Bill S-211

44. (1) No person or company shall

(a) trade in a security or act as an underwriter unless the person or company is registered as a dealer, or is registered as a salesperson or as a partner or as an officer of a registered dealer and is acting on behalf of the dealer; or

(b) act as an adviser unless the person or company is registered as an adviser, or is registered as a representative or as a partner or as an officer of a registered adviser and is acting on behalf of the adviser,

and the registration has been made in accordance with Canadian securities law and the person or company has received written notice of the registration from the Director and, where the registration is subject to terms and conditions, the person or company complies with such terms and conditions.

(2) The termination of the employment of a salesperson with a registered dealer shall operate as a suspension of the registration of the salesperson until notice in writing has been received by the Director from another registered dealer of the employment of the salesperson by the other registered dealer and the reinstatement of the registration has been approved by the Director.

(3) The Director may designate as non-trading any employee or class of employees of a registered dealer that does not usually sell securities, but the designation may be cancelled as to any employee or class of employees where the Director is satisfied that any such employee or any member of such class of employees should be required to apply for registration as a salesperson.

45. (1) Unless it appears to the Director that the applicant is not suitable for registration, renewal of registration or reinstatement of registration or that the proposed registration, renewal of registration, reinstatement of registration or amendment to registration is objectionable, the Director shall grant registration, renewal of registration, reinstatement of registration or amendment to registration to an applicant.

(2) The Director may in his or her discretion restrict a registration by imposing terms and conditions thereon and, without limiting the generality of the foregoing, may restrict the duration of a registration and may restrict the registration to trades in certain securities or a certain class of securities.

(3) The Director shall not refuse to grant, renew, reinstate or amend registration or impose terms and conditions thereon without giving the applicant an opportunity to be heard.

46. On application by a registrant, the Commission may accept, subject to such terms and conditions as it may impose, the voluntary surrender of the registration of the registrant if the Commission is satisfied that the financial obligations of the registrant to his, her or its clients have been discharged and the surrender of the registration would not be prejudicial to the public interest.

47. A further application for registration may be made upon new or other material or where it is clear that material circumstances have changed.

48. An application for registration or renewal of registration shall be made in writing in such form as may be required by the Commission and shall be accompanied by such fee as is prescribed by the regulations.

49. Every applicant shall state in the application an address for service in Canada and, except as otherwise provided in this Act, all notices under this Act or the regulations are sufficiently served for all purposes if delivered or sent by prepaid mail to the latest address for service so stated.

50. The Director may require any further information or material to be submitted by an applicant or a registrant within a specified time and may require verification by affidavit or otherwise of any information or material then or previously submitted or may require the applicant or the registrant or any partner, officer, director, governor or trustee of, or any person performing a like function for, or any employee of, the applicant or of the registrant to submit to examination under oath by a person designated by the Director.

51. Registration as an adviser is not required to be obtained by

(a) a bank, the Business Development Bank of Canada, a trust company under the Trust and Loan Companies Act, a trust corporation incorporated by or under an Act of the legislature of a province, an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province;

(b) a lawyer, accountant, engineer or teacher;

(c) a registered dealer, or any partner, officer or employee thereof; and

(d) a publisher of or any writer for any newspaper, news magazine or business or financial publication of general and regular paid circulation distributed only to subscribers thereto for value or to purchasers thereof, who gives advice as an adviser only through such publication and has no interest either directly or indirectly in any of the securities upon which the advice is given and receives no commission or other consideration for giving the advice,

where the performance of the service as an adviser is solely incidental to their principal business or occupation, or

(e) such other persons or companies as are designated by the regulations.

52. (1) Subject to the regulations, registration is not required in respect of the following trades:

(a) a trade by an executor, administrator, guardian or committee or by an authorized trustee or assignee, an interim or official receiver or a custodian under the Bankruptcy and Insolvency Act or by a receiver or liquidator under the Winding-up and Restructuring Act or an Act of the legislature of a province, or at a judicial sale;

(b) an isolated trade by or on behalf of an issuer in a specific security of its own issue, for the issuer’s account, or by or on behalf of an owner in a specific security, for the owner’s account, where the trade is not made in the course of continued and successive transactions of a like nature, and is not made by a person or company whose usual business is trading in securities;

