus or summary statement; and (b) where one or more financial statements for periods subsequent to those covered by the financial statements described in paragraph (a) have been filed with the superintendent under section 78 or 79 of the Act, a copy of the financial statements that were filed most recently before the day the prospectus or summary statement is sent or delivered. (4) Where the financial statements described in subsection (1) are omitted from a prospectus of a mutual fund and from a summary statement of a mutual fund under subsection (2), the prospectus and the summary statement shall each have printed on the outside cover page the following statement: "The information contained herein must be accompanied by the annual financial statements of the fund for the last financial year completed before the date of the current prospectus of the fund and the auditor's report thereon, which statements and report are considered to form part of this document. As well, if subsequent financial statements, whether semi-annual or annual, have been filed with the Superintendent of Securities, a copy of the most recent of such subsequent statements must also accompany this document." 58/91 s42; 14/06 s14 Back to Top Pro forma balance sheet 43. The superintendent may permit or require a prospectus to contain as part of the financial statements a pro forma balance sheet of the issuer and, unless the superintendent otherwise permits, of all its subsidiaries as at the date at which the balance sheet required by subparagraph 41(1)(d)(i) is made up, giving effect to the issue and sale or redemption or other retirement of securities issued or to be issued by the issuer and to other transactions that the superintendent may permit or require. 58/91 s43; 14/06 s15 Back to Top Business acquisition prospectus 44. (1) Where the proceeds of the securities offered by a prospectus are to be applied in whole or in part, directly or indirectly, to finance the acquisition of a business, by a purchase of assets or shares, the superintendent may permit or require the inclusion in the prospectus of (a) financial statements of the acquired business which shall be one or more of the financial statements referred to in paragraphs (a), (b) and (c) and subparagraph 41(1)(d)(i) and for the periods or as at the date therein referred to and the financial statements referred to in subsection 41(5) for the period referred to therein; (b) a pro forma balance sheet combining the assets and liabilities of the issuer and the business as shown by their respective balance sheets each as at the date referred to in subparagraph 41(1)(d)(i) or at such other date as the superintendent may permit or require, and, where the superintendent is satisfied that to do so would be meaningful to investors and that the information is necessary for full, true and plain disclosure of the material facts relating to the securities, he or she shall require for a period not more than one year immediately preceding the date referred to in subparagraph 41(1)(d)(i) and may permit for a period not greater than 5 years immediately preceding such date the inclusion in the prospectus of pro forma statements combining, year by year, (c) the income or losses of the business with the income or losses of the issuer; and (d) the changes in financial position of the business with the changes in financial position of the issuer. (2) An auditor's report prepared in connection with the pro forma financial statements referred to in paragraphs (1)(b), (c) and (d) need only be concerned with the manner in which the statements have been compiled. 58/91 s44; 14/06 s16 Back to Top Foreign issuer 45. Where a prospectus contains financial statements of an issuer incorporated or organized other than in Canada or a province or territory thereof and prepared in accordance with generally accepted accounting principles as permitted by subsection 2(4), the notes to the financial statements shall explain and quantify any significant differences between the principles applied and the principles referred to in subsection 2(3). 58/91 s45 Back to Top Exercise of option 46. The option under subsection 2(4) shall be exercised with respect to financial statements included in a prospectus only with the consent of the superintendent and subject to any conditions the superintendent may impose. 58/91 s46; 14/06 s17 Back to Top Debt securities prospectus 47. A prospectus relating to an issue of debt securities having a term to maturity in excess of one year or to an issue of preferred shares shall contain statements of asset coverage and earnings coverage, in form satisfactory to the superintendent, but the requirements of this section do not apply to a prospectus relating to securities of a newly-organized issuer or another issuer as to which the superintendent permits or requires that the disclosure not be made. 58/91 s47; 14/06 s17 Back to Top Inclusion of forecast 48. (1) In this section (a) "distributing firm" means a registrant that is an underwriter with respect to a distribution and includes the issuer of the securities being distributed if the issuer is registered as a security issuer; (b) "forecast" means a written estimate of the most probable results of operations of an issuer, alone or together with one or more of its affiliates, that contains any or all of (i) an estimate of earnings or a range of earnings, (ii) an estimate of the most probable financial position, (iii) an estimate of changes in financial position, for one or more periods that are future periods or are periods not completed when the estimate is made, but does not include an estimate (iv) that is prepared in the ordinary course of business and without reference to a specific distribution of securities, and (v) that appears in a compendium of estimates relating to a number of issuers or in a publication that is distributed regularly to investors or prospective investors, who are not selected because of their potential interest in a specific issue of securities. (2) The superintendent may permit the inclusion of a forecast in a prospectus and, where the superintendent permits the inclusion of a forecast, (a) the forecast shall be identified as such in the prospectus; and (b) the prospectus shall include the written comments of a public accountant concerning the accountant's review of the forecast. (3) A distributing firm, during the course of a distribution of securities for which a prospectus is required to be filed under the Act, shall not disseminate a forecast with respect to the issuer of those securities, unless the forecast is set out in the prospectus and what is disseminated by the distributing firm consists solely of that forecast or a reasonable extract therefrom or summary thereof. 58/91 s48; 14/06 s18 Back to Top Acquired business statement 49. Where under section 44 the superintendent permits or requires one or more of the financial statements of an acquired business to be included in a prospectus, sections 45, 46, 47 and 48 shall apply, with necessary modifications, to the financial statements of the business acquired. 58/91 s49; 14/06 s19 Back to Top Subsidiary's statements 50. The superintendent may direct that separate financial statements of a subsidiary of an issuer be included in a prospectus of the issuer, whether or not the financial statements of the subsidiary are consolidated with the financial statements of the issuer contained in the prospectus. 58/91 s50; 14/06 s19 Back to Top Unconsolidated financial statements 51. The superintendent may permit unconsolidated financial statements to be included in a prospectus as supplementary information. 58/91 s51; 14/06 s19 Back to Top Review by audit committee 52. Every financial statement of a person or company contained in a prospectus shall be submitted for review to the audit committee of its board of directors, where it has or is required to have such a committee, before its approval by the board of directors, which approval shall be evidenced by the manual signatures of 2 directors duly authorized to signify approval. 58/91 s52 Back to Top Financial statement 53. (1) A financial statement included in a prospectus that relates to a part of a financial year subsequent to the last audited financial year of the issuer need not be reported on by an auditor where (a) the part of a financial year ended not more than 90 days before the date of the issuing of a receipt for the preliminary prospectus or such longer time as the superintendent may permit and not more than one year after the last audited financial year or such longer time as the superintendent may permit; and (b) a balance sheet of the issuer as at the end of the latest audited financial year of the issuer is included in the prospectus. (2) Every balance sheet referred to in subparagraph 41(1)(d)(ii) and every income statement, statement of surplus and statement of changes in financial position required by subsection 41(5) and those for the same period for an acquired business referred to in section 44 may, but need not, be reported on by an auditor. (3) Where under this section a financial statement contained in a prospectus is not reported on by the auditor, there shall be filed with the superintendent such advice from the auditor as is suggested for these circumstances by the Handbook of the Chartered Professional Accountants of Canada, or such other advice as may reasonably be required by the superintendent, the purpose of which shall be to assist the superintendent in discharging his or her responsibilities and the advice may include a statement to that effect. 58/91 s53; 14/06 s20 ; 2014 cC-10.1 s74 Back to Top Auditor's letter 54. (1) Subject to subsection (2), where a preliminary prospectus does not contain a report of the auditor of the issuer, there shall be filed, at the time the preliminary prospectus is filed, a letter addressed to the superintendent and signed by the auditor of the issuer in which he or she shall make such statement with respect to his or her examination as may be appropriate in the circumstances and the letter shall include a statement that, on the basis of the information then available to him or her, he or she has no reason to believe that the financial statements included in the preliminary prospectus that are being audited by him or her do not provide a fair representation of the financial position and earnings of the issuer and which shall specify dates and years or periods. (2) If the examination of the accounts of the issuer by the auditor has not progressed to the point where the auditor can properly make the statements referred to in subsection (1), instead thereof the auditor may make the statements as the circumstances require and as are acceptable to the superintendent. 58/91 s54; 14/06 s21 Back to Top Reporting requirements 55. Every report filed under subsection 73(3) of the Act shall be filed in duplicate and prepared in accordance with Form 19. 58/91 s55 Back to Top Reporting requirements 56. Every report filed under paragraph 73(4)(c) of the Act shall be filed in duplicate and prepared in accordance with Form 20. 58/91 s56 Back to Top Reporting requirements 57. (1) Every report required to be filed under paragraph 73(5)(b) of the Act shall be filed in duplicate and prepared in accordance with Form 21. (2) Where the first trade in securities previously acquired under an exemption contained in paragraph 73(1)(f), (i), (j), (k) or (n) of the Act is a further trade exempted by subsection 73(1), the person or company making the trade shall within 10 days of making the trade file with the superintendent a letter disclosing the particulars of the trade and referring to the paragraph of subsection 73(1) which applies to the trade. (3) For the purpose of paragraph 73(5)(b), subsections 73(12) and 54(9) of the Act, adequate disclosure shall be deemed to have been made to the superintendent of a trade made in reliance on the exemptions in paragraph 73(1)(f), (i), (j), (k) or (n) of the Act if particulars of the date of the trade, the number of securities purchased and the purchase price paid or to be paid are disclosed in (a) an information circular or takeover bid circular filed in accordance with these regulations; or (b) a letter filed with the superintendent by a person or company certifying that he, she or it has knowledge of the facts contained, if the filing is effected before a resale of the securities that would be a distribution but for the exemption in subsection 73(5) of the Act except that this subsection shall not make unavailable that exemption if disclosure of the exempt trade is made to the superintendent in some other way. (4) Where a purchase plan or arrangement is operated without a prospectus in reliance on the exemption in paragraph 73(1)(n) of the Act, it shall be sufficient for the purpose of subsection (3) if the disclosure contemplated thereby is made when the plan or arrangement is first commenced and not less frequently than annually thereafter unless the volume of trading in securities sold in reliance on the exemption contained in paragraph 73(1)(n) of the Act in a month exceeds 1% of the securities of that class that were outstanding at the beginning of the month in which the securities were sold, in which case a separate report shall be filed in respect of that month. (5) Separate disclosure of a trade and resale shall be made in accordance with paragraph 73(5)(b) and subsection 73(7) of the Act, respectively, where (a) the trade is made with an employee by an issuer in reliance on the exemption in paragraph 73(1)(n) of the Act; (b) the employee immediately resells the security; and (c) the resale is a distribution as defined in subparagraph 2(1)(l)(iii) of the Act. 58/91 s57; 14/06 s22 Back to Top Notice of intention 58. Every notice of intention and declaration filed under subparagraph 73(7)(b)(i) of the Act shall be filed in duplicate and prepared in accordance with Form 22. 58/91 s58 Back to Top Statement of material facts 59. (1) Every statement of material facts referred to in paragraph 74(1)(b) of the Act shall be prepared in accordance with Form 23. (2) Every statement of material facts shall provide full, true and plain disclosure of all material facts relating to the security proposed to be offered. (3) Where an issuer other than a natural resource company files a statement of material facts, the superintendent may permit that Form 23 be adapted as appropriate. 58/91 s59; 14/06 s23 Back to Top Application of sections 60. Sections 22, 23, 24 and 36, subsection 37(6) and sections 45, 46, 47, 48, 50, 51, 52, 53 and 54 apply with necessary modifications to a statement of material facts. 58/91 s60 Back to Top Statement of material facts 61. (1) Every statement of material facts of an issuer shall contain (a) an income statement of the issuer for (i) each of the last 3 financial years or such shorter period as the superintendent permits or requires, and (ii) a part of a subsequent financial year to the date at which the balance sheet required by paragraph (d) is made up; (b) a statement of surplus of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); (c) subject to subsection (2), a statement of changes in financial position of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); and (d) a balance sheet of the issuer, as at a date not more than 90 days before the date of the filing of the statement of material facts, or as at such other date as the superintendent may permit or require. (2) Every statement of material facts of a company engaged in the business of investing shall include a statement of changes in net assets instead of a statement of changes in financial position. (3) Where the securities to which a statement of material facts relates are debt securities and the payment of principal or interest is guaranteed, the statement of material facts shall contain, with respect to the guarantor, the financial statements referred to in subsection (1). (4) Where the financial statements required by subsection (1) relate to part of a financial year, the statement of material facts shall also contain an income statement, a statement of surplus and a statement of changes in financial position for the comparable period in the preceding financial year. 58/91 s61; 14/06 s24 Back to Top Statement of material facts 62. (1) Every statement of material facts shall contain a certificate in the following form, signed by the chief executive officer, the chief financial officer and, on behalf of the board of directors, by any 2 directors of the issuer, other than the foregoing, duly authorized to sign and by a person or company who is a promoter of the issuer: "The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this statement of material facts." (2) Where the board of directors consists of fewer than 4 persons, the statement of material facts may be signed on behalf of the board of directors by any 2 directors of the issuer duly authorized to sign. (3) Where the superintendent is satisfied upon evidence or submissions made to him or her that either or both of the chief executive officer or chief financial officer of the issuer is for adequate cause not available to sign a certificate in a statement of material facts, the superintendent may permit the certificate to be signed by another responsible officer of the issuer instead of either or both of the chief executive officer or chief financial officer. (4) With the consent of the superintendent, (a) a promoter need not sign a certificate in a statement of material facts; or (b) a promoter may sign a certificate in a statement of material facts by his or her agent duly authorized in writing. 58/91 s62; 14/06 s25 Back to Top Underwriter's certificate 63. (1) Where there is an underwriter, a statement of material facts shall contain a certificate in the following form, signed by the underwriters: "To the best of our knowledge, information and belief, the foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this statement of material facts." (2) With the consent of the superintendent, an underwriter may sign a certificate in a statement of material facts by his or her agent duly authorized in writing. (3) For the purpose of this section, "underwriter" means an underwriter who, with respect to the securities offered by a statement of material facts, is in a contractual relationship with the issuer of the securities. 58/91 s63; 14/06 s26 Back to Top Material change 64. Where a material change occurs after a statement of material facts has been filed with and accepted by the superintendent but before the completion of the distribution under the statement of material facts, the superintendent shall be notified immediately of the change and an amendment to the statement of material facts shall be filed as soon as practicable and in any event within 10 days from the date the change occurs. 58/91 s64; 14/06 s27 Back to Top Exemption from compliance 65. (1) Where a person or company that proposes to distribute securities under a statement of material facts is unable to obtain any or all of the signatures to the certificates required by sections 62 and 63 or to comply in some other respect with a provision of the Act or these regulations relating to statements of material facts, the superintendent may, upon being satisfied that all reasonable efforts have been made to comply with the provisions of or under the Act and that no person or company is likely to be prejudicially affected by a failure to comply, exempt, subject to the terms and conditions that he or she may impose, the first mentioned person or company from the requirement to comply with the provisions. (2) The superintendent may require a document, report or other material to be filed with a statement of material facts. 58/91 s65; 14/06 s28 Back to Top Options 66. (1) Every option to sell securities known as a put referred to in paragraph 74(1)(c) of the Act shall be in accordance with Form 24. (2) Every option to purchase securities known as a call referred to in paragraph 74(1)(c) of the Act shall be in accordance with Form 25. 58/91 s66 Back to Top Escrow agreement 67. Every escrow agreement referred to in paragraph 62(2)(f) of the Act shall be made in accordance with Form 16 for a natural resource company, and in accordance with Form 17 for another type of issuer and every transferee of securities that are subject to the escrow agreement shall sign an acknowledgement in accordance with Form 18 and file it within 10 days of the date of the superintendent's consent to transfer within escrow. 58/91 s67; 14/06 s29 Back to Top Certificate - portion of distribution underwritten 68. (1) Subject to subsection (2), if more than 3 underwriters have signed or caused to be signed the certificate referred to in section 60 of the Act, the final prospectus filed with the superintendent shall be accompanied or preceded by a certificate duly executed by a person who certifies that he or she is a representative of the underwriter and has knowledge of the matters referred to, and the certificate shall (a) briefly identify the transaction to which the certificate relates; and (b) set out the total public offering price represented by the portion of the distribution underwritten by each underwriter who has signed or caused to be signed the certificate referred to in section 60 of the Act or, if the nature of the underwriting arrangements is such that this information is not available when the final prospectus is filed, shall describe the nature of those arrangements and undertake to file a further certificate setting out the information immediately after the information becomes available. (2) The certificate referred to in subsection (1) need not be filed if, as to each of the underwriters therein referred to, the information in paragraph (1)(b) is included in the prospectus. 58/91 s68; 14/06 s30 Back to Top Prospectus requirements - variation permitted 69. Every preliminary prospectus and prospectus including every prospectus referred to in subsection 54(2) of the Act shall comply with the relevant provisions of this Part, but the superintendent may permit a variation from those provisions where it will not detract from full, true and plain disclosure and may require such variation if necessary for full disclosure of material facts. 58/91 s69; 14/06 s31 Back to Top Restriction in use of terms 70. (1) A receipt shall not be issued for a prospectus of an issuer, other than a company licensed under the Trust and Loan Companies Licensing Act, doing business primarily as an industrial company, natural resource company or mutual fund if the issuer has as part of its name the words "acceptance", "credit", "finance", "loan" or "trust". (2) Subsection (1) does not apply to (a) an issuer that had the words "investment trust" as part of its name before the day of proclamation of the Act; or (b) an issuer that includes on the outside front cover page of the prospectus a statement, satisfactory to the superintendent, indicating the nature of the business actually carried on by the issuer. 58/91 s70; 14/06 s32 PART IV MUTUAL FUNDS Back to Top Financial disclosure requirements 71. (1) Every income statement of a mutual fund shall present fairly the results of the operations of the mutual fund for the period covered by the statement and distinguish severally, at least, (a) dividend revenue; (b) interest revenue; (c) every other item of revenue that is 5% or more of total revenue; (d) other revenue; (e) management fees; (f) audit fees; (g) directors' fees; (h) custodian's fees; (i) legal fees; (j) salaries, where the amount is 5% or more of total expenses; (k) shareholders' or unit holders' information costs, where the amount is 5% or more of total expenses; (l) every other item of expense that is 5% or more of total expenses; (m) other expenses; (n) income before taxes; (o) provision for income tax; (p) extraordinary gains, losses and provisions for losses; (q) net income for the period; (r) net income per share or unit for the period based on the average number of shares or units outstanding during the period; and (s) net income per share or unit for the immediately preceding period based on the average number of shares or units outstanding during that period. (2) The notes to an income statement of a mutual fund shall include (a) the basis for calculating the management fee; and (b) the composition of other expenses and other revenue, and unless otherwise disclosed in the material of which the income statement forms a part or which it accompanies, (c) the services received in consideration of the management fee; (d) the services provided to the mutual fund by those to whom salaries were paid; (e) where the mutual fund has a management company, and salaries of employees of the management company are allocated to the mutual fund, the basis of and reasons for the allocation; (f) the basis of the tax calculation and an explanation of the tax position of the mutual fund; and (g) where an unusual change in expenses from period to period is not adequately explained by changes in total assets of the mutual fund, a description and explanation of the unusual change. (3) In this section (a) "management fee" means the total fees paid by the mutual fund for portfolio management, investment advice and other services; and (b) "other expenses" and "other revenue" means the sum of those items of expense or revenue, other than those referred to in paragraphs (1)(a), (b), (e), (f), (g), (h) and (i), that individually do not exceed 5% of the total expenses or total revenue of the mutual fund for the period reported upon. 58/91 s71 Back to Top Statement of changes in net assets 72. (1) Subject to subsection (2), every statement of changes in net assets shall present fairly the information shown therein for the period covered by the statement and shall show separately, at least, (a) net assets at the beginning of the period; (b) net investment income or loss; (c) aggregate proceeds on sale of portfolio securities; (d) aggregate cost of portfolio securities owned at the beginning of the period; (e) aggregate cost of purchases of portfolio securities; (f) aggregate cost of portfolio securities owned at the end of the period; (g) aggregate cost of portfolio securities sold; (h) realized profit or loss on portfolio securities sold; (i) distributions, showing separately the amount out of net investment income and out of realized profits on portfolio securities sold; (j) proceeds from securities issued; (k) the redemption price of securities redeemed; (l) net increase or decrease in unrealized appreciation or depreciation of portfolio securities; (m) net assets at the end of the period; (n) net asset value per share or unit at the end of the period and at the end of each of the 4 immediately preceding periods; (o) distribution per share or unit out of net investment income; and (p) distribution per share or unit out of realized profits on portfolio securities sold. (2) Items of the nature described in paragraphs (1)(c), (d), (e), (f), (g), (n), (o) and (p) may be shown by way of a note or schedule to the statement of changes in net assets. 