Final Rule (effective March 15, 2000): NI - 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues
Final Rule (effective March 15, 2000): NI - 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues
NATIONAL INSTRUMENT 62-103
THE EARLY WARNING SYSTEM AND RELATED TAKE-OVER BID AND
INSIDER REPORTING ISSUES
PART 1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
(1) In this Instrument
"acquisition announcement provisions" means the requirement in securities legislation for an offerorto issue a news release if, during a formal bid for voting or equity securities of a reporting issuer byan entity other than the offeror, the offeror acquires ownership of, or control over, securities of theclass subject to the bid that, together with the offeror's securities of the class, constitute an amountequal to or greater than the amount specified in securities legislation;
"acting jointly or in concert" has the meaning ascribed to that phrase in securities legislation, and,when used in connection with an entity, has the meaning ascribed in securities legislation as if theterm "entity" replaced the term "person or company" or similar term;
"applicable definitions" means
(a) the definitions of "take-over bid" and "offeror's securities" in the take-over provisions, and
(b) the control block distribution definition;
"applicable provisions" means
(a) the early warning requirements,
(b) Part 4,
(c) the moratorium provisions,
(d) the insider reporting requirement,
(e) the acquisition announcement provisions, and
(f) section 2.1 of National Instrument 62-101 Control Block Distribution Issues, and
(g) in Quebec, Policy Statement Q-12 Secondary Distribution through Solicitations under theSecurities Act (Quebec);
"business unit" means a legal entity or part of a legal entity, or a combination of legal entities or partsof legal entities, that engage in a distinct business or investment activity separately from otherbusinesses and investment activities of the relevant entities;
"class" means, in relation to a security, a class or series of a class of the security;
"control" means, for a security
(a) when used in connection with the insider reporting requirements, the take-over bidrequirements and related definitions and the early warning requirements, the power toexercise control or direction over the security, or similar term or expression used insecurities legislation; and
(b) when used in connection with the control block distribution definition, holding the security,or similar term or expression used in securities legislation;
"control block distribution definition" means the provisions of securities legislation listed in AppendixA;
"early warning requirements" means the provisions of securities legislation listed in Appendix B;
"effective control" means, for a reporting issuer, the control in fact of the reporting issuer by an entitythrough the ownership of, or control over, voting securities of the reporting issuer, other thansecurities held by way of security only;
"eligible institutional investor" means
(a) a financial institution,
(b) a pension fund that is regulated by either the Office of the Superintendent of FinancialInstitutions (Canada), a pension commission of a jurisdiction, or a similar regulatoryauthority,
(c) a mutual fund that is not a reporting issuer,
(d) an investment manager in relation to securities over which it exercises discretion to vote,acquire or dispose without the express consent of the beneficial owner, subject to applicablelegal requirements, general investment policies, guidelines, objectives or restrictions, or
(e) an entity referred to in clauses (D) or (F) of Rule 13d-1(b)(1)(ii) under the 1934 Act;
"entity" means a person or company or a business unit;
"equity security" has the meaning ascribed to that term in securities legislation;
"financial institution" means
(a) a Canadian financial institution,
(b) an entity that is engaged in financial services activities and that is supervised and regulatedunder the banking, insurance, trust or similar laws of, and incorporated in, the United Statesof America or Japan, or
(c) a credit institution, within the meaning of European Union Directive 77/780/EEC, whosehome member state for purposes of that European Union Directive is France, Germany,Italy or the United Kingdom of Great Britain and Northern Ireland;
"formal bid"
(a) has the meaning ascribed to that term in securities legislation, and
(b) in Quebec only, means a take-over bid or an issuer bid made in accordance with ChapterIII of Title IV, or section 119, of the Securities Act (Quebec);
"investment manager" means an entity that
(a) either
(i) is registered or licensed to provide investment counselling, portfolio managementor similar advisory services in respect of securities, or is exempt from therequirement to be so registered or licensed, under the securities laws of ajurisdiction or of Japan or under the Investment Advisers Act of 1940 of the UnitedStates of America, as amended, or
(ii) is subject to European Union Directive 93/22 on investment services in thesecurities field, and provides the portfolio management services referred to inSection A(3) of the Annex to that Directive, and whose home member state isFrance, Germany, Italy or the United Kingdom of Great Britain and NorthernIreland, and
(b) provides the services referred to in paragraph (a) for valuable consideration under acontractual arrangement;
"joint actor" means, in relation to an entity and a security, another entity acting jointly or in concertwith the entity in connection with the ownership of, or control over, the security;
"moratorium provisions" means the provisions of securities legislation listed in Appendix C;
"news release" includes a press release;
"offeror"
(a) has the meaning ascribed to that term in securities legislation, and
(b) in Quebec only, means a person or company making a take-over bid or issuer bid or anacquisition subject to sections 147.11, 147.12, 147.15 and 147.16 of the Securities Act(Quebec);
"offeror's securities"
(a) has the meaning ascribed to that term in securities legislation, and
(b) in Quebec only, means the securities included in the calculation of an offeror's interest undersections 111 and 112 of the Securities Act (Quebec);
"ownership" means, in relation to a security, the beneficial ownership of the security, and "owns","owned" and similar words have corresponding meanings;
"pledgee" includes a holder of any type of security interest;
"portfolio adviser" means an entity that provides investment advice or portfolio management servicesto, or for, an investment fund;
"private mutual fund"
(a) has the meaning ascribed to that term in securities legislation; and
(b) in Quebec only, means a mutual fund that is
(i) operated as an investment club where the conditions in subsection 3(12) of theSecurities Act (Quebec) are met; or
(ii) referred to in subsection 3(11) of the Securities Act (Quebec).
