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CONSOLIDATED NEWFOUNDLAND

AND

LABRADOR

REGULATION 805/96

Securities Regulations

under the

Securities Act

(O.C. 96-286)

Amended by:

87/01

2001 c42

14/06

2014 cC-10.1 s74

CONSOLIDATED NEWFOUNDLAND

AND

LABRADOR

REGULATION 805/96

Securities Regulations

under the

Securities Act

(O.C. 96-286)

Under the authority of the Securities Act

and the Subordinate Legislation Revision and Consolidation Act

, the Lieutenant-Governor in Council makes the following regulations.

REGULATIONS

Analysis

PART I

GENERAL

INTERPRETATION

Short title

Interpretation

Financial statements

PART II

CONTINUOUS DISCLOSURE FOR ISSUERS OTHER THAN MUTUAL FUNDS

Non-financial matters

Confidential filing

Other disclosure

Reporting issuer filing

Interim financial statement

Content of statement

Exclusion from statement

Annual financial disclosure

Statement to be approved

Finance companies

Miscellaneous

PART III

PROSPECTUS REQUIREMENTS

Further exemptions

Application of exemptions

Acquisition cost

Restrictions of exemptions

Exemption not applicable

Exemption not applicable

Filing requirements

Consent filing

Preliminary prospectus change

Requirements for filing

Interpretation

Rules

Finance companies

Industrial company prospectus

Finance company prospectus

Resource company prospectus

Issuer bid prospectus

Mutual fund prospectus

Compliance by issuer

Type of prospectus

Unnecessary reference

Wrong inference

Form of information

Preliminary prospectus

Preliminary prospectus

Pro forma prospectus

Content of prospectus - financial matters

Mutual fund prospectus

Pro forma balance sheet

Business acquisition prospectus

Foreign issuer

Exercise of option

Debt securities prospectus

Inclusion of forecast

Acquired business statement

Subsidiary's statements

Unconsolidated financial statements

Review by audit committee

Financial statement

Auditor's letter

Reporting requirements

Reporting requirements

Reporting requirements

Notice of intention

Statement of material facts

Application of sections

Statement of material facts

Statement of material facts

Underwriter's certificate

Material change

Exemption from compliance

Options

Escrow agreement

Certificate - portion of distribution underwritten

Prospectus requirements - variation permitted

Restriction in use of terms

PART IV

MUTUAL FUNDS

Financial disclosure requirements

Statement of changes in net assets

Balance sheet

Statement of investment portfolio

Statement of portfolio transactions

Additions to financial statement

Interim financial statement

Interim financial statement

Auditor's report

Financial statement of mutual fund

Approval of statement

Omission from statement

Confirmation of trade

PART V

REGISTRATION REQUIREMENTS

Definitions

Determination of market value

Categories of registration

Categories of advisers

Registration as underwriter

Where portfolio manager is a broker

Conditions of registration - general

Registrant

Notice of registrant

Conditions of registration

Registered dealer

Conditions of registration - capital requirements

Bonding or insurance

Notice to superintendent

Compensation fund

Subordination agreement

Report on statements

Conditions of registration - record keeping

Conditions of registration - new accounts and supervision

Investment counsel standards

Conditions of registration - segregation of funds and securities

Where registrant holds securities

Credit balances

Subscriptions or prepayments

Securities account

108A.

Transfer from accounts

Exemption for registrants

Conditions of registration - statements of account and portfolio

Conditions of registration - proficiency requirements

Registration prohibited

Equivalent qualifications

Registration as salesperson

114A.

Conditions of registration - listed and posted securities

Application for registration

Renewals of registration

116A.

Expiry of registration

Renewal of registration

Renewal of registration

Examination

Amendments to registration

Notice to superintendent

Escrow agreement

Shares subject to escrow

Reporting to superintendent

Financial statement

End of year report

End of year report

Guideline

Audit of report

Auditors instructions

Focus of audit

Report of auditor

Further exemptions from registration requirements

Exempt purchaser

Certain banks

PART V

OVER-THE-COUNTER TRADING

General

Trade reporting

PART VI

PROCEDURE AND

RELATED MATTERS

Endorsement of warrants

Execution and certification of documents

Failure of material to comply

Investigations

PART VII

INSIDER TRADING

Disclosure requirement

Form of report

Filing not required

Time of filing

Preparation of report

Preparation of report

Affiliate report

Report re: estate

149A.

Rep. by NLR 87/01

149B.

Report outside jurisdiction

149C.

Facsimile signature

149D.

Exemption from liability

PART VIII

PROXIES AND

PROXY SOLICITATION

Contents of circular

Form of proxy

Effect of proxy

Limit on proxy

Copy of proxy

Certification of circular

PART IX

TAKE-OVER BIDS

AND

ISSUER BIDS

Interpretation

Market price

Take-over bid

Subsection 95(2) of Act

Subsection 95(5) of Act

Form of notice

Press release

Take-over bid circular

Issuer bid circular

Directors' circular

Director's circular

Notice of change

Description of change required

168A.

Bid variation

168B.

Consent of solicitor, et al

168C.

Press release authorization

168D.

Press release authorization

168E.

Joint action

168F.

Statement of rights

168G.

Presentation of information

168H.

Alternative signature

168I.

Triplicate filing

PART X

UNIVERSAL REGISTRATION

Interpretation

Indirect trade prohibited

Limited market dealer registration

International dealer registration

Financial intermediary dealer registration

Foreign dealer registration

Exemption

PART XI

DEALER OWNERSHIP RESTRICTIONS

Interpretation

Non-resident ownership

Ownership of securities

Regulations may be varied

Right to be heard

Notice of ownership

Miscellaneous

PART XII

CONFLICTS OF INTEREST

Interpretation

Provisions may be varied

General duties

Treatment of customers

Statement of policies

Limitations on underwriting

Limitations on trading

Confirmation and reporting of trades

Limitations on advising

Limitations on recommendations

Limitations on networking

Exceptions

Miscellaneous

Compliance conditions

Exemption of registrant

Offering memorandum prospectus

Repeal

PART I

GENERAL

INTERPRETATION

Short title

These regulations may be cited as the Securities Regulations.

58/91 s1

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Interpretation

(1)Every term used in these regulations that is

(

a) defined in

section 2 of the Act is used in these regulations as so defined unless it is otherwise defined in these regulations or the context otherwise requires;

(

b) defined in a Part of the Act for purposes of that

Part is used as so defined in those sections of these regulations that relate to the subject matter of that Part; and

(

c) defined only for a Part or

section of these regulations is, unless otherwise provided, so defined only for the purposes of such Part or section.

(2) In these regulations

(a)

"debt security" means a bond, debenture, note or similar instrument representing indebtedness, whether secured or unsecured;

(b)

"finance company" means an issuer, its subsidiaries and affiliates that

(

i) has issued securities on or after April 1, 1991

, in respect of which a prospectus was filed and a receipt therefor obtained under a predecessor of this Act, or

(ii)

distributes its securities in the province without filing a prospectus in respect thereof, in reliance on paragraph 36(2)(

d) of the Act, and is

(iii)

an issuer, or a subsidiary or affiliate of an issuer, a material business activity of which involves

(

A) purchasing, discounting or otherwise acquiring promissory notes, acceptances, accounts receivable, bills of sale, chattel mortgages, conditional sales contracts, drafts and other obligations representing part or all of the sales price or merchandise, or services,

(

B) factoring or purchasing and leasing personal property as part of a hire purchase or similar business, or

(

C) making secured and unsecured loans,

but does not include,

(iv)

a bank to which the Bank Act

( Canada

) applies, the Federal Business Development Bank, a loan company or trust company licensed under the Trust and Loan Companies Licensing Act

or an insurance company licensed under the Insurance Companies Act,

(

v) a credit union or co-operative society registered under the Co-operative Societies Act,

(vi)

an underwriter or dealer, or

(vii)

an issuer that, in the opinion of the superintendent, carries on operations making it more appropriate that the issuer be designated as an industrial company or natural resource company;

(c)

"industrial company" means an issuer designated by the superintendent as an industrial company;

(d)

"insurance company" means an issuer licensed under the Insurance Companies Act;

(e)

"natural resource company" means a mining, gas, oil or exploration issuer designated by the superintendent as a natural resource company; and

(f)

"variable insurance contract" means a contract of life insurance under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets.

(3) Subject to subsection (4), for the purposes of the Act and these regulations, where a recommendation has been made in the Handbook of the Chartered Professional Accountants of Canada which is applicable in the circumstances, the terms "generally accepted accounting principles", "auditor's report" and "generally accepted auditing standards" mean the principles, report and standards, respectively, recommended in the handbook.

(4) Subject to

section 46, where an issuer is incorporated or organized in a jurisdiction other than Canada or a province or territory thereof, "generally accepted accounting principles" may, at the option of the issuer, mean the principles as prescribed in the incorporating jurisdiction by or pursuant to applicable legislation or where a recommendation has been made by an association in that jurisdiction equivalent to the Chartered Professional Accountants of Canada, the principles recommended by that association, but where an option is exercised under this subsection, the notes to the financial statements shall state which option has been applied in the choice of generally accepted accounting principles.

(5) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a person and, by virtue of subsection 2(5) of the Act, one or more companies will also have to be shown as beneficially owning the securities, a statement disclosing all the securities beneficially owned by the person or deemed to be beneficially owned, and indicating whether the ownership is direct or indirect and, if indirect, indicating the name of the controlled company or company affiliated with the controlled company through which the securities are indirectly owned and the number or percentage of the securities so owned by the company, shall be deemed sufficient disclosure without disclosing the name of another company which is deemed to beneficially own the same securities.

(6) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a company, and by virtue of subsection 2(6) of the Act, one or more other companies will also have to be shown as beneficially owning the securities, a statement disclosing all securities beneficially owned or deemed to be beneficially owned by the parent company and indicating whether the ownership is direct or indirect and, if indirect, indicating the name of the subsidiary through which the securities are indirectly owned and the number or percentage of the securities so owned, shall be deemed sufficient disclosure without disclosing the name of another company which is deemed to beneficially own the same securities.

(7) A company shall be considered to be another's holding company or parent company if that other is its subsidiary.

(8) A reference to a form in these regulations means the form approved by the minister for the purpose of these regulations.

58/91 s2; 14/06 s1 ; 2014 cC-10.1 s74

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Financial statements

(1)Subject to subsections (3) and (4), the financial statements permitted or required by the Act or these regulations shall be prepared in accordance with generally accepted accounting principles and with an applicable provision of the Act or these regulations.

(2) Where an auditor reports on a financial statement required by the Act or these regulations, the report shall be prepared in accordance with generally accepted auditing standards and with an applicable provision of the Act or these regulations.

(3) Where the issuer is

(

a) a bank to which the Bank Act

( Canada

) applies; or

(

b) a company undertaking and transacting life insurance licensed under the Insurance Companies Act,

the financial statements of the bank or insurance company are not required to comply with subsection (1) if the financial statements are prepared in accordance with a statute incorporating, continuing or governing the bank or insurance company and any applicable generally accepted accounting principles.