58/91 s72 Back to Top Balance sheet 73. (1) Every balance sheet of a mutual fund shall present fairly the financial position of the mutual fund as at the date at which it is made up and distinguish severally, at least, (a) cash, term deposits and, if not included in the statement of investment portfolio, short term debt instruments; (b) dividends and accrued interest receivable; (c) accounts receivable in respect of shares or units sold; (d) accounts receivable in respect of portfolio securities sold; (e) every other class of assets that is 5% or more of total assets; (f) other assets; (g) investments at market value with a notation of their cost; (h) total assets; (i) accrued expenses; (j) liabilities in respect of portfolio securities purchased; (k) liabilities in respect of shares or units redeemed; (l) income tax payable; (m) every other class of liability that is 5% or more of total liabilities; (n) other liabilities; (o) total liabilities; (p) total net assets and shareholders' or unit holders' equity; and (q) net asset value per share or unit. (2) The notes to a balance sheet of a mutual fund shall include (a) where the basis of computing the cost of investments is other than average cost, a statement of the basis of computing the cost; (b) where a mutual fund has outstanding more than one class of shares or units ranking equally against its net assets but differing in other respects, a statement of the differences between the classes, the number of shares or units in each class and the number of shares or units in each class that have been issued and are outstanding; and (c) the composition of other assets and other liabilities. (3) In this section, "other assets" or "other liabilities" means the sum of those classes of assets or liabilities that as individual classes do not exceed 5% of the total assets or total liabilities of the mutual fund at the date reported upon. (4) Any of the specified classes of assets or liabilities which accounts for less than 5% of the total assets or total liabilities of the mutual fund at the date reported upon may be omitted and the relevant amount included in "other assets" or "other liabilities" with an appropriate explanation made by note. 58/91 s73 Back to Top Statement of investment portfolio 74. (1) Every statement of investment portfolio of a mutual fund shall present fairly the following information as at the date to which it is made up: (a) the name of each issuer of securities held; (b) the class or designation of each security held; (c) the number or aggregate face value of each class or designation of securities held; (d) the market value of each class or designation of securities held; (e) the cost of each class or designation of securities held and, where the basis of computing cost is other than average cost, a statement of the basis of computing the cost. (2) Subsection (1) shall apply to all short term debt instruments held pending the investment of funds but the information referred to in subsection (1) need only be provided in the aggregate with respect to those short term debt instruments that (a) are issued by a bank to which the Bank Act (Canada) applies or by a loan company or trust company licensed under the Trust and Loan Companies Licensing Act; or (b) have achieved an investment rating falling within the highest or next highest categories of every service that publishes ratings on the short term debt instruments of the issuer that is recognized by the superintendent. (3) The information required by paragraphs (1)(a), (b) and (c) with respect to securities with an aggregate market value of less than 5% of the total net assets of a mutual fund may be omitted from a statement of investment portfolio of the mutual fund where the securities are included in the statement as "miscellaneous securities" and the information required by paragraphs (1)(d) and (e) is given for the "miscellaneous securities" in the aggregate. (4) Where information is omitted from a statement of investment portfolio under subsection (3), the omitted information and the reason for omitting the information shall be included in the next corresponding statement of investment portfolio. (5) The information required by subsection (1) with respect to securities that are mortgages may be omitted from a statement of investment portfolio of the mutual fund if the following information with respect to the mortgages is presented instead thereof: (a) the total number of mortgages held; (b) the total market value of mortgages held; (c) the distribution, by reference to number and market value, of mortgages among mortgages insured under the National Housing Act ( Canada ), insured conventional mortgages and uninsured conventional mortgages; (d) the distribution, by reference to number, market value amortized cost and outstanding principal value, of mortgages among groups representing contractual interest rates varying by no more than one-quarter of 1%. 58/91 s74; 14/06 s33 Back to Top Statement of portfolio transactions 75. (1) Every statement of portfolio transactions of a mutual fund shall present fairly the following information: (a) the name of each issuer of every security purchased or sold during the period reported upon; (b) the class or designation of every security purchased or sold during the period reported upon; (c) the number of aggregate face value, by issuer, of securities of each class or designation purchased during the period reported upon and the total cost of purchasing securities of each such class or designation; (d) the number or aggregate face value, by issuer, of securities of each class or designation sold during the period reported upon and the consideration for selling securities of each such class or designation. (2) Subsection (1) shall apply to all short term debt instruments held pending the investment of funds but the information referred to in subsection (1) need only be provided in the aggregate with respect to those short term debt instruments held pending the investment of funds that (a) are issued by a bank to which the Bank Act (Canada) applies or by a loan company or trust company licensed under the Trust and Loan Companies Licensing Act; or (b) have achieved an investment rating falling within the highest or next highest categories of every service that publishes ratings on the short term debt instruments of the issuer that is recognized by the superintendent. (3) Every statement of portfolio transactions shall separate debt securities from securities other than debt securities and shall provide a total for debt securities and a total for other than debt securities. (4) Where information in respect of securities is omitted from a statement of investment portfolio of a mutual fund under subsection 74(3), information required in respect of those securities by this section may be omitted from the statement of portfolio transactions of the mutual fund. (5) Where information is omitted from a statement of portfolio transactions under subsection (4), the omitted information and the reason for omitting the information shall be included in the next corresponding statement of portfolio transactions. (6) The information required by subsection (1) with respect to securities that are mortgages may be omitted from a statement of portfolio transactions if the following information with respect to mortgages is presented instead thereof: (a) the total number of mortgages purchased or sold during the period reported upon; (b) the total cost of mortgages purchased and the total consideration for mortgages sold; (c) the distribution, by reference to number, of mortgages purchased or sold during the period reported upon among mortgages insured under the National Housing Act (Canada), insured conventional mortgages and uninsured conventional mortgages; (d) the distribution, by reference to number, of mortgages purchased or sold during the period reported upon among groups representing contractual interest rates varying by no more than one-quarter of 1%. 58/91 s75; 14/06 s34 Back to Top Additions to financial statement 76. Where applicable, and where the period or date reported on is a financial year or a financial year end, the following additional matters shall be referred to in the financial statements or by way of a note to the financial statements: (a) in the case of a mutual fund, the total commission paid to dealers in connection with portfolio transactions for the mutual fund during the period reported upon; (b) in the case of a mutual fund, the total compensation, other than commissions, paid to dealers in connection with portfolio transactions for the mutual fund during the period reported upon and, where the figure provided is an estimate, the basis for calculating the compensation, and where compensation to a dealer for the sale of shares or units in the mutual fund includes an allocation of the execution of portfolio transactions to that dealer, the compensation so allocated. 58/91 s76 Back to Top Interim financial statement 77. (1) Subject to subsection (2), every interim financial statement required to be filed under subsection 78(2) of the Act shall include (a) an income statement; (b) a statement of investment portfolio; (c) a statement of portfolio transactions; and (d) a statement of changes in net assets prepared for or as at the end of the period as applicable. (2) Every interim financial statement required to be filed under subsection 78(2) of the Act by a mutual fund in the province that invests exclusively in the shares or units of another mutual fund shall include (a) an income statement of the other mutual fund; (b) a statement of investment portfolio of the other mutual fund; (c) a statement of portfolio transactions of the other mutual fund; and (d) a statement of changes in net assets of the other mutual fund prepared for or as at the end of the period as applicable. 58/91 s77 Back to Top Interim financial statement 78. The interim financial statements under subsection 78(2) of the Act shall present at least the financial information for the current fiscal year to the date to which the financial statements are prepared and, in addition, may include comparative financial information for the corresponding 6 month period in the last financial year. 58/91 s78 Back to Top Auditor's report 79. The interim financial statements under section 78 of the Act need not include an auditor's report. 58/91 s79 Back to Top Financial statement of mutual fund 80. (1) Subject to subsection (2), the financial statements required to be filed under section 79 of the Act by a mutual fund in the province shall include (a) an income statement; (b) a balance sheet; (c) a statement of investment portfolio; (d) a statement of portfolio transactions; and (e) a statement of changes in net assets prepared for or as at the end of the period as applicable. (2) Every financial statement required to be filed under section 79 of the Act by a mutual fund in the province that invests exclusively in the shares or units of another mutual fund shall include (a) an income statement of the other mutual fund; (b) a balance sheet of the other mutual fund; (c) a statement of investment portfolio of the other mutual fund; (d) a statement of portfolio transactions of the other mutual fund; (e) a statement of changes in net assets of the other mutual fund; and (f) a balance sheet of the mutual fund prepared for or as at the end of the period as applicable. 58/91 s80 Back to Top Approval of statement 81. Every financial statement required to be filed under section 79 of the Act shall be approved by the board of directors of the reporting issuer and the approval shall be evidenced by the manual or facsimile signatures of 2 directors duly authorized to signify the approval. 58/91 s81 Back to Top Omission from statement 82. (1) Notwithstanding sections 77 and 80 but subject to subsection (4), a statement of portfolio transactions may be omitted from interim or annual financial statements of a mutual fund if a copy of the statement that would otherwise be required to be included therein is filed with the superintendent before or concurrently with the filing of the financial statements from which that statement has been omitted. (2) Notwithstanding section 42, but subject to subsection (4), a statement of portfolio transactions may be omitted from a prospectus of a mutual fund if a copy of the statement that would otherwise be required to be included therein is filed with the superintendent concurrently with the filing of the prospectus or has previously been filed with the superintendent under subsection (1). (3) A statement of portfolio transactions filed with the superintendent under this section need not be reported upon by an auditor, but shall contain a certificate signed by the chief executive officer and chief financial officer, or the person temporarily carrying out the responsibilities of either of them, that the statement of portfolio transactions presents fairly the required information.

(4) Where a statement of portfolio transactions is omitted from interim or annual financial statements under subsection (1) or from a prospectus under subsection (2), the published financial statements or prospectus shall contain a statement indicating that additional information as to portfolio transactions will be provided without charge on request to a specified address and (a) the omitted information shall be sent promptly and without charge to each person or company that requests it in compliance with the indication; and (b) where a person or company requests that the omitted information be sent routinely to the person or company, the request shall be carried out while the information continues to be omitted from subsequent financial statements or prospectuses until the person or company requests, or agrees to, termination of the arrangement. 58/91 s82; 14/06 s35 Back to Top Confirmation of trade 83. (1) Where a trade is made in a security of a mutual fund under a contractual plan that requires that some charges be prepaid but permits other charges to be deducted from first and subsequent instalments, the confirmation of trade required by subsection 37(3) of the Act shall contain, in addition to the requirements of subsections 37(1) and (2) and paragraph 37(3)(d) of the Act, the disclosure required by (a) paragraphs 37(3)(a) and (b) of the Act in respect of sales, service or other charges or portions thereof that are prepaid; and (b) paragraph 37(3)(c) of the Act in respect of all sales, service or other charges or portions thereof to be deducted from subsequent instalments. (2) The confirmation of a trade made in a security of a mutual fund under a contractual plan shall not have been required to contain the information described in paragraph 37(3)(d) of the Act where (a) the contractual plan was entered into before the day of proclamation of the Act; (b) the holder of the contractual plan, in addition to his or her rights under section 137 of the Act and to other rights to which he or she may be entitled, (i) was permitted within 365 days after the date upon which the contractual plan was entered into, to demand and to receive a refund of the net asset value of the shares or units credited to him or her before the date of demand, plus a refund of that portion of sales charges, exclusive of insurance premiums and fees to trustees of registered retirement savings plans, in excess of 30% of an amount equal to payments under the plan scheduled and made before the date of demand, but not including voluntary prepayments of instalments, and (ii) was provided with a form or letter approved by the superintendent describing rights under section 137 of the Act and under subparagraph (i) and setting out a table of sales charges and other information relevant to the decision of the investor as to whether to exercise such rights, which form or letter shall be sent to the investor together with each confirmation other than reinvested dividends or income during the first 365 days after the date upon which the contractual plan was entered into and was also sent to the investor not less than 15 days and not more than 45 days before the expiry of the 365 day period; or (c) the holder of the contractual plan, in addition to his or her rights under section 137 of the Act and to any rights to which he or she may be entitled, (i) was permitted within 180 days after the date upon which the contractual plan was entered into, to have and to exercise the rights that would have arisen under section 137 of the Act if the reference to "60 days" in subsection 137(1) read "180 days", and (ii) was provided with a form or letter approved by the superintendent describing rights under section 137 of the Act and under subparagraph (i) and setting out a table of sales charges and other information relevant to the decision of the investor as to whether to exercise such rights, which form or letter was to be sent to the investor together with each confirmation other than reinvested dividends or income during the first 180 days after the date upon which the contractual plan was entered into and was also sent to the investor not less than 15 days and not more than 45 days before the expiry of the 180 day period. (3) Where a customer advises a registered dealer in writing before a trade in a security of a mutual fund of the customer's participation in an automatic payment plan, automatic withdrawal plan or contractual plan that provides for systematic trading in the securities of the mutual fund no less frequently than monthly, the registered dealer shall provide the confirmation of that trade as required by section 37 of the Act, and thereafter during the continued existence of the plan and the customer's participation in the plan, the registered dealer, instead of the confirmations of trade required by section 37, may send by prepaid mail or deliver to the customer, no less frequently than semi-annually, written summaries of trades containing the information required by section 37 to be disclosed to the customer, with respect to all trades of the security of the mutual fund by the customer since the last confirmation or summary of trade was prepared. (4) A registered dealer who complies with subsection (3) need not comply with paragraph 37(1)(d) of the Act if the confirmation or summary of trades contains a statement that the name of the person or company from or to or through whom the security of the mutual fund was bought or sold will be provided to the customer upon request. 58/91 s83; 14/06 s36 PART V REGISTRATION REQUIREMENTS Back to Top Definitions 84. In this Part (a) "active assets" means money and the market value of assets readily convertible into money; (b) "adjusted liabilities" means total liabilities plus, where the securities accounts of the registrant are kept on a settlement date basis, unrecorded securities purchase commitments, minus, without duplication, the sum of (i) cash, (ii) money on deposit in a client's trust account, (iii) amounts deposited by the registrant pursuant to a compensation fund or contingency trust fund established under section 98, (iv) the cash surrender value of life insurance where the registrant is the beneficiary, (v) the market value of securities that the registrant owns or has contracted to purchase, and that, in either case, have a margin rate of 5% or less, (vi) interest accrued to the registrant in respect of the securities referred to in subparagraph (v), (vii) the sales price of securities for which the registrant has a sales commitment to a financial institution, (viii) debit balances with a financial institution, and (ix) the market value of securities that have a margin rate of 5% or less included in (A) non-segregated accounts of clients, partners, shareholders, dealers, or (B) held as collateral for secured loans receivable, not exceeding the debit balance of the account or the secured loan receivable; (c) "anniversary date" means the day and month on which the current registration or renewal of registration was granted, but where any doubt exists, the date shall be determined by the superintendent; (d) "Canadian Investment Finance Course" means a course prepared and conducted by the Canadian Securities Institute and so designated by that institute; (e) "Canadian Investment Funds Course" means a course prepared and conducted by the Education Division of The Investment Funds Institute of Canada and so designated by that institute; (f) "Canadian Securities Course" means a course prepared and conducted by the Canadian Securities Institute and so designated by that institute; (g) "capital" means money raised through the issuing of shares, certificates, bonds, debentures, long-term notes or another long-term obligation, contributed or earned surplus and reserves; (h) "Chartered Financial Analysts Course" means a course prepared and conducted by the Institute of Chartered Financial Analysts and so designated by that institute; (i) "client's trust account" means a trust account maintained by a registrant with a bank to which the Bank Act (Canada) applies or a trust company licensed under the Trust and Loan Companies Licensing Act or substantially similar laws of Canada or one of its provinces or territories and designated a client's trust account; (j) "financial institution" means (i) the Government of Canada , the government of a province or territory of Canada , a municipal corporation, Crown corporation or public board or commission in Canada , (ii) the Bank of Canada, a bank to which the Bank Act (Canada) applies, a Quebec savings bank, and the pension funds of the banks, (iii) a trust company or insurance company if the company is licensed to do business in Canada and has a minimum paid up capital and surplus of $5,000,000, and the pension funds of the companies, (iv) a credit union or credit union league with a minimum paid up capital and surplus of $5,000,000, (v) a mutual fund with net assets of $5,000,000, and (vi) a company, other than a dealer, having a minimum net worth of $25,000,000 on the last audited balance sheet, where the balance sheet is available for inspection by the superintendent and a trusteed pension plan of such a company; (k) "free credit balances" includes money received from, or held for the account of, clients by a registrant (i) for investment pending the investment and payment for securities purchased by the clients from or through the registrant where the registrant does not own the securities at the time of purchase or has not purchased them on behalf of the client, pending the purchase thereof by the registrant, and (ii) as proceeds of securities purchased from clients or sold by the registrant for the account of clients where securities have been delivered to the registrant but payment has not been made pending payment of the proceeds to the clients; (l) "liquid capital" means the amount by which active assets exceed the sum of (i) total liabilities, and (ii) where the securities accounts of the registrant are recorded on a settlement date basis, a net loss on offsetting future purchase and sales commitments of securities, and the amount of liquid capital may be increased by adding (iii) the loan value of securities delivered pursuant to a subordinated loan agreement in the form prescribed by the superintendent that are not included in the accounts, (iv) non-current liabilities fully secured by mortgages on real estate owned by the registrant, and (v) obligations for outstanding instalments due to natural resource companies whose securities the registrant is in the process of distributing or distributing to the public under a prospectus filed with the superintendent; (m) "loan value" means the market value of securities less the applicable margin requirements; (n) "margin", "margin agreement", "margin deficiency", "margin rate" and "margin requirements" mean (i) subject to subparagraph (ii), the provisions in that regard determined pursuant to the by-laws of a stock exchange, or (ii) where used with respect to commodity futures contracts, or cash commodities, the provisions in that regard prescribed under the Commodity Futures Act (Ontario) and substantially similar Acts of other provinces; (o) "market value" where used with respect to (i) a commodity futures contract means the settlement price on the relevant date or last trading day before the relevant date, (ii) a security means (A) where the security is listed and posted for trading on a stock exchange, 1. the bid price, or 2. if the security is sold short, the asking price, as shown on the exchange quotation sheets as of the close of business on the relevant date or last trading date before the relevant date, subject to an appropriate adjustment where an unusually large or unusually small quantity of securities is being valued, or (B) where the security is not listed and posted for trading on a stock exchange, a value determined in accordance with section 85; (p) "minimum free capital" means the applicable amount determined in accordance with section 95; (q) "net free capital" means liquid capital after deducting (i) the amount required to provide full margin for (A) cash commodities, other than in respect of securities, owned by the registrant, (B) firm commodity futures trading accounts, and (C) securities owned by the registrant and securities sold short by the registrant, (ii) the amount sufficient to provide for margin deficiencies on (A) secured loans receivable, (B) clients' accounts in respect of commodity futures, (C) joint accounts after excluding interest of a member of a stock exchange, the Investment Dealers' Association of Canada and a financial institution, (D) accounts of partners and shareholders, (E) accounts of clients and dealers, except, 1. genuine cash settlement accounts with a member of the Toronto Stock Exchange, the Montreal Stock Exchange, the Vancouver Stock Exchange, the Alberta Stock Exchange, the New York Stock Exchange, the American Stock Exchange and the Investment Dealers' Association of Canada, 2. accounts with a financial institution, and 3. genuine cash settlement accounts that have not been outstanding more than 10 days past the normal settlement date, where the shares have been available for delivery, and not more than 21 days past the normal settlement date in another case, (F) secured loans payable by the registrant if the collateral is held by other than the registrant or a financial institution, (G) where the securities accounts of the registrant are kept on a settlement date basis, future purchase and sales commitments not included in the calculation of liquid capital, and (H) other liquid capital items; (r) "Partners', Directors' and Senior Officers' Qualifying Examination" means an examination prepared and conducted by the Canadian Securities Institute and so designated by that institute; (s) "Registered Representative Examination" means an examination based on the Manual for Registered Representatives that has been prepared and is conducted by the Canadian Securities Institute and so designated by that institute; (t) "total liabilities" means all liabilities including (i) adequate provision for income taxes, and (ii) other accruals, but excluding (iii) debts the payment of which is postponed in favour of other creditors pursuant to a subordination agreement in form approved by the superintendent, and (iv) deferred income taxes relating to non-active assets; (u) "working capital" means the excess of current assets over current liabilities. 