Notice: OSCP - 57-602 - Cease Trading Orders - Applications for Partial Revocation to Permit a Security Holder to Establish a Tax Loss

Notice of Policy

The Commission has adopted as a policy Ontario Securities Commission Policy 57-602 Cease Trading Orders - Applications for Partial Revocation to Permit aSecurityholder to Establish a Tax Loss and rescinded Ontario Securities Commission Policy Statement No. 2.9 Cease Trading Orders - Applications for PartialRevocation to Permit a Securityholder to Establish a Tax Loss for Income Tax Purposes.

OSC Policy 57-602 comes into force and OSC Policy Statement No. 2.9 is rescinded on Febriary 24, 1998.

Substance and Purpose of Policy

The purpose of the Policy is to advise securityholders of an issuer subject to a cease trading order that the Commission may be prepared to vary the cease tradingorder to permit a disposition solely for the purpose of that securityholder establishing a tax loss.

The Policy is substantially similar to, and replaces, OSC Policy Statement No. 2.9 - Cease Trading Orders - Applications for Partial Revocation to Permit aSecurityholder to Establish a Tax Loss for Income Tax Purposes.

Terms used in the Policy that are defined or interpreted in the definition instruments in force in Ontario should be read in accordance with those definitioninstruments, unless the context otherwise requires.

Background

The Commission originally adopted the predecessor Policy Statement to OSC Policy Statement No. 2.9, OSC Policy Statement No. 3-31, in 1975. OSC PolicyNo. 3-31 was subsequently re-numbered as OSC Policy Statement No. 2.9 on December 24, 1982 with technical amendments but without substantive change.

Summary of Policy

The Policy provides that if securities are subject to a cease trading order, the Commission is prepared to vary an outstanding cease trading order to permit thedisposition of securities subject to the cease trading order if

i. the Commission is satisfied that a proposed disposition is being made by an applicant securityholder, so far as that securityholder is concerned, solely for thepurpose of that securityholder establishing a tax loss, and

ii. the applicant securityholder provides the purchaser with a copy of the cease trading order and the variation order.

The Policy also sets out the Commission's views that if the disposition is by way of gift, the disposition is not a "trade" within the meaning of subsection 1(1) ofthe Act even though it may be viewed as a "disposition" for the purposes of the Income Tax Act (Canada).

Changes to OSC Policy No. 2.9 are of a non-substantive nature.

Summary of Written Comments Received

A draft of the OSC Policy was published for comment in the Ontario Securities Commission Bulletin on June 27, 1997 ((1997), 20 OSCB 3365). TheCommission received no written submissions with respect to the Policy and no changes have been made from the draft.

OSC Policy

OSC Policy Statement No. 2.9 is replaced by OSC Policy 57-602 and has been rescinded on February 24, 1998. The text of the Policy follows.

Text of Rescission of OSC Policy Statement No. 2.9.

The text of the rescission of OSC Policy Statement No. 2.9 is:

"OSC Policy Statement No. 2.9 entitled "Cease Trading Orders - Applications For Partial Revocation to Permit a Securityholder to Establish a Tax Loss" isrescinded."

DATED: February 27, 1998.