Source: https://www.osc.gov.on.ca/en/SecuritiesLaw_rule_19981002_44-102ni.jsp
Timestamp: 2020-03-29 06:56:11
Document Index: 46903832

Matched Legal Cases: ['art 2', 'art 2', 'art 3', 'art 1', 'art 5', 'art 6', 'art 7', 'art 8', 'art 10', 'art 4', 'art 9', 'art 6', 'ART 1', 'ART 2', 'ART 3', 'ART 4', 'ART 5', 'ART 6', 'ART 7', 'ART 8', 'ART 9', 'ART 10', 'ART 1', 'art 2', 'ART 10', 'ART 11', 'art 2', 'ART 1', 'ART 2', 'ART 1', 'ART 2', 'ART 1', 'ART 3', 'ART 4', 'ART 5', 'ART 1', 'art 1', 'art 2']

Proposed National Instrument: NI - 44-101 - Short Form Prospectus Distributions -
44-102 /
Security Foundation - 44-102 /
Proposed National Instrument: NI - 44-101 - Short Form Prospectus Distributions
PROPOSED NATIONAL INSTRUMENT 44-102 AND
The Ontario Securities Commission (the "Commission"), together with other members of the Canadian Securities Administrators (the "CSA"), is publishing for comment proposed National Instrument 44-102 Shelf Distributions ("NI 44-102") and its proposed Companion Policy 44-102CP (the "Companion Policy").
NI 44-102 and the Companion Policy are initiatives of the CSA. NI 44-102 and the Companion Policy would replace National Policy Statement No. 44 Rules for Shelf Prospectus Offerings and for Pricing Offerings after the Final Prospectus is Receipted ("NP 44") as it applies to shelf prospectus offerings.
Proposed NI 44-102 is expected to be adopted as a rule in Alberta, British Columbia, Manitoba, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions, except Québec, represented by the CSA. The proposed Companion Policy is expected to be implemented as a policy in all jurisdictions, other than Québec, represented by the CSA. In Québec, the Commission des valeurs mobilières du Québec (the "CVMQ") has expressed agreement with the purpose and intent of NI 44-102 but does not propose to adopt NI 44-102 or the Companion Policy because Québec securities legislation provides procedures for shelf distributions. Proposed amendments to the Securities Act (Québec) (the "proposed amendments") will give the CVMQ the authority to make rules and, on the coming into force of the proposed amendments, the CVMQ will consider what changes to Québec securities legislation are necessary to implement NI 44-102. If the proposed amendments are not in force at the time of implementation of NI 44-102, the CVMQ will consider all measures available, including a blanket order, in order to enable issuers to efficiently access the shelf prospectus system in Québec.
Reformulation of NP 44 Shelf Distribution Regime
NP 44, which came into effect on May 10, 1991, established a Canadian system for distributions using shelf prospectuses. A shelf prospectus can pertain to multiple offerings of securities over a period of up to two years. The shelf prospectus consists of a base shelf prospectus that may omit disclosure of terms of a particular shelf offering, together with one or more shelf prospectus supplements each containing supplementary disclosure concerning the particular offerings to which they relate.
NP 44 also established rules for the pricing of certain offerings after the issuance of the receipt for a prospectus. NP 44 provides flexibility and reduces the burdens, costs and time pressures for issuers seeking to raise capital under changing market conditions, while maintaining investor protection.
The CSA consider that the shelf distribution system established by NP 44 has operated efficiently and with minimal difficulties. In reformulating NP 44, the CSA have sought to preserve substantive consistency with the shelf distribution regime under NP 44.
The CSA have decided to separate the shelf distribution regime from the post-receipt pricing regime because the two regimes are not so closely related that they should be contained in a single instrument. Proposed NI 44-102 and its Companion Policy would carry forward the system established under NP 44 relating to shelf distributions, and proposed National Instrument 44-103 Post-Receipt Pricing and its Companion Policy 44-103CP, which are being published for comment concurrently with proposed NI 44-102, would carry forward the regime established under NP 44 for pricing offerings after the final prospectus is receipted.
The CSA have considered regulatory and capital market developments since the implementation of NP 44 in 1991, including the implementation of National Policy Statement No. 47 Prompt Offering Qualification System ("NP 47") (itself the subject of reformulation in proposed National Instrument 44-101 Prompt Offering Qualification System ("NI 44-101"), which was published for comment on February 20, 1998), the increased use of derivative securities and changes in markets and regulation in the United States.
As a result of these considerations, the CSA propose to extend the Canadian shelf distribution system to reflect Canadian experience with derivative securities and the U.S. experience with the use of an "unallocated" shelf prospectus that pertains to more than one type of security. Aspects of NP 44 that duplicate provisions relating to the prompt offering qualification ("POP") system are not carried forward in NI 44-102 but instead will be dealt with in NI 44-101. Except to the extent expressly varied by NI 44-102, the requirements of Canadian securities legislation applicable to all distributions, and the requirements of the POP system in particular, will apply to shelf distributions. Provisions of NP 44 that are relevant to shelf distributions but omitted from NI 44-102 and the Companion Policy are identified in the attached Table of Concordance.
The purpose of NI 44-102 and the Companion Policy is to reformulate and replace NP 44 as it relates to shelf distributions, maintaining the substance of the shelf distribution system while adding clarity, operational efficiency and opportunities for access to the system. NI 44-102 and the Companion Policy are derived from and substantially similar to NP 44 in its application to shelf distributions.
NI 44-102 contains mandatory aspects of the shelf distribution system under NP 44. Aspects of NP 44, relating to shelf distributions, that are explanatory are included in the Companion Policy.
Terms used in the Companion Policy that are defined or interpreted in NI 44-102 or a definition instrument in force in the jurisdiction and not otherwise defined in the Companion Policy should be read in accordance with NI 44-102 or the definition instrument, unless the context otherwise requires.
Key aspects of proposed NI 44-102 follow:
Eligibility to use Shelf Distribution System. Part 2 of NI 44-102 governs eligibility to use the shelf procedures for a distribution of securities. The shelf procedures may be used only for a distribution that can be made under the POP system.
Generally, sections 2.2 through 2.7 of NI 44-102 would permit an issuer to file a preliminary base shelf prospectus if, at the time of filing, the issuer is eligible to participate in the POP system under a corresponding provision of NI 44-101. Differing eligibility criteria apply to differing categories including substantial Canadian issuers, reorganizations, securities with approved ratings and guaranteed securities.
Section 2.8 of NI 44-102 would prevent use of the shelf procedures for a distribution of rights under a rights offering because the CSA may wish to review in advance the pricing of a rights offering.
Opting into or out of Shelf Procedures. Sections 5.1 and 5.2 of NI 44-102 clarify procedures for opting into and out of the shelf procedures after filing a preliminary prospectus.
Shelf Prospectus Receipt. Under Part 2 of NI 44-102, the receipt for a final base shelf prospectus will be effective until the earliest of: (i) two years from the date of issue; (ii) the time immediately before the entering into of an agreement of purchase and sale for a security to be sold under the base shelf prospectus, unless the issuer has satisfied certain conditions that correspond to the relevant NI 44-101 eligibility criteria; and (iii) the lapse date of the receipt if prescribed by securities legislation, if no relief has been granted to the issuer.
The second expiry condition serves to carry forward certain of the POP system eligibility criteria to the time of a particular shelf distribution by providing for the expiry of the shelf prospectus receipt, and so preventing further distribution, if the relevant eligibility criteria are not satisfied at the time of the proposed distribution.
The third expiry condition reflects provisions in securities legislation of a number of jurisdictions pursuant to which a prospectus receipt lapses after one year from the date of issue. In Ontario, an issuer wishing to use the shelf system would have to make an application for discretionary relief with each base prospectus filed under the shelf system and specific relief from the usual one year prospectus receipt lapse date would be required. Proposed amendments to the Securities Act (Ontario), which were published for comment on August 14, 1998, have been submitted for the Fall 1998 Red Tape Bill.The proposed amendments would, among other things, deal with the lapse date problem discussed above.
Unallocated Shelf Prospectus. Part 3 of NI 44-102 introduces to the Canadian shelf distribution system the concept of an "unallocated" base shelf prospectus that pertains to more than one type of security for which the issuer is eligible to participate in the POP system. NP 44 currently restricts a base shelf prospectus to a single type of security such as debt, preferred shares or common shares.
The unallocated shelf prospectus adds to the flexibility of the shelf procedures, particularly in connection with distributions of equity securities, by addressing issuers' concerns about the "market overhang" effect of fully-allocated shelf prospectuses.
To ensure prompt public disclosure concerning a shelf equity distribution under an unallocated base shelf prospectus, section 3.2 of NI 44-102 would require the announcement by news release of the intention to proceed with a distribution of equity securities once discussions between the issuer or selling securityholder and an underwriter reach sufficient specificity that it is reasonable to expect that the distribution will proceed.
Asset-backed and Novel Derivative Securities. The CSA have endeavoured to balance the flexibility of the shelf procedures with concerns regarding investor protection. In the case of asset-backed and derivative securities, which can be complex instruments, NI 44-102 applies procedural safeguards where the securities are "novel" -- having characteristics not previously described in a prospectus for which a receipt has been issued in Canada (See Part 1 Definitions).
An issuer or selling securityholder that wishes to be able to distribute novel specified derivatives or asset-backed securities under a base shelf prospectus would be required, under section 4.1 of NI 44-102, to file an undertaking not to distribute specified derivatives or asset-backed securities that, at the time of distribution, are novel without pre-clearing with the regulator the disclosure to be contained in the relevant shelf prospectus supplement. The distribution could not proceed unless regulators' comments are addressed or no comments have been issued within 15 business days.
Base Shelf Prospectus. A base shelf prospectus must contain disclosure specified in Part 5 of NI 44-102, including certain information about the securities that can be distributed and the aggregate dollar amount of securities reasonably expected to be distributed within 24 months after the date of the receipt for the base shelf prospectus (under NP 44, this period commences on the date of filing of the base shelf prospectus).
Section 5.6 of NI 44-102 specifies the disclosure that may be omitted from a base shelf prospectus, including information not known at the time of filing of the base shelf prospectus, such as variable terms of securities, the dollar amount and size of each tranche of securities that may be distributed, variable terms of the plan of distribution and the name and prospectus certificate of the underwriter. A base shelf prospectus for securities to be distributed by one or more underwriters as a firm commitment may also omit the statement that the securities are to be taken up by the underwriters, if at all, on or before a specified date. A base shelf prospectus for a distribution on a best efforts basis, for which a minimum amount of funds is required by the issuer, may omit disclosure concerning the maximum time during which distribution may continue and concerning the disposition of subscription funds.
Amendment. A prospectus for which a receipt has been issued and under which distribution has not ended must, under NI 44-101, generally be amended to reflect material changes.
In the case of a base shelf prospectus, however, section 5.8 of NI 44-102 would permit the amendment to be effected: (i) if the material change occurs during a period in which no securities are being distributed under the base shelf prospectus, through incorporation by reference of a material change report disclosing the change; and (ii) if the material change occurs at a time when securities are being distributed under the base shelf prospectus, by the filing of a material change report, accompanied by certificates, disclosing both the change and that the base shelf prospectus is thereby amended.
Shelf Prospectus Supplement. Part 6 sets out requirements for a shelf prospectus supplement, generally consistent with those under NP 44.
A shelf prospectus supplement is incorporated by reference in the corresponding base shelf prospectus only for purposes of the relevant distribution. A shelf prospectus supplement must identify the corresponding base shelf prospectus and each previously filed shelf prospectus supplement. A shelf supplement or, if more than one is used, the shelf supplements together must contain: (i) all of the shelf information that was omitted from the base shelf prospectus; and (ii) all other information required to be disclosed in a short form prospectus that is not already in the base shelf prospectus.
A shelf prospectus supplement must, generally, be filed within two days after it is first used and must be delivered to purchasers. Under NI 44-102, reflecting implementation of SEDAR, filing is to be effected concurrently in all relevant jurisdictions. This is a change from NP 44.
Consents and Ancillary Documents. Part 7 of NI 44-102 varies the timing of the filing obligations in NI 44-101 for consents, auditors' comfort letters and underwriting agreements to the extent necessary to accommodate shelf distributions. The requirements correspond in substance to those in NP 44.
Medium Term Notes. Shelf procedures are available for medium term note ("MTN") programs, which can be established either in a base shelf prospectus or in a shelf prospectus supplement. The document that establishes the MTN program must contain a forward looking (or Method 1) certificate. Final pricing and other terms pertaining to a particular tranche of MTNs may be disclosed in a pricing supplement, which supplements the base shelf prospectus and relevant shelf prospectus supplement, if any.
Part 8 of NI 44-102 carries forward the MTN regime under NP 44 and extends it to other continuous distributions.
An issuer distributing securities under an MTN program or other continuous distribution under a base shelf prospectus must calculate and file updated earnings coverage ratios for the ratios contained in its base shelf prospectus each time the issuer prepares interim or audited annual financial statements. Pricing supplements or (in a departure from NP 44) a summary of their terms must be filed within seven days after the end of the month in which they are used.
Non-fixed Price Offerings. Generally, only securities that may be distributed at a non-fixed price under NI 44-101 may be distributed at a non-fixed price using the shelf procedures.
Section 9.1 of NI 44-102 is an exception to the general rule and permits at-the-market shelf distributions of equity securities if the market value of equity securities distributed does not exceed 10 percent of the aggregate market value of the issuer's outstanding equity securities of the same class. These rules are subject to restrictions on over-allotment and market stabilization.
Certificates. Appendices A and B to NI 44-102 set out provisions concerning certificates that are, respectively, forward-looking or non-forward looking.
Transition. Part 10 of NI 44-102 contains measures that would govern transition from NP 44, of particular importance in the case of base shelf prospectuses for which a receipt is in effect at the time NI 44-102 comes into effect.
