Proposed National Instrument: NI - 44-101 - Short Form Prospectus Distributions

Request for Comment National Instrument

le 20 février 1998

NATIONAL INSTRUMENT 44-101
PROMPT OFFERING QUALIFICATION SYSTEM
TABLE OF CONTENTS

PART 1 DEFINITIONS

1.1 Definitions

2.1 Short Form Prospectus

PART 2 ELIGIBILITY TO PARTICIPATE IN THE POP SYSTEM

2.2 Basic Eligibility Criteria

2.3 Alternative Eligibility Criteria for Substantial Canadian Issuers

2.4 Alternative Eligibility Criteria for Issuers of Approved Rating Non-Convertible Debt Securities, Non-Convertible Preferred Shares and Cash SettledDerivatives

2.5 Alternative Eligibility Criteria for Issuers of Guaranteed Non-Convertible Debt Securities, Non-Convertible Preferred Shares and Cash Settled Derivatives

2.6 Alternative Eligibility Criteria for Issuers of Guaranteed Convertible Debt Securities or Preferred Shares

2.7 Alternative Eligibility Criteria for Issuers of Asset-Backed Securities

2.8 Alternative Eligibility Criteria Following Reorganizations

2.9 Calculation of the Aggregate Market Value of an Issuer's Securities

PART 3 AIF

3.1 Initial AIF

3.2 Renewal AIF Filing Procedures

3.3 Supporting Documents

3.4 Alternative Form of AIF

PART 4 FILING OF SHORT FORM PROSPECTUSES

4.1 Requirements Applicable to Filing of Short Form Prospectus

4.2 Supporting Documents

PART 5 NON-FIXED PRICE OFFERINGS AND REDUCTION OF OFFERING PRICE UNDER SHORT FORM PROSPECTUS

5.1 Non-Fixed Price Offerings and Reduction of Offering Price under Short Form Prospectus

PART 6 CIRCULARS

6.1 Use of Short Form Prospectus Disclosure in Securities Exchange Take-Over Bid Circular and Securities Exchange Issuer Bid Circular

6.2 Use of Short Form Prospectus Disclosure in Information Circular

6.3 Information Circular Disclosure regarding Availability of Information

PART 7 SOLICITATIONS OF EXPRESSIONS OF INTERESTS

7.1 Solicitations of Expressions of Interest

PART 8 EXEMPTION

8.1 Exemption

8.2 Evidence of Exemption

8.3 Exemption under Prior Policy

FORM 44-101F1 - AIF

SCHEDULE 1 TO FORM 44-101F1 - MD&A

FORM 44-101F2 - SHORT FORM PROSPECTUS

NATIONAL INSTRUMENT 44-101⁽¹⁾

PROMPT OFFERING QUALIFICATION SYSTEM

PART 1 DEFINITIONS

1.1 Definitions⁽²⁾ - In this Instrument

"AIF" means an annual information form

(a) in the required form,

(b) in the alternative form permitted under section 3.4, or

(c) for an annual information form filed before this Instrument came into force, in the form of Appendix A to National Policy Statement No. 47;⁽³⁾

"alternative credit support" means support for payment obligations arising under securities, other than by way of a full and unconditional guarantee, that

(a) entitles the holder of the securities to receive from the person or company providing the credit support payment of all amounts due and payable under thesecurities within 15 days after any failure date, and

(b) results in the securities receiving the same credit rating as, or a higher credit rating than, they would have received if payment had been fully andunconditionally guaranteed by the person or company providing the support;⁽⁴⁾

⁽⁵⁾

"approved rating" means a rating from an approved rating organization that falls within one of the following generic rating categories of the approved ratingorganization or a rating category that replaces a category listed below:⁽⁶⁾

Approved RatingOrganization	Long Term	Short Term	Preferred Shares
CBRS Inc.	A++, A+, A or B++	A-1+, A-1, A-l (Low)or A-2	P-1+, P-1, P-2 orP-3
Dominion BondRating ServiceLimited	AAA, AA, A orBBB	R-1 or R-2	Pfd-1, Pfd-2 orPfd-3
Moody's InvestorsService, Inc.	Aaa, Aa, A or Baa	Prime-1, Prime-2 orPrime-3	"aaa", "aa", "a" or"baa"
Standard & Poor'sCorporation	AAA, AA, A orBBB	A-1+, A-1, A-2	AAA, AA, A orBBB

"approved rating organization" means each of CBRS Inc., Dominion Bond Rating Service Limited, Moody's Investors Service, Inc. and Standard & Poor'sCorporation and any of their successors;

"asset-backed security" means a security that is primarily serviced by the cash flows of a discrete pool of receivables or other financial assets, either fixed orrevolving, that by their terms convert into cash within a finite time period, and any rights or other assets designed to assure the servicing or timely distribution ofproceeds to securityholders;⁽⁷⁾

"associated party" means, if used to indicate a relationship with a person or company,

(a) a partner, other than a limited partner, of the person or company,

(b) a trust or estate in which the person or company has a substantial beneficial interest or for which the person or company serves as trustee or in a similarcapacity,

(c) an issuer in respect of which the person or company beneficially owns or controls, directly or indirectly, voting securities carrying more than 10 percent of thevoting rights attached to all outstanding voting securities of the issuer,

(d) a relative of the person who has the same home as that person,

(e) an individual who has the same home as the person and who is either married to the person or is living with the person as husband or wife, or

(f) a relative of an individual mentioned in paragraph (e) who has the same home as the person;

"capital resources" means indebtedness, share capital and any other financial arrangement, whether reflected on the balance sheet or not, that can reasonably beconsidered to provide resources to an issuer;⁽⁸⁾

⁽⁹⁾

"cash equivalent" means

(a) cash, or

(b) an evidence of indebtedness that has a remaining term to maturity of 365 days or less and that is issued, or fully and unconditionally guaranteed as to principaland interest, by

(i) the Government of Canada or the government of a jurisdiction,

(ii) the Government of the United States of America, the government of one of the states of the United States of America, the government of another sovereignstate or a permitted supranational agency, if, in each case, the evidence of indebtedness has an approved rating, or

(iii) a Canadian financial institution⁽¹⁰⁾ or a financial institution that is not incorporated or organized under the laws of Canada or of a jurisdiction if, in either case,evidences of indebtedness of that issuer or guarantor that are rated as short term debt by an approved rating organization have an approved rating;⁽¹¹⁾

"cash settled derivative" means a specified derivative, the terms of which provide for settlement only by means of cash equivalents, the amount of which isdeterminable by reference to the underlying interest of the specified derivative;⁽¹²⁾

"connected issuer" has the meaning ascribed to that term in Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts;

"convertible", if used to describe debt securities or preferred shares, means that the rights and attributes attaching to those securities include the right or option topurchase, convert into or exchange for or otherwise acquire equity securities of an issuer, or any other security that itself includes the right or option to purchase,convert into or exchange for or otherwise acquire equity securities of an issuer;

"credit supporter" means an issuer that provides a guarantee or alternative credit support under paragraph 2.5(1)1 or paragraph 1 of section 2.6;⁽¹³⁾

"current AIF" means

(a) for an issuer subsisting under the laws of a foreign jurisdiction that has filed an AIF in the form of a current annual report on Form 20-F under subsection3.4(1)

(i) during the period of 180 days following the issuer's most recently completed financial year

(A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or

(B) the AIF of the issuer for its financial year immediately preceding its most recently completed financial year, if that AIF has been accepted for filing under thisInstrument and the issuer's AIF for its most recently completed financial year has not been accepted for filing under this Instrument,

(ii) at any time after 180 days following the issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year ifthat AIF has been accepted for filing under this Instrument, or

(iii) an AIF of the issuer filed before this Instrument came into force that would constitute a "current AIF" for the purposes of National Policy Statement No. 47if that policy were in force, or

(b) for all other issuers

(i) during the period of 140 days following the issuer's most recently completed financial year,

(A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or

(ii) at any time after 140 days following an issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year ifthat AIF has been accepted for filing under this Instrument, or

(iii) an AIF of the issuer filed before this Instrument came into force that would constitute a "current AIF" for the purposes of National Policy Statement No. 47if that policy were in force;⁽¹⁴⁾

"designated jurisdiction" has the meaning ascribed to that term in the Memorandum of Understanding for Expedited Review of Short Form Prospectuses andRenewal AIFs dated December 18, 1996 of the Canadian securities regulatory authorities;⁽¹⁵⁾

"equity security" means any security of an issuer that carries a residual right to participate in the earnings of the issuer and, upon the liquidation or winding up ofthe issuer, in its assets;⁽¹⁶⁾

"expedited review system" means the system established by the Memorandum of Understanding for Expedited Review of Short Form Prospectuses and RenewalAIFs dated December 18, 1996 of the Canadian securities regulatory authorities;⁽¹⁷⁾

