Section 1 (2) definitions of "auditor", "auditor's report", "generally accepted accounting principles" and "generally accepted auditing standards" BEFORE amended by BC Reg 228/2009, effective September 28, 2009.
"auditor" means a person that is qualified under section 3 (5) to make an auditor's report referred to in section 3 (4);
"auditor's report" means
(a) a Canadian auditor's report, or
(b) in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada
(i) a Canadian auditor's report, or
(ii) a foreign auditor's report, if the issuer complies with section 2 (1);
"generally accepted accounting principles" means
(a) Canadian GAAP, or
(b) in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada
(i) Canadian GAAP, or
(ii) foreign GAAP, if the issuer complies with section 2 (1);
"generally accepted auditing standards" means
(a) Canadian GAAS, or
(b) in the case of an issuer incorporated or organized in a jurisdiction other than Canada or a province of Canada
(i) Canadian GAAS, or
(ii) foreign GAAS, if the issuer complies with section 2 (1);
Section 1 (1) definition of "NI 81-102" BEFORE amended by BC Reg 176/2014, effective September 22, 2014.
"NI 81-102" means National Instrument 81-102 Mutual Funds;
Section 1 (1) definitions of "forward contract" and "market value" BEFORE repealed by BC Reg 45/2020, effective March 27, 2020.
"forward contract" means a futures contract or an option on a futures contract that is not an exchange contract;
"market value" means
(a) if used with reference to a security that is listed and posted for trading on an exchange, the bid price or, if sold short, the ask price, as shown on the exchange quotation sheets at the close of business on the relevant date or last trading day before the relevant date, subject to an appropriate adjustment if an unusually large or unusually small quantity of securities is being valued,
(b) if used with reference to a security that is not listed and posted for trading on an exchange,
(i) a reasonable value determined on the basis of values shown in published market reports or inter-dealer quotation sheets on the relevant date or last trading day before the relevant date,
(ii) a value that would be more appropriate than the value assigned under subparagraph (i) when all the prevailing circumstances are taken into account, or
(iii) a value determined by the commission if the commission considers that another value is more appropriate in light of all the circumstances, including a value of zero if no published market report or inter-dealer quotation sheet exists for the security, and
(c) if used with reference to an exchange contract, the settlement price on the relevant date or last trading day before the relevant date;
Section 1 (1) definition of "NI 52-107" BEFORE amended by BC Reg 45/2020, effective March 27, 2020.
"NI 52-107" means National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency;
Section 1 (2) definition of "Handbook" BEFORE amended by BC Reg 209/2023, effective September 13, 2023.
"Handbook" means the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time;
Section 2 BEFORE repealed by BC Reg 228/2009, effective September 28, 2009.
Foreign financial statements and reports
2 (1) Unless otherwise permitted by NI 52-107, an issuer that is incorporated or organized in a jurisdiction other than Canada or a province of Canada must, before filing any of the following, obtain the written consent of the executive director and comply with any conditions the executive director may impose:
(a) financial statements prepared in accordance with foreign GAAP;
(b) financial statements accompanied by a foreign auditor's report.
(2) Unless otherwise permitted by NI 52-107, if financial statements are prepared in accordance with foreign GAAP, the notes to the financial statements must state which accounting principles have been applied and explain and quantify any significant differences between the foreign GAAP and Canadian GAAP.
(3) Unless otherwise permitted by NI 52-107, if an audit is performed on an issuer's financial statements and the auditor's report on those financial statements is prepared in accordance with foreign GAAS, the auditor's report must be accompanied by a statement of the auditor that describes any material differences in the form and content of the auditor's report as compared to an auditor's report prepared in accordance with Canadian GAAS.
(4) If a public accountant performs the procedures necessary to issue a foreign public accountant's report on an issuer's financial statements, the public accountant's report must explain any significant differences between the procedures performed to issue the foreign public accountant's report and the procedures necessary to prepare a Canadian public accountant's report.
[am. B.C. Reg. 109/2004, s. 2.]
Section 3 (1), (1.1), (2), (3), and (4) BEFORE repealed by BC Reg 228/2009, effective September 28, 2009.
(1) Subsection (5) does not apply if the financial statements are prepared in accordance with NI 52-107.
(1.1) For the purposes of subsection (2), "joint regulatory bodies" means the Montreal Exchange, the Toronto Stock Exchange, the TSX Venture Exchange and the Investment Dealers Association of Canada.
(2) Subject to any contrary provision of the Act or the regulations, the interpretations, statements, schedules, notes and instructions approved and issued by the joint regulatory bodies for the purpose of their members completing a Joint Regulatory Financial Questionnaire and Report, as amended from time to time, are incorporated by reference as part of these rules.
(3) Subject to subsections (7) and (8), the financial statements required by the Act or the regulations must be prepared in accordance with generally accepted accounting principles and with any applicable provision of the Act or the regulations.
(4) Subject to National Instrument 41-101 General Prospectus Requirements, National Instrument 81-101 Mutual Fund Prospectus Requirements, National Instrument 44-101 Short Form Prospectus Distributions, National Instrument 44-102 Shelf Distributions and section 144 (3), a person that is required to file financial statements under Part 9 of the Act or the regulations relating to that Part must include an auditor's report.
Section 3 (5) BEFORE amended by BC Reg 228/2009, effective September 28, 2009.
(5) A person is qualified to make an auditor's report referred to in subsection (4) only if the person is independent of the person that is required to file the financial statements and
(a) the person is a member, or is a partnership whose partners are members, in good standing of, and is authorized to carry on the practice of public accounting by, the institute of chartered accountants of a province or territory of Canada,
(b) the person is a member, or is a partnership whose partners are members, in good standing of, and is authorized to carry on the practice of public accounting by, the Certified General Accountants Association of British Columbia,
(c) the person is certified as an auditor by the Auditor Certification Board established under section 181 of the Company Act, or
(d) the person
(i) has qualifications as an auditor that the executive director considers are similar to the qualifications for membership in the Institute of Chartered Accountants of British Columbia or the Certified General Accountants Association of British Columbia, and
(ii) is authorized, by the appropriate authority in the jurisdiction in which the auditor is qualified, to carry on the practice of public accounting, and to report on the financial statements of issuers.
Section 3 (6) to (8) BEFORE repealed by BC Reg 228/2009, effective September 28, 2009.
(6) Subject to subsections (7) and (8), if financial statements permitted or required by the Act or the regulations are required to include an auditor's report, the audit must be performed and the auditor must prepare the report in accordance with generally accepted auditing standards and with any applicable provisions of the Act or the regulations.
(7) The executive director may vary or waive the application of a provision of this Part with respect to an issuer if the executive director considers that to do so would not be prejudicial to the public interest.
(8) On application by an issuer or on the commission's own motion, the commission may order that an issuer or class of issuers is exempt from a provision of this Part, if the commission considers that to do so would not be prejudicial to the public interest.
Part 5, Division 2 title BEFORE amended by BC Reg 226/2009, effective September 28, 2009.
Division 2 - Categories of Dealers and Advisers and Related Provisions
Section 6 BEFORE amended by BC Reg 226/2009, effective September 28, 2009.
Dealer categories
6 (1) In this section "real estate security" means a security of an issuer whose assets, that are the principal subject of its business, consist of real property, a partnership interest in real property or documents evidencing an interest in real property.
(2) A person registered as a dealer must be classified in one or more of the following categories:
(a) investment dealer: a person that
(i) is a member, a branch office member or an associate member of the Investment Dealers Association of Canada, and
(ii) trades in securities, exchange contracts or both;
(b) Repealed. [B.C. Reg. 57/2001, s. 2.]
(c) limited dealer —
(i) exchange contracts dealer: a person that trades exclusively in, or in any combination of, exchange contracts, forward contracts or commodity pools;
(ii) mutual fund dealer: a person that
(A) is a member of the Mutual Fund Dealers Association of Canada, and
(B) trades exclusively in, or in any combination of, the securities of a mutual fund, scholarship plan or trust, or an educational plan or trust;
(iii) security issuer: an issuer that trades in securities for purposes of distributing securities of its own issue exclusively for its own account;
(iv) real estate securities dealer: a person that trades in the capacity of agent or principal exclusively in real estate securities;
(v) scholarship plan dealer: a person that trades exclusively in securities of a scholarship or educational plan or trust;
(vi) special limited dealer: a person that trades exclusively in a specified type of security.
(3) A person registered as a securities dealer when this subsection comes into force must apply, on or before April 30, 2001, to the Mutual Fund Dealers Association of Canada, or the Investment Dealers Association of Canada, for membership.
(4) A person registered as a mutual fund dealer when this subsection comes into force must apply, on or before April 30, 2001, to the Mutual Fund Dealers Association of Canada for membership.
[am. B.C. Regs. 57/2001, ss. 1 and 2; 40/2003, s.2.]
Section 8 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Adviser categories
8 A person registered as an adviser must be classified in one or more of the following categories:
(a) portfolio manager: a person that manages or holds itself out as managing the investment portfolio, consisting of securities, exchange contracts or both, of one or more clients through discretionary authority granted by the clients;
(b) investment counsel: a person that engages or holds itself out as engaging in the business of advising others about investing in or buying or selling specific securities, exchange contracts or both, or that is primarily engaged in giving continuous advice on the investment of funds on the basis of the particular objectives of each client;
(c) securities adviser: a person that engages or holds itself out as engaging in the business of advising others through direct advice or through publications about investing in, or buying or selling, specific securities, exchange contracts or both, not purporting to tailor that advice or publication to the needs of specific clients.
Section 9 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Categories of individuals authorized to trade
9 An individual registered to trade on behalf of a registered dealer must be classified in one of the following categories:
(a) salesperson —
(i) registered representative: an employee of a registered dealer, other than an employee registered as an investment adviser, that trades in securities, exchange contracts or both on behalf of the dealer;
(ii) investment adviser: an employee of an investment dealer that trades in securities, exchange contracts or both on behalf of the investment dealer;
(b) trading partner, director or officer: a partner, director or officer of a registered dealer that trades in securities, exchange contracts or both on behalf of the dealer.
[am. B.C. Reg. 57/2001, s. 3.]
Section 10 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Categories of individuals authorized to advise
10 An individual registered to advise on behalf of a registered adviser must be classified in one of the following categories:
(a) advising employee: an employee of a registered adviser that advises on securities, exchange contracts or both on behalf of the adviser;
(b) advising partner, director or officer: a partner, director or officer of a registered adviser that advises on securities, exchange contracts or both on behalf of the adviser.
Section 11 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
False representation prohibited
11 A person must not use
(a) any of the words
(i) "portfolio manager",
(ii) "investment counsel",
(iii) "securities adviser", or
(iv) "investment adviser" or "investment advisor", or
(b) any other words in connection with the business of a person,
in a way likely to
(c) deceive or mislead the public about the proficiency and qualifications of the person to undertake the business of advising another with respect to investment in or the purchase or sale of securities or exchange contracts, or
(d) give a false impression that the person is authorized to act as a portfolio manager, investment counsel, securities adviser or salesperson — investment adviser, as the case may be.