The proposed Companion Policy provides views of the Canadian securities regulatory authorities on matters relating to shelf distributions, including eligibility criteria, information that may be omitted from a base shelf prospectus, distributions of derivatives and asset-backed securities, use of an unallocated shelf prospectus, use of shelf prospectus supplements and amendments, expiry of base shelf prospectus receipts and firm commitment and best efforts distributions.
In Ontario, a base shelf prospectus receipt expires a year after it is issued unless an issuer has applied for and received discretionary relief with respect to the lapse date specific to each base prospectus filed under the shelf system, as discussed in section 3.1 of the Companion Policy.
Changes from the NP 44 Shelf Distribution Regime
NI 44-102 is, in general, consistent with the shelf distribution regime established under NP 44. NI 44-102 would effect three principal changes from the NP 44 regime.
NI 44-102 differs from NP 44 in its incorporation of an expiry mechanism for base shelf prospectus receipts, making clear the circumstances and time at which distribution under a shelf prospectus must cease.
The combination of expanded POP eligibility criteria in proposed NI 44-101 and the principle that any POP distribution may be made using the shelf procedures will considerably broaden access to the shelf procedures, particularly for distributions of asset-backed and derivative securities.
The use of unallocated shelf prospectuses, together with additional public disclosure by news release in the circumstances specified in NI 44-102, would add considerable flexibility to the shelf procedures, particularly for distributions of equity securities, while ensuring necessary public disclosure.
Authority for NI 44-102 - Ontario
In those jurisdictions in which NI 44-102 is to be adopted or made as a rule or regulation, the securities legislation in each of those jurisdictions provides the securities regulatory authority with rule-making or regulation-making authority in respect of the subject matter of NI 44-102. The following provisions of the Act provide the Commission with authority to make NI 44-102.
Paragraph 143(1)13 of the Act authorizes the Commission to make rules regulating trading or advising in securities to prevent trading or advising that is fraudulent, manipulative, deceptive or unfairly detrimental to investors.
Paragraph 143(1)16 of the Act authorizes the Commission to make rules varying the application of the Act to establish procedures for or requirements in respect of the preparation and filing of preliminary prospectuses and prospectuses and the issuing of receipts therefor that facilitate or expedite the distribution of securities or the issuing of the receipts.
Paragraph 143(1)22 of the Act authorizes the Commission to make rules prescribing requirements in respect of the preparation and dissemination and other use, by reporting issuers, of documents providing for continuous disclosure that are in addition to the requirements under the Act.
Paragraph 143(1)35 of the Act authorizes the Commission to make rules regulating or varying the Act in respect of derivatives.
Paragraph 143(1)39 of the Act authorizes the Commission to make rules requiring or respecting the media, format, preparation, form, content, execution, certification, dissemination and other use, filing and review of all documents required under or governed by the Act, the regulations or the rules and all documents determined by the regulations or the rules to be ancillary to the documents.
The CSA have not considered any alternatives to the making of NI 44-102. The only alternative method of achieving the regulatory goals contained in NP44 is through the amendment of the securities legislation of the various jurisdictions. The CSA are satisfied with the general operation of the regime established by NP 44, and consider that replacing NP 44 with NI 44-102 is the most appropriate manner of regulating in this area.
In proposing NI 44-102 and Companion Policy, the CSA have not relied on any significant unpublished study, report, decision or other written materials.
The proposed Companion Policy is related to NI 44-102, proposed National Instrument 44-101 Prompt Offering Qualification System, proposed Companion Policy 44-101CP Prompt Offering Qualification System, proposed Ontario Rule 41-501 General Prospectus Requirements and proposed Companion Policy 41-501CP General Prospectus Requirements.
The Ontario Commission proposes to amend subsection 34(1) and paragraph 81(1)5 of the Ontario Regulation in the event that NI 44-102 comes into force before the coming into force of proposed Rule 41-501 General Prospectus Requirements. The references to the rule "In the Matter of Rules for Shelf Prospectus Offerings and for Price Offerings After the Prospectus is Receipted" (1991), 14 OSCB 1825 and to "National Policy Statement No. 44" (1991), 14 OSCB 1844 will be replaced with a reference to NI 44-102.
The Ontario Commission also proposes to amend the definitions of "Pricing Supplement" and "Shelf Procedures" in subsection 1(1) of Schedule 1 to the Ontario Regulation to replace the references to "National Policy Statement No. 44" with references to NI 44-102.
The CSA anticipate a number of benefits to result from the new shelf procedures under proposed NI 44-102. The combination of liberalization of the POP system under proposed NI 44-101 and broadened access to the shelf procedures under NI 44-102, as discussed above, would enhance the ability of issuers to respond flexibly to opportunities in Canadian capital markets.
The CSA do not anticipate that material new costs would arise from implementation of NI 44-102. In particular, issuers that are already eligible to participate in the POP system are not anticipated to face additional distribution costs under NI 44-102.
Interested parties are invited to make written submissions with respect to proposed NI 44-102 and the Companion Policy. Submissions received by January 8, 1999 will be considered.
Submissions should be sent to all of the Canadian securities regulatory authorities listed below in care of the Ontario Securities Commission, in duplicate, as indicated below:
Department of Government Services and Lands, Newfoundland and Labrador
Registrar of Securities, Government of the Northwest Territories
Claude St Pierre, General Secretary
A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted. As securities legislation in certain provinces requires that a summary of the written comments received during the comment period be published, confidentiality of submissions received cannot be maintained.
Telephone: (416) 593-8245
Legal Counsel, Market Operations
Telephone: (416) 593-8115
Director, Policy & Legislation
Telephone: (604) 899-6635
Deputy Director, Security Analysis
Telephone: (403) 422-2191
Policy Advisor Commission des valeurs mobilières du Québec
Telephone: (514) 873-5326
Deputy Director of Corporate Finance & Administration
Telephone: (902) 424-7355
Text of NI 44-102 and Companion Policy
The text of proposed NI 44-102 and the proposed Companion Policy follow, together with footnotes that are not part of the documents but have been included to provide background and explanation
NATIONAL INSTRUMENT 44-102 SHELF DISTRIBUTIONS AND NATIONAL INSTRUMENT 44-103 POST-RECEIPT PRICING TABLE OF CONCORDANCE TREATMENT OF NATIONAL POLICY NO. 44
This table shows how each provision of National Policy Statement No. 44 has been dealt with in the reformulated instruments. The table identifies some of the modifications made to these provisions during the reformulation. The table does not identify provisions in the National Instruments or Companion Policies that do not appear in National Policy Statement No. 44. Reference to the footnotes in the relevant reformulated instruments should be made for that information.
In this table, "NI44-102" means National Instrument 44-102 (replacing the provisions relating to shelf distributions contained in National Policy Statement No. 44), "NI44-103" means National Instrument 44-103 (replacing the provisions relating to PREP distributions contained in National Policy Statement No. 44), "NI44-101" means National Instrument 44-101 (replacing National Policy Statement No. 47), "Policy 44-102" means the Companion Policy to NI44-102 (44-102CP), "Policy 44-103" means the Companion Policy to NI44-103 (44-103CP), "Policy 44-101" means the Companion Policy to NI44-101 (44-101CP) and "NP44" means National Policy Statement No. 44.
Instrument (NP44) Treatment Comment
1. Introduction and Purpose Omitted Not necessary
(a) "AIF" Omitted Appears in NI44-101
(b) "Approved Rating" Omitted Appears in NI44-101
(c) "Approved Rating Organization" Omitted Appears in NI44-101
(d) "at-the-market" NI44-102 - s.1.1 "at-the-market distribution" Reference to stock exchange and market maker omitted
(e) "equity securities" Omitted Appears in NI44-101
(f) "lapse date" Omitted Although term is used in NI44-102, definition not necessary
(g) "Method 1" NI44-102 - s.1.1 "method 1" Modified to add description
(h) "Method 2" NI44-102 - s.1.1 "method 2" Modified to add description
(i) "MTN Program" NI44-102 - s.1.1 "MTN program"
(j) "MTN Terms" Omitted Not necessary
(k) "non-convertible" Omitted Appears in NI44-101
(l) "POP Issuers" Omitted Not necessary
(m) "POP System" Omitted Appears in NI44-101
(n) "PREP Changes" Omitted Not necessary
(o) "PREP Information" NI44-103 - s.1.1 "PREP information"
(p) "PREP Procedures" NI44-103 - s.1.1 "PREP procedures" Modified to refer to a distribution
(q) "Pricing Supplement" NI44-102 - s.1.1 "pricing supplement" Reference that pricing supplement "may" be used in MTN offerings omitted
(r) "Recognized Stock Exchange" Omitted Not necessary
(s) "Shelf Information" NI44-102 - s.1.1 "shelf information"
(t) "Shelf Procedures" NI44-102 - s.1.1 "shelf procedures" Reference to a "continuous or delayed basis" omitted
(u) "Supplemented PREP Prospectus" NI44-103 - s.1.1 "supplemented PREP prospectus" Modified to add description
2.2 Election to Use the Shelf Procedures and/or PREP Procedures
2.2(a) 1st sentence NI44-102 - s.2.1
2.2(a) 2nd sentence NI44-103 - s.2.1
2.2(a) 3rd sentence Omitted Reference to communication of election omitted as base shelf prospectus and base PREP prospectus must be identified as such on cover page
2.2(b) NI44-102 - s.5.1
NI44-103 - s.2.3
Modified to clarify how issuers can opt into the shelf and PREP procedures. NI44-102 section 5.1 also modified to clarify that an issuer opting out of the shelf procedures may file an amendment or a new preliminary short form prospectus methods for opting out of the shelf procedures
2.3 Form of Prospectus and Disclosure Requirements
2.3(a) 1st sentence NI44-102 - s.5.3
Policy 44-102 - s.1.2(2)
Policy 44-103 - s.1.3(1) and (2)
Modified to refer to requirements in NI44-101, Policy 44-101 and securities legislation
2.3(a) 2nd sentence Policy 44-103 - s.1.3(3)
2.3(a) 3rd sentence Policy 44-102 - s.1.1
Policy 44-103 - s.1.3
2.3(b) NI44-102 - s.5.5 paragraph 2
NI44-103 - s.3.2(1) paragraph 2
NI44-103 section 4.6 overrides paragraph 2 of section 3.2(1) for a supplemented PREP prospectus
2.4 Incorporation by Reference Omitted Redundant in light of NI44-101
2.5 Prospectus Amendments
2.5(a) Policy 44-102 - s. 4.1(1) Modified for shelf to refer generally to an amendment to a prospectus if a material change occurs; express mention omitted in Policy 44-103
2.5(b) Policy 44-102 - s.4.1(1) Modified in shelf to refer generally to an amendment to a prospectus if a material change occurs; express mention omitted in Policy 44-103
2.5(c) Policy 44-102 - s. 4.1(1)
Policy 44-103 - s. 2.1(1)
Modified in shelf to refer generally to an amendment to a prospectus if a material change occurs; modified in PREP to introduce a distinction in how requirement to file an amendment may be satisfied if the size of the distribution is changed by up to 20 percent
2.5(d) Omitted Redundant
2.5(e) Omitted Redundant
2.6 Civil Liability
2.6(a) Omitted Redundant
2.6(b) Policy 44-102 - s.2.1(1)
2.6(c) Policy 44-102 - s.2.1(2)
2.7 Other Regulatory Matters
2.7(a) Policy 44-102 - s.1.1
2.7(b) 1st sentence Omitted Redundant
2.7(b) 2nd sentence (1) NI44-102 - s.5.6 paragraph 5
Policy 44-102 - s.3.7
2.7(b) 2nd sentence (2) NI44-103 - s.3.3 paragraph 10
Policy 44-103 - s.3.1
2.7(c) 1st sentence Omitted Redundant
2.7(c) 2nd sentence (1) NI44-102 - s. 5.6 paragraph 6
Policy 44-102 - s.3.8
2.7(c) 2nd sentence (2) NI44-103 - s.3.3 paragraph 11
Policy 44-103 - s.3.2
3. Shelf Procedures
3.1(a)(1) NI44-102 - s.2.1 to 2.7
Policy 44-102 - s.3.1
Modified to reflect NI44-101
3.1(a)(2) Omitted Redundant in light of the exemption provision in NI44-102 section 11.1
3.1(b) NI44-102 - paragraph (b) of s.2.2(3), 2.3(3), 2.4(3), 2.5(3), 2.6(3) and 2.7(3) Prohibition on distribution has been reformulated as a mechanism causing a receipt to expire
1st footnote to 3.1(b) NI44-102 - paragraph (b) of s.2.4(3) Not necessary
3.2 Types of Permissible Shelf Offerings
3.2(a) Omitted NI44-102 permits use of an unallocated shelf; replaced by NI44-102 section 3.1
3.2(b) NI44-102 - s.2.8
Footnote to 3.2(b) Omitted Not necessary
3.2(c) Omitted NI44-102 permits shelf distributions of derivatives or asset-backed securities subject to limitation for "novel" products contained in Part 4 of NI44-102
Footnote to 3.2(c) Omitted Not necessary
3.2(d) NI44-102 - s.5.4 Modified to commence time period running at the date of receipt for the base prospectus instead of the date of filing
3.2(e) NI44-102 - Part 9 Modified to refer to any non-fixed price distribution allowed under NI44-101
3.2(f) Omitted Redundant
3.3 Disclosure in Shelf Offering Prospectuses
3.3(a) 1st sentence NI44-102 - s.5.3 and s.5.5 paragraph 5 Paragraph 5 of section 5.5 of NI44-102 modified to refer to the "aggregate dollar amount of securities"
3.3(a) 2nd sentence Omitted Redundant
3.3(b) Omitted Redundant
3.3(c)(1) NI44-102 - s.5.6 paragraphs 1 and 2
Policy 44-102 - s.3.5(1)
Modified to refer to the "dollar amount"
3.3(c)(2) NI44-102 - s.5.6 paragraph 3