"failure date" means

(a) for preferred shares of an issuer, the date on which any amount referred to in subparagraph 2.5(1)1(a) is stipulated in the provisions attached to the shares tobe paid by the issuer and is not paid,

(b) for debt securities of an issuer, the date on which the issuer is required to pay any amount referred to in subparagraph 2.5(1)1(b), but fails to do so, or

(c) for cash settled derivatives of an issuer, the date on which the issuer is required to pay any amount referred to in subparagraph 2.5(1)1(c), but fails to doso;⁽¹⁸⁾

⁽¹⁹⁾

"initial AIF" means the AIF, as may be revised,

(a) filed by an issuer in the local jurisdiction under subsection 3.1(1) of this Instrument, or

(b) filed by an issuer in the local jurisdiction before this Instrument came into force in order to participate in the prompt offering qualification systemcontemplated by National Policy Statement No. 47 in the local jurisdiction

(i) for the first time, or

(ii) after again becoming eligible to participate in the prompt offering qualification system contemplated by National Policy Statement No. 47;⁽²⁰⁾

"investee" means any entity that the Handbook recommends that an issuer account for by the equity method or the proportionate consolidation method;⁽²¹⁾

⁽²²⁾

"MD&A" means the management's discussion and analysis of financial condition and results of operations of an issuer required to be disclosed in an AIF;

"National Instrument 44-101 Receipt" means a receipt for a short form prospectus or amendment to a short form prospectus of an issuer that is issued by thejurisdiction selected by the issuer to act as principal jurisdiction and bears the legend referred to in subsection 4.6(7) of Companion Policy 44-101;⁽²³⁾

"National Instrument 44-101 Receipt System" means the system described in section 4.6 of Companion Policy 44-101 for the issuance of National Instrument44-101 Receipts;⁽²⁴⁾

"non-convertible", if used to describe debt securities or preferred shares, means securities that are not convertible;

"participant" means a party to a reorganization;⁽²⁵⁾

⁽²⁶⁾

"permitted supranational agency" means the International Bank for Reconstruction and Development, the International Finance Corporation, the Inter-AmericanDevelopment Bank, the Asian Development Bank, the Caribbean Development Bank, the European Bank for Reconstruction and Development and any personprescribed under paragraph 206(1)(g) of the ITA;⁽²⁷⁾

"POP system" means the prompt offering qualification system for the distribution by or on behalf of an issuer or a selling securityholder of securities of an issueras contemplated by this Instrument;

⁽²⁸⁾

"principal obligor" means, for an asset-backed security, a person or company that is obligated to make payments, or has guaranteed payments, on financial assetsthat represent a third or more of the aggregate amount owing on all of the financial assets underlying the asset-backed security;⁽²⁹⁾

"prospectus requirement" means the requirement in securities legislation that prohibits a person or company from distributing a security, unless a preliminaryprospectus and prospectus for the security have been filed and receipts obtained for them;⁽³⁰⁾

"renewal AIF" means an AIF, as may be revised, that is not an initial AIF;

"reorganization" means

(a) a statutory amalgamation,

(b) a statutory merger,

(d) any other similar transaction;⁽³¹⁾

⁽³²⁾

"specified derivative" means an instrument, agreement or security, the market price, value or payment obligations of which is derived from, referenced to, orbased on an underlying interest;⁽³³⁾

"successor issuer" means an issuer existing as a result of a reorganization, but, if the reorganization involved a divestiture of a portion of a participant's business,does not include an issuer that succeeded to or otherwise acquired the portion of the business divested;⁽³⁴⁾ and

"underlying interest" means, for a cash settled derivative, the security, commodity, financial instrument, currency, interest rate, foreign exchange rate, economicindicator, index, basket, agreement or benchmark or any other financial reference, interest or variable, and, if applicable, the relationship between any of theforegoing, from, to or on which the market price, value or any payment obligation of the derivative is derived, referenced or based.⁽³⁵⁾

PART 2 ELIGIBILITY TO PARTICIPATE IN THE POP SYSTEM

2.1 Short Form Prospectus

(1) An issuer that wishes to distribute, or enable a selling securityholder to distribute, securities for which the issuer is eligible to participate in the POP system inthe local jurisdiction under section 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 or 2.8 may satisfy

(a) the requirement under securities legislation to file a preliminary prospectus by filing a preliminary short form prospectus under this Instrument, prepared andcertified in the required form; and

(b) the requirement under securities legislation to file a prospectus by filing a short form prospectus under this Instrument, prepared and certified in the requiredform, if

(i) the issuer is not in default of any requirement of securities legislation at the time of the filing of its short form prospectus, and

(ii) if the issuer is relying on section 2.5 or 2.6 to be eligible to participate in the POP system, the credit supporter of the securities offered under the short formprospectus is not in default of securities legislation at the time of the filing the issuer's short form prospectus.⁽³⁶⁾

(2) An issuer that wishes to distribute, or enable a selling securityholder to distribute, securities which the issuer was permitted under National Policy StatementNo. 47 to distribute,

(a) is considered to have satisfied the requirement under securities legislation to file a preliminary prospectus if

(i) the issuer has filed a preliminary short form prospectus for those securities under National Policy Statement No. 47, and

(ii) if securities legislation provides for lapsing of a preliminary prospectus, the issuer's preliminary short form prospectus has not lapsed; and

(b) may satisfy the requirement under securities legislation to file a prospectus by filing a short form prospectus under this Instrument, prepared and certified inthe required form if

(i) the issuer has filed a preliminary short form prospectus under National Policy Statement No. 47,

(ii) if securities legislation provides for lapsing of a preliminary prospectus, the issuer's preliminary short form prospectus has not lapsed, and

(iii) the issuer is not in default of any requirement of securities legislation at the time of the filing of the short form prospectus.⁽³⁷⁾

(3) A National Instrument 44-101 Receipt is evidence of the issuance of a receipt under securities legislation for a short form prospectus or an amendment to ashort form prospectus in each jurisdiction in which the short form prospectus or amendment was filed and that did not opt out of the National Instrument 44-101Receipt System for the review of the short form prospectus or amendment.

(4) The provisions of securities legislation that require the filing of an amendment to a preliminary prospectus and prospectus are not satisfied by theincorporation by reference in a preliminary short form prospectus or a short form prospectus of subsequently filed material change reports.⁽³⁸⁾

2.2 Basic Eligibility Criteria - The criteria for an issuer to be eligible to participate in the POP system in the local jurisdiction for any of its securities are:

1. At the time of the filing of its most recent AIF, either

(a) the issuer has been a reporting issuer under securities legislation for the 12 calendar months immediately preceding the date of the filing of that AIF; or

(b) the issuer has been a reporting issuer under Canadian securities legislation of another jurisdiction for the 12 calendar months immediately preceding the dateof the filing of that AIF, and

(i) the issuer files with the AIF, or has previously filed, all continuous disclosure documents that it was required to file for the 12 calendar months immediatelypreceding the date of the filing of the AIF, under the Canadian securities legislation of each jurisdiction in which it is a reporting issuer, and

(ii) if the issuer is not a reporting issuer in the local jurisdiction, the issuer files with the AIF, or has previously filed,

(A) an application to be deemed to be, or designated as, a reporting issuer and the securities regulatory authority deems the issuer to be, or designates the issueras, a reporting issuer, or

(B) if the securities regulatory authority is unable to deem an issuer to be, or designate an issuer as, a reporting issuer, an undertaking to the securities regulatoryauthority to file all continuous disclosure documents that it would be required to file under securities legislation if it were a reporting issuer from the time of thefiling of the AIF until the issuer becomes a reporting issuer.⁽³⁹⁾

2. The issuer has a current AIF.

3. The issuer is not in default of any requirement of securities legislation at the time of the filing of the issuer's most recent AIF and the issuer's preliminary shortform prospectus.

4. The aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, is $75,000,000 or more on a date within60 days before the date of the filing of the issuer's preliminary short form prospectus.⁽⁴⁰⁾

2.3 Alternative Eligibility Criteria for Substantial Canadian Issuers - Alternative criteria for an issuer to be eligible to participate in the POP system in thelocal jurisdiction for any of its securities are:

1. The issuer is incorporated, continued or organized under the laws of Canada or a jurisdiction.

2. At the time of the filing of its most recent AIF, the issuer

(a) is a reporting issuer under securities legislation; or

(b) is a reporting issuer under Canadian securities legislation of another jurisdiction and complies with the filing requirements in subparagraphs 1(b)(i) and (ii) ofsection 2.2.

3. The issuer has a current AIF.

4. The issuer is not in default of any requirement of securities legislation at the time of the filing of the issuer's most recent AIF and the issuer's preliminary shortform prospectus.

