Proposed National Instrument and Companion Policy: NI - 44-103 - Post Receipt Pricing

Proposed National Instrument and Companion Policy: NI - 44-103 - Post Receipt Pricing

Request for Comment National Instrument



NOTICE
PROPOSED NATIONAL INSTRUMENT 44-103
AND COMPANION POLICY 44-103CP
AND RESCISSION OF NATIONAL POLICY
STATEMENT NO. 44
POST-RECEIPT PRICING

The Ontario Securities Commission (the "Commission"), together with other members of the Canadian SecuritiesAdministrators (the "CSA"), is publishing for comment proposed National Instrument 44-103 Post-Receipt Pricing ("NI 44-103") and its proposed Companion Policy 44-103CP (the "Companion Policy").

NI 44-103 and the Companion Policy are initiatives of the CSA.. NI 44-103 and the Companion Policy would replaceNational Policy Statement No. 44 Rules for Shelf Prospectus Offerings and for Pricing Offerings after the FinalProspectus is Receipted ("NP 44") as it applies to the pricing of offerings after a receipt has been issued for a finalprospectus.

Proposed NI 44-103 is expected to be adopted as a rule in Alberta, British Columbia, Manitoba, Ontario and NovaScotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions, except Québec,represented by the CSA. The proposed Companion Policy is expected to be implemented as a policy in all jurisdictions,other than Québec, represented by the CSA. In Québec, the Commission des valeurs mobilières du Québec (the"CVMQ") has expressed agreement with the purpose and intent of NI 44-103 but does not propose to adopt NI 44-103or the Companion Policy because Québec securities legislation provides procedures for post-receipt pricingdistributions. Proposed amendments to the Securities Act (Québec) (the "proposed amendments") will give the CVMQthe authority to make rules and, on the coming into force of the proposed amendments, the CVMQ will consider whatchanges to Québec securities legislation are necessary to implement NI 44-103. If the proposed amendments are notin force at the time of implementation of NI 44-103, the CVMQ will consider all measures available, including a blanketorder, in order to enable issuers to efficiently access the post-receipt pricing prospectus system in Québec.

Reformulation of NP 44 Post-Receipt Pricing Regime

NP 44, which came into effect on May 10, 1991, established procedures for the pricing of offerings after a receipt hasbeen issued for the final prospectus ("PREP procedures"). The receipted "base PREP prospectus" may omit certainpricing information ordinarily present in a receipted final prospectus. Once pricing is determined, a "supplementedPREP prospectus" containing all information omitted from the base PREP prospectus is filed and provided topurchasers. The PREP procedures enhance the ability of issuers and selling securityholders to respond to rapidlychanging market conditions without impairing the information or rights available to investors.

NP 44 also established a system for offerings of securities under a shelf prospectus. NP 44 provides flexibility andreduces the burdens, costs and time pressures for issuers seeking to raise capital under changing market conditions,while maintaining investor protection.

The CSA have decided to separate the post-receipt pricing regime from the shelf distribution regime because the tworegimes are not so closely related that they should be contained in a single instrument. Proposed NI 44-103 and itsCompanion Policy would carry forward the system established under NP 44 relating to post-receipt pricing, andproposed National Instrument 44-102 Shelf Distributions and its Companion Policy 44-102CP, which are being publishedfor comment concurrently with proposed NI 44-103, would carry forward the regime established under NP 44 for shelfdistributions.

The CSA have considered Canadian experience with the PREP procedures, discretionary relief provided by CSAmembers in connection with the PREP procedures, experience with similar procedures in the United States andregulatory and capital market developments in Canada and the United States. The CSA consider that the PREPprocedures established by NP 44 have operated efficiently and with minimal difficulties but that NP 44 may be undulyrestrictive.

As a result of these considerations, the CSA propose changes to the post-receipt pricing regime, while preserving thesubstance of the PREP procedures, primarily with a view to making PREP procedures available to a much broaderrange of issuers and selling securityholders than currently permitted under NP 44.

The CSA also propose changes and clarifications concerning the disclosure required in a base PREP prospectus, andchanges that would permit limited variation in the size of an offering disclosed in a base PREP prospectus.

A table of concordance between proposed NI 44-103 and its Companion Policy and provisions of NP 44 that

relate to post-receipt pricing follows the Notice in respect to proposed NI 44-102.

Substance and Purpose

NI 44-103 and the Companion Policy would reformulate and replace NP 44 as it relates to post-receipt pricing,maintaining the substance of the PREP procedures while adding clarity, operational efficiency and enhanced accessto the PREP procedures. NI 44-103 and the Companion Policy are derived from NP 44 in its application to post-receiptpricing.

NI 44-103 contains mandatory aspects of the post-receipt pricing regime under NP 44. Aspects of NP 44, relating topost-receipt pricing, that are explanatory are included in the Companion Policy.

Terms used in the Companion Policy that are defined or interpreted in NI 44-103 or a definition instrument in force inthe jurisdiction and not otherwise defined in the Companion Policy should be read in accordance with NI 44-103 or thedefinition instrument, unless the context otherwise requires.

Key aspects of proposed NI 44-103 follow:

  • Availability of PREP Procedures. Under NI 44-103, eligibility to use the PREP procedures would no longer berestricted to issuers either: (i) eligible to use the prompt offering qualification ("POP") system under NationalPolicy Statement No. 45 or its proposed successor, National Instrument 44-101 Prompt Offering QualificationSystem ("NI 44-101"); or (ii) that have securities listed on specified stock exchanges.

    Availability of the PREP procedures is dealt with in Part 2 of NI 44-103. Consistent with discretionary reliefgranted in the past, but unlike NP 44, the PREP procedures would be available for initial public offerings and forofferings of derivative securities.

    NI 44-103 does carry forward from NP 44 the current prohibition on use of the PREP procedures for rightsofferings, for which CSA members may wish to review pricing in advance.

    Part 2 of NI 44-103 also prescribes requirements for opting into or out of the PREP procedures.

  • Base PREP Prospectus Disclosure. Sections 3.2 and 3.3 of NI 44-103 clarify and somewhat modify PREPdisclosure requirements.

    The base PREP prospectus may omit PREP information such as pricing but must specify the aggregate offeringsize: the aggregate dollar amount in the case of non-share securities, and either dollar amount or number ofshares for share offerings. However, section 3.2(5)(a) of NI 44-103 provides that, if the proceeds of a PREPshare offering are to be applied to a purpose for which a minimum amount is required and there is not alreadya market for shares of that class, the aggregate dollar value of the offering must be stated in the base PREPprospectus.