Policy 44-102 - s.3.5(2)
3.3(c)(3) NI44-102 - s.5.6 paragraph 4 Reference to conflicts of interest omitted in light of NI44-102 section 6.5
3.3(c)(4) NI44-102 - s.5.6 paragraphs 7 and 8
Policy 44-102 - s.3.5(3)
Last sentence of 3.3(c) Omitted Redundant in light of definition of "shelf information" in section 1.1 of NI44-102
3.3(d) NI44-102 - s.5.5 paragraph 3
3.4 Supplement Procedure
3.4(a)(1) NI44-102 - s.6.3(2)
3.4(a)(2) NI44-102 - s.6.3(1) paragraph 3
3.4(a)(3) Omitted Not necessary in light of omission of ratio disclosure requirement in section 3.6 of NP44
3.4(a)(4) Omitted Not necessary in light of omission of section 3.7 of NP44
3.4(a)(5) Omitted Not necessary in light of omission of section 3.10 of NP44
3.4(a)(6) Omitted Not necessary in light of omission of section 3.11(b) of NP44
3.4(a)(7) NI44-102 - s.6.3(1) paragraph 4 Requirement to describe each document omitted
Last part of 1st sentence of 3.4(a) NI44-102 - s.6.4(a) Modified to require more prompt filing which is feasible under SEDAR
3.4(a) 2nd sentence NI44-102 - s.6.4(a) Modified to reflect feasibility of concurrent filings under SEDAR
3.4(a) 3rd sentence NI44-102 - s.6.3(1) paragraphs 1 and 2
3.4(a) 4th sentence Omitted Not necessary
3.4(b)(1) NI44-102 - s.8.1(a)
3.4(b)(2) Omitted Redundant
3.4(b)(3) Omitted Not necessary in light of omission of much of section 3.6 of NP44
3.4(b)(4) Omitted Not necessary in light of omission of section 3.7 of NP44
3.4(b)(5) Policy 44-102 - s.2.2
3.4(b)(6) Omitted Redundant
Sentence after 3.4(b)(6) NI44-102 - s.6.4(b); partly omitted
3.4(b)(7) NI44-102 - s.6.4(b); partly omitted Omissions made in light of omission of section 3.4(b)(3) and (4)
3.4(b)(8) Omitted
3.4(b)(9) Omitted Not necessary in light of omission of section 3.4(b)(6) of NP44
Last sentence of 3.4(b) NI44-102 - s.8.3(a)
3.4(c) 1st sentence NI44-102 - s.5.5 paragraph 4 and s.6.2 Modified to require statement in base shelf prospectus regarding incorporation of shelf supplements
3.4(c) 2nd sentence Omitted Not necessary
3.4(c) 3rd sentence NI44-102 - s.5.5 paragraph 4 and s.6.2 Modified to require statement in base shelf prospectus regarding incorporation of shelf supplements
3.4(d) 1st sentence Policy 44-102 - s.3.6(3)
3.4(d) 2nd sentence NI44-102 - s.6.7
3.4(e) Omitted
3.4(f) 1st sentence NI44-102 - s.8.1(a)
3.4(f) 2nd sentence Omitted
3.4(f)(1) NI44-102 - s.8.2(1)
References to "options", "MTN Terms" and examples omitted
Footnote to 3.4(f)(1) NI44-101 - s.8.2(1) paragraph 3
3.4(f)(2) NI44-102 - s.8.2(1) paragraph 1
3.4(f)(3) Omitted Redundant
3.4(f)(4) NI44-102 - s.8.2(2) paragraph 1 Reference to "MTN Terms" omitted
3.4(f)(5) NI44-102 - s.8.2(2) paragraph 2 Reference to describing document omitted; exception omitted
Sentence after 3.4(f)(5) Omitted
3.4(f)(6) Omitted
3.4(f)(7) NI44-102 - s.6.3(1) paragraph 3(a)
3.4(f)(8) NI44-102 - s.6.3(1) paragraph 3(a)
3.4(f)(9) Omitted Redundant
3.4(g) Policy 44-102 - s.2.2
3.4(h) Policy 44-102 - s.3.6(1)
3.5 Non-fixed Price Offerings
3.5(a) Omitted NI44-102 contains no specific cover page disclosure requirements for non-fixed price offerings
3.5(b)(1) NI44-102 - s.9.2(1) Timing of calculation modified
3.5(b)(2) Omitted Not necessary
3.5(b)(3) Omitted Not necessary in light of omission of paragraph 3.5(b)(2) of NP44
3.5(b)(4) NI44-102 - s.9.2(3)
3.6 Disclosure of Asset and Earnings Coverage Ratios
3.6(a) Omitted
3.6(b) 1st sentence Omitted Not necessary in light of omission of paragraph 3.6(a) of NP44
3.6(b) 2nd sentence NI44-102 - s.8.4(1) Split into paragraphs (a) and (b) for greater clarity; timing for calculation modified; reference to updating asset coverage ratios omitted
3.6(b) 3rd sentence NI44-102 - s.8.4(2)
3.6(b) 4th sentence Omitted Redundant in light of shelf prospectus supplement requirements contained in Part 6 of NI44-102
3.7 Disclosure of Dilution Omitted
3.8(a) Changes in the Plan of Distribution Omitted
3.8(b) Other Amendments
3.8(b)(1) NI44-102 - s.5.8(1)
Policy 44-102 - s.4.1(2)
Footnote to 3.8(b)(1) NI44-102 - s.5.8(1)
3.8(b)(2) NI44-102 - s.5.8(2)
Policy 44-102 - s.4.1(3)
3.8(b)(3) Omitted
3.9 Prospectus Certificates
3.9 - 1st sentence NI44-102 section 5.5 paragraph 8 and subsection 6.3(1) paragraph 3
3.9 - 2nd sentence Policy 44-102 - s.5.1(1) Applies unless a particular method is prescribed
3.9 - 3rd sentence NI44-102 - Appendix A
Policy 44-102 - s.5.1(1)
Modified to add reference to "credit supporter" and to tie promoter to issuer's method
3.9 - 4th sentence NI44-102 - Appendix A
Policy 44-102 - s.5.1(2)
Reference to "allows" replaced by "requires"
3.9 - 5th sentence Omitted Redundant
3.9 - 6th sentence NI44-102 - Appendix B
3.9 - 7th sentence Policy 44-102 - s.5.1(1)
3.9 - 8th sentence Omitted Not necessary
3.10 Acquisitions Omitted
3.11 Filing Packages and Commercial Copies
3.11 1st sentence NI44-102 - s.7.1
3.11(a) Directors' Resolutions Omitted Redundant in light of NI44-101
3.11(b) Natural Resource Issuers Omitted Redundant in light of NI44-101
3.11(c)(1) Consent Letters Omitted Redundant in light of NI44-101
3.11(c)(2) NI44-102 - s.7.2 Modified for greater precision
3.11(c)(3) Omitted Redundant
3.11(d) Comfort Letters
3.11(d) 1st sentence Omitted Redundant in light of NI44-101
3.11(d)(1) Omitted Redundant in light of NI44-101
3.11(d)(2) Omitted Redundant in light of NI44-101
3.11(d)(3) NI44-102 - s.7.3 Modified for greater precision
3.11(e) Material Contracts NI44-102 - s.7.4(2) Reference to "agency agreement or other material contract" omitted
3.11(f) Certificate Regarding the Portion of a Distribution Underwritten by Each Underwriter Omitted Redundant in light of NI44-101
3.11(g) Commercial Copies Omitted Redundant in light of NI44-101
3.11(h) Green Sheets Omitted Not necessary
3.12 Other Matters
3.12(a) Refiling of Shelf Prospectuses Omitted Issuers expected to obtain relief from the lapse date as necessary
3.12(b) Underwriters' Conflicts of Interest NI44-102 - s.6.5 Modified for greater precision
3.12(c) Transition Rules for Existing MTN Programs Omitted Not necessary
3.13 Shelf Fees Omitted
4. PREP Procedures
4.1 Eligibility for the PREP Procedures NI44-103 - s.2.1
4.2 Types of Permissible PREP Offerings
4.2(a) Omitted
4.2(b) Omitted
4.2(c) NI44-103 - s.2.2
4.2(d) Omitted Restriction on using PREP procedures for distributions of derivatives omitted
4.3 PREP Prospectus Disclosure
4.3(a)(1) NI44-103 - s.3.3 paragraph 1
4.3(a)(2) NI44-103 - s.3.3 paragraph 5
4.3(a)(3) NI44-103 - s.3.3 paragraph 2
4.3(a)(4) NI44-103 - s.3.3 paragraph 3 Modified to refer to net proceeds of the distribution
4.3(a)(5) NI44-103 - s.3.3 paragraph 7
4.3(a)(6) NI44-103 - s.3.3 paragraph 6
4.3(a)(7) Omitted Redundant in light of clause 4.3(a)(5) of NP44
4.3(a)(8) NI44-103 - s.3.3 paragraph 9
4.3(a)(9) NI44-103 - s.3.3 paragraph 12 Modified for greater clarity
4.3(b) 1st sentence NI44-103 - s.4.8
4.3(b) 2nd sentence NI44-103 - s.4.3
4.3(b)(1) NI44-103 - s.4.5(2) paragraph 1
4.3(b)(2) NI44-103 - s.4.5(2) paragraph 2 References to asset coverage ratios and dilution omitted
4.3(b)(3) NI44-103 - s.4.5(1)
4.3(b)(4) NI44-103 - s.4.6
4.3(b)(5) NI44-103 - s.4.5(2) paragraph 3
4.3(b)(6) NI44-103 - s.4.5(2) paragraph 4
4.3(b)(7) NI44-103 - s.4.5(2) paragraph 6
4.3(b)(8) Omitted
4.3(b) last sentence Omitted
4.3(c) 1st sentence NI44-103 - s.4.2
4.3(c) 2nd sentence NI44-103 - s.3.2(1) paragraph 3
4.3(c) 3rd sentence Policy 44-103 - s.3.4
4.3(d) 1st sentence Omitted
4.3(d) 2nd sentence NI44-103 - s.3.5(2) Modified for greater clarity
4.3(d) balance NI44-103 - s.3.5(2)
4.3(e) NI44-103 - s.3.5(2)
4.3(f) NI44-103 - s.3.5(1)
4.3(g) 1st sentence NI44-103 - s.3.2(1) paragraph 6 References to asset coverage ratios and dilution have been omitted
4.3(g) 2nd sentence NI44-103 - s.3.2(1) paragraph 6 References to asset coverage ratios and dilution have been omitted
4.3(g) 3rd sentence Omitted Inconsistent with NI44-103 subsection 4.5(2) paragraph 2
4.3(h) Policy 44-103 - s.2.1(2)
4.3(i) NI44-103 - s.3.2(1) paragraph 7
4.3(j) NI44-103 - s.3.2(1) paragraph 8
4.3(k) NI44-103 - s.3.6 regarding base PREP prospectus; s.4.7 regarding supplemented PREP prospectus
4.3(l) Omitted
4.4 Filing Packages and Commercial Copies
4.4 1st and 2nd sentences Omitted
4.4(a) Directors' Resolutions Omitted Redundant in light of NI44-101 and Ontario Rule 41-501
4.4(b) Consent Letters Omitted Redundant in light of NI44-101 and Ontario Rule 41-501
4.4(c) Comfort Letters Omitted Redundant in light of NI44-101 and Ontario Rule 41-501
4.4(d) Material Contracts NI44-103 - s.4.10 Reference to agency agreements omitted
4.4(e) Commercial Copies Omitted Redundant in light of NI44-101 and Ontario Rule 41-501
4.5 Delivery Obligations
4.5 1st sentence NI44-103 - s.4.9
4.5 2nd sentence Policy 44-103 - s.3.3
4.6 Where PREP Offering is Part of a Larger Shelf Offering Omitted
4.7 PREP Fees Omitted
Appendix A - Recognized Stock Exchanges Omitted
Appendix B - Forms of Prospectus Certificates NI44-102 - Appendix A: Method 1 and Method 2
Appendix C - Shelf Procedures Filing Fees Omitted
Appendix D - PREP Procedures Filing Fees Omitted
PART TITLE PART 1 DEFINITIONS AND INTERPRETATION
PART 2 SHELF ELIGIBILITY AND PERIOD OF RECEIPT EFFECTIVENESS
2.2 Shelf Eligibility for Distributions made under Section 2.2 (Basic) or 2.8 (Following Reorganizations) of National Instrument 44-101
2.3 Shelf Eligibility for Distributions made under Section 2.3 of National Instrument 44-101 (Substantial Canadian Issuers)
2.4 Shelf Eligibility for Distributions made under Section 2.4 of National Instrument 44-101 (Approved Rating)
2.5 Shelf Eligibility for Distributions made under Section 2.5 of National Instrument 44-101 (Guaranteed Non-Convertible)
2.6 Shelf Eligibility for Distributions made under Section 2.6 of National Instrument 44-101 (Guaranteed Convertible)
2.7 Shelf Eligibility for Distributions made under Section 2.7 of National Instrument 44-101 (Asset-backed)
2.8 Prohibited Offerings
PART 3 UNALLOCATED SHELF
3.1 Unallocated Shelf Permitted
3.2 Distributions of Equity Securities Under Unallocated Shelf
PART 4 DISTRIBUTIONS OF NOVEL DERIVATIVES OR ASSET-BACKED SECURITIES UNDER SHELF
4.1 Distributions of Novel Derivatives or Asset-backed Securities Under Shelf
PART 5 BASE SHELF PROSPECTUSES
5.1 Opting out of the Shelf Procedures After a Preliminary Prospectus has been Receipted
5.2 Opting into the Shelf Procedures After a Preliminary Prospectus has been Receipted
5.3 Form of Base Shelf Prospectus
5.4 Dollar Value of Securities
5.5 Required Disclosure
5.6 Disclosure that may be Omitted
5.7 Issue of Receipt
5.8 Amendments5
PART 6 SHELF PROSPECTUS SUPPLEMENTS
6.1 Requirement to Use Shelf Prospectus Supplements
6.2 Incorporation by Reference
6.3 Shelf Prospectus Supplement Disclosure
6.4 Time For Filing Shelf Prospectus Supplements
6.5 Underwriters' Conflicts of Interest
6.6 Market Stabilization
6.7 Delivery Requirement
PART 7 SHELF SUPPORTING DOCUMENTS
7.3 Auditor's Comfort Letters
7.4 Underwriting Agreements
PART 8 MTN PROGRAMS AND OTHER CONTINUOUS DISTRIBUTIONS UNDER SHELF
8.2 Additional Disclosure Requirements
8.3 Filing Requirement
8.4 Requirement to Update Earnings Coverage Ratios
PART 9 NON-FIXED PRICE OFFERINGS UNDER SHELF
9.1 Restriction on Non-fixed Price Offerings Under Shelf
9.2 At-the-Market Distributions of Equity Securities Under Shelf
PART 10 TRANSITIONAL SHELF PROCEDURES
10.1 Transitional Shelf Procedures
11.1 Exemption
11.2 Evidence of Exemption
APPENDIX A - METHOD 1 FOR SHELF PROSPECTUS CERTIFICATES
APPENDIX B - METHOD 2 FOR SHELF PROSPECTUS CERTIFICATES
NATIONAL INSTRUMENT 44-102(1) SHELF DISTRIBUTIONS
PART 1 DEFINITIONS AND INTERPRETATION(2)
"acting jointly or in concert" has the meaning ascribed to that phrase in securities legislation(3);
"at-the-market distribution" means a non-fixed price distribution of equity securities(4) under the shelf procedures into a pre-existing trading market in which securities of the same class are traded;(5)
"base shelf prospectus" means a short form prospectus that is prepared in the form required by National Instrument 44-101 Prompt Offering Qualification, as varied in accordance with this Instrument;(6)
"clearing corporation" has the meaning ascribed to that term in National Instrument 81-102 Mutual Funds;(7)
"conventional convertible security" means a security of an issuer that is convertible into, or exchangeable for, other securities of the issuer, or of an affiliate of the issuer;(8)
"conventional warrant or right" means a security of an issuer, other than a clearing corporation, that gives the holder the right to purchase securities of the issuer or of an affiliate of the issuer;(9)
"index participation unit" means a unit of an interest traded on and sponsored by a stock exchange in Canada and issued by a special purpose entity the only undertaking of which is to hold the securities that are included in a specified widely published market index in substantially the same proportion as those securities are reflected in the index;(10)
"method 1" means the method described in Appendix A of providing forward looking prospectus certificates in a base shelf prospectus or in a shelf prospectus supplement that establishes an MTN program or continuous distribution;(11)
"method 2" means the method described in Appendix B of providing non-forward looking prospectus certificates in a base shelf prospectus and a shelf prospectus supplement;(12)
"MTN program" means a continuous distribution of debt securities in which the specific variable terms of the individual debt securities and the method of distribution of those securities are determined at the time of the distribution;(13)
"novel" means
(a) for a specified derivative proposed to be distributed using the shelf procedures
(i) a derivative of a type that has not been distributed by way of prospectus in at least one jurisdiction(14) before the proposed distribution, or
(ii) a derivative of a type that has been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, but
(A) the attributes of the derivative differ materially from the attributes of derivatives of the same type previously distributed by way of prospectus,
