Final National Instrument (effective April 1, 1997): NI - 14-101 - National Definitions
Final National Instrument (effective April 1, 1997): NI - 14-101 - National Definitions
NATIONAL INSTRUMENT 14-101DEFINITIONS
Substance and Purpose of Proposed Amendment
National Instrument 14-101 Definitions (the "National Instrument"), which was adopted byeach of the jurisdictions of the Canadian Securities Administrators (the "CSA") and cameinto force on April 1, 1997(1), was designed to achieve three purposes. First, the NationalInstrument was intended to provide a national approach to interpretation of nationalinstruments and increase the level of consistency in both interpretation and application ofnational instruments. Second, the National Instrument was intended to provide aframework of terms the definitions of which the CSA have agreed upon for use in futurenational instruments. Third, the National Instrument set out commonly used terms, suchas "Canadian GAAP", definitions of terms necessary to provide local application of anational instrument such as "securities regulatory authority" and definitions of terms usedin more than one national instrument, although not used as frequently as some of the moregeneral terms.
At the time the National Instrument was published for comment, it was expected to beamended from time to time to add definitions of new terms that meet any of these threecriteria. The purpose of the proposed amendment is to add a number of definitions ofadditional terms to the National Instrument, modify subsection 1.1(2) to refer to one ormore jurisdictions rather than a single jurisdiction and to extend the application of theNational Instrument to Multilateral Instruments. A Multilateral Instrument is an instrumenttypically adopted by more than one CSA member, but not all CSA members.
Summary of Proposed Amendment
The proposed amendment to the National Instrument would add a number of definitionsof new terms to the National Instrument so that those terms would be defined for thepurposes of national instruments. The proposed amendment also changes the referenceto the Northwest Territories in Appendix C of the National Instrument and also modifiesslightly the definitions of "1933 Act" and "1934 Act". The proposed amendment alsoamends section 1.1 to add reference to "multilateral instruments" so that the NationalInstrument applies to Multilateral Instruments. The proposed amendment also modifiessubsection 1.1(2) to refer to one or more jurisdictions rather than a single jurisdiction.
Most of the terms to be added to the National Instrument through this amendment aregeneric terms that describe specific provisions of Canadian securities legislation in amanner that avoids using specific section numbers of any particular statute and that cantherefore be used in any jurisdiction. Those terms include "adviser registrationrequirement", "dealer registration requirement", "insider reporting requirement","networking notice requirement", "prospectus requirement", "registration requirement" and"underwriter registration requirement". By defining these terms in this manner, nationalinstruments can be drafted to make reference only to these terms without having to list theapplicable provisions of each jurisdiction's securities legislation.
In addition, the proposed amendment would add the terms "equity security", "issuer bid","multilateral instrument", "take-over bid" and "U.S. federal securities laws" to the NationalInstrument.
Authority for the Proposed Amendment
The proposed amendment contains no substantive provisions of its own and only sets outterms that are used in other national instruments or multilateral instruments. In Ontario,the proposed amendment derives its authority from the individual heads of authorityrelating to the national instruments or multilateral instruments in which the terms to whichthe proposed amendment pertains are used.
In Ontario, subsection 143(1) of the Securities Act (Ontario) provides the Commission withthe authority to make rules in which the terms defined in the proposed amendment will beused.
Unpublished Materials
In proposing this amendment, the CSA have not relied on any significant unpublishedstudy, report or other written material.
Alternatives Considered
No alternatives to the proposed amendment were considered.
Anticipated Costs and Benefits
The proposed amendment does not impose any costs. It is expected to provide a benefitto investors, industry participants and others by providing more certainty on the applicationand interpretation of terms used in rules by the Commission.
Regulations to be Amended
The proposed amendment does not require any regulation to be amended.
Comments
Interested parties are invited to make written submissions with respect to the proposedNational Instrument. Submissions received by December 11, 1998 will be considered.
Submissions should be sent to all of the Canadian securities regulatory authorities listedbelow in care of the Ontario Commission, in duplicate, as indicated below:
British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
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
Registrar of Securities, Government of Northwest Territories
Registrar of Securities, Government of Yukon
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 duQuébec 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, preferablyWordPerfect) should also be submitted. As securities legislation in certain provincesrequires that a summary of written comments received during the comment period bepublished, confidentiality of submissions cannot be maintained.