58/91 s84; 14/06 s37 Back to Top Determination of market value 85. (1) Subject to subsections (2), (3) and (4), the market value of a security not listed and posted for trading on a stock exchange shall be determined by assigning a reasonable value on the basis of values shown on published market reports or inter-dealer quotation sheets on the relevant date or last trading day before the relevant date. (2) The registrant may vary a value from that shown on published market reports or inter-dealer quotation sheets where, in light of all the circumstances, some other value would be more appropriate. (3) The superintendent may require that a different value from that determined under subsection (1) or (2) be assigned, where in light of all the circumstances some other value would be more appropriate. (4) Where no published market report or inter-dealer quotation sheet exists with respect to the security, the security shall be assigned a market value of zero unless the superintendent agrees otherwise. 58/91 s85; 14/06 s38 Back to Top Categories of registration 86. Every person or company that is required to register as a dealer shall be registered and classified into one or more of the following categories: (a) broker, being a person or company that is registered to trade in securities in the capacity of an agent or principal, which person or company is a member of a stock exchange in Canada recognized by the superintendent. (b) financial intermediary dealer, being a financial intermediary that is registered solely for the purpose of trading in securities in accordance with section 173; (c) foreign dealer, being a person or a company that is registered solely for the purpose of trading in securities in accordance with section 174; (d) international dealer, being a person or company that is registered solely for the purpose of trading in securities in accordance with section 172; (e) investment dealer, being a person or company that is a member, branch office member or associate member of the Newfoundland and Labrador District of the Investment Dealers' Association of Canada, which person or company engages in the business of trading in securities in the capacity of an agent or principal; (f) limited market dealer, being a person or company that is registered solely for the purpose of trading in securities in accordance with section 171; (g) mutual fund dealer, being a person or company that is registered solely for the purpose of trading in the shares or units of mutual funds; (h) scholarship plan dealer, being a person or company that is registered solely for the purpose of trading in securities of a scholarship or educational plan or trust; (i) securities dealer, being a person or company that is registered for trading in securities and engages in the business of trading in securities in the capacity of an agent or principal; (j) security issuer, being an issuer that is registered for trading in securities for the purpose of distributing securities of its own issue solely for its own account. 58/91 s86; 2001 c42 s45 ; 14/06 s39 Back to Top Categories of advisers 87. Every person or company that is required to register as an adviser shall be registered and classified into one or more of the following categories: (a) financial advisers, being persons or companies that engage in or hold themselves out as engaging in the business of advising others as to investing in or the buying or selling of securities on a basis that does not require their classification in another category of adviser; (b) investment counsel, being persons or companies that engage in or hold themselves out as engaging in the business of advising others as to the investing in or the buying or selling of specific securities or that are primarily engaged in giving continuous advice as to the investment of funds on the basis of the particular objectives of each client; (c) portfolio managers, being persons or companies that are registered for the purpose of managing the investment portfolio of clients through discretionary authority granted by one or more clients; (d) securities advisers, being persons or companies that hold themselves out as engaging in the business of advising others either through direct advice or through publications or writings, as to the investing in or the buying or selling of specific securities, not purporting to be tailored to the needs of specific clients. 58/91 s87 Back to Top Registration as underwriter 88. (1) Every broker, investment dealer or securities dealer shall be considered to have been granted registration as an underwriter. (2) Every mutual fund dealer, scholarship plan dealer and security issuer shall be considered to have been granted registration as an underwriter for the purpose of distributing the securities in which it is registered to trade. (3) Every limited market dealer, international dealer, financial intermediary dealer and foreign dealer shall be considered to have been granted registration as an underwriter for the purposes of a distribution which it is authorized to make by section 171, 172, 173 or 174. 58/91 s88 Back to Top Where portfolio manager is a broker 89. (1) Where the provisions of section 133 are applicable and have been complied with, the provisions of this Part as they relate to a portfolio manager do not apply to a broker or investment dealer acting as a portfolio manager. (2) The provisions of this Part apply to portfolio managers where they act as investment counsel. 58/91 s89 Back to Top Conditions of registration - general 90. A registration or renewal of registration shall not be granted unless the applicant has complied with the applicable requirements of these regulations at the time of the granting of the registration or renewal of registration. 58/91 s90 Back to Top Registrant 91. Each registrant shall comply with the applicable requirements of these regulations. 58/91 s91 Back to Top Notice of registrant 92. (1) A registrant who is a registered dealer, underwriter or adviser or a partner or officer of a registered dealer, underwriter or adviser and who proposes to acquire on or after the day of proclamation of the Act, directly or indirectly, beneficial ownership of or control or direction over any security of another registered dealer, underwriter or adviser, at least 30 days before the acquisition, shall give written notice to the superintendent providing all relevant facts to permit the superintendent to determine if the acquisition (a) is likely to give rise to conflicts of interest; (b) is likely to hinder a registrant in complying with the conditions of registration applicable to it; (c) is inconsistent with an adequate level of investor protection; or (d) is otherwise prejudicial to the public interest. (2) If, within 30 days of the receipt of a notice under subsection (1), the superintendent gives a written notice of objection to the registrant, the registrant shall not make the acquisition until the superintendent approves it. (3) The registrant, following receipt of a notice of objection under subsection (2), may request the superintendent to hold a hearing on the matter. (4) Subsection (1) does not apply to (a) a partner or officer of a registered dealer, underwriter or adviser who, alone or in combination with another person or company, proposes to acquire securities that, together with the securities already beneficially owned or over which control or direction is already exercised, do not exceed more than 5% of any class or series of securities of another registered dealer, underwriter or adviser that are listed and posted for trading on a stock exchange in or outside Canada; (b) an acquisition by a financial intermediary dealer or its officers or an acquisition of securities of a financial intermediary dealer; (c) an acquisition by an international dealer of securities of a dealer that is its only registered subsidiary; or (d) an acquisition by a registered dealer or underwriter in the ordinary course of its business of trading in securities. 58/91 s92; 14/06 s40 Back to Top Conditions of registration 93. The superintendent may prescribe conditions of registration for a registrant or group of registrants that are instead of some or all of the conditions of registration prescribed in sections 96 to 110, sections 112 to 114 and sections 124 to 132, where he or she gives prior notice of the proposed conditions to the registrant or group of registrants affected and affords the registrant or group of registrants an opportunity to be heard. 14/06 s41 Back to Top Registered dealer 94. Every registered dealer that is a reporting issuer shall comply with the applicable conditions of registration under the Act and these regulations. 58/91 s94 Back to Top Conditions of registration - capital requirements 95. (1) Subject to subsection (2), every dealer, other than a securities issuer, shall maintain a minimum free capital of the maximum amount that is deductible under a clause of the bonding or insurance policy required under section 96, plus the greater of (a) $25,000; and (b) an amount equal to the sum of 10% of the first $2,500,000 of adjusted liabilities, 8% of the next $2,500,000 of adjusted liabilities, 7% of the next $2,500,000 of adjusted liabilities, 6% of the next $2,500,000 of adjusted liabilities and 5% of adjusted liabilities in excess of $10,000,000. (2) Every dealer, other than a securities issuer, who is also registered as a futures commission merchant under the Commodity Futures Act (Ontario) or substantially similar Acts of another province, shall maintain a minimum free capital of the maximum amount that is deductible under a clause of the bonding or insurance policy required under section 96 of these regulations and under the corresponding provision under the Commodity Futures Act (Ontario) or substantially similar Acts of another province, plus the greater of (a) $75,000 of net free capital calculated in accordance with Form 9; and (b) the amount calculated in accordance with paragraph 14(1)(b) of Regulation 114 of Revised Regulations of Ontario, 1980, subject to subsection 14(2) thereof. (3) Every adviser shall maintain a minimum free capital of the maximum amount that is deductible under a clause of the bonding or insurance policy required under section 96 plus $5,000 of working capital calculated in accordance with generally accepted accounting principles or such greater amount as the superintendent considers necessary where the adviser exercises control over clients' funds or securities. (3A) Subsection (3) does not apply to an adviser who provides written or published advice if the adviser exercises no control over clients' funds or securities and if no investment advice is or purports to be tailored to the needs of specific clients. (4) Every underwriter shall maintain a minimum free capital of the maximum amount that is deductible under a clause of the bonding or insurance policy required under section 96, plus $10,000 of net free capital calculated in accordance with Form 9. (5) In paragraph (1)(a), $25,000 means (a) where it applies to a mutual fund dealer or a scholarship plan dealer, $25,000 of working capital calculated in accordance with generally accepted accounting principles; and (b) where it applies to another category of dealer other than a securities issuer, $25,000 of net free capital calculated in accordance with Form 9. 58/91 s95; 14/06 s42 Back to Top Bonding or insurance 96. (1) Except where the superintendent is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every dealer, other than a mutual fund dealer and a security issuer, shall maintain bonding or insurance, by means of a broker's blanket bond on terms acceptable to the superintendent, in an amount of not less than $200,000, or such larger amount as is indicated to be necessary by the resolution referred to in subsection (4). (2) Every mutual fund dealer shall maintain bonding or insurance, on terms acceptable to the superintendent, (a) for employees in an amount not less than $50,000 for each employee, or such larger amount as is indicated to be necessary by the resolution referred to in subsection (4); and (b) for itself in an amount to be determined by the superintendent. (3) Except where the superintendent is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every security issuer, every adviser and underwriter shall maintain bonding or insurance, on terms acceptable to the superintendent, in an amount of not less than $10,000, or such larger amount as is indicated to be necessary by the resolution referred to in subsection (4). (4) Every person or company applying for registration or renewal of registration as a dealer, adviser or underwriter shall deliver to the superintendent, with the application, a certified copy of a resolution of its directors stating that full consideration has been given to the amount of bonding or insurance necessary to cover insurable risks in the business of the applicant and that either (a) the minimum amount of coverage required by these regulations is sufficient; or (b) the minimum amount of coverage required by these regulations is not sufficient but that an indicated amount of coverage would be sufficient. (5) A registration or renewal of registration shall not be granted where in the opinion of the superintendent the minimum amount of bonding or insurance required by these regulations or, where a larger amount is indicated in a certified copy of a resolution referred to in subsection (4), the amount stated in the resolution is not sufficient. (6) The superintendent may exempt registrants who are members of a body recognized under section 20 of the Act, or an exchange from compliance with subsection (4) where the superintendent is satisfied that the registrant is subject to requirements imposed by one of those organizations that provide at least equal protection for clients to that under subsection (4). 58/91 s96; 14/06 s43 Back to Top Notice to superintendent 97. Every registrant shall immediately notify the superintendent in writing of a change in, or claim made under, the provisions of a bond or insurance policy maintained pursuant to the requirements of this Part. 14/06 s44 Back to Top Compensation fund 98. (1) Every dealer, other than a security issuer, shall participate in a compensation fund or contingency trust fund approved by the superintendent and established by an organization referred to in section 21 of the Act or a trust company licensed under the Trust and Loan Companies Licensing Act. (2) The superintendent may vary the amount required to be contributed by a participant where in his or her opinion it would not be prejudicial to the public interest to do so, provided that the notice of the variation is provided by the superintendent to the other participants before the variation takes effect. 58/91 s98; 14/06 s45 Back to Top Subordination agreement 99. At the request of the superintendent, a registrant shall enter into a subordination agreement in the form prescribed by the superintendent. 58/91 s99; 14/06 s46 Back to Top Report on statements 100. The financial statements and reports required under sections 124 to 127 shall be reported upon by a person, acceptable to the superintendent, who is the auditor of the registrant or is an accountant eligible for appointment as the auditor. 58/91 s100; 14/06 s46 Back to Top Conditions of registration - record keeping 101. (1) Every registrant shall maintain books and records necessary to record properly its business transactions and financial affairs. (2) All records may be kept by means of mechanical, electronic or other devices where such method of record keeping is not prohibited under other applicable legislation and the registrant (a) takes adequate precautions, appropriate to the means used, to guard against the risk of falsification of the information recorded; and (b) provides a means for making the information available in an accurate and intelligible form within a reasonable time to a person lawfully entitled to examine the records. (3) Without restricting the generality of subsection (1), a registrant shall maintain each of the following books and records that, in the opinion of the superintendent, are appropriate to its business: (a) blotters, or other records of original entry, containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities, including certificate numbers, all receipts and disbursements of cash, all other debits and credits, the account for which each transaction was effected, the name of the securities, the class or designation of the securities, the number or value of the securities, the unit and aggregate purchase or sale price, the trade date and the name or other designation of the person from whom the securities were purchased or received or to whom they were sold or delivered; (b) ledgers or other records maintained in detail reflecting all the assets and liabilities, income and expense and capital accounts; (c) ledger accounts or other records itemizing separately for each cash and margin account of every client all purchases, sales, receipts, and deliveries of securities and commodities for the account and all other debits and credits to the account; (d) ledgers or other records reflecting (i) securities in transfer, (ii) dividends and interest received, (iii) securities borrowed and securities loaned, (iv) money borrowed and money loaned, together with a record of the collateral therefor and substitutions in the collateral, and (v) securities which the registrant has failed to receive and failed to deliver; (e) a securities record or ledger showing separately for each security as of the trade date or settlement date all long and short positions, including securities in safekeeping, carried for the registrant's account or for the account of clients, the location of all securities long and the position offsetting securities sold short and, in all cases, the name or designation of the account in which each position is carried; (f) an adequate record of each order and of any other instruction, which may be a copy of the order or instruction, given or received for the purchase or sale of securities, whether executed or unexecuted, showing (i) the terms and conditions of the order or instruction and of a modification or cancellation of the order or instruction, (ii) the account to which the order or instruction relates, (iii) where the order or instruction is placed by an individual other than (A) the person in whose name the account is operated, or (B) an individual duly authorized to place orders or instructions on behalf of a customer that is a company the name, sales number or designation of the individual placing the order or instruction, (iv) the time of the entry of the order or instruction and, where the order is entered pursuant to the exercise of discretionary power of a registrant or an employee of a registrant, a statement to that effect, (v) the price at which the order or instruction was executed, and (vi) to the extent feasible, the time of execution or cancellation; (g) copies of confirmations or other records of all purchases and sales of securities required by section 37 of the Act and copies of notices of all other debits and credits or securities, cash and other items for the accounts of clients; (h) subject to subsection 102(4), a client record in respect of each cash and margin account containing (i) the name and address of the beneficial owner and the guarantor of the account, (ii) where trading instructions are accepted from a person or company other than the client, written authorization or ratification from the client naming the person or company, and (iii) in the case of a margin account, a properly executed margin agreement containing the signature of the owner and the guarantor, and the additional information obtained pursuant to the requirements of sections 102 and 103, but, in the case of a joint account or an account of a corporation, the records are required only in respect of the person authorized to transact business for the account; (i) a record of all puts, calls, spreads, straddles and other options in which the registrant has a direct or indirect interest or which the registrant has granted or guaranteed, containing at least an identification of the security and the underlying security and the number of underlying securities to which the put, call, spread, straddle or other option relates; (j) a record of the proof of money balances of all ledger accounts in the form of trial balances and a record of a reasonable calculation of minimum free capital, adjusted liabilities and capital required, prepared for each month within a reasonable time after the month. (4) Unless otherwise required by applicable legislation to be maintained for a longer period of time, (a) records relating to unexecuted orders or instructions as prescribed in paragraph (3)(f) and confirmations prescribed in paragraph (3)(g) shall be maintained for a period of at least 2 years; and (b) documents relating to executed orders or instructions as prescribed in paragraph (3)(f) shall be maintained for a period of at least 5 years and shall be retained in a readily accessible location for the first 2 years of that 5 year period. (5) Subject to subsection (6), every registrant shall maintain the situs of its books and records in the province. (6) Where the head office of the registrant is not in the province, the registrant shall maintain in the province the books and records as are necessary to record properly its business transactions and financial affairs in the province. 