(B) the structure and contractual arrangements underlying the derivative differ materially from the structure and contractual arrangements underlying derivatives of the same type previously distributed by way of prospectus, or
(C) the type of the underlying interest(15) for the derivative differs materially from the type of underlying interest for derivatives of the same type previously distributed by way of prospectus, and
(b) for an asset-backed security(16) proposed to be distributed using the shelf procedures
(i) a security of a type that has not been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, or
(ii) a security of a type that has been distributed by way of prospectus in at least one jurisdiction before the proposed distribution, but
(A) the attributes of the security differ materially from the attributes of securities of the same type previously distributed by way of prospectus,
(B) the structure and contractual arrangements underlying the security differ materially from the structure and contractual arrangements underlying securities of the same type previously distributed by way of prospectus, or
(C) the type of financial assets servicing the security differ materially from the type of financial assets servicing securities of the same type previously distributed by way of prospectus;(17)
"pricing supplement" means a shelf prospectus supplement that contains the price of securities distributed under an MTN program or other continuous distribution using the shelf procedures;(18)
"shelf information" means the information permitted by this Instrument to be omitted from a base shelf prospectus;(19)
"shelf procedures" means the requirements in this Instrument for the distribution of securities under a base shelf prospectus and a shelf prospectus supplement;(20)
"shelf prospectus supplement" means a supplement to a base shelf prospectus, containing some or all of the information omitted from the base shelf prospectus as permitted by this Instrument;(21)
"special warrant" means a security
(a) that entitles or requires the holder to acquire another security without payment of material additional consideration, and
(b) the issuer of which, or the issuer of the other security that the holder is entitled or required to acquire, is obliged to undertake efforts to file a prospectus to qualify the distribution of the other security;(22)
"specified derivative" means an instrument, agreement or security, the market price, value or payment obligations of which are derived from, referenced to, or based on an underlying interest, other than one that is also
(a) a conventional convertible security,
(b) an index participation unit,
(c) a strip bond,
(d) a listed equity capital or dividend share or a subdivided equity or fixed income security,
(e) a conventional warrant or right, or
(f) a special warrant;(23) and
"stabilization provisions" means those provisions of securities legislation that prohibit an issuer, selling securityholder, underwriter or dealer, or an affiliate of any of the foregoing persons or companies, or any person or company acting jointly or in concert with any of them from trading in securities being distributed by way of prospectus during the period of distribution.(24)
(2) All terms defined in National Instrument 44-101 and used, but not defined, in this Instrument have the respective meanings ascribed to them in National Instrument 44-101.(25)
(1) References in this Instrument, other than in Appendix A and Appendix B, to an amendment to a prospectus include both a separate amending document and an amended and restated prospectus.
(2) For the purposes of this Instrument, the aggregate market value of an issuer's equity securities on a day shall be calculated in accordance with section 2.9 of National Instrument 44-101.(26)
2.1 General - Subject to the requirements of this Instrument, an issuer that wishes to use the shelf procedures, or enable a selling securityholder to use the shelf procedures, to distribute securities for which the issuer is eligible to participate in the POP system under National Instrument 44-101 may file a short form prospectus that is a base shelf prospectus.(27)
(1) An issuer may file a preliminary base shelf prospectus if, at the time of filing, the issuer is eligible to participate in the POP system under section 2.2 or 2.8 of National Instrument 44-101.(28)
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.2 or 2.8 of National Instrument 44-101 may file the corresponding base shelf prospectus if the issuer is not in default of any requirement of securities legislation at the time of the filing of the base shelf prospectus.(29)
(a) the second anniversary of its issue;
(i) the issuer does not have a current AIF,(30)
(ii) the aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, has not been $75,000,000 or more on a date within 60 days before the date of the agreement, or
(iii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.(31)
2.3 Shelf Eligibility for Distributions made under Section 2.3 of National Instrument 44-101 (Substantial Canadian Issuers)(32)
(1) An issuer may file a preliminary base shelf prospectus if, at the time of filing, the issuer is eligible to participate in the POP system under section 2.3 of National Instrument 44-101.
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.3 of National Instrument 44-101 may file the corresponding base shelf prospectus if the issuer is not in default of any requirement of securities legislation at the time of the filing of the base shelf prospectus.
(i) the issuer does not have a current AIF,
(ii) the aggregate market value of the issuer's equity securities, listed and posted for trading on an exchange in Canada, has not been $300,000,000 or more on a date within 60 days before the date of the agreement, or
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.
2.4 Shelf Eligibility for Distributions made under Section 2.4 of National Instrument 44-101 (Approved Rating)(33)
(1) An issuer eligible to participate in the POP system under section 2.4 of National Instrument 44-101 may file a preliminary base shelf prospectus for approved rating non-convertible(34) securities if, at the time of filing, the issuer has reasonable grounds for believing that, if it were to distribute securities under the base shelf prospectus, the securities distributed would receive an approved rating(35) from at least one approved rating organization(36) and would not receive a rating lower than an approved rating from any approved rating organization.
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.4 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus
(a) the issuer has reasonable grounds for believing that, if it were to distribute non-convertible securities under the base shelf prospectus, the securities distributed would receive an approved rating from at least one approved rating organization and would not receive a rating lower than an approved rating from any approved rating organization; and
(b) the issuer is not in default of any requirement of securities legislation.
(ii) the securities to which the agreement relates
(A) have not received a final approved rating from at least one approved rating organization, or
(B) have received a provisional or final rating lower than an approved rating from any approved rating organization, or
2.5 Shelf Eligibility for Distributions made under Section 2.5 of National Instrument 44-101 (Guaranteed Non-Convertible)(37)
(1) An issuer eligible to participate in the POP system under section 2.5 of National Instrument 44-101 may file a preliminary base shelf prospectus for the types of securities referred to in that section.
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.5 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus, each of the issuer and the credit supporter(38) of the securities to be distributed under the base shelf prospectus is not in default of any requirement of securities legislation.
(i) another issuer has not provided a guarantee or alternative credit support for the securities to which the shelf prospectus supplement relates that satisfies the criteria in paragraph 1 of subsection 2.5(1) of National Instrument 44-101,
(ii) the credit supporter referred to in subparagraph (i) is not a reporting issuer, does not have a current AIF or is in default of any requirement of securities legislation,
(iii) the aggregate market value of the credit supporter's equity securities listed and posted for trading on an exchange in Canada has not been more than $75,000,000 on a date within 60 days before the date of the agreement, and
(A) the credit supporter does not have issued and outstanding non-convertible securities that have received an approved rating from at least one approved rating organization and that have not received a rating lower than an approved rating from any approved rating organization, or
(B) the securities to which the agreement relates have not received a final approved rating from at least one approved rating organization or have received a provisional or final rating lower than an approved rating from any approved rating organization, or
(iv) the issuer is in default of any requirement of securities legislation; and
2.6 Shelf Eligibility for Distributions made under Section 2.6 of National Instrument 44-101 (Guaranteed Convertible)(39)
(1) An issuer eligible to participate in the POP system under section 2.6 of National Instrument 44-101 may file a preliminary base shelf prospectus for the types of securities referred to in that section.
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.6 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus, each of the issuer and the credit supporter of the securities to be distributed under the base shelf prospectus is not in default of any requirement of securities legislation.
(3) A receipt issued for a base shelf prospectus filed under subsection (2) is effective until the earliest of
(i) the issuer of the securities into which the securities to which the agreement relates are convertible has not provided a guarantee or alternative credit support that satisfies the criteria in paragraph 1 of section 2.6 of National Instrument 44-101,
(ii) the credit supporter referred to in subparagraph (i)
(A) is not a reporting issuer,
(B) does not have a current AIF,
(C) does not have equity securities listed and posted for trading on an exchange in Canada, the aggregate market value of which has been more than $75,000,000 on a date within 60 days before the date of the agreement, or
(D) is in default of any requirement of securities legislation, or
2.7 Shelf Eligibility for Distributions made under Section 2.7 of National Instrument 44-101 (Asset-backed)(40)
(1) An issuer eligible to participate in the POP system under section 2.7 of National Instrument 44-101 may file a preliminary base shelf prospectus for asset-backed securities if, at the time of filing, the issuer has reasonable grounds for believing that
(a) all asset-backed securities that it may distribute under the base shelf prospectus will receive an approved rating from at least one approved rating organization; and
(2) An issuer that has filed a preliminary base shelf prospectus in reliance on the eligibility criteria in section 2.7 of National Instrument 44-101 may file the corresponding base shelf prospectus if, at the time of the filing of the base shelf prospectus
(a) the issuer has reasonable grounds for believing that
(i) all asset-backed securities that it may distribute under the base shelf prospectus will receive an approved rating from at least one approved rating organization, and
(ii) no asset-backed securities that it may distribute under the base shelf prospectus will receive a rating lower than an approved rating from any approved rating organization; and
(3) A receipt issued for a base shelf prospectus filed under subsection (2) is effective for a distribution of asset-backed securities until the earliest of
(b) the time immediately before the entering into of an agreement of purchase and sale for an asset-backed security to be sold under the base shelf prospectus, unless at that time
(i) the asset-backed securities to which the agreement relates
(ii) the issuer is in default of any requirement of securities legislation; and
(c) the lapse date, if any, prescribed by securities legislation, if relief therefrom has not been granted to the issuer.(41)
2.8 Prohibited Offerings - Despite the other provisions of this Instrument, the shelf procedures shall not be used for a distribution of rights under a rights offering.(42)
3.1 Unallocated Shelf Permitted - A base shelf prospectus may pertain to more than one type of security for which the issuer is eligible to participate in the POP system.(43)
(1) An issuer or selling securityholder that intends to distribute a tranche of equity securities under a base shelf prospectus that is not specifically restricted to equity securities shall issue, promptly upon having discussions of the nature described in subsection (2), a news release that announces the intention to proceed with the distribution.
(2) The discussions referred to in subsection (1) are discussions of an issuer or a selling securityholder with one or more underwriters concerning the distribution of a tranche of equity securities under the base shelf prospectus of sufficient specificity that it is reasonable to expect that the distribution will proceed.(44)
(1) If a base shelf prospectus pertains to specified derivatives or asset-backed securities, the issuer or the selling securityholder, as the case may be, shall file before or concurrently with the base shelf prospectus an undertaking that it will not distribute under the base shelf prospectus specified derivatives or asset-backed securities, as the case may be, in the local jurisdiction(45) that, at the time of distribution, are novel without pre-clearing with the regulator(46) in accordance with subsection (2) the disclosure to be contained in a shelf prospectus supplement pertaining to the distribution of the novel specified derivatives or asset-backed securities.
