Bill 86 — First Session, 17Th Legislature, 21 Elizabeth Ii the Legislative Assembly of Alberta Bill 86 the Securities Amendment Act, 1972 (Legislature 17, Session 1)

L17 S1 5067

Alberta — Bills

1972 Bill 86 First Session, 17th Legislature, 21 Elizabeth II THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 86 The Securities Amendment Act, 1972 MR. KOZIAK First Reading .............................. . Second Reading ..... Third Reading ..................... . = Printed by L. S. Wall, Queen's Printer, Edmonton

BILL 86 1972 THE SECURITIES AMEND'ME'NT ACT, 1972 (Assented to , 1972) I-IER MAJESTY, hy alnd with the advke and consent of the Legislative Assembly of Alberta, enacts as follows: 1. The Securities Act is hereby amended.

Section 2, subsection (1) is amended (

a) by striking out clauses 1 and 2 and by sUbstituting therefor the following clauses: 1. "adviser" means a person or company engaged in or holding himself or itself out as engaging in the business of advising others as to the ad visability of investing in or buying or selling securities; 2. "associate", where used to indicate a relation ship with any person or company, means (

i) any company of which such person or com pany beneficially owns, directly or indirect ly, equity shares carrying more than 10 per cent of the voting rights attached to all equity shares of the company for the time being outstanding, or (ii) any partners of that person or company acting by or for the partnership of which they are both partners, or (iii) any trust or estate in which such person or company has a substantial beneficial inte rest or as to which such person or company serves as trustee or in a similar capacity, or (iv) any spouse, son or daughter of that person, or (

v) any relative of such person or of his spouse, other than a relative referred to in sub clause (iv), who has the same home as such person; (

b) by striking out clause 3,

Explanatory Notes 1. This Bill amends chaper 3·33 of the Revised Statutes of Alberta 1970. 2. (

a) The definition of "adviser" replaces the

definitions of "investment counsel" and of "securities adviser"and the definition of "associate" is widened. (

c) The definition of "dealer" replaces the

definitions of "broker", "broker-dealer", "investment dealer" and "securities issuer". "Sub-broker-dealers" are eliminated entirely. (

d) The definition of "distribution to the public" replaces the definition of "primary distribution to the public" and more clearly indicates what is a substantial holding. (f) "Salesman" redefined.

2 (

c) by inserting after clause 5 the following clause: 5.1 "dealer" means a person or company who trades in securities in the capacity of principal or agent; (

d) by inserting after clause 6 the following clause: 6.1 "distribution to the public", used in relation to trading in securities, means (

i) trades that are made for the purpose of distributing to the public securities issued by a company and not previously distri buted to the public, or (ii) trades in previously issued securities for the purpose of distributing such securities to the public where the securities form all or a part of or are derived from the holdings of any person, company or any combination of persons or companies hold ing a sufficient number of any of the securities of a company to materially affect the control of such company, but any person, company or any combination of per,sons or companies holding more than 20 per cent of the outstanding equity shares in a company shall, in the absence of evidence to the contrary, be deemed to be holding a sufficient number of equity shares to mat'erially affect the control of such company, whether such trades are made directly to the pubHc or indirectly to the public through an underwriter or otherwise, and includes any transaction or series of transactions involving a purchase and sale or a repurchase and resale in the course of or incidental to such distri. bution; (

e) by striking out clauses 10, 11 and 16, (

f) by striking out clause 25 and by substituting there for the following clause: 25. "salesman" means an individual who is em ployed by a dealer for the purpose of making trades in securities on behalf of that dealer; (

g) by striking out clauses 26, 28, and 30, and (

h) as to clause 32, by striking out the word "primary".

Section 3 is amended (

a) as to subsection (-'+), clause (

b) by striking out the words "subsection (1), (2) or (3)," and (

b) by striking out SUbsection (5) and by substituting therefor the following subsection: (5) .N?twi~hstanding subsection (3), where the Commlsslon IS empowered to make a ruling on

3. This

section will be amended to conform with the amend ment to

section 59 of The Securities Act in clause 18 of this Bill and to clarify the differences in the two subsections.

Section 3, subsections (3), (4) and (5) read: 2

(3) Two members of the Oommission constitute a quorum.

(4) Notwithstanding subsectiqn (3), where an application is made to the Commissi'on (

a) under 'section 103, subsection (2),

section 115, subsection (1) or sectioU1 131, subsection (1) of this Act or

section 88 of The Companies Act, or (

b) foir a ruling under

section 59, subsecti'on (1), (2) or (3), the chairman may, unless the applicant ,requests otherwise, act as the Commi'ssion for the purpose of hearing and determining the appHcation and may exercise and perform the powers and duties of the Commission in connection with it.

(5) Notwlthstanding subsecti'on (3), the chairman may act as the Commission for the purpose of making any ruling under

section 59, subsection (1), (2) or (3) on the motion of the Commission and for that purpose may exercise and perfi()rm the powers and duties of the Commission.

its own motion under

section 59, the chairman may, on the motion of the Commission, act as the Commission for the purpose of making the ruling and in so doing may exercise and perform all powers and duties of the Commission necessary to do so.

