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Statutes of Newfoundland 1999


CHAPTER 18

AN ACT TO AMEND THE SECURITIES ACT

(Assented to December 14, 1999)

Analysis

1. S.144.1 Added
Director may make rules

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:


RSN1990 cS-13
as amended

1. The Securities Act is amended by adding immediately after section 144 the following:

Director may make rules

144.1 (1) The director may, with the approval of the minister, make rules with respect to the following:

(a) prescribing requirements with respect to applications for registration and the renewal, amendment, expiration or surrender of registration and with respect to suspension, cancellation or reinstatement of registration;

(b) prescribing categories of registrants, classifying registrants into categories and prescribing the conditions of registration or other requirements for registrants or a category of registrants, including,

(i) standards of practice and business conduct of registrants in dealing with their customers and clients and prospective customers and clients,

(ii) requirements for the regulation of conflicts of interest, and

(iii) requirements with respect to membership in a self-regulatory organization;

(c) extending requirements prescribed under paragraph (b) to unregistered directors, partners, salespersons and officers of registrants;

(d) prescribing requirements with respect to residence of a registrant in the province or Canada;

(e) prescribing requirements with respect to notification by a registrant or other person or company with respect to a proposed change in beneficial ownership of, or control or direction over, securities of the registrant and authorizing the director to make an order that a proposed change may not be effected before a decision by the director as to whether he or she will exercise his or her powers under subsections 28(1) and 127(1) as a result of the proposed change;

(f) prescribing requirements for persons and companies with respect to calling at or telephoning to residences for the purpose of trading in securities;

(g) prescribing requirements for registrants with respect to disclosing or furnishing of information to the public or the director;

(h) providing for exemptions from the registration requirements under this Act or for the removal of exemptions from those requirements;

(i) providing for exemptions from the requirements of sections 42 and 43 with respect to dealers;

(j) prescribing requirements with respect to books, records and other documents, including the form in which and the period for which those books, records and other documents shall be kept;

(k) regulating the listing or trading of publicly traded securities including requiring reporting of trades and quotations;

(l) regulating recognized stock exchanges, recognized self-regulatory organizations and recognized clearing agencies, including prescribing requirements with respect to the review or approval by the director of a by-law, rule, regulation, policy, procedure, interpretation or practice;

(m) regulating trading or advising in securities to prevent trading or advising that is fraudulent, manipulative, deceptive or unfairly detrimental to investors;

(n) regulating trading or advising in penny stocks, including prescribing requirements with respect to additional disclosure and suitability for investment;

(o) varying the application of this Act to establish procedures for or requirements with respect to the preparation and filing of preliminary prospectuses and prospectuses and the issuing of receipts for them that facilitate or expedite the distribution of securities or the issuing of the receipts, including,

(i) requirements with respect to distribution of securities by means of a prospectus incorporating other documents by reference,

(ii) requirements with respect to distribution of securities by means of a simplified or summary prospectus,

(iii) requirements with respect to distribution of securities on a continuous or delayed basis,

(iv) requirements with respect to pricing of distributions of securities after the issuance of a receipt for the prospectus filed in relation to it, and

(v) procedures for the issuing of receipts for prospectuses after expedited or selective review of them;

(p) prescribing requirements for the escrow of securities in connection with distributions;

(q) designating activities, including the use of documents or advertising, in which registrants or issuers are permitted to engage or are prohibited from engaging in connection with distributions;

(r) prescribing which distributions and trading in relation to the distributions are distributions and trading outside the province;

(s) providing for exemptions from the prospectus requirements under this Act and for the removal of exemptions from those requirements;

(t) prescribing the circumstances in which the director may refuse to issue a receipt for a prospectus;

(u) prescribing requirements with respect to the preparation and dissemination and other use, by reporting issuers, of documents providing for continuous disclosure that are in addition to the requirements under this Act, including requirements with respect to,

(i) an annual report,

(ii) an annual information form, and

(iii) supplemental analysis of financial statements;