(2) The undertaking referred to in subsection (1) shall state that the issuer or the selling securityholder, as the case may be, shall not distribute specified derivatives or asset-backed securities in the local jurisdiction that, at the time of distribution, are novel, unless
(a) the draft shelf prospectus supplement or, if more than one shelf prospectus supplement is to be used, the draft shelf prospectus supplements pertaining to the distribution of the novel specified derivatives or asset-backed securities have been delivered to the regulator in substantially final form; and
(i) the regulator has confirmed his or her acceptance of each draft shelf prospectus supplement in substantially final form or each shelf prospectus supplement in final form, or
(ii) 21 days have elapsed since the date of delivery of each draft shelf prospectus supplement in substantially final form to the regulator and the regulator has not provided written comments on the draft shelf prospectus supplement.(47)
5.1 Opting out of the Shelf Procedures After a Preliminary Prospectus has been Receipted - If a receipt for a preliminary base shelf prospectus for a distribution of securities has been issued and the issuer or the selling securityholder no longer wishes to use the shelf procedures for the distribution, the issuer shall file
(i) an amended preliminary short form prospectus in accordance with National Instrument 44-101 that is not a preliminary base shelf prospectus, or
(ii) a new preliminary short form prospectus that is not a preliminary base shelf prospectus; and
(b) a covering letter stating that the issuer or the selling securityholder, as the case may be, has decided not to use the shelf procedures for the distribution.(48)
5.2 Opting into the Shelf Procedures After a Preliminary Prospectus has been Receipted - If a receipt for a preliminary short form prospectus that is not a preliminary base shelf prospectus for a distribution of securities has been issued and the issuer or selling securityholder wishes to use the shelf procedures for the distribution, the issuer shall file
(i) an amended preliminary base shelf prospectus in accordance with this Instrument, or
(ii) a new preliminary short form prospectus that is a preliminary base shelf prospectus in accordance with this Instrument; and
(b) a covering letter stating that the issuer or the selling securityholder, as the case may be, has decided to use the shelf procedures for the distribution.(49)
5.3 Form of Base Shelf Prospectus - A base shelf prospectus may vary from the required form of short form prospectus under National Instrument 44-101 to the extent provided for in this Instrument.(50)
5.4 Dollar Value of Securities - A base shelf prospectus shall pertain to no more than the dollar value of securities that the person or company proposing to distribute securities under the base shelf prospectus reasonably expects, at the time the base shelf prospectus is filed, to distribute within 24 months after the date of the receipt for the base shelf prospectus.(51)
5.5 Required Disclosure - A base shelf prospectus shall contain the following:
1. A statement at the top of the cover page identifying the short form prospectus as a base shelf prospectus.(52)
2. The following statement in red ink in italics on the cover page:
"This short form prospectus has been filed under procedures in [insert names of the jurisdictions where qualified] that permit certain information about these securities to be determined after this prospectus has become final and that permit the omission from this prospectus of the information. The procedures require the delivery to purchasers of a prospectus supplement containing this omitted information within a specified period of time after agreeing to purchase any of these securities."(53)
3. A statement that all shelf information omitted from the base shelf prospectus will be contained in one or more shelf prospectus supplements that will be delivered to purchasers together with the base shelf prospectus.(54)
4. A statement that each shelf prospectus supplement will be incorporated by reference into the base shelf prospectus as of the date of the shelf prospectus supplement and only for the purposes of the distribution of the securities to which the shelf prospectus supplement pertains.(55)
5. A statement of the aggregate dollar amount of securities that may be raised under the base shelf prospectus.(56)
6. Disclosure of the types of securities that may be distributed under the base shelf prospectus.(57)
7. If an undertaking is required to be filed under subsection 4.1(1), a statement that the issuer or the selling securityholder, as the case may be, has filed an undertaking that it will not distribute specified derivatives or asset-backed securities, as the case may be, that, at the time of distribution, are novel without pre-clearing with the regulator the disclosure to be contained in the shelf prospectus supplement pertaining to the distribution of the novel specified derivatives or asset-backed securities.(58)
8. The prospectus certificates prescribed by method 1, if
(a) the base shelf prospectus is being used to establish an MTN program or other continuous distribution; or
(b) method 2 has not been elected.(59)
5.6 Disclosure that may be Omitted - A base shelf prospectus may omit the following:
1. The variable terms of the securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.(60)
2. The dollar amount, size and other specific terms of each tranche of securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.(61)
3. The variable terms of the plans of distribution for the securities that may be distributed under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.(62)
4. The name and prospectus certificate of an underwriter if, at the time of the filing of the base shelf prospectus, no underwriter is, and it is not known that a particular underwriter will be, in a contractual relationship with the issuer or selling securityholder for any of the securities to be distributed under the base shelf prospectus.(63)
5. If one or more underwriters have agreed to purchase the securities to be distributed under the base shelf prospectus at a specified price,(64) the statement required by securities legislation that the securities are to be taken up by the underwriters, if at all, on or before a specified date.(65)
6. If the securities to be distributed under the base shelf prospectus are underwritten on a best efforts basis for which a minimum amount of funds are required by an issuer, the disclosure required by securities legislation concerning the maximum length of time for which the distribution may continue and concerning the disposition of subscription funds.(66)
7. Other information that pertains only to a specific distribution of securities under the base shelf prospectus, if not known on the date the base shelf prospectus is filed.(67)
8. Other information required under National Instrument 44-101 or other securities legislation that is not known and cannot be ascertained at the time of filing of the base shelf prospectus.(68)
5.7 Issue of Receipt - Despite the omission of shelf information, the regulator may issue a receipt for a base shelf prospectus.(69)
(1) If a material change occurs at a time when no securities are being distributed under a base shelf prospectus, the provisions of securities legislation that require the filing of an amendment to a prospectus if a material change occurs may be satisfied, despite subsection 2.1(4) of National Instrument 44-101, by
(a) the filing of a material change report; and
(b) the incorporation by reference in the base shelf prospectus of the material change report.(70)
(2) If a material change occurs at the time when securities are being distributed under a base shelf prospectus, the provisions of securities legislation that require the filing of an amendment to a prospectus if a material change occurs may be satisfied by filing a material change report that
(a) states that the base shelf prospectus is amended and supplemented by the contents of the material change report; and
(b) contains the certificates required to be contained in an amendment.(71)
6.1 Requirement to Use Shelf Prospectus Supplements - An issuer or selling securityholder proposing to distribute securities under a base shelf prospectus shall use a shelf prospectus supplement, and may use more than one shelf prospectus supplement, to supplement the disclosure in the base shelf prospectus pertaining to the distribution in order to comply with the requirement in securities legislation that a prospectus contain full, true and plain disclosure of all material facts relating to the securities offered under the prospectus.(72)
6.2 Incorporation by Reference - A shelf prospectus supplement is incorporated by reference, as of the date of the shelf prospectus supplement, in the corresponding base shelf prospectus only for purposes of the distribution to which the shelf prospectus supplement pertains.(73)
(1) A shelf prospectus supplement shall contain the following:
1. The name of the issuer on the cover page.(74)
2. The dates of the corresponding base shelf prospectus and of each previously filed shelf prospectus supplement corresponding to the same base shelf prospectus and pertaining to the same distribution, on the cover page.(75)
3. The prospectus certificates prescribed by
(a) method 1, if the shelf prospectus supplement establishes an MTN program or other continuous distribution; or
(b) method 2, if the prospectus certificates prescribed by method 1 have not been included in the corresponding base shelf prospectus and if method 1 is not mandatory under paragraph (a).(76)
4. A list of each document that is incorporated by reference into the corresponding base shelf prospectus as of the date of the shelf prospectus supplement and provides disclosure pertaining to the securities being distributed under the shelf prospectus supplement.(77)
(2) If only one shelf prospectus supplement is used to supplement the disclosure in the corresponding base shelf prospectus pertaining to a distribution of securities, that shelf prospectus supplement shall contain the following, and if more than one shelf prospectus supplement is used to supplement the disclosure in the corresponding base shelf prospectus pertaining to a distribution of securities, the shelf prospectus supplements used shall, together, contain the following:
1. All of the shelf information pertaining to the distribution of securities that was omitted from the corresponding base shelf prospectus.
2. All material facts relating to the securities to be distributed and all other information required by securities legislation to be disclosed in a short form prospectus that is not disclosed, either directly or through incorporation by reference, in the corresponding base shelf prospectus.(78)
6.4 Time For Filing Shelf Prospectus Supplements - A shelf prospectus supplement shall be filed in each jurisdiction in which the corresponding base shelf prospectus was filed
(a) if the shelf prospectus supplement pertains to a distribution of securities, other than an MTN program or other continuous distribution, on the earlier of
(i) the date two days after the date the shelf prospectus supplement was first used, and
(ii) the date the offering price of the securities to which it pertains is determined;(79) and
(b) otherwise within two days after the date the shelf prospectus supplement was first used.(80)
6.5 Underwriters' Conflicts of Interest - For a distribution of securities under a base shelf prospectus, the provisions of securities legislation that regulate conflicts of interest in connection with a distribution of securities of a registrant, a connected issuer of a registrant or a related issuer of a registrant
(a) concerning the participation of independent underwriters shall be satisfied
(i) on a tranche-by-tranche basis for a distribution other than an MTN program or other continuous distribution, or
(ii) on the basis of the total dollar amount of securities that are being distributed under the program or distribution for a distribution of securities under an MTN program or other continuous distribution; and
(b) concerning disclosure, to the extent not previously satisfied in the base shelf prospectus, shall be satisfied by including the prescribed disclosure in a shelf prospectus supplement pertaining to the distribution.(81)
6.6 Market Stabilization - The stabilization provisions shall be satisfied on a tranche-by-tranche basis for a non-continuous distribution of securities under a base shelf prospectus.(82)
6.7 Delivery Requirement - The shelf prospectus supplement or the shelf prospectus supplements that, together with the corresponding base shelf prospectus, contain full, true and plain disclosure of all material facts relating to the securities being distributed shall be sent by prepaid mail or delivered to a purchaser of the securities concurrently with the base shelf prospectus.(83)
7.1 General - To the extent varied in this Part, the provisions of National Instrument 44-101 requiring the filing of documents with a preliminary short form prospectus, a short form prospectus and a prospectus amendment under the POP system do not apply to filings under the shelf procedures.(84)
7.2 Consents - A consent required to be filed by securities legislation of an expert named in a document that is incorporated by reference into a base shelf prospectus but filed after the base shelf prospectus shall be filed in accordance with the following:
1. If the document is incorporated by reference into the base shelf prospectus by the terms of the base shelf prospectus, the consent shall be filed
(a) no later than the time the document is filed, if the base shelf prospectus establishes an MTN program or other continuous distribution; and
(b) otherwise, no later than the time of the next filing of a shelf prospectus supplement corresponding to the base shelf prospectus.
2. If the document is incorporated by reference into the base shelf prospectus by the terms of a shelf prospectus supplement and the document is filed before or concurrently with the shelf prospectus supplement, the consent shall be filed no later than the time the shelf prospectus supplement is filed.
3. If the document is incorporated by reference into the base shelf prospectus by the terms of a shelf prospectus supplement and the document in which the expert is named is filed after the shelf prospectus supplement is filed, the consent shall be filed no later than the time the document is filed.(85)
7.3 Auditor's Comfort Letters - An auditor's comfort letter for unaudited financial statements incorporated by reference into a base shelf prospectus but filed after the date of filing of the base shelf prospectus shall be filed in accordance with the following:
1. Concurrently with the unaudited financial statements, if the base shelf prospectus establishes an MTN program or other continuous distribution.
2. Otherwise, no later than the time of the next filing of a shelf prospectus supplement corresponding to the base shelf prospectus.(86)
(1) If, at the time of the filing of a base shelf prospectus of an issuer, no underwriter is in a contractual relationship with the issuer or selling securityholder for the securities to be distributed under the base shelf prospectus, the issuer is not required to file a signed copy of an underwriting agreement with the base shelf prospectus.(87)
(2) If an underwriter enters into a contractual relationship with an issuer or selling securityholder for a distribution of securities under a base shelf prospectus after the base shelf prospectus is filed, the issuer shall file a signed copy of the underwriting agreement pertaining to the distribution concurrently with the next shelf prospectus supplement filed pertaining to that distribution.(88)
8.1 General - Securities for which an issuer may file a base shelf prospectus under Part 2 may be distributed under an MTN program or other continuous distribution by using
(a) either a base shelf prospectus or a shelf prospectus supplement to establish the program or distribution;(89) and
(b) a pricing supplement.(90)
(1) Despite section 5.5, a base shelf prospectus or shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain the following:
1. A description of the method of distribution, including the name of any underwriter involved in the distribution and the amount of any underwriting fee, discount or commission.(91)
2. A description of the intended parameters of the terms of the MTN program or other continuous distribution.(92)
3. At the option of the issuer or selling securityholder proposing to distribute securities under the MTN program or other continuous distribution, a statement that the issuer or selling securityholder, as the case may be, reserves the ability to issue securities under the MTN program or other continuous distribution on terms outside the intended parameters disclosed under paragraph 2.(93)
(2) A pricing supplement used for an MTN program or other continuous distribution under the shelf procedures shall contain the following:
1. The terms of the securities distributed that are not disclosed in the base shelf prospectus or shelf prospectus supplement establishing the MTN program or other continuous distribution.(94)
2. A list of each document that is incorporated by reference into the corresponding base shelf prospectus as of the date of the pricing supplement and provides disclosure pertaining to the securities being distributed under the MTN program or other continuous distribution.(95)
8.3 Filing Requirement - If an issuer has distributed securities in the local jurisdiction under a pricing supplement using the shelf procedures in a particular month, the issuer shall, despite section 6.4, file within seven days after the end of the month
(a) a copy of each pricing supplement used for the first time in the month for the distribution of securities;(96) or
(b) a summary of the information contained in each pricing supplement used in the month, including
(i) a list of the pricing supplements used for the first time in the month,
(ii) the terms of the securities distributed under each pricing supplement used during the month, and
(iii) the aggregate amount of securities distributed under each pricing supplement used during the month.(97)
(1) An issuer distributing securities under an MTN program or other continuous distribution under a base shelf prospectus shall
(a) calculate updated earnings coverage ratios for the ratios contained in its base shelf prospectus each time the issuer prepares interim or audited annual financial statements, using the 12 month period ended on the last day of the most recently completed financial period; and
(b) file the updated earnings coverage ratios, concurrently with the filing of its financial statements, either
(i) as an exhibit to the financial statements, or
(ii) as a shelf prospectus supplement corresponding to the base shelf prospectus.(98)
(2) The updated earnings coverage ratios filed under subsection (1) need not be audited.(99)
9.1 Restriction on Non-fixed Price Offerings Under Shelf - A security shall only be distributed at a non-fixed price using the shelf procedures if that security may be distributed at a non-fixed price under National Instrument 44-101.(100)
(1) Despite section 9.1 and the provisions of National Instrument 44-101, the shelf procedures may be used for an at-the-market distribution of equity securities if the market value of equity securities distributed in the at-the-market distribution does not exceed 10 percent of the aggregate market value of the issuer's outstanding equity securities of the same class as the class of securities distributed, calculated in accordance with section 2.9 of National Instrument 44-101 as at the last trading day of the month before the month in which the first trade under the at-the-market distribution is made.(101)
(2) No underwriter or dealer involved in an at-the-market distribution, or any affiliate of such an underwriter or dealer, or any person or company acting jointly or in concert with such an underwriter or dealer, shall, in connection with the distribution, over-allot the securities or effect any other transactions that are intended to stabilize or maintain the market price of the securities.(102)
(3) A base shelf prospectus or shelf prospectus supplement pertaining to an at-the-market distribution shall disclose that no underwriter or dealer involved in the distribution, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer has over-allotted, or will over-allot, securities in connection with the distribution or effect any other transactions that are intended to stabilize or maintain the market price of the securities.(103)
PART 10 TRANSITIONAL SHELF PROCEDURES(104)
(1) A receipt issued for a shelf prospectus filed under NP44 is considered to be a receipt issued for a base shelf prospectus under this Instrument.