5. The aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, is $300,000,000 or more on a date within60 days before the date of the filing of the issuer's preliminary short form prospectus.⁽⁴¹⁾

2.4 Alternative Eligibility Criteria for Issuers of Approved Rating Non-Convertible Debt Securities, Non-Convertible Preferred Shares and CashSettled Derivatives

(1) Alternative criteria for an issuer to be eligible to participate in the POP system in the local jurisdiction for non-convertible debt securities, non-convertiblepreferred shares and cash settled derivatives of the issuer are:

1. The issuer satisfies the 12 month reporting issuer history criteria in paragraph 1 of section 2.2.

2. At the time of the filing of its most recent AIF, the issuer has reasonable grounds for believing that, if it were to distribute one of such types of securities, thesecurities distributed would receive an approved rating from at least one approved rating organization and would not receive a rating lower than an approvedrating from any approved rating organization.

3. The issuer has a current AIF.

4. The issuer is not in default of any requirement of securities legislation at the time of the filing of the issuer's most recent AIF and the issuer's preliminary shortform prospectus.

5. At the time of the filing of the preliminary short form prospectus for the securities, the securities to be distributed

(a) have received an approved rating, on a provisional basis, from at least one approved rating organization; and

(b) have not received a provisional or final rating lower than an approved rating from any approved rating organization.⁽⁴²⁾

(2) The eligibility criteria in paragraph 2.4(1)5 do not apply to an issuer if the preliminary short form prospectus filed by the issuer is a base shelf prospectusunder National Instrument 44-102 Shelf Prospectus Distributions and Pricing Distributions after a Prospectus is Receipted and is filed in order to distributeapproved rating non-convertible debt securities, approved rating non-convertible preferred shares or approved rating cash settled derivatives.⁽⁴³⁾

2.5 Alternative Eligibility Criteria for Issuers of Guaranteed Non-Convertible Debt Securities, Non-Convertible Preferred Shares and Cash SettledDerivatives

1. Another issuer fully and unconditionally guarantees the payment within 15 days after any failure date or, if prohibited by law from providing a full andunconditional guarantee, provides alternative credit support⁽⁴⁴⁾ that provides for the payment within 15 days after any failure date

(a) if debt securities are to be distributed, of the principal of and premium, if any, and interest on the securities being distributed, together with any other amountspayable under

(i) an agreement to which the issuer is party governing the rights of holders of the securities to be distributed,⁽⁴⁵⁾ and

(ii) the provisions of the securities to be distributed;

(b) if preferred shares are to be distributed, of

(i) any amounts to be paid as dividends in accordance with, and on the dividend payment dates stipulated in, the provisions attached to the shares whether or notthe dividends have been declared, and

(ii) all amounts to be paid in accordance with the provisions attached to the shares in the event of redemption, liquidation, dissolution, return of capital orwinding up; or

2. The credit supporter

(a) satisfies either

(i) the 12 month reporting issuer history criteria in paragraph 1 of section 2.2, or

(ii) both

(A) the reporting issuer criteria in paragraph 2 of section 2.3, and

(B) the criterion that the aggregate market value of the credit supporter's equity securities, listed and posted for trading on an exchange in Canada, is$300,000,000 or more on a date within 60 days before the date of the filing of the issuer's preliminary short form prospectus;

(b) has a current AIF; and

(c) is not in default of any requirement of securities legislation at the time of the filing of its most recent AIF and at the time of the filing of the issuer'spreliminary short form prospectus.

3. Unless the aggregate market value of the credit supporter's equity securities listed and posted for trading on an exchange in Canada is $75,000,000 or more ona date within 60 days before the date of the filing of the issuer's preliminary short form prospectus, then at the time of the filing of the preliminary short formprospectus,

(a) the credit supporter has issued and outstanding non-convertible debt securities, non-convertible preferred shares or cash settled derivatives that

(i) have received an approved rating from at least one approved rating organization, and

(ii) have not received a rating lower than an approved rating from any approved rating organization; and

(b) the securities to be issued by the issuer

(i) have received an approved rating, on a provisional basis, from at least one approved rating organization, and

(ii) have not received a provisional or final rating lower than an approved rating from any approved rating organization.⁽⁴⁶⁾

4. The issuer is not in default of any requirement of securities legislation at the time of the filing of its preliminary short form prospectus.⁽⁴⁷⁾

(2) The eligibility criteria in paragraph 2.5(1)3(b) do not apply to an issuer if the preliminary short form prospectus filed by the issuer is a base shelf prospectusunder National Instrument 44-102 Shelf Prospectus Distributions and Pricing Distributions after a Prospectus is Receipted and is filed in order to distributeguaranteed non-convertible debt securities, guaranteed non-convertible preferred shares or guaranteed cash settled derivatives.⁽⁴⁸⁾

2.6 Alternative Eligibility Criteria for Issuers of Guaranteed Convertible Debt Securities or Preferred Shares - Alternative criteria for an issuer to beeligible to participate in the POP system in the local jurisdiction for convertible debt securities or convertible preferred shares of the issuer are:

1. The debt securities or the preferred shares are convertible into securities of an issuer that fully and unconditionally guarantees payment within 15 days afterany failure date or, if prohibited by law from providing a full and unconditional guarantee, that provides alternative credit support that provides for paymentwithin 15 days after any failure date of the amounts set out in paragraph 2.5(1)1(a), in the case of debt securities, or paragraph 2.5(1)1(b), in the case ofpreferred shares.

2. The credit supporter

(a) satisfies either

(i) both

(A) the 12 month reporting issuer history criteria in paragraph 1 of section 2.2, and

(B) the criterion that the aggregate market value of the credit supporter's equity securities, listed and posted for trading on an exchange in Canada, is$75,000,000 or more on a date within 60 days before the date of the filing of the issuer's preliminary short form prospectus, or

(ii) both

(A) the reporting issuer criteria in paragraph 2 of section 2.3, and

(b) has a current AIF; and

(c) is not in default of any requirement of securities legislation at the time of the filing of its most recent AIF and at the time of the filing of the issuer'spreliminary short form prospectus.

3. The issuer is not in default of any requirement of securities legislation at the time of the filing of its preliminary short form prospectus.⁽⁴⁹⁾

2.7 Alternative Eligibility Criteria for Issuers of Asset-Backed Securities⁽⁵⁰⁾

(1) Alternative criteria for an issuer established in connection with a distribution of asset-backed securities to be eligible to participate in the POP system in thelocal jurisdiction for asset-backed securities of the issuer are:

1. The issuer has a current AIF.⁽⁵¹⁾

2. The issuer is not in default of any requirement of securities legislation at the time of the filing of its most recent AIF or its preliminary short form prospectus.

3. At the time of the filing of its most recent AIF, the issuer has reasonable grounds for believing that

(a) all asset-backed securities that it may distribute under the POP system will receive an approved rating from at least one approved rating organization; and

(b) no asset-backed securities that it may distribute under the POP system will receive a rating lower than an approved rating from any approved ratingorganization.

4. At the time of the filing of its preliminary short form prospectus, the issuer

(a) has received confirmation from at least one approved rating organization that the asset-backed securities to be distributed thereunder will receive an approvedrating, subject to final determination of the specific attributes of the asset-backed securities; and

(b) has not been informed by any approved rating organization of an intention to provide a rating, whether on a provisional or final basis, of the asset-backedsecurities that is lower than an approved rating.

(2) The eligibility criteria in paragraph 2.7(1)4 do not apply to an issuer if the preliminary short form prospectus filed by the issuer is a base shelf prospectusunder National Instrument 44-102 Shelf Prospectus Distributions and Pricing Distributions after a Prospectus is Receipted and is filed in order to distributeasset-backed securities.⁽⁵²⁾

2.8 Alternative Eligibility Criteria Following Reorganizations

(1) Alternative eligibility criteria for a successor issuer to be eligible to participate in the POP system in the local jurisdiction for any of its securities are:

1. The successor issuer has a current AIF.

2. The successor issuer is a reporting issuer under Canadian securities legislation.⁽⁵³⁾

3. The successor issuer is not in default of any requirements of securities legislation at the time of the filing of

(a) its most recent AIF, if the successor issuer filed its most recent AIF; and

(b) the successor issuer's preliminary short form prospectus.

4. The aggregate market value of the successor issuer's equity securities listed and posted for trading on an exchange in Canada, is $75,000,000 or more on adate within 60 days before the date of the filing of the successor issuer's preliminary short form prospectus.

5. The aggregate market value of at least one of the participants' equity securities listed and posted for trading on an exchange in Canada, was $75,000,000 ormore on a date within 60 days before the date of the reorganization.

6. A participant that satisfies the criterion in paragraph 5 also satisfies the 12 month reporting issuer history criteria in paragraph 1 of section 2.2.

