2003 Legislative Session: 4th Session, 37th Parliament
FIRST READING
The following electronic version is for informational
purposes only.
The printed version remains the official version.
HONOURABLE RICK THORPE
MINISTER OF COMPETITION, SCIENCE AND ENTERPRISE
HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:
1 Section 1 (1) of the Securities Act, R.S.B.C. 1996, c. 418, is amended
(a) in paragraph (b) (ii) of the definition of "investor relations activities" by striking out "body or exchange," and substituting "body, exchange or quotation and trade reporting system,", and
(b) by repealing the definition of "salesperson" and substituting the following:
"salesperson" means a person that trades securities or exchange contracts on behalf of a dealer; .
2 Section 15 (3) is repealed and the following substituted:
(3) Money received by the commission as revenue from administrative penalties under section 162 may be expended only for the purpose of educating securities market participants and members of the public about investing, financial matters or the operation or regulation of securities markets.
3 Section 39 (1) (c) is repealed and the following substituted:
(c) the bylaws, rules, other regulatory instruments or policies of the self regulatory body, exchange or quotation and trade reporting system, if any, of which or in which the registrant is a member or participant.
4 Section 40 is repealed and the following substituted:
40 (1) A registration granted under this Act or the regulations is immediately suspended if,
(a) in the case of a registered salesperson that is an employee of, or contracts with, a registered dealer, the registrant's authority to trade on behalf of the dealer is suspended or terminated, or
(b) in all other cases in which the registrant is an employee, the employment of the registrant is suspended or terminated.
(2) A registration suspended under subsection (1) remains suspended until the executive director reinstates the registration.
5 The following section is added to Part 12:
84.1 In this Part, "related financial instrument" means, with respect to a reporting issuer, a security or exchange contract the market price or value of which varies materially with the market price or value of a security of the reporting issuer.
6 Section 85 is repealed.
7 Section 86 (1) is repealed and the following substituted:
(1) A person that
(a) is in a special relationship with a reporting issuer, and
(b) knows of a material fact or material change with respect to the reporting issuer, which material fact or material change has not been generally disclosed,
must not enter into a transaction involving a security of the reporting issuer or a related financial instrument.
8 Section 87 is repealed and the following substituted:
87 (1) In this section, "reporting issuer" does not include a mutual fund.
(2) A person who is an insider of a reporting issuer must, within a prescribed period of time after becoming an insider, file an insider report in the required form effective the date on which the person became an insider, disclosing
(a) any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, and
(b) any interest in a transaction involving a related financial instrument if the person continues to have rights or obligations associated with the related financial instrument, or the transaction, after the date the person became an insider.
(3) A person who is an insider of a reporting issuer is not required to file an insider report under subsection (2) if, at the time the person became an insider of the reporting issuer, the person did not have
(a) direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, or
(b) any rights or obligations associated with a related financial instrument or a transaction involving a related financial instrument.
(4) Under subsection (3), a person is deemed to have filed an insider report for the purposes of subsection (5).
(5) If, while a person is an insider of a reporting issuer,
(a) the person enters into a transaction involving a security of the reporting issuer or, for any other reason, the person's direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer changes from that shown or required to be shown in the latest insider report filed by the person, or
(b) the person enters into a transaction involving a related financial instrument,
the person must, within the prescribed period, file an insider report in the required form.
(6) If a director or senior officer
(a) of an issuer is deemed under section 2 (2) to have been an insider of a reporting issuer, or
(b) of a reporting issuer is deemed under section 2 (3) to have been an insider of another reporting issuer,
then, within a prescribed period of time after the date on which that deeming occurs, the director or senior officer must file the insider reports referred to in subsections (2) and (5), for the period for which the director or senior officer is deemed to have been an insider.
9 The following section is added:
87.1 (1) A person who is an insider of a reporting issuer must, on or before a prescribed date, file an insider report in the required form disclosing any transaction involving a related financial instrument that the person entered into at any time while the person was an insider of the reporting issuer.