Section 12 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Investment dealer acting as portfolio manager
12 The provisions of this Part that apply to a portfolio manager do not apply to
(a) an investment dealer, or
(b) a partner, director, officer or salesperson of an investment dealer
that, by the operation of section 86, is exempt from registration under 34 (1) (c) of the Act as a portfolio manager.
[en. B.C. Reg. 57/2001, s. 4.]
Section 13 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Refusal to register or renew or reinstate registration
13 The executive director must not register, or renew or reinstate the registration of, a registrant if the executive director considers that, because of the registrant's past conduct or, if the registrant is not an individual, the past conduct of the registrant's salespersons or advising employees, partners, directors or officers, the business of the registrant will not be conducted with integrity or the clients of the registrant will not be dealt with fairly, honestly and in good faith.
[am. B.C. Reg. 40/2003, s. 3.]
Section 14 (2) BEFORE amended by BC Reg 226/2009, effective September 28, 2009.
(2) A registered
(a) salesperson,
(b) trading partner, director or officer,
(c) advising employee, or
(d) advising partner, director or officer
of a dealer or adviser must deal fairly, honestly and in good faith with the clients of the dealer or adviser.
Section 15 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Jurisdiction of organization or incorporation of registrants
15 (1) Subject to subsection (3), a person applying for registration, renewal of registration or reinstatement of registration, as a dealer, other than a security issuer, underwriter or adviser must be incorporated or organized as a partnership, under the laws of Canada or a province or territory of Canada.
(2) If the corporation or partnership referred to in section (1)
(a) is incorporated under the laws of a jurisdiction other than British Columbia, it must be registered as an extraprovincial company with the Registrar of Companies under the Company Act, or
(b) is organized as a partnership, it must have registered its business name and other particulars with the Registrar of Companies under the Partnership Act.
(3) The executive director may register a person as an adviser if that person is organized as a sole proprietorship, provided that the sole proprietorship has registered its business name and other particulars with the Registrar of Companies under the Partnership Act.
(4) The executive director may vary or waive the application of subsections (1), (2) and (3) if the executive director considers that to do so would not be prejudicial to the public interest.
Section 16 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Registrant's interest in other registrants
16 (1) Except as permitted under subsection (2), no registrant or unregistered partner, director, officer or associate of a registered dealer, underwriter or adviser may have a direct or indirect interest in any other dealer, underwriter or adviser without the approval of the executive director.
(2) Subsection (1) does not prohibit a salesperson, partner, director or officer of a dealer, underwriter or adviser from having an interest in
(a) that dealer, underwriter or adviser, or
(b) a dealer, underwriter or adviser that is a related party of the dealer, underwriter or adviser referred to in paragraph (a),
where "related party", for the purpose of this section, has the meaning set out in section 75 (1).
Section 17 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Executive director's conditions of registration
17 (1) The executive director may
(a) waive or vary, if the executive director considers that to do so would not be prejudicial to the public interest, or
(b) add to, if the executive director considers that to do so would be in the public interest,
the provisions respecting the registration of a registrant or group of registrants in Divisions 4, 5, 6 and 7 and sections 66, 67, 69 and 70.
(2) The executive director must not vary or add to the provisions respecting registration under subsection (1) without giving the registrant or group of registrants an opportunity to be heard.
Section 19 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Dealer's and underwriter's risk adjusted capital and working capital
19 (0.1) This section applies to a person registered as an investment dealer, securities dealer, limited dealer or underwriter before September 28, 2009.
(1) An investment dealer must maintain positive risk adjusted capital.
(2) Subject to subsection (4), a securities dealer, exchange contracts dealer or underwriter must maintain positive risk adjusted capital but may calculate risk adjusted capital on the basis of a minimum capital requirement of $100 000 instead of the minimum of $250 000 required by the Joint Regulatory Financial Questionnaire and Report.
(3) Subject to subsection (5), a limited dealer, except for a security issuer and exchange contracts dealer, must maintain working capital, calculated in accordance with the required form, equal to, or greater than, $75 000 plus the maximum amount that is deductible under any bond required under section 21.
(4) An exchange contracts dealer that does not hold client funds or securities and is recognized by the executive director as an introducing broker must maintain positive risk adjusted capital but may calculate risk adjusted capital on the basis of a minimum capital requirement of $75 000 instead of the minimum of $100 000 set out in subsection (2).
(5) A mutual fund dealer that does not hold client funds or securities and is recognized by the executive director must maintain working capital, calculated in accordance with the required form, equal to, or greater than, $25 000 plus the maximum amount that is deductible under any bond required under section 21.
[am. B.C. Regs. 57/2001, s. 5; 226/2009, Sch. C, s. 4.]
Section 20 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Adviser's minimum working capital
20 (0.1) This section applies to a person registered as a portfolio manager or investment counsel before September 28, 2009.
(1) Subject to subsection (2), a portfolio manager or investment counsel must maintain working capital, calculated in accordance with the required form, equal to, or greater than, $25 000 plus the maximum amount that is deductible under any bond required under section 21.
(2) An investment counsel that does not hold client funds or securities and is recognized by the executive director must maintain working capital, calculated in accordance with the required form, equal to, or greater than, $5 000 plus the maximum amount that is deductible under any bond required under section 21.
[am. B.C. Reg. 226/2009, Sch. C, s. 5.]
Section 21 BEFORE repealed by BC Reg 226/2009, effective March 28, 2010.
Bonding requirement
21 (0.1) This section applies to a person registered as a dealer, underwriter, portfolio manager or investment counsel before September 28, 2009.
(1) A dealer, other than a security issuer, underwriter, portfolio manager or investment counsel must maintain
(a) bonding in a form and amount that the executive director considers necessary, and
(b) a certified copy of a resolution of the person's partners or directors stating that they consider the amount of bonding adequate to cover insurable business risks.
(2) A partner, director or officer or other employee of a dealer, underwriter, portfolio manager or investment counsel must maintain bonding in a form and amount that the executive director considers necessary.
[am. B.C. Reg. 226/2009, Sch. C, s. 6.]
Section 23 (1) (a) BEFORE amended by BC Reg 45/2020, effective March 27, 2020.
(a) a self regulatory body or an exchange recognized under section 24 (1) or (2) of the Act, or
Section 23 (2) BEFORE amended by BC Reg 45/2020, effective March 27, 2020.
(2) A dealer must contribute an amount of money to a fund referred to in subsection (1) equal to the amount that the self regulatory body, exchange or, in the case of a fund established by a trust company, the executive director requires.
Section 24 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Requirements for not holding funds or securities
24 (1) This section applies to a person registered as a exchange contracts dealer before September 28, 2009.
(2) If an exchange contracts dealer is permitted under section 19 (4) to calculate risk adjusted capital on the basis of a lower minimum capital requirement, a mutual fund dealer is permitted under section 19 (5) to maintain a lower level of working capital, an investment counsel is permitted under section 20 (2) to maintain a lower level of working capital or a dealer is exempted under section 23 (3) from the requirement to participate in and contribute to a compensation fund or contingency trust fund, the exchange contracts dealer, mutual fund dealer, investment counsel or dealer must not
(a) hold funds or securities on behalf of clients,
(b) receive from clients funds or securities for the payment or settlement of trades in securities or exchange contracts on behalf of the client,
(c) receive from clients cheques made out to the dealer for the payment of or settlement of trades in securities or exchange contracts on behalf of the client,
(d) receive from other persons funds payable to the client on account of the sale of or settlement of trades in securities or exchange contracts on behalf of the client, or
(e) receive from other persons cheques made out to the dealer on account of the sale of securities or exchange contracts or settlement of trades in securities or exchange contracts on behalf of the client.
[am. B.C. Reg. 226/2009, Sch. C, s. 7.]
Section 25 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Subordination agreement
25 (1) This section applies to a person registered as a dealer or adviser before September 28, 2009.
(2) If a registrant borrows in order to maintain positive risk adjusted capital or to meet the minimum working capital requirements set out in sections 19 and 20, the registrant and the person from whom the registrant borrowed must enter into a subordination agreement in the required form.
[am. B.C. Reg. 226/2009, Sch. C, s. 8.]
Part 5, Division 5 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Division 5 - Record Keeping and Reporting
Interpretation
26 In this Division "offsetting transaction" means
(a) the exercise or expiry of a security or exchange contract,
(b) a purchase of an exchange contract in which the purchaser, immediately before the purchase, had an outstanding short position in the same exchange contract, or
(c) a sale of an exchange contract in which the seller, immediately before the sale, had an outstanding long position in the same exchange contract.
Record keeping by registrant
27 (1) A dealer, underwriter or adviser must keep at its head office or, if its head office is out of British Columbia, at its chief place of business in British Columbia a complete and accurate record of its business transactions and financial affairs that are conducted
(a) in British Columbia if its head office is out of British Columbia, and
(b) in or out of British Columbia if its head office is in British Columbia.
(2) The records required under subsection (1) include the records referred to in sections 29 to 41 that the executive director considers relevant to the registrant's category of registration.
Adequate precautions and access
28 A dealer, underwriter or adviser may record or store information referred to in section 27 using mechanical, electronic or other means only if
(a) the method used is not prohibited by law,
(b) the dealer, underwriter or adviser takes adequate precautions to guard against falsification of the information, and
(c) the dealer, underwriter or adviser provides the information in an accurate and intelligible form, capable of being printed, within a reasonable time to any person lawfully entitled to examine the information.
Blotters
29 Itemized daily blotters or other records of original entry must show
(a) all purchases and sales of securities or exchange contracts,
(b) all receipts and deliveries of securities including certificate numbers,
(c) all receipts and disbursements of cash,
(d) all other debits and credits, and
(e) for each transaction described in (a) to (d) of this section
(i) the account for which the transaction was effected,
(ii) the name of the securities or exchange contracts,
(iii) any particulars necessary to identify the securities or exchange contracts,
(iv) the number or value of the securities or exchange contracts,
(v) the unit and aggregate purchase or sale price, if any,
(vi) the date on which the transaction took place,
(vii) the name of any other dealer used by the registered dealer as its agent to effect the transaction, and
(viii) the name of any person from whom securities or cash were received or to whom securities or cash were delivered.
Registrant's ledgers
30 Detailed ledgers or other records must show
(a) assets and liabilities, income and expenditures and capital accounts of the registrant,
(b) securities in transfer,
(c) dividends and interest received,
(d) securities borrowed and securities loaned,
(e) money borrowed and money loaned, together with a record of any collateral for that money and any substitutions in the collateral, and
(f) securities that the registrant has failed to receive or failed to deliver.
Client's ledger accounts
31 Itemized ledger accounts or other records for each account of each client must show
(a) all purchases, sales, receipts and deliveries of securities,
(b) all purchases and sales of exchange contracts, and
(c) all other debits and credits.
Securities and exchange contracts position report
32 A securities and exchange contracts position report must show separately for each security or exchange contract, at least monthly, and on demand by the executive director,
(a) the name, account number and type of account in which a position is held,
(b) all long and short positions, including securities in safekeeping, carried for the registrant's account or for the account of clients,
(c) the depository or other location of all securities long and the position offsetting securities sold short, and
(d) the date of the latest activity in that security or exchange contract.