(2) An issuer that has filed a preliminary shelf prospectus under NP44 is considered to have filed a preliminary base shelf prospectus under this Instrument.
(3) A receipt issued for a shelf prospectus filed under NP44 after National Instrument 44-101 came into force shall expire
(a) if the issuer relied on section 2.2 or 2.8 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.2 of this Instrument;
(b) if the issuer relied on section 2.3 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.3 of this Instrument;
(c) if the issuer relied on section 2.4 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.4 of this Instrument;
(d) if the issuer relied on section 2.5 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.5 of this Instrument;
(e) if the issuer relied on section 2.6 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.6 of this Instrument; and
(f) if the issuer relied on section 2.7 of National Instrument 44-101 in order to be eligible to participate in the POP system and file the shelf prospectus, at the time specified in section 2.7 of this Instrument.
(4) A receipt issued for a shelf prospectus filed under NP44 before National Instrument 44-101 came into force shall expire
(a) if the issuer relied on section 4.1 or 4.4 of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.2 of this Instrument;
(b) if the issuer relied on section 4.2 of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.3 of this Instrument;
(c) if the issuer relied on paragraph 4.3(1)(a) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.4 of this Instrument;
(d) if the issuer relied on paragraph 4.3(1)(b) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.5 of this Instrument; and
(e) if the issuer relied on subsection 4.3(2) of National Policy Statement No. 47 to be eligible to file the shelf prospectus, at the time specified in section 2.6 of this Instrument.
PART 11 EXEMPTIONS(105)
(1) The regulator or the securities regulatory authority(106) may grant an exemption to this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.
(4) An application made to the securities regulatory authority or regulator for an exemption from this Instrument shall include a letter or memorandum describing the matters relating to the exemption, and indicating why consideration should be given to the granting of the exemption.
11.2 Evidence of Exemption(107)
(1) Except in respect of an application for an exemption from the provisions of Part 2 of this Instrument, subject to subsection (2) and without limiting the manner in which an exemption under this Part may be evidenced,
(a) if a jurisdiction, other than the local jurisdiction, has been assigned to act as designated jurisdiction in the review of a base shelf prospectus under the expedited review system(108), the issuance of a final expedited review receipt document for a prospectus or an amendment to a prospectus by the designated jurisdiction is evidence of the granting of the exemption in the local jurisdiction if the final expedited review receipt document confirms the issuance of a final receipt for the prospectus or the amendment to the prospectus in the local jurisdiction;
(b) if a jurisdiction, other than the local jurisdiction, has agreed to act as principal jurisdiction in the review of a base shelf prospectus, the issuance of a National Instrument 44-101 Receipt for the prospectus or an amendment to the prospectus is evidence of the granting of the exemption in the local jurisdiction if the National Instrument 44-101 Receipt evidences the issuance of a final receipt for the prospectus or the amendment to the prospectus in the local jurisdiction; and
(c) the issuance of a receipt for a base shelf prospectus or an amendment to a base shelf prospectus by the regulator is evidence of the granting of the exemption by the regulator.
(2) An exemption under this Part may be evidenced in the manner set out in subsection (1) only if
(a) the person or company that sought the exemption
(i) sent to the regulator the letter or memorandum referred to in subsection 11.1(4) on or before the date of filing of the preliminary prospectus, or
(ii) sent to the regulator the letter or memorandum referred to in subsection 11.1(4) after the date of filing of the preliminary prospectus and received a written acknowledgement from the regulator that the exemption may be evidenced in the manner set out in subsection (1); and
(b) the regulator has not sent notice to the contrary to the person or company that sought the exemption before, or concurrent with, the issuance of the receipt.
APPENDIX A(109)
METHOD 1 FOR SHELF PROSPECTUS CERTIFICATES
METHOD 1: FORWARD LOOKING CERTIFICATES TO BE INCLUDED IN BASE SHELF PROSPECTUSES OR SUPPLEMENTS ESTABLISHING AN MTN PROGRAM OR OTHER CONTINUOUS DISTRIBUTION
PART 1 Base Shelf Prospectuses
1.1 Certificate of Issuer and Promoter - If a base shelf prospectus establishes an MTN program or other continuous distribution, or if method 2 has not been elected by an issuer, the preliminary base shelf prospectus and the base shelf prospectus shall contain a certificate in the following form signed by
(b) on behalf of the board of directors of the issuer, any two directors of the issuer, other than the chief executive officer or chief financial officer, duly authorized to sign; and
"This short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of each supplement to this prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."
1.2 Underwriters' Certificates - A preliminary base shelf prospectus and a base shelf prospectus shall contain an underwriter's certificate in the following form signed by each underwriter who, at the time of filing, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus, if
(a) the base shelf prospectus establishes an MTN program or other continuous distribution; or
"To the best of our knowledge, information and belief, this short form prospectus, together with the documents incorporated in this prospectus by reference will, as of the date of each supplement to this prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under this prospectus and the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".
1.3 Credit Supporter's Certificate - A preliminary base shelf prospectus and a base shelf prospectus shall contain a certificate in the form described in section 1.1 signed by a credit supporter of the securities to be distributed under the base shelf prospectus, if
(a) National Instrument 44-101 requires a prospectus certificate of the credit supporter; and
(i) the base shelf prospectus establishes an MTN program or other continuous distribution, or
(ii) method 2 has not been elected by the credit supporter.
(1) An amendment to a base shelf prospectus or an amended and restated base shelf prospectus shall, subject to subsection (2), contain
(a) the certificates required under section 1.1 to be included in a base shelf prospectus, if the base shelf prospectus contains an issuer's certificate in the form described in section 1.1;
(b) the certificates required under section 1.2 to be included in a base shelf prospectus, if the base shelf prospectus contains an underwriter's certificate in the form described in section 1.2; and
(c) the certificate required under section 1.3 to be included in a base shelf prospectus, if the base shelf prospectus contains a credit supporter's certificate in the form described in section 1.3.
(2) In each certificate required under subsection (1), the reference to "this short form prospectus" shall be omitted and replaced by
(a) in the case of an amendment to a base shelf prospectus, "the short form prospectus dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated base shelf prospectus, "this amended and restated short form prospectus".
PART 2 Shelf Prospectus Supplements establishing an MTN Program
2.1 Certificate of Issuer and Promoter - If an issuer's certificate in the form described in section 1.1 was not included in the corresponding base shelf prospectus, a shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the following form signed by
"The short form prospectus dated together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of each supplement to the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and by the supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".
2.2 Underwriters' Certificates - A shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the following form signed by each underwriter who
(a) is in a contractual relationship with the issuer for the securities being distributed under the shelf prospectus supplement; and
(b) did not sign and include in the corresponding base shelf prospectus a certificate in the form described in section 1.2:
"To the best of our knowledge, information and belief, the short form prospectus together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of each supplement to the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and by the supplement as required by [insert name of jurisdiction in which qualified] [insert if distribution made in Quebec---"and will not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."
2.3 Credit Supporter's Certificate - A shelf prospectus supplement that establishes an MTN program or other continuous distribution shall contain a certificate in the form described in section 2.1 signed by a credit supporter of the securities being distributed under the shelf prospectus supplement, if
(b) a prospectus certificate of the credit supporter in the form described in section 1.3 was not included in the corresponding base shelf prospectus.
(1) An amendment to a shelf prospectus supplement or an amended and restated shelf prospectus supplement that establishes an MTN program or other continuous distribution shall, subject to subsection (2), contain
(a) the certificates required under section 2.1 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains an issuer's certificate in the form described in section 2.1;
(b) the certificates required under section 2.2 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains an underwriter's certificate in the form described in section 2.2; and
(c) the certificate required under section 2.3 to be included in a shelf prospectus supplement, if the shelf prospectus supplement contains a credit supporter's certificate in the form described in section 2.3.
(2) In each certificate required under subsection (1), the reference to "this shelf prospectus supplement" shall be omitted and replaced by
(a) in the case of an amendment to a shelf prospectus supplement, "the shelf prospectus supplement dated [insert date] as amended by this amendment"; and
(b) in the case of an amended and restated shelf prospectus supplement, "this amended and restated shelf prospectus supplement".
APPENDIX B(110) METHOD 2 FOR SHELF PROSPECTUS CERTIFICATES
METHOD 2: NON-FORWARD LOOKING PROSPECTUS CERTIFICATES TO BE INCLUDED IN BOTH BASE SHELF PROSPECTUSES AND SUPPLEMENTS
PART 1 Base Shelf Prospectus
1.1 Certificate of Issuer and Promoter - If method 2 is elected by an issuer, a preliminary base shelf prospectus and a base shelf prospectus shall contain a certificate in the following form signed by
"This short form prospectus, together with the documents incorporated in this prospectus by reference, constitutes full, true and plain disclosure of all material facts relating to the securities as required by the securities laws of [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."
1.2 Underwriters' Certificates - A preliminary base shelf prospectus and a base shelf prospectus shall contain an underwriter's certificate in the following form signed by each underwriter who
(a) at the time of filing, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus; and
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, constitutes full, true and plain disclosure of all material facts relating to the securities as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"]."
1.3 Credit Supporter's Certificate - A base shelf prospectus shall contain a certificate in the form described in section 1.1 signed by a credit supporter of the securities to be distributed under the base shelf prospectus, if
(b) method 2 is elected by the credit supporter.
(a) the certificates required under section 1.1 to be included in a base shelf prospectus, if the issuer has elected method 2;
(i) at the time of filing the amendment or the amended and restated base shelf prospectus, is, or it is known will be, in a contractual relationship with the issuer for the securities to be distributed under the base shelf prospectus, and
PART 2 Shelf Prospectus Supplement
2.1 Certificate of Issuer and Promoter - If method 2 is elected by an issuer, each shelf prospectus supplement shall contain a certificate in the following form signed by
"The short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and this supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".
2.2 Underwriters' Certificates - Each shelf prospectus supplement shall contain a certificate in the following form signed by each underwriter who
(a) is in a contractual relationship with the issuer for the securities being distributed under the supplement; and
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered under the prospectus and this supplement as required by [insert name of each jurisdiction in which qualified] [insert if distribution made in Quebec---"and does not contain any misrepresentation likely to affect the value or the market price of the securities to be distributed"].".
2.3 Credit Supporter's Certificate - Each shelf prospectus supplement shall contain a certificate in the form described in section 2.1 signed by a credit supporter of the securities being distributed under the shelf prospectus supplement, if
(1) An amendment to a shelf prospectus supplement or an amended and restated shelf prospectus supplement shall, subject to subsection (2), contain
(i) at the time of filing the amendment or the amended and restated shelf prospectus supplement, is in a contractual relationship with the issuer for the securities being distributed under the shelf prospectus supplement, and
(b) in the case of an amended and restated shelf prospectus supplement, "this amended and restated shelf prospectus supplement". COMPANION POLICY 44-102CP TO NATIONAL INSTRUMENT 44-102 SHELF DISTRIBUTIONS
PART 1 IMPLEMENTATION OF THE INSTRUMENT
1.1 Relationship of the Instrument to Canadian Securities Legislation
1.2 Shelf Distributions in Quebec
2.2 Draft Supplements
PART 3 SHELF PROCEDURES
3.1 Shelf Eligibility
3.2 Period of Receipt Effectiveness
3.3 Unallocated Shelf
3.4 Distributions of Derivatives and Asset-Backed Securities using the Shelf Procedures
3.5 Information that may be Omitted from a Base Shelf Prospectus
3.6 Shelf Prospectus Supplements
3.7 Firm Commitment Distributions
3.8 Best Efforts Distributions
3.9 Delivery Obligations
PART 4 SHELF PROSPECTUS AMENDMENTS
4.1 Shelf Prospectus Amendments
PART 5 PROSPECTUS CERTIFICATES
5.1 Prospectus Certificates
PART 1 IMPLEMENTATION OF THE INSTRUMENT(111)
(1) Issuers are reminded that the rules and procedures contained in the Instrument for distributions made under the shelf procedures should be read in conjunction with other provisions of Canadian securities legislation in each jurisdiction in which an distribution is being made.
