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2003 Legislative Session: 4th Session, 37th Parliament

FIRST READING

The following electronic version is for informational

purposes only.

The printed version remains the official version.

HONOURABLE RICK THORPE

MINISTER OF COMPETITION,

SCIENCE AND ENTERPRISE

BILL 24 – 2003

SECURITIES AMENDMENT ACT, 2003

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Section 1 (1) of the Securities Act, R.S.B.C. 1996, c. 418,

is amended

(

a) in paragraph (b) (ii) of the definition of "investor relations

activities" by striking out "body or exchange,"

and substituting "body, exchange or quotation and trade reporting

system," , and

(

b) by repealing the definition of "salesperson" and

substituting the following:

"salesperson" means a person that trades securities

or exchange contracts on behalf of a dealer; .

Section 15 (3) is repealed and the following substituted:

(3) Money received by the commission as revenue from administrative penalties under

section 162 may be expended only for the purpose of educating securities market participants and members of the public about investing, financial matters or the operation or regulation of securities markets.

Section 39 (1) (

c) is repealed and the following substituted:

(

c) the bylaws, rules, other regulatory instruments or policies of the self regulatory body, exchange or quotation and trade reporting system, if any, of which or in which the registrant is a member or participant.

Section 40 is repealed and the following substituted:

Suspension of registration

(1) A registration granted under this Act or the regulations is immediately suspended if,

(

a) in the case of a registered salesperson that is an employee of, or contracts with, a registered dealer, the registrant's authority to trade on behalf of the dealer is suspended or terminated, or

(

b) in all other cases in which the registrant is an employee, the employment of the registrant is suspended or terminated.

(2) A registration suspended under subsection (1) remains suspended until the executive director reinstates the registration.

5 The following

section is added to

Part 12:

Definition

84.1 In this Part, "related financial instrument" means, with respect to a reporting issuer, a security or exchange contract the market price or value of which varies materially with the market price or value of a security of the reporting issuer.

Section 85 is repealed.

Section 86 (1) is repealed and the following substituted:

(1) A person that

(

a) is in a special relationship with a reporting issuer, and

(

b) knows of a material fact or material change with respect to the reporting issuer, which material fact or material change has not been generally disclosed,

must not enter into a transaction involving a security of the reporting issuer or a related financial instrument.

Section 87 is repealed and the following substituted:

Insider reports

(1) In this section, "reporting issuer" does not include a mutual fund.

(2) A person who is an insider of a reporting issuer must, within a prescribed period of time after becoming an insider, file an insider report in the required form effective the date on which the person became an insider, disclosing

(

a) any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, and

(

b) any interest in a transaction involving a related financial instrument if the person continues to have rights or obligations associated with the related financial instrument, or the transaction, after the date the person became an insider.

(3) A person who is an insider of a reporting issuer is not required to file an insider report under subsection (2) if, at the time the person became an insider of the reporting issuer, the person did not have

(

a) direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, or

(

b) any rights or obligations associated with a related financial instrument or a transaction involving a related financial instrument.

(4) Under subsection (3), a person is deemed to have filed an insider report for the purposes of subsection (5).

(5) If, while a person is an insider of a reporting issuer,

(

a) the person enters into a transaction involving a security of the reporting issuer or, for any other reason, the person's direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer changes from that shown or required to be shown in the latest insider report filed by the person, or

(

b) the person enters into a transaction involving a related financial instrument,

the person must, within the prescribed period, file an insider report in the required form.

(6) If a director or senior officer

(

a) of an issuer is deemed under

section 2 (2) to have been an insider of a reporting issuer, or

(

b) of a reporting issuer is deemed under

section 2 (3) to have been an insider of another reporting issuer,

then, within a prescribed period of time after the date on which that deeming occurs, the director or senior officer must file the insider reports referred to in subsections (2) and (5), for the period for which the director or senior officer is deemed to have been an insider.

9 The following

section is added:

Temporary insider filing requirement

87.1

(1) A person who is an insider of a reporting issuer must, on or before a prescribed date, file an insider report in the required form disclosing any transaction involving a related financial instrument that the person entered into at any time while the person was an insider of the reporting issuer.