58/91 s101; 14/06 s47 Back to Top Conditions of registration - new accounts and supervision 102. (1) Every registered dealer and adviser shall establish procedures for dealing with its clients that conform with prudent business practice and that enable it to service its clients adequately and shall take whatever steps are necessary or appropriate to supervise the procedures properly. (2) Brokers and investment dealers may comply with this section by following the guidelines published by the Investment Dealers' Association of Canada, if the guidelines are submitted to the superintendent before they are to take effect, and the superintendent does not object to them. (3) The procedures referred to in subsection (1) shall be in writing and designate a partner or director or, in the case of a branch office, a manager reporting directly to the designated partner or director, who shall be responsible for approving the opening of new accounts and the supervision of trades made for or to that client. (4) For the purpose of subsection (1), but without limiting the requirements of that subsection and subject to subsection (7), each dealer, investment counsel and portfolio manager shall make such inquiries as (a) will enable it to establish the identity and, where applicable, the credit worthiness of each client, and the reputation of the client if information known to the dealer, investment counsel or portfolio manager causes doubt as to whether the client is of good reputation; and (b) subject to subsection (5), are appropriate in view of the nature of the client's investment and of the type of transaction being effected for its account, as to the general investment needs and objectives of each client and the suitability of a proposed purchase or sale for that client. (5) Paragraph (4)(b) does not apply to a dealer who executes a trade on the instructions of an investment counsel, portfolio manager, another dealer, a bank to which the Bank Act (Canada) applies, a loan company or trust company licensed under the Trust and Loan Companies Licensing Act, or an insurance company licensed under the Insurance Companies Act. (6) For the purpose of complying with the requirements of this section as to obtaining appropriate information concerning new clients, use of a form in accordance with the requirements prescribed by the superintendent is sufficient, but other forms or procedures may be used where they are more appropriate. (7) Notwithstanding subsections (1) and (3), where an account is opened and traded by an investment counsel or portfolio manager on behalf of a client, (a) where the investment counsel or portfolio manager executes orders in its own name or identifies its client by means of a code or symbols, the dealer must satisfy itself as to the credit worthiness of the investment counsel or portfolio manager but shall not otherwise have any responsibility for the suitability of a trade for the client of the investment counsel or portfolio manager; and (b) where the investment counsel or portfolio manager executes orders in the name of its client with no agreement that payment of the account is guaranteed by the investment counsel or portfolio manager, the dealer shall (i) obtain full information concerning the client with a view to determining the credit worthiness of the client, or (ii) obtain a letter of undertaking from the investment counsel or portfolio manager and the letter shall refer to the familiarity of the investment counsel or portfolio manager with applicable rules of account supervision and the letter shall contain a covenant to make the investigation contemplated by the rules and to advise, where known, if the client is an insider or an employee, director or officer of a company or a partner in a firm engaged in the securities business, but the dealer shall not have responsibility for determining the suitability of a trade for the client. 58/91 s102; 14/06 s48 Back to Top Investment counsel standards 103. (1) Every investment counsel shall maintain standards directed to ensuring fairness in the allocation of investment opportunities among his or her clients and a copy of the policies established shall be provided to each client and filed with the superintendent. (2) Every investment counsel shall charge his or her clients directly for his or her services and the charge may be based upon the dollar value of the client's portfolio, but not on the value or volume of the transactions initiated for the client and, except with the written agreement of the client, shall not be contingent upon profits or performance. (3) Subject to subsection (4), every investment counsel shall ensure that (a) the account of each client is supervised separate and distinct from other clients; and (b) except in the case of mutual or pension funds, an order placed on behalf of one account is not pooled with that of another account. (4) A portfolio manager shall ensure that the account of each client is supervised, separate and distinct from other clients but, subject to the by-laws of a stock exchange with respect to commission rate structure, an order placed on behalf of one account may be pooled with that of another account. (5) Where there has been a material change in the ownership or control of the investment counsel or where it is proposed that an investment counsel sell or assign the account of a client in whole or in part to another registrant, the investment counsel shall, before the sale or assignment and immediately after the material change, give a written explanation to the client of the proposal or change and he or she shall inform the client of the client's right to withdraw his or her account. (6) A purchase or sale of any security in which an investment counsel or a partner, officer or associate of an investment counsel has a direct or indirect beneficial interest shall not be made from or to a portfolio managed or supervised by the investment counsel. 58/91 s103; 14/06 s49 Back to Top Conditions of registration - segregation of funds and securities 104. (1) Securities that are held by a registrant for a client pursuant to a written safekeeping agreement and that are unencumbered shall be kept apart from all other securities and be identified as being held in safekeeping for a client in the registrant's security position record, client's ledger and statement of account. (2) Securities held under subsection (1) may be released only on an instruction from the client and not solely because the client has become indebted to the registrant. 58/91 s104 Back to Top Where registrant holds securities 105. (1) Securities held by a registrant for a client that are unencumbered and that are either fully paid for or are excess margin securities but that are not held pursuant to a written safekeeping agreement shall be (a) segregated and identified as being held in trust for the client; and (b) described as being held in segregation on the registrant's security position record, client's ledger and statement of account. (2) Segregated securities may be used by the registrant, by sale or loan, whenever a client becomes indebted to a registrant but only to the extent reasonably necessary to cover the indebtedness. (3) Bulk segregation of securities described in subsection (1) is permissible. 58/91 s105 Back to Top Credit balances 106. Clients' free credit balances, where satisfactory arrangements concerning bonding or insurance have not been made and approved by the superintendent, shall be deposited in a client's trust account and properly identified immediately upon their receipt by the registrant. 58/91 s106; 14/06 s50 Back to Top Subscriptions or prepayments 107. Subscriptions or prepayments held pending investment by mutual fund dealers, securities advisers or investment counsel shall be segregated in a trust account and not commingled with the assets of the dealer, adviser or counsel. 58/91 s107 Securities account 108A. (1) Where a registrant maintains a securities account and a commodity futures account for the same client and where the securities account contains a free credit balance and the commodity futures account contains a debit balance of $5,000 or more, the registrant shall transfer to the commodity futures account as much of the free credit balance in the securities account as is necessary to eliminate or, if the free credit balance is less than the debit balance, to reduce to the greatest extent possible the debit balance in the commodity futures account. (2) Subsection (1) does not apply to a registrant in respect of a client's securities and commodity futures accounts where the client has directed the registrant, in writing or orally, if subsequently confirmed in writing, (a) to transfer an amount that is less than the amount otherwise required to be transferred under that subsection; or (b) not to transfer an amount, from the securities account to the commodity futures account. (3) For the purpose of this section, "free credit balance" does not include money in a client's securities account that are committed to be used on a specific settlement date as payment for securities where the registrant who maintains the securities account prepares financial statements on a settlement date basis. 58/91 s108A Transfer from accounts 108B. A registrant who maintains a securities account and a commodity futures account for the same client may make a transfer of an amount of a free credit balance from the securities account to the commodity futures account of the client if (a) the transfer is made in accordance with a written agreement between the registrant and the client; and (b) the transfer is not a transfer referred to in section 108A. 58/91 s108B Back to Top Exemption for registrants 109. The superintendent may exempt registrants who are members of a body recognized under section 20 of the Act or a stock exchange from compliance with sections 103 to 108B where the superintendent is satisfied that the registrant is subject to requirements imposed by one or both of those organizations that provide protection for clients at least equal to that under sections 103 to 108B. 58/91 s109; 14/06 s51 Back to Top Conditions of registration - statements of account and portfolio 110. (1) Subject to subsection (5), a dealer shall send a statement of account to each client at the end of each month in which the client has effected a transaction where there is a debit or credit balance or securities held. (2) Subject to subsection (5), where a client has not effected a transaction but there are either funds or securities held by the dealer on a continuing basis, the dealer shall forward a statement of account to the client showing a debit or credit balance and the details of any securities held or owned not less than once every 3 months. (3) The superintendent may vary subsections (1) and (2) as they apply to a dealer. (4) The statements required by subsections (1) and (2) must list the securities held for the client and indicate clearly which securities are held for safekeeping or in segregation. (5) A mutual fund dealer is not required to comply with subsections (1) and (2) where a statement of account is sent to each client not less frequently than once every 12 months, showing the number and market value at the date of purchase or redemption, of securities purchased or redeemed during the period since the date of the last statement sent under this subsection and showing the total market value of all securities of the mutual fund held by the client at the date of the statement.

(6) Except where the client has expressly directed otherwise, every portfolio manager shall send to each client not less than once every 3 months a statement of the portfolio of the client under his or her management. 58/91 s110; 14/06 s52 Back to Top Conditions of registration - proficiency requirements 111. (1) Subject to subsection (2), an individual shall not be granted registration as a salesperson of a registered dealer unless the individual has been registered previously as a dealer or a partner or officer of a dealer or has successfully completed the Canadian Securities Course. (2) Notwithstanding subsection (1), an individual may be granted registration as a salesperson of a registered mutual fund dealer if the individual has successfully completed the Canadian Investment Funds Course. (3) In addition to the requirements of subsection (1), an individual shall not be granted registration as a salesperson with a broker or investment dealer unless he or she has been registered previously as a salesperson or he or she has successfully completed the Registered Representatives Examination. (4) An individual shall not be granted registration as a securities adviser or as a partner or officer of a registered securities adviser unless the individual has successfully completed the Canadian Securities Course and Canadian Investment Finance Course and has established to the satisfaction of the superintendent that he or she has performed research involving the financial analysis of investment for at least 5 years under the supervision of an adviser. (5) An individual shall not be granted registration as an investment counsel or as a partner or officer of a registered investment counsel unless the individual has successfully completed the Canadian Securities Course, the Canadian Investment Finance Course and the first year of the Chartered Financial Analysts Course, and has been employed for at least 5 years performing research involving the financial analysis of investments with at least 3 of those years under the supervision of an adviser having the responsibility for the management or supervision of investment portfolios having an aggregate value of not less than $1,000,000. (6) An individual shall not be granted registration as a broker, broker-dealer, investment dealer or securities dealer or as a partner or an officer of such dealers unless the individual has successfully completed the Partners', Directors' and Senior Officers' Qualifying Examination. 58/91 s111; 14/06 s53 Back to Top Registration prohibited 112. (1) A person, other than an individual, or company shall not be granted registration as a partner or officer of a registered securities adviser unless the person or an individual employed by the person or company and responsible for discharging the obligations of the person or company as a partner or officer of the adviser has successfully completed the Canadian Securities Course and the Canadian Investment Finance Course and has established to the satisfaction of the superintendent that he or she has performed research involving the financial analysis of investments for at least 5 years under the supervision of an adviser. (2) A person, other than an individual, or company shall not be granted registration as a partner or officer of a registered investment counsel unless the person or an individual employed by the person or company and responsible for discharging the obligations of the person or company as a partner or officer of the investment counsel has successfully completed the Canadian Securities Course, the Canadian Investment Finance Course and the first year of the Chartered Financial Analysts Course and has been employed for at least 5 years performing research involving the financial analysis of investments with at least 3 of those years under the supervision of an adviser having the responsibility for the management or supervision of investment portfolios having an aggregate value of not less than $1,000,000. (3) A person, other than an individual, or company shall not be granted registration as a broker, broker-dealer, investment dealer or securities dealer or as a partner or officer of the dealer unless the person or an individual employed by the person or company and responsible for discharging the obligations of the person or company as a partner or officer of the registered dealer has successfully completed the Partners', Directors' and Senior Officers' Qualifying Examination. 58/91 s112; 14/06 s53 Back to Top Equivalent qualifications 113. Notwithstanding sections 111 and 112, where the superintendent is satisfied that a person or company has the educational qualifications and experience that are equivalent to what is required in those sections, the superintendent may, subject to the terms and conditions that he or she may impose, exempt the person or company from such sections. 58/91 s113; 14/06 s54 Back to Top Registration as salesperson 114. (1) Subject to subsection (2), an individual shall not be granted registration or renewal of registration as a salesperson unless he or she is employed full time as a salesperson. (2) Subsection (1) does not apply to an individual granted registration or renewal of registration where (a) the individual is a part-time student enrolled in a business, commercial or financial course; (b) the individual is a full-time student enrolled in a business, commercial or financial course and he or she satisfied the superintendent that he or she has a present intention of continuing a career in the investment business; (c) the individual is otherwise employed for 6 months or less during the calendar year and while so employed is not employed as a salesperson; (d) the individual is carrying on a hobby, recreational or cultural activity which in the opinion of the superintendent will not interfere with his or her duties and responsibilities as a salesperson; (e) in the case of a salesperson employed by a mutual fund dealer, the area in which the individual is to be employed is in the opinion of the superintendent so remote and sparsely populated that full-time employment as a salesperson is not economically feasible; (f) the individual holds a licence as an agent under the Life and Accident Insurance Agents Licensing Act or a licence as a salesperson under the Investment Contracts Act and is in the employ or under the sponsorship of the dealer who proposes to employ him or her; (g) with the written consent of the dealer employing him or her and the superintendent, the individual is employed outside the normal working hours and there is no conflict of interest arising from his or her duties as a salesperson and his or her outside employment; (h) the individual is carrying on an activity which in the opinion of the superintendent and the employer will not in the circumstances interfere with his or her duties and responsibility as a salesperson and there is no conflict of interest arising from his or her duties as a salesperson and his or her outside activity; or (i) the individual is registered under the Commodity Futures Act ( Ontario ) or substantially similar Acts of other provinces. 58/91 s114; 14/06 s55 Conditions of registration - listed and posted securities 114A. (1) A registered dealer shall not purchase or sell a security that is listed and posted for trading on a stock exchange in Canada other than through the facilities of such a stock exchange if the security would be a COATS security except for the fact that it is so listed and posted. (2) In subsection (1), "COATS security" means a COATS security as defined in section 136. 58/91 s114A Back to Top Application for registration 115. Unless the superintendent permits or requires otherwise, (a) an applicant for registration as a dealer, adviser or underwriter, or a combination thereof, shall complete and execute Form 3 and an applicant for registration as an adviser shall file together with Form 3 the financial statements referred to in paragraphs 11(1)(a), (b), (c) and (d) made up as at a date not more than 90 days before the date of the application or other supporting material that may be satisfactory to the superintendent; and (b) an applicant for registration as (i) a salesperson, or (ii) a partner or officer of a registered dealer or a registered adviser, shall complete and execute Form 4, unless the information required by Form 4 has previously been filed by the applicant and the information as previously filed is current and correct as of the date of the application. 58/91 s115; 14/06 s56 Back to Top Renewals of registration 116. (1) Subject to subsection (2), every registration and renewal of registration is suspended at the end of the day preceding the first anniversary of the granting of the registration or renewal of registration. (2) The registration or renewal of registration of every salesperson, partner and officer of a registered dealer is suspended at the same time as the registration or renewal of registration of the registered dealer is suspended. (3) Every application for renewal of registration shall be filed no later than 30 days before the date on which the registration or renewal of registration is suspended. 58/91 s116 Expiry of registration 116A. (1) Subject to subsection (2), the registration of a registered dealer, salesperson, partner or officer that is suspended under section 116 expires on the second anniversary of the suspension unless, in the interim, an application for renewal satisfactory to the superintendent is filed. (2) Where a hearing is commenced under section 28 of the Act, the registration of the registered dealer, salesperson, partner or officer that has been suspended under section 116 continues in suspension until a decision has been made by the superintendent. 58/91 s116A; 14/06 s57 Back to Top Renewal of registration 117. (1) Unless the superintendent permits or requires otherwise, and subject to subsection (2), every application for renewal of registration as a dealer, adviser or underwriter shall be by way of a letter filed with the superintendent requesting renewal of registration. (2) Subject to subsection (3), where the information filed by the applicant in his or her last application for registration has changed and particulars of the change have not been filed with the superintendent as an application for amendment or renewal of registration, an application for renewal of registration shall be prepared in accordance with Form 5. (3) Where the information that has changed is that required in an exhibit required by paragraph (b) of item 10 of Form 3 and is for a person in respect of whom a similar exhibit has been filed by the applicant with a securities commission or administrator in a province or territory of Canada in which the principal office of the applicant is situate, the exhibit is not required for the person where the full name of the person and the place that the exhibit has been so filed are stated. 58/91 s117; 14/06 s58 Back to Top Renewal of registration 118. (1) Unless the superintendent permits or requires otherwise, and subject to subsection (2), an application for renewal of registration as a salesperson shall be by way of letter filed with the superintendent requesting renewal of registration. (2) Where the information filed by the applicant in his or her last application for registration has changed and particulars of the change have not been filed with the superintendent as an application for amendment or renewal of registration, an application for renewal of registration shall be prepared in accordance with Form 6. 58/91 s118; 14/06 s59 Back to Top Examination 119. A summons for an examination under section 32 of the Act shall be in Form 8. 58/91 s119 Back to Top Amendments to registration 120. (1) Subject to subsections (2) and (3), every notice to the superintendent under subsections 34(1) and (2) of the Act shall be by way of a letter filed with the superintendent providing the information required by the applicable part of the subsections. (2) Upon receipt and review of the letter referred to in subsection (1), the superintendent may require an application for amendment of registration prepared in accordance with Form 7. (3) Notice to the superintendent under subsection 34(1) or (2) of the Act is not required where the registrant is a reporting issuer. 58/91 s120; 14/06 s60 Back to Top Notice to superintendent 121. Every notice to the superintendent under subsection 34(3) of the Act shall be by way of a letter filed with the superintendent providing the information required by the applicable part of that subsection and signed by the salesperson. 14/06 s61 Back to Top Escrow agreement 122. Every escrow agreement referred to in paragraph 36(2)(n) of the Act shall be in accordance with Form 16. 58/91 s122 Back to Top Shares subject to escrow 123. Every transferee of shares that are subject to the escrow agreement shall sign an acknowledgement in accordance with Form 18 and file it within 10 days of the date of the superintendent's consent to a transfer in escrow. 58/91 s123; 14/06 s62 Back to Top Reporting to superintendent 124. Every adviser, mutual fund dealer and scholarship plan dealer shall deliver to the superintendent within 90 days after the end of its financial year a copy of its financial statements for the financial year. 14/06 s63 Back to Top Financial statement 125. The financial statements required to be delivered under section 124 shall include (a) an income statement, a statement of surplus and a statement of changes in financial position, each for the financial year; and (b) a balance sheet as at the end of the financial year, signed by one director of the registrant. 58/91 s125 Back to Top End of year report 126. Every mutual fund dealer and scholarship plan dealer shall deliver to the superintendent within 90 days after the end of its financial year a report prepared in accordance with Statement C of Form 9. 58/91 s126 Back to Top End of year report 127. Every securities dealer and underwriter that is not a member in good standing of a self-regulatory body referred to in section 21 of the Act shall deliver to the superintendent within 90 days after the end of its financial year a report prepared in accordance with Form 9. 58/91 s127 Back to Top Guideline 128. Form 10 may be used as a guideline for the purpose of assisting in the auditing of the financial statements of a portfolio manager. 58/91 s128 Back to Top Audit of report 129. The report required by section 127 shall be audited in accordance with generally accepted auditing standards and the audit requirements published by the superintendent. 58/91 s129; 14/06 s64 Back to Top Auditors instructions 130. (1) Every registrant that is not a member in good standing of a self-regulatory body referred to in section 25 of the Act shall issue a direction to its auditor instructing the auditor to conduct an audit requested by the superintendent during its registration and shall deliver a copy of the direction to the superintendent (a) with its application for registration; and (b) immediately after the registrant changes its auditor. (2) Where the superintendent requests an auditor to conduct an audit of the financial affairs of a registrant in accordance with a direction referred to in subsection (1) 14/06 s65 Back to Top Focus of audit 131. Every audit under section 22 of the Act shall relate to the affairs of the registrant and shall be performed in accordance with generally accepted auditing standards and the audit requirements published by the superintendent. 