    Reflecting comparable U.S. procedures, NI 44-103 permits omission from the base PREP prospectus of theidentity of non-lead underwriters.

    PREP information that may be omitted from a base PREP prospectus includes specific price information andcertain other terms that are tied to pricing. To eliminate ambiguity, section 3.3 of NI 44-103 makes clear thatPREP information is restricted to information either specifically enumerated in the first 11 paragraphs of section3.3 or mathematically derivable from such information.

  • Base PREP Prospectus Receipt. Under NP 44, a supplemented PREP prospectus is to be filed within fivebusiness days of the date of the base PREP prospectus receipt. In the absence of that filing, for the offering toproceed, the disclosure in the base PREP prospectus must be updated by the filing of either: (i) a prospectusamendment that contains the PREP information; or (ii) an amended prospectus to commence a new fivebusiness day period for filing a supplemented PREP prospectus.

    Section 3.5 of NI 44-103 would extend the period for the filing of a supplemented PREP prospectus from fivebusiness days to 20 days, and provide that in the absence of that filing a distribution can proceed only if alldisclosure contained in the base PREP prospectus is updated by the filing of an amended base PREP prospectuswithin the preceding 20 days. In the alternative as noted above, Part 2 of NI 44-103 makes provision for optingout of the PREP procedures.

     

    To preclude use of this provision for indefinite extension of the receipt, the receipt expires 75 days after issuanceunless a supplemented PREP prospectus is filed within that period.

  • Supplemented PREP Prospectus. A supplemented PREP prospectus must be filed in the local jurisdiction bythe second business day following the date of the determination of the PREP information omitted from the basePREP prospectus, if distribution proceeds.

    A supplemented PREP prospectus must be identical to the corresponding base PREP prospectus except aspermitted or required by Part 4 of NI 44-103. Content of a supplemented PREP prospectus that is not alsocontained in the corresponding base PREP prospectus is incorporated by reference in the base PREPprospectus.

    The supplemented PREP prospectus must bear the date on which the public offering price of the securities isdetermined and must include all the PREP information omitted from the base PREP prospectus, earningscoverage ratios required by securities legislation, an issuer's prospectus certificate, an underwriters' certificate,a certificate of a credit supporter (if securities legislation so requires) and a list of the documents incorporatedby reference in the base PREP prospectus.

    A "credit supporter" is defined as a provider of credit support that differs from but serves virtually the samepurpose as a guarantee. In circumstances in which it is not appropriate that a credit supporter sign a PREPprospectus certificate, Canadian securities regulatory authorities will consider applications for exemptions.

  • Adjustment of Offering Size. In a departure from NP 44, section 4.4 of NI 44-103 would permit an issuer toadjust the aggregate size of a PREP offering upward or downward by up to 20% from the offering size specifiedin the base PREP prospectus. Disclosure in the supplemented PREP prospectus would be sufficient.

    At present, an adjustment in the aggregate size of a PREP offering requires formal amendment of the basePREP prospectus, although relief has been granted in individual cases.

     

  • Transition. Part 5 of NI 44-103 addresses transition from the PREP procedures set out in NP44. It wouldpermit continued reliance, after NI 44-103 comes into effect, on PREP receipts in effect at that time.

    The proposed Companion Policy sets out views of the Canadian securities regulatory authorities on various issuesconcerning the PREP procedures.

    Changes from the NP 44 Post-Receipt Pricing Regime

    NI 44-103 is largely consistent with NP 44 in respect of the PREP procedures but, as noted above, would make thoseprocedures available to a much broader range of issuers and selling securityholders.

    The principal changes from the NP 44 regime are the elimination of most restrictions on access to the PREPprocedures, added flexibility in use of a base PREP prospectus (notably, the ability to alter the size of the offering) andclarification of disclosure requirements.

    Authority for NI 44-103 - Ontario

    In those jurisdictions in which NI 44-103 is to be adopted or made as a rule or regulation, the securities legislation ineach of those jurisdictions provides the securities regulatory authority with rule-making or regulation-making authorityin respect of the subject matter of NI 44-103. The following provisions of the Act provide the Commission with authorityto make NI 44-103.

    Paragraph 143(1)13 of the Act authorizes the Commission to make rules regulating trading or advising in securities toprevent trading or advising that is fraudulent, manipulative, deceptive or unfairly detrimental to investors.

    Paragraph 143(1)16 of the Act authorizes the Commission to make rules varying the application of the Act to establishprocedures for or requirements in respect of the preparation and filing of preliminary prospectuses and prospectusesand the issuing of receipts therefor that facilitate or expedite the distribution of securities or the issuing of the receipts.

    Paragraph 143(1)39 of the Act authorizes the Commission to make rules requiring or respecting the media, format,preparation, form, content, execution, certification, dissemination and other use, filing and review of all documentsrequired under or governed by the Act, the regulations or the rules and all documents determined by the regulationsor the rules to be ancillary to the documents.

    Alternatives Considered

    The CSA have not considered any alternatives to the making of NI 44-103. The only alternative method of achievingthe regulatory goals contained in NP44 is through the amendment of the securities legislation of the variousjurisdictions. The CSA are satisfied with the general operation of the regime established by NP 44, and consider thatreplacing NP 44 with NI 44-103 is the most appropriate manner of regulating in this area.

    Unpublished Materials

    In proposing NI 44-103 and Companion Policy, the CSA have not relied on any significant unpublished study, report,decision or other written materials.

    Related Instruments

    The proposed Companion Policy is related to NI 44-103, proposed National Instrument 44-101 Prompt OfferingQualification System, proposed Companion Policy 44-101CP Prompt Offering Qualification System, proposed OntarioRule 41-501 General Prospectus Requirements and proposed Companion Policy 41-501CP General ProspectusRequirements.

    Amendment of Regulation - Ontario

    The Commission proposes to amend subsection 34(1) and paragraph 81(1)5 of the Regulation in the event that NI 44-103 comes into force before the coming into force of proposed Rule 41-501 General Prospectus Requirements. Thereferences to the rule "In the Matter of Rules for Shelf Prospectus Offerings and for Price Offerings After the Prospectusis Receipted" (1991), 14 OSCB 1825 and to "National Policy Statement No. 44" (1991), 14 OSCB 1844 will be replacedwith a reference to NI 44-103.