Orders and instructions
33 (1) A complete and accurate record of each order and instruction, given or received for the purchase, sale, receipt or delivery of a security or exchange contract, whether executed or unexecuted, must show
(a) the terms and conditions of the order or instruction and any modification or cancellation of the order or instruction,
(b) the account to which the order or instruction relates,
(c) if the order or instruction is placed by an individual, other than
(i) the person in whose name the account is operated, or
(ii) an individual duly authorized to place orders or instructions on behalf of a client that is a corporation,
the identity of the individual placing the order or instruction and, if applicable, whether a registrant or an employee of a registrant enters the order or instruction pursuant to the exercise of a discretionary power,
(d) the time the order or instruction is entered,
(e) the prices at which the order or instruction is executed, and
(f) if practical, the time of execution or cancellation of the order or instruction.
(2) If money is transferred to or from a client's account, the record referred to in subsection (1) must also show
(a) the amount of money transferred,
(b) the balance of the account before and after the transfer,
(c) whether the client requested the transfer and the name of the persons requesting and authorizing the transfer, and
(d) the date on which the transfer took place.
Confirmations and statements
34 A confirmation and statement record must consist of
(a) a copy of every statement provided to prospective clients under section 35,
(b) a copy of every confirmation for each purchase or sale of a security or exchange contract sent under section 36 (1), and
(c) a copy of every statement of account sent under section 38.
Statement to be provided to prospective client
35 Before a dealer or adviser opens a client's account, the dealer or adviser must provide the client with a written statement, in the required form, for that type of registrant and account.
Confirmation of purchase or sale
36 (1) If a registered dealer purchases or sells a security or exchange contract for a client, the dealer must promptly send to the client a written confirmation of the purchase or sale setting out the required information in accordance with subsections (2) to (5).
(2) Subject to subsection (4), if a purchase or sale is made in a security, the confirmation must disclose
(a) the description of the security,
(b) the quantity purchased or sold,
(c) the price at which the security was purchased or sold and the total cost of the purchase or total proceeds of the sale,
(d) the commission and fees charged for the purchase or sale,
(e) the date on which the purchase or sale took place,
(f) the name of the exchange, if any, where the purchase or sale took place,
(g) the name of any salesperson acting for the client in the purchase or sale,
(h) whether the registered dealer acted as principal or agent,
(i) whether the registered dealer used another dealer as its agent to effect the purchase or sale, and
(j) the information required by section 80 (1), if applicable.
(3) Subject to subsections (4) and (5), if a purchase or sale is made in an exchange contract, the confirmation must disclose
(a) the description of the exchange contract,
(b) the quantity purchased or sold,
(c) the price at which the exchange contract was purchased or sold and the total cost of the purchase or total proceeds of the sale,
(d) the commission and fees charged for the purchase or sale,
(e) the date on which the purchase or sale took place,
(f) the delivery month and year of the exchange contract,
(g) the expiry date of the exchange contract,
(h) the name of the exchange where the purchase or sale took place,
(i) the name of the salesperson acting for the client in the purchase or sale, and
(j) whether the registered dealer used another dealer as its agent to effect the purchase or sale.
(4) If a security or exchange contract that is an option is purchased or sold, the confirmation must also disclose
(a) the exercise price, and
(b) the specified asset that is the subject of the option.
(5) If an offsetting transaction is made in an exchange contract, the confirmation must also disclose
(a) the price of the initial and offsetting transactions,
(b) the dates of the initial and offsetting transactions,
(c) the name of the exchange where each transaction took place,
(d) the gross profit or loss on the transactions, and
(e) the net profit or loss on the transactions.
(6) For the purposes of subsection (2) or (3), a dealer or a salesperson may be identified in a written confirmation by means of a code or symbols if the written confirmation also states that the name of the dealer or salesperson will be provided to the client on request.
Confirmation of purchase or sale respecting mutual funds
37 (1) In this section "charges" means sales charges, service charges and any other amount charged to the client.
(2) If a purchase or sale is made in a security of a mutual fund, in addition to the requirements of section 36 (2), the confirmation must set out
(a) the price for each security at which the purchase or sale was effected, and
(b) any amount deducted for charges.
(3) If a purchase or sale is made in a security of a mutual fund under a contractual plan, in addition to the requirements of section 36 (2) and subsection (2), the confirmation must set out,
(a) if an initial payment is made under a contractual plan that requires the prepayment of charges, a statement of the initial payment and the part of the charges that is allocated to subsequent payments in the mutual fund and the manner of its allocation to them,
(b) if a subsequent payment is made under a contractual plan that requires the prepayment of charges, a statement of the part of the charges that is allocated to the payment which is the subject of the confirmation,
(c) if an initial purchase is made under a contractual plan which permits the deduction of charges from the first and subsequent installments, a brief statement of the charges to be deducted from subsequent purchases, and
(d) if a subsequent purchase is made under a contractual plan, a statement of the total number of securities of the mutual fund acquired and the amount of charges paid under the contractual plan up to the date on which the confirmation is sent.
(4) The confirmation of a purchase or sale made in a security of a mutual fund under a contractual plan need not contain the information described in subsection (3) (d) if
(a) the contractual plan was entered into before the coming into force of the Act, or
(b) the holder of the contractual plan has, in addition to any rights to which that holder may be entitled under section 139 of the Act or otherwise, rights under the plan in accordance with subsection (5).
(5) If a registered dealer relies upon the relief set out in subsection (4) (b), the holder of the contractual plan must be permitted
(a) to receive on demand, at any time within 365 days after the date on which the contractual plan was entered into, the sum of
(i) a refund of the net asset value of the securities credited to that holder of the contractual plan before the date of demand, and
(ii) a refund of that portion of sales charges, excluding insurance premiums and fees to trustees of registered retirement savings plans, that is in excess of 30% of the scheduled payments under the plan that were made before the date of demand, but not including voluntary prepayments of installments, or
(b) to have and to exercise the rights described in section 139 of the Act, at any time within 180 days after the date on which the contractual plan was entered into.
(6) If a right is given under subsection (5), the registered dealer required under section 36 to confirm the transaction must send to the investor a notice, approved by the executive director, that describes the rights under subsection (5) and section 139 of the Act and sets out a table of charges and other information relevant to a decision of the investor as to whether the investor will exercise those rights, and the notice must be sent
(a) if a right is given under subsection (5) (a),
(i) with each confirmation, other than for reinvested dividends or income, during the first 365 days after the date on which the contractual plan was entered into, and
(ii) not less than 15 days and not more than 45 days before the end of that 365 day period, and
(b) if a right is given under subsection (5) (b),
(i) with each confirmation, other than for reinvested dividends or income, during the first 180 days after the date on which the contractual plan was entered into, and
(ii) not less than 15 days and not more than 45 days before the end of that 180 day period.
(7) If a client advises a registered dealer in writing before a purchase or sale in a security of a mutual fund of the client's participation in an automatic payment plan, automatic withdrawal plan or contractual plan that provides for systematic purchasing or selling of the securities of the mutual fund no less frequently than monthly, the registered dealer must send the confirmation of that purchase or sale as required by section 36, and thereafter during the continued existence of the plan and the client's participation in it the registered dealer, in lieu of the confirmations of purchase or sale required by section 36, may send to the client, no less frequently than half yearly, written summaries of purchases and sales containing the information required by section 36 to be disclosed to the client, with respect to all purchases and sales of the security of the mutual fund by the client since the last confirmation or summary of purchases and sales was prepared.
(8) A registered dealer that complies with subsection (7) need not comply with section 36 (2) if the confirmation or summary of purchases and sales contains a statement that the name of the person from, to or through whom the security of the mutual fund was bought or sold will be provided to the client upon request.
(9) A mutual fund dealer need not send to its client a written confirmation of the purchase or sale of a security of a mutual fund if the manager of the mutual fund sends the client the information that is required to be sent under this section and section 36 (2) to (5).
Statement of account
38 (1) Subject to subsection (4), a dealer must prepare and send a statement of account to each client at the end of each month in which the dealer records a transaction, other than the receipt of interest or dividends, in the client's account.
(2) The record referred to in subsection (1) must include
(a) the opening balance,
(b) all debits and credits,
(c) the closing balance,
(d) the quantity and description of each security and exchange contract purchased, sold, received or delivered,
(e) the exercise price of each option,
(f) the market value of the underlying asset of the option,
(g) the price at which each exchange contract was purchased or sold and its current market value, and
(h) the quantity and description of each security and exchange contract held for the account.
(3) Subject to subsections (4) and (6), if a dealer holds a client's funds, securities or exchange contracts on a continuing basis, the dealer must send, not less than once every quarter, a statement of account to the client showing any debit or credit balance and the details of securities or exchange contracts held.
(4) If a dealer has sent four quarterly statements to a client under subsection (3) and there have been no transactions in the client's account during the four quarters, the dealer is not required to continue sending quarterly statements to the client provided that,
(a) there continue to be no transactions in the client's account,
(b) the client has not requested to continue to receive statements of account, and
(c) the dealer sends to the client a statement of account annually for the 5 years following cessation of quarterly mailings, with the fifth such statement clearly marked as being the final statement of account that the dealer will send to the client.
(5) A statement of account sent under this section must indicate clearly which securities are held for safekeeping or in segregation.
(6) Subsections (1) and (3) do not apply to a mutual fund dealer that sends, or causes to be sent, a statement of account to each client at least once every 12 months showing
(a) the number and market value at the date of purchase or redemption of securities purchased or redeemed during the period since the date of the last statement sent under this subsection, and
(b) the total market value of all securities of the mutual fund held by the client at the date of the statement.
(7) Unless a client has expressly directed otherwise, a portfolio manager must send to each client at least once every 3 months a statement of the client's portfolio.
Record of account
39 (1) Subject to subsection (2) and section 48 (3), a record of an account must show
(a) the name and address of each of
(i) the client,
(ii) the beneficial owners of securities, exchange contracts or cash held in the account, if different from the client, and
(iii) any guarantor of the account,
(b) if trading instructions are accepted from a person other than the client, written authorization or ratification from the client naming that person, and
(c) in the case of a margin account, a margin agreement containing
(i) the signature of
(A) the client
(B) the beneficial owner if the beneficial owner is different from the client and has the legal capacity to enter into a margin agreement, and
(C) any guarantor, and
(ii) the date of signing, and
(d) any other information about the client required to be obtained under section 48.
(2) In the case of a joint account or an account of a corporation, the record is required only in respect of the person authorized to transact business for the account.
Records of options granted or guaranteed by a registrant
40 A record of options granted or guaranteed by a registrant must show all options that a registrant grants or guarantees or in which the registrant has a direct or indirect interest, including the
(a) underlying asset that is the subject of the option,
(b) number of underlying securities or underlying exchange contracts,
(c) exercise price,
(d) expiry date, and
(e) if the option was purchased or sold on an exchange, the name of that exchange.