Section 6 is amended (

a) as to subsection (1) (

i) by str'iking out clause (

a) and by substituting therefor the following clause: (

a) trade in a security unless such person or company is registered as a dealer, or as a salesman of a registered dealer, or and (ii) by striking out clauses (c), (

d) and (

e) and by sUbstituting therefor the following clauses: and (

c) act as a saleslnan of or on behalf of a per son or company in connection with a trade in a security by such person or company unless he is registered as a salesman of such person or company and such p'erson or company is registered as a dealer, or (

d) act as an underwriter unless such person or company is registered as an underwriter or is a bank to which the Bank Act (Can ada) applies, or (

e) act as an adviser unless such person or company is registered as an adviser, or (

b) by striking out subsection (2) and by substituting therefor the following subsection:

(2) No person shall act as a dealer, adviser or und'erwriter for or on behalf of a person or com pany that is registered as a dealer, adviser or underwriter ex'cept such partners or officers there of as are designated by the Director.

Section 14 is amended as to subsections (1) and (2) by stTiking out the words "broker, investment dealer, under writer, broker-dealer, sub-broker-dealer, security issuer, investment counsel, securities adviser or salesman" where they occur therein and by substituting therefor the words "dealer, adviser, underwriter or salesman".

Section 15 is amended (

a) as to subsection (1) by striking out the words "broker, investment dealer and broker-dealer" and by substituting therefor the word "dealer", (

b) by striking out subsection (2), 3

4. Persons and companies required to register. Amendments made to complement new

definitions. The new subsection (2) in effect removes automatic exemption for partners and officers. 5. Refusal of registration of non-resident. Amendment arises from new

definitions. 6. Notice of change. Amendments arise from new

definitions. 3

(

c) as to subsection (3) by striking out the words "investment counsel, securities adviser" and by sub stituting therefor the word "adviser", and (

d) by striking out subsection (5).

Section 18 is amended by striking out the words "in vestment counselor securities".

Section 19 is amended (

a) as to subsection (1) by inserting after clause 9 the following clauses,' 9.1 a trade in a security of a company in con nection with an offer to purchase shares by way of private agreement with fewer than 15 shareholders, or an offer to purchase all of the shares in a pdvate 'company; 9.2 a trade in a security by a company as con sideration for a portion of or all of the assets of any person, other than an individual, or any company who agrees to hold the securities for investment only and not with a view to resale or distribution, if the fair value of the assets so purchased is not less than $100,000; 9.3 a trade by a company in the securities of its own issue to its promoters; (

b) as to subsection (2) by adding after clause 12 the following clause,' 12.1 securities of a 'commercial syndicate within the m'eaning of

Part 6, issued by the commercial syndicate, where a commercial syndicate agree ment relating to the commercial syndicate has been filed and a receipt therefor issued by the Registrar if such securities are not offered for sale to the pubBc and are sold to not more than 50 persons or companies; and (

c) as to subsection (3) by adding after the words "aggregate acquisition cost" the words "to that pur chaser".

Section 21, subsection (2) is amended by striking out the words "with the consent of the Minister, by order, appoint one or more persons" and by substituting therefor the, words "by order, appoint any person".

Section 35, subsection (1) is amended by striking out the word "primary".

Section 37 is amended by striking out the word "primary" . 4

7. Amendment in accordance with new

definitions. 8. New exemptions from registration.

Section 19 (3) reads:

(3) Subject to the regulations, registration is not required in re.spect of a trade where the purchaser is (

a) a person other than an individual, or (

b) a company, that purchasHs for investment only and not with a view tD resale Dr distribution, if the trade is in a security which has an aggregate acquisition Clost of not less than $97,000. 9. Minister's consent not required for investigation.

Section 21 (2) reads:

(2) The Commission may, with the consent of the Minister, by order, apl>o~nt one or more persons to make such investigation as it con siders expedient for the due administration of this Act lO·r into any matter relating to trading in secUjrities, and in such 'Order shall de termine and prescribe the scope 'Of the investigation. A report would still be made to the Minister under

Section 22 and he could still initiate investigations under Secion 23. 10. Amended in accordance with new definition. II. Amended in accordance with new definition. 4

Section 39 is a,mended by striking out the word "primary" .

Section 54 is amen,ded as to subsections (1) and (2) by striking out the word "primary" wherever it occurs.

Section 55 is amended by striking out the word "primary" .

Section 56 is amended by striking out the word "primary" .

Section 57 is a1nended by striking out the word "primary" .

Section 58 is amended (

a) by striking out subsection (1) and by sUbstituting therefor the following subsections: 58.

(1) Section 35 does not apply to a trade in the course of a distribution to the public where (

a) the purchaser or proposed purchaser is a per son or company referred to in se'ction 19, sub s'ection (1), clause 3 who purchases as prin cipal for ~nvestment only and not with a view to resale or distribution, or (

b) the purchaser or proposed purchaser is a per son or company referred to in

section 19, sub section (3) who purchases as principal, or (

c) the trade is one referred to in

section 19, subsection (1), clauses 6, 8, 9, 9.1, 9.2, 9.3 and 10, or (

d) the trade is made from one person or company registered for trading in securiti'es to another person or company r'egistered for trading in securities where the purchasing person or company is acting as principal.