(4) Notwithstanding subsection (1), where a financial statement is not prepared in accordance with generally accepted accounting principles,

(

a) the superintendent may accept the financial statement for the purposes for which it is to be filed,

(

i) where the superintendent is satisfied that it is not reasonably practicable for the issuer to revise the presentation in the financial statement to conform to generally accepted accounting principles, or

(ii)

where the superintendent by his or her order under paragraph (

b) has previously accepted a financial statement of the same issuer with a corresponding variation from generally accepted accounting principles and the superintendent is satisfied that there has been no material change in the circumstances upon which his or her previous decision was based; or

(

b) the superintendent may, by his or her order, accept the financial statement after giving interested parties an opportunity to be heard if the superintendent is satisfied in all the circumstances of the particular case that the variation from generally accepted accounting principles is supported or justified by considerations that outweigh the desirability of uniform adherence to generally accepted accounting principles.

(5) Except where expressly provided otherwise in the Act or in sections 10, 40, 53, 79 and 82, each financial statement prepared under a requirement of the Act or these regulations shall include an auditor's report on the statement.

(6) It is not necessary to designate the financial statements referred to in the Act or these regulations as the income statement, statement of surplus, statement of changes in financial position, balance sheet, statement of investment portfolio, statement of portfolio transactions, or statement of changes in net assets.

(7) Notwithstanding anything in this Part, it is not necessary to state in a financial statement any matter that in all the circumstances is of relative insignificance.

58/91 s3; 14/06 s2

PART II

CONTINUOUS DISCLOSURE FOR ISSUERS OTHER THAN MUTUAL FUNDS

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Non-financial matters

Every report required to be filed under subsection 76(2) of the Act

(

a) shall be prepared in accordance with Form 26; and

(

b) subject to

section 5, shall be delivered to the superintendent in an envelope addressed to the superintendent and marked "Continuous Disclosure".

58/91 s4; 14/06 s3

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Confidential filing

Where the reporting issuer files

(

a) the report required by subsection 76(2) of the Act in reliance on

(i)

subsection 76(3) of the Act, or

(ii)

item 7 of Form 26; or

(

b) the notification required by subsection 76(4) of the Act,

everything that is required to be filed thereby shall be marked "Confidential" and placed in an envelope addressed to the superintendent marked "Confidential".

58/91 s5; 14/06 s4

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Other disclosure

(1)Every report required to be filed under subsection 82(2) of the Act shall be prepared in accordance with Form 27.

(2) The information contained in a report required to be filed under subsection 82(2) of the Act shall be clearly presented and the statements made therein shall be divided into groups according to subject matter and the various groups of statements shall be preceded by appropriate headings.

(3) The order of items set out in Form 27 need not be followed.

(4) Where practicable and appropriate, information required by Form 27 shall be presented in tabular form.

(5) All amounts required by Form 27 shall be stated in figures.

(6) Information required by more than one applicable item in Form 27 need not be repeated.

(7) No statement need be made in response to an item in Form 27 which is inapplicable and negative answers to an item may be omitted.

58/91 s6

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Reporting issuer filing

(1)Every reporting issuer shall file, in duplicate,

(

a) a copy of all material sent by the reporting issuer to its security holders; and

(

b) subject to subsection (2), all information not already filed with the superintendent, whether in the same or a different form, that it files with a government of another jurisdiction, or an agency thereof, or with a stock exchange of another jurisdiction, under the securities or corporation law of that jurisdiction or under the by-laws, rules or regulations of the stock exchange, on the basis that it is material to investors although the information is not specifically required to be filed by the terms of the applicable statute or regulation, or of the applicable by-laws, rules or regulations of the stock exchange.

(2) Information is not required to be filed with the superintendent under paragraph (1)(

b) where the information filed in the other jurisdiction is information that is specifically required to be filed in the other jurisdiction by the terms of the applicable statute, regulation or of the by-laws, rules or regulations of the stock exchange.

(3) Information required to be filed with the superintendent under subsection (1) shall be sent to the superintendent within 24 hours of

(

a) sending the information referred to in paragraph (1)(

a) to its security holders; or

(

b) filing in another jurisdiction the information referred to in paragraph (1)(b).

(4) Information that is filed with the superintendent under paragraph (1)(

b) and that has been filed on a confidential basis in all other jurisdictions in which it is filed shall be kept confidential so long as it remains confidential in all those other jurisdictions.

58/91 s7; 14/06 s5

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Interim financial statement

(1)The interim financial statements required to be filed under subsection 78(1) of the Act shall include

(

a) subject to subsection (2), a statement of changes in financial position; and

(

b) an income statement.

(2) Every issuer primarily engaged in the business of investing shall file a statement of changes in net assets for each period instead of a statement of changes in financial position.

58/91 s8

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Content of statement

The interim financial statements under subsection 78(1) of the Act shall present financial information for the current fiscal year to the date to which the financial statements are prepared and may include as additional information financial information for the most recent 3 month period to the date to which the financial statements are prepared, and which may be comparative for the corresponding 3 month period in the last financial year.

58/91 s9

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Exclusion from statement

The interim financial statements under

section 78 of the Act need not include an auditor's report.

58/91 s10

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Annual financial disclosure

(1)The financial statements required to be filed under

section 79 of the Act by an issuer that is not a mutual fund in the province shall include

(

a) an income statement;

(

b) a statement of surplus;

(

c) subject to subsection (2), a statement of changes in financial position; and

(

d) a balance sheet

prepared for or as at the end of the period as applicable.

(2) Every issuer primarily engaged in the business of investing shall file a statement of changes in net assets for each period instead of a statement of changes in financial position.

58/91 s11

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Statement to be approved

Every financial statement required to be filed under

section 79 of the Act shall be approved by the board of directors of the reporting issuer and the approval shall be evidenced by the manual or facsimile signatures of 2 directors duly authorized to signify the approval.

58/91 s12

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Finance companies

(1)Each finance company not otherwise required to file financial statements in accordance with sections 78 and 79 of the Act shall file, in duplicate, the financial statements required under subsections 78(1) and 79(1), as appropriate, as though the finance company were subject to those subsections.

(2) Subject to subsection (3), each finance company, whether or not otherwise required to file financial statements in accordance with sections 78 and 79 of the Act, shall file, annually, within 140 days after the end of its financial year,

(

a) a report prepared in accordance with Form 28; and

(

b) other forms as are deemed appropriate by the superintendent.

(3) A finance company shall not be required to comply with subsection (2) where

(

a) the Association of Canadian Financial Corporations, after consultation with the Investment Dealers' Association of Canada, has passed a by-law setting a standard of continuous disclosure for its members deemed by the superintendent to be an appropriate alternative to the disclosure required by subsection (2);

(

b) the finance company, whether it is a member of the Association of Canadian Financial Corporations or an agreeing non-member,

(

i) complies with the by-law referred to in paragraph (a),

(ii)

files copies of each report required by the by-law with the Association of Canadian Financial Corporations in accordance with the by-law, with the superintendent and a stock exchange as required by subsection (8), and

(iii)

agrees that it will, immediately upon the request of the Association of Canadian Financial Corporations or of an interested party, add the name of an interested party to its mailing list for distribution of the reports until the interested party requests or agrees to the removal of his or her name from the mailing list.

(4) For the purpose of subsection (3), an "agreeing non-member" is a finance company that is not a member of the Association of Canadian Financial Corporations but has filed an undertaking with the superintendent that it will comply with the by-law of the Association of Canadian Financial Corporations relating to continuous disclosure.

(5) (6) Every report filed under subsection (2) shall be accompanied by a report of the auditor of the finance company stating that he or she has read the report and that he or she has no reason to believe that there are misrepresentations in the information contained therein that is derived from the financial statements upon which he or she reported or that is within his or her knowledge as a result of his or her audit of the financial statements.

(7) Copies of the report required by subsection (2) or prepared in accordance with subsection (3), including exhibits and all papers and documents required in support thereof, shall be filed with the superintendent and, where any security of the finance company is listed on a stock exchange, a copy of the report shall be filed with the stock exchange.

(8) The reports filed with the superintendent and a stock exchange shall be manually signed by a senior financial officer of the finance company.

(9) Every finance company shall, upon the request of a debt security holder of the finance company, provide the debt security holder with a copy of its financial statements most recently filed under

section 78 or 79 of the Act or under subsection (1).

58/91 s13; 14/06 s6

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Miscellaneous

Where applicable, and where the period or date reported on is a financial year or financial year end, the following additional matters shall be referred to in the financial statements or by way of a note to the financial statements:

(

a) in the case of a finance company or an issuer engaged primarily in investing, an analysis of shares, bonds, debentures and other investments showing separately

(

i) the name of each issuer of the securities owned by the company,

(ii)

the class or designation of each security held,

(iii)

the number of each class of shares or aggregate face value of each class of other securities held, and

(iv)

the cost and market value of each class of securities held and, if the carrying value is other than average cost, the basis of valuation;

(

b) in the case of an industrial or natural resource company that is in the promotional, exploratory or developmental stage, an analysis, if material, of shares, bonds, debentures and other investments owned by the company showing separately

(

i) the name of each issuer of the securities held,

(ii)

the class or designation of each security held,

(iii)

the number of each class of shares or aggregate face value of each class of other securities held, and

(iv)

the cost and market value of each class of securities held and, if the carrying value is other than average cost, the basis of valuation;

(

c) in the case of an industrial or natural resource company that is in the promotional, exploratory or developmental stage, an analysis of deferred charges, if material, for the period covered by the income statement or statement of changes in financial position, segregating year by year, expenditures for development and exploration from expenditures for administration and showing the total for each.

58/91 s14

PART III

PROSPECTUS REQUIREMENTS

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Further exemptions

(1)Subject to subsection (2),

section 54 of the Act does not apply to a trade by a person or company referred to in subparagraph 2(1)(l)(iii) of the Act in a security that was acquired pursuant to a take-over bid that is a formal bid as defined in subsection 90(1) of the Act if

(

a) the offeree issuer had been a reporting issuer for at least 12 months at the date of the bid;

(

b) the intention to make the trade was disclosed in the take-over bid circular in respect of the take-over bid;

(

c) the trade is made within the period commencing on the day of the expiry of the bid and ending 20 days thereafter;

(

d) a notice of intention and a declaration in Form 22 are filed before the trade;

(

e) a report of the trade is filed within 5 days after the completion of the trade; and

(

f) no unusual effort is made to prepare the market or to create a demand for the security and no extraordinary commission is paid in respect of the trade.

(2) Where an offeror referred to in subsection (1) sells the securities acquired pursuant to a formal bid to another person or company that made a competing formal bid for securities of the same issuer, for not greater than the same consideration than that offered by that other person or company in its take-over bid, the offeror need not comply with paragraph (1)(b).

58/91 s15

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Application of exemptions

(1)The exemptions contained in paragraph 36(2)(j), subsection 73(5) and paragraph 74(1)(

a) of the Act apply where the securities being traded are those of a company that

(

a) is incorporated but not continued under the British Columbia Companies Act,

S.B.C. 1973, c.18, as amended;

(

b) is not a reporting company within the meaning of

section 2 of the British Columbia Securities Act,

S.B.C. 1967, c.45, as amended; and

(

c) does not offer its securities for sale to the public

as if the company were a private company as defined in the Act.

(2) The exemptions contained in subparagraph 36(2)(a)(ii) and paragraph 74(1)(

a) of the Act apply, where the securities being traded are bonds, debentures or other evidence of indebtedness of Conseil scolaire de l'ile de Montreal.