(c) a trade where the party purchasing as principal, but not as underwriter, is

(i) a bank or the Business Development Bank of Canada,

(ii) a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province,

(iii) an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

(iv) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) a subsidiary of any company referred to in subparagraph (i), (ii), (iii) or (iv), where the company owns all of the voting shares of the subsidiary,

(vi) a dealer registered in the category of broker, investment dealer or securities dealer,

(vii) Her Majesty in right of Canada or any province, or

(viii) any municipal corporation or public board or commission in Canada;

(d) a trade where the party purchasing as principal is a company or a person and is recognized by the Commission as an exempt purchaser;

(e) a trade where the purchaser purchases as principal, if the trade is in a security which has an aggregate acquisition cost to such purchaser of not less than $150,000 or such other amount as is prescribed;

(f) a trade from the holdings of any person, company or combination of persons or companies described in paragraph (c) of the definition of “distribution” in subsection 2(1) for the purpose of giving collateral for a debt made in good faith;

(g) a trade by or for the account of a pledgee, mortgagee or other encumbrancer for the purpose of liquidating a debt made in good faith by selling or offering for sale a security pledged, mortgaged or otherwise encumbered in good faith as collateral for the debt;

(h) a trade in a security that may occasionally be transacted by employees of a registered dealer where the employees do not usually sell securities and have been designated by the Director as non-trading employees, either individually or as a class;

(i) a trade between a person or company and an underwriter acting as purchaser or between or among underwriters;

(j) a trade in a security by a person or company acting solely through an agent who is a registered dealer;

(k) the execution of an unsolicited order to purchase or sell through a registered dealer by a bank, an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, as agent for a person or company and the trade by such person or company in placing the unsolicited order with the bank, association, society, trust company or trust corporation;

(l) a trade by an issuer

(i) in a security of its own issue that is distributed by it to holders of its securities as a stock dividend or other distribution out of earnings or surplus,

(ii) in a security whether of its own issue or not that is distributed by it to holders of its securities as incidental to a good faith reorganization or winding up of the issuer or distribution of its assets for the purpose of winding up its affairs pursuant to the laws of the jurisdiction in which the issuer was incorporated, organized or continued,

(iii) in securities of its own issue transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer, provided that no commission or other remuneration is paid or given to others in respect of such distribution except for ministerial or professional services or for services performed by a registered dealer;

(m) a trade by an issuer in a security of a reporting issuer held by it that is distributed by it to holders of its securities as a dividend in kind;

(n) a trade by an issuer

(i) in a right, transferable or otherwise granted by the issuer to holders of its securities to purchase additional securities of its own issue and the issue of securities pursuant to the exercise of the right, or

(ii) in securities of a reporting issuer held by it transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

if the issuer has given the Commission written notice stating the date, amount, nature and conditions of the proposed trade, including the approximate net proceeds to be derived by the issuer on the basis of such additional securities being fully taken up and paid for, and either

(iii) the Commission has not informed the issuer in writing within ten days of the giving of the notice that it objects to the proposed trade, or

(iv) the issuer has delivered to the Commission information relating to the securities that is satisfactory to and accepted by the Commission;

(o) a trade in a security of a company that is exchanged by or for the account of the company with another company or the holders of the securities of that other company in connection with

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company which in turn loses its existence by operation of law, or under which the existing companies merge into a new company;

(p) a trade in a security of an issuer that is exchanged by or for the account of the issuer with the security holders of another issuer in connection with a takeover bid as defined in Part XVIII;

(q) a trade in a security to a person or company pursuant to a takeover bid or issuer bid made by that person or company;

(r) a trade by an issuer in a security of its own issue as consideration for a portion or all of the assets of any person or company, if the fair value of the assets so purchased is not less than $150,000 or such other amount as is prescribed;

(s) a trade by an issuer in the securities of its own issue with its employees or the employees of an affiliate who are not induced to purchase by expectation of employment or continued employment, whether such trade takes place directly between the issuer and the employee or through a trustee or an administrator of a share purchase plan established for the benefit of employees of the issuer or its affiliates;

(t) a trade by an issuer in securities of its own issue where the trade is reasonably necessary to facilitate the incorporation or organization of the issuer and the securities are traded for a nominal consideration to not more than five incorporators or organizers unless the statute under which the issuer is incorporated or organized requires the trade to be for a greater consideration or to a larger number of incorporators or organizers, in which case the securities may be traded for that greater consideration or to that larger number of incorporators or organizers;