    Anticipated Costs and Benefits

    The CSA anticipate a number of benefits to result from the implementation of NI 44-103. Broadened access to thePREP procedures would enhance the ability of issuers to respond flexibly to opportunities in Canadian capital markets.

    The CSA do not anticipate that material new costs would arise from implementation of NI 44-103.

    Comments

    Interested parties are invited to make written submissions with respect to proposed NI 44-103 and the CompanionPolicy. Submissions received by January 8, 1999 will be considered.

    Submissions should be sent to all of the Canadian securities regulatory authorities listed below in care of the OntarioSecurities Commission, in duplicate, as indicated below:

    British Columbia Securities Commission
    Alberta Securities Commission
    Saskatchewan Securities Commission
    The Manitoba Securities Commission
    Ontario Securities Commission
    Office of the Administrator, New Brunswick
    Registrar of Securities, Prince Edward Island
    Nova Scotia Securities Commission
    Department of Government Services and Lands, Newfoundland and Labrador
    Registrar of Securities, Government of the Northwest Territories
    Registrar of Securities, Government of the Yukon Territory

    c/o Daniel P. Iggers, Secretary
    Ontario Securities Commission
    20 Queen Street West
    Suite 800, Box 55
    Toronto, Ontario M5H 3S8

    Submissions should also be addressed to the Commission des valeurs mobilières du Québec as follows:

    Claude St Pierre, General Secretary
    Commission des valeurs mobilières du Québec
    800 Victoria Square
    Stock Exchange Tower
    P.O. Box 246, 17th Floor
    Montréal, Québec H4Z 1G3

    A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted.As securities legislation in certain provinces requires that a summary of the written comments received during thecomment period be published, confidentiality of submissions received cannot be maintained.

    Questions may be referred to any of:

    Susan Wolburgh Jenah
    Manager, Market Operations
    Ontario Securities Commission
    Telephone: (416) 593-8245

    Iva Vranic
    Legal Counsel, Market Operations
    Ontario Securities Commission
    Telephone: (416) 593-8115

    Brenda Benham
    Director, Policy & Legislation
    British Columbia Securities Commission
    Telephone: (604) 899-6635

    Stephen Murison
    Legal Counsel
    Alberta Securities Commission
    Telephone: (403) 297-4233

    Agnes Lau
    Deputy Director, Security Analysis
    Alberta Securities Commission
    Telephone: (403) 422-2191

    Barbara Shourounis
    Director
    Saskatchewan Securities Commission
    Telephone: (306) 787-5842

    Rosetta Gagliardi
    Policy Advisor
    Commission des valeurs mobilières du Québec
    Telephone: (514) 873-5326

    Bill Slattery
    Deputy Director of Corporate Finance & Administration
    Nova Scotia Securities Commission
    Telephone: (902) 424-7355

    Text of NI 44-103 and Companion Policy

    The text of proposed NI 44-103 and the proposed Companion Policy follow, together with footnotes that are not partof the documents but have been included to provide background and explanation

    DATED: October 2, 1998.

    NATIONAL INSTRUMENT 44-103
    POST-RECEIPT PRICING
    TABLE OF CONTENTS

    PARTTITLE
    PART 1 DEFINITIONS AND INTERPRETATION
    1.1 Definitions
    1.2 Interpretation

    PART 2 USE OF THE PREP PROCEDURES
    2.1 Availability of PREP Procedures
    2.2 Prohibited Offerings
    2.3 Opting out of the PREP Procedures After a Preliminary Prospectus has been Receipted and before theProspectus has been Receipted
    2.4 Opting into the PREP Procedures After a Preliminary Prospectus has been Receipted and before theProspectus has been Receipted
    2.5 Opting out of the PREP Procedures After a Prospectus has been Receipted

    PART 3 BASE PREP PROSPECTUSES
    3.1 Form of Base PREP Prospectus
    3.2 Required Disclosure
    3.3 Disclosure that may be Omitted
    3.4 Issuance of Receipt
    3.5 Expiry of Receipt
    3.6 Amendment to a Base PREP Prospectus

    PART 4 SUPPLEMENTED PREP PROSPECTUSES
    4.1 Requirement to Use a Supplemented PREP Prospectus
    4.2 Incorporation by Reference
    4.3 Restriction on Changes
    4.4 Changes in the Size of Distribution
    4.5 Required Disclosure
    4.6 Legend to be Omitted
    4.7 Amendment to a Supplemented PREP Prospectus
    4.8 Timing of Filing of Supplemented PREP Prospectus
    4.9 Delivery Requirement
    4.10 Underwriting Agreements

    PART 5 TRANSITIONAL PREP PROCEDURES
    5.1 Transitional PREP Procedures

    PART 6 EXEMPTIONS
    6.1 Exemption
    6.2 Evidence of Exemption

     

    NATIONAL INSTRUMENT 44-103(1)
    POST-RECEIPT PRICING

    PARTDEFINITIONS AND INTERPRETATION(2)

1.1 Definitions

(1) In this Instrument

"base PREP prospectus" means a prospectus or a short form prospectus that at the time of filing andissuance of a receipt therefor omits information as permitted by this Instrument;(3)

"credit supporter" means, for securities, a person or company, other than the issuer of the securities, that

(a) guarantees payment to a holder of the securities, in the event of non-payment by the issuer of thesecurities, of all or substantially all of the payments to be made to the holder under the terms of thesecurities, or

(b) provides payment support, other than by way of a guarantee, that entitles a holder of the securities,in the event of non-payment by the issuer of the securities, to receive from the person or companyall or substantially all of the payments to be made to the holder under the terms of the securities;(4)

"PREP information" means the information permitted by this Instrument to be omitted from a base PREPprospectus;(5)

"PREP procedures" means the requirements in this Instrument for the distribution under a base PREPprospectus and a supplemented PREP prospectus of securities, the price of which is determined after areceipt has been obtained for the base PREP prospectus;(6) and

"supplemented PREP prospectus" means a prospectus filed under the PREP procedures containing PREPinformation.(7)

(2) All terms defined in National Instrument 44-101 and used in this Instrument have the respective meaningsascribed to them in National Instrument 44-101.(8)

1.2 Interpretation - References in this Instrument to an amendment to a prospectus include both a separateamending document and an amended and restated prospectus.(9)