58/91 s16

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Acquisition cost

(1)For the purpose of paragraph 36(1)(

e) of the Act and paragraph 73(1)(

d) of the Act, the aggregate acquisition cost is not less than $97,000.

(2) For the purpose of paragraph 36(1)(

r) of the Act and paragraph 73(1)(

l) of the Act, the fair value of the assets is not less than $100,000.

58/91 s17

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Restrictions of exemptions

(1)Subsection (1) does not affect the exemption contained in paragraph 36(2)(

h) and paragraph 74(1)(

a) of the Act for securities issued by co-operative societies to which the Co-operative Societies Act

applies.

(2) The superintendent may, upon the application of an interested person or company, rule that a trade, intended trade, person or company is not subject to subsection (1) where the superintendent is satisfied

(

a) that a party effecting the conversion of a multiple unit residential property to establish the occupancy rights referred to in subsection (1) has prior to the day this

section comes into force materially altered his or her position to his or her detriment in reliance on the law as it existed prior to that day; or

(b)

58/91 s18; 14/06 s7

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Exemption not applicable

The exemption contained in paragraph 36(1)(

e) of the Act and the corresponding exemption contained in paragraph 73(1)(

d) of the Act are unavailable where the trade is in a security which has an aggregate acquisition cost to the purchaser of less than $100,000.

58/91 s19

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Exemption not applicable

The exemption contained in paragraph 36(1)(

r) of the Act and the corresponding exemption contained in paragraph 73(1)(

l) of the Act are unavailable where the value of the assets purchased is less than $100,000.

58/91 s20

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Filing requirements

A mutual fund may file a

summary statement as a separate document in the form prescribed in this Part together with a prospectus filed under

section 54 or 63 of the Act.

58/91 s21

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Consent filing

(1)Where a solicitor, auditor, accountant, engineer, appraiser or another person or company whose profession gives authority to a statement made by him or her is named as having prepared or certified a part of a prospectus,

summary statement or documents prepared in connection with a

summary statement, or is named as having prepared or certified a report or valuation used in or in connection with a prospectus or

summary statement, the written consent of the person or company to being so named and to the use of the report or valuation shall be filed not later than the time the prospectus is filed.

(2) The superintendent may dispense with the filing of a consent required by subsection (1) if, in his or her opinion, the filing is impracticable or involves undue hardship.

(3) The consent of the auditor or accountant referred to in subsection (1) shall refer to his or her report stating the date thereof and the dates of the financial statements on which the reports are made, and shall contain a statement that he or she has read the prospectus and he or she has no reason to believe that there are any misrepresentations in the information contained therein that is derived from the financial statements upon which he or she reported or that is within his or her knowledge as a result of his or her audit of the financial statements.

(4) Where a solicitor, auditor, accountant, engineer, appraiser or other person or company referred to in subsection (1)

(

a) has received or expects to receive any interest, whether direct or indirect, in the property of the issuer or an associate or affiliate of the issuer; or

(

b) beneficially owns, directly or indirectly, any securities of the issuer or an associate or affiliate of the issuer,

the interest or ownership shall be disclosed in the prospectus.

(5) Where a person or company referred to in subsection (1) is or is expected to be elected, appointed or employed as a director, officer or employee of the issuer or an associate or affiliate of the issuer, the fact or expectation shall be disclosed in the prospectus.

58/91 s22; 14/06 s8

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Preliminary prospectus change

Where a change is proposed to be made in a preliminary prospectus or prospectus that in the opinion of the superintendent materially affects a consent required by

section 22, the superintendent may require that a further consent be filed before an amendment to the preliminary prospectus or prospectus is accepted.

58/91 s23; 14/06 s9

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Requirements for filing

There shall be filed at the time of the filing of a preliminary prospectus for a natural resource company, or at the time of the filing of a prospectus for a natural resource company under

section 63 of the Act, a full and up-to-date report on the property of the natural resource company referred to in paragraph (

b) or (

c) of item 9 in Form 14 and the development thereof, made by an individual who is a mining engineer, geologist or other qualified individual acceptable to the superintendent, accompanied by a certificate on the report which certificate shall state

(

a) the address and occupation of the individual;

(

b) the qualifications of the individual;

(

c) whether or not the report is based on personal examination;

(

d) the date of the examination;

(

e) where the report is not based on personal examination, the source of the information contained in the report; and

(

f) whether or not the individual has, directly or indirectly, received or expects to receive any interest, direct or indirect, in the property of the person or company or an associate or affiliate of the person or company, or beneficially owns, directly or indirectly, any securities of the person or company or an associate or affiliate of the person or company and, if so, the particulars of the interest or beneficial ownership.

58/91 s24; 14/06 s9

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Interpretation

(1)In sections 26 and 27,

(a)

"trustee" means a person or company named as trustee under the terms of a trust indenture, whether or not the person or company is a trust company authorized to carry on business in the province;

(b)

"trust indenture" means a deed, indenture or document, including a supplement or amendment to a deed, indenture or document by the terms of which a person or company issues securities and in which a trustee is named as trustee for the holders of the securities issued thereunder;

(c)

"underwriter" means an underwriter that has signed a certificate included in a prospectus under

section 60 of the Act.

(2) For the purposes of the reports required under

section 24 and for references to the property of an issuer contained in Form 14, where the report or reference relates to the property of a natural resource company,

(a)

"commercial production" means output from a well of the quantity of crude oil, liquid hydrocarbons, natural gas and natural gas liquids as, having regard to the cost of drilling and production and the price, kind and quality of the production, would justify from a commercial and economic standpoint the drilling of a similar well in the immediate surroundings;

(b)

"crude oil" means a mixture that consists mainly of pentanes and heavier hydrocarbons which may contain sulphur compounds and that is recoverable at a well from an underground reservoir and that is liquid at the conditions under which its volume is measured or estimated and includes all other liquid hydrocarbons so recoverable except natural gas liquids;

(c)

"indicated ore" has the same meaning as "probable ore";

(d)

"inferred ore" has the same meaning as "possible ore";

(e)

"measured ore" has the same meaning as "proven ore";

(f)

"natural gas" means a mixture, consisting principally of hydrocarbons that may contain non-hydrocarbon gases such as carbon dioxide, hydrogen sulphide, nitrogen or other elements, which mixture is recoverable from an underground reservoir and is in the gaseous phase or in solution with crude oil in the reservoir;

(g)

"natural gas liquids" means the hydrocarbon components propane, butanes, and pentanes plus, or a combination of them, which hydrocarbon components are subject to recovery from raw gas as liquids by the processes of condensation or absorption, which recovery takes place in field separators, scrubbers, gas processing and reprocessing plants or cycling plants;

(h)

"ore" means a natural aggregate of one or more minerals which, at a specified time and place, may be mined and sold at a profit or from which some part may be profitably separated;

(i)

"possible ore" means that material for which quantitative estimates are based largely on broad knowledge of the geologic character of the deposit and for which there are few samples or measurements and for which the estimates are based on an assumed continuity or repetition for which there are reasonable geological indications, which indications may include comparison with deposits of similar type and bodies that are completely concealed may be included if there is specific evidence of their presence, and

(

i) estimates of possible ore shall include a statement of conditions within which the possible material occurs, and

(ii)

since the arithmetical average of an amount of sampling is not necessarily representative, unless the distribution of values and number of samples are properly taken into account, a statement of how samples were taken shall be given and, where mineralization is erratic, the method of treating erratic values shall be given in the narrative of the report;

(j)

"probable additional reserves" of crude oil, natural gas and natural gas liquids means an estimate of reserves not included in an estimate of the proven reserves that may be recovered from the known reservoir or from that portion underlying the properties, provided

(

i) the estimates of probable additional reserves are as realistic as can be determined on the basis of the information available,

(ii)

the reserve considered probable additional shall be the estimated ultimate recoverable content of the reservoir less the proven reserve, or of that portion underlying the properties, and shall be based on a realistic

interpretation of the geological, geophysical and well test data available at the time the estimate is made,

(iii)

probable additional reserves to be obtained by the application of enhanced recovery processes will be the increased recovery over and above that recognized in the proven category which can be realistically estimated to be ultimately economically recovered from the pool or the portions that underlie properties;

(k)

"probable ore" means that material for which tonnage and grade are computed partly from specific measurements partly from either or both sample data or production data and partly from projection for a reasonable distance on geologic evidence and for which the sites available for inspection, measurement and sampling are too widely or otherwise inappropriately spaced to outline the material completely or to establish its grade throughout;

(l)

"proven developed reserves" means those proven reserves which will be produced from existing wells or facilities;

(m)

"proven ore" means that material for which tonnage is computed from dimensions revealed in outcrops or trenches or underground workings or drill holes and for which the grade is computed from the results of adequate sampling and for which the sites for inspection, sampling and measurement are so spaced and the geological character so well defined that the size, shape and mineral content are established and for which the computed tonnage and grade are judged to be accurate within limits which shall be stated and for which it shall be stated whether the tonnage and grade or proven ore or measured ore are in situ

or extractable, with dilution factors shown and reasons for the use of these dilution factors clearly explained;

(n)

"proven reserves underlying a property" means the estimated economically recoverable quantities of crude oil, natural gas and natural gas liquids, including the reserves to be obtained by enhanced recovery processes demonstrated to be successful, from that portion of an area delineated by gas-oil or oil-water or gas-water contacts in drilled wells or which can be reasonably evaluated as economically productive, on the basis of drilling, geological, geophysical and engineering data, but reserves in undrilled prospects cannot be classed as proven reserves;

(o)

"proven undeveloped reserves" means proven reserves which are not recoverable from existing wells or facilities or from which those zones in existing wells which have been cased off, but which can be recovered through the drilling of additional wells.

58/91 s25

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Rules

(1)Subject to subsection (2), the following general rules apply:

(

a) a receipt for a prospectus will not be issued if the superintendent is aware that the issuer is in default in filing a document required to be filed by it under the Act or these regulations or under the statute under which it is incorporated or organized;

(

b) where a receipt for a prospectus is not issued within 75 days after the date of a receipt for a preliminary prospectus due to the inaction of the person or company filing the preliminary prospectus, then no final receipt shall be issued for that prospectus;

(

c) where an escrow agreement is required for an industrial company before a receipt for a prospectus is issued, the promoters may receive, free of escrow, that number of shares whose value at the offering price is equivalent to the aggregate of the cash and the fair market value of the tangible assets as are acceptable to the superintendent that they have transferred to the issuer;

(

d) where a preliminary prospectus names an underwriter of the issuer who proposes to act as underwriter in the province and who is not a registrant or the distribution is to be effected by the issuer and the issuer is not a registrant then the receipt for the preliminary prospectus shall not be issued until an application for registration has been received and the receipt for the prospectus shall only be issued concurrently with or after the granting of registration;

(

e) the receipt for a prospectus relating to securities underwritten on a firm commitment basis, other than securities to be distributed continuously, shall not be issued unless the prospectus indicates that the securities are to be taken up by the underwriter, if at all, on or before a date not later than 6 weeks after the date of the final receipt;

(

f) where there is no trading market for the securities offered, and none is expected to develop as a consequence of the distribution, except for mutual funds, a notice to this effect must be included on the cover page of the prospectus together with a statement that purchasers may not be able to resell securities purchased pursuant to the prospectus;

(

g) where a minimum amount of funds are required by an issuer, the receipt for a prospectus relating to securities proposed to be distributed on a best efforts basis, other than securities to be distributed continuously, shall not issue unless the prospectus indicates that the offering may not continue for more than 60 days where the minimum amount of funds are not subscribed within 60 days, without the consent of the superintendent and those persons or companies who subscribed within the 60 days.