(2) A distribution using the shelf procedures is a POP system distribution, and is subject to all the requirements of National Instrument 44-101 and other provisions of securities legislation, as supplemented or varied by the Instrument and the implementing law of the jurisdiction. Reference is made to Part 1 of the Companion Policy to National Instrument 44-101 for a discussion of the relationship between National Instrument 44-101 and various other pieces of Canadian securities legislation.
1.2 Shelf Distributions in Quebec - The Commission des valeurs mobilières du Québec agrees with the purpose and intent of the Instrument and this Policy, but has not adopted the Instrument or this Policy, as its securities legislation currently provides for shelf distributions of securities for which the issuer is eligible to participate in the POP system under National Instrument 44-101 Prompt Offering Qualification System. Issuers are reminded to refer specifically to the Quebec securities legislation when considering a distribution of securities in the Province of Quebec and concurrently in other jurisdictions under the Instrument.
(1) The Canadian securities regulatory authorities are of the view that an issuer's prospectus certificate contained in an amendment to a base shelf prospectus filed under the shelf procedures supersedes and replaces the issuer's certificate contained in the base shelf prospectus. Accordingly, an officer who signed the later dated certificate and the directors at the time the amendment was filed would be subject to statutory civil liability to purchasers of securities under the amended base shelf prospectus.(112)
(2) The Canadian securities regulatory authorities are of the view that an issuer's prospectus certificate contained in a shelf prospectus supplement filed under the shelf procedures supersedes and replaces the issuer's certificate contained in the base shelf prospectus for purposes of the distribution of securities under the shelf prospectus supplement. Accordingly, an officer who signed the later dated certificate and the directors at the time the supplement was filed would be subject to statutory civil liability to purchasers of securities under the shelf prospectus supplement.(113)
2.2 Draft Supplements - A preliminary form of shelf prospectus supplement describing a tranche of securities may be used in marketing the securities before the public offering price is determined. Issuers are reminded that the ability to use a preliminary form of shelf prospectus supplement in this manner for a distribution of equity securities under an unallocated base shelf prospectus is subject to the requirement contained in section 3.2 of the Instrument to issue a news release once the issuer or the selling securityholder has had discussions with underwriters of sufficient specificity that it is reasonable to expect that distribution will proceed.(114)
(1) The principle guiding the eligibility provisions of the Instrument is that any distribution under the POP system, other than rights offerings, may be effected using the shelf procedures.
(2) A distribution using the shelf procedures is necessarily a distribution under the POP system. Therefore, issuers must be eligible to participate in the POP system under National Instrument 44-101 Prompt Offering Qualification as well as satisfying the additional eligibility criteria under Part 2 of the Instrument.(115)
(1) The Instrument provides that a receipt for a base shelf prospectus is effective until the earliest of the three events: (i) the second anniversary date of the issuance of a receipt for the base shelf prospectus, (ii) immediately before selling the securities, if certain prescribed conditions relating to the issuer's eligibility to use the POP system are not satisfied, and (iii) the lapse date of the receipt, if any, prescribed by securities legislation, if no relief has been granted to the issuer through a blanket ruling or upon application by the issuer. This receipt expiry mechanism is designed to impose a limit of two years on shelf distributions under the same base shelf prospectus and to prevent distributions of securities under a base shelf prospectus if the issuer would no longer be eligible to participate in the POP system.
(2) The Canadian securities legislation in some jurisdictions provides that a prospectus receipt does not continue to be effective for more than one year absent relief granted by the Canadian securities regulatory authority in that jurisdiction. Some of these jurisdictions have provided blanket relief for receipts issued for base shelf prospectuses. At the time of the coming into force of this Policy, the following jurisdictions have a lapse date provision in their securities legislation and have not provided blanket relief for shelf distributions: Ontario, New Brunswick and Nova Scotia.
(3) In the jurisdictions specifically mentioned in subsection (2), issuers must apply for and obtain relief from securities legislation in order for a receipt for a base shelf prospectus to be effective for more than one year. An application for relief may consist of a covering letter accompanying the filing of the preliminary base shelf prospectus or the base shelf prospectus containing the following statement:
"The [issuer] hereby applies for an extension of the lapse date of this base shelf prospectus to 24 months."
Where application for relief is made, the issuance of a receipt for the base shelf prospectus is evidence of the granting of the relief. (See section 11.2 of the Instrument.)(116)
3.3 Unallocated Shelf - Section 3.1 of the Instrument provides that a base shelf prospectus may pertain to different types of securities. This allows a base shelf prospectus to be used to distribute any combination of debt securities, preferred shares, derivatives, asset-backed securities and equity securities, for which the issuer is eligible to participate in the POP system.(117)
(1) The Canadian securities regulatory authorities recognize the utility of the shelf procedures for distributions of derivatives and asset-backed securities in order to permit tranches of these products to be priced and distributed expeditiously to take advantage of market opportunities, without the need for regulatory approval.
(2) However, the Canadian securities regulatory authorities are also aware of the complexities that may be associated with distributions of specified derivatives and asset-backed securities. Particularly in the area of distributions of novel specified derivatives and asset-backed securities, the Canadian securities regulatory authorities wish to encourage adequate prospectus disclosure, either in the base shelf prospectus or the shelf prospectus supplement, of the attributes of and the risks associated with these products. The Canadian securities regulatory authorities have attempted to balance these objectives in formulating the Instrument.
(3) The requirements relating to the clearance of issues of derivatives or asset-backed securities make a distinction between "novel" and "non-novel" products. If a base shelf prospectus pertains to specified derivatives or asset-backed securities, the issuer or selling securityholder, as the case may be, must file an undertaking under section 4.1 with its base shelf prospectus. The undertaking must state that the issuer or the selling securityholder, as the case may be, will not distribute under the base shelf prospectus specified derivatives or asset-backed securities that at the time of distribution are novel without pre-clearing the disclosure in shelf prospectus supplements with the regulator.
(4) The Canadian securities regulatory authorities are of the view that the definition of the term "novel" should be read relatively restrictively. The term is intended to apply to a distribution of derivatives or asset-backed securities that is structured in a manner that differs materially from the manner in which any public distribution that has previously taken place in a jurisdiction was structured. A security would not be novel merely because a new underlying interest was used.
(5) If the product is not novel, then the shelf prospectus supplements concerning the product need not be reviewed by the Canadian securities regulatory authorities. The Canadian securities regulatory authorities are of the view that the disclosure in shelf prospectus supplements in such circumstances should be no less comprehensive than the disclosure that has previously been reviewed by a Canadian securities regulatory authority in a jurisdiction.(118)
(1) Paragraph 1 of section 5.6 of the Instrument provides that a base shelf prospectus may omit the variable terms, if not known, of the securities that may be distributed under it. The types of variable information that may be omitted from the base shelf prospectus include
(a) the designation of the tranche;
(b) maturities;
(c) denominations;
(d) interest or dividend provisions;
(e) purchase, redemption and retraction provisions;
(f) conversion or exchange provisions;
(g) the terms for extension or early repayment;
(h) the currencies in which the securities are issued or payable;
(i) sinking fund provisions; and
(j) any special covenants or other terms applicable to the securities of the tranche.
(2) Paragraph 3 of section 5.6 of the Instrument provides that a base shelf prospectus may omit information, if not known, relating to the variable terms of the plans of distribution for the securities that may be distributed under the base shelf prospectus. These variable terms may include
(a) if the shelf prospectus sets forth alternative methods of distribution, the method that will be applicable to each tranche of securities distributed under the shelf prospectus; and
(b) for each tranche of securities distributed under the shelf prospectus, the specific terms not included in the description of the applicable method of distribution in the shelf prospectus, including, if applicable
(i) the names of any underwriters, and
(ii) the distribution spread and underwriting fees, discounts and commissions.
(3) Paragraph 7 of section 5.6 of the Instrument provides that a base shelf prospectus may omit other information, if not known, that pertains only to a specific distribution of securities under the base shelf prospectus. These terms may include
(a) the public offering price;
(b) delivery dates;
(c) legal opinions regarding the eligibility for investment of the securities and tax matters;
(d) statements regarding listing of the securities;
(e) actual amount of proceeds on the distribution; and
(f) information about the use of proceeds.(119)
(1) The ability to file a shelf prospectus supplement does not prevent the filing of a shelf prospectus amendment to supply some or all of the information that is permitted to be included in a prospectus supplement.(120)
(2) Under subsection 6.3(2) of the Instrument, the shelf prospectus supplements used in a distribution must contain all omitted shelf information as well as all information necessary for the base shelf prospectus to comply with the disclosure requirements for a short form prospectus. For example, if the securities being distributed using the shelf procedures are rated, that rating must be disclosed in a shelf prospectus supplement because National Instrument 44-101 requires all ratings, including provisional ratings, received from one or more approved rating organizations for the securities to be distributed and continuing in effect, to be disclosed in a short form prospectus.
(3) Section 6.7 of the Instrument provides that all shelf prospectus supplements pertaining to the securities being distributed under a base shelf prospectus shall be sent by prepaid mail or delivered to purchasers of the securities concurrently with the base shelf prospectus. A shelf prospectus supplement may take the form of a "sticker", a "wrap-around" or a one or more page supplement to a base shelf prospectus.(121)
3.7 Firm Commitment Distributions - Paragraph 5 of section 5.6 of the Instrument provides that a base shelf prospectus for securities to be distributed by one or more underwriters that have agreed to purchase the securities at a specified price may omit the statement that the securities are to be taken up by the underwriters, if at all, on or before a specified date. This paragraph provides an exemption from the requirement of securities legislation that this disclosure be contained in a prospectus. Issuers are reminded that paragraph 1 of subsection 6.3(2) of the Instrument requires all information that was omitted from the base shelf prospectus to be included in a shelf prospectus supplement. Therefore, it is necessary to include in a shelf prospectus supplement the disclosure required by securities legislation relating to specific distributions that are being effected on a firm commitment basis.(122)
3.8 Best Efforts Distributions - Paragraph 6 of section 5.6 of the Instrument similarly provides that a base shelf prospectus for a distribution of securities underwritten on a best efforts basis for which a minimum amount of funds are required by an issuer may omit disclosure required by securities legislation concerning the maximum length of time for which the distribution can continue and concerning the disposition of subscription funds. Issuers are reminded that paragraph 1 of subsection 6.3(2) of the Instrument requires all information that was omitted from the base shelf prospectus to be included in a shelf prospectus supplement. Therefore, it is necessary to include in a shelf prospectus supplement the disclosure required by securities legislation relating to specific distributions that are being effected on a best efforts basis.(123)
3.9 Delivery Obligations - The Canadian securities regulatory authorities are of the view that statutory rights of rescission or withdrawal commence from the time of the purchaser's receipt of all relevant shelf prospectus supplements. It is only at this time that the entire prospectus has been delivered.(124)
(1) Canadian securities legislation in a number of jurisdictions requires that an amendment to a prospectus be filed if a material change occurs after the receipt for the prospectus is obtained but before the completion of the distribution under that prospectus. These requirements apply to base shelf prospectuses.(125)
(2) Subsection 5.8(1) of the Instrument permits, in limited circumstances, the requirement in Canadian securities legislation to file an amendment to be satisfied by the incorporation by reference of material change reports filed after the base shelf prospectus has been receipted. The circumstances are limited to periods in which no securities are being distributed under the base shelf prospectus.(126)
(3) If securities are being distributed under the base shelf prospectus, subsection 2.1(4) of National Instrument 44-101 applies. It provides that the requirement in Canadian securities legislation to file an amendment are not satisfied by the incorporation by reference of material change reports filed after the short form prospectus has been receipted. Subsection 5.8(2) of the Instrument permits, during distributions under a base shelf prospectus, the requirement in Canadian securities legislation to file an amendment to be satisfied by filing a material change report that contains a prospectus certificate.(127)
(1) Appendix A and Appendix B of the Instrument provide for two alternate methods of executing prospectus certificates. Unless a particular method is prescribed, the choice of method may be changed between the date of filing of the preliminary base shelf prospectus and the date of filing of the base shelf prospectus. Furthermore, the method elected by an issuer, credit supporter and underwriter need not be the same. The method elected by an issuer applies to a promoter.
(2) Method 1 requires that a forward looking prospectus certificate be included in a base shelf prospectus. Doing so allows the use of shelf prospectus supplements that do not contain prospectus certificates. Method 2 requires prospectus certificates that speak only to the present to be included in both the base shelf prospectus and each shelf prospectus supplement.
(3) Method 1 is mandatory for a base shelf prospectus that establishes an MTN program. If an MTN program is established in a shelf prospectus supplement, method 1 is mandatory and prescribes that forward looking certificates be included, unless they were already included in the base shelf prospectus.(128)
1. This proposed National Instrument, together with Companion Policy 44-102CP (the "Policy") and any local implementing rules, reformulates the shelf provisions of National Policy Statement No. 44 ("NP44"). The Policy contains those parts of NP44 that are not operative or mandatory, but rather interpretative or explanatory. This Instrument is expected to be adopted as a rule in each of British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the Canadian Securities Administrators (the "CSA"), other than Quebec. The Commission des valeurs mobilières du Québec (the "CVMQ") agrees with the purpose and intent of this Instrument, but will not be adopting it at this time as its securities legislation provides for accessibility to a shelf prospectus procedure. Proposed amendments to the Securities Act (Quebec) (the "proposed amendments") will give the CVMQ the authority to make rules and, on the coming into force of the proposed amendments, the CVMQ will be conducting a review of its securities legislation to determine what changes are advisable in order to implement this Instrument. If the proposed amendments are not in force at the time of implementation of this Instrument, the CVMQ will consider all measures available, including a blanket order, in order to enable issuers to efficiently access the shelf prospectus system in Quebec. The proposed Policy is expected to be adopted as a policy in all jurisdictions represented by the CSA, other than Quebec, and implementing rules are expected to be adopted in those jurisdictions in which it is necessary to do so and may take the form of blanket rulings or orders in some jurisdictions. This Instrument avoids repetition of provisions contained in proposed National Instrument 44-101 Prompt Offering Qualification System ("NI44-101") which reformulates National Polic
2. A national definition instrument has been adopted as National Instrument 14-101 Definitions ("NI14-101"). It contains definitions of certain terms used in more than one national instrument. NI14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in that statute, unless the context otherwise requires. NI14-101 also provides that a provision or a reference within a provision of a national instrument that specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.