Monthly capital record
41 (1) A capital record, prepared within 30 days following the end of each month, must show
(a) the trial balances of all ledger accounts,
(b) risk adjusted capital, if the registrant is an investment dealer, securities dealer, exchange contracts dealer or underwriter, and
(c) working capital, calculated in the required form, if the registrant is an adviser or a limited dealer, except for an exchange contracts dealer.
(2) If the capital record described in subsection (1) indicates that the registrant does not meet the requirements
(a) for positive risk adjusted capital required by section 19 (1), (2), or (4),
(b) for working capital required by sections 19 (3) or (5) or 20,
the registrant must immediately notify, in writing, the executive director or, if the registrant is a member of a self regulatory body or exchange recognized under section 24 of the Act, the self regulatory body or exchange.
[am. B.C. Reg. 57/2001, s. 6.]
Time for keeping records
42 (1) Unless otherwise required by applicable legislation to keep records for a longer period of time, a registrant must keep records of
(a) unexecuted orders and instructions prescribed under section 33 and confirmations prescribed under section 36 (1), for at least 2 years, and
(b) executed orders and instructions prescribed under section 33 and statements of account prescribed under section 38, for at least 7 years.
(2) A registrant must keep statements of account, orders and instructions for the 2 most recent years in a readily accessible location.
Sections 43 to 48 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Interpretation
43 In this Division:
"trust account for clients" means an account designated and maintained by a registrant as a clients' trust account with a bank or a trust company registered under the Financial Institutions Act or under similar federal, territorial or provincial legislation;
"safekeeping agreement" means a written agreement between a registrant and its client setting out the terms and conditions for holding securities of the client.
Registrant's business procedures
44 (1) A dealer, portfolio manager or investment counsel must establish and apply written prudent business procedures for dealing with clients in compliance with the Act and the regulations.
(2) A portfolio manager, investment counsel or dealer, except for a security issuer or investment dealer, must file a copy of
(a) its business procedures referred to in subsection (1), as part of its application for registration, and
(b) any proposed amendment that would significantly change its business procedures referred to in subsection (1), at least 30 days before the amendment is to become effective.
(3) If, within 30 days immediately after receipt of the proposed amendment referred to in subsection (2) (b), the executive director gives a written notice of objection to the registrant, the registrant must not put into place the amendment unless the executive director gives written approval.
(4) After giving the registrant an opportunity to be heard, the executive director may, if the executive director considers it to be in the public interest,
(a) refuse to allow the registrant to put into place the proposed amendment to the registrant's business procedures, or
(b) allow the registrant to put into place the proposed amendment to the registrant's business procedures on conditions, if any, imposed by the executive director.
(5) A portfolio manager or investment counsel must include, as part of its written business procedures under subsection (1), written standards of fairness for the allocation of investment opportunities among its clients and must provide a copy of the standards to each client.
[am. B.C. Reg. 57/2001, s. 7.]
Underwriter's due diligence procedures
45 (1) An underwriter must establish and apply written prudent business procedures or other safeguards for underwriting distributions of securities made by way of prospectus, or other offering document that the executive director specifies for the purposes of this section.
(2) An underwriter must maintain and, subject to subsection (3), file a copy of
(a) a description of its procedures and other safeguards referred to in subsection (1), at the time that it applies for registration and at any other time the executive director may require, and
(b) any proposed amendment that would significantly change its procedures and other safeguards referred to in subsection (1), at least 30 days before the amendment is to become effective.
(3) If an underwriter is a member of a self regulatory body or exchange recognized under section 24 of the Act, the underwriter must file a copy of the document referred to in subsection (2) with the self regulatory body or exchange.
(4) If, within 30 days immediately after receipt of the proposed amendment referred to in subsection (2) (b), the executive director gives a written notice of objection to the registrant, the registrant must not put into place the amendment unless the executive director gives prior written approval.
(5) If the executive director gives a written notice of objection under subsection (4), after giving the registrant an opportunity to be heard, the executive director may, if the executive director considers it to be in the public interest,
(a) refuse to allow the registrant to put the proposed amendment to the registrant's procedures referred to in subsection (1) into place, or
(b) allow the registrant to put the proposed amendment to the registrant's procedures referred to in subsection (1) into place on conditions, if any, imposed by the executive director.
Investment dealer's and mutual fund dealer's guidelines
46 (1) An investment dealer or mutual fund dealer complies with section 44 (1) if it follows the bylaws, rules or other regulatory instruments or policies relating to dealing with clients established by a recognized self regulatory body of which it is a member if those bylaws, rules or other regulatory instruments or policies
(i) have been filed before they take effect, and
(ii) have not been objected to by the commission.
(2) An investment dealer, if registered as an underwriter, complies with section 45 (1) if it follows the bylaws, rules or other regulatory instruments or policies relating to underwriting established by a self regulatory body of which it is a member that is named in or recognized for the purpose of section 7, relating to underwriting, if those bylaws, rules or other regulatory instruments or policies
(i) have been filed before they take effect, and
(ii) have not been objected to by the commission.
(3) If a self regulatory body files a bylaw, rule or other regulatory instrument or policy in accordance with subsection (1) (i) or 2 (i) and the commission does not give a written notice of objection within 30 days after filing, the bylaw, rule or other regulatory instrument or policy is deemed not to have been objected to by the commission.
[en. B.C. Reg. 57/2001, s. 8.]
Responsibility for opening new accounts and supervising
47 A registrant must designate, to approve the opening of new client accounts and supervise transactions made on behalf of clients,
(a) a compliance officer, as required by section 65, and
(b) in the case of a branch office of a dealer, as required by section 66,
(i) a branch manager, or
(ii) if the branch is located in a branch of a financial institution, an administration officer
provided that the branch manager or administration officer reports about new accounts and supervision directly to the compliance officer.
Know your client and suitability rules
48 (1) A registrant, except an underwriter or a securities adviser, must make enquiries concerning each client
(a) to learn the essential facts relative to every client, including the identity and, if applicable, credit worthiness of the client and the reputation of the client if information known to the registrant causes doubt as to whether the client is of good business or financial reputation, and
(b) to determine the general investment needs and objectives of the client, the appropriateness of a recommendation made to that client and the suitability of a proposed purchase or sale for that client.
(2) If a registrant considers that a proposed purchase or sale is not suitable for the investment needs and objectives of a client that is an individual, the registrant must make a reasonable effort to so advise the client before executing the proposed transaction.
(3) Subsection l (b) does not apply if a registrant
(a) executes a trade on the instructions of a dealer, portfolio manager, investment counsel, bank, trust company or insurer, and
(b) is reasonably satisfied that the person giving the instructions is authorized to carry on business as a dealer, portfolio manager, investment counsel, bank, trust company or insurer in the jurisdiction in which the person is located.
Section 49 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Explanation of relevant terms and conditions
49 (1) This section applies to a person registered as a dealer or adviser before September 28, 2009.
(2) If a dealer trades or proposes to trade an exchange contract on behalf of a client or a dealer or adviser gives advice about an exchange contract to a client, the dealer or adviser must, on the client's request,
(a) explain the terms and conditions of the exchange contract, and
(b) state where the client may get a copy, or view the terms and conditions, of the exchange contract.
[am. B.C. Reg. 226/2009, Sch. C, s. 11.]
Section 50 (0.1) was added by BC Reg 226/2009, effective September 28, 2009.
Section 50 (1) (b) BEFORE amended by BC Reg 226/2009, effective September 28, 2009.
(b) any conditions of registration that the executive director has imposed under section 17 of these rules or section 36 of the Act, or that a self regulatory body or exchange has imposed, on the registrant,
Section 50 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
Information about registrant available on client's request
50 (0.1) This section applies to a person registered as a dealer or adviser before September 28, 2009.
(1) On request, a registrant must provide a client or prospective client with
(a) the registrant's category and expiry date of registration,
(b) any conditions of registration that the executive director has imposed under section 36 of the Act, or that a self regulatory body or exchange has imposed, on the registrant,
(c) any current administrative proceeding by a securities or exchange contracts regulatory authority, or by a self regulatory body or exchange, against the registrant in any jurisdiction,
(d) any previous administrative proceedings by a securities or exchange contracts regulatory authority, or by a self regulatory body or exchange, against the registrant in any jurisdiction if an order, ruling or other adverse finding was made against the registrant,
(i) if the registrant is an individual, for an unlimited period of time, or
(ii) if the registrant is not an individual, during the 5 years immediately preceding the client's request,
(e) the commission and fees the registrant charges and the practices the registrant follows in setting fees,
(f) if the registrant is an individual, the registrant's education, including which of the courses and examinations required by the executive director or similar courses and examinations required in another jurisdiction the registrant has successfully completed,
(g) subject to subsection (2), if the registrant is a dealer,
(i) a copy of the dealer's most recently prepared statement of financial condition in the required form, or, in the alternative, if the dealer is a security issuer, a copy of the dealer's most recently prepared annual financial statements that it has filed under section 145 (1), and
(ii) a list of the dealer's partners, directors and officers, prepared and certified as of a date not more than 30 days before the request, and
(h) any registration or licensing under the Financial Institutions Act or comparable legislation of another jurisdiction.
(2) If a dealer or a class of dealers is subject to conditions of registration or to regulations imposed by a self regulatory body or exchange that requires the dealer to disclose information similar to the information required under subsection (1), the executive director may waive or vary the requirement to comply with subsection (1).
(3) A registered dealer must inform its clients on every statement of account, or by other means that the commission or executive director has approved, that the information referred to in subsection (1) is available to clients on request.
[am. B.C. Regs. 218/2005, App. H, s. 5; 397/2007, s. 1; 226/2009, Sch. C, s. 12.]
Section 52 (0.1) was added by BC Reg 226/2009, effective September 28, 2009.
Section 52 (2) BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
(2) If a portfolio manager, investment counsel or a dealer other than an investment dealer proposes to sell or assign the account of a client in British Columbia, in whole or in part, to another registrant, the portfolio manager, investment counsel or dealer must provide to the client, before the sale or assignment,
(a) a written explanation of the proposed sale or assignment, and
(b) advice of the client's right to close or transfer the client's account.
Section 52 (0.1) BEFORE spent effective September 28, 2010.
(0.1) This section applies to a person registered as a dealer or adviser before September 28, 2009.
Section 52 (1) BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
(1) If there has been a material change in the ownership or control of a portfolio manager or investment counsel, the portfolio manager or investment counsel must provide immediately to each of its clients in British Columbia, in addition to any notice required by Division 10,
(a) a written explanation of the change, and
(b) advice of the client's right to close or transfer the client's account.
Section 53 BEFORE repealed by BC Reg 226/2009, effective March 28, 2010.
Disclosure of referral fees and commission splitting
53 (0.1) This section applies to a person registerd as a dealer or adviser before September 28, 2009.
(1) Subject to subsection (3), if a registrant
(a) receives a fee or other compensation from another person for the referral of a client, or
(b) pays a fee or other compensation to another person for the referral of a client,
the registrant must disclose the compensation to the client.
(2) Subject to subsections (3), (4) and (5), if a registrant receives from, or pays to, another person a commission or other compensation related to the purchase or sale of a security or exchange contract on behalf of a client, not otherwise required to be disclosed under subsection (1), the registrant must disclose the compensation to the client on whose behalf the purchase or sale is made.