(2) Subsection (1) does not apply if
(a) the transaction has been previously disclosed in an insider report filed under this Act, or
(b) the person no longer has rights or obligations associated with the related financial instrument or the transaction.
10 Section 117 is repealed.
11 Section 119 (1) is repealed.
12 Section 153 (1) (a) (ii) is repealed and the following substituted:
(ii) a clearing agency or a quotation and trade reporting system, .
13 Section 155 (1) (b) is amended
(a) by striking out "85 to 87," and substituting "85, 86, 87,",
(b) by striking out "85,",
(c) by striking out "86, 87," and substituting "86 to 87.1,", and
(d) by striking out "117 (1) and (2),".
14 Section 161 (1) (a) (iii) is amended by striking out "or exchange," and substituting ", exchange or quotation and trade reporting system,".
15 Section 167 (5) is amended by striking out "party" and substituting "respondent".
16 Section 183 (6) is amended by striking out "and" at the end of subparagraph (v), by adding ", and" at the end of subparagraph (vi) and by adding the following subparagraph:
(vii) different or additional requirements for different classes of registrants within a registration category; .
17 Sections 1 (b), 4 to 11 and 13 (b), (c) and (d) come into force by regulation of the Lieutenant Governor in Council.
SECTION 1: [Securities Act, amends section 1 (1)]
(a) expands the definition of "investor relations activities" to ensure that activities performed in compliance with the requirements of quotation and trade reporting systems are not regulated under the Securities Act, and
(b) expands the definition of "salesperson" to allow corporate entities to perform the same role.
SECTION 2: [Securities Act, repeals and replaces section 15 (3)] expands the purposes for which penalties collected under the Act can be used.
SECTION 3: [Securities Act, repeals and replaces section 39 (1) (c)] expands the power of review to ensure that registrants are complying with the rules of quotation and trade reporting systems.
SECTION 4: [Securities Act, re-enacts section 40] is consequential to the amendment made by section 1 (b) of this Bill.
SECTION 5: [Securities Act, enacts section 84.1] provides a definition to clarify that insider trading provisions apply to derivatives and other securities that relate to a reporting issuer, even if those securities were not issued by that reporting issuer.
SECTION 6: [Securities Act, repeals section 85] repeals the obligation for issuers to report material changes to the affairs of the issuer, as that reporting will be dealt with by regulation.
SECTION 7: [Securities Act, repeals and replaces section 86 (1)] clarifies that the prohibition on trading securities using inside information applies to all types of securities related to a reporting issuer, even if those securities were not issued by the reporting issuer.
SECTION 8: [Securities Act, re-enacts section 87] clarifies that insider trade reporting requirements apply to all types of securities that relate to a reporting issuer, even if those securities were not issued by the reporting issuer.
SECTION 9: [Securities Act, enacts section 87.1] ensures that the public record is up to date with respect to any derivatives or similar securities that relate to a reporting issuer that are held by insiders of that reporting issuer.
SECTION 10: [Securities Act, repeals section 117] repeals the proxy solicitation requirements relating to reporting issuers as those matters will be dealt with by regulation.
SECTION 11: [Securities Act, repeals section 119 (1)] is consequential to the amendment made by section 10 of this Bill.
SECTION 12: [Securities Act, repeals and replaces section 153 (1) (a) (ii)] expands the commission's powers of review to include quotation and trade reporting systems.
SECTION 13: [Securities Act, amends section 155 (1) (b)] is consequential to the amendments made by sections 6 to 10 of this Bill.
SECTION 14: [Securities Act, amends section 161 (1) (a) (iii)] enables the commission to ensure trading activities comply with the requirements of quotation and trade reporting systems.
SECTION 15: [Securities Act, amends section 167 (5)] clarifies that the commission can fully participate during appeals of its decisions.
SECTION 16: [Securities Act, amends section 183 (6)] allows rules prescribed for registrants acting through corporate entities to be different from or additional to rules prescribed for registrants acting in a personal capacity.
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