7. At the time of the reorganization, none of the participants was in default of any requirement of securities legislation.⁽⁵⁴⁾

(2) A successor issuer may elect, at its option, to use the AIF of a participant in the reorganization, as a result of which the successor issuer exists, if the AIF wasa current AIF of the participant at the time of the reorganization.

(3) A successor issuer that elects under subsection (2) to use the AIF of a participant is considered to have a current AIF for the purposes of this Instrument andForm 44-101F2 until the earlier of

(a) the date the successor issuer files an AIF; and

(b) either

(i) the date the AIF ceases to be a current AIF of the participant, if the participant continues to exist after the reorganization, or

(ii) the date 140 days following the end of the financial year to which the AIF relates, if the participant did not continue to exist after the reorganization.⁽⁵⁵⁾

(4) If the participant referred to in subsection (2) continues to exist after the reorganization, the use by a successor issuer of the participant's AIF does notpreclude the participant's continuing use of the AIF.

2.9 Calculation of the Aggregate Market Value of an Issuer's Securities

(1) For the purposes of determining whether an issuer satisfies any of the market value criteria in Part 2, the aggregate market value of the equity securities of theissuer on a date is the aggregate of the market value of each class of its equity securities on the day as calculated by multiplying

(a) the total number of equity securities of the class outstanding on the day; by

(b) the closing price on the day of the equity securities of the class on the exchange in Canada on which that class of equity securities is principally traded.⁽⁵⁶⁾

(2) For the purposes of subsection (1), in calculating the total number of equity securities of a class, an issuer shall exclude those equity securities of the classthat are beneficially owned, directly or indirectly, or over which control or direction is exercised, by persons or companies that alone or together with theirrespective affiliates and associated parties beneficially own or exercise control or direction over more than 10 percent of the outstanding equity securities of theissuer except that if a portfolio manager of a pension fund, mutual fund or non-redeemable investment fund, alone or together with its affiliates and associatedparties,⁽⁵⁷⁾ exercises control or direction in the aggregate over more than 10 percent of the outstanding equity securities, and the fund owns or exercises controlor direction over 10 percent or less of the issued and outstanding equity securities of the issuer, the securities that the fund owns or exercises control or directionover are not excluded unless the portfolio manager is an affiliate of the issuer.⁽⁵⁸⁾

PART 3 AIF

3.1 Initial AIF⁽⁵⁹⁾

(1) An issuer may file an AIF under this section, in either the required form or the alternative form permitted under section 3.4, and supporting documents inaccordance with section 3.3, if the issuer

(a) has not previously filed an AIF in the local jurisdiction that has been accepted for filing under this Instrument, or

(b) previously had a current AIF in the local jurisdiction and no longer has one.⁽⁶⁰⁾

(2) If an initial AIF is being filed in more than one jurisdiction, the issuer shall select from among the jurisdictions willing to act as principal jurisdiction ajurisdiction to act as principal jurisdiction at the time it files its initial AIF and shall identify the principal jurisdiction selected in a covering letter accompanyingthe filing of the initial AIF.⁽⁶¹⁾

(3) If revisions to an issuer's initial AIF are made as a result of the review by the regulator, regulatory review in another jurisdiction in which the AIF is filed, orreview by the SEC, the issuer shall file a revised initial AIF and a copy of the revised initial AIF, black-lined to show changes from the initial AIF.⁽⁶²⁾

(4) The regulator shall as soon as practicable accept for filing an initial AIF, with such alterations or additions, if any, as may be necessary to comply with thisInstrument, and send to the issuer a notice of acceptance of the issuer's initial AIF.

(5) If an issuer has prepared a French language version of the initial AIF, the issuer shall file the most recent French language version and any supportingdocuments if requested by the regulator or, if not requested by the regulator, then if and at the time it proposes to make use of the French language version of theinitial AIF in the local jurisdiction.⁽⁶³⁾

3.2 Renewal AIF Filing Procedures⁽⁶⁴⁾

(1) In this section, a reference to "the regulator" means

(a) the regulator of the local jurisdiction if the renewal AIF is filed only in the local jurisdiction; and

(b) the person referred to in Appendix D of National Instrument 14-101 Definitions opposite the name of the jurisdiction that has been assigned to act asdesignated jurisdiction under the expedited review system if the renewal AIF is filed in more than one jurisdiction.⁽⁶⁵⁾

(2) An issuer may file a renewal AIF under this section, in either the required form or the alternative form permitted under section 3.4 and supporting documentsin accordance with section 3.3, if the issuer

(a) has a current AIF that relates to a financial year immediately preceding its most recently completed financial year; and

(b) wishes to have a current AIF that relates to its most recently completed financial year.

(3) An issuer filing a renewal AIF for a financial year in which the issuer made an acquisition of shares or assets, or was a party to a reorganization, that in eithercase was material to the issuer, shall state in a covering letter accompanying the renewal AIF that the acquisition or reorganization has occurred.⁽⁶⁶⁾

(4) If a renewal AIF is being filed in more than one jurisdiction, the issuer shall identify in a covering letter accompanying the renewal AIF each jurisdiction inwhich the renewal AIF is being filed and the jurisdiction that has been assigned to act as designated jurisdiction.

(5) The regulator shall as soon as practicable accept for filing a renewal AIF filed under subsection (2) and send to the issuer a notice of acceptance of therenewal AIF.

(6) A notice of acceptance issued by the regulator is evidence that the renewal AIF has been accepted for filing by each jurisdiction in which the renewal AIF wasfiled.

(7) Despite the issuance of a notice of acceptance, the regulator may decide, within 10 days of the date of the filing of the renewal AIF, to review the renewalAIF, in which case the regulator shall notify the issuer that it is reviewing the renewal AIF.

(8) A renewal AIF may be reviewed by the regulator at any time after notice has been given under subsection (7) and before a receipt is issued for a short formprospectus incorporating by reference the renewal AIF.

(9) During any review period, an issuer shall place on the outside front cover page of any renewal AIF that is sent to anyone other than a Canadian securitiesregulatory authority, the statement required by item 1 of the required form of AIF.⁽⁶⁷⁾

(10) As soon as practicable after completion of a review of the renewal AIF, the regulator shall send the issuer a notice that the review has been completed.

(11) If an issuer revises its renewal AIF, the issuer shall promptly

(a) file in all jurisdictions in which the renewal AIF was filed the revised renewal AIF and a copy of the revised renewal AIF, black-lined to show changes fromthe renewal AIF; and

(b) send a copy of the revised renewal AIF to each person and company that received a renewal AIF.

(12) If an issuer advises the regulator that it has complied with subsection (11), the regulator shall, as soon as practicable, accept for filing the revised renewalAIF and shall send to the issuer a notice of acceptance of the revised renewal AIF.

(13) A notice of acceptance issued by the regulator is evidence that the revised renewal AIF has been accepted for filing by each jurisdiction in which the revisedrenewal AIF was filed.

(14) If an issuer has prepared a French language version of a renewal AIF, the issuer shall file the most recent French language version and any supportingdocuments if requested by a jurisdiction or, if not requested by a jurisdiction, then if and at the time it proposes to make use of the French language version ofthe renewal AIF or revised renewal AIF in the local jurisdiction.

3.3 Supporting Documents⁽⁶⁸⁾

(1) An issuer shall file with an initial AIF or renewal AIF the following:

1. An eligibility certificate, executed on behalf of the issuer by one of its senior officers certifying that the issuer satisfies the eligibility criteria on which the issueris relying in order to be eligible to participate in the POP system that are to be satisfied at the time of filing an AIF.

2. Copies of all material incorporated by reference in the initial AIF or renewal AIF and not previously filed.

3. Any supporting documents required under securities legislation.

(2) If an issuer is filing an AIF in the form of an annual report on Form 10-K or on Form 20-F under section 3.4, the issuer shall file an undertaking with theregulator to the effect that the issuer will provide to any person or company, upon request to the secretary of the issuer, the documents listed in item 9(1)(a) ofForm 44-101F1.