PART 2 USE OF THE PREP PROCEDURES

2.1 Availability of PREP Procedures - Subject to the requirements of this Instrument, any issuer that wishes touse the PREP procedures, or enable a selling securityholder to use the PREP procedures, to distributesecurities may file a prospectus or a short form prospectus that, in either case, is a base PREP prospectus.(10)

2.2 Prohibited Offerings - Despite the other provisions of this Instrument, the PREP procedures shall not be usedfor a distribution of rights under a rights offering.(11)

2.3 Opting out of the PREP Procedures After a Preliminary Prospectus has been Receipted and before theProspectus has been Receipted - If a receipt for a preliminary base PREP prospectus for a distribution ofsecurities has been issued and the issuer or the selling securityholder decides, before a receipt is issued fora base prospectus, no longer to use the PREP procedures for the distribution, the issuer shall file a coveringletter, with a prospectus or short form prospectus that is not a base PREP prospectus, stating that the issueror the selling securityholder, as the case may be, has decided not to use the PREP procedures for thedistribution.(12)

2.4 Opting into the PREP Procedures After a Preliminary Prospectus has been Receipted and before theProspectus has been Receipted - If a receipt for a preliminary prospectus or preliminary short formprospectus that is not a preliminary base PREP prospectus for a distribution of securities has been issued andthe issuer or the selling securityholder decides, before a receipt is issued for a prospectus or short formprospectus, to use the PREP procedures for the distribution, the issuer shall file a covering letter, with a basePREP prospectus, stating that the issuer or the selling securityholder, as the case may be, has decided to usethe PREP procedures for the distribution.(13)

2.5 Opting out of the PREP Procedures After a Prospectus has been Receipted - If a receipt has been issuedfor a base PREP prospectus for a distribution of securities and the issuer or the selling securityholder decides,before a supplemented PREP prospectus is filed, no longer to use the PREP procedures for the distribution,the issuer shall file

(a) either

(i) an amended prospectus that is not a base PREP prospectus or a supplemented PREP prospectus,or

(ii) a new preliminary prospectus that is not a preliminary base PREP prospectus; and

(b) a covering letter stating that the issuer or the selling securityholder, as the case may be, has decided notto use the PREP procedures for the distribution.(14)

PART 3 BASE PREP PROSPECTUSES

3.1 Form of Base PREP Prospectus - The required form of prospectus and the required form of short formprospectus under securities legislation(15) may be varied for a PREP prospectus to the extent provided for in thisInstrument.(16)

3.2 Required Disclosure

(1) A base PREP prospectus of an issuer shall contain the following:

1. A statement at the top of the cover page identifying the prospectus as a base PREP prospectus.(17)

2. The following statement in red ink in italics on the cover page:

"This [insert throughout in the case of POP system distributions..."short form"] prospectus hasbeen filed under procedures in [insert names of each jurisdiction where qualified] that permitcertain information about these securities to be determined after the prospectus has become finaland that permit the omission from this prospectus of the information. The procedures require thedelivery to purchasers of a supplemented PREP prospectus containing the omitted informationwithin a specified period of time after agreeing to purchase any of these securities."(18)

3. A statement that all disclosure contained in a supplemented PREP prospectus that is not containedin the base PREP prospectus will be incorporated by reference into the base PREP prospectus asof the date of the supplemented PREP prospectus.(19)

4. If securities other than shares are being distributed, a statement of the aggregate dollar amount ofsecurities, to which the base PREP prospectus pertains.(20)

5. If shares are being distributed,

(a) the aggregate dollar amount of the shares to which the base PREP prospectus pertains, if

(i) the proceeds of the offering are to be applied to a specific purpose identified in theprospectus and a minimum amount must be raised through the offering in order toaccomplish the purpose, and

(ii) there is no pre-existing trading market in which securities of the same class as the securitiesto be distributed under the prospectus are traded; and

(b) otherwise, either the aggregate number of the shares or the aggregate dollar amount of theshares, to which the base PREP prospectus pertains.(21)

6. Any earnings coverage ratios required by securities legislation, which may be expressed as rangesbased on a reasonable estimate of the PREP information.(22)

7. A certificate in the following form signed by the chief executive officer, the chief financial officer, and,on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chiefexecutive officer or chief financial officer, duly authorized to sign and any promoter of the issuer:

"This [describe document - insert throughout in the case of POP system distributions - "shortform prospectus"], together with the documents and information incorporated herein byreference, will, as of the date of the supplemented prospectus providing the information permittedto be omitted from this [describe document], constitute full, true and plain disclosure of allmaterial facts relating to the securities offered by this [describe document] as required bysecurities legislation of [insert name of each jurisdiction in which qualified] [insert if distributionmade in Quebec - "For the purpose of the Province of Quebec, this [describe document], [insertin the case of POP system distributions - "as supplemented by the permanent informationrecord,"] will contain no misrepresentation likely to affect the value or the market price of thesecurities to be distributed"]."(23)

8. A certificate in the following form signed by the each underwriter, if any, who for the securities to bedistributed under the prospectus, is in a contractual relationship with the issuer or sellingsecurityholder:

"To the best of our knowledge, information and belief, this [describe document - insert throughoutin the case of POP system distributions - "short form prospectus"], together with the documentsand information incorporated herein by reference, will, as of the date of the supplementedprospectus providing the information permitted to be omitted from this [describe document],constitute full, true and plain disclosure of all material facts relating to the securities offered bythis [describe document] as required by securities legislation of [insert name of each jurisdictionin which qualified] [insert if distribution made in Quebec - "For the purpose of the Province ofQuebec, this [describe document], [insert in the case of POP system distributions - "assupplemented by the permanent information record,"] will contain no misrepresentation likely toaffect the value or the market price of the securities to be distributed"]."(24)

9. A certificate signed by a credit supporter in the form described in paragraph 7 if securities legislationrequires a prospectus certificate of a credit supporter.(25)

(2) Despite subsection (1), a preliminary base PREP prospectus is not required to contain the informationrequired in paragraphs 4, 5 and 6 of subsection (1), if the information is not known at the time of filing thepreliminary base PREP prospectus.(26)

3.3 Disclosure that may be Omitted - A base PREP prospectus may omit the following:

1. The public offering price of the securities to be distributed.(27)

2. The amount of cash underwriting fees, discounts and commissions for the distribution of the securities.(28)

3. The net proceeds of the distribution.(29)

4. If shares are being distributed and only the aggregate number of securities to be distributed is disclosedand the aggregate dollar amount of shares is not required to be disclosed under paragraph 5 of subsection3.2(1), the gross proceeds of the distribution.(30)