(2) Where the superintendent is satisfied that there is sufficient justification he or she may permit or require that the provisions of subsection (1) be amended or waived.

58/91 s26; 14/06 s9

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Finance companies

A receipt shall not be issued for a prospectus of a finance company relating to a debt security not issued under a trust indenture unless it is clearly stated on the outside front cover page of the prospectus that the debt security is not issued under a trust indenture.

58/91 s27

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Industrial company prospectus

The prospectus of an industrial company shall be prepared in accordance with Form 12.

58/91 s28

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Finance company prospectus

The prospectus of a finance company shall be prepared in accordance with Form 13.

58/91 s29

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Resource company prospectus

The prospectus of a natural resource company shall be prepared in accordance with Form 14.

58/91 s30

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Issuer bid prospectus

Where a prospectus is required to be filed in respect of an issuer bid, the information prescribed in Form 32, except the certificate in item 30, shall be included in the prospectus.

58/91 s31

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Mutual fund prospectus

(1)The prospectus of a mutual fund shall be prepared in accordance with Form 15.

(2) The

summary statement of a mutual fund shall be prepared in accordance with Form 15A.

58/91 s32

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Compliance by issuer

Where the disclosure called for by a prospectus form or an item in a prospectus form could, in the opinion of the superintendent, properly be made applicable to an issuer, the superintendent may require the issuer to comply with the prospectus form or the item.

58/91 s33; 14/06 s10

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Type of prospectus

Unless the superintendent otherwise permits or requires,

(

a) the body of a printed prospectus shall be in roman type at least as large as 10-point modern type, except that, to the extent necessary for convenient presentation, financial statements and other statistical or tabular data and the notes thereto may be in roman type at least as large as 8-point modern type;

(

b) the type in a printed prospectus shall be leaded at least 2 points; and

(

c) unless the superintendent determines that to permit the inclusion of specific graphs, photographs or maps would be misleading or detract from the readability of the prospectus, the prospectus may contain

(

i) graphs that are relevant to matters dealt with in the text of the prospectus,

(ii)

photographs, if they include only the product of the issuer, and

(iii)

maps for the purpose of indicating the locations of property or operations, present and proposed, of the issuer.

58/91 s34; 14/06 s10

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Unnecessary reference

A reference need not be made in a prospectus to inapplicable items contained in the forms and negative answers to any items contained in the forms may be omitted.

58/91 s35

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Wrong inference

(1)An inference shall not be drawn from the items of disclosure called for by the various prospectus forms that in any way qualifies or limits the discretion granted to the superintendent by the Act.

(2) An inference shall not be drawn from the items of disclosure called for by the various prospectus forms that in any way qualifies or limits the obligation to provide full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed.

(3) The information required to be disclosed in answer to an item of a prospectus form or a part thereof may be omitted if the information is, in the opinion of the superintendent, immaterial.

58/91 s36; 14/06 s11

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Form of information

(1)The information contained in a prospectus shall be presented in narrative form.

(2) The information contained in a prospectus need not follow the order of the items contained in the forms and may be expressed in a condensed or summarized manner if it does not obscure the required information or information necessary to keep the required information from being incomplete or misleading.

(3) Where information is required to be presented in a prospectus in tabular form it shall be substantially presented in the tabular form specified.

(4) All information contained in a prospectus shall be set out under appropriate headings or captions reasonably indicative of the principal subject matter set out thereunder.

(5) Every prospectus shall contain a reasonably detailed table of contents.

(6) Information required by more than one applicable item of a prospectus form need not be repeated.

58/91 s37

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Preliminary prospectus

Every preliminary prospectus shall have printed in red ink on the outside front cover page the following statement or the variation that the superintendent may permit:

"This is a preliminary prospectus relating to these securities, a copy of which has been filed with the Superintendent of Securities but which has not yet become final for the purpose of a distribution to the public. Information contained herein is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time a receipt is obtained from the Superintendent of Securities for the final prospectus."

58/91 s38; 2001 c42 s45 ; 14/06 s12

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Preliminary prospectus

Every preliminary prospectus, prospectus or

summary statement shall have printed on the outside front cover page the following statement:

"No securities commission or similar authority in Canada

has in any way passed upon the merits of the securities offered hereunder and any representation to the contrary is an offence."

58/91 s39

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Pro forma prospectus

(1)Subject to subsection (2), every pro forma

prospectus shall substantially comply with the requirements of the Act and these regulations relating to the form and content of a prospectus.

(2) A certificate required by

section 59 or 60 of the Act and a report of an auditor otherwise required by these regulations may be omitted from a pro forma

prospectus.

58/91 s40

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Content of prospectus - financial matters

(1)Every prospectus of an issuer, other than a mutual fund, shall contain

(

a) an income statement of the issuer for

(

i) each of the last 5 financial years or such shorter period as the superintendent permits or requires, and

(ii)

a part of a subsequent financial year to the date at which the balance sheet required by paragraph (

d) is made up;

(

b) a statement of surplus of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a);

(

c) subject to subsection (3), a statement of changes in financial position of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); and

(

d) a balance sheet of the issuer

(

i) as at a date not more than 120 days before the date of the issuance of a receipt for the preliminary prospectus or the date of a new prospectus referred to in

section 63 of the Act, or as at such other date as the superintendent may permit or require, and

(ii)

subject to subsection (2), as at the corresponding date of the previous financial year.

(2) Where the balance sheet included under subparagraph (1)(d)(

i) is as at a date other than a financial year end, the balance sheet referred to in subparagraph (1)(d)(ii) may be omitted if the prospectus contains a balance sheet as at the most recent financial year end and as at the immediately preceding financial year end.

(3) Every prospectus of an issuer engaged primarily in the business of investing shall include a statement of changes in net assets instead of a statement of changes in financial position.

(4) Where the securities to which a prospectus relates are debt securities and the payment of principal or interest is guaranteed, the prospectus shall contain, with respect to the guarantor, the financial statements referred to in subsection (1).

(5) Where the financial statements required by subsection (1) relate to part of a financial year, the prospectus shall contain an income statement, a statement of surplus, and a statement of changes in financial position for the comparable period in the preceding financial year.

(6) Where the superintendent is satisfied that there is sufficient justification, he or she may permit the omission of a financial statement required by this section.

58/91 s41; 14/06 s13

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Mutual fund prospectus

(1)Every prospectus of a mutual fund and every

summary statement of a mutual fund shall contain

(

a) an income statement;

(

b) a balance sheet;

(

c) a statement of investment portfolio;

(

d) a statement of portfolio transactions; and

(

e) a statement of changes in net assets

of the mutual fund, each for or as at the end of, as appropriate, its last financial year or for a period permitted or required by the superintendent.

(2) Notwithstanding subsection (1) but subject to subsections (3) and (4), where a

summary statement of a mutual fund is filed together with a prospectus, the financial statements described in subsection (1) may be omitted from the prospectus of the mutual fund and from the

summary statement if a copy of the financial statements that would otherwise be required to be included therein is filed concurrently with the filing of the prospectus and

summary statement or has previously been filed under

section 79 of the Act.

(3) Where, under subsection (2), a prospectus of a mutual fund and a

summary statement do not contain the financial statements described in subsection (1), a prospectus or a

summary statement sent or delivered to a purchaser of securities under

section 72 or subsection 64(5) of the Act shall be accompanied by

(

a) a copy of the financial statements that would otherwise be required to be included in the prospectus or

summary statement; and

(

b) where one or more financial statements for periods subsequent to those covered by the financial statements described in paragraph (

a) have been filed with the superintendent under

section 78 or 79 of the Act, a copy of the financial statements that were filed most recently before the day the prospectus or

summary statement is sent or delivered.

(4) Where the financial statements described in subsection (1) are omitted from a prospectus of a mutual fund and from a

summary statement of a mutual fund under subsection (2), the prospectus and the

summary statement shall each have printed on the outside cover page the following statement:

"The information contained herein must be accompanied by the annual financial statements of the fund for the last financial year completed before the date of the current prospectus of the fund and the auditor's report thereon, which statements and report are considered to form part of this document. As well, if subsequent financial statements, whether semi-annual or annual, have been filed with the Superintendent of Securities, a copy of the most recent of such subsequent statements must also accompany this document."

58/91 s42; 14/06 s14

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Pro forma balance sheet

The superintendent may permit or require a prospectus to contain as part of the financial statements a pro forma

balance sheet of the issuer and, unless the superintendent otherwise permits, of all its subsidiaries as at the date at which the balance sheet required by subparagraph 41(1)(d)(

i) is made up, giving effect to the issue and sale or redemption or other retirement of securities issued or to be issued by the issuer and to other transactions that the superintendent may permit or require.

58/91 s43; 14/06 s15

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Business acquisition prospectus

(1)Where the proceeds of the securities offered by a prospectus are to be applied in whole or in part, directly or indirectly, to finance the acquisition of a business, by a purchase of assets or shares, the superintendent may permit or require the inclusion in the prospectus of

(

a) financial statements of the acquired business which shall be one or more of the financial statements referred to in paragraphs (a), (

b) and (

c) and subparagraph 41(1)(d)(

i) and for the periods or as at the date therein referred to and the financial statements referred to in subsection 41(5) for the period referred to therein;

(

b) a pro forma

balance sheet combining the assets and liabilities of the issuer and the business as shown by their respective balance sheets each as at the date referred to in subparagraph 41(1)(d)(

i) or at such other date as the superintendent may permit or require,

and, where the superintendent is satisfied that to do so would be meaningful to investors and that the information is necessary for full, true and plain disclosure of the material facts relating to the securities, he or she shall require for a period not more than one year immediately preceding the date referred to in subparagraph 41(1)(d)(

i) and may permit for a period not greater than 5 years immediately preceding such date the inclusion in the prospectus of pro forma

statements combining, year by year,

(

c) the income or losses of the business with the income or losses of the issuer; and

(

d) the changes in financial position of the business with the changes in financial position of the issuer.

(2) An auditor's report prepared in connection with the pro forma

financial statements referred to in paragraphs (1)(b), (

c) and (

d) need only be concerned with the manner in which the statements have been compiled.

58/91 s44; 14/06 s16

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Foreign issuer

Where a prospectus contains financial statements of an issuer incorporated or organized other than in Canada or a province or territory thereof and prepared in accordance with generally accepted accounting principles as permitted by subsection 2(4), the notes to the financial statements shall explain and quantify any significant differences between the principles applied and the principles referred to in subsection 2(3).

58/91 s45

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Exercise of option

The option under subsection 2(4) shall be exercised with respect to financial statements included in a prospectus only with the consent of the superintendent and subject to any conditions the superintendent may impose.

58/91 s46; 14/06 s17

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Debt securities prospectus

A prospectus relating to an issue of debt securities having a term to maturity in excess of one year or to an issue of preferred shares shall contain statements of asset coverage and earnings coverage, in form satisfactory to the superintendent, but the requirements of this

section do not apply to a prospectus relating to securities of a newly-organized issuer or another issuer as to which the superintendent permits or requires that the disclosure not be made.