3.4 Alternative Form of AIF⁽⁶⁹⁾

(1) An issuer that has securities registered under section 12 of the 1934 Act or has a reporting obligation under section 15(d) of the 1934 Act may file an AIF inthe form of a current annual report on Form 10-K or on Form 20-F under the 1934 Act.⁽⁷⁰⁾

(2) If an issuer subsisting under the laws of Canada or a jurisdiction files a current annual report on Form 20-F and if a disclosure requirement of the Form 20-Frefers to a requirement of the issuer's home country, then the applicable requirements of the required form of AIF apply for that disclosure requirement.⁽⁷¹⁾

PART 4 FILING OF SHORT FORM PROSPECTUSES

4.1 Requirements Applicable to Filing of Short Form Prospectus⁽⁷²⁾

(1) An issuer that files a preliminary short form prospectus and short form prospectus shall file a signed copy of each, and any supporting documents requiredunder this Instrument or other provisions of securities legislation.⁽⁷³⁾

(2) An issuer that files an amendment to a preliminary short form prospectus or short form prospectus shall file a signed copy of the amendment, and anysupporting documents required under this Instrument or other provisions of securities legislation.⁽⁷⁴⁾

(3) If a distribution is to be made in more than one jurisdiction, then, unless an issuer has been advised by any of the Canadian securities regulatory authoritiesbefore the filing of a preliminary short form prospectus that a jurisdiction has been assigned to act as designated jurisdiction in the review of the issuer's shortform prospectus under the expedited review system, the issuer shall select from among the jurisdictions willing to act as principal jurisdiction a jurisdiction to actas principal jurisdiction at the time it files its preliminary short form prospectus and shall identify the principal jurisdiction selected in a covering letteraccompanying the filing of the preliminary short form prospectus.⁽⁷⁵⁾

(4) If an issuer files a short form prospectus before its directors have approved the comparative audited annual financial statements for its last completed financialyear and before the time period for filing the statements under securities legislation has expired, the requirement of securities legislation to include in a prospectusits financial statements for the last completed financial year does not apply if the issuer includes in its short form prospectus, directly or through incorporation byreference, the interim financial statements for the third quarter of the last completed financial year.⁽⁷⁶⁾

(5) An issuer may satisfy any requirement of securities legislation to reconcile financial statements contained in a preliminary short form prospectus or short formprospectus to Canadian GAAP by including the required audited reconciliation, in the case of annual financial statements, and the required unauditedreconciliation, in the case of interim financial statements, in its preliminary short form prospectus and short form prospectus, either directly or throughincorporation by reference of notes to the financial statements that contain the required reconciliation.⁽⁷⁷⁾

⁽⁷⁸⁾

(6) If an issuer has prepared a French language version of the preliminary short form prospectus, short form prospectus, any amendment to the preliminary shortform prospectus or short form prospectus and any supporting documents, the issuer shall file the most recent French language version if requested by theregulator or, if not requested by the regulator, then if and at the time it proposes to make use of the French language version of the preliminary short formprospectus, short form prospectus or any amendment to the preliminary short form prospectus or short form prospectus in the local jurisdiction.⁽⁷⁹⁾

4.2 Supporting Documents

(1) An issuer shall file with a preliminary short form prospectus the following:

1. An eligibility certificate executed on behalf of the issuer by one of its senior officers certifying that all of the eligibility criteria on which the issuer is relying inorder to be eligible to participate in the POP system have been satisfied.

2. Copies of all material incorporated by reference in the preliminary short form prospectus and not previously filed.⁽⁸⁰⁾

(2) If any solicitor, auditor, accountant, engineer, appraiser or any other person or company whose profession gives authority to a statement made by that personor company is named in a short form prospectus or an amendment to a short form prospectus, either directly or in a document incorporated by reference

(a) as having prepared or certified any part of that document, or

(b) as having prepared or certified a report or valuation used in a short form prospectus or an amendment to a short form prospectus, either directly or in adocument incorporated by reference,

the issuer shall file no later than the time the short form prospectus or the amendment to the short form prospectus is filed, the written consent of the person orcompany to being named and to that use of the report or valuation.⁽⁸¹⁾

(3) The consent required to be filed under subsection (2) shall be in the form prescribed by securities legislation, if any.⁽⁸²⁾

(4) The requirement in subsection (2) shall not apply to an approved rating organization that issues a rating or provisional rating that is used in or in connectionwith a preliminary short form prospectus or short form prospectus.⁽⁸³⁾

(5) If any of the financial statements contained in a short form prospectus or an amendment to a short form prospectus, either directly or through incorporationby reference, are unaudited, the issuer shall file an auditors' comfort letter in accordance with the requirements of securities legislation.⁽⁸⁴⁾

(6) If a preliminary short form prospectus is filed for a proposed distribution of debt securities having a term to maturity in excess of one year or for a proposeddistribution of preferred shares, the issuer shall file with the preliminary short form prospectus an explanation of the manner by which the earnings coverageratios are calculated.⁽⁸⁵⁾

(7) An issuer shall file with a short form prospectus the following:

1. A copy of the short form prospectus, black-lined to show changes from the preliminary short form prospectus.

2. A signed copy of the underwriting agreement for the distribution.

3. Copies of all material incorporated by reference in the short form prospectus and not previously filed.

4. If requested by the regulator, a copy of any technical report referred to in the short form prospectus.⁽⁸⁶⁾

(8) If requested by the regulator, an issuer shall deliver to the regulator a copy of any material contract referred to in the short form prospectus.

(9) An issuer shall make available all material contracts referred to in the short form prospectus for inspection at a reasonable time and place during thedistribution of the securities being offered under the short form prospectus.

(10) No document filed with a preliminary short form prospectus under subsection (1) or with a short form prospectus under subsection (7) need be filed with anamendment to a preliminary short form prospectus or short form prospectus unless the document has been amended since the original date of filing.

(11) If an amendment to a preliminary prospectus or short form prospectus materially affects, or relates to, the subject matter of a consent filed under subsection(2) or an auditors' comfort letter filed under subsection (5), the issuer shall file with the amendment a new consent or auditors' comfort letter, as applicable.

PART 5 NON-FIXED PRICE OFFERINGS AND REDUCTION OF OFFERING PRICE UNDER SHORT FORM PROSPECTUS

5.1 Non-Fixed Price Offerings and Reduction of Offering Price under Short Form Prospectus

(1) Subject to subsection (3), non-convertible debt securities, non-convertible preferred shares, cash settled derivatives and asset-backed securities for which theissuer is eligible to participate in the POP system under Part 2 may be distributed for cash at non-fixed prices under a short form prospectus if, at the time of thefiling of the preliminary short form prospectus, the securities have received a rating, on a provisional basis, from at least one approved rating organization.⁽⁸⁷⁾

(2) Subject to subsection (3), if securities are distributed for cash under a short form prospectus, the price of the securities may be decreased from the initialpublic offering price fixed in the short form prospectus and, after such a decrease, changed from time to time to an amount not greater than the initial publicoffering price, without the filing of an amendment to the short form prospectus to reflect the change, if

(a) the securities are distributed through one or more underwriters that have agreed to purchase all of the securities at a specified price;

(b) the proceeds to be received by the issuer or a selling securityholder or by the issuer and a selling securityholder are fixed in the short form prospectus; and

(c) the underwriters have made a good faith effort to sell all of the securities distributed under the short form prospectus at the initial public offering price fixed inthe short form prospectus.⁽⁸⁸⁾

(3) Subsections (1) and (2) do not apply to rights offerings.⁽⁸⁹⁾

PART 6 CIRCULARS

6.1 Use of Short Form Prospectus Disclosure in Securities Exchange Take-Over Bid Circular and Securities Exchange Issuer Bid Circular

(1) If a take-over bid or issuer bid provides that the consideration for the securities of the offeree issuer is to be, in whole or in part, securities of an issuer forwhich the issuer is eligible to participate in the POP system under section 2.2, 2.3, 2.4 or 2.8 the offeror may satisfy the requirement of securities legislation toinclude in the securities exchange take-over bid circular or securities exchange issuer bid circular information prescribed by the form of prospectus appropriatefor the issuer whose securities are being offered in exchange for the securities of the offeree issuer, by including, either directly or through incorporation byreference, the information to be included in a short form prospectus under this Instrument in the take-over bid circular or issuer bid circular.⁽⁹⁰⁾

(2) In determining for the purposes of subsection (1) whether an issuer is eligible to participate in the POP system under section 2.2, 2.3, 2.4 or 2.8, references insections 2.2, 2.3, 2.4 and 2.8 to the time of the filing of a preliminary short form prospectus shall be read as references to the time of the filing of the take-overbid circular or issuer bid circular.⁽⁹¹⁾

(3) Item 11 of the required form of short form prospectus applies with necessary changes to a securities exchange take-over bid referred to in subsection (1), ifthe securities exchange take-over bid would result in the offeror acquiring a business and the acquisition is material to the offeror.⁽⁹²⁾

6.2 Use of Short Form Prospectus Disclosure in Information Circular

(1) If an information circular is being prepared in connection with a meeting of securityholders at which action is to be taken in respect of a reorganization, underwhich securities of an issuer for which the issuer is eligible to participate in the POP system under section 2.2, 2.3, 2.4 or 2.8 are to be issued, offered inexchange or otherwise distributed, the issuer preparing the information circular may satisfy the requirement of securities legislation to include in the informationcircular information prescribed by the form of prospectus appropriate for the issuer whose securities are to be issued, offered in exchange or otherwisedistributed by including, either directly or through incorporation by reference, the information to be included in a short form prospectus under this Instrument inthe information circular.⁽⁹³⁾

6.3 Information Circular Disclosure regarding Availability of Information⁽⁹⁴⁾

(1) An issuer that has a current AIF shall insert in any information circular prepared by the issuer and required to be delivered to securityholders a statementdescribing the availability, without charge to a security holder, upon request made to the secretary of the issuer of

(a) one copy of the current AIF of the issuer, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in thecurrent AIF;

(b) one copy of the most recently filed comparative annual financial statements of the issuer together with the accompanying report of the auditor, and one copyof any interim financial statements of the issuer that have been filed for any period after the end of its most recently completed financial year; and

(c) one copy of the information circular of the issuer for its most recent annual meeting of shareholders that involved the election of directors or one copy of anyannual filing prepared instead of that information circular, as appropriate.