(3) Subject to subsection (4), the disclosure required under subsections (1) and (2) must
(a) be made
(i) in the circumstances described in subsection (1) (a), before the fee is accepted,
(ii) in the circumstances described in subsection (1) (b), before the fee is paid, or
(iii) in the circumstances described in subsection (2), at the time the purchase or sale is made or as soon as practicable after that time,
(b) be in writing, and
(c) contain
(i) the amount of the fee or, if not determinable, the method of calculating the fee,
(ii) to whom and by whom the fee is to be paid, and
(iii) the services for which the fee is payable.
(4) If the payment or receipt of a commission or other compensation referred to in subsection (2) is part of a continuing arrangement between a registrant and another party, the registrant is not required to disclose the compensation each time that the registrant makes a purchase or sale of a security or exchange contract on behalf of a client, provided that the registrant has disclosed the arrangement, and any subsequent material changes in the arrangement, to that client prior to the first purchase or sale under that arrangement.
(5) A registrant is not required to disclose to a client a commission or other compensation under subsection (2) if the commission or other compensation is paid from or to
(a) the registrant's partners, directors, officers or salespersons,
(b) another registered dealer, or
(c) a person registered in the capacity of a dealer in another jurisdiction.
[am. B.C. Regs. 174/2001, Sch. s. 2; 226/2009, Sch. C, s. 15.]
Section 54 BEFORE repealed by BC Reg 226/2009, effective September 28, 2010.
No contingent fees without client's consent
54 (1) This section applies to a person registered as a dealer or adviser before September 28, 2009.
(2) A registrant may only charge contingent commissions or fees based on profits or performance to a client with the client's prior informed written consent.
[am. B.C. Reg. 226/2009, Sch. C, s. 16.]
Sections 55 to 59 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Unencumbered securities held under safekeeping agreement
55 A registrant that holds unencumbered securities for a client under a written safekeeping agreement must
(a) keep the securities apart from all other securities,
(b) identify the securities as being held in safekeeping for the client, in
(i) the client's ledger account referred to in section 31,
(ii) the registrant's securities and exchange contracts position report referred to in section 32, and
(iii) the statement of account referred to in section 38 (1), and
(c) release the securities from the safekeeping agreement only on written instructions of the client.
Unencumbered securities held in segregation
56 (1) Subject to subsection (3), a registrant that, other than under a written safekeeping agreement, holds unencumbered securities for a client that are either fully paid for or are excess margin securities must
(a) segregate the securities in trust for the client, and
(b) describe the securities as being held in segregation in
(i) the client's ledger account referred to in section 31,
(ii) the registrant's securities and exchange contracts position report referred to in section 32, and
(iii) the statement of account referred to in section 38 (1).
(2) If a client becomes indebted to a registrant, the registrant, by written agreement with the client, may sell or lend securities held in segregation for the client only to the extent reasonably necessary to cover the indebtedness and subject to any resale restrictions and disclosure requirements that are applicable to the client.
(3) A registrant may segregate in bulk the securities described in subsection (1).
Clients' free credit balances
57 (1) In this section "free credit balance" means money that a registrant receives from, or holds for the account of, a client
(a) for paying for securities or exchange contracts to be purchased by the client from or through the registrant if, at the time of payment by the client, the registrant
(i) does not own the securities or exchange contracts, and
(ii) has not yet purchased the securities or exchange contracts on behalf of the client, and
(b) as proceeds of a purchase or sale of securities or exchange contracts
(i) purchased from the client by the registrant, or
(ii) sold by the registrant for the account of the client,
if the securities or exchange contracts have been delivered by the client to the registrant;
(2) On receiving clients' free credit balances, a registrant must immediately and clearly identify them as free credit balances and deposit them in a trust account for clients with interest earned, if any, on such funds accruing to the credit of clients.
Clients' subscriptions or prepayments
58 If a registrant holds subscriptions or prepayments for clients pending investment, the registrant must
(a) hold the subscriptions or prepayments in a trust account for clients separate from the trust account referred to in section 57 (2),
(b) ensure that the subscriptions or prepayments are segregated from the registrant's own assets, and
(c) ensure that any interest earned on the subscriptions or prepayments while in trust accrues or is paid to the credit of the clients.
[am. B.C. Reg. 3/2000, s. 2.]
Membership in self-regulatory organization and handling of clients' money
58.1 Sections 57 (2) and 58 do not apply to a registrant that is a member of, and that complies with the rules, bylaws or other regulatory instruments or policies established by, The Investment Dealers Association of Canada, The Montreal Exchange, The Toronto Stock Exchange or the Canadian Venture Exchange Inc. relating to the handling of client money.
[en. B.C. Reg. 3/2000, s. 3.]
Mutual fund money
58.2 Sections 57 (2) and 58 do not apply to any subscriptions or prepayments held by a registrant for clients pending investment in the securities of a mutual fund, or to clients' free credit balances arising from a redemption of securities of a mutual fund, if NI 81-102 applies to those subscriptions, prepayments or credit balances.
[en. B.C. Reg. 3/2000, s. 3.]
Purchase or sale of exchange contract on margin
59 If a dealer purchases or sells an exchange contract for a client's margin account, the dealer must obtain from the client an amount of margin in accordance with the requirements of the bylaws, rules or other regulatory instruments of the exchange on which the exchange contract is purchased or sold.
Part 5, Divisions 7 to 11 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Division 7 - Proficiency and Qualification Requirements
Designated compliance officer and branch manager
60 (1) The designated compliance officer referred to in section 65 and the branch manager referred to in section 66 must have successfully completed the courses and examinations and have the experience the executive director requires.
(2) Except where otherwise permitted by the executive director, if the compliance officer referred to in section 65 is designated by
(a) a dealer, the compliance officer must be a trading partner, director or officer, or
(b) a portfolio manager or investment counsel, the compliance officer must be an advising partner, director or officer.
[am. B.C. Regs. 174/2001, Sch. s. 3; 40/2003, s. 4.]
Salesperson, trading partner, director or officer, advising employee or advising partner, director or officer
61 (1) An individual applying for registration as a salesperson, trading partner, director or officer, advising employee or advising partner, director or officer must have successfully completed the courses and examinations and have the experience the executive director requires.
(2) A salesperson, advising employee and advising partner, director or officer must not act as a director or officer of a reporting issuer.
Rewriting industry examinations
62 An individual must successfully rewrite a course or examination that the executive director requires for the category of registration that the individual is seeking, if the individual
(a) has previously surrendered registration pursuant to section 41 of the Act and applies for registration 3 or more years after the date of surrender, or
(b) has not been previously registered in British Columbia and applies for registration 3 or more years after successful completion of the course or examination.
Salesperson employed other than full time
63 (1) Subject to subsection (2), an individual must not be granted registration, renewal or reinstatement of registration as a salesperson unless the individual is or will be employed full time as a salesperson.
(2) Subsection (1) does not apply to an individual who, with the consent of the executive director, is carrying on an outside activity, including
(a) other employment, or
(b) a hobby, recreational or cultural activity,
if the outside activity will not interfere, and does not create a conflict of interest, with the individual's duties and responsibilities as a salesperson.
Division 8 - Registration and Amendments to Registration
Application for registration
64 (1) An applicant for registration as a dealer, except an investment dealer or security issuer, or as an underwriter or adviser, must file
(a) financial statements in the form required to be filed by a reporting issuer under section 145 (1) and made up as at a date not more than 90 days before the date of the application, and
(b) if the applicant, if registered, would be required to maintain positive risk adjusted capital or working capital in accordance with section 19 or 20, a calculation of risk adjusted capital or working capital.
(2) The executive director may accept other records instead of the financial statements or calculations referred to in subsection (1).
(3) The executive director may waive the requirement for the required form of application for registration, referred to in section 34 (2) of the Act, if the applicant has previously filed the information required in that form and that information is current and accurate at the date of the waiver.
[am. B.C. Regs. 57/2001, s. 10; 218/2005, App. H, s. 6.]
Designated compliance officer required
65 A person applying for registration, renewal of registration or reinstatement of registration, as a dealer, underwriter, portfolio manager or investment counsel must designate at least one individual as a compliance officer to ensure compliance with the Act and the regulations by the person, its partners, directors, officers and other employees.
[am. B.C. Reg. 40/2003, s. 5.]
Branch manager required
66 (1) Subject to subsections (2) and (3), a dealer, portfolio manager or investment counsel that carries on business in a branch office must employ, with the approval of the executive director, a branch manager to ensure that the branch complies with the Act and the regulations.
(2) If fewer than 4 registered individuals carry on business in a branch office of a dealer, portfolio manager or investment counsel, the dealer or adviser is not required to comply with subsection (1) if the executive director is satisfied that a branch manager in another branch office is able to ensure that the branch office without a branch manager complies with the Act and the regulations.
(3) The executive director may permit more than 4 registered individuals to carry on business in a branch office without a branch manager if
(a) one or more of the individuals carries on business on a part-time basis, or
(b) the executive director is satisfied that a branch manager in another branch office is able to ensure that the branch office without a branch manager complies with the Act and the regulations.
[am. B.C. Regs. 174/2001, Sch. s. 4; 40/2003, s. 6.]
Duration of registration
67 Unless earlier suspended or canceled and subject to section 36 (1) of the Act, registration expires on December 31 of the year in which the registration was granted, renewed or reinstated.
[en. B.C. Reg. 40/2003, s. 7.]
Notice under section 42 of Act
68 (1) Subject to subsection (2), a registered dealer, underwriter, adviser or salesperson must file a notice under section 42 of the Act not more than 5 business days after the change to which the notice relates.
(2) A registrant that is a reporting issuer is exempt from the notice requirements of section 42 (1) (d) (iii) and (2) (c) (iii) of the Act.
Division 9 - Financial Statements and Financial Reports
Annual financial statements
69 (1) A registered dealer, except a security issuer, and an underwriter or adviser must file financial statements
(a) annually, in the form required to be filed by a reporting issuer under section 145 (1), on or before the 90th day after the end of the registrant's latest financial year, and
(b) at any other time in the form required by the executive director.
(2) The financial statements required to be filed by a registrant under this section must be approved by the directors if the registrant is a corporation, by the partners if the registrant is a partnership or by the sole proprietor if the registrant is a sole proprietorship, and the approval must be evidenced by the signature, or facsimile of the signature of 2 directors or 2 partners duly authorized to evidence the approval, or of the sole proprietor, in accordance with section 189.
[am. B.C. Reg. 218/2005, App. H, s. 7.]
Other financial reports
70 (1) An investment dealer, securities dealer, exchange contracts dealer or a person registered solely as an underwriter must file a Joint Regulatory Financial Questionnaire and Report relating to the registrant's latest financial year.
(2) A securities dealer, exchange contracts dealer or person registered solely as an underwriter must file a report of risk adjusted capital in the required form,
(a) if the registrant has not completed its initial period of registration referred to in section 67, monthly, relating to the period commencing at the end of the registrant's last completed financial year and ending at the end of the registrant's latest financial month, and
(b) subsequently, relating to the periods commencing at the end of the registrant's last completed financial year and ending 3, 6 and 9 months after that date.