58/91 s47; 14/06 s17

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Inclusion of forecast

(1)In this

section

(a)

"distributing firm" means a registrant that is an underwriter with respect to a distribution and includes the issuer of the securities being distributed if the issuer is registered as a security issuer;

(b)

"forecast" means a written estimate of the most probable results of operations of an issuer, alone or together with one or more of its affiliates, that contains any or all of

(

i) an estimate of earnings or a range of earnings,

(ii)

an estimate of the most probable financial position,

(iii)

an estimate of changes in financial position,

for one or more periods that are future periods or are periods not completed when the estimate is made, but does not include an estimate

(iv)

that is prepared in the ordinary course of business and without reference to a specific distribution of securities, and

(

v) that appears in a compendium of estimates relating to a number of issuers or in a publication that is distributed regularly to investors or prospective investors, who are not selected because of their potential interest in a specific issue of securities.

(2) The superintendent may permit the inclusion of a forecast in a prospectus and, where the superintendent permits the inclusion of a forecast,

(

a) the forecast shall be identified as such in the prospectus; and

(

b) the prospectus shall include the written comments of a public accountant concerning the accountant's review of the forecast.

(3) A distributing firm, during the course of a distribution of securities for which a prospectus is required to be filed under the Act, shall not disseminate a forecast with respect to the issuer of those securities, unless the forecast is set out in the prospectus and what is disseminated by the distributing firm consists solely of that forecast or a reasonable extract therefrom or

summary thereof.

58/91 s48; 14/06 s18

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Acquired business statement

Where under

section 44 the superintendent permits or requires one or more of the financial statements of an acquired business to be included in a prospectus, sections 45, 46, 47 and 48 shall apply, with necessary modifications, to the financial statements of the business acquired.

58/91 s49; 14/06 s19

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Subsidiary's statements

The superintendent may direct that separate financial statements of a subsidiary of an issuer be included in a prospectus of the issuer, whether or not the financial statements of the subsidiary are consolidated with the financial statements of the issuer contained in the prospectus.

58/91 s50; 14/06 s19

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Unconsolidated financial statements

The superintendent may permit unconsolidated financial statements to be included in a prospectus as supplementary information.

58/91 s51; 14/06 s19

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Review by audit committee

Every financial statement of a person or company contained in a prospectus shall be submitted for review to the audit committee of its board of directors, where it has or is required to have such a committee, before its approval by the board of directors, which approval shall be evidenced by the manual signatures of 2 directors duly authorized to signify approval.

58/91 s52

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Financial statement

(1)A financial statement included in a prospectus that relates to a part of a financial year subsequent to the last audited financial year of the issuer need not be reported on by an auditor where

(

a) the part of a financial year ended not more than 90 days before the date of the issuing of a receipt for the preliminary prospectus or such longer time as the superintendent may permit and not more than one year after the last audited financial year or such longer time as the superintendent may permit; and

(

b) a balance sheet of the issuer as at the end of the latest audited financial year of the issuer is included in the prospectus.

(2) Every balance sheet referred to in subparagraph 41(1)(d)(ii) and every income statement, statement of surplus and statement of changes in financial position required by subsection 41(5) and those for the same period for an acquired business referred to in

section 44 may, but need not, be reported on by an auditor.

(3) Where under this

section a financial statement contained in a prospectus is not reported on by the auditor, there shall be filed with the superintendent such advice from the auditor as is suggested for these circumstances by the Handbook of the Chartered Professional Accountants of Canada, or such other advice as may reasonably be required by the superintendent, the purpose of which shall be to assist the superintendent in discharging his or her responsibilities and the advice may include a statement to that effect.

58/91 s53; 14/06 s20 ; 2014 cC-10.1 s74

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Auditor's letter

(1)Subject to subsection (2), where a preliminary prospectus does not contain a report of the auditor of the issuer, there shall be filed, at the time the preliminary prospectus is filed, a letter addressed to the superintendent and signed by the auditor of the issuer in which he or she shall make such statement with respect to his or her examination as may be appropriate in the circumstances and the letter shall include a statement that, on the basis of the information then available to him or her, he or she has no reason to believe that the financial statements included in the preliminary prospectus that are being audited by him or her do not provide a fair representation of the financial position and earnings of the issuer and which shall specify dates and years or periods.

(2) If the examination of the accounts of the issuer by the auditor has not progressed to the point where the auditor can properly make the statements referred to in subsection (1), instead thereof the auditor may make the statements as the circumstances require and as are acceptable to the superintendent.

58/91 s54; 14/06 s21

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Reporting requirements

Every report filed under subsection 73(3) of the Act shall be filed in duplicate and prepared in accordance with Form 19.

58/91 s55

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Reporting requirements

Every report filed under paragraph 73(4)(

c) of the Act shall be filed in duplicate and prepared in accordance with Form 20.

58/91 s56

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Reporting requirements

(1)Every report required to be filed under paragraph 73(5)(

b) of the Act shall be filed in duplicate and prepared in accordance with Form 21.

(2) Where the first trade in securities previously acquired under an exemption contained in paragraph 73(1)(f), (i), (j), (

k) or (

n) of the Act is a further trade exempted by subsection 73(1), the person or company making the trade shall within 10 days of making the trade file with the superintendent a letter disclosing the particulars of the trade and referring to the paragraph of subsection 73(1) which applies to the trade.

(3) For the purpose of paragraph 73(5)(b), subsections 73(12) and 54(9) of the Act, adequate disclosure shall be deemed to have been made to the superintendent of a trade made in reliance on the exemptions in paragraph 73(1)(f), (i), (j), (

k) or (

n) of the Act if particulars of the date of the trade, the number of securities purchased and the purchase price paid or to be paid are disclosed in

(

a) an information circular or takeover bid circular filed in accordance with these regulations; or

(

b) a letter filed with the superintendent by a person or company certifying that he, she or it has knowledge of the facts contained,

if the filing is effected before a resale of the securities that would be a distribution but for the exemption in subsection 73(5) of the Act except that this subsection shall not make unavailable that exemption if disclosure of the exempt trade is made to the superintendent in some other way.

(4) Where a purchase plan or arrangement is operated without a prospectus in reliance on the exemption in paragraph 73(1)(

n) of the Act, it shall be sufficient for the purpose of subsection (3) if the disclosure contemplated thereby is made when the plan or arrangement is first commenced and not less frequently than annually thereafter unless the volume of trading in securities sold in reliance on the exemption contained in paragraph 73(1)(

n) of the Act in a month exceeds 1% of the securities of that class that were outstanding at the beginning of the month in which the securities were sold, in which case a separate report shall be filed in respect of that month.

(5) Separate disclosure of a trade and resale shall be made in accordance with paragraph 73(5)(

b) and subsection 73(7) of the Act, respectively, where

(

a) the trade is made with an employee by an issuer in reliance on the exemption in paragraph 73(1)(

n) of the Act;

(

b) the employee immediately resells the security; and

(

c) the resale is a distribution as defined in subparagraph 2(1)(l)(iii) of the Act.

58/91 s57; 14/06 s22

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Notice of intention

Every notice of intention and declaration filed under subparagraph 73(7)(b)(

i) of the Act shall be filed in duplicate and prepared in accordance with Form 22.

58/91 s58

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Statement of material facts

(1)Every statement of material facts referred to in paragraph 74(1)(

b) of the Act shall be prepared in accordance with Form 23.

(2) Every statement of material facts shall provide full, true and plain disclosure of all material facts relating to the security proposed to be offered.

(3) Where an issuer other than a natural resource company files a statement of material facts, the superintendent may permit that Form 23 be adapted as appropriate.

58/91 s59; 14/06 s23

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Application of sections

Sections 22, 23, 24 and 36, subsection 37(6) and sections 45, 46, 47, 48, 50, 51, 52, 53 and 54 apply with necessary modifications to a statement of material facts.

58/91 s60

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Statement of material facts

(1)Every statement of material facts of an issuer shall contain

(

a) an income statement of the issuer for

(

i) each of the last 3 financial years or such shorter period as the superintendent permits or requires, and

(ii)

a part of a subsequent financial year to the date at which the balance sheet required by paragraph (

d) is made up;

(

b) a statement of surplus of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a);

(

c) subject to subsection (2), a statement of changes in financial position of the issuer for each of the financial years or shorter period and a part of a subsequent financial year covered by the income statement referred to in paragraph (a); and

(

d) a balance sheet of the issuer, as at a date not more than 90 days before the date of the filing of the statement of material facts, or as at such other date as the superintendent may permit or require.

(2) Every statement of material facts of a company engaged in the business of investing shall include a statement of changes in net assets instead of a statement of changes in financial position.

(3) Where the securities to which a statement of material facts relates are debt securities and the payment of principal or interest is guaranteed, the statement of material facts shall contain, with respect to the guarantor, the financial statements referred to in subsection (1).

(4) Where the financial statements required by subsection (1) relate to part of a financial year, the statement of material facts shall also contain an income statement, a statement of surplus and a statement of changes in financial position for the comparable period in the preceding financial year.

58/91 s61; 14/06 s24

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Statement of material facts

(1)Every statement of material facts 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 2 directors of the issuer, other than the foregoing, duly authorized to sign and by a person or company who is a promoter of the issuer:

"The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this statement of material facts."

(2) Where the board of directors consists of fewer than 4 persons, the statement of material facts may be signed on behalf of the board of directors by any 2 directors of the issuer duly authorized to sign.

(3) Where the superintendent is satisfied upon evidence or submissions made to him or her that either or both of the chief executive officer or chief financial officer of the issuer is for adequate cause not available to sign a certificate in a statement of material facts, the superintendent may permit the certificate to be signed by another responsible officer of the issuer instead of either or both of the chief executive officer or chief financial officer.

(4) With the consent of the superintendent,

(

a) a promoter need not sign a certificate in a statement of material facts; or

(

b) a promoter may sign a certificate in a statement of material facts by his or her agent duly authorized in writing.

58/91 s62; 14/06 s25

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Underwriter's certificate

(1)Where there is an underwriter, a statement of material facts shall contain a certificate in the following form, signed by the underwriters:

"To the best of our knowledge, information and belief, the foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this statement of material facts."

(2) With the consent of the superintendent, an underwriter may sign a certificate in a statement of material facts by his or her agent duly authorized in writing.

(3) For the purpose of this section, "underwriter" means an underwriter who, with respect to the securities offered by a statement of material facts, is in a contractual relationship with the issuer of the securities.

58/91 s63; 14/06 s26

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Material change

Where a material change occurs after a statement of material facts has been filed with and accepted by the superintendent but before the completion of the distribution under the statement of material facts, the superintendent shall be notified immediately of the change and an amendment to the statement of material facts shall be filed as soon as practicable and in any event within 10 days from the date the change occurs.

58/91 s64; 14/06 s27

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Exemption from compliance

(2) The superintendent may require a document, report or other material to be filed with a statement of material facts.

58/91 s65; 14/06 s28

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Options

(1)Every option to sell securities known as a put referred to in paragraph 74(1)(

c) of the Act shall be in accordance with Form 24.

(2) Every option to purchase securities known as a call referred to in paragraph 74(1)(

c) of the Act shall be in accordance with Form 25.