(2) An issuer may also include a statement following the statement required by subsection (1) that it may make a reasonable charge for the documents referred toin subsection (1) if the request is made by a person or company who is not a securityholder of the issuer.

PART 7 SOLICITATIONS OF EXPRESSIONS OF INTERESTS

7.1 Solicitations of Expressions of Interest - The prospectus requirement does not apply to solicitations of expressions of interest before the filing of apreliminary short form prospectus for securities to be qualified for distribution under a short form prospectus in accordance with this Instrument, if

(a) the issuer has entered into an enforceable agreement with an underwriter who has, or underwriters who have, agreed to purchase the securities;

(b) the agreement referred to in paragraph (a) has fixed the terms of the distribution and requires that the issuer file a preliminary short form prospectus for thesecurities and obtain a receipt for the preliminary short form prospectus from

(i) the regulator in at least one jurisdiction dated not more than two business days after the date that the agreement is entered into, and

(ii) the Canadian securities regulatory authorities in any other jurisdictions in which the distribution is to be made dated not more than three business days afterthe date that the agreement is entered into;

(d) upon issuance of a receipt for the preliminary short form prospectus, a copy of the preliminary short form prospectus is sent to each person or company whohas expressed an interest in acquiring the securities; and

(e) except as provided in paragraph (a), no agreement of purchase and sale for the securities is entered into until the short form prospectus has been filed and areceipt obtained.⁽⁹⁵⁾

PART 8 EXEMPTION

8.1 Exemption⁽⁹⁶⁾

(1) The regulator or the securities regulatory authority may grant an exemption to this Instrument, in whole or in part, subject to such conditions or restrictionsas 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 this Instrument shall include a letter or memorandum describingthe matters relating to the exemption, and indicating why consideration should be given to the granting of the exemption.

8.2 Evidence of Exemption⁽⁹⁷⁾

(1) Except in respect of an application for an exemption from the provisions of Part 2 of this Instrument, subject to subsection (2) and without limiting themanner in which an exemption under this Part may be evidenced,

(a) if a jurisdiction, other than the local jurisdiction, has been assigned to act as designated jurisdiction in the review of a short form prospectus under theexpedited review system, the issuance of a final expedited review receipt document for the short form prospectus or an amendment to the short form prospectusby the designated jurisdiction is evidence of the granting of the exemption in the local jurisdiction if the final expedited review receipt document evidences theissuance of a final receipt for the short form prospectus or the amendment to the short form prospectus in the local jurisdiction;

(b) if a jurisdiction, other than the local jurisdiction, has agreed to act as principal jurisdiction in the review of a short form prospectus under this Instrument, theissuance of a National Instrument 44-101 Receipt for the short form prospectus or an amendment to the short form prospectus is evidence of the granting of theexemption in the local jurisdiction if the National Instrument 44-101 Receipt evidences the issuance of a final receipt for the short form prospectus or theamendment to the short form prospectus in the local jurisdiction; and

(c) the issuance of a receipt for a short form prospectus or an amendment to a short form prospectus by the regulator is evidence of the granting of theexemption 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 8.1(4) on or before the date of the filing of the preliminary short form prospectus, or

(ii) sent to the regulator the letter or memorandum referred to in subsection 8.1(4) after the date of the filing of the preliminary short form prospectus andreceived a written acknowledgement from the regulator that 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 exemption before, or concurrent with, the issuance of the receipt.

8.3 Exemption under Prior Policy - An issuer that before the time this Instrument came into force was eligible to participate in the prompt offering qualificationsystem contemplated by National Policy Statement No. 47 under an exemption, ruling, order, decision or other action of the securities regulatory authority orregulator, other than a blanket ruling or order,⁽⁹⁸⁾ is eligible to participate in the POP system in reliance on the action, for no longer than the period for which theAIF filed by the issuer before this Instrument came into force is a current AIF under this Instrument and otherwise in accordance with the terms and conditions ofthat action, unless otherwise stated in the action.⁽⁹⁹⁾

Footnotes

1. The proposed Instrument is an initiative of the Canadian Securities Administrators (the "CSA") and is expected to be adopted as a rule in British Columbia,Alberta, Ontario and Nova Scotia, as a Commission Regulation in Saskatchewan and as a Policy in all other jurisdictions represented by the CSA, other thanQuebec. The Commission des valeurs mobilières du Québec (the "CVMQ") agrees with the purpose and intent of the proposed Instrument, but will not beadopting it at this time as its securities legislation provides for accessibility to a simplified prospectus procedure. The CVMQ will be conducting a review of itssecurities legislation to determine if changes are advisable as a result of implementation of the proposed Instrument. This proposed Instrument is derived fromNational Policy Statement No. 47 ("NP47") and, in part, National Policy Statement No. 1 ("NP1") of the Canadian securities regulatory authorities and relatedBlanket Orders or Rulings adopted by them.

2. A national definition instrument has been adopted as National Instrument 14-101 Definitions. It contains definitions of certain terms used in more than onenational instrument. National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of theapplicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning in that jurisdiction given to it in thatstatute, unless the context otherwise requires. National Instrument 14-101 also provides that a provision or a reference within a provision in a national instrumentthat specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in theprovision.

3. The definition of "AIF" in NP47 has been modified in this definition to include the alternative form of AIF permitted under section 3.4 of this Instrument anda transitional provision that grandfathers AIFs filed under NP47.

4. This definition is new. The term is used in sections 2.5 and 2.6 as an alternative to a guarantee for POP eligibility where the provider of the credit support isprohibited by law from providing a guarantee, eg. under section 414 of the Bank Act.

5. 0 NP47 contains a definition for the term "Applicable Regulator". Appendix C of NP47 lists the Applicable Regulator in each province or territory. The termappears in National Instrument 14-101 Definitions as "regulator" and is defined as meaning, for the local jurisdiction, the person described in Appendix D toNational Instrument 14-101 opposite the name of the local jurisdiction. The term "jurisdiction" is defined in National Instrument 14-101 to mean "a province orterritory of Canada except when used in the term foreign jurisdiction". The term "local jurisdiction" is defined in National Instrument 14-101 to mean "in anational instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority issituate". Section 1.7(4) of the Companion Policy to National Instrument 44-101 lists the office held by the person generally exercising the powers of theregulator in each jurisdiction for the purposes of this Instrument.

6. In this definition, the debt category that appears in the definition of "Approved Rating" in NP47 has been broken into long term debt and short term debt andratings for short term debt have been added.

7. This definition is new and has been added to reflect that this Instrument includes POP eligibility criteria specifically applicable to a distribution ofasset-backed securities issued by a special purpose vehicle issuer. See section 2.7 of this Instrument. POP eligibility makes the shelf system available for suchdistributions. Proposed National Instrument 44-102 Shelf Prospectus Distributions and Pricing Distributions after a Prospectus is Receipted will be published forcomment shortly. Asset-backed securities may also be distributed under non-fixed price offerings under the POP system. See section 5.1 of this Instrument.

8. The parenthetical reference to "leases and put options" in the definition of "Capital Resources" in NP47 has been omitted as it is illustrative only.

9. 0 The definition of "CICA" that appears in NP47 has not been included as it is unnecessary. The definition of "CICA Handbook" has been omitted, asNational Instrument 14-101 Definitions defines the term "Handbook" as "the Handbook of the Canadian Institute of Chartered Accountants, as amended fromtime to time".

10. The term "Canadian financial institution" is defined in National Instrument 14-101 Definitions as "a bank, loan corporation, trust company, insurancecompany, treasury branch, credit union or caisse populaire that, in each case, is authorized to carry on business in Canada or a jurisdiction or the Confédérationdes caisses populaires et d'économie Desjardins du Québec".

11. This definition is new. The term is used in the definition of "cash settled derivative".

12. This definition is new. The term is used in sections 2.4 and 2.5 of this Instrument, which set out the POP eligibility criteria specifically applicable todistributions of cash settled derivatives, and in section 5.1 of this Instrument, which permits cash settled derivatives to be distributed under a non-fixed priceoffering under the POP system.