5. Any dividend or interest rate of the securities to be distributed.(31)

6. Any dividend or interest payment dates, record dates and any dates from which dividends or interestaccrue for the securities to be distributed.(32)

7. Any redemption, purchase for cancellation, conversion and exchange prices of the securities.(33)

8. The identity of, and the disclosure, if any, required by Multilateral Instrument 33-105 concerning, themembers of the underwriting syndicate, other than the lead underwriter and any co-lead underwriter.(34)

9. The delivery dates of securities to be purchased under the distribution.(35)

10. If one or more underwriters have agreed to purchase the securities to be distributed at a specified price,the statement required by securities legislation that the securities are to be taken up by the underwriters,if at all, on or before a specified date.(36)

11. If the securities to be distributed are underwritten on a best efforts basis for which a minimum amount offunds are required by an issuer, disclosure required by securities legislation concerning the maximumlength of time for which the distribution may continue and concerning the disposition of subscriptionfunds.(37)

12. Other terms of the securities to be distributed that are mathematically derivable from any of theinformation referred to in paragraphs 1 through 11.(38)

3.4 Issuance of Receipt - Despite the omission of PREP information, the regulator(39) may issue a receipt for abase PREP prospectus.(40)

3.5 Expiry of Receipt

(1) Subject to subsection (2), a receipt issued for a base PREP prospectus expires 75 days after issuanceunless a supplemented PREP prospectus is filed within the 75 day period.(41)

(2) If a supplemented PREP prospectus is not filed within 20 days of the filing of a base PREP prospectus,the receipt issued for the base PREP prospectus expires at the time immediately before the entering intoof the first agreement of purchase and sale for a security to which the base PREP prospectus pertains,unless a receipt has been issued within the preceding 20 days for an amended base PREP prospectusthat updates to the date of the filing of the amended base PREP prospectus all of the disclosure containedin the base PREP prospectus.(42)

3.6 Amendment to a Base PREP Prospectus - An amendment to a base PREP prospectus, other than anamendment filed under section 2.5 to opt out of the PREP procedures, shall contain the certificates requiredunder subsection 3.2(1) to be included in a base PREP prospectus with the following changes:

1. If the amendment is not a restatement of the base PREP prospectus, insert the phrase "as amended bythis amendment" after the reference in each certificate to the base PREP prospectus.

2. If the amendment is an amended and restated base PREP prospectus, preface the reference in eachcertificate to the document with the phrase "this amended and restated".(43)

PART 4 SUPPLEMENTED PREP PROSPECTUSES

4.1 Requirement to Use a Supplemented PREP Prospectus - An issuer or selling securityholder proposing todistribute securities under a base PREP prospectus shall use a supplemented PREP prospectus to supplementthe disclosure in the base PREP prospectus pertaining to the distribution in order to comply with therequirement in securities legislation that a prospectus contain full, true and plain disclosure of all material factsrelating to the securities offered under the prospectus.(44)

4.2 Incorporation by Reference - The content of a supplemented PREP prospectus that is not also containedin the corresponding base PREP prospectus is incorporated by reference in the base PREP prospectus as ofthe date of the supplemented PREP prospectus.(45)

4.3 Restriction on Changes - A supplemented PREP prospectus shall be identical to the corresponding basePREP prospectus, except for the changes permitted or required by this Part.(46)

4.4 Changes in the Size of Distribution

(1) The size of the distribution as disclosed in the base PREP prospectus under paragraph 4 or 5 ofsubsection 3.2(1) may be increased or decreased by up to 20 percent in a supplemented PREPprospectus.

(2) If the size of the distribution as disclosed in the base PREP prospectus under paragraph 4 or 5 ofsubsection 3.2(1) is increased or decreased by up to 20 percent in a supplemented PREP prospectus andthat increase or decrease is a material change, the provisions of securities legislation that require the filingof an amendment to a prospectus if a material change occurs may be satisfied by the filing of thesupplemented PREP prospectus.

(3) Despite the provisions of securities legislation regarding the prescribed form of certificates for prospectusamendments, a supplemented PREP prospectus filed in order to satisfy provisions of securities legislationthat require the filing of an amendment to a prospectus if a material change occurs shall contain thecertificates required in subsection 4.5(2).(47)

4.5 Required Disclosure

(1) A supplemented PREP prospectus shall be dated the date that the public offering price of the securitiesis determined.(48)

(2) A supplemented PREP prospectus shall contain the following:

1. All of the PREP information omitted from the base PREP prospectus.(49)

2. Instead of the earnings coverage ratios expressed as ranges based on a reasonable estimate of thePREP information as permitted under paragraph 6 of subsection 3.2(1), the earnings coverage ratiosrequired by securities legislation.(50)

3. Instead of the prospectus certificate required under paragraph 7 of subsection 3.2(1), a certificate inthe following form signed by the chief executive officer, the chief financial officer, and, on behalf ofthe board of directors of the issuer, any two directors of the issuer, other than the chief executiveofficer or chief financial officer, duly authorized to sign and any promoter of the issuer:

"This [describe document - insert throughout in the case of POP system distributions - "shortform prospectus"] [insert in the case of POP system distributions - ", together with the documentsincorporated herein by reference,"] constitutes full, true and plain disclosure of all material factsrelating to the securities offered by this [describe document] as required by the securities lawsof [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec - "Forthe purpose of the Province of Quebec, this short form prospectus, as supplemented by thepermanent information record, contains no misrepresentation that is likely to affect the value orthe market price of the securities to be distributed"]."(51)

4. Instead of the prospectus certificate required under paragraph 8 of subsection 3.2(1), a certificate inthe following form signed by the each underwriter, if any, who for the securities to be distributed underthe prospectus, is in a contractual relationship with the issuer or selling securityholder:

"To the best of our knowledge, information and belief, this [describe document - insert throughoutin the case of POP system distributions - "short form prospectus"] [insert in the case of POPsystem distributions - ", together with the documents incorporated herein by reference,"]constitutes full, true and plain disclosure of all material facts relating to the securities offered bythis [describe document] as required by the securities laws of [insert name of each jurisdictionin which qualified] [insert if distribution made in Quebec - "For the purpose of the Province ofQuebec, this short form prospectus, as supplemented by the permanent information record,contains no misrepresentation that is likely to affect the value or the market price of the securitiesto be distributed"]."(52)

5. Instead of the prospectus certificate required under paragraph 9 of subsection 3.2(1), a certificatesigned by a credit supporter in the form described in paragraph 3 if securities legislation requires aprospectus certificate of a credit supporter.(53)

6. A list and brief description of each document that has been incorporated by reference in the basePREP prospectus since the issuance of a receipt for the base PREP prospectus.(54)

4.6 Legend to be Omitted - A supplemented PREP prospectus shall omit the legend required by paragraph 2 ofsubsection 3.2(1).(55)

4.7 Amendment to a Supplemented PREP Prospectus - An amendment to a supplemented PREP prospectusshall contain the certificates required under subsection 4.5(2) to be included in a supplemented PREPprospectus with the following changes:

1. If the amendment is not a restatement of the supplemented PREP prospectus, the phrase "as amendedby this amendment" inserted after the reference in each certificate to the supplemented PREP prospectus.