58/91 s131; 14/06 s66 Back to Top Report of auditor 132. (1) Every report of an auditor under section 22 of the Act shall be prepared in accordance with generally accepted auditing standards. (2) A registrant shall not withhold, destroy or conceal any information or documents or otherwise fail to co-operate with a reasonable request made by an auditor of a registrant in the course of an audit under section 22 of the Act. 58/91 s132 Back to Top Further exemptions from registration requirements 133. Registration is not required as an adviser by a broker or an investment dealer acting as a portfolio manager where (a) a stock exchange, in the case of a broker, or the Investment Dealers' Association of Canada, in the case of an investment dealer, as the self-regulatory body to whose discipline the broker or investment dealer is subject has passed by-laws or regulations that (i) govern the activities of its members as portfolio managers, (ii) impose standards and conditions applicable to all members managing the investment portfolios of clients through discretionary authority granted by the clients, and (iii) together with amendments thereto, have been approved by the superintendent as the substantial equivalent of the requirements and conditions of registration for portfolio managers; (b) a stock exchange or the Investment Dealers' Association of Canada has (i) recognized certain activities of the broker or investment dealer as being the equivalent of those of a portfolio manager and has so advised the superintendent, and (ii) with respect to the broker or investment dealer, provided the superintendent with (A) the names of a partner, director, officer or employee designated and approved pursuant to the applicable by-laws or regulations to make investment decisions on behalf of or to offer advice to clients, and (B) changes made in the designation and approval of a partner, director, officer or employee; and (c) the designated and approved individuals referred to in paragraph (b), who are resident in the province, are registered, designated or approved to trade in securities under section 26 of the Act. 58/91 s133; 14/06 s67 Back to Top Exempt purchaser 134. (1) An applicant for recognition as an exempt purchaser or for renewal of recognition as an exempt purchaser shall complete and execute Form 11. (2) A person or company shall not be granted recognition as an exempt purchaser or renewal of recognition as an exempt purchaser for a period of more than one year. (3) Every application for renewal of recognition as an exempt purchaser shall be filed no later than 30 days before the date on which the then current recognition as an exempt purchaser expires. 58/91 s134 Back to Top Certain banks 135. For the purpose of subparagraph 36(2)(a)(v) of the Act, the Asian Development Bank and the Inter-American Development Bank shall (a) file with the superintendent copies of its annual report to its board of governors and copies of its charter documents and any material modifications and amendments thereto; (b) file with the superintendent, before the initial trade by it of its securities in the province, and thereafter, the material that it would be required to file with the Securities and Exchange Commission of the United States of America if all trades of such securities made by it in the province had been made in the United States of America; and (c) advise the superintendent in writing if its (i) filing requirements with, or (ii) exemptions from legislation administered by the Securities and Exchange Commission of the United States of America are suspended, revoked or substantially amended. 58/91 s135; 14/06 s68 PART V OVER-THE-COUNTER TRADING Back to Top General 136. In this Part (a) "approved market-maker" means a registered dealer who is approved under these regulations to act as a market-maker in a security; (b) "COATS security" means (i) a share of a company, (ii) a right or warrant, but not an option, to purchase a share of the company, or (iii) a combination of a share of a company and a right or warrant, but not an option, to purchase a share of a company, but does not include (iv) a security that under subsection 36(2) of the Act is exempt from registration, or (v) a security that is listed and posted for trading on a stock exchange in Canada ; (c) "COAT system" means the system developed for trading in the over-the-counter market and known as the Canadian Over-the-Counter Automated Trading System. 58/91 s136 Back to Top Trade reporting 137. (1) Every purchase or sale in the province of a COATS security made by a registered dealer, as principal or agent, shall be reported on the COAT system except a trade that is (a) made through the facilities of a stock exchange or other organized market recognized by the superintendent for the purpose of this Part; (b) a distribution by or on behalf of an issuer; or (c) a trade made in reliance on an exemption set out in paragraph 73(1)(a), (c) or (d) of the Act. (2) Every purchase or sale in a COATS security that is required to be reported under subsection (1) shall be reported on the COAT system in accordance with the following provisions: (a) the registered dealer through or by whom the sale is made shall report the trade; (b) where the sale is not made by or through a registered dealer, the registered dealer by or through whom the purchase is made shall report the trade; (c) the report shall be made in accordance with the requirements of the COAT system. 58/91 s137; 14/06 s69 PART VI PROCEDURE AND RELATED MATTERS Back to Top Endorsement of warrants 138. The endorsement of a warrant by a Provincial Court judge, magistrate or justice of another province of Canada provided for by section 125 of the Act shall be in accordance with Form 38. 58/91 s138 Back to Top Execution and certification of documents 139. Except as otherwise provided in the Act or section 12, 149C or 155, (a) every document required or permitted to be filed with the superintendent by an individual that is required to be signed or certified shall be manually signed and shall include below the signature the name of the individual in typewritten or printed form; (b) subject to paragraph (c), every document required or permitted to be filed with the superintendent by a company or person, other than an individual, that is required to be signed or certified, shall be manually signed by an officer or director of the company or person or, subject to paragraph (d), by the attorney or agent of the person or company and shall include below the signature the name of the officer, director, attorney or agent in typewritten or printed form; (c) where a partner signs or certifies on behalf of a professional partnership, the partner is not required to sign his or her name but if an individual other than a partner signs or certifies, the individual shall sign his or her name manually and the name of the individual shall be included below his or her signature in typewritten or printed form; and (d) where a document required or permitted to be filed with the superintendent by an individual, company or person has been executed by an attorney or agent of the individual, company or person, a duly completed power of attorney or document of authority authorizing the signing of the document shall be filed with the document unless the superintendent permits the filing of the document without the power of attorney or document of authority. 58/91 s139; 14/06 s70 Back to Top Failure of material to comply 140. (1) Where material that is filed is not prepared in accordance with the Act or these regulations, the superintendent may return the material to the person or company that is required to comply with the provisions. (2) Where material is returned to a person or company under subsection (1), the fee paid upon the filing of the material shall not be refunded without the consent of the superintendent. 58/91 s140; 14/06 s71 Back to Top Investigations 141. The following practices and procedures apply to investigations conducted under the Act: (a) every summons issued by a person under subsection 12(4) or section 14 of the Act shall be served personally on the individual summoned who shall be paid the like fees and allowances for his or her attendance before the person as are paid for the attendance of a witness summoned to attend before the Trial Division; (b) every summons to a witness to appear before a person appointed to make an investigation under section 12 or 14 of the Act shall be in Form 1; (c) the service of a summons on a witness, the payment or tender of fees and allowances to the witness and the service of a notice on a witness may be proved by an affidavit in Form 2. 58/91 s141 PART VII INSIDER TRADING Back to Top Disclosure requirement 142. The disclosure required by section 41 of the Act with respect to a person or company that would be an insider of the adviser if the adviser were a reporting issuer is required only where the person or company participates in the formulation of, or has access before implementation to, investment decisions made on behalf of or the advice given to clients of the adviser. 58/91 s142 Back to Top Form of report 143. Every report required to be filed under sections 108 and 109 of the Act shall be prepared in accordance with Form 35. 58/91 s143 Back to Top Filing not required 144. Notwithstanding subsection 108(1) of the Act, a person or company is not required to file a report on becoming an insider of an issuer where the person or company does not own or exercise control or direction over securities of the issuer. 58/91 s144 Back to Top Time of filing 145. Every report required to be filed under section 109 of the Act shall be filed within 10 days of the date of the transfer. 58/91 s145 Back to Top Preparation of report 146. Every report required to be filed under section 110 of the Act shall be prepared in accordance with Form 36. 58/91 s146 Back to Top Preparation of report 147. Every report required to be filed under section 118 of the Act shall be prepared in accordance with Form 37. 58/91 s147 Back to Top Affiliate report 148. For the purpose of section 108 of the Act, (a) a report filed by a company that includes securities beneficially owned or deemed to be beneficially owned by an affiliate or which includes changes in an affiliate's beneficial ownership of the securities shall be deemed to be a report filed by the affiliate and the affiliate need not file a separate report; (b) a report filed by a person which includes the securities beneficially owned or deemed to be beneficially owned by a company controlled by the person or by an affiliate of the controlled company or which includes changes in the controlled company's or affiliate's beneficial ownership or deemed beneficial ownership of the securities shall be deemed to be a report filed by the controlled company or affiliate and the controlled company and affiliate need not file a separate report. 58/91 s148 Back to Top Report re: estate 149. (1) Where there are one or more executors, administrators or other personal representatives of an estate referred to in this section as an executor, the reporting requirements of this Part shall be deemed to be satisfied as they apply to (a) a co-executor; and (b) the directors and senior officers of an executor or co-executor, where the applicable report is filed by a co-executor or by the executor in respect of securities owned by the estate. (2) Subsection (1) only applies to reporting requirements that arise solely from the capacity of co-executor or director or senior officer of an executor or co-executor. 58/91 s149 Rep. by NLR 87/01 149A. [Rep. by NLR 87/01] 87/01 Report outside jurisdiction 149B. A person or company that is required under this Part and under Part XX of the Act to file a report prepared in accordance with Form 35 shall be deemed to have complied with the requirements if a report prepared in accordance with Form 35 is filed in a Canadian jurisdiction other than the province with a securities commission or other agent that has been designated by the superintendent for the purpose of accepting the filings. 58/91 s149B; 14/06 s72 Facsimile signature 149C. A report prepared in accordance with Form 35 that is filed with the superintendent may contain the facsimile signature of the individual, officer, director, agent or attorney required to sign the form, if an original manually signed copy is filed concurrently with a securities commission in Canada designated by the superintendent for the purpose of accepting the filings. 14/06 s73 Exemption from liability 149D. (1) A person or company that purchases or sells securities of a reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is exempt from subsection 77(1) of the Act and from liability under section 134 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 reporting issuer 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. (2) A person or company that purchases or sells securities of a reporting issuer with knowledge of a material fact or material change with respect to the reporting issuer that has not been generally disclosed is exempt from subsection 77(1) of the Act and from liability under section 134 of the Act, where the person or company proves that (a) the 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. (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 77(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 77(2) or (3) of the Act. (4) A person or company who purchases or sells a security of a reporting issuer as agent or trustee for a person or company who is exempt from subsection 77(1) of the Act and from liability under section 134 of the Act by reason of paragraph (2)(b) or (c) is also exempt from subsection 77(1) of the Act and from liability under section 134 of the Act. (5) A person or company is exempt from subsections 77(1), (2) and (3) of the Act where the person or company proves that the 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 had knowledge of the material fact or material change. 58/91 s149D PART VIII PROXIES AND PROXY SOLICITATION Back to Top Contents of circular 150. (1) An information circular shall contain the information prescribed in Form 29. (2) The information required by Form 29 shall be given as of a specified date not more than 30 days before the date upon which the information circular is first sent to any of the security holders of the reporting issuer. (3) The information contained in an information circular shall be clearly presented and the statements made therein shall be divided into groups according to subject matter and the various groups of statements shall be preceded by appropriate headings. (4) The order of items set out in Form 29 need not be followed. (5) Where practicable and appropriate, information required by Form 29 shall be presented in tabular form. (6) All amounts required by Form 29 shall be stated in figures. (7) Information required by more than one applicable item in Form 29 need not be repeated. (8) No statement need be made in response to an item in Form 29 which is inapplicable and negative answers to an item may be omitted. (9) Information that is not known to the person or company on whose behalf the solicitation is to be made and that is not reasonably within the power of the person or company to ascertain or procure may be omitted if a brief statement is made in the information circular of the circumstances rendering the information unavailable. (10) There may be omitted from the information circular any information contained in another information circular, notice of meeting or form of proxy sent to the persons or companies whose proxies were solicited in connection with the same meeting if reference is made to the particular document containing the information. 58/91 s150 Back to Top Form of proxy 151. (1) Every form of proxy sent or delivered to a security holder of a reporting issuer by a person or company soliciting proxies shall indicate in bold-face type whether or not the proxy is solicited by or on behalf of the management of the reporting issuer and shall provide a specifically designated blank space for dating the form of proxy. (2) An information circular or form of proxy shall indicate in bold-face type that the security holder has the right to appoint a person or company to represent him or her at the meeting other than the person or company designated in the form of proxy and shall contain instructions as to the manner in which the security holder may exercise the right. (3) If a form of proxy contains a designation of a named person or company as nominee, it shall provide a means whereby the security holder may designate in the form of proxy some other person or company as his or her nominee. (4) Every form of proxy shall provide a means for the security holder to specify that the securities registered in his or her name shall be voted for or against each matter or group of related matters identified therein or in the notice of meeting or in an information circular, other than the appointment of an auditor and the election of directors. (5) A proxy may confer discretionary authority with respect to each matter referred to in subsection (4) as to which a choice is not so specified in the form of proxy or the information circular states in bold-face type how the securities represented by the proxy will be voted in respect of each matter or group of related matters. (6) A proxy shall provide a means for the security holder to specify that the securities registered in the name of the security holder shall be voted or withheld from voting in respect of the appointment of an auditor or the election of directors. (7) A proxy or an information circular shall state that the securities represented by the proxy will be voted or withheld from voting in accordance with the instructions of the security holder on a ballot that may be called for and that, if the security holder specifies a choice under subsection (4) or (6), with respect to any matter to be acted upon, the securities shall be voted accordingly. 58/91 s151 Back to Top Effect of proxy 152. A proxy may confer discretionary authority with respect to (a) amendments or variations to matters identified in the notice of meeting; and (b) other matters which may properly come before the meeting where (c) the person or company by whom or on whose behalf the solicitation is made is not aware within a reasonable time prior to the time the solicitation is made that amendments, variations or other matters are to be presented for action at the meeting; and (d) a specific statement is made in the information circular or in the form of proxy that the proxy is conferring such discretionary authority. 58/91 s152 Back to Top Limit on proxy 153. A proxy shall not confer authority to vote (a) for the election of a person or company as a director of a reporting issuer unless as a genuine proposed nominee for the election is named in the information circular; or (b) at a meeting other than the meeting specified in the notice of meeting or an adjournment thereof. 58/91 s153 Back to Top Copy of proxy 154. Every person or company that sends or delivers an information circular or proxy to security holders of a reporting issuer shall immediately file a copy of the information circular, proxy and all other material sent or delivered by the person or company in connection with the meeting to which the information circular or proxy relates. 58/91 s154 Back to Top Certification of circular 155. The certification of every information circular required to be filed under section 82 of the Act shall be evidenced by the manual or facsimile signature of the officer or director referred to in paragraph 139(b). 58/91 s155 PART IX TAKE-OVER BIDS AND ISSUER BIDS Back to Top Interpretation 156. (1) In this section (a) "formal valuation" means a valuation prepared by a qualified and independent valuer based upon techniques that are appropriate in the circumstances, after considering going concern or liquidation assumptions or both, together with other relevant assumptions, that arrives at an opinion as to a value or range of values for the participating securities based upon the analysis without downward adjustments to reflect the fact the participating securities do not form part of a controlling interest; (b) "going private transaction" means an amalgamation, arrangement, consolidation or other transaction proposed to be carried out by an insider of an issuer as a consequence of which the interest of the holder of a participating security of the issuer in that security may be terminated without the consent of that holder and without the substitution therefor of an interest of equivalent value in a participating security of the issuer or of a successor to the business of that issuer or of another issuer that controls the issuer but does not include the acquisition of participating securities pursuant to a statutory right of acquisition; (c) "insider" means (i) every director or senior officer of an issuer, (ii) every director or senior officer of a company that is itself an insider or subsidiary of an issuer, (iii) a person or company who beneficially owns, directly or indirectly, voting securities of an issuer or who exercises control or direction over voting securities of an issuer or a combination of both carrying more than 10% of the voting rights attached to all voting securities of the issuer for the time being outstanding other than voting securities held by the person or company as underwriter in the course of a distribution, and (iv) an issuer where it has purchased, redeemed or otherwise acquired its securities, for so long as it holds its securities; (d) "insider bid" means a take-over bid made by an insider of the offeree issuer or by an associate or affiliate of an insider of an offeree issuer; (e) "participating security" means a security that carries the right to participate in earnings to an unlimited degree including a security that by its term is convertible into or exchangeable for or carries the right to purchase such a security; (f) "prior valuation" means an existing independent appraisal or valuation or any material non-independent appraisal or valuation in respect to an issuer, its material assets or its securities. (2) Every take-over bid circular and issuer bid circular to which this subsection applies shall contain, except where the offeror establishes to the superintendent's satisfaction that the offeror lacks access to information enabling the offeror to comply with this subsection, and subject to a waiver or variation consented to in writing by the superintendent, (a) a summary of a formal valuation of the offeree issuer; (b) an outline of every prior valuation of the offeree issuer made within 24 months preceding the date of the take-over bid including a description of the source and circumstances under which it was made. (3) This section applies only to (a) a take-over bid circular that is required by the Act in respect of an insider bid; (b) a take-over bid circular that is required by the Act where it is anticipated by the offeror that a going private transaction will follow the take-over bid; or (c) an issuer bid circular that is required by the Act. (4) Subject to subsection (5), a formal valuation referred to in paragraph (2)(a) shall be as of a date that is not more than 120 days before the date of the take-over bid or issuer bid and shall contain appropriate adjustments for material intervening events. (5) A formal valuation referred to in paragraph (2)(a) may be as of a date that is more than 120 days before the date of the take-over bid or issuer bid if it is accompanied by a letter addressed to the directors of the issuer confirming that the valuer has no reasonable ground to believe that an intervening event has materially affected the value or range of values determined in the valuation or, if there has been such an event, describing it and stating the resultant change in the value or range of values in the valuation. (6) Where the superintendent is of the opinion that disclosure of information required by subsection (2) to be provided to the holders of securities would cause a detriment to the offeree issuer or the security holders of the offeree issuer that would outweigh the benefit of the information to the prospective recipients, the superintendent may permit the omission of the information. (7) A formal valuation referred to in paragraph (2)(a) and a letter of confirmation referred to in subsection (5) shall be filed concurrently with the filing of the circular in which reference to the valuation is made except where the superintendent otherwise permits. 