(1.1) For the purposes of subsection (1), a trust company registered under The Trust Companies Act shall be deemed to be acting as principal when it trades as trustee for accounts fully managed by it. (

b) as to subsection (2) by (

i) inserting after the words "Section 35 does not apply to" the words "a distribution to the pub lic of", and (ii) striking out the words "clause 16," in clause (

c) and by substituting therefor the words "clause 6.1,", and (

c) by adding the following subsection after subsection (2): 5

12. Amended in accordance with new definition. 13. Amended in accordance with new definition. 14. Amended in accordance with new definition. 15. Amended in accordance with new definition. 16. Amended in accordance with new definition. 17. The amendment makes it clear that the exemptions from the requirement for a prospectus are confined to purchases as principal for the purchaser's own account, preventing the exemp tions from being used as a means of avoiding obtaining registration as an underwriter.

Section 58, subsections (1) and (2) read: 58.

(1) Section 35 does not apply to a trade where the purchaser or proposed purchaser is a person o,r company referred to in se·ction 19, subsection (1), cTause 3 OJr in

section 19, subsection(3) or to a trade referred to in

section 19, subsection (1), clauses 6, 8, 9 and 10 or to trades from 'one person '0'1' company registered for trading in securities to another person or company registered for tjrading in securities where the purchasing person or company is acting as principal.

(2) Section 35 dnes not apply to seculrities (

a) that are referred to in

section 19, subsection (2), or (

b) that are listed and posted for trading on any stock exchange reoognized by the Commission where such securities are dis tributed to the public through the facilities 'nf such stock ex change pursuant to the !rule·s of such stock exchange and the requirements of the Commission, provided that a statement of material facts, which shall comply as to form and content with the regulations, is filed with and is acceptable tOI such stock exchange and the Oo·mmissi'on, or (

c) that are Hsted and posted for trading on any stock exchange recognized by the Commission where such securities are dis tributed to the public within the meaning of

section 2, sub section (1), clause 16, subclause (ii) through the facilities of such st·olck exchange by way of isolated trades not made in the c'ourse of continued and successive 1:Iransactions of a like nature, or (

d) that are exempted by the regulations. 5

(2.1) The Commission may recognize any stock exchange located inside or outside of Alberta but the recognition may be for such limited purposes or may be subj ect to su~h terms and conditions as the Com mission considers necessary.

Section 59 is struck out and the following

section is substituted therefor: 59.

(1) Where doubt exists whether a trade proposed or intended to be made in a security would be in the course of a distribution to the public of the security, the Commis sion may, on its own motion or upon the application of an interested party, determine whether the proposed or in tended trade would be in the course of a distribution to the public of the security and rule accordingly.

(2) The Commission, where in its opinion to do so would not be prej udicial to the public interest, upon the applica tion of an interested party may rule that, subject to such terms or conditions as the Commission may impose, a trade or an intended trade in a security shall be deemed not to be a distribution to the public.

(3) Where the Commission determines under subsection (1) or (2) that a trade or an intended trade would not be a distribution to the public of the security, the Commis sion may rule that registration is not required in respect of such trade.

(4) Where doubt exists whether a distribution to the public of any security has been concluded or is eurrently in progress, the Commission may determine the question and rule accordingly.

(5) A ruling of the Commiss,ion under this

section is final and there is no appeal therefrom.

Section 60 is aTnenclecl as to subsections (1) and (2) by striking out the word "primary".

Section 61, subsection (1) is amended by striking out clause (

d) and by substituting therefor the following clause: (

d) such escrow or pooling agreement as the Director considers necessary or advisable with respect to securities has not been entered into, or .'21.

Section 62 is amended as to subsections (1) and (3) by striking out the word "primary" wherever it occurs.

Section 63 is a'mended as to subsections (1) and (2) by striking out the word "primary". 6

18. Commission given the power to exempt on the basis of pub lic interest subject to conditions. 19. Amended in accordance with new definition. 20. The amendment permits the Director to refuse to issue a rece1pt for a prospectus where there is not an escrow agreement for securities including those issued for cash consideration.

Section 61 (1) (

d) reads: 6 61.

(1) The Director may in his discretion direct the Registrar to issue a receipt for any prospectus filed under this Part, unless it ap pears to the DirectoQr that (

d) such escrow 'Or pooling· agreement as the Direct'or deems neces sary 'Or advisable with respect to securities issued for a con sideration other than cash has not been entered into, or 21. Amended in accordance with new definition. 22. Amended in accordance with new definition.

Section 64, subsection (1) is amended by striking out the wo'rd "prin1ary".

Section 65 is a'mended (

a) as to subsection (1) by striking out the word "pri mary", (

b) by striking out subsection (2) and by substituting the following subsection therefor:

(2) No action shall be commenced to enforce the right of rescission conferred by this

section after the expiration of 90 days from the receipt of the prospectus or amended prospectus by the purchaser or from the date of the contract referred to in sub section (1), whichever is later. and (

c) as to subsection (7) by striking out the words "The cause of action" and by sUbstituting there/oj' the words "The right of rescission".

Section 66 is amended by striking out the word "primary" .

Section 71 is amended by striking out the words "investment couns'el and securities".

Section 80 is amended by striking out clause (

b) and by substituting therefor the following clause: (b) "exempt offer" means (

i) an offer to purchas'e shares by way of private agreement with fewer than 15 shareholders and not made to shareholders generally, or (ii) an offer to purehase shares to be effec~d through the facilities of a stock e~change or In the over-the-counter market, where such pur chases are reported in accordance with

section 109.1, or (iii) an offer to purchase shares in a private com pany, or (iv) an offer exempted by order of the Commission made under

section 89;

Section 81 is amended (

a) by striking out clause (

c) and by substituting there for the following clause: (

c) any shares deposited pursuant to a take-over bid may be withdrawn by or on behalf of an 7

23. Amended in accordance with new definition. 24. (

a) Amended in accordance with new definition. (:

b) and (

c) The words implying that the provision confers a cause of action are changed to more accurately refer to a right conferred by the provision.