"securityholding percentage" means, in relation to an entity and a class of securities, the percentageof the outstanding securities of the class owned, together with the percentage controlled by the entity,determined in accordance with the provisions of applicable securities legislation listed in Appendix Dand after application of any aggregation relief available under Part 5 that is relied on by the entity;
"take-over provisions" means the provisions in securities legislation that regulate take-over bids andissuer bids; and
"underwriting period" means, for an entity acting as an underwriter of securities, the periodcommencing from the date of execution of an underwriting agreement or commitment until
(a) for securities acquired by the entity upon the exercise of an over-allotment option, fourbusiness days after the acquisition of those securities, and
(b) for all other securities, the earlier of
(i) the expiration of 40 days after the date of the closing of the purchase of thesecurities, and
(ii) the date of the completion of the distribution by the underwriter of the securities.
1.2 Deemed Effective Control - For the purposes of the definition of "effective control", an entity that, either aloneor together with one or more joint actors, owns or controls voting securities carrying more than 30 percent ofthe votes attached to all of the outstanding voting securities of a reporting issuer shall, in the absence ofevidence to the contrary, be deemed to possess effective control over the reporting issuer.
PART 2 GENERAL RELIANCE AND REPORTING PROVISIONS
2.1 Reliance on Reported Outstanding Shares
(1) Subject to subsection (2), in determining its securityholding percentage in a class of securities for thepurposes of the early warning requirements or Part 4, an entity may rely upon information mostrecently provided by the issuer of the securities in a material change report or under section 2.1 ofNational Instrument 62-102 Disclosure of Outstanding Share Data, whichever contains the mostrecent relevant information.
(2) Subsection (1) does not apply if the entity has knowledge both
(a) that the information filed is inaccurate or has changed; and
(b) of the correct information.
2.2 Copies of News Release and Report - An entity that files a news release and report under the early warningrequirements, or a report under Part 4, in relation to a reporting issuer shall immediately send a copy of eachfiling to the reporting issuer.
2.3 No Duplication of News Releases or Reports
(1) An entity that is required to issue a news release under both the early warning requirements and theacquisition announcement provisions is exempt from the requirement to issue the news releasecontained in the provision requiring the later release if
(a) the news release is filed under the provision with the earlier reporting requirement; and
(b) the facts required to be contained in the two news releases are identical.
(2) An entity that is required to file a report under the acquisition announcement provisions and eitherthe early warning requirements or Part 4 is exempt from the requirement to file the report under theprovision requiring the later report if
(a) the report is filed under the provision requiring the earlier report; and
(b) the facts required to be contained in the two reports are identical.
PART 3 EARLY WARNING REQUIREMENTS
3.1 Contents of News Releases and Reports
(1) A news release required under the early warning requirements shall contain the information requiredby Appendix E.
(2) Despite subsection (1), a news release required under the early warning requirements may omit theinformation otherwise required by paragraphs 1(d), (g), (h) and (i) of Appendix E, and paragraph 1(j) of Appendix E to the extent that the information relates to paragraphs 1(d), (g), (h) and (i), if
(a) the omitted information is included in the corresponding report required by securitieslegislation; and
(b) the news release indicates the name and telephone number of an individual to contact inorder to obtain a copy of the report.
(3) The offeror shall send a copy of the report referred to in paragraph (2)(a) promptly to any entityrequesting it.
3.2 Filing Relief for Joint Actors - The early warning requirements and the acquisition announcement provisionsdo not apply to a joint actor of an offeror in connection with the obligation to make a specific filing of a newsrelease or report if
(a) the offeror files a news release or report at the time that the joint actor would be required to file; and
(b) the news release or report filed discloses the information concerning the joint actor required bysecurities legislation.
3.3 Exemption from Early Warning Requirements for Mutual Fund Securities - The early warningrequirements do not apply in connection with the ownership or control of securities issued by a mutual fundto which National Instrument 81-102 Mutual Funds applies.
PART 4 ALTERNATIVE MONTHLY REPORTING SYSTEM
4.1 Exemption from the Early Warning Requirements - The early warning requirements do not apply to aneligible institutional investor for a reporting issuer if the eligible institutional investor
(a) is not disqualified by section 4.2 from filing reports under this Part for the reporting issuer; and
(b) either
(i) intends to file reports under this Part for the reporting issuer, if no reports are yet requiredto be filed; or
(ii) is not in arrears of filing reports under this Part for the reporting issuer, if a report has beenrequired by this Part to be filed.
4.2 Disqualification - An eligible institutional investor shall not file reports under this Part for a reporting issuerif the eligible institutional investor, or a joint actor
(a) makes or intends to make a formal bid for securities of the reporting issuer; or
(b) proposes or intends to propose a reorganization, amalgamation, merger, arrangement or similarbusiness combination with a reporting issuer that if completed would reasonably be expected to resultin the eligible institutional investor, either alone or together with any joint actors, possessing effectivecontrol over the reporting issuer or a successor to all or a part of the business of the reporting issuer.