2. If the amendment is an amended and restated supplemented PREP prospectus, the reference in eachcertificate to the document prefaced by the phrase "this amended and restated".(56)

4.8 Timing of Filing of Supplemented PREP Prospectus - If securities are distributed using the PREPprocedures in the local jurisdiction(57), a supplemented PREP prospectus prepared in accordance with thisInstrument shall be filed in the local jurisdiction by the second business day following the date of thedetermination of the information omitted from the base PREP prospectus.(58)

4.9 Delivery Requirement - If securities are being distributed using the PREP procedures, the requirement undersecurities legislation to deliver a prospectus to a purchaser of securities shall be satisfied by the delivery ofa supplemented PREP prospectus.(59)

4.10 Underwriting Agreements - Despite the provisions of securities legislation, an underwriting agreement orother material contract that relates to a distribution of securities that cannot be completed until the distributionis priced and that is required by securities legislation to be filed or delivered to the regulator with a prospectus

(a) shall be filed or delivered, as the case may be, with the base PREP prospectus in draft form and may omitPREP information; and

(b) shall be refiled or redelivered, as the case may be, in final form, together with the supplemented PREPprospectus or base PREP prospectus amendment containing the PREP information and a copy of theagreement, black-lined against the draft form filed under paragraph (a).(60)

PART 5 TRANSITIONAL PREP PROCEDURES(61)

5.1 Transitional PREP Procedures

(1) An issuer that has filed and obtained a receipt for a PREP prospectus under National Policy StatementNo. 44 before this Instrument came into force is considered to have filed and obtained a receipt for a basePREP prospectus under this Instrument.

(2) An issuer that has filed a preliminary PREP prospectus under National Policy Statement No. 44 isconsidered to have filed a preliminary base PREP prospectus under this Instrument.

PART 6 EXEMPTIONS(62)

6.1 Exemption

(1) The regulator or the securities regulatory authority(63) may grant an exemption to this Instrument, in wholeor in part, subject to such conditions or restrictions as may be imposed in the exemption.

(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.

(3) Despite subsection (1), in Alberta, only the regulator may grant such an exemption.

(4) An application made to the securities regulatory authority or regulator for an exemption from thisInstrument shall include a letter or memorandum describing the matters relating to the exemption, andindicating why consideration should be given to the granting of the exemption.

6.2 Evidence of Exemption(64)

(1) Subject to subsection (2) and without limiting the manner in which an exemption under this Part may beevidenced,

(a) if a jurisdiction(65), other than the local jurisdiction, has been assigned to act as designated jurisdictionin the review of a base PREP prospectus under the expedited review system(66), the issuance of a finalexpedited review receipt document for a prospectus or an amendment to a prospectus by thedesignated jurisdiction is evidence of the granting of the exemption in the local jurisdiction if the finalexpedited review receipt document confirms the issuance of a final receipt for the prospectus or theamendment to the prospectus in the local jurisdiction;

(b) if a jurisdiction, other than the local jurisdiction, has agreed to act as principal jurisdiction in thereview of a base PREP prospectus filed under the POP system, the issuance of a National Instrument44-101 Receipt for the prospectus or an amendment to the prospectus is evidence of the granting ofthe exemption in the local jurisdiction if the National Instrument 44-101 Receipt evidences theissuance of a final receipt for the prospectus or the amendment to the prospectus in the localjurisdiction; and

(c) the issuance of a receipt for a base PREP prospectus or an amendment to a base PREP prospectusby the regulator is evidence of the granting of the exemption by the regulator.

(2) An exemption under this Part may be evidenced in the manner set out in subsection (1) only if

(a) the person or company that sought the exemption

(i) sent to the regulator the letter or memorandum referred to in subsection 6.1(4) on or before thedate of filing of the preliminary prospectus, or

(ii) sent to the regulator the letter or memorandum referred to in subsection 6.1(4) after the date offiling of the preliminary prospectus and received a written acknowledgement from the regulatorthat the exemption may be evidenced in the manner set out in subsection (1); and

(b) the regulator has not sent notice to the contrary to the person or company that sought the exemptionbefore, or concurrent with, the issuance of the receipt.

 

 

COMPANION POLICY 44-103CP TO NATIONAL INSTRUMENT 44-103
POST-RECEIPT PRICING
TABLE OF CONTENTS

PART TITLE

PART 1 IMPLEMENTATION OF THE INSTRUMENT
1.1 Implementation of the Instrument
1.2 Post-Receipt Pricing in Quebec
1.3 Relationship of the Instrument to Canadian Securities Legislation

PART 2 PROSPECTUS AMENDMENTS
2.1 Prospectus Amendments

PART 3 PREP PROCEDURES
3.1 Firm Commitment Distributions
3.2 Best Efforts Distributions
3.3 Rights of Rescission or Withdrawal
3.4 Supplements not Amendments
3.5 Certificates

 

 

COMPANION POLICY 44-103CP TO NATIONAL INSTRUMENT 44-103
POST-RECEIPT PRICING

PART 1 IMPLEMENTATION OF THE INSTRUMENT

1.1 Implementation of the Instrument - Certain jurisdictions have implemented National Instrument 44-103 Post-Receipt Pricing (the "Instrument") by one or more instruments forming part of Canadian securities legislationor Canadian securities directions in the jurisdiction. As a result, the provisions of the Instrument apply in thosejurisdictions to the extent provided by, and except as modified by, the implementing law of the jurisdiction.