(3) A mutual fund dealer must file a report of working capital in the required form
(a) if the dealer has not completed its initial period of registration referred to in section 67, monthly, relating to the period commencing at the end of the dealer's last completed financial year and ending at the end of the dealer's latest financial month, and
(b) subsequently, relating to the periods commencing at the end of the dealer's last completed financial year and ending 3, 6 and 9 months after that date.
(4) A dealer, except a security issuer, must file a statement of financial condition referred to in section 50 in the required form, annually, relating to the dealer's latest financial year.
(5) The report required to be filed under subsection (1) and the statement required to be filed under subsection (4) must include an auditor's report on the report or statement prepared by a person that is qualified under section 3 (5) to make the auditor's report.
(6) The report or statement, as the case may be, required to be filed
(a) under subsections (1) and (4), must be filed on or before the 90th day after the end of the latest financial year, and
(b) under subsections (2) and (3), must be filed on or before the 30th day after the date to which the report is made up.
(7) A report or statement required to be filed by a registrant under this section must be approved by the directors if the registrant is a corporation, the partners if the registrant is a partnership or the sole proprietor if the registrant is a sole proprietorship and the approval must be evidenced by the signature, or facsimile of the signature, of 2 directors or 2 partners duly authorized to evidence the approval, or of the sole proprietor, in accordance with section 189.
[am. B.C. Reg. 57/2001, s. 11.]
Audits
71 A registrant or unregistered partner, director, officer or employee of a registrant must not withhold, destroy or conceal any information or records or otherwise fail to cooperate with a reasonable request made by the auditor of a dealer, underwriter or adviser in the course of an audit.
Registrant's direction to auditor
72 (1) An applicant for registration as a dealer, underwriter or adviser must
(a) in writing direct its auditor to conduct, at the applicant's expense, any audit that the executive director requires during the applicant's registration, and
(b) file a copy of the direction.
(2) If there is a change in its auditor, a registered dealer, underwriter or adviser must
(a) in writing, immediately notify the executive director of the change, and
(b) prepare and file a current direction to its auditor, in the form required under paragraph (1) (a).
(3) The requirements set out in subsections (1) and (2) are in addition to any audit requirements that a self regulatory body or exchange, recognized by the commission under section 24 of the Act, may impose on its members.
Division 10 - Registrant Ownership and Diversification Requirements
Notice of ownership
73 (1) Subject to subsection (2), an underwriter, adviser or registered dealer, except a security issuer, that knows or has reason to believe that any person, directly or indirectly, acting alone or in concert with one or more other persons,
(a) is about to acquire beneficial ownership of or exercise control or direction over, or
(b) has acquired beneficial ownership of or is exercising control or direction over
securities of the registrant that, together with securities already owned by the person or persons, constitute 10% or more of the outstanding voting securities of any class or series of the registrant, must immediately file written notice of that fact together with the name of each person involved.
(2) A registrant is not required to file notice under subsection (1) (b) if the registrant has previously filed notice under subsection (1) (a).
Notice of diversification
74 (1) An underwriter, adviser or registered dealer, except a security issuer that intends to carry on, directly or indirectly, acting alone or in concert with one or more other persons, any other business than that of dealer, underwriter or adviser, as the case may be, must file written notice of that intention on or before the 30th day before the registrant begins carrying on the other business.
(2) If, on or before the 30th day after receipt of the notice referred to in subsection (1), the executive director sends a written notice of objection to the registrant, the registrant must not begin carrying on the other business unless the executive director withdraws the objection.
(3) If, under subsection (2), the executive director sends a written notice of objection to a registrant, the executive director, after giving the registrant an opportunity to be heard, may
(a) refuse to withdraw the objection if the executive director considers that the refusal is in the public interest, or
(b) withdraw the objection if the executive director considers that the withdrawal is not prejudicial to the public interest.
Division 11 - Registrants' Conflicts of Interest
Interpretation
75 (1) In this Division:
"associated party of the registrant" means
(a) a related party of the registrant,
(b) a partner of the registrant,
(c) an individual that is a director, officer, salesperson or employee of the registrant or a partner, director, officer, salesperson or other employee of a related party of the registrant if
(i) in the case described in section 79 (1) (b), the individual participates in the trade or purchase,
(ii) in the case described in section 81 (1) (b), the individual participates in the formulation or giving of the advice,
(iii) in the case described in section 82 (1) (b), the individual participates in the formulation of the investment decision, or
(iv) in the case described in section 83 (1) (b) or (2) (b), the individual participates in the formulation or making of the recommendation or statement, or
(d) an associate of any of the above persons, other than an associate within the meaning of paragraph (a) or (c) of the definition of "associate" in section 1 (1) of the Act;
"connected party" has the meaning ascribed to the definition of "connected issuer" in National Instrument 33-105 Underwriting Conflicts;
"fully registered dealer" means a registered dealer described in section 6 (2) (a), (b) or (c);
"initial distribution" means
(a) a distribution within the meaning of paragraph (a), (b), (c) or (d) of the definition of "distribution" in section 1 (1) of the Act,
(b) a distribution within the meaning of section 2.13 of NI 45-102, or
(c) a transaction or series of transactions involving further purchases and sales in the course of or incidental to a distribution referred to in paragraph (a) or (b);
"registrant" has the meaning ascribed to that term in National Instrument 33-105 Underwriting Conflicts;
"related party" has the meaning ascribed to the definition of "related issuer" in National Instrument 33-105 Underwriting Conflicts;
"security" includes, in respect of an issuer,
(a) an option or other right or obligation to purchase or sell securities of the issuer, and
(b) a security of any other issuer all or substantially all of whose assets are securities of the issuer.
(2) to (6) Repealed. [B.C. Reg. 311/2001, s. 1.]
[am. B.C. Regs. 269/2001, s. 1 (b); 311/2001, s. 1; 215/2008, s. 2.]
Executive director's discretion
76 (1) On the application of an interested person or on the executive director's own motion, the executive director may vary the provisions of this Division as they apply to a person by designating the person to be a related party or a connected party of a registrant
(a) if the executive director considers the designation appropriate because of the manner in which the person carries on its business with the registrant or with any related party of the registrant, or
(b) in any other case if the executive director considers the designation to be in the public interest.
(2) The executive director must not make a designation under subsection (1) without first giving the registrant and the other person affected an opportunity to be heard.
Conflict of interest rules statement
77 (1) Every registrant must file a conflict of interest rules statement in the required form.
(2) When a person becomes a registrant's client, the registrant must provide to the person, free of charge, a copy of the registrant's current conflict of interest rules statement.
(3) If any significant change occurs in the information required by the conflict of interest rules statement, the registrant must
(a) immediately file a revised conflict of interest rules statement in the required form, and
(b) provide to each of its clients a copy of the revised statement on or before the 45th day after the filing referred to in paragraph (a).
(4) Despite subsection (1), a registrant that does not act as an adviser, dealer or underwriter in the circumstances set out in sections 79, 81, 82 or 83, or in National Instrument 33-105 Underwriting Conflicts, is not required to file or provide to its clients a conflict of interest rules statement if it files in the required form
(a) a statement that it does not engage in such activities, and
(b) an undertaking not to engage in such activities unless it complies with this Division.
[am. B.C. Reg. 311/2001, s. 2.]
Limitations on trading
79 (1) A registrant must not,
(a) as principal or agent, trade in or purchase a security with, from or on behalf of any client if the security is issued by the registrant or a related party of the registrant or is being issued in the course of an initial distribution by a connected party of the registrant, or
(b) as principal or agent, trade in or purchase a security with, from or on behalf of any client if any partner, director, officer, salesperson or other employee of the registrant that participates in the trade or purchase actually knows that the security will directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or
(ii) purchased from a person that is a connected party of the registrant and that is a control person of the issuer of the security,
unless
(c) the registrant has, before entering into an agreement of purchase and sale respecting the security, delivered the current conflict of interest rules statement of the registrant to the client, or has informed the client orally or by some other means of substantially all the information and all changes in such information required by section 77 (1) and (3) (a) to be included in the conflict of interest rules statement, and
(d) the registrant complies with the requirements of sections 36 and 80.
(2) Subsection (1) does not apply if
(a) the client is purchasing as principal and is either a fully registered dealer or is a related party of the registrant, or
(b) the registrant neither solicits the trade or purchase nor advises the client in respect of it.
Confirmation and reporting of transactions
80 (1) The written confirmation of the transaction required by section 36 to be sent by a registered dealer to a client must,
(a) in the case of a security issued by a related party of the registrant or, in the course of an initial distribution, a security issued by a connected party of the registrant, state that the security was issued by a related party or a connected party of the registrant, as the case may be, and
(b) if any partner, director, officer, salesperson or other employee of the registrant that participated in the transaction actually knew at the time of the transaction that the security would directly or indirectly be
(i) purchased from or sold to an associated party of the registrant, or
(ii) purchased from a person that at the time of the transaction was a connected party of the registrant and was a control person of the issuer of the security,
state that the security was directly or indirectly purchased from or sold to such a person.
(2) Any report, other than the written confirmation required by section 36, sent or delivered by a registrant to a client respecting any trade or purchase of a security made by the registrant with, from or on behalf of the client, including a trade or purchase of a security for an account or portfolio of the client over which the registrant has discretionary authority, must,
(a) in the case of a security issued by a related party of the registrant or, in the course of an initial distribution, a security issued by a connected party of the registrant, state that the security was issued by a related party or a connected party of the registrant, as the case may be, and
(b) if any partner, director, officer, salesperson or other employee of the registrant that participated in the transaction actually knew at the time of the transaction that the security would directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or
(ii) purchased from a person that at the time of the transaction was a connected party of the registrant and was a control person of the issuer of the security,
state that the security was directly or indirectly purchased from or sold to such a person.
Limitations on advising
81 (1) A registrant must not act as an adviser in respect of a security if
(a) the security is issued by a related party of the registrant or is being issued in the course of an initial distribution by a connected party of the registrant, or
(b) any partner, director, officer, salesperson or other employee of the registrant that participates in the formulation or giving of the advice actually knows, or it is reasonable for any such person to expect in the circumstances, that wholly or partly as a result of the advice given the security will directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or
(ii) purchased from a person that is a connected party of the registrant and that is a control person of the issuer of the security,
unless the registrant before advising the client makes to the client a concise statement either in writing or orally, confirmed promptly to the client in writing,
(c) in the case of paragraph (a), disclosing the relationship between the registrant and the issuer of the security, and
(d) in the case of paragraph (b), disclosing
(i) that the registrant knows or expects that the security will or may be directly or indirectly purchased from or sold to the registrant or an associated party of the registrant or directly or indirectly purchased from a connected party of the registrant, and
(ii) the relationship between the registrant and such person or persons.
(2) Subsection (1) does not apply if
(a) the client is a fully registered dealer or a related party of the registrant, or
(b) the advice is given by a registered dealer and
(i) is solely incidental to a trade or purchase of the security carried out by the registered dealer, and
(ii) no fee is charged for the advice other than the usual and customary commission for the trade or purchase.