4.3 Reporting and Filing Requirements
(1) If an eligible institutional investor is relying on the exemption in section 4.1 for a reporting issuer andbecomes disqualified under section 4.2 from filing, or no longer intends to file, reports under this Partfor the reporting issuer, the eligible institutional investor shall
(a) immediately issue and file a news release; and
(b) within two business days after filing the news release, file a report.
(2) The news release and report required by subsection (1) shall contain the information required byAppendix F.
(3) An eligible institutional investor that is required to file a report under subsection (1) for a reportingissuer is not exempt from the early warning requirements for that reporting issuer as of the date onwhich the news release required by subsection (1) is required to be filed.
(4) An eligible institutional investor that files reports under this Part for a reporting issuer and thatcontrols securities of the reporting issuer that are owned by another entity shall
(a) on request by the entity, promptly advise the entity of the number of securities held on itsbehalf; and
(b) if the eligible institutional investor has reason to believe that the securityholding percentageof the entity in a class of voting or equity securities of the reporting issuer equals 10 percentor more, promptly advise the entity of the number of securities held on its behalf.
4.4 Restrictions on Acquisitions - An eligible institutional investor that has become disqualified under section4.2 from filing reports under this Part for a reporting issuer, if the securityholding percentage of the eligibleinstitutional investor in a class of voting or equity securities of the reporting issuer is 10 percent or more, shallnot acquire ownership of, or control over, any additional securities of the reporting issuer for the period
(a) starting at the time that the news release referred to in paragraph 4.3(1)(a) is required to be filed; and
(b) ending 10 days after the news release is filed.
4.5 Filing Obligations under this Part - In order to rely on the exemption provided by section 4.1, an eligibleinstitutional investor shall file a report
(a) within 10 days after the end of the month in which the eligible institutional investor elected to beginto file reports for the reporting issuer under this Part, if the securityholding percentage of the eligibleinstitutional investor in a class of voting or equity securities of the reporting issuer at the end of themonth is 10 percent or more;
(b) within 10 days after the end of the month in which the securityholding percentage of the eligibleinstitutional investor in a class of voting or equity securities of the reporting issuer, as at the end ofthe month, increased to 10 percent or more;
(c) within 10 days after the end of the month in which the securityholding percentage of the eligibleinstitutional investor in a class of voting or equity securities of the reporting issuer, as at the end ofthe month, increased or decreased past thresholds that are products of whole numbers multiplied by2.5 percent of the outstanding securities of the class and that are in excess of 10 percent of theoutstanding securities of the class; and
(d) within 10 days after the end of the month in which the securityholding percentage of the eligibleinstitutional investor in a class of voting or equity securities of the reporting issuer, as at the end ofthe month, decreased to less than 10 percent.
4.6 Change Reports - In addition to the filing requirements of section 4.5, an eligible institutional investor shallfile a report within 10 days after the end of the month in which there has been a change in a material factcontained in the report of the eligible institutional investor most recently filed under this Part.
4.7 Contents of Reports
(1) A report filed under this Part shall contain the information required by Appendix G.
(2) Despite subsection (1), a report filed under paragraph 4.5(d) may be limited to
(a) the name and address of the eligible institutional investor;
(b) the name of the reporting issuer and the designation and number or principal amount ofvoting or equity securities of the reporting issuer in respect of which the report is being filedand the securityholding percentage of the eligible institutional investor in the class ofsecurities; and
(c) a statement that the eligible institutional investor is eligible to file reports under this Part.
4.8 Exemptions - The requirement to file a report under this Part does not apply to a joint actor with an eligibleinstitutional investor in connection with a specific filing if
(a) the eligible institutional investor files a report under this Part at the time that the joint actor is requiredto file; and
(b) the report discloses the information concerning the joint actor required by this Instrument.
PART 5 AGGREGATION RELIEF
5.1 Separate Business Units - An eligible institutional investor, or an affiliate or associate of an eligibleinstitutional investor, that conducts business or investment activities through business units may, for thepurposes of the applicable provisions and securities legislation related to the applicable definitions, treatsecurities that are owned or controlled through a business unit, or securities into which those securities areconvertible, exerciseable or exchangeable, separately from securities owned or controlled through any otherof its business units if
(a) decisions on each of the acquisition, disposition, holding or voting of the securities owned orcontrolled by a business unit are made in all circumstances by that business unit;
(b) the business unit is not a joint actor with any other business unit with respect to the securities,determined without regard to the presumption in securities legislation that an associate or affiliate ofan offeror is presumed to be acting jointly or in concert with the offeror;
(c) no entity that makes, advises on, participates in the formulation of, or exercises influence over,decisions on the acquisition, disposition, holding or voting of securities owned or controlled by or onbehalf of a business unit also makes, advises on, participates in the formulation of or exercisesinfluence over, decisions on the acquisition, disposition, holding or voting of securities owned orcontrolled by or on behalf of any other business unit, except for the purposes of
(i) preparing research reports,
(ii) monitoring or ensuring compliance with regulatory requirements, or
(iii) setting, monitoring or ensuring compliance with general investment policies, guidelines,objectives or restrictions;
(d) the eligible institutional investor or affiliate or associate has reasonable grounds for believing thateach business unit complies with the applicable provisions and securities legislation related to theapplicable definitions in connection with the securities owned or controlled by the business unit;
(e) the eligible institutional investor or affiliate or associate has taken reasonable steps to ensure thateach business unit complies with the requirements of this Part; and
(f) the eligible institutional investor or affiliate or associate complies with section 5.3.
