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British Columbia Regulatory Updates
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By: Brian Koscak, EMDA Chairman and Partner, Cassels Brock & Blackwell LLP

BCSC Amends Northwest Exemption Effective April 16, 2012, the British Columbia Securities Commission (BCSC) has added two new conditions to BC Instrument 32-513 – Registration Exemption for Trades in Connection with Certain Prospectus Exempt Distributions. (1) Under the new conditions the exemption will not be available to a former registrant and to a person who has provided financial services to the purchaser. Financial services includes, but is not limited to, carrying on business as a mortgage broker, selling or providing insurance or related services or acting as a financial planner who considers the tax, personal or financial situation of a person and then provides that person with advice about how to make financial planes. The effect will now require certain firms/individuals to register as an exempt market dealer/dealing representative under British Columbia (BC) securities legislation if they continue to carry on their business after the changes and are former registrants or have previously provided financial services to a purchaser.

The BCSC knows who is relying on the Northwest Exemption in BC since a firm/individual seeking to rely on the Northwest Exemption in BC must file an information report with the BCSC. In other words, the BCSC knows who you are. Rest assured anyone who is relying on the Northwest Exemption in BC must now reconsider whether the changes now require registration. If in doubt, you should contact the BCSC or a securities lawyer specializing insecurities registration matters to determine whether registration is required. Remember, if you get it wrong, the consequences could be severe so to be prudent and check first.

The author understands that the BCSC has been focusing on those relying on the Northwest Exemption in BC in connection with mortgage investment entities. So, if you are caught by these changes, note that you are likely a focus of attention by the regulators.

Form 45-106F6 British Columbia Report of Exempt Distribution

As you are likely aware, effective October 3, 2011, the BCSC has adopted a new form for reports of exempt distribution, Form 45-106F6 British Columbia Report of Exempt Distribution. An issuer distributing securities in BC under certain prospectus exemptions is required to use Form 45-106F6 for any distribution occurring on or after October 3, 2011. They would use this form instead of Form 45-106F1. The effect of this new form is that issuers distributing securities in BC and other jurisdictions in Canada under certain prospectus exemptions now potentially have two forms to complete and file with the applicable Canadian securities regulatory authorities,subject to certain exemptions. On December 9, 2011, the BCSC ordered under BC Instrument 45-533 Exemptions from Form 45-106F6 requirements that certain issuers and underwriters are exempt from Form 45-106F6 requirements.

Information about Form 45-106F6

Information about Form 45-106F6 is available on the BCSC’s web site at: http://www.bcsc.bc.ca/drequirements.asp?id=13722.

There is also a useful PowerPoint presentation by the BCSC that is also available on the BCSC’s website. The BCSC used to have a webinar related to this PowerPoint presentation on Form 45-106F6 on its website but it was removed after certain exemptions were added in connection with BC Instrument 45-533.

For more information contact:
Brian Koscak - bkoscak@casselsbrock.com

1. See http://www.bcsc.bc.ca/policy.aspx?id=14442&cat=BC%20Notices

For more articles, please download the Exempt Market Update - the national magazine of the EMDA

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