(v) exempting reporting issuers from a requirement of Part XVII

(i) if the requirement conflicts with a requirement of the laws of the jurisdiction under which the reporting issuers are incorporated, organized or continued,

(ii) if the reporting issuers ordinarily distribute financial information to holders of their securities in a form, or at times, different from those required by Part XVII, or

(iii) under circumstances that the director considers justify the exemption;

(w) requiring issuers or other persons and companies to comply, in whole or in part, with Part XVII or rules made under paragraph (u);

(x) prescribing requirements with respect to financial accounting, reporting and auditing for the purpose of this Act, the regulations and the rules, including,

(i) defining accounting principles and auditing standards acceptable to the director,

(ii) financial reporting requirements for the preparation and dissemination of future-oriented financial information and pro forma financial statements,

(iii) standards of independence and other qualifications for auditors,

(iv) requirements respecting a change in auditors by a reporting issuer or a registrant, and

(v) requirements respecting a change in the financial year of an issuer or in an issuer’s status as a reporting issuer under this Act;

(y) prescribing requirements for the validity and solicitation of proxies;

(z) providing for the application of Parts XVII and XVIII with respect to registered holders or beneficial owners of voting securities or equity securities of reporting issuers or other persons or companies on behalf of whom the securities are held, including requirements for reporting issuers, recognized clearing agencies, registered holders, registrants and other persons or companies who hold securities on behalf of persons or companies but who are not the registered holders;

(aa) regulating take-over bids, issuer bids, insider bids, going-private transactions and related-party transactions, including,

(i) providing for exemptions, in addition to those set out in subsections 94(1) and (3), or removing an exemption set out in those subsections,

(ii) providing for exemptions from section 95 or removing an exemption set out in that section,

(iii) varying the requirements set out in section 96,

(iv) providing exemptions from section 102,

(v) prescribing requirements with respect to issuer bids, insider bids, going-private transactions and related-party transactions, for disclosure, valuations, review by independent committees of boards of directors and approval by minority security holders, and

(vi) prescribing requirements respecting defensive tactics in connection with take-over bids;

(bb) providing for exemptions from a requirement of section 77 or from liability under section 134 and prescribing standards or criteria for determining when a material fact or material change has been generally disclosed;

(cc) providing for exemptions from a requirement of Part XX;

(dd) regulating mutual funds or non-redeemable investment funds and the distribution and trading of the securities of the funds including,

(i) varying the application of Part XIV or XVII by prescribing additional disclosure requirements with respect to the funds and requiring or permitting the use of particular forms or types of additional offering or other documents in connection with the funds,

(ii) prescribing permitted investment policy and investment practices for the funds and prohibiting or restricting certain investments or investment practices for the funds,

(iii) prescribing requirements governing the custodianship of assets of the funds,

(iv) prescribing minimum initial capital requirements for a fund making a distribution and prohibiting or restricting the reimbursement of costs in connection with the organization of a fund,

(v) prescribing matters affecting a fund that require the approval of security holders of the fund, the director, including, in the case of security holders, the level of approval,

(vi) prescribing requirements with respect to the calculation of the net asset value of mutual funds,

(vii) prescribing requirements with respect to the content and use of sales literature, sales communications or advertising relating to the funds or the securities of funds,

(viii) designating mutual funds as private mutual funds and prescribing requirements for private mutual funds,

(ix) respecting sales charges imposed by a distribution company or contractual plan service company under a contractual plan on purchasers of shares or units of a mutual fund, and directors or sales incentives to be paid to registrants in connection with the securities of a mutual fund,

(x) prescribing the circumstances in which a plan holder under a contractual plan has the right to withdraw from the contractual plan, and

(xi) prescribing procedures applicable to mutual funds, registrants and another person or company with respect to sales and redemptions of mutual fund securities and payments for sales and redemptions;

(ee) respecting fees payable by an issuer to an adviser as consideration for investment advice, alone or together with administrative or management services provided to a mutual fund or non-redeemable investment fund;

(ff) prescribing requirements relating to the qualification of a registrant to act as an adviser to a mutual fund or non-redeemable investment fund;