(3) Subsection (1) (a) does not apply if section 82 (1) (a) applies.
(4) Subsection (1) (b) does not apply if section 82 (1) (b) applies.
Limitations on the exercise of discretion
82 (1) A registrant must not, in respect of any account or portfolio of a client over which it has discretionary authority,
(a) purchase for or sell from such account or portfolio a security if the security is issued by the registrant or a related party of the registrant or is being issued in the course of an initial distribution by a connected party of the registrant,
(b) purchase for or sell from such account or portfolio a security if any partner, director, officer, salesperson or other employee of the registrant that participates in the formulation of the investment decision made by the registrant on behalf of the client actually knows, or it is reasonable for any such person to expect in the circumstances, that the security will directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or
(ii) purchased from a person that is a connected party of the registrant and that is a control person of the issuer of the security, or
(c) purchase for such account or portfolio a security being issued in the course of an initial distribution if
(i) any partner, director, officer, salesperson or other employee of the registrant or of a related party of the registrant, that participates in the formulation of the investment decision made by the registrant on behalf of the client, is a director or officer of the issuer of the security, or
(ii) an associate of any of the persons referred to in paragraph (c) (i), other than an associate within the meaning of paragraph (a), (b) or (c) of the definition of "associate" in section 1 (1) of the Act, is a director or officer of the issuer of the security,
unless prior to such purchase or sale the registrant has disclosed to the client all relevant facts in respect of the matters referred to in paragraph (a), (b) or (c), as the case may be, and has obtained the client's specific and informed written consent to purchase or sell the security for or from the client's account or portfolio.
(2) Subsection (1) does not apply if the client is a fully registered dealer or a related party of the registrant.
(3) A registrant must not make a loan from any account or portfolio of a client over which it has discretionary authority to
(a) the registrant,
(b) a related party of the registrant,
(c) a partner of the registrant,
(d) a director, officer, salesperson or other employee of the registrant or of a related party of the registrant, or
(e) an associate of any of the above persons, other than an associate within the meaning of paragraph (a) or (c) of the definition of "associate" in section 1 (1) of the Act.
Limitations on recommendations
83 (1) A registrant must not make a recommendation, or cooperate with any other person in the making of a recommendation, that a security be sold, exchanged, purchased or held if
(a) the security is issued by the registrant or a related party of the registrant or is being issued in the course of an initial distribution by a connected party of the registrant,
(b) any partner, director, officer, salesperson or other employee of the registrant that participates in the formulation or making of the recommendation actually knows, or it would be reasonable for any such person to expect in the circumstances, that wholly or partly as a result of the recommendation the security will directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or a trade, purchase or holding of the security will result in a material direct or indirect financial benefit to such person, other than the usual and customary commission payable to a registered dealer, or
(ii) purchased from a person that is a connected party of the registrant and that is a control person of the issuer of the security, or
(c) the registrant is a dealer or underwriter that has at any time during the past 12 months
(i) assumed an underwriting liability respecting the security, or
(ii) provided financial advice to the issuer of the security for consideration,
unless the recommendation is contained in a circular, pamphlet or similar publication that is published, issued or sent by the registrant and is of a type distributed with reasonable regularity in the ordinary course of the registrant's business, and includes in a conspicuous position, in type not less legible than is used in the body of such publication, a statement
(d) in the case described in paragraph (a), except if the security is issued by the registrant, disclosing the relationship between the registrant and the issuer of the security including, in the case of a related party, the nature and extent of the ownership of, or the control or direction over, the securities of the other person, and in the case of a connected party, the nature of the indebtedness or other relationship,
(e) in the case described in paragraph (b), disclosing, as the case may be, either or both of the following:
(i) that the registrant knows or expects that the security will or may be directly or indirectly purchased from or sold to the registrant or an associated party of the registrant, or directly or indirectly purchased from a connected party of the registrant, and the relevant facts on which such knowledge or expectation is based;
(ii) that the registrant knows or expects that a trade, purchase or holding of the security will or may result in the registrant or an associated party of the registrant receiving a financial benefit, and the nature and extent of such benefit,
and disclosing the relationship between the registrant and such person or persons referred to in either or both of subparagraph (i) or (ii), as the case may be, and
(f) in the case described in paragraph (c), disclosing that the registrant has, during the past 12 months,
(i) assumed an underwriting liability respecting the security, or
(ii) provided financial advice to the issuer of the security for consideration,
as the case may be.
(2) A registrant, with the intention of effecting a purchase of or trade in a security, must not, alone or in cooperation with any other person, publish, issue or send a circular, pamphlet, advertisement or other statement, other than a recommendation, promoting the security if
(a) the security is issued by the registrant or a related party of the registrant or is being issued in the course of an initial distribution by a connected party of the registrant, or
(b) any partner, director, officer, salesperson or other employee of the registrant that participates in the formulation or making of the statement actually knows, or it would be reasonable for any such person to expect in the circumstances, that wholly or partly as a result of the statement the security will directly or indirectly be
(i) purchased from or sold to the registrant or an associated party of the registrant, or
(ii) purchased from a person that is a connected party of the registrant and that is a control person of the issuer of the security,
unless the statement discloses in a conspicuous position, in type not less legible than is used in the body of such statement,
(c) that it is published, issued or sent by the registrant,
(d) in the case described in paragraph (a), except if the security is issued by the registrant, the relationship between the registrant and the issuer of the security, and
(e) in the case described in paragraph (b),
(i) that the registrant knows or expects that the security will or may be directly or indirectly purchased from or sold to the registrant or an associated party of the registrant or directly or indirectly purchased from a connected party of the registrant, and
(ii) the relationship between the registrant and such person or persons.
(3) Subsections (1) and (2) do not apply to a recommendation or statement that is not written and that is not made in a public medium of communication.
Exceptions
85 (1) Repealed. [B.C. Reg. 311/2001, s. 4 (a).]
(2) Sections 79 (1) (a), 80 (1) (a) and (2) (a), 81 (1) (a), 82 (1) (a), 83 (1) (a) and (2) (a), except as those sections apply to initial distributions of securities of related parties, do not apply to any trading in or purchasing of, or advising, exercising discretion, or making recommendations or statements in respect of, securities described in section 46 of the Act.
[am. B.C. Reg. 311/2001, s. 4.]
Part 6 BEFORE repealed by BC Reg 226/2009, effective September 28, 2009.
Part 6 - Exemption from Registration Requirements
Investment dealer acting as portfolio manager
86 (1) An investment dealer and a partner, director, officer or salesperson of the investment dealer, is exempt from registration under section 34 (1) (c) of the Act if
(a) the investment dealer, partner, director, officer or salesperson follows the bylaws, rules or other regulatory instruments or policies established by the Investment Dealers Association of Canada relating to activities as a portfolio manager, and
(b) those bylaws, rules or other regulatory instruments or policies
(i) have been filed before they take effect, and
(ii) have not been objected to in writing by the commission within 30 days after filing.
(2) Repealed. [B.C. Reg. 69/2002, s. 2 (b).]
[en. B.C. Reg. 57/2001, s. 12; am. B.C. Reg. 69/2002, s. 2.]
Exemption from underwriter registration
87 A person is exempt from registration under section 34 (1) (b) of the Act as an underwriter unless the person is acting as an underwriter in a distribution of securities made by way of a prospectus or other offering document that the executive director specifies for purposes of this section.
[en. B.C. Reg. 69/2002, s. 3.]
Application for designation as exempt purchaser
88 (1) An applicant for designation as an exempt purchaser under section 45 (2) (4) or 74 (2) (3) of the Act or under section 2.3 of National Instrument 45-106 Prospectus and Registration Exemptions must apply in the required form.
(2) A designation as an exempt purchaser remains in effect for one year, unless the executive director designates a person to be an exempt purchaser for a shorter period of time.
[am. B.C. Reg. 269/2005, Sch. E, s. 1.]
Exemptions
89 Registration under section 34 (1) (a) of the Act is not required for a trade in the following circumstances:
(a) and (b) Repealed. [B.C. Reg. 69/2002, s. 4 (a).]
Securities for debt
(c) the trade is made by a reporting issuer in a security of its own issue to settle a genuine debt;
Trade under escrow agreement
(d) the trade is made by a person that beneficially owns securities that are subject to the terms of an escrow agreement, in the form required by
(i) the commission, or
(ii) an exchange recognized by the commission for the purpose of this section,
and the trade is permitted by the escrow agreement and the transferee agrees to be subject to the terms of the escrow agreement;
Bonus or finder's fee
(e) the trade is made by a reporting issuer in a security of its own issue as consideration for
(i) a loan or loan guarantee, or
(ii) services performed by a person, that is not an insider or an associate of an insider of the issuer, in connection with
(A) arranging a loan or loan guarantee,
(B) the issuer acquiring or disposing of assets, other than proceeds of a distribution, or
(C) the issuer making a distribution under section 74 (2) of the Act to persons not resident in British Columbia;
Management company employee
(f) the trade is made by a reporting issuer in a security of its own issue to an individual employed by a person providing management services to the issuer if the individual is not induced to purchase by expectation of employment or continued employment with either the issuer or the person providing the management services.
(g) and (h) Repealed. [B.C. Reg. 69/2002, s. 4 (e).]
[am. B.C. Reg. 69/2002, s. 4.]
Prescribed amounts for exemptions
90 (1) For the purpose of section 45 (2) (5) of the Act, the prescribed amount is $150 000.
(2) For the purpose of section 45 (2) (6) of the Act, the prescribed amount is $150 000.
(3) For the purpose of section 45 (2) (22) of the Act, the prescribed amount is $150 000.
[am. B.C. Reg. 269/2005, Sch. E, s. 2.]
Restrictions on not for profit issuers
92 (1) Repealed. [B.C. Reg. 189/2000, s. 2.]
(2) The exemption under section 46 (g) of the Act does not apply to a person making a trade of securities unless
(a) the person making the trade is the issuer,
(b) the purchaser is the issuer or a securityholder of the issuer, or
(c) the person making the trade is not the issuer and, before the person makes the trade, the person
(i) notifies the issuer of the proposed trade, and
(ii) provides the purchaser with a copy of any applicable information statement and financial and other information concerning the issuer's affairs that the issuer provided to the person during the 2 years immediately preceding the date of the proposed trade.
[en. B.C. Reg. 340/98, s. 1; am. B.C. Regs. 189/2000, s. 2; 69/2002, s. 6.]
Section 128 (e), (f) and (g) BEFORE repealed by B.C. Reg 227/2009, effective September 28, 2009.
(e) the trade is made by a reporting issuer in a security of its own issue to settle a genuine debt;
Bonus or finder's fee
(f) the trade is made by a reporting issuer in a security of its own issue as consideration for
(i) a loan or loan guarantee, or
(ii) services performed by a person, that is not an insider or an associate of an insider of the issuer, in connection with
(A) arranging a loan or loan guarantee,
(B) the issuer acquiring or disposing of assets, other than proceeds of a distribution, or
(C) the issuer making a distribution under section 74 (2) of the Act to persons not resident in British Columbia;
Management company employee
(g) the trade is made by a reporting issuer in a security of its own issue to an individual employed by a person providing management services to the issuer if the individual is not induced to purchase by expectation of employment or continued employment with either the issuer or the person providing the management services.