58/91 s156; 14/06 s74 Back to Top Market price 157. (1) For the purpose of Part XIX of the Act, "market price" of a class of securities, as to which there is a published market, at any date, is an amount equal to the simple average of the closing price of securities of that class for each of the business days on which there was a closing price falling not more than 20 business days before that date. (2) Where a published market does not provide a closing price, but provides only the highest and lowest prices of securities traded on a particular day, the market price of the securities, at any date, is an amount equal to the average of the simple averages of the highest and lowest prices for each of the business days on which there were highest and lowest prices falling not more than 20 business days before that date. (3) Where there is more than one published market for a security, the market price for the purposes of subsections (1) and (2) shall be determined as follows: (a) if only one of the published markets is in Canada , the market price shall be determined solely by reference to that market; (b) if there is more than one published market in Canada, the market price shall be determined solely by reference to the published market in Canada on which the greatest volume of trading in the particular class of securities occurred during the 20 business days preceding the date as of which the market price is being determined; (c) if there is no published market in Canada, the market price shall be determined solely by reference to the published market on which the greatest volume of trading in the particular class of securities occurred during the 20 business days preceding the date as of which the market price is being determined. (4) Where there has been trading of securities in a published market for fewer than 10 of the 20 business days preceding the date as of which the market price of the securities is being determined, the market price shall be the average of the following prices established for each of the 20 business days preceding that date, (a) the average of the bid and asking prices for each day on which there was no trading; and (b) the closing price of securities of the class for each day that there has been trading, if the published market provides a closing price; or (c) the average of the highest and lowest prices of securities of that class for each day that there has been trading, if the published market provides only the highest and lowest prices of securities traded on a particular day. (5) Notwithstanding subsection (1), (2), (3) or (4), for the purpose of paragraph 94(1)(b) of the Act, where an offeror acquires securities on a published market, the market price for those securities shall be the price of the last board lot of securities of that class purchased, before the acquisition by the offeror, by a person or company that was not acting jointly or in concern with the offeror. 58/91 s157 Back to Top Take-over bid 158. A take-over bid is exempt from sections 96 to 101 of the Act for securities in respect of which there is no published market if (a) purchases are made from not more than 5 persons or companies in the aggregate, including persons or companies outside of the province; and (b) the bid is not made generally to security holders of the class of securities that is the subject of the bid. 58/91 s158 Back to Top Subsection 95(2) of Act 159. (1) Subsection 95(2) of the Act is not applicable to an agreement between a security holder and an offeror to the effect that the security holder will tender the security holder's securities to a formal take-over bid made by the offeror in accordance with the terms and conditions of the bid. (2) Subsection 95(8) of the Act does not apply to prohibit the issue of securities by an issuer pursuant to a stock dividend plan, dividend reinvestment plan, employees' stock purchase plan or other similar plan, notwithstanding that the issuer is making an issuer bid. (3) For the purpose of paragraph 95(1)(c) of the Act, an associate of a security holder referred to in that paragraph does not include a person or company who is not acting jointly or in concert with the security holder. 58/91 s159 Back to Top Subsection 95(5) of Act 160. Subsection 95(5) of the Act does not apply so as to affect the consideration offered or the number of securities offered to be acquired under a formal take-over bid where the prior transaction was an acquisition pursuant to a distribution as defined in subparagraph 2(1)(l)(i) or (ii) of the Act. 58/91 s160 Back to Top Form of notice 161. (1) A notice of intention to make an issuer bid as required by paragraph 94(3)(f) of the Act shall contain the information prescribed in Form 30. (2) A notice of intention referred to in subsection (1) shall be filed and a press release in respect thereof issued at least 5 days before the commencement of the issuer bid. 58/91 s161 Back to Top Press release 162. A press release that is required by paragraph 95(3)(c) of the Act shall disclose in respect to the class of securities subject to the bid and each class of securities convertible into securities of that class purchased through the facilities of the stock exchange (a) the name of the purchaser; (b) where the purchaser is a person or company referred to in paragraph 95(1)(b) or (c) of the Act, the relationship of the purchaser and the offeror; (c) the number of securities purchased by the purchaser on that day; (d) the highest price paid for the securities by the purchaser on that day; (e) the aggregate number of securities purchased through the facilities of the stock exchange by the purchaser during the currency of the bid;

(f) the average price paid for the securities that were purchased by the purchaser through the facilities of the stock exchange during the currency of the bid; and (g) the total number of securities owned by the purchaser as of the close of business of the stock exchange on that day. 58/91 s162 Back to Top Take-over bid circular 163. A take-over bid circular shall contain the information prescribed in Form 31. 58/91 s163 Back to Top Issuer bid circular 164. An issuer bid circular shall contain the information prescribed in Form 32. 58/91 s164 Back to Top Directors' circular 165. A directors' circular shall contain the information prescribed in Form 33. 58/91 s165 Back to Top Director's circular 166. A director's or officer's circular shall contain the information prescribed in Form 34. 58/91 s166 Back to Top Notice of change 167. A notice of change or variation in respect of a take-over bid or issuer bid as required by subsection 99(2) of the Act shall contain (a) a description of the change in the information contained in the circular or of the variation in the terms of the take-over bid or the issuer bid; (b) the date of the change in the information contained in the circular or the variation in the terms of the bid; (c) the date up to which securities may be deposited; (d) the date by which securities deposited must be taken up by the offeror; and (e) the rights of withdrawal that are available to security holders, and shall include a certificate duly signed and in the form required under Form 31 in the case of a take-over bid or Form 32 in the case of the issuer bid, amended to refer to the initial circular and all notices of change or variation thereto. 58/91 s167 Back to Top Description of change required 168. A notice of change in respect of the information contained in a directors' circular or a director's or officer's circular as required by subsection 100(6) of the Act shall contain a description of the change in the information contained in the circular and shall include a certificate, duly signed and in the form required under Form 33 or 34, amended to refer to the initial directors' or director's or officer's circular and all notices of change thereto. 58/91 s168 Bid variation 168A. (1) A variation in the terms of a bid may not be made after the expiry of the deposit period, except the waiver by the offeror of a condition that is specifically stated in the bid as being waivable at the sole option of the offeror. (2) Section 99 of the Act does not apply so as to require a notice of variation with respect to a waiver referred to in subsection (1) after the deposit period where the consideration offered for the securities that are subject to the bid consists solely of cash, but a press release with respect to the waiver must be issued within 5 days after the deposit period. (3) In this section, "deposit period" means the period, including an extension, during which securities may be deposited pursuant to the bid. 58/91 s168A Consent of solicitor, et al 168B. The consent of every solicitor, auditor, accountant, engineer, appraiser or another person or company whose profession or business gives authority to a statement made by the person or company to the use of a report, appraisal or statement of the person or company included in or accompanying a take-over bid circular, issuer bid circular, directors' circular, director's or officer's circular or a notice of change or variation to the foregoing shall be filed with the superintendent. 58/91 s168B; 14/06 s75 Press release authorization 168C. (1) A press release required under section 102 of the Act shall be authorized by a senior officer of the offeror and shall set out, in respect of the class of securities subject to the bid and each class of voting or equity securities into which the securities of the class subject to the bid are convertible, (a) the name of the offeror; (b) the number of securities over which the offeror and a person or company acting jointly or in concert with the offeror acquired ownership or control or direction as a result of the transaction or occurrence giving rise to the report; (c) the ownership of or control and direction by the offeror and a person or company acting jointly or in concert with the offeror over the securities immediately after the transaction or occurrence giving rise to the report; (d) the name of the market wherein the transaction or occurrence took place; (e) the purpose of the offeror and a person or company acting jointly or in concert with the offeror in effecting the transaction, including a future intention to increase the beneficial ownership, control or direction of the offeror and a person or company acting jointly or in concert with the offeror over securities of the offeree issuer; (f) where applicable, a description of a change in any material fact set out in a previous report under section 102 of the Act; and (g) the names of the persons or companies acting jointly or in concert with the offeror in connection with the disclosure required by paragraph (b), (c) or (d). (2) A report required under section 102 of the Act shall be signed by the offeror and shall include the information that is required in subsection (1). 58/91 s168C Press release authorization 168D. A press release required under section 103 of the Act shall be authorized by a senior officer of the offeror and shall include in respect to the class of securities subject to the bid and each class of securities into which the securities of the class are subject to the bid are convertible (a) the name of the offeror issuing the release; (b) the number of securities acquired by or over which the offeror and every person acting jointly or in concert with the offeror has acquired control or direction since the commencement of the bid; (c) the number of securities held by or over which the offeror and every person acting jointly or in concert with the offeror exercised control or direction after the transaction or occurrence giving rise to the press release; (d) the market where the transaction or occurrence took place; and (e) the purpose of the offeror and a person acting jointly or in concert with the offeror in effecting the transaction, including a future intention to increase the beneficial ownership, control or direction of the offeror and a person acting jointly or in concert with the offeror over securities of the offeree issuer. 58/91 s168D Joint action 168E. Where an offeror and one or more persons or companies acting jointly or in concert with the offeror are required to file or issue a report or press release under section 102 or 103 of the Act, and where a report or press release filed or issued by the offeror discloses the information as to a person or company acting jointly or in concert that is required by section 168C or 168D, the person or company need not file a separate report or press release. 58/91 s168E Statement of rights 168F. (1) Every take-over bid circular, issuer bid circular, directors' circular and director's or officer's circular and a notice of change or variation to any such circular shall contain a statement of the rights provided by section 131 of the Act relating to that document. (2) If the take-over bid or issuer bid is made in the province and in another province or territory of Canada , inclusion in a circular or notice of the following statement shall be deemed to be in compliance with subsection (1): Securities legislation in certain of the provinces and territories of Canada provides security holders of the offeree issuer with, in addition to other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to the security holders. However, the rights must be exercised within prescribed time limits. Security holders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer. (3) If the take-over bid or issuer bid is made in the province only, inclusion in a circular or notice of the following statement shall be deemed to be in compliance with subsection (1): Securities legislation in the province provides security holders of the offeree issuer with, in addition to other rights they may have at law, rights of rescission or to damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to the security holders. However, the rights must be exercised within prescribed time limits. Security holders should refer to the applicable provisions of the province's securities legislation for particulars of those rights or consult with a lawyer. 58/91 s168F Presentation of information 168G. (1) The information contained in a circular or notice required under Part XIX of the Act shall be clearly presented and the statements made therein shall be divided into groups according to subject matter and the various groups of statements shall be preceded by appropriate headings. (2) The order of items in the appropriate form need not be followed. (3) Where practical and appropriate, information in a circular or notice shall be presented in tabular form. (4) All amounts required in a circular or notice shall be stated in figures. (5) Information required by more than one applicable item in the appropriate form need not be repeated. (6) No statement need be made in response to an item in the appropriate form that is inapplicable and negative answers to an item may be omitted except where expressly required by the applicable form. 58/91 s168G Alternative signature 168H. Where the superintendent is satisfied upon evidence or submissions made to him or her that a chief executive officer or chief financial officer is, for adequate cause, not available to sign a certificate or notice required to be filed under Part XIX of the Act, the superintendent may permit the certificate or notice to be signed by another responsible officer or director. 14/06 s76 Triplicate filing 168I. A circular or notice required under Part XIX of the Act shall be filed in triplicate on the same date that it is first sent to security holders of the offeree. 58/91 s168I PART X UNIVERSAL REGISTRATION Back to Top Interpretation 169. (1) In this Part (a) "designated institution" means (i) a financial intermediary, (ii) the Federal Business Development Bank, (iii) a subsidiary of a company referred to in subparagraph (i) or (ii), where the company beneficially owns all of the voting securities of the subsidiary, (iv) the Government of Canada or a province or territory of Canada , (v) a municipal corporation or public board or commission in Canada , (vi) a mutual fund, other than a private mutual fund, having net assets of at least $5,000,000, (vii) a trusteed pension plan or fund sponsored by an employer for the benefit of its employees and having net assets of at least $5,000,000, (viii) a registered dealer, (ix) a company or person, other than an individual, recognized by the superintendent as an exempt purchaser, (x) a person or company deemed to be a designated institution under subsection (2); (b) "foreign security" means (i) a security, whether or not it is an interlisted security, issued by an issuer incorporated, formed or created under the laws of a jurisdiction other than Canada or a province or territory of Canada, (ii) a security issued by a country other than Canada or by a political division of the country, (iii) a security designated by the superintendent under subsection (3) as a foreign security, but does not include a security designated by the superintendent under subsection (3) as a security that is not foreign security; (c) "fully registered dealer" means a registered dealer described in paragraph 86(a), (e) or (i); (d) "interlisted security" means a listed security that is listed and posted or otherwise available for trading on a stock exchange outside Canada, or other organized market outside Canada recognized by the superintendent for the purposes of this Part; (e) "listed security" means a security listed and posted or accepted, conditionally or otherwise, for listing and posting on a stock exchange, or other organized market, in Canada recognized by the superintendent for the purposes of this Part; (f) "market intermediary" means a person or company that engages or holds himself, herself or itself out as engaging in the province in the business of trading in securities as principal or agent, other than trading in securities purchased by the person or company for his, her or its own account for investment only and not with a view to resale or distribution, and includes a person or company that engages or holds himself, herself or itself out as engaging in the business of (i) entering into agreements or arrangements with underwriters or issuers, in connection with distributions of securities, to purchase or sell the securities, (ii) participating in distributions of securities as a selling group member, (iii) making a market in securities, or (iv) trading in securities with accounts fully managed by the person or company as agent or trustee, whether or not the person or company engages in trading in securities purchased for investment only; (g) "non-resident" means a non-resident as defined in section 176; (h) "selling group member" means, in respect of a distribution, a person or company whose interest in the distribution is limited to receiving the usual and customary distributor's or seller's commission payable by an underwriter or issuer. (2) Where a portfolio manager or financial intermediary, acting as a trustee or agent for a person or company whose account is fully managed by it, purchases or sells securities on behalf of the person or company, the person or company shall be deemed to be a designated institution. (3) The superintendent may designate a security as a foreign security or designate a security not to be a foreign security where, in the opinion of the superintendent, it is appropriate that the security be so designated because of the manner in which the issuer carries on its business or because of the relationships among the issuer and its affiliates. 58/91 s169; 14/06 s77 Back to Top Indirect trade prohibited 170. Where this Part does not permit an unregistered market intermediary or a registered dealer to trade directly with a person or company, the unregistered market intermediary or registered dealer shall not arrange to trade indirectly with such a person or company by trading through another person or company with whom the unregistered market intermediary or registered dealer is permitted to trade, whether the other person or company is acting as principal or agent. 58/91 s170 Back to Top Limited market dealer registration 171. (1) A limited market dealer may act as market intermediary solely for the purpose of trading in respect of which registration was not required under the Act and these regulations on the day of proclamation of the Act. (2) A financial intermediary may not register as a limited market dealer. (3) The conditions of registration applicable to a limited market dealer and to the salespersons, partners and officers of a limited market dealer shall be those applicable to an investment dealer and to the salespersons, partners and officers of an investment dealer, respectively. (4) The superintendent may vary subsection (3) as it applies to a limited market dealer or salesperson, partner or officer of a limited market dealer if the superintendent is satisfied that the variation would be consistent with restrictions as to trading activities applicable to the limited market dealer and that to do so would not be prejudicial to the public interest. 58/91 s171; 14/06 s78 Back to Top International dealer registration 172. (1) An international dealer may act as a market intermediary solely for the purposes of (a) carrying on in the province those activities, other than sales of securities, that are reasonably necessary to facilitate a distribution of securities that are offered primarily abroad; (b) trading with a designated institution in debt securities in the course of a distribution, where the debt securities are offered primarily abroad and otherwise than by means of a prospectus prepared and filed in accordance with the Act; (c) trading with a designated institution in debt securities, except in the course of the distribution by which they were issued; (d) trading with a designated institution in foreign securities, except in the course of a distribution by means of a prospectus prepared and filed in accordance with the Act; and (e) trading with a broker, foreign dealer or investment dealer in any securities, and only if the international dealer is acting as principal or as agent for the issuer of the securities, another designated institution or a non-resident. (2) A person or company may not register as an international dealer unless the person or company carries on the business of a dealer and underwriter in a country other than Canada . (3) An international dealer shall file with the commission such reports as to trading in securities as the superintendent may require. (4) Subsection (3) does not apply to an international dealer that is affiliated with a fully registered dealer, a foreign dealer or a financial intermediary dealer, if the affiliated dealer files the reports in respect of the international dealer that are required by that subsection. (5) The salespersons, partners and officers of an international dealer are exempt from the registration requirements of the Act and these regulations in respect of trading in securities on behalf of the international dealer in accordance with subsection (1). 58/91 s172; 14/06 s79 Back to Top Financial intermediary dealer registration 173. (1) A financial intermediary dealer may act as a market intermediary solely for the purposes of (a) trading as principal or agent in securities referred to in subparagraphs 36(2)(a)(i), (ii), (iv) and (v) of the Act; (b) trading as principal or agent in securities referred to in paragraph 36(2)(d) of the Act so long as the trade is made in accordance with that paragraph; (c) trading as principal or agent in debt securities of the financial intermediary including, (i) in the case of an insurance company licensed under the Insurance Companies Act, contracts of insurance, and (ii) in the case of a trust company licensed under the Trust and Loan Companies Licensing Act, certificates or receipts issued for money received for guaranteed investment; (d) trading as principal or agent in debt securities of an affiliate of the financial intermediary that are guaranteed by the financial intermediary; (e) trading as principal or agent in other debt securities if the trading does not constitute distributing the debt securities; (f) trading as principal or agent in syndicated or consortium loans, other than loans that are distributed by means of a prospectus; (g) trading as principal or agent in shares or units of mutual funds if the shares or units are sold to a pension plan, deferred profit sharing plan, retirement savings plan or other similar capital accumulation plan maintained by the sponsor of the plan for its employees and the employees deal only with the sponsor in respect of their participation in the plan and the purchases of the shares or units by the plan; (h) trading as principal or agent with or for accounts fully managed by the financial intermediary as agent or trustee; (i) taking as agent for a person or company an unsolicited order to purchase or sell securities other than debt securities for execution by a registered dealer; and (j) participating with a registrant in a networking arrangement, as defined in subsection 183(1), in which the registrant may participate under section 193. (2) For the purpose of paragraph 173(1)(i), an order to purchase or sell securities is not unsolicited where it is placed with a financial intermediary that advertises or otherwise promotes, or an affiliate of which advertises or otherwise promotes, the service of executing the orders or of acting as an adviser. (3) Subject to subsection (9), a financial intermediary dealer may not act as an adviser. (4) Only a financial intermediary may register as a financial intermediary dealer. (5) Sections 95 to 100 do not apply to a financial intermediary dealer. (6) A financial intermediary dealer shall file with the superintendent the reports as to trading in securities as the superintendent may require. (7) Subject to subsection (8), the salespersons and officers of a financial intermediary dealer are exempt from the registration requirements of the Act with respect to trading in securities on behalf of the financial intermediary dealer under subsection (1). (8) The superintendent may vary the provisions of these regulations (a) as they apply to a financial intermediary dealer, including by imposing additional conditions of registration on it, if the superintendent is of the opinion that the varied conditions are sufficient or necessary to create and maintain supervisory and control procedures with respect to officers and salespersons of the financial intermediary dealer that achieve an adequate level of investor protection; and (b) as they apply to the salespersons and officers of a financial intermediary dealer by imposing conditions of registration on them if the superintendent is of the opinion that the conditions are necessary to achieve an adequate level of investor protection. (9) The superintendent may vary the provisions of these regulations to permit a financial intermediary dealer to act as an adviser subject to the conditions of registration applicable to advisers and their officers as the superintendent may impose. (10) Notwithstanding another provision of the Act or these regulations, a financial intermediary regulated by the federal Office of the Superintendent of Financial Institutions and the officers and salespersons of the financial intermediary (a) are not required to obtain registration as a dealer or as officers and salespersons of a dealer, respectively, for the purpose of trading as described in paragraphs (1)(a) to (j); and (b) are not required to obtain registration as an adviser or as officers of an adviser, respectively, for the purpose of acting as an adviser in accordance with the legislation of the Parliament of Canada governing the financial intermediary. 