3. The term "securities legislation" is defined in NI14-101 as meaning the particular statute and legislative instruments of the local jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, the rules, forms, rulings and orders relating to securities in the local jurisdiction.
4. The term "equity security" is defined in NI44-101 as meaning "any security of an issuer that carries a residual right to participate in the earnings of the issuer and, upon the liquidation or winding up of the issuer, in its assets".
5. This definition is based on paragraph 2.1(d) of NP44; the references to stock exchange and market maker have been omitted.
6. This definition is new.
7. The term "clearing corporation" is defined in proposed National Instrument 81-102 Mutual Funds ("NI81-102") as meaning "an organization through which trades in options or standardized futures are cleared and settled".
8. This definition is based on section 1.1 of NI81-102.
9. This definition is based on section 1.1 of NI81-102.
10. This definition is based on section 1.1 of NI81-102.
11. This definition is based on paragraph 2.1(g) of NP44.
12. This definition is based on paragraph 2.1(h) of NP44.
13. This definition is based on paragraph 2.1(i) of NP44.
14. The term "jurisdiction" is defined in NI14-101 as meaning a province or territory of Canada except when used in the term foreign jurisdiction.
15. The term "underlying interest" is defined in NI44-101 as meaning, for a cash settled derivative, "the security, commodity, financial instrument, currency, interest rate, foreign exchange rate, economic indicator, index, basket, agreement or benchmark or any other financial reference, interest or variable, and, if applicable, the relationship between any of the foregoing, from, to or on which the market price, value or any payment obligation of the derivative is derived, referenced or based".
16. The term "asset-backed security" is defined in NI44-101 as meaning a "security that is primarily serviced by the cash flows of a discrete pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period, and any rights or other assets designed to assure the servicing or timely distribution of proceeds to securityholders".
17. This definition is new.
18. This definition is based on paragraph 2.1(q) of NP44. This definition has been modified to omit the reference contained in NP44 that pricing supplements "may" be used in MTN offerings, as this Instrument clarifies in section 8.1 that, regardless of whether an MTN program is established by a shelf prospectus or a shelf prospectus supplement, a pricing supplement is always used to disclose the specific terms of MTN securities sold.
19. This definition is based on paragraph 2.1(s) of NP44.
20. This definition is based on paragraph 2.1(t) of NP44; the reference to "a continuous or delayed basis" has been omitted.
21. This definition is new.
22. This definition is new.
23. This definition is based on section 1.1 of NI81-102.
24. This definition is new.
25. This subsection is new.
26. This section is new.
27. This section is based on paragraph 2.2(a) and subparagraph 3.1(a)(1) of NP44.
28. This subsection is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect sections 2.2 and 2.8 of NI44-101.
29. This subsection is based on subparagraph 3.1(a)(1) of NP44.
30. The term "current AIF" is defined in NI44-101 to mean "(a) for an issuer subsisting under the laws of a foreign jurisdiction that has filed an AIF in the form of a current annual report on Form 20-F under subsection 3.4(1), (i) during the period of 180 days following the issuer's most recently completed financial year (A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or (B) the AIF of the issuer for its financial year immediately preceding its most recently completed financial year, if that AIF has been accepted for filing under this Instrument and the issuer's AIF for its most recently completed financial year has not been accepted for filing under this Instrument, (ii) at any time after 180 days following the issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year if that AIF has been accepted for filing under this Instrument, or (iii) an AIF of the issuer filed before this Instrument came into force that would constitute a "current AIF" for the purposes of National Policy Statement No. 47 if that policy were in force, or (b) for all other issuers (i) during the period of 140 days following the issuer's most recently completed financial year, (A) the AIF of the issuer for its most recently completed financial year, if that AIF has been accepted for filing under this Instrument, or (B) the AIF of the issuer for its financial year immediately preceding its most recently completed financial year, if that AIF has been accepted for filing under this Instrument and the issuer's AIF for its most recently completed financial year has not been accepted for filing under this Instrument, (ii) at any time after 140 days following an issuer's most recently completed financial year, the AIF of the issuer for its most recently completed financial year if that AIF has been accepted for
31. This subsection is new and provides for three alternate events that can cause a receipt issued for a base shelf prospectus to expire. The third event, referred to in paragraph 2.2(3)(c), is the lapse date, if any, under securities legislation if no relief has been granted to the issuer other than through a blanket ruling or on application by the issuer. Sections 2.3 through 2.7 contain similar provisions.
32. This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.3 of NI44-101.
33. This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.4 of NI44-101.
34. The term "non-convertible" is defined in NI44-101, if used to describe debt securities or preferred shares, as meaning "securities that are not convertible". The term "convertible" is defined in NI44-101, if used to describe debt securities or preferred shares, as meaning "that the rights and attributes attaching to those securities include the right or option to purchase, convert into or exchange for or otherwise acquire equity securities of an issuer, or any other security that itself includes the right or option to purchase, convert into or exchange for or otherwise acquire equity securities of an issuer".
35. The term "approved rating" is defined in NI44-101 as meaning "a rating from an approved rating organization that falls within one of the following generic rating categories of the approved rating organization or a rating category that replaces a category" listed in that Instrument.
36. The term "approved rating organization" is defined in NI44-101 as meaning "each of CBRS Inc., Dominion Bond Rating Service Limited, Moody's Investors Service, Inc. and Standard & Poor's Corporation and any of their successors".
37. This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.5 of NI44-101.
38. The term "credit supporter" is defined in NI44-101 as meaning "an issuer that provides a guarantee or alternative credit support under paragraph 2.5(1)1 or paragraph 1 of section 2.6" of that instrument.
39. This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.6 of NI44-101.
40. This section is based on subparagraph 3.1(a)(1) of NP44 and has been modified to reflect section 2.7 of NI44-101.
41. This section is new and reflects section 2.7 of NI44-101.
42. This section is based on paragraph 3.2(b) of NP44. The restriction in paragraph 3.2(c) of NP44 on using the shelf procedures for distributions of derivatives has been omitted.
43. This section is new and replaces paragraph 3.2(a) of NP44. In a departure from NP44, the CSA are proposing to permit the use of an unallocated shelf prospectus. NP44 prohibits unallocated shelf prospectuses by requiring shelf prospectuses to pertain to only one basic type of security (i.e. debt, preferred shares or common shares).
44. This section is new.
45. The term "local jurisdiction" is defined in NI14-101. The definition is "in a national instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory authority is situate".
46. The term "regulator" is defined in NI14-101 as meaning, in a local jurisdiction, the person set out in an appendix to that instrument opposite the name of the local jurisdiction.
47. This section is new.
48. This section is based on paragraph 2.2(b) of NP44 and has been modified to clarify that an issuer has a choice of filing either an amendment or a new preliminary short form prospectus.
49. This section is new and has been added to clarify how an issuer may opt into the shelf procedures.
50. This section is based on paragraph 2.3(a) of NP44 and has been modified to expressly permit changes from the required form of short form prospectus.
51. This section is based on paragraph 3.2(d) of NP44. The timing has been changed from the date of filing of the base shelf prospectus to the date of receipt for the base prospectus.
52. This paragraph is new.
53. This paragraph is based on paragraph 2.3(b) of NP44.
54. This paragraph is based on paragraph 3.3(d) of NP44.
55. This paragraph is based on paragraph 3.4(c) of NP44.
56. This paragraph is based on the first sentence of paragraph 3.3(a) of NP44; the reference to "all other non-variable information" has been omitted. It has been modified to refer to the "aggregate dollar amount of securities".
57. This paragraph is new and reflects the introduction of the unallocated shelf.
58. This paragraph is new and reflects the introduction of shelf distributions of specified derivatives and asset-backed securities in that the securities regulatory authorities want to be able to review the disclosure in supplements for "novel" products.
59. This paragraph is based on section 3.9 of NP44.
60. This paragraph is based on subparagraph 3.3(c)(1) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(1) of the proposed Policy.
61. This paragraph is based on subparagraph 3.3(c)(1) of NP44.
62. This paragraph is based on subparagraph 3.3(c)(2) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(2) of the proposed Policy.
63. This paragraph is based on subparagraph 3.3(c)(3) of NP44.
64. The words "that have agreed to purchase the securities at a specified price" have replaced the reference to a "firm underwriting" in a manner consistent with the terminology in Ontario Rule 41-501 General Prospectus Requirements and NI44-101.
65. This paragraph is based on subparagraph 2.7(b)(1) of NP44.
66. This paragraph is based on paragraph 2.7(c)(1) of NP44.
67. This paragraph is based on subparagraph 3.3(c)(4) of NP44. Examples of the types of variable information referred to in this paragraph are contained in subsection 3.5(3) of the proposed Policy.
68. This paragraph is based on subparagraph 3.3(c)(4) of NP44.
69. This section is new.
70. This subsection is based on subparagraph 3.8(b)(1) of NP44.
71. This subsection is based on subparagraph 3.8(b)(2) of NP44.
72. This section is new.
73. This section is based on the first and third sentences of paragraph 3.4(c) of NP44.
74. This paragraph is based on the third sentence of paragraph 3.4(a) of NP44.
75. This paragraph is based on the third sentence of paragraph 3.4(a) of NP44.
76. This paragraph is based on subparagraph 3.4(a)(2) and section 3.9 of NP44.
77. This paragraph is based on subparagraph 3.4(a)(7) of NP44. The list required has been changed to a cumulative list of documents then incorporated by reference into the base shelf prospectus and the requirement to provide a description of those documents has been omitted.
78. This subsection is based on subparagraph 3.4(a)(1) of NP44 and has been modified to clarify that all omitted shelf information as well as all information required to be in a short form prospectus must appear in one or more shelf prospectus supplements.
79. This paragraph is based on paragraph 3.4(a) of NP44 and has been modified to require more prompt filing which is feasible in light of SEDAR.
80. This paragraph is based on the sentence after subparagraph 3.4(b)(6) of NP44.
81. This section is based on paragraph 3.12(b) of NP44 and has been modified for greater precision.
82. This section is new and has been added to reflect local regulation concerning market stabilization. In Ontario, this refers to paragraph 26(c) of OSC Policy 5.1.
83. This section is based on the second sentence of paragraph 3.4(d) of NP44.
84. This section is based on section 3.11 of NP44.
85. This section is based on subparagraph 3.11(c)(2) of NP44 and has been modified for greater precision.
86. This section is based on subparagraph 3.11(d)(3) of NP44 and has been modified for greater precision.
87. This subsection is new and has been added for greater clarity.
88. This subsection is based on paragraph 3.11(e) of NP44; the reference to agency agreements or other material contacts has been omitted as unnecessary.
89. This paragraph is based on the first sentence of paragraph 3.4(f) and subparagraph 3.4(b)(1) of NP44.
90. This paragraph is new.
91. This paragraph is based on subparagraph 3.4(f)(2) of NP44.
92. This paragraph is based on subparagraph 3.4(f)(1) of NP44; references to "options" and the examples have been omitted.
93. This paragraph is based on the footnote to subparagraph 3.4(f)(1) of NP44.
94. This paragraph is based on subparagraph 3.4(f)(4) of NP44; the reference to "MTN Terms" has been omitted as that term is not defined in this Instrument.
95. This paragraph is based on subparagraph 3.4(f)(5) of NP44. However, the list required has been changed to a cumulative list, the requirement to include a description has been omitted and the exemption contained in the second paragraph has been omitted.
96. This paragraph is based on the last sentence of paragraph 3.4(b) of NP44.
97. This paragraph is new and has been modified to reflect industry practice.
98. This subsection is based on the second sentence of paragraph 3.6(b) of NP44; the reference to updating asset coverage ratios has been omitted.
99. This subsection is based on the third sentence of paragraph 3.6(b) of NP44.
100. This section is new and has been added to clarify that non-fixed price offerings are prohibited unless expressly permitted.
101. This subsection is based on subparagraph 3.5(b)(1) of NP44; the calculation timing has been modified.
102. In addition to the disclosure requirement in subsection (3) of this section, this subsection imposes a prohibition.
103. This subsection is based on subparagraph 3.5(b)(4) of NP44.
104. This part is new.
105. This part is new.
106. The term "securities regulatory authority" is defined in NI14-101 as meaning, for a local jurisdiction, the securities commission or similar regulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction.
107. This section may be deleted from the National Instrument if it becomes unnecessary in light of the proposed National Policy on Mutual Reliance for Prospectuses.
108. The term "expedited review system" is defined in NI44-101 as meaning "the system established by the Memorandum of Understanding for Expedited Review of Short Form Prospectuses and Renewal AIFs dated December 18, 1996 of the Canadian securities regulatory authorities".
109. This appendix is based on Appendix B of NP44.
110. This appendix is based on Appendix B of NP44.
111. This part is new.
112. This subsection is based on paragraph 2.6(b) of NP44.
113. This subsection is based on paragraph 2.6(c) of NP44.
114. This section is based on subparagraph 3.4(b)(5) and paragraph 3.4(g) of NP44.
115. This section is based on subparagraph 3.1(a)(1) of NP44.
116. This section is new.
117. This section is new.
118. This section is new.
119. This section is based on subparagraph 3.3(c)(4) of NP44.
120. This subsection is based on paragraph 3.4(h) of NP44.
121. This subsection is based on the first sentence of paragraph 3.4(d) of NP44.
122. This section is based on paragraph 2.7(b)(1) of NP44.
123. This section is based on paragraph 2.7(c)(1) of NP44.
124. This section is new and modelled on a section of NP44 relating to the PREP procedures, section 4.5.
125. This subsection is based on section 2.5 of NP44.
126. This subsection is new.
127. This subsection is based on subparagraphs 3.8(b)(1) and 3.8(b)(2) of NP44.
128. This section is based on section 3.9 of NP44.