5.2 Securities Held by an Investment Fund - An eligible institutional investor, or an affiliate or associate of aneligible institutional investor, may, for the purposes of the applicable provisions and securities legislationrelated to the applicable definitions, treat securities owned or controlled by an investment fund over which theeligible institutional investor, affiliate or associate exercises or shares control, or securities into which thosesecurities are convertible, exercisable or exchangeable, separately from other securities owned or controlledby the eligible institutional investor or affiliate or associate if
(a) the investment fund is not a private mutual fund;
(b) a portfolio adviser manages the investment fund on behalf of the eligible institutional investor undera written agreement;
(c) the portfolio adviser has been identified as managing the investment fund in a document providedto an investor;
(d) none of the eligible institutional investor, its affiliates or associates, or a director, officer, partner,employee or agent of the eligible institutional investor or its affiliates or associates, makes, adviseson, participates in the formulation of, or exercises influence over, decisions made by the portfolioadviser on the acquisition, disposition, holding or voting of securities, except for the purposes of
(i) preparing research reports,
(ii) monitoring or ensuring compliance with regulatory requirements, or
(iii) setting, monitoring or ensuring compliance with general investment policies, guidelines,objectives or restrictions;
(e) the eligible institutional investor or affiliate or associate has reasonable grounds for believing that theportfolio adviser complies with the applicable provisions and securities legislation related to theapplicable definitions in connection with securities owned or controlled by the investment fund;
(f) the portfolio adviser neither controls nor is controlled by the eligible institutional investor or an affiliateor associate of the eligible institutional investor; and
(g) the eligible institutional investor or affiliate or associate complies with section 5.3.
5.3 Reporting and Record Keeping
(1) In addition to the requirements of sections 5.1 and 5.2, in order to rely on section 5.1 or 5.2, aneligible institutional investor or an affiliate or associate shall indicate in any document released orfiled under the applicable provisions or securities legislation related to the applicable definitions
(a) its reliance on either section 5.1 or 5.2;
(b) the identity of the business units or investment funds for which ownership and control of thesecurities has been disclosed; and
(c) the fact that securities owned or controlled by other business units or investment funds havenot been, or may not have been, disclosed.
(2) An eligible institutional investor or affiliate or associate shall maintain records of the detailsconcerning
(a) business units of the entity that are treated separately, by reason of section 5.1, for thepurposes of compliance with the applicable provisions and securities legislation related tothe applicable definitions; and
(b) investment funds whose ownership of, or control over, securities are treated separately, byreason of section 5.2, for the purposes of compliance with the applicable provisions andsecurities legislation related to the applicable definitions.
5.4 No Requirement to Satisfy Insider Reporting Requirement - If an eligible institutional investor, or anaffiliate or associate of an eligible institutional investor, is relying on this Part so that it is not subject to theinsider reporting requirement for a reporting issuer, then every director or senior officer of the eligibleinstitutional investor, or of the affiliate or associate of an eligible institutional investor, who is an insider of thereporting issuer solely as a result of being a director or senior officer of the eligible institutional investor, or theaffiliate or associate of an eligible institutional investor, is not subject to the insider reporting requirement forthe reporting issuer.
PART 6 ISSUER ACTIONS
6.1 Issuer Actions
(1) An entity is exempt from the early warning requirements and the obligation to report under Part 4 inconnection with an increase in the securityholding percentage of the entity in a class of securities ofa reporting issuer that arises without any action being taken by the entity and solely from
(a) a reduction in outstanding securities that occurs as a result of redemptions, retractions orother repurchases by the reporting issuer, that affect or are offered to all securityholders ofthe relevant class; or
(b) a transaction effected under National Instrument 32-101 Small Securityholder Selling andPurchase Arrangements.
(2) An entity is exempt from the early warning requirements and the obligation to report under Part 4 inconnection with a decrease in the securityholding percentage of the entity in a class of securities ofa reporting issuer that arises without any action being taken by the entity and solely from
(a) an increase in outstanding securities that occurs as a result of treasury issuances ofsecurities by the reporting issuer; or
(b) a transaction effected under National Instrument 32-101 Small Securityholder Selling andPurchase Arrangements.
(3) An entity may rely upon an exemption provided by this section in connection with a class of securitiesonly until the entity undertakes any transaction that changes the securityholding percentage of theentity in that class of securities.
(4) An entity that undertakes a transaction described in subsection (3) shall comply with the earlywarning requirements or Part 4 in connection with the class of securities referred to in that subsectionin a manner that reflects the changes in the securityholding percentage of the entity in that class ofsecurities since the last news release or report made or filed under the early warning requirementsor Part 4.