Questions may be referred to any of:
Melody Schalm
Legal Counsel
British Columbia Securities Commission
(604) 899-6644
David Sheridan
Legal Counsel
Alberta Securities Commission
(403) 297-2630
Barbara Shourounis
Director
Saskatchewan Securities Commission
(306) 787-5645
Susan Greenglass
Legal Counsel, Policy Coordinator's Office
Ontario Securities Commission
(416) 593-8140
Rosetta Gagliardi
Policy Advisor
Commission des valeurs mobilières du Québec
(514) 873-5326
Proposed Amendment
The text of the proposed amendment follows.
DATED: September 11, 1998.
NATIONAL INSTRUMENT 14-101
DEFINITIONS
PART 1 AMENDMENTS
1.1 Amendments
(1) National Instrument 14-101 Definitions is amended by
(a) adding the words "or multilateral instrument" after the words "nationalinstrument" every place they appear in section 1.1 except in thedefinition of "national instrument";
(b) deleting subsection 1.1(2) and replacing it with the following:
(2) A provision or reference within a provision of a national instrument ormultilateral instrument that specifically refers by name to one or morejurisdictions other than the local jurisdiction shall not have any effect in thelocal jurisdiction, unless otherwise stated in the national instrument ormultilateral instrument.;
(c) amending the definition of "1933 Act" in subsection 1.1(3) by addingthe words ",as amended from time to time" following the word"America";
(d) amending the definition of "1934 Act" in subsection 1.1(3) by addingthe words ",as amended from time to time" following the word"America";
(e) adding the following definition to subsection 1.1(3) after the definitionof "1934 Act":
"adviser registration requirement" means the requirement in securitieslegislation that prohibits a person or company from acting as anadviser unless the person or company is registered in the appropriatecategory of registration under securities legislation;
(f) adding the following definitions to subsection 1.1(3) after thedefinition of "CSA":
"dealer registration requirement" means the requirement in securitieslegislation that prohibits a person or company from trading in asecurity unless the person or company is registered in theappropriate category of registration under securities legislation;
"equity security" has the meaning ascribed to that term in securitieslegislation;
(g) adding the following definitions to subsection 1.1(3) after thedefinition of "implementing law of a jurisdiction":
"insider reporting requirement" means the requirement in securitieslegislation for an insider of a reporting issuer to file reports disclosingthe insider's direct or indirect beneficial ownership of, or control ordirection over, securities of the reporting issuer;
"issuer bid" has the meaning ascribed to that term in securitieslegislation;
(h) adding the following definition to subsection 1.1(3) after the definition"local jurisdiction":
"multilateral instrument" means an instrument described by the CSAas a multilateral instrument, and adopted or made by the securitiesregulatory authority;
(i) adding the following definition to subsection 1.1(3) after the definitionof "national instrument":
"networking notice requirement" means the requirement in securitieslegislation that a registrant give written notice to the securitiesregulatory authority or regulator before entering into a networkingarrangement;
(j) adding the following definitions to subsection 1.1(3) after thedefinition of "person or company":
"prospectus requirement" means the requirement in securitieslegislation that prohibits a person or company from distributing asecurity unless a preliminary prospectus and prospectus for thesecurity have been filed and receipts obtained for them;
"registration requirement" means the requirement in securitieslegislation that prohibits a person or company from trading in asecurity or acting as an underwriter or an adviser unless the personor company is registered in the appropriate category of registrationunder securities legislation;
(k) deleting the word "and" following the definition of "securitiesregulatory authority" in subsection 1.1(3) and adding the followingdefinitions to subsection 1.1(3) after the definition of "SRO":
"take-over bid" has the meaning ascribed to that term in securitieslegislation;
"underwriter registration requirement" means the requirement insecurities legislation that prohibits a person or company from actingas an underwriter unless the person or company is registered in theappropriate category of registration under securities legislation; and
"U.S. federal securities law" means the federal statutes of the UnitedStates of America concerning the regulation of securities markets andtrading in securities and the regulations, rules, forms and schedulesunder those statutes, all as amended from time to time; and
(l) replacing the words "Securities Registry, Government of theNorthwest Territories" opposite "Northwest Territories" in Appendix Cwith the words "Registrar of Securities, Northwest Territories".
PART 2 EFFECTIVE DATE
2.1 Effective Date - This Amendment comes into force on •
Footnotes
1. In Ontario, published at (1997), 20 OSCB 1727.