Section 129 BEFORE repealed by B.C. Reg 227/2009, effective September 28, 2009.
Prescribed amounts for exemptions
129 (1) For the purpose of section 74 (2) (4) of the Act, the prescribed amount is $150 000.
(2) For the purpose of section 74 (2) (5) of the Act, prescribed amount is $150 000.
(3) For the purpose of section 74 (2) (19) of the Act, the prescribed amount is $150 000.
[am. B.C. Regs. 269/2001, s. 1 (d); 269/2005, Sch. E, s. 3.]
Section 131 BEFORE repealed by B.C. Reg 227/2009, effective September 28, 2009.
Restrictions on not for profit issuers
131 (1) Repealed. [B.C. Reg. 189/2000, s. 2.]
(2) The exemption under section 75 (a) of the Act does not apply to a person making a distribution of securities described in section 46 (g) of the Act unless
(a) the person making the distribution is the issuer,
(b) the purchaser is the issuer or a securityholder of the issuer, or
(c) the person making the distribution is not the issuer and, before the person makes the distribution, the person
(i) notifies the issuer of the proposed distribution, and
(ii) provides the purchaser with a copy of any applicable information statement and financial and other information concerning the issuer's affairs that the issuer provided to the person during the 2 years immediately preceding the date of the proposed distribution.
[en. B.C. Reg. 340/98, s. 2; am. B.C. Regs. 189/2000, s. 2; 69/2002, s. 9.]
Section 136 BEFORE repealed by B.C. Reg 227/2009, effective September 28, 2009.
Notice by control person
136 The exemptions under section 74 (2) (1), (3), (4), (6) or (16) (ii) of the Act do not apply to a control person of a reporting issuer unless the control person files a notice in the form and within the time periods set out in section 2.8 of NI 45-102.
[en. B.C. Reg. 269/2001, s. 1 (e); am. B.C. Reg. 215/2008, s. 3.]
Section 137 (1) BEFORE amended by B.C. Reg 227/2009, effective September 28, 2009.
(1) If a control person of a reporting issuer distributes a security under section 74 (2) of the Act, or under an order issued under section 76 (1) of the Act, the control person must file a report in the form required under section 87 of the Act on or before the 3rd day after the distribution.
Section 139 BEFORE repealed by B.C. Reg 227/2009, effective September 28, 2009.
Report on distribution
139 (1) In this section, "financial institution" means a savings institution or a trust company, loan company or credit union carrying on business in Canada.
(2) Subject to subsections (3) and (4), if an issuer distributes a security under section 74 (2) (1) to (5), (8) to (10), (11) (i), (14), (16) (i), (18) or (23) to (26) of the Act or section 128 (e) to (g) of these rules, the issuer must file a report in the required form on or before the 10th day after the distribution.
(3) An issuer is not required to file the report required under subsection (2) if the issuer distributes, under section 74 (2) (1) or (4) of the Act, an evidence of indebtedness to a financial institution as security for a loan made by the financial institution to the issuer.
(4) An issuer that distributes a security through a purchase plan or purchase arrangement under section 74 (2) (9) or (10) of the Act must file the report required under subsection (2) at the time the plan or arrangement begins and at least once a year after that and, in addition, if the number of securities distributed in one month exceeds 1% of the securities of the same class outstanding at the beginning of the month, the issuer must file, in respect of the securities distributed in that month, the report required under subsection (2) on or before the 10th day after the end of the month.
(5) An issuer that distributes a security under section 74 (2) (19) of the Act must file a report in the required form not later than 10 days after the end of the calendar year in which the distribution took place.
[am. B.C. Reg. 69/2002, s. 11.]
Section 155.1 BEFORE repealed by B.C. Reg 104/2010, effective April 30, 2010.
Prescribed time periods for filing insider reports
155.1 (1) For the purpose of section 87 (2) of the Act, the prescribed period is 10 days after becoming an insider.
(2) For the purpose of section 87 (5) of the Act, the prescribed period is 10 days after the change takes place.
(3) For the purpose of section 87 (6) of the Act, the prescribed period is 10 days after the date on which the deeming occurs.
(4) For the purpose of section 87.1 of the Act, the prescribed date is March 9, 2004.
[en. B.C. Reg. 230/2001, Sch. s. 2; am. B.C. Reg. 72/2004.]
Section 156 BEFORE repealed by B.C. Reg 104/2010, effective April 30, 2010.
Report deemed filed by affiliate or controlled corporation
156 If a person files a report under section 87 of the Act or Part 5 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and the report includes details of
(a) securities beneficially owned or deemed to be beneficially owned by a corporation controlled by that person, or owned by an affiliate of that person or of the controlled corporation, or
(b) changes in the controlled corporation's or affiliate's beneficial ownership or deemed beneficial ownership of the securities, the controlled corporation, its affiliate and the affiliate of the person that files the report, as the case may be, are not required to file a separate report.
[am. B.C. Reg. 21/2008, Sch. B. s. 2.]
Section 157 BEFORE repealed by B.C. Reg 104/2010, effective April 30, 2010.
Report by executor and co-executor
157 (1) In this section "executor" includes an administrator, trustee or other personal representative of an estate and "co-executor" has a corresponding meaning.
(2) Subject to subsection (3), if the executor or a co-executor of an estate files a report under section 87 of the Act or Part 5 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids in respect of securities owned by the estate,
(a) a co-executor, and
(b) the directors and officers of the executor or a co-executor
are not required to file a separate report.
(3) Subsection (2) only applies to reporting requirements that arise solely from the capacity of a person as a co-executor or as a director or officer of an executor or co-executor.
[am. B.C. Regs. 397/2007, s. 2; 21/2008, Sch. B. s. 2.]
Section 184.2 BEFORE amended by BC Reg 67/2015, effective May 5, 2015
Document and time period prescribed for section 135.1 of the Act
184.2 For the purpose of section 135.1 of the Act,
(a) the prescribed disclosure document is an offering memorandum required to be delivered to a purchaser of a security under section 2.9 of National Instrument 45-106 Prospectus and Registration Exemptions, and
(b) the prescribed time is two business days after the purchaser signs the agreement to purchase the securities.
[en. B.C. Reg. 260/2002; am. B.C. Reg. 269/2005, Sch. E, s. 5.]
Section 184.3 BEFORE amended by BC Reg 67/2015, effective May 5, 2015
Document prescribed for section 138.1 of the Act
184.3 For the purpose of section 138.1 of the Act, the prescribed disclosure document is the offering memorandum required to be delivered to a purchaser of a security under section 2.9 of National Instrument 45-106 Prospectus and Registration Exemptions.
[en. B.C. Reg. 260/2002; am. B.C. Reg. 269/2005, Sch. E, s. 6.]
Section 185.3 (2) BEFORE amended by BC Reg 106/2016, effective May 9, 2016.
(2) Part 16.1 of the Act applies to the acquisition or disposition of an issuer's security in connection with or pursuant to a take-over bid that is exempt under section 4.1, 4.4 or 4.5 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids or an issuer bid that is exempt under section 4.8, 4.10 or 4.11 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and, for greater certainty, the class of acquisitions and the class of dispositions described in this subsection are prescribed for the purposes of clause 140.2 (c) of the Act.
Section 187.1 BEFORE re-enacted by BC Reg 45/2020, effective March 27, 2020.
Calculation of profit
187.1 (1) For the purpose of section 155 (5) of the Act, profit is to be determined as follows:
(a) for a purchase of securities in contravention of section 57.2 (2) of the Act, the profit is the aggregate of the gains associated with all securities purchased in contravention of that section where, for the purpose of the calculation, the gain per security purchased is
| A − B |
A equals, if the security was
(i) subsequently sold before the 10th trading day immediately following general disclosure of the inside information, the price at which the security was sold, or
(ii) not subsequently sold before the 10th trading day immediately following general disclosure of the inside information, the volume- weighted average market price of the security for the 10 trading days immediately following general disclosure of the inside information, and
B equals the amount paid for the security by the person who contravened section 57.2 (2);
(b) for a sale of securities in contravention of section 57.2 (2) of the Act, the profit is the aggregate of the gains associated with all securities sold in contravention of that section where, for the purpose of the calculation, the gain per security sold is
| A − B |
A equals the proceeds from the sale of the security, and
B equals, if the contravention was
(i) a short sale and the short sale has been covered, the price at which the purchase covering the short sale was made,
(ii) a short sale and the short sale has not been covered, the volume- weighted average market price of the security for the 10 trading days immediately following general disclosure of the inside information, or
(iii) not a short sale, the volume-weighted average market price of the security over the 10 trading days immediately following general disclosure of the inside information;
(c) for a purchase of securities in contravention of section 57.3 (3) (a) of the Act, the profit is the aggregate of the gains associated with all securities purchased in contravention of that section where, for the purpose of the calculation, the gain per security purchased is
| A − B |
A equals, if the security
(i) was subsequently sold before the execution of the last trade that was the subject of the material order information, the price at which the security was sold, or
(ii) was not subsequently sold before the execution of the last trade that was the subject of the material order information, the last price paid in the execution of the order that is the subject of the material order information, and
B equals the amount paid for the security by the person who contravened section 57.3 (3) (a);
(d) for a sale of securities in contravention of section 57.3 (3) (a) of the Act, the profit is the aggregate of the gains associated with all securities sold in contravention of that section where, for the purpose of the calculation, the gain per security purchased is
| A − B |
A equals the proceeds from the sale of the security, and
B equals, if the contravention was
(i) a short sale, and the short sale has been covered, the price at which the purchase covering the short sale was made,
(ii) a short sale, and the short sale has not been covered, the last price paid in the execution of the order that is the subject of the material order information, or
(iii) not a short sale, the last price paid in the execution of the order that is the subject of the material order information;
(i) section 57.2 (3) or (4) of the Act,
(ii) section 57.2 (5) of the Act,
(iii) section 57.3 (4) of the Act, or
(iv) section 57.3 (5) of the Act,
the profit is
A + B
where
A equals the value of the consideration received by the person for providing the information or recommendation, and
B equals the aggregate profit of all persons who received the information or recommendation, calculated under paragraph (a), (b), (c), (d), or (f) (ii), (iii) or (iv), as applicable;
(ii) section 57.2 (2) of the Act in connection with a related financial instrument,
(iii) section 57.3 (3) (a) in connection with an exchange contract,
(iv) section 57.3 (3) (b) of the Act, or
(v) a provision referred to in section 155 (5) of the Act that is not otherwise referred to in this subsection,
the amount determined by the court.
(2) For the purpose of calculating profit under subsection (1) (a) to (d) or (f), the court may take into account the commissions paid by the person who contravened the Act in respect of the securities purchased or sold in relation to the contravention.
[en. B.C. Reg. 397/2007, s. 6.]