PART 7 UNDERWRITING EXEMPTION
7.1 Underwriting Exemption - An entity is exempt from the early warning requirements and the obligation toreport under Part 4 in respect of securities owned by the entity in its capacity as underwriter or securities intowhich those securities are convertible, or exerciseable or exchangeable, during the underwriting period, if
(a) the entity is engaged in the business of an underwriter of securities; and
(b) the entity or the issuer of the securities has issued and filed a news release that
(i) announces the proposed underwriting, and
(ii) identifies the reporting issuer and the designation and number or principal amount of thesecurities underwritten.
PART 8 RELIEF FOR PLEDGEES
8.1 Relief for Pledgees
(1) For securities that are controlled by a person or company as a pledgee, and any securities into whichthose securities are convertible, exercisable or exchangeable, in either case that are pledged,mortgaged or otherwise encumbered as collateral for a debt under a written pledge agreement andin the ordinary course of the business of the person or company, the person or company is exemptfrom the applicable provisions, and those securities are not required to be taken into account for thepurposes of securities legislation related to the applicable definitions.
(2) Subsection (1) does not apply at any time that the person or company is legally entitled to disposeof the securities as pledgee for the purpose of applying proceeds of realization in repayment of thesecured debt.
8.2 Further Relief for de minimis Pledgees
(1) Despite subsection 8.1(2), for securities that are controlled by a person or company as a pledgee,and any securities into which those securities are convertible, exercisable or exchangeable, in eithercase that are or were pledged, mortgaged or otherwise encumbered as collateral for a debt, undera written pledge agreement and in the ordinary course of the business of the person or company, theperson or company is exempt from the applicable provisions, and those securities are not requiredto be taken into account for the purposes of securities legislation related to the applicable definitions,even if the person or company is legally entitled to dispose of the securities as pledgee for thepurpose of applying proceeds of realization in repayment of the secured debt, if
(a) the principal amount of the debt, together with the principal amount of all other debts of orguaranteed by the same borrower to the person or company, does not exceed $2,000,000;and
(b) the pledged securities, and securities into which the pledged securities are convertible,exercisable or exchangeable, constitute less than 10 percent of a class of voting or equitysecurities.
8.3 Corresponding Insider Reporting Relief - If a person or company is exempt under section 8.1 or 8.2 fromthe insider reporting requirement for those securities of a reporting issuer that it controls as pledgee, everydirector or senior officer of the person or company who is an insider of the reporting issuer solely as a resultof being a director or senior officer of the person or company that is an insider of the reporting issuer is exemptfrom the insider reporting requirement for those securities.
PART 9 INSIDER REPORTING EXEMPTION; EARLY WARNING DECREASE REPORTS
9.1 Insider Reporting Exemption; Early Warning Decrease Reports
(1) Subject to subsections (3) and (4), an eligible institutional investor is exempt from the insiderreporting requirement for a reporting issuer if
(a) the eligible institutional investor has filed the report required under the early warningrequirements or Part 4 for the reporting issuer in connection with the current securityholdingpercentage of the eligible institutional investor in the classes of voting and equity securitiesof the reporting issuer;
(b) the eligible institutional investor is not disqualified under section 4.2 from filing reports underPart 4;
(c) the eligible institutional investor does not have knowledge of any material fact or materialchange with respect to the reporting issuer that has not been generally disclosed;
(d) the eligible institutional investor does not receive in the ordinary course of its business andinvestment activities knowledge of any material fact or material change with respect to thereporting issuer that has not been generally disclosed;
(e) there are no directors or officers of the reporting issuer who were, or could reasonably beseen to have been, selected, nominated or designated by the eligible institutional investoror any joint actor; and
(f) the eligible institutional investor, either alone or together with any joint actors, does notpossess effective control of the reporting issuer.
(2) An eligible institutional investor relying on the exemption in subsection (1) shall maintain records thatinclude the information that, absent this section, would have been required to be included in a reportfiled under the insider reporting requirement.
(3) Despite subsection (1), an eligible institutional investor that is filing reports under the early warningrequirements for a reporting issuer, and whose securityholding percentage in a class of voting orequity securities of the reporting issuer decreases by two percent or more, may rely upon theexemption contained in subsection (1) for the reporting issuer only if
(a) the eligible institutional investor treats the decrease as a change in a material fact for thepurposes of securities legislation pertaining to the early warning requirements; or
(b) the decrease arose without any action being taken by the eligible institutional investor andsolely from an increase in outstanding securities that occurred as a result of treasuryissuances of securities by the reporting issuer, and the eligible institutional investor has notundertaken any transaction in respect of the class of securities since the decrease.
(4) Despite subsection (1), an eligible institutional investor that is an insider of a reporting issuer maynot rely upon the exemption contained in subsection (1) if
(a) the eligible institutional investor, either alone or with a joint actor or joint actors, purchasedin the previous month, directly or indirectly, 50 percent or more of all of the securities of aclass that were reported sold on stock exchanges, over-the-counter markets or both in theprevious month; or
(b) the eligible institutional investor, either alone or with a joint actor or joint actors, sold in theprevious month, directly or indirectly, 50 percent or more of all of the securities of a classthat were reported sold on stock exchanges, over-the-counter markets or both in theprevious month.