Section 65 (1), (2) and (7) read: 65.

(1) A pers'on or company that is a par~y to a contract as. pur chaser resulting from the offer of a security III the course of prImary distribution t'o the pubHc to which

section 35 or 56 is avplicable has a right to rescind the contlI"act while still the .owner of the security if the prospectus and any amended prospectus then filed with the Com mission in compliance with

section 55 received by the purchaser, as of the date of receipt, contains an untrue statement of a material fact or omits to state a material fact neceSSajry in order to make any state ment contained therein not misleading in the light of the circumstances in which it was made.

(2) No acti'on shall be commenced under this

section after the expllraUon of 90 days from the last to o'ccur {)(f the receipt of the pros pectus ·or amended prospectus by the purchaser or the date of the contract referred to in SUbsection (1).

(7) The cause of action conferred by this

section is in additi~n to and without derogation fpom any other right the purchaser may have at law. 25. Amended in accordance with new definition. 26. Amended in accordance with new definition. 27.'.Dhe definition of exempt offer is revi'sed to eliminate in consistencies and to complement sections 7 and 30 of this Bill. Clause (

b) now reads: 80. In this Part, (b) "exempt offer" means (

i) an {)ffer to purchase shares by way lof private agreement with individual shareholders and not made to shareholders generally, or (ii) an offer to purchase shares to be effected through the facilities of a stock exchange or in the over-the-counter market, ·or (iii) an offer to purchase shares in a private company, or in a pub-ric company that has fewer than 15 shareholders whose last addres,s as shown on the books of the offeree company is in Alberta, two 'or m'ore persons who are joint registered owners of one or more share,s being counted as one share ho,lder, or (iy) an offer exempted by order of a judge' of the Supreme Court made pursuan t t'o

section 89; 28. The amendment gives an offeree an additional seven-day withdrawal period where the terms of the take-over bid are varied before the expiration of the offer and deletes the restrictive words "of a class" so that the offer must be for all of the equity ,shares if the offeror wishes it to extend longer than 35 days. The amend ment also requires ,certain additional information in the take-over circular and prohibits any conditions to the offer except the right to withdraw if a minimum number of shares is not tendered. 7

offeree at any time until the expiration of seven days from its date, but where the terms of the take-over bid are varied before the expiration thereof the offeree shall have an additional seven days from the date of their receipt of the varied offer to withdraw any shares deposited pursuant to the take-over bid; (

b) as to clauses (d), (e), (

f) and (

g) by striking out the word.~ "of a class", and (

c) by adding the following clauses: (

h) where the laws applicable to the company pro vide for a right of appraisal or acquisition, the offeror shall advise the offeree of his rights of appraisal and whether the offeror intends exer cising any right of acquisition he may have; (

i) where the offeror intends to purchase securit ies in the market, his intention shall be set out in the take-over hid circular and, where the take-over bid is made for less than all of the equity shares owned by the offeree, he shall not reduce the number of shares he is bound or willing to take up under clause (

g) by the number of shares pur'Chased in the market; (

j) the offeror shall not attach any conditions to the offer except the right to withdraw the offer if the off'erees fail to tender the minimum number of shares the offeror is bound and willing to take up or where the action of the board of directors of the offeree company sub sequent to the date of the offer materially changes the undertakings, assets or capital of the offeree company; (

k) where the offer is made for all of the equity shares owned by offerees the offeror shall, at the expiration of 35 days from the making of the offer, take up and pay for the shares tendered at that time or abandon his offer.

Section 86 is struck out and the following

section is substituted therefor: 86.

(1) Where the board of directors of an offeree company recommends to offerees acceptance or rejection of a take-over bid made to such offerees, the board shall Bend or cause to be sent to each offeree with this communication a directors' circular, which shall contain the information prescribed by Division 4 of this Part.

(2) Where the board of directors is considering send ing a circular under subsection (1), it may advise its share holders of this fact and may advise them not to tender their shares until a further communication is received from the directors. 8

29. The provisions for directors' -circulars are rewritten to pro vide for advance notice of the circular and to permit an individual director to recommend acceptance or rej ection of the take-over bid. 8

(3) Where the board of directors elects to send a com munication under subsection (2), it shall send a directors' circular at least seven days prior to the 'expiry of the offer.

(4) An individual director or offieer may recommend to offerees acceptance or rejection of a take-over bid made to such offerees if the director or officer sends or causes to be sent to each offeree with this communication a circular con taining, with all necessary modifications, the information required by

section 95 relating to his holdings and interest.

(5) All communications required or permitted by this

section shall be sent to each offeree by prepaid mail at his last address as shown on the books of the company. 30. The following

section is added after

section 88: 88.1.

(1) Subject to subsection (2), where a take-over bid is made by or on behalf of a ,company, the take-over bid circular shall contain a certiHcate in the following form, signed by the chief executive officer, the chief financial officer and, on behalf of the board of directors, by any two directors of the company other than the foregoing, duly authorized to sign: The foregoing constitutes full, true and plain dis closure of all mate.rial facts relating to the take-over bid made by this circular as required by

Part 9 of The Securities Act, and the regulations thereunder.