58/91 s66

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Escrow agreement

Every escrow agreement referred to in paragraph 62(2)(

f) of the Act shall be made in accordance with Form 16 for a natural resource company, and in accordance with Form 17 for another type of issuer and every transferee of securities that are subject to the escrow agreement shall sign an acknowledgement in accordance with Form 18 and file it within 10 days of the date of the superintendent's consent to transfer within escrow.

58/91 s67; 14/06 s29

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Certificate - portion of distribution underwritten

(1)Subject to subsection (2), if more than 3 underwriters have signed or caused to be signed the certificate referred to in

section 60 of the Act, the final prospectus filed with the superintendent shall be accompanied or preceded by a certificate duly executed by a person who certifies that he or she is a representative of the underwriter and has knowledge of the matters referred to, and the certificate shall

(

a) briefly identify the transaction to which the certificate relates; and

(

b) set out the total public offering price represented by the portion of the distribution underwritten by each underwriter who has signed or caused to be signed the certificate referred to in

section 60 of the Act or, if the nature of the underwriting arrangements is such that this information is not available when the final prospectus is filed, shall describe the nature of those arrangements and undertake to file a further certificate setting out the information immediately after the information becomes available.

(2) The certificate referred to in subsection (1) need not be filed if, as to each of the underwriters therein referred to, the information in paragraph (1)(

b) is included in the prospectus.

58/91 s68; 14/06 s30

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Prospectus requirements - variation permitted

Every preliminary prospectus and prospectus including every prospectus referred to in subsection 54(2) of the Act shall comply with the relevant provisions of this Part, but the superintendent may permit a variation from those provisions where it will not detract from full, true and plain disclosure and may require such variation if necessary for full disclosure of material facts.

58/91 s69; 14/06 s31

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Restriction in use of terms

(1)A receipt shall not be issued for a prospectus of an issuer, other than a company licensed under the Trust and Loan Companies Licensing Act,

doing business primarily as an industrial company, natural resource company or mutual fund if the issuer has as part of its name the words "acceptance", "credit", "finance", "loan" or "trust".

(2) Subsection (1) does not apply to

(

a) an issuer that had the words "investment trust" as part of its name before the day of proclamation of the Act; or

(

b) an issuer that includes on the outside front cover page of the prospectus a statement, satisfactory to the superintendent, indicating the nature of the business actually carried on by the issuer.

58/91 s70; 14/06 s32

PART IV

MUTUAL FUNDS

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Financial disclosure requirements

(1)Every income statement of a mutual fund shall present fairly the results of the operations of the mutual fund for the period covered by the statement and distinguish severally, at least,

(

a) dividend revenue;

(

b) interest revenue;

(

c) every other item of revenue that is 5% or more of total revenue;

(

d) other revenue;

(

e) management fees;

(

f) audit fees;

(

g) directors' fees;

(

h) custodian's fees;

(

i) legal fees;

(

j) salaries, where the amount is 5% or more of total expenses;

(

k) shareholders' or unit holders' information costs, where the amount is 5% or more of total expenses;

(

l) every other item of expense that is 5% or more of total expenses;

(

m) other expenses;

(

n) income before taxes;

(

o) provision for income tax;

(

p) extraordinary gains, losses and provisions for losses;

(

q) net income for the period;

(

r) net income per share or unit for the period based on the average number of shares or units outstanding during the period; and

(

s) net income per share or unit for the immediately preceding period based on the average number of shares or units outstanding during that period.

(2) The notes to an income statement of a mutual fund shall include

(

a) the basis for calculating the management fee; and

(

b) the composition of other expenses and other revenue, and

unless otherwise disclosed in the material of which the income statement forms a part or which it accompanies,

(

c) the services received in consideration of the management fee;

(

d) the services provided to the mutual fund by those to whom salaries were paid;

(

e) where the mutual fund has a management company, and salaries of employees of the management company are allocated to the mutual fund, the basis of and reasons for the allocation;

(

f) the basis of the tax calculation and an explanation of the tax position of the mutual fund; and

(

g) where an unusual change in expenses from period to period is not adequately explained by changes in total assets of the mutual fund, a description and explanation of the unusual change.

(3) In this

section

(a)

"management fee" means the total fees paid by the mutual fund for portfolio management, investment advice and other services; and

(b)

"other expenses" and "other revenue" means the sum of those items of expense or revenue, other than those referred to in paragraphs (1)(a), (b), (e), (f), (g), (

h) and (i), that individually do not exceed 5% of the total expenses or total revenue of the mutual fund for the period reported upon.

58/91 s71

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Statement of changes in net assets

(1)Subject to subsection (2), every statement of changes in net assets shall present fairly the information shown therein for the period covered by the statement and shall show separately, at least,

(

a) net assets at the beginning of the period;

(

b) net investment income or loss;

(

c) aggregate proceeds on sale of portfolio securities;

(

d) aggregate cost of portfolio securities owned at the beginning of the period;

(

e) aggregate cost of purchases of portfolio securities;

(

f) aggregate cost of portfolio securities owned at the end of the period;

(

g) aggregate cost of portfolio securities sold;

(

h) realized profit or loss on portfolio securities sold;

(

i) distributions, showing separately the amount out of net investment income and out of realized profits on portfolio securities sold;

(

j) proceeds from securities issued;

(

k) the redemption price of securities redeemed;

(

l) net increase or decrease in unrealized appreciation or depreciation of portfolio securities;

(

m) net assets at the end of the period;

(

n) net asset value per share or unit at the end of the period and at the end of each of the 4 immediately preceding periods;

(

o) distribution per share or unit out of net investment income; and

(

p) distribution per share or unit out of realized profits on portfolio securities sold.

(2) Items of the nature described in paragraphs (1)(c), (d), (e), (f), (g), (n), (

o) and (

p) may be shown by way of a note or

schedule to the statement of changes in net assets.

58/91 s72

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Balance sheet

(1)Every balance sheet of a mutual fund shall present fairly the financial position of the mutual fund as at the date at which it is made up and distinguish severally, at least,

(

a) cash, term deposits and, if not included in the statement of investment portfolio, short term debt instruments;

(

b) dividends and accrued interest receivable;

(

c) accounts receivable in respect of shares or units sold;

(

d) accounts receivable in respect of portfolio securities sold;

(

e) every other class of assets that is 5% or more of total assets;

(

f) other assets;

(

g) investments at market value with a notation of their cost;

(

h) total assets;

(

i) accrued expenses;

(

j) liabilities in respect of portfolio securities purchased;

(

k) liabilities in respect of shares or units redeemed;

(

l) income tax payable;

(

m) every other class of liability that is 5% or more of total liabilities;

(

n) other liabilities;

(

o) total liabilities;

(

p) total net assets and shareholders' or unit holders' equity; and

(

q) net asset value per share or unit.

(2) The notes to a balance sheet of a mutual fund shall include

(

a) where the basis of computing the cost of investments is other than average cost, a statement of the basis of computing the cost;

(

b) where a mutual fund has outstanding more than one class of shares or units ranking equally against its net assets but differing in other respects, a statement of the differences between the classes, the number of shares or units in each class and the number of shares or units in each class that have been issued and are outstanding; and

(

c) the composition of other assets and other liabilities.

(3) In this section, "other assets" or "other liabilities" means the sum of those classes of assets or liabilities that as individual classes do not exceed 5% of the total assets or total liabilities of the mutual fund at the date reported upon.

(4) Any of the specified classes of assets or liabilities which accounts for less than 5% of the total assets or total liabilities of the mutual fund at the date reported upon may be omitted and the relevant amount included in "other assets" or "other liabilities" with an appropriate explanation made by note.

58/91 s73

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Statement of investment portfolio

(1)Every statement of investment portfolio of a mutual fund shall present fairly the following information as at the date to which it is made up:

(

a) the name of each issuer of securities held;

(

b) the class or designation of each security held;

(

c) the number or aggregate face value of each class or designation of securities held;

(

d) the market value of each class or designation of securities held;

(

e) the cost of each class or designation of securities held and, where the basis of computing cost is other than average cost, a statement of the basis of computing the cost.

(2) Subsection (1) shall apply to all short term debt instruments held pending the investment of funds but the information referred to in subsection (1) need only be provided in the aggregate with respect to those short term debt instruments that

(

a) are issued by a bank to which the Bank Act

(Canada) applies or by a loan company or trust company licensed under the Trust and Loan Companies Licensing Act;

(

b) have achieved an investment rating falling within the highest or next highest categories of every service that publishes ratings on the short term debt instruments of the issuer that is recognized by the superintendent.

(3) The information required by paragraphs (1)(a), (

b) and (

c) with respect to securities with an aggregate market value of less than 5% of the total net assets of a mutual fund may be omitted from a statement of investment portfolio of the mutual fund where the securities are included in the statement as "miscellaneous securities" and the information required by paragraphs (1)(

d) and (

e) is given for the "miscellaneous securities" in the aggregate.

(4) Where information is omitted from a statement of investment portfolio under subsection (3), the omitted information and the reason for omitting the information shall be included in the next corresponding statement of investment portfolio.

(5) The information required by subsection (1) with respect to securities that are mortgages may be omitted from a statement of investment portfolio of the mutual fund if the following information with respect to the mortgages is presented instead thereof:

(

a) the total number of mortgages held;

(

b) the total market value of mortgages held;

(

c) the distribution, by reference to number and market value, of mortgages among mortgages insured under the National Housing Act

( Canada

), insured conventional mortgages and uninsured conventional mortgages;

(

d) the distribution, by reference to number, market value amortized cost and outstanding principal value, of mortgages among groups representing contractual interest rates varying by no more than one-quarter of 1%.

58/91 s74; 14/06 s33

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Statement of portfolio transactions

(1)Every statement of portfolio transactions of a mutual fund shall present fairly the following information:

(

a) the name of each issuer of every security purchased or sold during the period reported upon;

(

b) the class or designation of every security purchased or sold during the period reported upon;

(

c) the number of aggregate face value, by issuer, of securities of each class or designation purchased during the period reported upon and the total cost of purchasing securities of each such class or designation;

(

d) the number or aggregate face value, by issuer, of securities of each class or designation sold during the period reported upon and the consideration for selling securities of each such class or designation.

(2) Subsection (1) shall apply to all short term debt instruments held pending the investment of funds but the information referred to in subsection (1) need only be provided in the aggregate with respect to those short term debt instruments held pending the investment of funds that

(

a) are issued by a bank to which the Bank Act

(Canada) applies or by a loan company or trust company licensed under the Trust and Loan Companies Licensing Act;

(

b) have achieved an investment rating falling within the highest or next highest categories of every service that publishes ratings on the short term debt instruments of the issuer that is recognized by the superintendent.

(3) Every statement of portfolio transactions shall separate debt securities from securities other than debt securities and shall provide a total for debt securities and a total for other than debt securities.

(4) Where information in respect of securities is omitted from a statement of investment portfolio of a mutual fund under subsection 74(3), information required in respect of those securities by this

section may be omitted from the statement of portfolio transactions of the mutual fund.

(5) Where information is omitted from a statement of portfolio transactions under subsection (4), the omitted information and the reason for omitting the information shall be included in the next corresponding statement of portfolio transactions.