(u) a trade made by an issuer with a view to the sale of securities of its own issue if solicitations are made to not more than fifty prospective purchasers resulting in sales to not more than twenty-five purchasers and

(i) each purchaser purchases as principal, and all of the purchases are completed within a period of six months of the first purchase, except that subsequent sales to the same purchasers may be carried out if made in compliance with written agreements entered into during that six-month period,

(ii) each purchaser has access to substantially the same information concerning the issuer that a prospectus filed under this Act would provide and is

(A) an investor who, by virtue of net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the issuer whose securities are being offered and who is a registered adviser or a registered dealer, is able to evaluate the prospective investment on the basis of information respecting the investment presented by the issuer,

(B) a senior officer or director of the issuer,

(C) a parent, brother, sister or child of the person mentioned in sub-subparagraph (B), or

(D) a person to whom the person mentioned in sub-subparagraph (B) is married or with whom the person mentioned in sub-subparagraph (B) is living in a conjugal relationship outside marriage,

(iii) the offer and sale of the securities are not accompanied by an advertisement and no selling or promotional expenses have been paid or incurred in connection therewith, except for professional services or for services performed by a registered dealer, and

(iv) no promoter of the issuer, other than a registered dealer, has acted as a promoter of any other issuer which has traded in securities of its own issue pursuant to the exemption in this paragraph within the previous twelve months,

but an issuer which has relied upon this exemption may not again thereafter rely upon this exemption;

(v) a trade in respect of which the regulations provide that registration is not required.

(2) Subject to the regulations, registration is not required to trade in the following securities:

(a) bonds, debentures or other evidences of indebtedness

(i) of or guaranteed by the Government of Canada or any province or by the Government of the United Kingdom or any foreign country or any political division thereof,

(ii) of any municipal corporation in Canada, including debentures issued for public, separate, secondary or vocational school purposes, or guaranteed by any municipal corporation in Canada, or secured by or payable out of rates or taxes levied under the law of any province on property in such province and collectable by or through the municipality in which such property is situated,

(iii) of any school board,

(iv) of or guaranteed by a bank, a body corporate to which the Trust and Loan Companies Act applies, a trust or loan corporation incorporated by or under an Act of the legislature of a province, an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) issued by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province, to members of the association or society or to an insurer of its deposits,

(vi) of or guaranteed by the International Bank for Reconstruction and Development established by the Agreement for an International Bank for Reconstruction and Development approved by the Bretton Woods and Related Agreements Act, if the bonds, debentures, or evidences of indebtedness are payable in the currency of Canada or the United States of America,

(vii) of or guaranteed by the International Finance Corporation established by Articles of Agreement approved by the Bretton Woods and Related Agreements Act, if the bonds, debentures or evidences of indebtedness are payable in the currency of Canada or the United States of America and if, with respect to such securities, such documents, certificates, reports, releases, statements, agreements or other information as may be required by the Commission are filed, or

(viii) of or guaranteed by the Asian Development Bank or the Inter-American Development Bank, if the bonds, debentures or evidences of indebtedness are payable in the currency of Canada or the United States of America and if, with respect to such securities, such documents, certificates, reports, releases, statements, agreements or other information as may be required by the Commission are filed;

(b) certificates or receipts issued by a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, or by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province for money received for guaranteed investment;

(c) securities issued by a private mutual fund;

(d) negotiable promissory notes or commercial paper maturing not more than one year from the date of issue, provided that each such note or commercial paper traded to an individual has a denomination or principal amount of not less than $50,000;

(e) mortgages or other encumbrances upon real or personal property, other than mortgages or other encumbrances contained in or secured by a bond, debenture or similar obligation or in a trust deed or other instrument to secure bonds or debentures or similar obligations, if such mortgages or other encumbrances are offered for sale by a person or company registered or licensed, or exempted from the requirement to be registered or licensed, by or under an Act of the legislature of a province that regulates persons who sell such mortgages or encumbrances;

(f) securities evidencing indebtedness due under any conditional sales contract or other title retention contract providing for the acquisition of personal property if such securities are not offered for sale to an individual;