(5) If an eligible institutional investor is exempt under subsection (1) from the insider reportingrequirement for a reporting issuer, every director or senior officer of the eligible institutional investorwho is an insider of the reporting issuer solely as a result of being director or senior officer of theeligible institutional investor is exempt from the insider reporting requirement for the reporting issuer.
PART 10 MORATORIUM RELIEF
10.1 Moratorium Relief
(1) An entity is exempt from the moratorium provisions in respect of the acquisition of, or offers toacquire, securities, if those acquisitions or offers are made by an investment manager acting onbehalf of the entity without the direction or prior knowledge of the entity.
(2) Subsection (1) does not apply to an investment manager acting as principal.
(3) An entity is exempt from the moratorium provisions in respect of any acquisitions of, or offers toacquire, securities made solely in its capacity as an approved specialist, or market maker, recognizedby a stock exchange or an over-the-counter market that represents a published market for thesecurities.
(4) An eligible institutional investor is exempt from the moratorium provisions in respect of securities ofa reporting issuer at any time in which
(a) the eligible institutional investor is using the exemption in section 4.1 in connection withfilings relating to securities of that reporting issuer; or
(b) the eligible institutional investor is subject to the restrictions contained in section 4.4.
PART 11 EXEMPTIONS
11.1 Exemptions
(1) The regulator or the securities regulatory authority may grant an exemption to this Instrument, inwhole or 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.
PART 12 EFFECTIVE DATE
12.1 Effective Date - This Instrument comes into force on March 15, 2000.
JURISDICTION SECURITIES LEGISLATION REFERENCE
ALBERTA Clause 1(f)(iii) of the Securities Act (Alberta)
BRITISH COLUMBIA Paragraph (c) of the definition of "distribution" contained in subsection 1(1) of the SecuritiesAct (British Columbia)
MANITOBA Paragraph 1(b) of the definition of "primary distribution to the public" contained in subsection1(1) of the Securities Act (Manitoba)
NEW BRUNSWICK Paragraph (b) of the definition of "primary distribution to the public" contained in section 1of the Security Frauds Prevention Act (New Brunswick)
NEWFOUNDLAND Clause 2(1)(l)(iii) of the Securities Act (Newfoundland)
NOVA SCOTIA Clause 2(1)(l)(iii) of the Securities Act (Nova Scotia)
ONTARIO Paragraph (c) of the definition of "distribution" contained in subsection 1(1) of the SecuritiesAct (Ontario)
PRINCE EDWARD Clause 1(b.1)(iii) of the Securities Act (Prince Edward Island)
ISLAND
SASKATCHEWAN Subclause 2(1)(r)(iii) of The Securities Act, 1988 (Saskatchewan)
JURISDICTION SECURITIES LEGISLATION REFERENCE
ALBERTA Subsections 141(1), 141(2), and 141(3) of the Securities Act (Alberta)
BRITISH COLUMBIA Subsections 111(1) and 111(2) of the Securities Act (British Columbia)
MANITOBA Subsections 92(1) and 92(2) of the Securities Act (Manitoba)
NEWFOUNDLAND Subsections 102(1) and 102(2) of the Securities Act (Newfoundland)
NOVA SCOTIA Subsections 107(1) and 107(2) of the Securities Act (Nova Scotia)
ONTARIO Subsections 101(1) and 101(2) of the Securities Act (Ontario)
QUEBEC Sections 147.11 and 147.12 of the Securities Act (Quebec)
SASKATCHEWAN Subsections 110(1) and 110(2) of The Securities Act, 1988 (Saskatchewan)
NATIONAL INSTRUMENT 62-103
JURISDICTION SECURITIES LEGISLATION REFERENCE
ALBERTA Subsection 141(4) of the Securities Act (Alberta)
BRITISH COLUMBIA Subsection 111(3) of the Securities Act (British Columbia)
MANITOBA Subsection 92(3) of the Securities Act (Manitoba)
NEWFOUNDLAND Subsection 102(3) of the Securities Act (Newfoundland)
NOVA SCOTIA Subsection 107(3) of the Securities Act (Nova Scotia)
ONTARIO Subsection 101(3) of the Securities Act (Ontario)
QUEBEC Section 147.14 of the Securities Act (Quebec)
SASKATCHEWAN Subsection 110(3) of The Securities Act, 1988 (Saskatchewan)
NATIONAL INSTRUMENT 62-103
JURISDICTION SECURITIES LEGISLATION REFERENCE
ALBERTA Sections 5 and 6, subsections 131(4), 131(5) and 131(6), and section 131.1 of the SecuritiesAct (Alberta)
BRITISH COLUMBIA Subsection 1(4) and sections 95 and 96 of the Securities Act (British Columbia)
MANITOBA Subsections 1(6) and 1(7) and sections 81 and 82 of the Securities Act (Manitoba)
NEWFOUNDLAND Subsections 2(5) and 2(6) and sections 91 and 92 of the Securities Act (Newfoundland)
NOVA SCOTIA Subsections 2(5) and 2(6) and sections 96 and 97 of the Securities Act (Nova Scotia)
ONTARIO Subsections 1(5) and 1(6) and sections 90 and 91 of the Securities Act (Ontario)
QUEBEC Sections 111 and 112 of the Securities Act (Quebec)
SASKATCHEWAN Subsections 2(5) and 2(6) and sections 99 and 100 of The Securities Act, 1988(Saskatchewan)
REQUIRED DISCLOSURE IN NEWS RELEASE FILED UNDER EARLY WARNING REQUIREMENTS
1. For each class of securities involved in a transaction or occurrence giving rise to an obligation to file a newsrelease under the early warning requirements and, if applicable, for each class of voting or equity securities intowhich the securities of the class are convertible, exercisable or exchangeable, the news release shall include:
(a) the name and address of the offeror;
(b) the designation and number or principal amount of securities and the offeror's securityholding percentagein the class of securities of which the offeror acquired ownership or control in the transaction oroccurrence giving rise to the obligation to file the news release, and whether it was ownership or controlthat was acquired in those circumstances;