13. This is definition is new and has been added to reflect the addition of the concept of "alternative credit support" in paragraph 2.5(1)1 and paragraph 1 ofsection 2.6 of this Instrument.

14. The definition of "current AIF" has been divided into two paragraphs to distinguish between the standard AIF filing deadline of 140 day after year end andthe extended AIF filing deadline 180 days after year end afforded to foreign issuers that file an AIF in the form of a Form 20-F. Subparagraph (iii) has beenadded to each of paragraphs (a) and (b) as a transition clause to grandfather an AIF accepted for filing under NP47. An AIF accepted for filing under NP47constitutes a current AIF under this Instrument for the same period of time as it would otherwise have been a current AIF under NP47.

15. This is a new definition and has been inserted to reflect the expedited review system established by the Memorandum of Understanding on ExpeditedReview of Short Form Prospectuses and Renewal AIFs ("MOU").

16. The definition of "Equity Securities" in NP47 has been modified slightly in this definition to more closely mirror the definition of "equity security" found inthe take-over bid provisions of provincial securities legislation.

17. This is a new definition that has been added to reflect the expedited review system established by the MOU.

18. Paragraph (c) is new and has been added to reflect the inclusion in this Instrument of POP eligibility criteria specifically applicable to cash settledderivatives.

19. 0 The definition of "implementing order" in NP47 has been omitted as the definition of "implementing law of a jurisdiction" appears in National Instrument14-101 Definitions. The definition is "for a local jurisdiction, a regulation, rule, ruling or order of the Canadian securities regulatory authority that implements anational instrument in the local jurisdiction".

20. A reference to NP47 has been added to address the transitional situation where an initial AIF is filed under NP47 before this National Instrument comesinto force.

21. The definition of "investee" in NP47 has been modified in this definition to capture all entities that the issuer equity accounts for or accounts for by theproportionate consolidation method.

22. 0 The definition of "jurisdiction" in NP47 has been omitted as it appears in National Instrument 14-101 Definitions. The definition is set out in note 5.

23. This definition is new and is based on the NP1 Receipt.

24. This definition is new and is based on the NP1 Receipt System.

25. The definition of "Participants" in NP47 has been simplified in this definition to refer only to parties to a reorganization, and the words "directly orindirectly" in the NP47 definition have been omitted. The "for greater certainty" clarification in the NP47 definition that this term includes an issuer that issuessecurities under a reorganization to holders of securities of any party to the reorganization has been omitted as it is redundant.

26. 0 The definition of "Person" in NP47 has been omitted as National Instrument 14-101 Definitions (a) provides that terms not otherwise defined shall havethe meaning in local legislation and (b) contains a definition of the term "person or company" for the purposes of a national instrument as it applies in BritishColumbia.

27. This definition is new and has been added because the term is used in the definition of "cash equivalents". The term "ITA" is defined in National Instrument14-101 Definitions as meaning "the Income Tax Act (Canada)".

28. 0 The definition of "Principal Jurisdiction" in NP47 has been omitted as unnecessary. Under subsection 3.1(2) of this Instrument, if an issuer files an initialAIF in more than one jurisdiction, the issuer is required to select a "principal jurisdiction". The term "principal jurisdiction" is used in the provisions of thisInstrument dealing with initial AIFs. In the provisions of this Instrument dealing with renewal AIFs, the term "designated jurisdiction" is used to reflect theexpedited review system. In the provisions of this Instrument dealing with prospectuses, both terms are used as either may be applicable.

29. This definition is new and has been added because the term is used in item 4(2) of Form 44-101F1, the form of AIF.

30. This definition is new and has been added because the term is used in section 7.1 of this Instrument. It may eventually be moved into National Instrument14-101 Definitions by way of consequential amendment.

31. The exclusion in the definition of "reorganization" in NP47 of certain amalgamations of issuers and their wholly-owned subsidiaries has been omitted in thisdefinition. The rules governing the AIF filing obligations on successor issuers after a reorganization have changed and the exclusion in the definition is no longernecessary from a policy perspective. The references to "merger" and "arrangement" in the definition of "reorganization" in NP47 have been changed to "statutorymerger" and "statutory arrangement".

32. 0 The definitions of "revised AIF" and "selling securityholder" in NP47 have been omitted as they are not necessary. The definitions of "SEC", "securitieslegislation", "securities regulatory authority" and "securities requirements" in NP47 have been omitted as these terms are defined in National Instrument 14-101Definitions. The definition of "SEC" in National Instrument 14-101 is "the Securities and Exchange Commission of the United States of America". The definitionof "securities legislation" is "for the local jurisdiction, the statute and other instruments listed in Appendix B opposite the name of the local jurisdiction"."Securities directions" (which replaces "securities requirements") has the meaning "for the local jurisdiction, the instruments listed in Appendix A opposite thename of the local jurisdiction". The term "securities regulatory authority" is defined in National Instrument 14-101 as "for the local jurisdiction, the securitiescommission or similar regulatory authority listed in Appendix D opposite the name of the local jurisdiction".

33. This definition is new and has been added because the term is used in the definition of "cash settled derivative".

34. The definition of "Successor Issuer" in NP47 has been modified in this definition in two respects. First, "existing as an issuer after a Reorganization" hasbeen replaced by "existing as a result of a reorganization". Second, an exclusion of "spin-offees" has been added in the definition. This exclusion is based on thefootnote to the definition of "Successor Issuer" in NP47.

35. This definition is new and has been added because the term is used in the definition of "cash settled derivative".

36. This subsection is based on subsections 4.1(3) and 6.1(1) of NP47.

37. This subsection is a transition clause that enables an issuer to file a short form prospectus under this Instrument if a preliminary short form prospectus hasbeen filed under NP47.

38. This subsection is based on the first sentence of subsection 6.1(5) of NP47.

39. In this clause, the filing obligation runs from "the time of the filing of the AIF" because subparagraph (i) already requires the filing of continuous disclosuredocuments filed in another jurisdiction in the 12 months preceding the filing of the AIF. This is a clarifying change from subclause 4.1(1)(a)(ii)(B)(bb) in NP47that avoids the potential for duplication in filing that arises under NP47. The NP47 subclause requires the filing of documents from "the time of the filingsrequired under section 4.1(1)(a)(ii)(A)" of NP47 (subparagraph 1(b)(i) of section 2.2 of this Instrument).

40. This section is based on subsection 4.1(1) of NP47. The time at which the public float test in paragraph 4 of this section must be satisfied has been changedfrom that in NP47.

41. This section is based on subsection 4.2(1) of NP47. The time at which the public float test in paragraph 5 in this section must be satisfied has been changedfrom that in NP47.

42. This subsection is based on paragraph 4.3(1)(a) of NP47. For clarity, paragraph 4.3(1)(b) of NP47 appears in this Instrument in a separate section, section2.5.

43. Subsection (2) has been added to accommodate shelf issuers. A corresponding provision will appear in proposed National Instrument 44-102 ShelfProspectus Distributions and Pricing Distributions after a Prospectus is Receipted dealing with the rating requirement for securities distributed under prospectussupplements.

44. The concept of "alternative credit support" is new and provides an alternative to a guarantee for POP eligibility where the provider of the credit support isprohibited by law from providing a guarantee, eg. under section 414 of the Bank Act.

45. For greater precision, the words "an agreement to which the issuer is a party governing the rights of holders of the securities to be distributed" in thisclause replace the reference in subclause 4.3(1)(b)(i)(B)(aa) of NP47 to "trust agreement or other agreement relating to the securities to be distributed".

46. Unlike under paragraph 4.3(1)(b) of NP47, if a credit supporter satisfies the market value criterion in section 2.2, the securities being issued do not have tohave an "approved rating" and the credit supporter does not have to have "approved rating" securities outstanding. This change tracks relief given by the OntarioSecurities Commission in In the Matter of Trizec Corporation Ltd. (1995), 18 OSCB 4611.

47. This subsection is based on paragraph 4.3(1)(b) of NP47. Subparagraphs 4.3(1)(b)(i), (ii) and (iii) of NP47 have been modified and divided into fourparagraphs in this subsection. The inclusion of cash settled derivatives is new.

48. Subsection (2) has been added to accommodate shelf issuers. A corresponding provision will appear in proposed National Instrument 44-102 ShelfProspectus Distributions and Pricing Distributions after a Prospectus is Receipted dealing with the rating requirement for securities distributed under prospectussupplements.

49. This section is based on subsection 4.3(2) of NP47. This section omits the requirement in paragraph 4.3(2)(c) of NP47 that the guarantor have approvedrating securities outstanding and that the securities to be issued be approved rating securities on the basis of the requirement that the credit supporter satisfy thepublic float test. This change is consistent with the change made in section 2.5 of this Instrument, referred to in footnote 47.

