Notice and Proposed Rule: OSC Rule - 33-501 - Surrender of Registration

NOTICE OF PROPOSED RULE 33-501

SURRENDER OF REGISTRATION

Substance and Purpose of Proposed Rule

The substance and purpose of the proposed Rule is to ensure that, upon application for surrender of registration, the registrant's registration is suspended. Thesuspension will provide a period of non-activity by the registrant, while the registrant remains subject to the oversight of the Commission, during which theregistrant will discharge its obligations. This will allow for an orderly discharge of obligations. The proposed Rule requires the applicant to consent to thesuspension of its registration. The consent allows the Commission to suspend the registration without the procedural step of a formal hearing.

The proposed Rule is substantially similar to Uniform Act Policy Statement 2-07 ("UAP 2-07"), which it replaces.

The original version of UAP 2-07 was published in November 1979. The Policy advised registrants that upon receiving notice of a registrant's intention toterminate its registration, the securities regulatory authority would normally suspend the registration pending receipt of satisfactory evidence that the registranthad discharged its obligations.

Summary of Rule

UAP 2-07 currently contains guidelines relating to surrender of registrations by registrants. The proposed Rule replaces UAP 2-07 in Ontario and contains anobligation on an applicant for surrender of registration to provide a consent to the suspension of the registration.

The first sentence of UAP 2-07 has been reformulated and included in the proposed Rule. The second sentence of UAP 2-07, which provides the suspension isremoved on receipt of evidence of discharge of the registrant's obligations, has not been included in the proposed Rule, as once a surrender of registration isaccepted, the suspension is of no effect.

Authority for Proposed Rule

Paragraph 143(1)1 of the Securities Act (Ontario) (the "Act") authorizes the Commission to make rules prescribing requirements in respect of applications forsurrender of registration and in respect of suspension and cancellation of registration.

Alternatives Considered

The Commission believes that UAP 2-07 has worked well. However, given the mandatory nature of certain of the provisions, the Commission determined thatcertain of its provisions should be made as the proposed Rule. No alternatives were considered.

Unpublished Materials

In proposing the Rule, the Commission has not relied on any significant unpublished study, report or other written materials.

Anticipated Costs and Benefits

The Commission believes that investors and the capital markets will benefit from the continued oversight by it of a registrant while the registrant discharges itsobligations in an orderly fashion. The proposed Rule will impose the cost of completing a consent to suspension on applicants for surrender of registration, whichcost is not expected to be significant.

The proposed Rule retains the status quo and the Commission is of the view that the benefits outweigh the costs.

Comments

Interested parties are invited to make written submissions with respect to the proposed Rule. Submissions received by September 25, 1997 will be considered.

Submissions should be sent, in duplicate, to the Commission:c/o Daniel P. Iggers, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8

A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted. As the Act requires that a summary ofwritten comments received during the comment period be published, confidentiality of submissions cannot be maintained.

Questions may be referred to:Nancy Ross
Legal Advisor
Registration, Market Operations
Ontario Securities Commission
(416) 593-8154

Proposed Rule

The text of the proposed Rule follows, together with footnotes that are not part of the Rule but have been included to provide background and explanation.

DATED June 27, 1997 .

ONTARIO SECURITIES COMMISSION RULE

33-501

SURRENDER OF REGISTRATION⁽¹⁾

⁽²⁾

Suspension on Surrender of Registration⁽³⁾ - An applicant that files an application to surrender registration as a dealer, underwriter or adviser shall includewith the application a consent to suspension of the applicant's registration.

1. This Rule is based on Uniform Act Policy No. 2-07 ("UAP 2-07"). This Rule was initially proposed to be national. However, other Canadian securitiesregulatory authorities determined not to adopt the proposed rule. The number adopted was previously reserved for a proposed local rule that will be adoptednationally.

2. A general definition rule has been adopted as Rule 14-501 Definitions. It contains definitions of certain terms used in more than one rule. Rule 14-501provides, among other things, that terms used in a rule and defined in section 1 of the Securities Act, or subsection 1(2) of the Regulation will have the respectivemeaning given to them in the Securities Act or Regulation, as appropriate.

3. The references to "notification" that a registrant wishes to "terminate" its registration contained in UAP 2-07 have been replaced by references to an"application" to "surrender" its registration to reflect the language of section 27 of the Securities Act (Ontario). The consent to suspension is necessary to avoidhearing procedures otherwise necessary under securities legislation.