(6) The information required by subsection (1) with respect to securities that are mortgages may be omitted from a statement of portfolio transactions if the following information with respect to mortgages is presented instead thereof:

(

a) the total number of mortgages purchased or sold during the period reported upon;

(

b) the total cost of mortgages purchased and the total consideration for mortgages sold;

(

c) the distribution, by reference to number, of mortgages purchased or sold during the period reported upon among mortgages insured under the National Housing Act

(Canada), insured conventional mortgages and uninsured conventional mortgages;

(

d) the distribution, by reference to number, of mortgages purchased or sold during the period reported upon among groups representing contractual interest rates varying by no more than one-quarter of 1%.

58/91 s75; 14/06 s34

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Additions to financial statement

Where applicable, and where the period or date reported on is a financial year or a financial year end, the following additional matters shall be referred to in the financial statements or by way of a note to the financial statements:

(

a) in the case of a mutual fund, the total commission paid to dealers in connection with portfolio transactions for the mutual fund during the period reported upon;

(

b) in the case of a mutual fund, the total compensation, other than commissions, paid to dealers in connection with portfolio transactions for the mutual fund during the period reported upon and, where the figure provided is an estimate, the basis for calculating the compensation, and where compensation to a dealer for the sale of shares or units in the mutual fund includes an allocation of the execution of portfolio transactions to that dealer, the compensation so allocated.

58/91 s76

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Interim financial statement

(1)Subject to subsection (2), every interim financial statement required to be filed under subsection 78(2) of the Act shall include

(

a) an income statement;

(

b) a statement of investment portfolio;

(

c) a statement of portfolio transactions; and

(

d) a statement of changes in net assets

prepared for or as at the end of the period as applicable.

(2) Every interim financial statement required to be filed under subsection 78(2) of the Act by a mutual fund in the province that invests exclusively in the shares or units of another mutual fund shall include

(

a) an income statement of the other mutual fund;

(

b) a statement of investment portfolio of the other mutual fund;

(

c) a statement of portfolio transactions of the other mutual fund; and

(

d) a statement of changes in net assets of the other mutual fund

prepared for or as at the end of the period as applicable.

58/91 s77

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Interim financial statement

The interim financial statements under subsection 78(2) of the Act shall present at least the financial information for the current fiscal year to the date to which the financial statements are prepared and, in addition, may include comparative financial information for the corresponding 6 month period in the last financial year.

58/91 s78

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Auditor's report

The interim financial statements under

section 78 of the Act need not include an auditor's report.

58/91 s79

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Financial statement of mutual fund

(1)Subject to subsection (2), the financial statements required to be filed under

section 79 of the Act by a mutual fund in the province shall include

(

a) an income statement;

(

b) a balance sheet;

(

c) a statement of investment portfolio;

(

d) a statement of portfolio transactions; and

(

e) a statement of changes in net assets

prepared for or as at the end of the period as applicable.

(2) Every financial statement required to be filed under

section 79 of the Act by a mutual fund in the province that invests exclusively in the shares or units of another mutual fund shall include

(

a) an income statement of the other mutual fund;

(

b) a balance sheet of the other mutual fund;

(

c) a statement of investment portfolio of the other mutual fund;

(

d) a statement of portfolio transactions of the other mutual fund;

(

e) a statement of changes in net assets of the other mutual fund; and

(

f) a balance sheet of the mutual fund

prepared for or as at the end of the period as applicable.

58/91 s80

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Approval of statement

Every financial statement required to be filed under

section 79 of the Act shall be approved by the board of directors of the reporting issuer and the approval shall be evidenced by the manual or facsimile signatures of 2 directors duly authorized to signify the approval.

58/91 s81

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Omission from statement

(1)Notwithstanding sections 77 and 80 but subject to subsection (4), a statement of portfolio transactions may be omitted from interim or annual financial statements of a mutual fund if a copy of the statement that would otherwise be required to be included therein is filed with the superintendent before or concurrently with the filing of the financial statements from which that statement has been omitted.

(2) Notwithstanding

section 42, but subject to subsection (4), a statement of portfolio transactions may be omitted from a prospectus of a mutual fund if a copy of the statement that would otherwise be required to be included therein is filed with the superintendent concurrently with the filing of the prospectus or has previously been filed with the superintendent under subsection (1).

(3) A statement of portfolio transactions filed with the superintendent under this

section need not be reported upon by an auditor, but shall contain a certificate signed by the chief executive officer and chief financial officer, or the person temporarily carrying out the responsibilities of either of them, that the statement of portfolio transactions presents fairly the required information.

(4) Where a statement of portfolio transactions is omitted from interim or annual financial statements under subsection (1) or from a prospectus under subsection (2), the published financial statements or prospectus shall contain a statement indicating that additional information as to portfolio transactions will be provided without charge on request to a specified address and

(

a) the omitted information shall be sent promptly and without charge to each person or company that requests it in compliance with the indication; and

(

b) where a person or company requests that the omitted information be sent routinely to the person or company, the request shall be carried out while the information continues to be omitted from subsequent financial statements or prospectuses until the person or company requests, or agrees to, termination of the arrangement.

58/91 s82; 14/06 s35

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Confirmation of trade

(1)Where a trade is made in a security of a mutual fund under a contractual plan that requires that some charges be prepaid but permits other charges to be deducted from first and subsequent instalments, the confirmation of trade required by subsection 37(3) of the Act shall contain, in addition to the requirements of subsections 37(1) and (2) and paragraph 37(3)(

d) of the Act, the disclosure required by

(a)

paragraphs 37(3)(

a) and (

b) of the Act in respect of sales, service or other charges or portions thereof that are prepaid; and

(b)

paragraph 37(3)(

c) of the Act in respect of all sales, service or other charges or portions thereof to be deducted from subsequent instalments.

(2) The confirmation of a trade made in a security of a mutual fund under a contractual plan shall not have been required to contain the information described in paragraph 37(3)(

d) of the Act where

(

a) the contractual plan was entered into before the day of proclamation of the Act;

(

b) the holder of the contractual plan, in addition to his or her rights under

section 137 of the Act and to other rights to which he or she may be entitled,

(

i) was permitted within 365 days after the date upon which the contractual plan was entered into, to demand and to receive a refund of the net asset value of the shares or units credited to him or her before the date of demand, plus a refund of that portion of sales charges, exclusive of insurance premiums and fees to trustees of registered retirement savings plans, in excess of 30% of an amount equal to payments under the plan scheduled and made before the date of demand, but not including voluntary prepayments of instalments, and

(ii)

was provided with a form or letter approved by the superintendent describing rights under

section 137 of the Act and under subparagraph (

i) and setting out a table of sales charges and other information relevant to the decision of the investor as to whether to exercise such rights, which form or letter shall be sent to the investor together with each confirmation other than reinvested dividends or income during the first 365 days after the date upon which the contractual plan was entered into and was also sent to the investor not less than 15 days and not more than 45 days before the expiry of the 365 day period; or

(

c) the holder of the contractual plan, in addition to his or her rights under

section 137 of the Act and to any rights to which he or she may be entitled,

(

i) was permitted within 180 days after the date upon which the contractual plan was entered into, to have and to exercise the rights that would have arisen under

section 137 of the Act if the reference to "60 days" in subsection 137(1) read "180 days", and

(ii)

was provided with a form or letter approved by the superintendent describing rights under

section 137 of the Act and under subparagraph (

i) and setting out a table of sales charges and other information relevant to the decision of the investor as to whether to exercise such rights, which form or letter was to be sent to the investor together with each confirmation other than reinvested dividends or income during the first 180 days after the date upon which the contractual plan was entered into and was also sent to the investor not less than 15 days and not more than 45 days before the expiry of the 180 day period.

(3) Where a customer advises a registered dealer in writing before a trade in a security of a mutual fund of the customer's participation in an automatic payment plan, automatic withdrawal plan or contractual plan that provides for systematic trading in the securities of the mutual fund no less frequently than monthly, the registered dealer shall provide the confirmation of that trade as required by

section 37 of the Act, and thereafter during the continued existence of the plan and the customer's participation in the plan, the registered dealer, instead of the confirmations of trade required by

section 37, may send by prepaid mail or deliver to the customer, no less frequently than semi-annually, written summaries of trades containing the information required by

section 37 to be disclosed to the customer, with respect to all trades of the security of the mutual fund by the customer since the last confirmation or

summary of trade was prepared.

(4) A registered dealer who complies with subsection (3) need not comply with paragraph 37(1)(

d) of the Act if the confirmation or

summary of trades contains a statement that the name of the person or company from or to or through whom the security of the mutual fund was bought or sold will be provided to the customer upon request.

58/91 s83; 14/06 s36

PART V

REGISTRATION REQUIREMENTS

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Definitions

In this Part

(a)

"active assets" means money and the market value of assets readily convertible into money;

(b)

"adjusted liabilities" means total liabilities plus, where the securities accounts of the registrant are kept on a settlement date basis, unrecorded securities purchase commitments, minus, without duplication, the sum of

(

i) cash,

(ii)

money on deposit in a client's trust account,

(iii)

amounts deposited by the registrant pursuant to a compensation fund or contingency trust fund established under

section 98,

(iv)

the cash surrender value of life insurance where the registrant is the beneficiary,

(

v) the market value of securities that the registrant owns or has contracted to purchase, and that, in either case, have a margin rate of 5% or less,

(vi)

interest accrued to the registrant in respect of the securities referred to in subparagraph (v),

(vii)

the sales price of securities for which the registrant has a sales commitment to a financial institution,

(viii)

debit balances with a financial institution, and

(ix)

the market value of securities that have a margin rate of 5% or less included in

(

A) non-segregated accounts of clients, partners, shareholders, dealers, or

(

B) held as collateral for secured loans receivable,

not exceeding the debit balance of the account or the secured loan receivable;

(c)

"anniversary date" means the day and month on which the current registration or renewal of registration was granted, but where any doubt exists, the date shall be determined by the superintendent;

(d)

"Canadian Investment Finance Course" means a course prepared and conducted by the Canadian Securities Institute and so designated by that institute;

(e)

"Canadian Investment Funds Course" means a course prepared and conducted by the Education Division of The Investment Funds Institute of Canada and so designated by that institute;

(f)

"Canadian Securities Course" means a course prepared and conducted by the Canadian Securities Institute and so designated by that institute;

(g)

"capital" means money raised through the issuing of shares, certificates, bonds, debentures, long-term notes or another long-term obligation, contributed or earned surplus and reserves;

(h)

"Chartered Financial Analysts Course" means a course prepared and conducted by the Institute

of Chartered Financial Analysts

and so designated by that institute;

(i)

"client's trust account" means a trust account maintained by a registrant with a bank to which the Bank Act

(Canada) applies or a trust company licensed under the Trust and Loan Companies Licensing Act

or substantially similar laws of Canada or one of its provinces or territories and designated a client's trust account;

(j)

"financial institution" means

(i)

, the government of a province or territory

of Canada

, a municipal corporation, Crown corporation or public board or commission in Canada

(ii)

the Bank of Canada, a bank to which the Bank Act

(Canada) applies, a Quebec savings bank, and the pension funds of the banks,

(iii)

a trust company or insurance company if the company is licensed to do business in Canada and has a minimum paid up capital and surplus of $5,000,000, and the pension funds of the companies,

(iv)

a credit union or credit union league with a minimum paid up capital and surplus of $5,000,000,

