Commission Approval of National Instrument: NI - 32-101 - Small Securityholder Selling and Purchase Arrangements

NOTICE OF RULE MADE BY THE COMMISSION

NATIONAL INSTRUMENT 32-101

SMALL SECURITYHOLDER SELLING AND PURCHASE ARRANGEMENTS

Notice of National Instrument

The Commission has, under section 143 of the Securities Act (the "Act"), made National Instrument 32-101 Small Securityholder Selling and PurchaseArrangements (the "National Instrument") as a Rule under the Act.

The National Instrument is derived from the Blanket Rulings (the "Blanket Rulings") entitled In the Matter of a Policy of The Toronto Stock Exchange on SmallSecurityholder Selling and Purchase Arrangements (1987), 10 OSCB 1455 and In the Matter of a Policy of the Montreal Exchange on Small SecurityholderSelling and Purchase Arrangements (1987), 10 OSCB 4938. The Blanket Rulings became deemed rules of the same name, which were revoked on March 1,1997 and replaced by the rules of the same name (the "Replacement Rules") notice of which was provided in (1997), 20 OSCB 1217. The Replacement Rulesexpire on the earlier of the date on which the National Instrument comes into force and July 1, 1998.

The National Instrument together with the material required by the Act to be delivered to the Minister of Finance were delivered on August 19, 1997. If theMinister does not approve the National Instrument, reject the National Instrument or return it to the Commission for further consideration, the NationalInstrument will come into force in Ontario on November 2, 1997. If the Minister approves the National Instrument, the National Instrument will come into force15 days after it is approved. The National Instrument will come into force on different dates in other jurisdictions.

Substance and Purpose of National Instrument

The National Instrument provides an exemption to an issuer and its agents from adviser and dealer registration requirements in Canadian securities legislation forcertain activities relating to arrangements that permit holders of small amounts of securities of the issuer to sell those securities or to acquire additional securities.The National Instrument is derived from blanket orders and rulings issued by the Canadian securities regulatory authorities.

The National Instrument is an initiative of the Canadian Securities Administrators (the "CSA"), and is expected to be adopted as a rule in each of BritishColumbia, Alberta, Ontario and Nova Scotia as a Commission regulation in Saskatchewan, and as a policy in all the other jurisdictions represented by the CSA.The National Instrument may be implemented by a blanket order or ruling in certain jurisdictions.

The National Instrument implements, in part, the recommendation of the CSA Task Force on Operational Efficiencies that Canadian securities regulatoryauthorities increase the co-ordination of regulation, including standardization of requirements.

Summary of National Instrument

The National Instrument provides an exemption from the adviser and dealer registration requirements under Canadian securities legislation for trades by an issueror its agents in furtherance of participation by existing holders of the issuer's securities in small securityholder selling and purchase arrangements in accordancewith the policy of certain stock exchanges.

The exemption is subject to the condition that neither the issuer nor its agents provide advice on participation by a securityholder in an arrangement, other than adescription of the operation of the arrangement, procedures for participation in the arrangement, or both. This condition is consistent with the manner in whichsmall securityholder selling and purchase arrangements are currently conducted.

In the National Instrument, the Canadian securities regulatory authorities recognize the policies of The Toronto Stock Exchange, The Montreal Exchange andThe Alberta Stock Exchange and provides the Canadian securities regulatory authorities with the ability to designate other stock exchanges that have policiessubstantially similar to the policy of The Toronto Stock Exchange.

The National Instrument also expands current exemptions available in several jurisdictions by allowing any agent of the company to use the exemption, instead oflimiting the exemption to agents that are transfer agents.

Summary of Written Comments Received by the CSA

The CSA did not receive any comments on the National Instrument.

Text of National Instrument

The text of the National Instrument follows.

DATED: August 22, 1997.

PART 1 DEFINITIONS AND INTERPRETATION

1.1 Definitions - In this Instrument

"adviser registration requirement" means the requirement in securities legislation that prohibits a person or company from acting as an adviser unless the personor company is registered in the appropriate category of registration under securities legislation;

"dealer registration requirement" means the requirement in securities legislation that prohibits a person or company from trading in a security unless the person orcompany is registered in the appropriate category of registration under securities legislation;

"Exchange" means

(a) The Toronto Stock Exchange;

(b) The Montreal Exchange;

(c) The Alberta Stock Exchange; or

(d) an exchange that

(i) has a by-law, rule, regulation or policy that is substantially similar to the policy of The Toronto Stock Exchange; and

(ii) is designated by the securities regulatory authority for the purpose of this Instrument; and

"policy" means

(a) in the case of The Toronto Stock Exchange, The Toronto Stock Exchange Policy Statement on Small Shareholder Selling and Purchase Arrangements as itexists on August 5, 1997 and every successor to that policy that does not change the significant subject matter of the policy;

(b) in the case of The Montreal Exchange, The Montreal Exchange Policy I-9 Small Shareholder Selling and Purchase Arrangements as it exists on August 5,1997 and every successor to that policy that does not change the significant subject matter of the policy;

(c) in the case of The Alberta Stock Exchange, The Alberta Stock Exchange Circular No.15 Small Shareholder Selling and Purchase Arrangements as it exists onAugust 5, 1997 and every successor to that circular that does not change the significant subject matter of the circular; and

(d) in the case of an Exchange referred to in paragraph (d) of the definition of Exchange, the by-law, rule, regulation or policy of the Exchange on smallshareholder selling and purchase arrangements and every successor to that by-law, rule, regulation or policy that does not change the significant subject matter ofthe by-law, rule, regulation or policy.

1.2 Interpretation - For the purposes of paragraph 2.1(c), an exemption from, or variation of, the maximum number of securities that a securityholder ispermitted to hold under a policy in order to be eligible to participate in the arrangement provided for in the policy is not an exemption from, or variation of, thesignificant subject matter of the policy.

PART 2 EXEMPTION

2.1 Exemption - The adviser registration requirement and the dealer registration requirement do not apply to a trade by an issuer or its agent, in securities of theissuer that are listed and posted for trading on an Exchange, if

(a) the trade is an act in furtherance of participation by the holders of the securities in an arrangement that is in accordance with the Exchange's policy;

(b) the issuer and its agent do not provide advice to a securityholder about the securityholder's participation in the arrangement referred to in paragraph (a), otherthan a description of the arrangement's operation, procedures for participation in the arrangement, or both;

(c) the trade is made in accordance with the policy of the Exchange, without resort to an exemption from, or variation of, the significant subject matter of thepolicy; and

(d) at the time of the trade after giving effect to a purchase under the arrangement, the market value of the maximum number of securities that a securityholder ispermitted to hold in order to be eligible to participate in the arrangement is not more than $25,000.