(2) Subsection (1) does not apply if

(

a) the transaction has been previously disclosed in an insider report filed under this Act, or

(

b) the person no longer has rights or obligations associated with the related financial instrument or the transaction.

Section 117 is repealed.

Section 119 (1) is repealed.

Section 153 (1) (a) (ii) is repealed and the following substituted:

(ii) a clearing agency or a quotation and trade reporting

system, .

Section 155 (1) (

b) is amended

(

a) by striking out "85 to 87," and substituting

"85, 86, 87," ,

(

b) by striking out "85," ,

(

c) by striking out "86, 87," and substituting "86

to 87.1," , and

(

d) by striking out "117 (1) and (2)," .

Section 161 (1) (a) (iii) is amended by striking out "or

exchange," and substituting ", exchange or quotation and trade

reporting system," .

Section 167 (5) is amended by striking out "party"

and substituting "respondent" .

Section 183 (6) is amended by striking out "and"

at the end of subparagraph (v), by adding ", and" at the end of

subparagraph (vi) and by adding the following subparagraph:

(vii) different or additional requirements for different

classes of registrants within a registration category; .

Commencement

17 Sections 1 (b), 4 to 11 and 13 (b), (

c) and (

d) come into force by regulation of the Lieutenant Governor in Council.

Explanatory Notes

SECTION 1: [Securities Act, amends

section 1 (1)]

(

a) expands the definition of "investor relations activities"

to ensure that activities performed in compliance with the requirements of quotation

and trade reporting systems are not regulated under the Securities Act ,

and

(

b) expands the definition of "salesperson" to allow corporate entities to perform the same role.

SECTION 2: [Securities Act, repeals and replaces

section 15 (3)]

expands the purposes for which penalties collected under the Act can be

used.

SECTION 3: [Securities Act, repeals and replaces

section 39 (1) (c)]

expands the power of review to ensure that registrants are complying with

the rules of quotation and trade reporting systems.

SECTION 4: [Securities Act, re-enacts

section 40] is consequential

to the amendment made by

section 1 (

b) of this Bill.

SECTION 5: [Securities Act, enacts

section 84.1] provides

a definition to clarify that insider trading provisions apply to derivatives

and other securities that relate to a reporting issuer, even if those securities

were not issued by that reporting issuer.

SECTION 6: [Securities Act, repeals

section 85] repeals

the obligation for issuers to report material changes to the affairs of the

issuer, as that reporting will be dealt with by regulation.

SECTION 7: [Securities Act, repeals and replaces

section

86 (1)] clarifies that the prohibition on trading securities using inside

information applies to all types of securities related to a reporting issuer,

even if those securities were not issued by the reporting issuer.

SECTION 8: [Securities Act, re-enacts

section 87]

clarifies that insider trade reporting requirements apply to all types of

securities that relate to a reporting issuer, even if those securities were

not issued by the reporting issuer.

SECTION 9: [Securities Act, enacts

section 87.1]

ensures that the public record is up to date with respect to any derivatives

or similar securities that relate to a reporting issuer that are held by insiders

of that reporting issuer.

SECTION 10: [Securities Act, repeals

section 117]

repeals the proxy solicitation requirements relating to reporting issuers

as those matters will be dealt with by regulation.

SECTION 11: [Securities Act, repeals

section 119 (1)]

is consequential to the amendment made by

section 10 of this Bill.

SECTION 12: [Securities Act, repeals and replaces

section

153 (1) (a) (ii)] expands the commission's powers of review to

include quotation and trade reporting systems.

SECTION 13: [Securities Act, amends

section 155 (1) (b)] is consequential

to the amendments made by sections 6 to 10 of this Bill.

SECTION 14: [Securities Act, amends

section 161 (1) (a)

(iii)] enables the commission to ensure trading activities comply

with the requirements of quotation and trade reporting systems.

SECTION 15: [Securities Act, amends

section 167 (5)] clarifies

that the commission can fully participate during appeals of its decisions.

SECTION 16: [Securities Act, amends

section 183 (6)]

allows rules prescribed for registrants acting through corporate entities

to be different from or additional to rules prescribed for registrants acting

in a personal capacity.

Copyright (c) 2003: Queen's Printer, Victoria, British Columbia, Canada