58/91 s173; 14/06 s80 Back to Top Foreign dealer registration 174. (1) A foreign dealer may act as a market intermediary solely for the purposes of trading on a stock exchange in Canada recognized by the superintendent for the purpose of this Part and of which the foreign dealer is a member where the trade is made as principal or as agent for (a) a designated institution; (b) an employee of the foreign dealer; (c) a non-resident; or (d) a vendor that is selling securities with aggregate net proceeds of disposition to the vendor of not less than $100,000 with another registered dealer that is a member of the stock exchange. (2) A person may not register as a foreign dealer. (3) A company may not register as a foreign dealer unless the company (a) is incorporated under the laws of Canada or a province or territory of Canada ; (b) is controlled by a non-resident that carries on the business of a dealer or underwriter in a country other than Canada ; and (c) is a member of a stock exchange in Canada recognized by the superintendent for the purpose of this Part or is a member, branch office member or associate member of a body recognized under section 20 of the Act of Canada. (4) The conditions of registration applicable to a foreign dealer and its salespersons and officers shall be those applicable to an investment dealer and its salespersons and officers, respectively. 58/91 s174; 14/06 s81 Back to Top Exemption 175. The superintendent may exempt a person or company from the requirements of a provision of this Part where he or she is satisfied that to do so would not be prejudicial to the public interest and, in granting the exemption, the superintendent may impose the terms and conditions that are considered necessary. 58/91 s175; 14/06 s82 PART XI DEALER OWNERSHIP RESTRICTIONS Back to Top Interpretation 176. (1) In this Part (a) "non-resident" means (i) an individual who is not a resident Canadian, (ii) a company incorporated under the laws of a jurisdiction other than Canada or a province or territory of Canada , (iii) a person, other than an individual, formed or created under the laws of a jurisdiction other than Canada or a province or territory of Canada , (iv) a person or company controlled, directly or indirectly, by a person or company or a combination of persons and companies referred to in subparagraphs (i), (ii) and (iii) or any of them, (v) a person or company designated by the superintendent as a non-resident in accordance with section 179, but does not include a person or company designated by the superintendent not to be a non-resident in accordance with section 179; (b) "parent company" means, in respect of a dealer, a company that beneficially owns all of the voting securities and participating securities of the dealer, or where another company beneficially owns all of the voting securities and participating securities of that company, or a company in like relation thereto, the other company; (c) "participating security" means, in respect of a dealer, a security of the dealer that entitles the holder (i) to a dividend or other distribution of assets, otherwise than by way of return of capital, at a rate that is not fixed either in amount or by formula, (ii) to a dividend or other distribution of assets, otherwise than by way of return of capital, at a rate that is fixed by reference to a dividend or such a distribution of assets in respect of a security referred to in subparagraph (i), or (iii) to a dividend or other distribution of assets, otherwise than by way of return of capital, or to payment of interest, at a rate calculated by reference to the earnings, income or profits of the dealer, whether calculated on a before-tax or after-tax basis, whether or not the security also entitles the holder to a dividend, a distribution of assets or payment of interest at a rate or in an amount that is otherwise fixed either in amount or by formula; (d) "resident Canadian" means an individual who is (i) a Canadian citizen ordinarily resident in Canada , (ii) a permanent resident within the meaning of the Immigration Act (Canada) and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship, or (iii) a Canadian citizen not ordinarily resident in Canada who is a full-time employee of a company that is a subsidiary of a registered dealer of which more than 50% of each class and series of the voting securities or participating securities are beneficially owned and over which control and direction are exercised by resident Canadians, where the principal reason for the residence outside Canada is to act as such an employee. (2) This Part applies to underwriters as if a reference to a dealer were a reference to an underwriter. (3) For the purpose of subparagraph (iv) of the definition of "non-resident", (a) control includes control in fact, whether through another person or company or otherwise; and (b) a company or person, other than an individual, shall be deemed to be controlled if, directly or indirectly, a person or company or combination of persons and companies referred to in subparagraphs (i), (ii) and (iii) of the definition, or any of them, beneficially own, or exercise control or direction over, more than 33 1/3% of a class or series of voting securities or participating securities of the company or person. (4) For the purpose of this Part, a mutual life insurance company licensed under the Insurance Companies Act that is incorporated under the laws of Canada or a province or territory of Canada and has its head office in Canada and at least 75% of the directors of which are Canadian citizens ordinarily resident in Canada shall be deemed not to be a non-resident. 58/91 s176; 14/06 s83 Back to Top Non-resident ownership 177. (1) A registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada . (2) Subsection (1) does not apply to an international dealer or security issuer. 58/91 s177 Back to Top Ownership of securities 178. For the purpose of this Part (a) a non-resident who is an individual shall be considered to own beneficially all of the securities owned beneficially, or over which control or direction is exercised, by another individual of the opposite sex to whom the non-resident is married or with whom the non-resident is living in a conjugal relationship outside marriage and a relative of the non-resident, or of that other individual, who has the same home as the non-resident; and (b) if a security is owned by more than one owner and one or more of the owners is a non-resident, the security shall be deemed to be wholly owned by the non-resident. 58/91 s178 Back to Top Regulations may be varied 179. The superintendent may vary the provisions of these regulations as they apply to a person or company by designating the person or company to be a non-resident or not to be a non-resident where, in the opinion of the superintendent, it is appropriate that the person or company be so designated because of the manner in which the person or company carries on its business. 58/91 s179; 14/06 s84 Back to Top Right to be heard 180. The superintendent shall not make a designation under section 179 without first giving the registered dealer and the person or company affected an opportunity to be heard. 58/91 s180; 14/06 s84 Back to Top Notice of ownership 181. (1) A registered dealer that knows or has reason to believe that a person or company either alone or in combination with another person or company is about to acquire, directly or indirectly, beneficial ownership of, or to exercise control or direction over, 10% or more of a class or series of voting securities of the dealer shall immediately give written notice of the fact to the superintendent together with the name of each person and company involved. (2) A registered dealer that knows or has reason to believe that a person or company either alone or in combination with another person or company has acquired, directly or indirectly, beneficial ownership of, or is exercising control or direction over, 10% or more of a class or series of voting securities of the dealer shall immediately give written notice of the fact together with the name of each person or company involved. (3) Subsections (1) and (2) do not apply to a financial intermediary dealer, international dealer or securities issuer. (4) Subsection (2) does not apply if notice in respect of the person or company or combination of persons and companies has been given previously under subsection (1). 58/91 s181; 14/06 s85 Back to Top Miscellaneous 182. The superintendent may exempt a person or company from the requirements of a provision of this Part where he or she is satisfied that to do so would not be prejudicial to the public interest and in granting the exemption the commission may impose the terms and conditions as are considered necessary. 58/91 s182; 14/06 s86 PART XII CONFLICTS OF INTEREST Back to Top Interpretation 183. (1) In this Part (a) "connected issuer" means, in respect of the registrant, an issuer that has, or a related issuer of which has, an indebtedness to or other relationship with the registrant, a related issuer of the registrant or a director, officer or partner of the registrant or a related issuer of the registrant that, in connection with a distribution of securities of the issuer, is material to a prospective purchaser of the securities; (b) "designated institution" means a designated institution as defined in section 169; (c) "influence" means, in respect of a person or company, having the power, directly or indirectly, to exercise a controlling influence over the management and policies of the company or person, other than an individual, or the activities of an individual, whether alone or in combination with one or more other persons or companies and whether through the beneficial ownership of voting securities, through one or more other persons or companies or otherwise; (d) "networking arrangement" means an arrangement between a registrant, including a financial intermediary dealer, and a financial intermediary, whether or not a registrant, under which the registrant (i) offers for sale or sells to the public a combination of securities and goods or services, a portion of which consists of securities, goods or services issued or provided by the financial intermediary, or (ii) co-operates with the financial intermediary in the joint offering for sale or sale of securities and goods or services, including by paying the financial intermediary or its employees a commission for referring to the registrant a customer or client to whom the registrant sells securities or services, but does not include trades in, or purchases of, securities of the financial intermediary by the registrant on the same basis on which the registrant trades in the securities of issuers other than financial intermediaries; (e) "registrant" does not include an officer, partner or salesperson of a registrant; (f) "related issuer" means, in respect of a person or company, (i) another person or company that influences the person or company, (ii) another person or company that is influenced by the person or company, (iii) another person or company in like relation to a person or company referred to in paragraph (a) or (b) or another person or company, or (iv) another person or company designated by the superintendent as a related issuer of the person or company in accordance with subsection 184(1); (g) "security" includes, in respect of an issuer, (i) a put, call, option or other right or obligation to purchase or sell securities of the issuer, and (ii) a security of another issuer, all or substantially all of the assets of which are securities of the issuer; (h) "selling group member" means a selling group member as defined in section 169; (i) "statement of policies" means a statement of policies prepared, revised or amended and filed with the superintendent under section 187. (2) For the purpose of the definition of "connected issuer" in connection with a distribution of securities of an issuer, indebtedness of the issuer or another relationship with the issuer is material to a prospective purchaser of the securities if (a) there is a likelihood that a reasonable prospective purchaser would consider the indebtedness or other relationship important under the circumstances in determining whether to purchase the securities; or (b) the indebtedness or other relationship under the circumstances may lead a reasonable prospective purchaser to question whether the registrant and the issuer are independent of each other, whether or not the indebtedness or other relationship is a material fact. (3) For the purposes of the definitions of "connected issuer" and "related issuer", an issuer is not a connected issuer of a registrant or a related issuer of a registrant only by reason of the fact that the registrant, acting as an underwriter, owns securities of the issuer in the course of a distribution and in the ordinary course of business of the registrant. (4) For the purpose of the definition of "influence" in respect of a company or person, other than an individual, another person or company that, directly or indirectly and whether alone or in combination with one or more other persons or companies, beneficially owns or exercises control or direction over more than 20% of a class or series of voting securities of the company or person, other than an individual, in the absence of evidence to the contrary, shall be deemed to influence the company or person. 58/91 s183; 14/06 s87 Back to Top Provisions may be varied 184. (1) The superintendent may vary the provisions of this Part as they apply to a person or company by designating the person or company to be a related issuer of a registrant where, in the opinion of the superintendent, it is appropriate that the person or company be so designated because of the manner in which the person or company carries on its business with the registrant or a related issuer of the registrant. (2) The superintendent shall not make a designation under subsection (1) without first giving the registrant and the person or company affected an opportunity to be heard. 58/91 s184; 14/06 s88 Back to Top General duties 185. Every registrant shall deal fairly, honestly and in good faith with its customers and clients. 58/91 s185 Back to Top Treatment of customers 186. (1) Every officer, partner, salesperson and registered director of a registrant shall deal fairly, honestly and in good faith with its customers and clients of the registrant. (2) An individual referred to in subsection (1) shall not act on behalf of the registrant in connection with a transaction or other act of the registrant that is not in compliance with this Part. 58/91 s186 Back to Top Statement of policies 187. (1) Every registrant shall prepare and file with the superintendent a statement of policies that contains (a) a full and complete statement of the policies of the registrant regarding the activities in which it is prepared to engage as an adviser, dealer and underwriter in respect of securities of the registrant and related issuers of the registrant and, in the course of a distribution, of securities of connected issuers of the registrant; (b) a list of related issuers of the registrant that are reporting issuers or that have distributed securities outside the province on a basis that, if they had done so in the province, would have made them reporting issuers; (c) a concise statement of the relationship between the registrant and each of the related issuers of the registrant referred to in paragraph (b); and (d) the following note, or an expanded version of it, in a conspicuous position and in bold face type not less legible than that used in the body of the statement of policies: The securities laws of the province require securities dealers and advisers, when they trade in or advise with respect to their own securities or securities of certain other issuers to which they, or certain other parties related to them, are related or connected, to do so only in accordance with particular disclosure and other rules. These rules require dealers and advisers, prior to trading with or advising their customers or clients, to inform them of the relevant relationships and connections with the issuer of the securities. Clients and customers should refer to the applicable provisions of these securities laws for the particulars of these rules and their rights or consult with a legal adviser. (2) A registrant shall provide to each of its customers and clients, free of charge, a copy of its statement of policies at the time at which the customer or client becomes a customer or client of the registrant or by December 31, 1991 , whichever is later. (3) In the event of a significant change in the information required to be contained in the statement of policies of a registrant, the registrant shall (a) immediately prepare and file with the superintendent a revised version of, or amendment to, the statement of policies; and (b) provide to each of its customers and clients a copy of the revised version or amendment either (i) within 45 days of the filing, or (ii) promptly after the first trade by the registrant with or on behalf of the customer or client or the first time at which the registrant acts as an adviser to the client, whichever is earlier. (4) Notwithstanding subsection (1), a registrant that does not engage in activities as an adviser, dealer or underwriter in respect of securities of the registrant or of related issuers of the registrant or, in the course of a distribution, in respect of the securities of connected issuers of the registrant is not required to prepare or file a statement of policies if it files with the superintendent a statement that it does not engage in the activities and an undertaking that it will not engage in the activities except in compliance with this Part. 58/91 s187; 14/06 s89 Back to Top Limitations on underwriting 188. (1) A registrant shall not act as an underwriter or selling group member in connection with a distribution of securities of the registrant or a related issuer or connected issuer of the registrant unless (a) the distribution is made by means of a prospectus prepared and filed in accordance with the Act or other document that contains the information required by items 5, 29a and 29b of Form 12; and (b) in the case of a distribution made by means of a prospectus prepared and filed in accordance with the Act, the portion of the distribution underwritten by at least one other registrant in respect of which the issuer is not a related issuer or connected issuer is not less than the aggregate of the portions of the distribution underwritten by the registrant and each other registrant in respect of which the issuer is a related issuer or connected issuer. (2) Paragraph (1)(a) does not apply in the case of (a) a distribution, otherwise than by means of a prospectus prepared and filed in accordance with the Act, in which all of the purchasers are related issuers of the registrant purchasing as principal but not as underwriters; or (b) a distribution as referred to in paragraph 73(7)(b) of the Act. (3) Paragraph (1)(b) does not apply to a distribution in which all of the purchasers are related issuers of the registrant purchasing as principal but not as underwriter. 58/91 s188 Back to Top Limitations on trading 189. (1) A registrant, as principal or agent, shall not (a) trade in securities of the registrant or of a related issuer of the registrant with or on behalf of a customer of the registrant; or (b) purchase securities of the registrant or of a related issuer of the registrant from or on behalf of a customer of the registrant. (2) Subsection (1) does not apply if (a) before entering into a contract for the sale or purchase of the securities and before accepting payment or receiving a security or other consideration under or in anticipation of a contract, the registrant makes to the customer a concise statement, either orally or in writing, of the relationship between the registrant and the issuer of the securities; (b) the customer is (i) a fully registered dealer that is trading or purchasing as principal, or (ii) a related issuer of the registrant that is trading or purchasing as principal; or (c) the trade is a distribution other than as referred to in paragraph 73(7)(b) of the Act. 58/91 s189 Back to Top Confirmation and reporting of trades 190. (1) The written confirmation required by subsection 37(1) of the Act to be sent by a registrant in connection with a sale or a purchase of securities shall, in the case of a sale or a purchase of securities of the registrant or a related issuer of the registrant or, in the course of a distribution, of securities of a connected issuer of the registrant, state that the securities are securities of the registrant, a related issuer of the registrant or a connected issuer of the registrant. (2) If a registrant sends or delivers to a customer or client a report, other than the written confirmation referred to in subsection (1), of any trades in securities that the registrant has made with or on behalf of the customer or client, including a report of trades made by or at the direction of a registrant acting as a portfolio manager, the report shall, in respect of trades in securities of the registrant or a related issuer of the registrant or, in the course of a distribution, in respect of securities of a connected issuer of the registrant, state that the securities are securities of the registrant, a related issuer of the registrant or a connected issuer of the registrant. 58/91 s190 Back to Top Limitations on advising 191. (1) A registrant shall not act as an adviser in respect of securities of the registrant or of a related issuer of the registrant or, in the course of a distribution, in respect of securities of a connected issuer of the registrant. (2) Subsection (1) does not apply, (a) in the case of a registrant, acting otherwise than as a portfolio manager, if the registrant, before advising the client, makes to the client a concise statement, either orally or in writing, of the relationship or connection between the registrant and the issuer of the securities; (b) in the case of a registrant acting as a portfolio manager, if the registrant, before acquiring discretionary authority in respect of the securities and once within each 12 month period thereafter, (i) provides the client with the statement of policies of the registrant, and (ii) secures the specific and informed written consent of the client to the exercise of the discretionary authority in respect of the securities; or (c) if the client is a fully registered dealer or related issuer of the registrant. (3) For the purpose of subparagraph (2)(b)(ii), (a) a general power to invest in the discretion of the portfolio manager does not constitute specific consent; and (b) consent is only informed if the portfolio manager believes and has reasonable grounds for believing that it is informed. 58/91 s191 Back to Top Limitations on recommendations 192. (1) A registrant shall not in a medium of communication recommend, or co-operate with another person in the making of a recommendation, that securities of the registrant or a related issuer of the registrant or, in the course of a distribution, that securities of a connected issuer of the registrant be purchased, sold or held. (2) Subsection (1) does not apply to a recommendation in a circular, pamphlet or similar publication that (a) is published, issued or sent by the registrant and is of a type distributed with reasonable regularity in the ordinary course of its business; (b) includes in a conspicuous position, in type not less legible than that used in the body of the publication, a full and complete statement of the relationship or connection between the registrant and the issuer of the securities and of the obligations of the registrant under subsection (1) and this subsection; (c) includes information similar to that set out in respect of the issuer of the securities in respect of a substantial number of the other persons or companies that are in the industry or business of the issuer of the securities; and (d) does not give materially greater space or prominence to the information set out in respect of the issuer of the securities than to the information set out in respect of another person or company described therein. (3) A registrant shall not publish, issue or send an advertisement, notice or other similar publication in respect of securities of a related issuer of the registrant or, in the course of a distribution, in respect of securities of a connected issuer of the registrant, unless the publication states in a conspicuous position in bold face, 12 point type, or such larger type as is required to ensure its prominence in the publication, that the issuer of the securities is a related issuer of the registrant or a connected issuer of the registrant. 58/91 s192 Back to Top Limitations on networking 193.