(g) securities issued by an issuer organized exclusively for educational, benevolent, fraternal, charitable, religious or recreational purposes and not for profit, where no commission or other remuneration is paid in connection with the sale thereof;

(h) securities issued by a cooperative to which the Canada Cooperatives Act applies or by a cooperative entity incorporated and regulated by or under an Act of the legislature of a province;

(i) membership shares of an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province;

(j) securities issued to its members by an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province;

(k) securities of a private company where they are not offered for sale to the public;

(l) securities issued and sold by a prospector for the purpose of financing a prospecting expedition;

(m) securities issued by a prospecting syndicate that has filed a prospecting syndicate agreement under Part XII for which the Director has issued a receipt, where the securities are sold by the prospector or one of the prospectors who staked claims that belong to or are the subject of a declaration of trust in favour of the prospecting syndicate, and the prospector delivers a copy of the prospecting syndicate agreement to the person or company purchasing the security before accepting payment therefor;

(n) securities issued by a prospecting syndicate that has filed a prospecting syndicate agreement under Part XII for which the Director has issued a receipt, if the securities are not offered for sale to the public and are sold to not more than fifty persons or companies;

(o) securities issued by a mining company or a mining exploration company as consideration for mining claims

(i) where the vendor enters into such escrow or pooling agreement as the Director considers necessary, or

(ii) where the security that is proposed to be issued, or the security underlying that security, is listed and posted for trading on a stock exchange recognized for the purpose of this paragraph by the Commission and the issuer has received (where required by the bylaws, rules or policies of that stock exchange) the consent of that stock exchange to the issuance of the security;

(p) securities in respect of which the regulations provide that registration is not required.

(3) For the purpose of subsection (1), a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, shall be deemed to be acting as principal when it trades as trustee or as agent for accounts fully managed by it.

53. (1) Every registered dealer who has acted as principal or agent in connection with any trade in a security shall promptly send by prepaid mail or deliver to the customer a written confirmation of the transaction, setting forth

(a) the quantity and description of the security;

(b) the consideration;

(c) whether or not the registered dealer is acting as principal or agent;

(d) if acting as agent in a trade, the name of the person or company from or to or through whom the security was bought or sold;

(e) the date and the name of the stock exchange, if any, upon which the transaction took place;

(f) the commission, if any, charged in respect of the trade; and

(g) the name of the salesperson, if any, in the transaction.

(2) Where a trade is made in a security of a mutual fund, the confirmation shall contain, in addition to the requirements of subsection (1),

(a) the price per share or unit at which the trade was effected; and

(b) the amount deducted by way of sales, service and other charges.

(3) Subject to the regulations, where a trade is made in a security of a mutual fund under a contractual plan, the confirmation shall contain in addition to the requirements of subsections (1) and (2),

(a) in respect of an initial payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the initial payment and the portion of the sales, service and other charges that is allocated to subsequent investments in the mutual fund and the manner of allocation thereof;

(b) in respect of each subsequent payment made under a contractual plan which requires the prepayment of sales, service and other charges, a statement of the portion of the sales, service and other charges, that is allocated to the payment which is the subject of the confirmation;

(c) in respect of an initial purchase made under a contractual plan which permits the deduction of sales, service and other charges from the first and subsequent instalments, a brief statement of the sales, service and other charges to be deducted from subsequent purchases;

(d) in respect of each purchase made under a contractual plan, a statement of the total number of shares or units of the mutual fund acquired and the amount of sales charges paid under the contractual plan up to the date the confirmation is sent or delivered.

(4) For the purposes of paragraphs (1)(d) and (g), a person or company or a salesperson may be identified in a written confirmation by means of a code or symbols if the written confirmation also contains a statement that the name of the person, company or salesperson will be furnished to the customer on request.

(5) Where a person or company uses a code or symbols for identification in a confirmation under subsection (1), the person or company shall forthwith file the code or symbols and their meaning, and shall notify the Commission within five days of any change in or addition to the code or symbols or their meaning.

(6) Every dealer who has acted as agent in connection with any trade in a security shall promptly disclose to the Commission, upon request by the Commission, the name of the person or company from or to or through whom the security was bought or sold.

(7) A registered dealer need not send to its client a written confirmation of a trade in a security of a mutual fund where the manager of the mutual fund sends the client a written confirmation containing the information required to be sent under this section.