(2) Where the company has only three directors, two of whom are the chief executive officer and the chief financial offker, the certificate may be signed by all the directors of the company.

(3) Where a take-over bid is made by a person, the cir cular shall be certiHed in the form set out in subs'ection (1) by the person making the offer.

(4) Where the take-over bid is made on behalf of an un disclosed principal, as permitted by

section 91, the circular shall be certified in the form set out in subsection (1) by the agent making the offer.

Section 89 is struck out and the following

section is subst,ituted therefor: 89. Any person or company may apply to the Commission for an order declaring a take-over bid to be an exempt offer and the Commission may, where in its opinion such an order would not be prejudicial to the public interest, upon such terms or conditions as it may impose, deem the pro posed offer to be exempt. 9

30. The take-over bid circular is required to be ·certified ~n !~e same manner as a prospectus and to be subject to the same lIabIlI- ties. 31. Commission may exempt offers. At present there must be a court application.

Section 89 reads: 89·

(1) Any person 'or company may apply to a judge of the Su preme Court designated by the Chief Justice of the Trial Division f1o·r an order declaring a take-over bid to be an exempt offer, and the judge may, upon such terms and conditions as he may impose, order the proposed offer to be exempt.

(2) The applicant shall give the Commission notice of any applica tion under subsection (1), and the Commission has the right to appear and be heard theron.

(3) An appeal lies tOI the Appellate Division from any order made under subsection (1). There would still be a right of appeal under

section 29.

32. SecUon 91 is amended by renumbering it as subsection (1) and by adding thereafter the following subsection:

(2) Where a take-over bid is made for less than all of the outstanding equity shares owned by off'erees, the identity of the offeror shall be disclosed in the take-over bid circular.

Section 98 is struck out and the following

section is substituted therefor: 98.

(1) Subj'ect to subsection (2), where a directors' cir cular is sent to offerees under

section 86, subsection (1), it shall contain a certificate in the following form, signed by the chief executive officer, the chief financial officer and, on behalf of the board of directors, by any two directors of the company other than the foregoing, duly authorized to sign: The foregoing constitute.s full, true and plain dis closure of all material facts relating to the take-over bid as required by sections 95 to 97 of The Securitie.s Act, and the regulations the.reunder.

(2) Where the company has only three directors, two of whom are the chief executive officer and the chief financial officer, the certificate may be signed by all the directors of the company.

(3) Where a circular is sent out to offerees under

section 8~, sub.~cction (4), it shall be cerUfied by the individual dire'ctor or officer in the form s'et out in subsection (1). 34. The following

section is added aft,er

section 99: Right of Rescission 99.1

(1) An offeree who is a party to a contract result ing from a take-over bid has a right to rescind the contract if the take-over bid circular forwarded in compliance with this Part and received by the offeree, as of the date of receipt, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make any statement contained therein not misleading in the light of the circumstances in which it was made.

(2) No action shall be commenced to 'enfor,ce the right of rescission conferred by this

section after the expiration of 90 days from the receipt of the take-over bid circular or amended circular or from the date of the contract referred to in subsection (1), whichever is later. (3) Subsection (1) does not apply to untrue statements of a material fact or an omission to state a material fact, 10 (

a) if the untruth of such statements or the fact of such omission was unknown to the offeror and, in the

32. Self-explanatory. 33. The directors' circular is required to be certified in the same way as the take-over bid circular. 34. The offerees are given the same right to rescind when the take-over circular is misleading as a purchaser has in the case of a misleading prospectus. 10

exercise of reasonable diligence, could not have been known to the offeror, or (

b) if the offeree knew of the untruth of the ,statement or knew of the omission at the time he tendered his securities to the offeror.

(4) For the purpose of this section, where a take-over bid circular or amended circular is sent by prepaid mail, it shall be deemed to be received in the ordinary course of mail by the person or company to whom it was addressed.

(5) The right of rescission conferred by this s'eciJion is in addition to and without derogation from any other right the offeree may have at law.

(6) Every take-over bid circular shall contain a state ment of the right of rescission provided by this section.

Section 100, clause (

a) is amended by st.riking out sub clause (

i) and by SUbstituting therefor the following sub clause: (

i) that has issued equity shares that after October 1, 1967 are distributed in the course of a distribution to the public, in respect of which a prospectus is filed with the Commission and a receipt therefor obtained, or

Section 108, subsection (2) is amended (

a) by striking out the, word "and" at the end of clause (a), (

b) by adding the word", and" at the end of clause (b), and (

c) by adding after clause (

b) the following clause: (

c) for the purpose of reporting under

section 109 or 109.1, ownership shall be deemed to pass at such time as an offer to sell is accepted by the purchaser or his agent or an offer to buy is accepted by the vendor or his agent. 37. The following

section is added after

section 109: 109.1

(1) Where an offeror as defined in

Part 9 be com'es an insider under this Part or under The Companies Act and through purchases effected through the facilities of a stock exchange or in the over-the-counter market becomes the beneficial owner, directly or indirectly, of equity shares of a corporation carrying 20 per cent or more of the voting rights attached to all equity shares of the corporation for the time being outstandIng, such offeror within three days of acquiring such 20 per cent ownership, shall file with the Commission a report as of the day on which he attained such ownership. 11

35. Amended in accordance with new definition. 36. Ownership defined for the purposes of insider reporting. 37. The amendment requires a timely insider report upon the acquisition through market purchases of 20 per cent of the equity shares. A similar report is required on the acquisition of each 5 per cent thereafter. 11

(2) An offeror required to file a report under subsection (1) shall, within three days of purchasing further equity shares carrying an additional 5 per cent of the voting rights through the facilities of a Sltock exchange or in the over-the-counter fI1arket, file with the Commission a report as of the day on which he attained the additional 5 per cent of the voting rights and thereafter each time he acquires a further 5 per cent.