50. This section is new and sets out POP eligibility criteria specifically applicable to a special purpose vehicle wishing to distribute asset-backed securitiesunder the POP system. POP eligibility makes the shelf system available for such distributions. Proposed National Instrument 44-102 Shelf ProspectusDistributions and Pricing Distributions after a Prospectus is Receipted will be published for comment shortly.

51. An issuer of asset-backed securities must file an AIF prior to the first distribution of asset-backed securities under the POP system. The special purposenature of the issuer and the fact that it may have been established immediately prior to the distribution will limit the nature and scope of disclosure required to beincluded in the initial AIF.

52. Subsection (2) has been added to accommodate shelf offerings. A corresponding provision will appear in proposed National Instrument 44-102 ShelfProspectus Distributions and Pricing Distributions after a Prospectus is Receipted dealing with the rating requirement for securities distributed under prospectussupplements.

53. The requirement that a successor issuer be a reporting issuer in at least one jurisdiction is new. A 12 month history is not required for a successor issuer asit can rely on one of the participant's reporting history.

54. This subsection is based on section 4.4 of NP47. The requirement in subsection 4.4(3) of NP47 for a successor issuer to file an AIF after a reorganizationhas been omitted. A successor issuer must have a current AIF in order to be POP eligible, but under subsection 2.8(2) of this Instrument a successor issuer mayuse the AIF of a participant in order to satisfy the requirement of a current AIF.

55. This subsection is new.

56. This subsection is based on subsection 4.1(2) of NP47, which has been subdivided into two subsections in this Instrument. The clarification contained in thefootnote to subsection 4.1(2) of NP47 dealing with an issuer that wished to include the market value of instalment receipts in the market value of its equitysecurities has been omitted and replaced with a clarification statement in subsection 2.3(2) of the Companion Policy.

57. The references to "affiliates" and "associated parties" of the portfolio manager are new. Examples (2) and (3) described in section 2.3 of the CompanionPolicy demonstrate the significance of affiliates of the portfolio manager.

58. This subsection is based on paragraph 4.1(2)(a) of NP47.

59. This section is based on section 5.1 of NP47. The provisions in section 5.1 of NP47 dealing with the manner in which the regulators will review an initialAIF have been moved to section 3.1 of the Companion Policy. The provisions of section 5.1 of NP47 that have been incorporated into this Instrument are thosethat address the obligations of an issuer filing an initial AIF and, if necessary, refiling a revised AIF and the obligation on the part of the regulator in the localjurisdiction to issue a notice of acceptance for the initial AIF.

60. The requirement in section 5.1 of NP47 that an issuer has satisfied the applicable eligibility criteria of Part 4 of NP47 has been omitted in this subsection asredundant because an issuer filing an AIF is required under section 3.3 of this Instrument to concurrently file an eligibility certificate.

61. This subsection is based on the requirement in NP1 to select a principal jurisdiction. As the Memorandum of Understanding for Expedited Review of ShortForm Prospectuses and Renewal AIFs does not apply to the review of initial AIFs, an issuer must select a principal jurisdiction at the time it files an initial AIF.

62. The requirement in section 5.1 of NP47 to identify a revised initial AIF as such has been omitted since it appears as a disclosure item in item 1(3) of Form44-101F1, the form of AIF. The requirement to file a black-lined copy of a revised initial AIF has been made explicit in this subsection.

63. This subsection is based on endnotes 13 and 18 in NP1 and codifies current practice.

64. This section is based on section 5.2 of NP47, which has been modified to integrate those portions of the Memorandum of Understanding for ExpeditedReview of Short Form Prospectuses and Renewal AIFs dealing with renewal AIFs. These provisions have been made mandatory so that issuers filing renewalAIFs can no longer choose between the procedures in the MOU and the procedures in NP47. Those portions of the MOU that set out the review proceduresappear in section 3.2 of the Companion Policy. Those portions of section 5.2 of NP47 that deal with the treatment of certain renewal AIFs as initial AIFs appearin section 3.2 of the Companion Policy.

65. This section is new and reflects the circumstance of expedited review by a single regulator.

66. This subsection is based on the second footnote to paragraph 5.2(3)(b) of NP47 which advised issuers to indicate in a covering letter to its renewal AIFthat a takeover bid material to the issuer had occurred. This subsection has been expanded to also require the issuer to advise of a material reorganization or amaterial acquisition of assets.

67. This refers to the cover page legend required by item 1(2) of Form 44-101F1, the form of AIF.

68. This section is based on section 5.3 of NP47. The requirement in NP47 to file a copy of the directors' resolution approving the AIF has been omitted as it isa matter of corporate governance that, in the view of the CSA, need not be subject to review by CSA staff.

69. This section is based on section 5.4 of NP47.

70. The requirement in section 5.4 of NP47 to file a cross-reference sheet has been omitted.

71. The statement in section 5.4 of NP47 that foreign issuers filing Forms 10-K or Forms 20-F shall file the relevant form within the time period required bythe 1934 Act has been omitted. This issue, as it relates to issuers filing Form 20-F, has been addressed in the definition of "current AIF" in this Instrument.Issuers filing Form 10-K have 90 days to file under the 1934 Act; therefore, an extension to 180 days is not relevant. The 140 day filing period under thisInstrument has not been shortened for these issuers.

72. The review aspects of subsection 6.3(1) of NP47 appear in section 4.5 of the Companion Policy. The provisions of NP47 and NP1 dealing with thecontemporaneous filing of the same short form prospectus in multiple jurisdictions and responses to comments received from various jurisdictions have beenmoved to the Companion Policy. The provisions in subsection 6.3(2) of NP47 referring to the filing of a specified number of copies of documents have beenomitted in light of SEDAR.

73. This subsection is based on subsection 6.3(2) of NP47. The requirement in NP47 to file unsigned copies has been omitted.

74. This subsection is based on the second sentence of subsection 6.1(5) of NP47. The requirement in NP47 to deliver the prospectus amendment has beenomitted as it is required under securities legislation.

75. This subsection is based on the requirement in NP1 to select a principal jurisdiction and has been modified to reflect that a jurisdiction may have beenassigned under the expedited review system to act as a designated jurisdiction.

76. This subsection is based on subsection 6.3(7) of NP47.

77. This subsection is based on the footnote to section 5.4 of NP47 and codifies current practice.

78. 0 Subsections 6.3(8) and (9) of NP47, which provide for the not issuing of a receipt in a firm commitment offering unless the securities are taken up within 6weeks of the date of the receipt and the not issuing of a receipt where a minimum amount of funds are required by the offering unless the prospectus indicatesthat the offering will cease within 90 days, now appear as disclosure requirements in item 1.8(4) and item 6(5) of Form 44-101F2, the short form prospectusform.

79. This subsection is based on endnote 18 in NP1 and codifies current practice.

80. This subsection is new. The requirement to file an eligibility certificate has been added because of the substantive eligibility criteria to be satisfied at thetime of filing the short form preliminary prospectus, eg. the public float test.

81. This subsection is based on the first sentence of subsection 6.3(3) of NP47.

82. This subsection is based on the second sentence of subsection 6.3(3) of NP47.

83. This subsection is new and replaces the relief granted locally by each jurisdiction.

84. This subsection is based on subsection 6.3(4) of NP47.

85. The requirement in subsection 6.3(5) of NP47 to disclose asset coverage ratios has been omitted.

86. This subsection is based on subsection 6.3(2) of NP47 and the table of documents in NP1 and has been modified to clarify that an issuer is required to file atechnical report referred to in a short form prospectus if requested by the regulator. The ability under NP1 to file a notarized copy of the underwriting agreement,instead of a signed copy, has been omitted. The requirement to file commercial copies of the short form prospectus has also been omitted in light of SEDAR.

87. This subsection is based on subsection 6.1(7) of NP47 and has been modified to apply to cash settled derivatives and asset-backed securities and to nolonger require an approved rating, merely a rating.

88. This subsection is based on subsection 6.1(8) of NP47.

89. This subsection is based on subsection 6.1(9) of NP47.

90. This subsection is based on the first sentence of subsection 6.2(1) of NP47.

91. This subsection is based on the second sentence of subsection 6.2(1) of NP47.

92. This subsection is based on subsection 6.2(3) of NP47.

93. This subsection is new.

94. This section is based on Part 8 of NP47.

95. This section is based on local blanket rulings that provide relief for the solicitation of expressions of interest.

96. This section is based on the first sentence of section 7.3 of NP47.

97. This section is based on the second sentence of section 7.3 of NP47.

98. The term "blanket rulings and orders" is defined in National Instrument 14-101 Definitions as meaning "rulings and orders issued under Canadian securitieslegislation in certain jurisdictions that are applicable to a class of persons, trades, intended trades, securities, exchange contracts or transactions".

99. This transition clause is new.