1.2 Post-Receipt Pricing in Quebec - The Commission des valeurs mobilières du Québec agrees with thepurpose and intent of the Instrument and this Policy, but has not adopted the Instrument or this Policy, as itssecurities legislation currently provides for accessibility to a post-receipt pricing procedure for certainsecurities. Issuers are reminded to refer specifically to the Quebec securities legislation when considering adistribution of securities in the Province of Quebec and concurrently in other jurisdictions under the Instrument.

1.3 Relationship of the Instrument to Canadian Securities Legislation

(1) Issuers are reminded that the rules and procedures contained in the Instrument for distributions madeusing the PREP procedures should be read in conjunction with other provisions of Canadian securitieslegislation in each jurisdiction in which an distribution is being made.

(2) A distribution under the POP system using the PREP procedures is a POP system distribution, and issubject to all the requirements of National Instrument 44-101 and other provisions of securities legislation,as supplemented or varied by the Instrument and the implementing law of the jurisdiction. Reference ismade to Part 1 of the Companion Policy to National Instrument 44-101 for a discussion of the relationshipbetween National Instrument 44-101 and various other pieces of securities legislation.(67)

(3) Similarly, a distribution using the PREP procedures not made under the POP system is subject tosecurities legislation, as supplemented or varied by the Instrument and the implementing law of thejurisdiction.(68)

PART 2 PROSPECTUS AMENDMENTS

2.1 Prospectus Amendments

(1) Section 4.4 of the Instrument provides that the size of an offering may be increased or decreased by upto 20 percent between the filing of the prospectus and the filing of the supplemented PREP prospectus.The section further provides that, in cases where such a change in the size of the offering constitutes amaterial change, that the requirement in Canadian securities legislation to file an amendment if a materialchange occurs may be satisfied by filing the supplemented PREP prospectus. The certificates requiredin the supplemented PREP prospectus are those prescribed by subsection 4.5(2) of the Instrument. Forchanges in the size of the offering by more than 20 percent that constitute a material change, this flexibilityin how the requirement in Canadian securities legislation to file an amendment is not available.(69)

(2) The Canadian securities regulatory authorities are of the view that an issuer's ability to use the PREPprocedures does not prevent the filing of a prospectus amendment to make some or all of the changesto the prospectus that are permitted to be made by a supplemented PREP prospectus.(70)

PART 3 PREP PROCEDURES

3.1 Firm Commitment Distributions - Paragraph 10 of section 3.3 of the Instrument provides that a base PREPprospectus for securities to be distributed by one or more underwriters that have agreed to purchase thesecurities at a specified price is not required to indicate that the securities are to be taken up by theunderwriters, if at all, on or before a specified date. This subsection provides an exemption from therequirement of securities legislation that this disclosure must be contained in a prospectus. Issuers arereminded that paragraph 1 of subsection 4.5(2) requires all information omitted from a base PREP prospectusto be included in a supplemented PREP prospectus. Therefore, it is necessary to comply with the relevantrequirement of securities legislation in a supplemented PREP prospectus relating to specific distributions thatare being effected on a firm commitment basis.(71)

3.2 Best Efforts Distributions - Similarly, paragraph 11 of section 3.3 of the Instrument provides that a basePREP prospectus for a distribution of securities underwritten on a best efforts basis for which a minimumamount of funds are required by an issuer is not required to include disclosure required by securities legislationconcerning the maximum length of time for which the distribution may continue and concerning the dispositionof subscription funds. Issuers are reminded, as in the previous subsection, that paragraph 1 of subsection4.5(2) requires all information omitted from a base PREP prospectus to be included in a supplemented PREPprospectus. Therefore, it is necessary to comply with the relevant requirement of securities legislation in asupplemented PREP prospectus relating to specific distributions that are being effected on a best effortsbasis.(72)

3.3 Rights of Rescission or Withdrawal - The Canadian securities regulatory authorities are of the view thatstatutory rights of rescission or withdrawal commence from the time of the purchaser's receipt of asupplemented PREP prospectus. It is only at this time that the entire prospectus has been delivered.(73)

3.4 Supplements not Amendments - The Canadian securities regulatory authorities do not consider asupplemented PREP prospectus to constitute an amendment to a prospectus within the meaning of Canadiansecurities legislation.(74)

3.5 Certificates - With respect to the certificate requirements in the Instrument, reference should be made to theprovisions of securities legislation of a jurisdiction that provide for a right of action against every person whosigns a prospectus or an amendment to a prospectus. The Canadian securities regulatory authoritiesrecognize that, in certain circumstances, a credit supporter may consider that its knowledge of the affairs ofthe issuer is not such that it considers it appropriate to sign a certificate in the form specified by theInstrument. In these circumstances, if the credit supporter is not a promoter of the issuer or a sellingsecurityholder, the Canadian securities regulatory authorities may allow the credit supporter to sign a differentform of certificate. Credit supporters who wish to make application should do so in accordance with Part 6of the Instrument.(75)

 

Footnotes

1. This proposed National Instrument, together with Companion Policy 44-102CP (the "Policy") and local implementing rules reformulatethe PREP provisions of National Policy Statement No. 44 ("NP44"). The Policy contains those parts of NP44 that are not operative ormandatory, but rather interpretative or explanatory. This Instrument is expected to be adopted as a rule in each of British Columbia,Alberta, Manitoba, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictionsrepresented by the Canadian Securities Administrators (the "CSA"), other than Quebec. The Commission des valeurs mobilières duQuébec (the "CVMQ") agrees with the purpose and intent of this Instrument, but will not be adopting it at this time as the regulationsunder its securities regulation provide for accessibility to a post-receipt pricing procedure. Proposed amendments to the Securities Act(Quebec) (the "proposed amendments") will give the CVMQ the authority to make rules and, on the coming into force of the proposedamendments, the CVMQ will be conducting a review of its securities regulation to determine what changes are advisable in order toimplement this National Instrument. If the proposed amendments are not in force at the time of implementation of this NationalInstrument, the CVMQ will consider all measures available, including a blanket order, in order to enable issuers to efficiently access thepost-receipt pricing system in Quebec. The proposed Policy is expected to be adopted as a policy in all jurisdictions represented by theCSA, other than Quebec, and implementing rules are expected to be adopted in those jurisdictions in which it is necessary to do so and maytake the form of blanket rulings or orders in some jurisdictions.Except as supplemented or varied by this Instrument, Canadian securities legislation applies to a distribution using the PREP procedures.