(gg) regulating commodity pools, including,

(i) varying the application of Part XIV or XVII to prescribe additional disclosure requirements with respect to commodity pools and requiring or permitting the use of particular forms or types of additional offering or other documents in connection with commodity pools,

(ii) prescribing requirements with respect to, or in relation to, promoters, advisers, persons and companies who administer or participate in the administration of the affairs of commodity pools,

(iii) prescribing standards in relation to the suitability of investors in commodity pools,

(iv) prohibiting or restricting the payment of fees, commissions or compensation by commodity pools or holders of securities of commodity pools and restricting the reimbursement of costs in connection with the organization of commodity pools,

(v) prescribing requirements with respect to the voting rights of security holders, and

(vi) prescribing requirements with respect to the redemption of securities of a commodity pool;

(hh) regulating or varying this Act with respect to derivatives, including,

(i) providing exemptions from a requirement of this Act,

(ii) prescribing disclosure requirements and requiring or prohibiting the use of particular forms or types of offering documents or other documents, and

(iii) prescribing requirements that apply to mutual funds, non-redeemable investment funds, commodity pools or other issuers;

(ii) varying the application of this Act to foreign issuers to facilitate distributions, compliance with requirements applicable or relating to reporting issuers and the making of take-over bids, issuer bids, insider bids, going-private transactions and related party transactions where the foreign issuers are subject to requirements of the laws of other jurisdictions that the director considers are adequate for the purpose of this Act;

(jj) prescribing requirements with respect to reverse take-overs including requirements for disclosure that are substantially equivalent to that provided by a prospectus;

(kk) 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 this Act, the regulations or the rules and all documents determined by the regulations or the rules to be ancillary to the documents, including,

(i) applications for registration and other purposes,

(ii) preliminary prospectuses and prospectuses,

(iii) interim financial statements and financial statements,

(iv) proxies and information circulars, and

(v) take-over bid circulars, issuer bid circulars and directors’ circulars;

(ll) respecting the designation or recognition of a person, company or jurisdiction if advisable for the purpose of this Act, including,

(i) recognizing stock exchanges, self-regulatory organizations and clearing agencies, and

(ii) designating, for purpose of subsection 89(1), the jurisdictions whose requirements are substantially similar to the requirements of Part XVII;

(mm) respecting

(i) the conduct of investigations carried out under Part VI, and

(ii) the conduct of hearings;

(nn) prescribing the fees payable to the director, including those for filing, for applications for registration or exemptions, for trades in securities, with respect to audits made by the director;

(oo) varying the application of this Act to permit or require the use of an electronic or computer-based system for the filing, delivery or deposit of,

(i) documents or information required under or governed by this Act, the regulations or rules, and

(ii) documents determined by the regulations or rules to be ancillary to documents required under or governed by this Act, the regulations or rules;

(pp) establishing requirements for and procedures with respect to the use of an electronic or computer-based system for the filing, delivery or deposit of documents or information; and

(qq) prescribing the circumstances in which persons or companies are considered to have signed or certified documents on an electronic or computer-based system for a purpose of this Act.

(2) A rule made under subsection (1) shall have the same effect as subordinate legislation but is not subordinate legislation within the meaning of the Statutes and Subordinate Legislation Act.

(3) A rule made under subsection (1) shall be effective on the date it is approved by the minister, and a copy of it shall be kept on file with the director, and shall be available for inspection by the public at all reasonable times.

(4) A rule made under this section is not invalid by reason only that it was not published in the Gazette, but a person shall not be convicted of an offence consisting of a contravention of a rule which at the time of the alleged contravention was not published in the Gazette unless it is proven that at the date of the alleged contravention reasonable steps had been taken under subsection (3) to make the rule accessible to those persons affected by it.

(5) Where there is a conflict between rules made by the director under this section and regulations made by the Lieutenant-Governor in Council under section 143, regulations made by the Lieutenant-Governor in Council shall apply to the extent of the inconsistency.

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