(c) the designation and number or principal amount of securities and the offeror's securityholding percentagein the class of securities immediately after the transaction or occurrence giving rise to obligation to filethe news release;
(d) the designation and number or principal amount of securities and the percentage of outstanding securitiesof the class of securities referred to in paragraph (c) over which
(i) the offeror, either alone or together with any joint actors, has ownership and control,
(ii) the offeror, either alone or together with any joint actors, has ownership but control is held by otherpersons or companies other than the offeror or any joint actor, and
(iii) the offeror, either alone or together with any joint actors, has exclusive or shared control but doesnot have ownership;
(e) the name of the market in which the transaction or occurrence that gave rise to the news release tookplace;
(f) the purpose of the offeror and any joint actors in effecting the transaction or occurrence that gave rise tothe news release, including any future intention to acquire ownership of, or control over, additionalsecurities of the reporting issuer;
(g) the general nature and the material terms of any agreement, other than lending arrangements, withrespect to securities of the reporting issuer entered into by the offeror, or any joint actor, and the issuerof the securities or any other entity in connection with the transaction or occurrence giving rise to the newsrelease, including agreements with respect to the acquisition, holding, disposition or voting of any of thesecurities;
(h) the names of any joint actors in connection with the disclosure required by this Appendix;
(i) in the case of a transaction or occurrence that did not take place on a stock exchange or other market thatrepresents a published market for the securities, including an issuance from treasury, the nature and valueof the consideration paid by the offeror; and
(j) if applicable, a description of any change in any material fact set out in a previous report by the entityunder the early warning requirements or Part 4 in respect of the reporting issuer's securities.
2. Despite paragraph (1)(b), an offeror may omit the securityholding percentage from a news release if it is includedin the corresponding report filed under the early warning requirements and the change in percentage wouldrepresent less than 1 percent of the class.
3. A news release may also include
(a) information in addition to that required by this Instrument; and
(b) a declaration that the issuance of the news release is not an admission that an entity named in the newsrelease owns or controls any described securities or is a joint actor with another named entity.
REQUIRED DISCLOSURE IN NEWS RELEASE AND REPORT FILED BY AN ELIGIBLE INSTITUTIONAL INVESTORUNDER SECTION 4.3
1. For each class of securities involved in an occurrence giving rise to an obligation to file a news release undersection 4.3 and, if applicable, for each class of voting or equity securities into which the securities of the classare convertible, exercisable or exchangeable, the news release shall include:
(a) a statement that the eligible institutional investor is ceasing to file reports under Part 4 for the reportingissuer;
(b) the reasons for doing so;
(c) the name and address of the eligible institutional investor;
(d) the designation and number or principal amount of securities and the eligible institutional investor'ssecurityholding percentage in the class of securities immediately after the occurrence giving rise toobligation to file the news release;
(e) the designation and number or principal amount of securities and the percentage of outstanding securitiesof the class of securities referred to in paragraph (d) over which
(i) the eligible institutional investor, either alone or together with any joint actors, has ownership andcontrol,
(ii) the eligible institutional investor, either alone or together with any joint actors, has ownership butcontrol is held by other persons or companies other than the eligible institutional investor or anyjoint actor, and
(iii) the eligible institutional investor, either alone or together with any joint actors, has exclusive orshared control but does not have ownership;
(f) the purpose of the eligible institutional investor and any joint actors in effecting the occurrence that gaverise to the news release, including any future intention to acquire ownership of, or control over, additionalsecurities of the reporting issuer;
(g) the general nature and the material terms of any agreement, other than lending arrangements, withrespect to securities of the reporting issuer entered into by the eligible institutional investor, or any jointactor, and the issuer of the securities or any other entity in connection with the occurrence giving rise tothe news release, including agreements with respect to the acquisition, holding, disposition or voting ofany of the securities;
(h) the names of any joint actors in connection with the disclosure required by this Appendix;
(i) in the case of an occurrence that did not take place on a stock exchange or other market that representsa published market for the securities, including an issuance from treasury, the nature and value of theconsideration paid by the eligible institutional investor; and
(j) if applicable, a description of any change in any material fact set out in a previous report by the eligibleinstitutional investor under the early warning requirements or Part 4 in respect of the reporting issuer'ssecurities.
2. A news release may also include
(a) information in addition to that required by this Instrument; and
(b) a declaration that the issuance of the news release is not an admission that an entity named in the newsrelease owns or controls any described securities or is a joint actor with another named entity.