(1) A registrant that proposes to enter a networking arrangement with a financial intermediary, at least 30 days before entering the arrangement, shall give written notice to the superintendent providing all relevant facts to permit the superintendent to determine if the arrangement makes use of a means of offering for sale or selling securities, goods or services that is inconsistent with an adequate level of investor protection, or if the arrangement (a) is likely to give rise to conflicts of interest; or (b) is likely to hinder a registrant in complying with the conditions of registration applicable to it. (2) If, within 30 days of receipt of a notice under subsection (1), the superintendent gives a written notice of objection to the registrant, the registrant shall not enter the networking arrangement until the superintendent approves it. (3) The registrant, following receipt of a notice of objection under subsection (2), may request the superintendent to hold a hearing on the matter. 58/91 s193; 14/06 s90 Back to Top Exceptions 194. (1) This Part, other than sections 185 and 186, does not apply to a trading, purchasing of or advising with respect to securities referred to in subsection 36(2) of the Act, so long as registration is not required, except under Part X, to trade in the securities. (2) Sections 187 to 192 do not apply to a mutual fund dealer. (3) Sections 188 and 189 do not apply in respect of a trade where the registrant neither solicits the trade nor advises the customer or client in respect of it. (4) Sections 187, 189, 190 and 191, subsection 192(1) and section 193 do not apply to an international dealer. (5) Section 185 and subsection 186(1) apply to a financial intermediary dealer, an international dealer and a security issuer and their respective directors, officers, partners and salespersons but only in respect of trading in, purchasing of, and advising with respect to, securities. 58/91 s194 Back to Top Miscellaneous 195. A registrant shall file with the superintendent reports as to its activities in respect of its securities and of the securities of related issuers and connected issuers of the registrant as the superintendent may require. 58/91 s195; 14/06 s91 Back to Top Compliance conditions 196. The obligations imposed by sections 185 and 186 on a registrant or an officer, partner, salesperson or director of a registrant are not necessarily satisfied solely by virtue of compliance with the other applicable provisions of this Part. 58/91 s196 Back to Top Exemption of registrant 197. The superintendent may exempt a registrant from the requirements of a provision of this Part where he or she is satisfied that to do so would not be prejudicial to the public interest and in granting the exemption the superintendent may impose the terms and conditions that are considered necessary. 58/91 s197; 14/06 s92 Back to Top Offering memorandum prospectus 198. (1) An issuer may use an offering memorandum prospectus where the trade is made by an issuer in a share or preferred share of its own issue which is or is part of a specified securities issue, within the meaning of the Stock Savings Tax Credit Act and regulations made thereunder, in respect of which a certificate of eligibility has been issued under that Act and has not been revoked, if (a) each purchaser to whom shares are sold has been supplied information identifying every officer and director of the issuer and every promoter thereof and giving the particulars of such of their professional qualifications and associations during the immediately preceding 5 years are relevant to the undertaking being financed and indicating which of the directors will be devoting his or her full time to the affairs of the issuer; (b) each purchaser has access to substantially the same information concerning the issuer that a prospectus filed under the Act would provide and is (i) an investor who, by virtue of his or her net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the issuer whose securities are being offered and who is a broker or salesperson thereof, is able to evaluate the prospective investment on the basis of information respecting the investment presented to him or her by or on behalf of the issuer, or (ii) a senior officer or director of the issuer or of an affiliate of the issuer or a spouse, parent, brother, sister or child of a director or officer; (c) each purchaser is provided with an offering memorandum prospectus in form satisfactory to the superintendent before an agreement of purchase and sale is entered into with the purchaser and is given a contractual right of action that is described in the offering memorandum prospectus; (d) the issuer has given the superintendent written notice of the proposed trade and a copy of the proposed offering memorandum prospectus prior to the trade and either (i) the superintendent has not informed the issuer in writing after receipt of the written notice and proposed offering memorandum prospectus that the superintendent objects to the proposed trade, or (ii) the issuer has delivered to the superintendent information relating to the proposed trade or has amended the proposed offering memorandum prospectus in a manner satisfactory to the superintendent; (e) the issuer is not required to file or provide a purchaser of the shares or shares and warrants with a prospectus or similar disclosure documents under the laws of another jurisdiction; (f) the issuer makes arrangements satisfactory to the superintendent to ensure that the funds raised by the issue are spent on the purposes specified in paragraph (2)(u); (g) resale of securities of an issuer previously issued by the issuer under this section can only be made without prospectus or offering memorandum prospectus or without the issuer listing an issue of securities on a stock exchange in Canada where each of the parties to the trade is one of the persons referred to in paragraph (1)(b), provided that the purchaser in the trade is advised in writing by or on behalf of the vendor prior to entering into an agreement of purchase and sale that the purchaser shall not accrue an advantage under the Stock Savings Tax Credit Act as a result of the purchase. (2) Subject to subsection (8), every offering memorandum prospectus sent or delivered to a purchaser with respect to a trade in a security issued by an issuer to which paragraph 2(1)(l) of the Stock Savings Tax Credit Act applies shall include (a) the name and address of the issuer and the underwriter through which the issuer is effecting the distribution; (b) a statement that the distribution is being made in reliance upon the exemption contained in subsection (1), and as a consequence thereof the issuer will not, following the distribution, be required to comply with certain provisions of the Act and these regulations designed to protect investors which the issuer would have been required to comply with if it had filed a prospectus in respect of the distribution and obtained a receipt therefor under the Act; (c) the information referred to in paragraph (1)(a); (d) a statement that each prospective purchaser is entitled to have access to substantially the same information concerning the issuer that a prospectus filed under the Act would provide and that the information supplied by or on behalf of the issuer constitutes full, true and plain disclosure of all material facts relating to the securities offered; (e) to the extent that the information referred to in paragraph (d) is not contained in the offering memorandum prospectus, a statement explaining where, when and how a prospective purchaser may obtain the information; (f) a statement that each purchaser, other than a purchaser referred to in subparagraph (1)(b)(ii), is required to be an investor who by virtue of the investors' worth and investment experience or by virtue of the consultation referred to in subparagraph (1)(b)(i) is able to evaluate the prospective investment on the basis of the information presented to the investor by or on behalf of the issuer; (g) a statement that each purchaser must purchase as principal; (h) a statement that there are disclosure requirements imposed by the Act and these regulations on the resale of the securities by the purchaser and a description of the general nature of those restrictions; (i) where there is no genuine trading market for the securities offered and one is not expected to develop as a consequence of the distribution a statement to that effect in bold face type on the cover page of the offering memorandum prospectus and a statement that the purchaser may not be able to resell the securities being offered; (j) a statement in the following form: "No securities commission or similar authority in Canada has in any way passed upon the adequacy of this offering memorandum prospectus or upon the merits of the securities offered hereunder and any representation to the contrary is an offence. The satisfaction of the superintendent with respect to this offering memorandum prospectus or the failure of the superintendent to object to the offering memorandum prospectus indicates only that the superintendent is satisfied that the form hereof complies with the applicable regulations under the Securities Act." ; (k) a description of the terms of the contractual right of action expressed without reference to the provisions of the Act or these regulations; (l) a general summary of the income tax consequences to a purchaser who purchases the securities; (m) details of the certificate of eligibility issued under the Stock Savings Tax Credit Act with respect to the specified securities issued, a statement explaining the eligibility of a purchaser for stock savings tax credit and the portion of the purchase price of the securities eligible for tax credit purposes and a general statement of the consequences of (i) the failure of the securities to be subscribed within 90 days following the date of the certificate, and (ii) the revocation of the certificate of eligibility, to the issuer and to a purchaser, including to a purchaser who purchases after a revocation of the certificate of eligibility; (n) a statement of the means by which a prospective purchaser can obtain information from the Minister of Finance on the status of the certificate of eligibility referred to in paragraph (m); (o) a statement of the proposed application and use of the proceeds of the issue by the issuer of the securities a minimum level of proceeds that are required to be generated by the distribution in order to reasonably achieve the purpose of the distribution; (p) where the minimum level of proceeds is required to be generated by the distribution, a statement that the offering of the securities will not continue for more than 90 days if the minimum level is not achieved within 90 days without the consent of the superintendent and those persons and companies that subscribed within that 90 days; (q) where a minimum number of subscribers for the securities offered is required to qualify the issue as being offered for sale in the manner set out in the Stock Savings Tax Credit Act, a statement of the minimum number of subscribers so required and a statement as to the number of days during which the securities will be offered in an effort to achieve that minimum number and a statement that a subscriber may withdraw their subscription if the minimum number is not achieved within the stated number of days; (r) a statement of the commissions to be paid to dealers or underwriters in connection with the issue and the consideration paid or to be paid for promotional purposes by the issuer in connection with the issue; (s) a statement of (i) the number, class and characteristics of the securities being offered for sale, and (ii) the aggregate of the maximum subscription prices for the maximum number of securities that may be issued by the issuer pursuant to the specified securities issued; (t) the share and loan capital structure of the issuer; (u) a statement of the specific purposes in detail and the approximate amounts to be devoted to the purposes, so far as determinable, for which the security to be offered is to supply funds, and if the funds are to be raised in part from other sources, the amounts and the sources; (v) other information as the superintendent may require. (3) Every offering memorandum prospectus referred to in subsection (2) shall be signed by the issuer and contain the following certificates at the end thereof: (a) a certificate signed by the chief executive officer, the chief financial officer or a person acting as same and, on behalf of the board of directors, any 2 directors of the issuer, other than the foregoing, duly authorized to sign and a person or company who is a promoter of the issuer, in the following form: "The foregoing and the information which will be supplied by or on behalf of the issuer on request of a purchaser constitutes full, true and plain disclosure of all material facts relating to the securities offered by this offering memorandum prospectus."; (b) a certificate signed by the underwriter through which the issuer is effecting the distribution in the following form: "To the best of our information, knowledge and belief, the foregoing and the information which will be supplied by or on behalf of the issuer on request of a purchaser constitutes full, true and plain disclosure of all material facts relating to the securities offered by this offering memorandum prospectus.". (4) Where a material adverse change occurs after an offering memorandum prospectus referred to in subsection (2) has been given to the superintendent under subsection (1), the issuer shall (a) notify the superintendent immediately of the change; (b) cease to distribute the offering memorandum prospectus and cease to trade in the securities with respect to which the offering memorandum prospectus was prepared; (c) file with the superintendent an amended offering memorandum prospectus reflecting the material change as soon as practical after the change occurs and in any event within 10 days after the day on which the change occurs; (d) make, in a timely manner, all changes to the amended offering memorandum prospectus that the superintendent may require; (e) not distribute the amended offering memorandum prospectus and not recommence trading in the securities with respect to which the offering memorandum prospectus was prepared until the superintendent has given his or her approval to the amended offering memorandum prospectus; and (f) send or deliver the amended offering memorandum prospectus to every person or company that was sent or delivered the offering memorandum prospectus immediately following the superintendent giving his or her approval to the amended offering memorandum prospectus. (5) Where a statement referred to in paragraph (2)(p) or (q) is included in an offering memorandum prospectus, the superintendent may require, as a condition of not objecting to the proposed trade, that trust arrangements satisfactory to him or her are adhered to. (6) The superintendent may require or order that a distribution under an offering memorandum prospectus shall (a) not continue beyond a date specified by the superintendent before the distribution commences; or (b) cease during the course of distribution if he or she is satisfied that to do so is in the public interest provided that the superintendent provides the issuer with an opportunity to be heard. (7) Where the superintendent is satisfied to do so is either justified or necessary in the public interest, he or she may permit the information required to be included in an offering memorandum prospectus under subsection (2) to be varied or omitted. (8) The superintendent shall object to a proposed offering memorandum prospectus if it appears to him or her that any of the following circumstances exist: (a) an unconscionable consideration has been paid or given or is intended to be paid or given for promotional purposes or for the acquisition of property; (b) the proceeds from the sale of the securities to which the offering memorandum prospectus relates that are to be paid into the treasury of the issuer, together with other resources of the issuer, are insufficient to accomplish the purpose of the issue stated in the offering memorandum prospectus; (c) having regard to the financial condition of the issuer or an officer, director, promoter, or a person or company or combination of persons or companies holding sufficient of the securities of the issuer to affect materially the control of the issuer, the issuer cannot reasonably be expected to be financially responsible in the conduct of its business; (d) the past conduct of the issuer or an officer, director, promoter, or a person or company or combination of person or companies holding sufficient of the securities of the issuer to affect materially the control of the issuer affords reasonable grounds for belief that the business of the issuer will not be conducted with integrity and in the best interests of its security holders; (e) such escrow or pooling agreement as the superintendent considers necessary or advisable with respect to securities has not been entered into; (f) such agreement as the superintendent considers necessary or advisable to accomplish the objects indicated in the offering memorandum prospectus for the holding in trust of the proceeds payable to the issuer from the sale of the securities has not been entered into; or (g) a person or company who has prepared or certified a part of the offering memorandum prospectus or is named as having prepared or certified a report or valuation used in or in connection with an offering memorandum prospectus is not acceptable to him or her. 58/91 s198; 14/06 s93 Back to Top Repeal 199. The Securities Regulations, 1991, Newfoundland Regulation 58/91, are repealed.