(3) Where the facts required to be reported by this sec tion are identical to those required under

section 109, a sep arate report under

section 109 is not required.

Section 110 is amended by inserting after the figure "109" the figure "or 109.1".

Section 111 is amended (

a) as to subse.ction (1) by inserting after the figure "109" the words "or 109.1", and (b). as to subsection (2) by inserting after the figure "109" the words "or 109.1".

Section 114, clause (

a) is amended by inserting after the figure "109" the words "or 109.1".

Section 115, subsecUon (1) is amended by inserting after the figure "109" wherever it appears in the subsection the words "or 109.1". 12

Section 117 is amended (a) (

b) as to subsection (1) by st,riking out clause (

a) and by substituting the,refor the following clause: (

a) that has issued equity shares that, after October 1, 1967 are distributed in the course. of a distribution to the public, in respect of whIch a prospectus is filed with the Commission and a receipt therefor obtained, or by adding after subsection (1) the following sub section:

(1.1) In this Part, (a) "auditor", used in relation to a corporation, in cludes the auditor of the corporation or any other independent accountant acceptable to the Commission; (b) "basic earnings per share" means the amount of income attributable to each outstanding share that carri'es as an incident of ownership

38. Consequential amendment. See

section 36 of this Bill. 39. Consequential amendment. See

section 36 of this Bill. 40. Consequential amendment. See

section 36 of this Bill. 41. Consequential amendment. See

section 36 of this Bill. Sec tion 115 (1) reads: 12 115.

(1) Upon the application of an interested person or company, the Commission may, (

a) if a requirement of secUo,n 109 conflicts with a requirement of the laws of the jurisdiction in which a corporation is incorpor ted, or (

b) if the laws of the jurisdiction to which the corporation is sub ject contain substanthlly similar requirements as contained in

section 109, or (

c) if otherwise satisfied in the circumstances of the particular case that there is adequate justification for so doing, make an order o·n such terms and conc1itions as seem to the Commission just and expedient exempting, in whole or in part, a person or com pany from the requirements of

section 109. 42.

Definitions.

the right to participate in earnings to an un limited degree, calculated in the manner pre scribed by the regulations; (c) "fully diluted earnings per share" means the amount of income attributable to each share that would, if all potential conversions, exer cises and contingent issuances had occurred during the period, be outstanding and have as an incident of ownership the right to partici pate in earnings to an unlimited degree, cal culated in the manner prescribed by the regulations. and (

c) as to subsection (2) by striking out the word "primary" .

Section 119 is amended by striking out subsections (3) and (4).

Section 120 is amended (

a) as to subsection (1) by striking out the. word "and" at the end of clause (

i) and by adding after clause (

j) the following clauses: (

k) the basic earnings per share for the current and preceding year for (

i) income before extraordinary items, and (ii) net income for the period, and (1) fully diluted earnings per share for the current year for (

i) income before extraordinary items, and (ii) net income for the period, (

b) by striking out subse.ction (3).

Section 125, subsection (3) is amended by adding after clause 15 the following clauses: 16. Where the corporation (

i) has in the course of a financial period, carried on business of two or more classes that, in the opinion of its directors, differ substantially from each other and the corporation is not one that has any subsidiaries at the end of that financial period, or if it has one or more sub sidiaries, does not prepare its financial state ment in consolidated form in respect of any subsidiary, or (ii) has one or more subsidiaries at the end of its financial period and prepares its financial statement in consolidated form in respect of 13

43. The prDvisions repealed read:

(3) Notwithstanding subsectiton (1), the financial statements re ferred to therein may relate 'only to the ,latest completed financial year if the reason for the omission of the statements in respect of the financial year next preceding such latest completed financial year is set out in the financial statements or by way <>If noOte thereto.

(4) Notwithstanding subsectioOn (l), clause (e), the statement of source and applicatiton .of funds may be omitted if the )reason for such omission is set .out in the financial statements or by way of note theret.o. and are cDvered by the amendment made by sectiDn 47 Df the Bill. 44. (

a) Earnings per share are required toO be shDwn in the financial statement. (

b) subsectiDn (3) .of sectiDn 120 reads:

(3) A corporation may apply to the Commission for an order per mitting 'sales or gross operating revenue referred to in subsection (1), clause (

a) or

section 129, subsection (1), clause (b), subclause(

i) to be omitted from the statement of profit and loss .or the interim financial statement, as the case may be, and the CoOmmission may, on such terms and condiHo.ns as it may impose, permit such 'omission where it is satisfied that in the circumstances the disclosure of such informa tion would be unduly detrimental to the interests of the corporation. This is cDvered by the amendment made by sectiDn 47 .of the Bill. 45. The amendment prDvides fDr the break-dDwn by nDte to' the financial statement .of certain infDrmatiDn in respect Df each class of business where the cDrpDratiDn carries Dn mDre than Dne class Df business. 13