REQUIRED DISCLOSURE IN REPORT FILED BY AN ELIGIBLE INSTITUTIONAL INVESTOR UNDER PART 4
1. For each class of securities required to be reported upon under Part 4, a report shall include:
(a) the name and address of the eligible institutional investor;
(b) the net increase or decrease in the number or principal amount of securities, and in the eligibleinstitutional investor's securityholding percentage in the class of securities, since the last report filed bythe eligible institutional investor under Part 4 or the early warning requirements;
(c) the designation and number or principal amount of securities and the eligible institutional investor'ssecurityholding percentage in the class of securities at the end of the month for which the report is made;
(d) the designation and number or principal amount of securities and the percentage of outstanding securitiesreferred to in paragraph (c) over which
(i) the eligible institutional investor, either alone or together with any joint actors, has ownership andcontrol,
(ii) the eligible institutional investor, either alone or together with any joint actors, has ownership butcontrol is held by other entities other than the eligible institutional investor or any joint actor, and
(iii) the eligible institutional investor, either alone or together with any joint actors, has exclusive orshared control but does not have ownership;
(e) the purpose of the eligible institutional investor and any joint actors in acquiring or disposing of ownershipof, or control over, the securities, including any future intention to acquire ownership of, or control over,additional securities of the reporting issuer;
(f) the general nature and the material terms of any agreement, other than lending arrangements, withrespect to securities of the reporting issuer entered into by the eligible institutional investor, or any jointactor, and the issuer of the securities or any other entity in connection with any transaction or occurrenceresulting in the change in ownership or control giving rise to the report, including agreements with respectto the acquisition, holding, disposition or voting of any of the securities;
(g) the names of any joint actors in connection with the disclosure required by this Appendix;
(h) if applicable, a description of any change in any material fact set out in a previous report by the eligibleinstitutional investor under the early warning requirements or Part 4 in respect of the reporting issuer'ssecurities; and
(i) a statement that the eligible institutional investor is eligible to file reports under Part 4 in respect of thereporting issuer.
2. Despite paragraph (1)(b), an eligible institutional investor may omit the securityholding percentage from a reportif the change in percentage is less than 1 percent of the class.
3. A report may also include
(a) information in addition to that required by this Instrument; and
(b) a declaration that the filing of the report is not an admission that an entity named in the report owns orcontrols any described securities or is a joint actor with another named entity.
NATIONAL INSTRUMENT 62-103
THE EARLY WARNING SYSTEM AND RELATED TAKE-OVER BID AND
INSIDER REPORTING ISSUES
TABLE OF CONTENTS
PART TITLE
PART 1 DEFINITIONS AND INTERPRETATION
1.1 Definitions
1.2 Deemed Effective Control
PART 2 GENERAL RELIANCE AND REPORTING PROVISIONS
2.1 Reliance on Reported Outstanding Shares
2.2 Copies of News Release and Report
2.3 No Duplication of News Releases or Reports
PART 3 EARLY WARNING REQUIREMENTS
3.1 Contents of News Releases and Reports
3.2 Filing Relief for Joint Actors
3.3 Exemption from Early Warning Requirements for Mutual Fund Securities
PART 4 ALTERNATIVE MONTHLY REPORTING SYSTEM
4.1 Exemption from the Early Warning Requirements
4.2 Disqualification
4.3 Reporting and Filing Requirements
4.4 Restrictions on Acquisitions
4.5 Filing Obligations under this Part
4.6 Change Reports
4.7 Contents of Reports
4.8 Exemptions
PART 5 AGGREGATION RELIEF
5.1 Separate Business Units
5.2 Securities Held by an Investment Fund
5.3 Reporting and Record Keeping
5.4 No Requirement to Satisfy Insider Reporting Requirement
PART 6 ISSUER ACTIONS
6.1 Issuer Actions
PART 7 UNDERWRITING EXEMPTION
7.1 Underwriting Exemption
PART 8 RELIEF FOR PLEDGEES
8.1 Relief for Pledgees
8.2 Further Relief for de minimis Pledgees
8.3 Corresponding Insider Reporting Relief
PART 9 INSIDER REPORTING EXEMPTION; EARLY WARNING DECREASE REPORTS
9.1 Insider Reporting Exemption; Early Warning Decrease Reports
PART 10 MORATORIUM RELIEF
10.1 Moratorium Relief
PART 11 EXEMPTIONS
11.1 Exemptions
PART 12 EFFECTIVE DATE
12.1 Effective Date
APPENDIX A CONTROL BLOCK DISTRIBUTION DEFINITION
APPENDIX B EARLY WARNING REQUIREMENTS
APPENDIX C MORATORIUM PROVISIONS
APPENDIX D SECURITY OWNERSHIP AND CONTROL PROVISIONS
APPENDIX E REQUIRED DISCLOSURE IN NEWS RELEASE FILED UNDER EARLY WARNINGREQUIREMENTS
APPENDIX F REQUIRED DISCLOSURE IN NEWS RELEASE AND REPORT FILED BY AN ELIGIBLEINSTITUTIONAL INVESTOR UNDER SECTION 4.3
APPENDIX G REQUIRED DISCLOSURE IN REPORT FILED BY AN ELIGIBLE INSTITUTIONAL INVESTORUNDER PART 4