54. (1) The Commission may by order suspend, cancel, restrict or impose terms and conditions upon the right of any person or company named or described in the order to

(a) call at any residence; or

(b) telephone from within Canada to any residence within or outside Canada,

for the purpose of trading in any security or in any class of securities.

(2) The Commission shall not make an order under subsection (1) without giving the person or company affected an opportunity to be heard.

(3) In this section,

“residence” includes any building or part of a building in which the occupant resides either permanently or temporarily and any premises appurtenant thereto.

(4) For the purposes of this section, a person or company shall be deemed conclusively to have called or telephoned where an officer, director or salesperson of the person or company calls or telephones on its behalf.

55. (1) No person or company, with the intention of effecting a trade in a security, other than a security that carries an obligation of the issuer to redeem or purchase, or a right of the owner to require redemption or purchase, shall make any representation, written or oral, that he, she or it or any person or company

(a) will resell or repurchase; or

(b) will refund all or any of the purchase price of,

such security.

(2) No person or company, with the intention of effecting a trade in a security, shall give any undertaking, written or oral, relating to the future value or price of such security.

(3) Subject to the regulations, no person or company, with the intention of effecting a trade in a security, shall, except with the written permission of the Director, make any representation, written or oral, that such security will be listed on any stock exchange or quoted on any quotation and trade reporting system, or that application has been or will be made to list such security upon any stock exchange or quote such security on any quotation and trade reporting system, unless

(a) application has been made to list or quote the securities being traded, and securities of the same issuer are currently listed on any stock exchange or quoted on any quotation and trade reporting system; or

(b) the stock exchange or quotation and trade reporting system has granted approval to the listing or quoting of the securities, conditional or otherwise, or has consented to, or indicated that it does not object to, the representation.

(4) This section does not apply to any representation referred to in subsection (1) made to a person or to a company where the representation is contained in an enforceable written agreement and the security has an aggregate acquisition cost of more than $50,000.

56. (1) Where a registered dealer, with the intention of effecting a trade in a security with any person or company other than another registered dealer, issues, publishes or sends a circular, pamphlet, letter, telegram or advertisement, and proposes to act in the trade as a principal, the registered dealer shall so state in the circular, pamphlet, letter, telegram or advertisement or otherwise in writing before entering into a contract for the sale or purchase of any such security and before accepting payment or receiving any security or other consideration under or in anticipation of any such contract.

(2) A statement made in compliance with this section or paragraph 53(1)(c) that a dealer proposes to act or has acted as principal in connection with a trade in a security does not prevent such dealer from acting as agent in connection with a trade of such security.

(3) This section does not apply to trades referred to in subsection 52(1) or to securities referred to in subsection 52(2).

57. Subject to the regulations, every registered adviser shall cause to be printed in a conspicuous position on every circular, pamphlet, advertisement, letter, telegram and other publication issued, published or sent out by the adviser, in which the adviser recommends that a specific security be purchased, sold or held, in type not less legible than that used in the body of the circular, pamphlet, advertisement, letter or other publication, a full and complete statement of any financial or other interest that the adviser or any partner, director, officer or a person or company that would be an insider of the adviser if the adviser was a reporting issuer may have either directly or indirectly in any securities referred to therein or in the sale or purchase thereof, including

(a) any ownership, beneficial or otherwise, that any of them may have in respect of such securities or in any securities issued by the same issuer;

(b) any option that any of them may have in respect of such securities, and the terms thereof;

(c) any commission or other remuneration that any of them has received or may expect to receive from any person or company in connection with any trade in such securities;

(d) any financial arrangement relating to such securities that any of them may have with any person or company; and

(e) any financial arrangement that any of them may have with any underwriter or other person or company who has any interest in the securities.

58. Every registered dealer that recommends a purchase, sale, exchange or hold of a security in any circular, pamphlet, advertisement, letter, telegram or other publication issued, published or sent by it and intended for general circulation shall, in type not less legible than that used in the body of the publication, state whether the registered dealer or any of its officers or directors has at any time during the past twelve months assumed an underwriting liability with respect to such securities or for consideration provided financial advice to the issuer of such securities or whether the registered dealer or any of its officers or directors will receive any fees as a result of the recommended action.