14 any of the subsidiaries, if the corporation and any of the subsidiaries carried on between them in the course of the period business of two or more classes that, in the opinion of the direc tors of the corporation, differ substantially from each other, a statement of the proportions in which the amount of sales or gross revenue for that period, so far as stated in the financial statement in respect of that period, is divided among those classes of business, but for the purposes of subclauses (

i) and (ii), (iii) classes of business that, in the opinion of the directors, do not differ substantially from each other shall be treated as one class, and (iv) a corporation having gross sales and revenues exceeding $25,000,000 need only report in re spect of a class of business that contributes 10 per cent or more of the total gross revenue of the corporation and a corporation having gross sales and revenues of $25,000,000 or less need only report in respect of a class of business that contributes 15 per eent or more of the total gross revenue of the corporation. 17.

Where there has been a business combination or acquisition arrived at through private agreements, consolidation, amalgamation, merger or reorgani zation, a take-over bid as defined in

Part 9, asset purchases or other methods of materially adding to or combining with an existing business, the details thereof in accordance with the acquisition equation prescribed by the regulations. 18. Where securities have been issued to acquire assets, the proportion of the total ,securities outstanding, expressed as a percentage, represented by the sec urities issued to make the acquisition. 19. Where the pooling of interest method is us'ed to account for a business comhination or acquisition, an earnings history for at least two years as though the companies were pooled for the years covered by such history, set out alongside the earnings history of the acquiring company.

Section 129 is amended (

a) as to subsection (1), clause (

b) by striking out the. word "and" at the end of subclause (iv) and by adding after subclause (

v) the following subclauses: (vi) the basic earnings per share for income before 'extraordinary items and for net income for the period, and

46. (

a) The earnings per share are required to be shown on the interim financial statements in the same way as they are re quired by

section 42 of this Bill to be shown on the financial state ment. (b) subsection (3) reads:

(3) The interim financial statement requir,ed by subsection (1) may omit either or both of (

a) the information relating to the comparab1e period, and (

b) the statement of s'o,urce and application of funds if the reason for the omissi'on or omissions, a.s the case may be, is set out in the interim financial statement or by way of note thereto. This is covered by the amendment made by

section 47 of the Bill. 14

(vii) fully diluted ~arnin¥s per share for income be fore extraordInary Items and for net income. and (

b) by striking out subsection (3).

Section 131 is amended (

a) by striking out subse.ction (1) and by substituting therefor the following subsection: 131.

(1) Upon the application of a corporation, the Commission may, where in the opinion of the Commission to do so would not be prejudicial to the public interest, make an order on such terms and conditions as the Commission may impose, (

a) permitting the omission of (b) (c) (

i) financial statements relating separately to the p'eriod covered by the financial year next preceding the latest completed financ ial year referred to in

section 119, sub section (1), 'Clause (b), or (ii) sales or gross op'erating revenue referred to in

section 120, subsection (1), clause (

a) or

section 129, subsection (1), clause (b), subclause (i), from the statement of profit and loss or the interim financial statement, as the case may be, where the Commission is satisfied that the disclosure of such information would be unduly detri mental to the interests of the corporation, or (iii) the basic 'earnings per share or fully ~i luted earnings per share referred to III

section 120, ,subsection (1), dauses (

k) and (1) or in

section 129, subsection (1), clause (b), subclauses (vi) and (vii) from the statement of profit and loss or the interim financial statement, as the case may be, or (iv) the information relating to the comparable period referred to in

section 129, sub section (1) ; where, in the opinion of the Commission, the corporation is unable to ,comply with the re requirements of

section 122, permitting the c?r poration to file in lieu thereof, an alternative statement containing such information, if any, as the Commission considers appropriate; exempting, in whole or in part, the corporation from the requirements of this Part, 15

47. The amendment requires the Commission's approval to omit certain information from the financial statement, which at present can be omitted through the use of a note to the financial statement and consolidates in one place the procedure for all similar appli cations to the Commission. 15

(

i) if such a requirement conflicts with a re quirement of the laws of the jurisdiction in which a corporation is incorporated, or (ii) if the laws of the jurisdiction to which the corporation is subj ect contain ,substantial ly similar requirements as contained in this Part, or (iii) if otherwise satisfied in the circumstances of the particular case that there is ade quate justification for so doing. (

b) as to subsection (2) by striking out the words "clause (b)" and by substituting therefor the words "subsection (1), clause (a)".

Section 133, subsection (1) is amended by striking out clause (

a) and by substit,uting the.refor the following clause: (

a) that has issued equity shares that, after October 1, 1967, are distributed in the course of a distribution to the public in respect of which a prospectus is filed with the Commission and a receipt therefor obtained, or

Section 137 is amended by striking out subsection (2) and by substituting therefor the following subsections:

(2) No prosecution for an offence under this Act shall be commenced by the Commission or anyone on its behalf more than one year after the facts upon which the prose cution would be based first came to the knowledge of the Commission.