(

v) a mutual fund with net assets of $5,000,000, and

(vi)

a company, other than a dealer, having a minimum net worth of $25,000,000 on the last audited balance sheet, where the balance sheet is available for inspection by the superintendent and a trusteed pension plan of such a company;

(k)

"free credit balances" includes money received from, or held for the account of, clients by a registrant

(

i) for investment pending the investment and payment for securities purchased by the clients from or through the registrant where the registrant does not own the securities at the time of purchase or has not purchased them on behalf of the client, pending the purchase thereof by the registrant, and

(ii)

as proceeds of securities purchased from clients or sold by the registrant for the account of clients where securities have been delivered to the registrant but payment has not been made pending payment of the proceeds to the clients;

(l)

"liquid capital" means the amount by which active assets exceed the sum of

(

i) total liabilities, and

(ii)

where the securities accounts of the registrant are recorded on a settlement date basis, a net loss on offsetting future purchase and sales commitments of securities,

and the amount of liquid capital may be increased by adding

(iii)

the loan value of securities delivered pursuant to a subordinated loan agreement in the form prescribed by the superintendent that are not included in the accounts,

(iv)

non-current liabilities fully secured by mortgages on real estate owned by the registrant, and

(

v) obligations for outstanding instalments due to natural resource companies whose securities the registrant is in the process of distributing or distributing to the public under a prospectus filed with the superintendent;

(m)

"loan value" means the market value of securities less the applicable margin requirements;

(n)

"margin", "margin agreement", "margin deficiency", "margin rate" and "margin requirements" mean

(

i) subject to subparagraph (ii), the provisions in that regard determined pursuant to the by-laws of a stock exchange, or

(ii)

where used with respect to commodity futures contracts, or cash commodities, the provisions in that regard prescribed under the Commodity Futures Act

(Ontario) and substantially similar Acts of other provinces;

(o)

"market value" where used with respect to

(

i) a commodity futures contract means the settlement price on the relevant date or last trading day before the relevant date,

(ii)

a security means

(

A) where the security is listed and posted for trading on a stock exchange,

the bid price, or

if the security is sold short, the asking price,

as shown on the exchange quotation sheets as of the close of business on the relevant date or last trading date before the relevant date, subject to an appropriate adjustment where an unusually large or unusually small quantity of securities is being valued, or

(

B) where the security is not listed and posted for trading on a stock exchange, a value determined in accordance with

section 85;

(p)

"minimum free capital" means the applicable amount determined in accordance with

section 95;

(q)

"net free capital" means liquid capital after deducting

(

i) the amount required to provide full margin for

(

A) cash commodities, other than in respect of securities, owned by the registrant,

(

B) firm commodity futures trading accounts, and

(

C) securities owned by the registrant and securities sold short by the registrant,

(ii)

the amount sufficient to provide for margin deficiencies on

(

A) secured loans receivable,

(

B) clients' accounts in respect of commodity futures,

(

C) joint accounts after excluding interest of a member of a stock exchange, the Investment Dealers' Association of Canada and a financial institution,

(

D) accounts of partners and shareholders,

(

E) accounts of clients and dealers, except,

genuine cash settlement accounts with a member of the Toronto Stock Exchange, the Montreal Stock Exchange, the Vancouver Stock Exchange, the Alberta Stock Exchange, the New York Stock Exchange, the American Stock Exchange and the Investment Dealers' Association of Canada,

accounts with a financial institution, and

genuine cash settlement accounts that have not been outstanding more than 10 days past the normal settlement date, where the shares have been available for delivery, and not more than 21 days past the normal settlement date in another case,

(

F) secured loans payable by the registrant if the collateral is held by other than the registrant or a financial institution,

(

G) where the securities accounts of the registrant are kept on a settlement date basis, future purchase and sales commitments not included in the calculation of liquid capital, and

(

H) other liquid capital items;

(r)

"Partners', Directors' and Senior Officers' Qualifying Examination" means an examination prepared and conducted by the Canadian Securities Institute and so designated by that institute;

(s)

"Registered Representative Examination" means an examination based on the Manual for Registered Representatives that has been prepared and is conducted by the Canadian Securities Institute and so designated by that institute;

(t)

"total liabilities" means all liabilities including

(

i) adequate provision for income taxes, and

(ii)

other accruals,

but excluding

(iii)

debts the payment of which is postponed in favour of other creditors pursuant to a subordination agreement in form approved by the superintendent, and

(iv)

deferred income taxes relating to non-active assets;

(u)

"working capital" means the excess of current assets over current liabilities.

58/91 s84; 14/06 s37

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Determination of market value

(1)Subject to subsections (2), (3) and (4), the market value of a security not listed and posted for trading on a stock exchange shall be determined by assigning a reasonable value on the basis of values shown on published market reports or inter-dealer quotation sheets on the relevant date or last trading day before the relevant date.

(2) The registrant may vary a value from that shown on published market reports or inter-dealer quotation sheets where, in light of all the circumstances, some other value would be more appropriate.

(3) The superintendent may require that a different value from that determined under subsection (1) or (2) be assigned, where in light of all the circumstances some other value would be more appropriate.

(4) Where no published market report or inter-dealer quotation sheet exists with respect to the security, the security shall be assigned a market value of zero unless the superintendent agrees otherwise.

58/91 s85; 14/06 s38

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Categories of registration

Every person or company that is required to register as a dealer shall be registered and classified into one or more of the following categories:

(

a) broker, being a person or company that is registered to trade in securities in the capacity of an agent or principal, which person or company is a member of a stock exchange in Canada

recognized by the superintendent.

(

b) financial intermediary dealer, being a financial intermediary that is registered solely for the purpose of trading in securities in accordance with

section 173;

(

c) foreign dealer, being a person or a company that is registered solely for the purpose of trading in securities in accordance with

section 174;

(

d) international dealer, being a person or company that is registered solely for the purpose of trading in securities in accordance with

section 172;

(

e) investment dealer, being a person or company that is a member, branch office member or associate member of the Newfoundland and Labrador District of the Investment Dealers' Association of Canada, which person or company engages in the business of trading in securities in the capacity of an agent or principal;

(

f) limited market dealer, being a person or company that is registered solely for the purpose of trading in securities in accordance with

section 171;

(

g) mutual fund dealer, being a person or company that is registered solely for the purpose of trading in the shares or units of mutual funds;

(

h) scholarship plan dealer, being a person or company that is registered solely for the purpose of trading in securities of a scholarship or educational plan or trust;

(

i) securities dealer, being a person or company that is registered for trading in securities and engages in the business of trading in securities in the capacity of an agent or principal;

(

j) security issuer, being an issuer that is registered for trading in securities for the purpose of distributing securities of its own issue solely for its own account.

58/91 s86; 2001 c42 s45 ; 14/06 s39

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Categories of advisers

Every person or company that is required to register as an adviser shall be registered and classified into one or more of the following categories:

(

a) financial advisers, being persons or companies that engage in or hold themselves out as engaging in the business of advising others as to investing in or the buying or selling of securities on a basis that does not require their classification in another category of adviser;

(

b) investment counsel, being persons or companies that engage in or hold themselves out as engaging in the business of advising others as to the investing in or the buying or selling of specific securities or that are primarily engaged in giving continuous advice as to the investment of funds on the basis of the particular objectives of each client;

(

c) portfolio managers, being persons or companies that are registered for the purpose of managing the investment portfolio of clients through discretionary authority granted by one or more clients;

(

d) securities advisers, being persons or companies that hold themselves out as engaging in the business of advising others either through direct advice or through publications or writings, as to the investing in or the buying or selling of specific securities, not purporting to be tailored to the needs of specific clients.

58/91 s87

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Registration as underwriter

(1)Every broker, investment dealer or securities dealer shall be considered to have been granted registration as an underwriter.

(2) Every mutual fund dealer, scholarship plan dealer and security issuer shall be considered to have been granted registration as an underwriter for the purpose of distributing the securities in which it is registered to trade.

(3) Every limited market dealer, international dealer, financial intermediary dealer and foreign dealer shall be considered to have been granted registration as an underwriter for the purposes of a distribution which it is authorized to make by

section 171, 172, 173 or 174.

58/91 s88

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Where portfolio manager is a broker

(1)Where the provisions of

section 133 are applicable and have been complied with, the provisions of this Part as they relate to a portfolio manager do not apply to a broker or investment dealer acting as a portfolio manager.

(2) The provisions of this Part apply to portfolio managers where they act as investment counsel.

58/91 s89

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Conditions of registration - general

A registration or renewal of registration shall not be granted unless the applicant has complied with the applicable requirements of these regulations at the time of the granting of the registration or renewal of registration.

58/91 s90

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Registrant

Each registrant shall comply with the applicable requirements of these regulations.

58/91 s91

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Notice of registrant

(1)A registrant who is a registered dealer, underwriter or adviser or a partner or officer of a registered dealer, underwriter or adviser and who proposes to acquire on or after the day of proclamation of the Act, directly or indirectly, beneficial ownership of or control or direction over any security of another registered dealer, underwriter or adviser, at least 30 days before the acquisition, shall give written notice to the superintendent providing all relevant facts to permit the superintendent to determine if the acquisition

(

a) is likely to give rise to conflicts of interest;

(

b) is likely to hinder a registrant in complying with the conditions of registration applicable to it;

(

c) is inconsistent with an adequate level of investor protection; or

(

d) is otherwise prejudicial to the public interest.

(2) If, within 30 days of the receipt of a notice under subsection (1), the superintendent gives a written notice of objection to the registrant, the registrant shall not make the acquisition until the superintendent approves it.

(3) The registrant, following receipt of a notice of objection under subsection (2), may request the superintendent to hold a hearing on the matter.

(4) Subsection (1) does not apply to

(

a) a partner or officer of a registered dealer, underwriter or adviser who, alone or in combination with another person or company, proposes to acquire securities that, together with the securities already beneficially owned or over which control or direction is already exercised, do not exceed more than 5% of any class or series of securities of another registered dealer, underwriter or adviser that are listed and posted for trading on a stock exchange in or outside Canada;

(

b) an acquisition by a financial intermediary dealer or its officers or an acquisition of securities of a financial intermediary dealer;

(

c) an acquisition by an international dealer of securities of a dealer that is its only registered subsidiary; or

(

d) an acquisition by a registered dealer or underwriter in the ordinary course of its business of trading in securities.

58/91 s92; 14/06 s40

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Conditions of registration

The superintendent may prescribe conditions of registration for a registrant or group of registrants that are instead of some or all of the conditions of registration prescribed in sections 96 to 110, sections 112 to 114 and sections 124 to 132, where he or she gives prior notice of the proposed conditions to the registrant or group of registrants affected and affords the registrant or group of registrants an opportunity to be heard.

14/06 s41

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Registered dealer

Every registered dealer that is a reporting issuer shall comply with the applicable conditions of registration under the Act and these regulations.

58/91 s94

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Conditions of registration - capital requirements

(1)Subject to subsection (2), every dealer, other than a securities issuer, shall maintain a minimum free capital of the maximum amount that is deductible under a clause of the bonding or insurance policy required under

section 96, plus the greater of

(a)

$25,000; and

(

b) an amount equal to the sum of 10% of the first $2,500,000 of adjusted liabilities, 8% of the next $2,5