59. No registrant shall use the name of another registrant on letterheads, forms, advertisements or signs, as correspondent or otherwise, unless the registrant is a partner, officer or agent of or is authorized so to do in writing by the other registrant.

60. No person or company shall hold himself, herself or itself out as being registered by having printed in a circular, pamphlet, advertisement, letter, telegram or other stationery that he, she or it is registered.

61. No person or company who is not registered shall, either directly or indirectly, hold himself, herself or itself out as being registered.

62. No person or company shall make any representation, written or oral, that the Commission has in any way passed upon the financial standing, fitness or conduct of any registrant or upon the merits of any security or issuer.

63. (1) Where a person, or a partner or employee of a partnership, or a director, officer or employee of a company, after the person or the partnership or company has contracted as a registered dealer with any customer to buy and carry upon margin any securities of any issuer either in Canada or elsewhere, and while such contract continues, sells or causes to be sold securities of the same issuer for any account in which

(a) the person;

(b) the firm or a partner thereof; or

(c) the company or a director thereof,

has a direct or indirect interest, if the effect of such sale would, otherwise than unintentionally, be to reduce the amount of such securities in the hands of the dealer or under the dealer’s control in the ordinary course of business below the amount of such securities that the dealer should be carrying for all customers, any such contract with a customer is, at the option of the customer, voidable and the customer may recover from the dealer all money paid with interest thereon or securities deposited in respect thereof.

(2) The customer may exercise such option by a notice to that effect sent by prepaid mail addressed to the dealer at the dealer’s address for service in Canada.

64. Any person or company who places an order for the sale of a security through an agent acting for him, her or it that is a registered dealer and who,

(a) at the time of placing the order, does not own the security; or

(b) if acting as agent, knows the principal does not own the security,

shall, at the time of placing the order to sell, declare to the agent that he, she or it or the principal, as the case may be, does not own the security.

65. (1) Subject to subsection (4), voting securities of an issuer registered in the name of

(a) a registrant or in the name of the registrant’s nominee; or

(b) a custodian or in the name of the custodian’s nominee, where such issuer is a mutual fund that is a reporting issuer,

that are not beneficially owned by the registrant or the custodian, as the case may be, shall not be voted by the registrant or custodian at any meeting of security holders of the issuer.

(2) Forthwith after receipt of a copy of a notice of a meeting of security holders of an issuer, the registrant or custodian shall, where the name and address of the beneficial owner of securities registered in the name of the registrant or custodian are known, send or deliver to each beneficial owner of such security so registered at the record date for notice of meeting a copy of any notice, financial statement, information circular or other material but the registrant or custodian is not required to send or deliver such material unless the issuer or the beneficial owner of such securities has agreed to pay the reasonable costs to be incurred by the registrant or custodian in so doing.

(3) At the request of a registrant or custodian, the person or company sending material referred to in subsection (2) shall forthwith furnish to the registrant or custodian, at the expense of the sender, the requisite number of copies of the material.

(4) A registrant or custodian shall vote or give a proxy requiring a nominee to vote any voting securities referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

(5) A registrant or custodian shall, if requested in writing by a beneficial owner, give to the beneficial owner or his, her or its nominee a proxy enabling the beneficial owner or the nominee to vote any voting securities referred to in subsection (1).

(6) For the purpose of this section,

“custodian” means a custodian of securities issued by a mutual fund held for the benefit of plan holders under a custodial agreement or other arrangement.

66. (1) The Commission may, after giving the registered dealer an opportunity to be heard, and upon being satisfied that the registered dealer’s past conduct with respect to the use of advertising and sales literature affords reasonable grounds for belief that it is necessary for the protection of the public to do so, order that the registered dealer shall deliver to the Commission at least seven days before it is used, copies of all advertising and sales literature which the registered dealer proposes to use in connection with trading in securities.

(2) For the purposes of this section,

“advertising” includes television and radio commercials, newspaper and magazine advertisements and all other sales material generally disseminated through the communications media;

“sales literature” includes records, videotapes and similar material, written matter and all other material, except preliminary prospectuses and prospectuses, designed for use in a presentation to a purchaser, whether such material is given or shown to the purchaser.

(3) Where the Commission has issued an order pursuant to subsection (1), the Director may prohibit the use of the advertising and sales literature so delivered or may require that deletions or changes be made prior to its use.