(3) Subject to subsection (2), no proceedings under this Act shall be commenced by the Commission or anyone on its behalf more than two years after the facts upon which the proceedings would be based first came to the knowledge of the Commission. 50. Se.ction 139 is amended by adding after subsecUon (2) the following subsection:

(3) Any person or company who feels aggrieved by any direction, order or decision made under any by-law, rule or regulation of a stock exchange in Alberta may apply to the Commission for a hearing and review thereof and

section 28 appUes to the hearing and review in the same manner as to the hearing and review of a direction, decision, order or ruling of the Director. 16

48. Amended in accordance with new definition. 49. Time limitations.

Section 137 reads: 137.

(1) No proceedings under

section 99 Oil' 136 shall be instituted except with the consent or under the direction of the Minister.

(2) No proceedings under this Act shall be commenced more than one year after the facts upon which the proceedings are based first came to the knowledge of the Commission. 50. Review of decisions of a 'stock exchange. 16

51. The following

section is added after

section 140: 140.1 Where a circular has been sent to' the Qfferees or the sharehQlders Qf an Qfferee CQmpany as required by

Part 9, every perSQn Qr CQmpany to' whQm such circular was sent shall be deemed to' have relied UPQn the statements made in the circular and, if a material false statement is cQntained in a circular, each perSQn whO' at the time the circular was signed was a directQr Qf the CQmpany Qn whQse behalf the circular was signed and each perSQn whO' was required to sign a certificate under sectiQn 88.1 Qr sectiQn 98 is liable to pay cQmpensatiQn to' all sharehQlders Qf the CQmpany whose shares are the subj ect Qf the take-Qver bid fQr any lQSS or damage such sharehQlders have sustained as a result Qf such material false statement unless it is prQved (

a) that the circular was prepared and sent withQut his knQwledge QrcQnsent, and that, Qn becQming aware Qf its being sent, he fQrthwith gave reasQnable public nQtice that it was SO' sent withQut his know ledge Qr cQnsent, Qr (

b) that, befQre the statement was relied Qr acted upon, Qn becQming aware Qf any false statement therein, he withdrew his cQnsent theretO' and gave reason able public nQtice Qf such withdrawal and of the reaSQns therefQr, Qr (

c) that, with respect to' every false statement, he had reasQnable grQunds to' believe and did believe that the statement was true, Qr (

d) that he had nO' reasQnable grQunds to' believe that an expert whO' made a statement in a circular Qr whose repQrt Qr valuatiQn was prQduced Qr fairly sum marized therein was nQt cQmpetent to' make such statement, valuatiQn Qr repQrt, Qr (

e) that, with respect to' every false statement purport ing to' be a statement made by an Qfficial perSQn or cQntained in what purpQrts to' be a CQPy Qf Qr 'extract frQm a public Qfficial document, it was a correct and fair representatiQn Qf the statement a CQPy or extract frQm the dQcument.

Section 143 is struck out and the following

section is substit,ute.d therefor: 143.

(1) The CQmmissiQn may, where in its opinion such actiQn is in the public interest, Qrder, subject to' such terms. and cQnditiQns as it may impQS'e, that trading shall cease In respect of such securities fQr such periQd as is spec ified in the Qrder.

(2) NO' Qrder shall be made under subsectiQn (1) with Qut a hearing unless in the QpiniQn Qf the CQmmissiQn the length Qf time required fQr a hearing CQuld be prej udicial to' the public interest, in which event the CQmmissiQn may 17

51. The amendment provides similar civil liability and defences in respect of errors in a take-over bid circular as are provided in respect of false statements in a prospectus. 52. Orders to cease trading.

Section 143 reads: 143.

(1) The Director may by order direct any bvojker or salesman to cease and desIst fjrom trading in a security or a class of securities.

(2) Upon receipt of an order under subsection (1) the broker or s!llesman shall cease and desist from trading in the se·curity 0Ir securi ties mentioned in the 'order, and failure to do so constitutes an offence. 17

make a temporary order, which shall expire 15 days from the date of the making thereof, but such order may be ex tended for such period as the Commission considers neces sary where satisfactory information is not provided to the Commission with~n the 15-day period.

(3) The Commission may give notice of its intention to make an order or to hold a hearing under this

section by publication in a newspaper of general 'circulation or in such other manner and to such persons as the Commission thinks fit.

Section 144 is amended (

a) by inserting after clause (

b) the following clause: (bl) classifying registrants into categories and pre scribing the terms and conditions of registra tion of registrants in each category, but no registrant shall be included in a category desig nated as (

i) investment dealer, unless he is a member of the Alberta District of the Investment Dealers' Association of Canada, or (ii) broker, unless he is a member of a stock exchange recognized by the Commission, (

b) by inserting after clause (

d) the following clause: (dl) regulating the trading of securities other than on a stock exchange recognized by the Commis sion, (

c) as to clause (

I) by striking out the words "invest ment counselor securities", and (

d) by inserting alter clause (

m) thl3t following clause: (ml) prescribing the manner of calculating basic earnings per share and fully diluted earnings per share for the purposes of

section 117, sub s'ection (1.1), clauses (

b) and (c), 54. This Act comes into force on the day upon which it is assented to. 18

53. Regulations. 18 Title: 1972 (17th, 1st) Bill 86, The Securities Amendment Act, 1972

Document details

Collection	Alberta — Bills
Citation	L17 S1 5067
Type	bill
Volume / chapter	L17 S1 5067
Language	en
Format	json
Source	PROVINCIAL
Identifier	9ecbae64233ab44dd2cceca186b4b2668abb6a11

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