2. A national definition instrument has been adopted as National Instrument 14-101 Definitions ("NI14-101"). It contains definitions ofcertain terms used in more than one national instrument. NI14-101 also provides that a term used in a national instrument and defined inthe statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, willhave the meaning given to it in that statute, unless the context otherwise requires. NI14-101 also provides that a provision or a referencewithin a provision of a national instrument that specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not haveany effect in the local jurisdiction, unless otherwise stated in the provision.

3. This definition is new.

4. This definition is new.

5. This definition is based on paragraph 2.1(o) of NP44.

6. This definition is based on paragraph 2.1(p) of NP44.

7. This definition is based on paragraph 2.1(u) of NP44.

8. This subsection is new.

9. This section is new.

10. This section is new and replaces the restrictions on the availability of the PREP procedures in paragraph 2.2(a) and section 4.1 of NP44.

11. This section is based on paragraph 4.2(c) of NP44. The restriction in paragraph 4.2(d) of NP44 on using the PREP procedures fordistributions of derivatives has been omitted.

12. This section is based on paragraph 2.2(b) of NP44.

13. This section is new and has been added to clarify how an issuer may opt into the PREP procedures.

14. This section is new and has been added to clarify how an issuer may opt out of the PREP procedures after a base PREP prospectus has beenreceipted.

15. The term "securities legislation" is defined in NI14-101 as meaning the particular statute and legislative instruments of the localjurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, the rules, forms,rulings and orders relating to securities in the local jurisdiction.

16. This section is new.

17. This paragraph is new.

18. This paragraph is based on paragraph 2.3(b) of NP44.

19. This paragraph is based on the second sentence of paragraph 4.3(c) of NP44.

20. This paragraph is new and resolves, for distributions of securities other than shares, the ambiguity that exists under NP44 as to whether thesize of a distribution is required disclosure in a base PREP prospectus.

21. This paragraph is new and resolves, for distributions of shares, the ambiguity that exists under NP44 as to whether the size of a distributionis required disclosure in a base PREP prospectus.

22. This paragraph is based on paragraph 4.3(g) of NP44; the references to asset coverage ratios and dilution have been omitted.

23. This paragraph is based on paragraph 4.3(i) of NP44.

24. This paragraph is based on paragraph 4.3(j) of NP44.

25. This paragraph is new. Section 3.5 of the Policy states that there may be circumstances in which it is not appropriate that a credit supportersign a certificate, and that the Canadian securities regulatory authorities will consider applications for exemptions in this regard.

26. This subsection is new.

27. This paragraph is based on subparagraph 4.3(a)(1) of NP44.

28. This paragraph is based on subparagraph 4.3(a)(3) of NP44.

29. This paragraph is based on subparagraph 4.3(a)(4) of NP44; it has been modified to refer to the net proceeds of the distribution.

30. This paragraph is new and has been added for clarification.

31. This paragraph is based on subparagraph 4.3(a)(2) of NP44.

32. This paragraph is based on subparagraph 4.3(a)(6) of NP44.

33. This paragraph is based on subparagraph 4.3(a)(5) of NP44.

34. This paragraph is new and has been added for consistency with U.S. procedures.

35. This paragraph is based on subparagraph 4.3(a)(8) of NP44.

36. This paragraph is based on subparagraph 2.7(b)(2) of NP44.

37. This paragraph is based on subparagraph 2.7(c)(2) of NP44.

38. This paragraph is based on subparagraph 4.3(a)(9) of NP44 and has been modified for greater clarity.

39. The term "regulator" is defined in NI44-101 as meaning, in a local jurisdiction, the person set out in an appendix to that instrumentopposite the name of the local jurisdiction.

40. This paragraph is new.

41. This subsection is based on paragraph 4.3(f) of NP44.

42. This subsection is based on paragraphs 4.3(d) and (e) of NP44.

43. This section is based on paragraph 4.3(k) of NP44.

44. This section is new.

45. This section is based on the first sentence of paragraph 4.3(c) of NP44.

46. This section is based on paragraph 4.3(b) of NP44. The discretion of the regulator that appears in NP44 to permit changes, other than byway of exemption, has been omitted.

47. This section is new.

48. This subsection is based on subparagraph 4.3(b)(3) of NP44.

49. This paragraph is based on subparagraph 4.3(b)(1) of NP44.

50. This paragraph is based on subparagraph 4.3(b)(2) of NP44. The references in NP44 to disclosure of asset coverage ratios and dilutionhave been omitted.

51. This paragraph is based on subparagraph 4.3(b)(5) of NP44.

52. This paragraph is based on subparagraph 4.3(b)(6) of NP44.

53. This paragraph is new.

54. This paragraph is based on subparagraph 4.3(b)(7) of NP44.

55. This section is based on subparagraph 4.3(b)(4) of NP44.

56. This section is based on paragraph 4.3(k) of NP44.

57. The term "local jurisdiction" is defined in NI14-101. The definition is "in a national instrument adopted or made by a Canadian securitiesregulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate".

58. This section is based on the first sentence of paragraph 4.3(b) of NP44.

59. This section is based on the first sentence of section 4.5 of NP44.

60. This section is based on paragraph 4.4(d) of NP44.

61. This part is new.

62. This part is new.

63. The term "securities regulatory authority" is defined in NI14-101 as meaning, for a local jurisdiction, the securities commission or similarregulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction.

64. This section may be deleted from the National Instrument if it becomes unnecessary in light of the proposed National Policy on MutualReliance for Prospectuses.

65. The term "jurisdiction" is defined in NI14-101 as meaning a province or territory of Canada except when used in the term foreignjurisdiction.

66. The term "expedited review system" is defined in NI44-101 as meaning "the system established by the Memorandum of Understanding for Expedited Review of Short Form Prospectuses and Renewal AIFs dated December 18, 1996 of the Canadian securities regulatory authorities".

67. Subsections (1) and (2) are based on paragraphs 2.3(a) and 2.7(a) of National Policy Statement No. 44 ("NP44").

68. This subsection is based on the second sentence of paragraph 2.3(a) of NP44.

69. This subsection replaces paragraph 2.5(c) of NP44.

70. This subsection is based on paragraph 4.3(h) of NP44.

71. This section is based on paragraph 2.7(b)(2) of NP44.

72. This section is based on paragraph 2.7(c)(2) of NP44.

73. This section is based on the second sentence of section 4.5 of NP44.

74. This section is based on the third sentence of paragraph 4.3(c) of NP44.

75. This section is new.