67. (1) Upon the filing of a prospecting syndicate agreement and the issuance of a receipt therefor by the Director, the liability of the members of the syndicate or parties to the agreement is limited to the extent provided by the terms of the agreement where

(a) the sole purpose of the syndicate is the financing of prospecting expeditions, preliminary mining development, or the acquisition of mining properties, or any combination thereof;

(b) the agreement clearly sets out

(i) the purpose of the syndicate,

(ii) the particulars of any transaction effected or in contemplation involving the issue of units for a consideration other than cash,

(iii) the maximum amount, not exceeding 25 per cent of the sale price, that may be charged or taken by a person or company as commission upon the sale of units in the syndicate,

(iv) the maximum number of units in the syndicate, not exceeding 33 1/3 per cent of the total number of units of the syndicate, that may be issued in consideration of the transfer to the syndicate of mining properties,

(v) the location of the principal office of the syndicate and that the principal office shall at all times be maintained in Canada and that the Director and the members of the syndicate shall be notified immediately of any change in the location of the principal office,

(vi) that a person or company holding mining properties for the syndicate shall execute a declaration of trust in favour of the syndicate with respect to such mining properties,

(vii) that after the sale for cash of any issued units of the syndicate no mining properties shall be acquired by the syndicate other than by staking unless such acquisition is approved by members of the syndicate holding at least two-thirds of the issued units of the syndicate that have been sold for cash,

(viii) that the administrative expenditures of the syndicate, including, in addition to any other items, salaries, office expenses, advertising and commissions paid by the syndicate with respect to the sale of its units, shall be limited to one-third of the total amount received by the treasury of the syndicate from the sale of its units,

(ix) that a statement of the receipts and disbursements of the syndicate shall be furnished to the Director and to each member annually,

(x) that 90 per cent of the vendor units of the syndicate shall be escrowed units and may be released upon the consent of the Director and that any release of such units shall not be in excess of one vendor unit for each unit of the syndicate sold for cash,

(xi) that no securities, other than those of the syndicate’s own issue, and no mining properties owned by the syndicate or held in trust for the syndicate shall be disposed of unless such disposal is approved by members of the syndicate holding at least two-thirds of the issued units of the syndicate other than escrowed units; and

(c) the agreement limits the capital of the syndicate to a sum not exceeding $250,000.

(2) The Director may in his or her discretion issue a receipt for a prospecting syndicate agreement filed under this section and is not required to determine whether it is in conformity with paragraphs (1)(a), (b) and (c).

(3) No registered dealer shall trade in a security issued by a prospecting syndicate either as agent for the prospecting syndicate or as principal.

(4) The Director shall not refuse to issue a receipt under subsection (1) without giving the person or company who filed the prospecting syndicate agreement an opportunity to be heard.

68. (1) No person or company shall trade in a security on his, her or its own account or on behalf of any other person or company if the trade would be a distribution of the security, unless a preliminary prospectus and a prospectus have been filed and receipts have been issued for them by the Director.

(2) A preliminary prospectus and a prospectus may be filed in accordance with this Part to enable the issuer to become a reporting issuer, despite the fact that no distribution is contemplated.

69. (1) A preliminary prospectus shall substantially comply with the requirements of Canadian securities law respecting the form and content of a prospectus, except that the report or reports of the auditor or accountant required by the regulations need not be included.

(2) A preliminary prospectus may exclude information with respect to the price to the underwriter and offering price of any securities and other matters dependent upon or relating to such prices.

70. The Director shall issue a receipt for a preliminary prospectus forthwith upon the filing thereof.

71. (1) A prospectus shall provide full, true and plain disclosure of all material facts relating to the securities issued or proposed to be distributed and shall comply with the requirements of Canadian securities law.

(2) The prospectus shall contain or be accompanied by such financial statements, reports or other documents as are required by this Act or the regulations.

72. (1) Where a material adverse change occurs after a receipt is obtained for a preliminary prospectus filed in accordance with subsection 68(1) and before the receipt for the prospectus is obtained or, where a material change occurs after the receipt for the prospectus is obtained but prior to the completion of the distribution under such prospectus, an amendment to such preliminary prospectus or prospectus, as the case may be, shall be filed as soon as practicable and in any event within ten days after the change occurs.

(2) If, after a receipt for a prospectus or for an amendment to a prospectus is issued but before the distribution under the prospectus or amendment is completed, securities in addition to those previously disclosed in the prospectus or amendment are to be distributed, the issuer making the distribution shall file an amendment to the prospectus disclosing the additional securities as soon as practicable and, in any event, within ten days after the decision to increase the number of securities offered is made.

(3) The Director shall issue a receipt for an amendment to a prospectus that must be filed under subsection (1) or (2) unless the Director refuses in accordance with subsection 76(2) to issue the receipt.

(4) Unless otherwise permitted by regulation, an issuer shall not proceed with a distribution or an additional distribution until a receipt is issued for an amendment to the prospectus that must be filed under subsection (1) or (2).

(5) An amendment to a preliminary prospectus referred to in subsection (1) shall, forthwith after it has been filed, be forwarded to each recipient of the preliminary prospectus according to the record maintained under section 82.

73. (1) Subject to subsection (3) of this section and subsection 78(2), and subject to any waiver or variation consented to in writing by the Director, a prospectus filed under subsection 68(1) or subsection 77(1) shall contain a certificate in the prescribed form, signed by the chief executive officer, the chief financial officer, and, on behalf of the board of directors, any two directors of the issuer, other than the foregoing, duly authorized to sign, and any person or company who is a promoter of the issuer.

(2) Subject to subsection (3) of this section and subsection 78(2), a prospectus filed under subsection 68(2) shall contain a certificate in the prescribed form, signed by the chief executive officer, the chief financial officer, and, on behalf of the board of directors, any two directors of the issuer, other than the foregoing, duly authorized to sign, and any person or company who is a promoter of the issuer.

(3) Where the issuer has only three directors, two of whom are the chief executive officer and the chief financial officer, the certificate may be signed by all the directors of the issuer.

(4) Where the Director is satisfied upon evidence or on submissions that either, or both of, the chief executive officer or chief financial officer of the issuer is for adequate cause not available to sign a certificate in a prospectus, the Director may permit the certificate to be signed by any other responsible officer or officers of the issuer in lieu of either, or both of, the chief executive officer or chief financial officer.

(5) With the consent of the Director, a promoter or a guarantor need not sign the certificate in a prospectus.

(6) The Director may, in his or her discretion, require any person or company who was a promoter of the issuer within the two preceding years or who is a guarantor of the securities being distributed to sign the certificate required by subsection (1) or (2) subject to such conditions as the Director may consider proper.

(7) With the consent of the Director, a promoter or a guarantor may sign a certificate in a prospectus by his, her or its agent duly authorized in writing.

74. (1) Subject to subsection 78(2), where there is an underwriter, a prospectus shall contain a certificate in the prescribed form, signed by the underwriter or underwriters who, with respect to the securities offered by the prospectus, are in a contractual relationship with the issuer or security holder whose securities are being offered by the prospectus.

(2) With the consent of the Director, an underwriter may sign a certificate in a prospectus by his, her or its agent duly authorized in writing.

75. Every prospectus shall contain a statement of the rights given to a purchaser by sections 86 and 193.

76. (1) Subject to subsection (2) of this section and subsection 78(4), the Director shall issue a receipt for a prospectus filed under this Part unless it appears to the Director that it is not in the public interest to do so.

(2) The Director shall not issue a receipt for a prospectus or an amendment to a prospectus if it appears to the Director that

(a) the prospectus or any document required to be filed with it

(i) does not comply in any substantial respect with any of the requirements of this Act or the regulations,

(ii) contains any statement, promise, estimate or forward-looking information that is misleading, false or deceptive, or

(iii) contains a misrepresentation;

(b) an unconscionable consideration has been paid or given or is intended to be paid or given for any services or promotional purposes or for the acquisition of property;

(c) the aggregate of

(i) the proceeds from the sale of the securities under the prospectus that are to be paid into the treasury of the issuer, and

(ii) the other resources of the issuer,

is insufficient to accomplish the purpose of the issue stated in the prospectus;

(d) the issuer cannot reasonably be expected to be financially responsible in the conduct of its business because of the financial condition of

(i) the issuer,

(ii) any of the issuer’s officers, directors, promoters, or control persons, or

(iii) the investment fund manager of the issuer or any of the investment fund manager’s officers, directors or control persons;

(e) the business of the issuer may not be conducted with integrity and in the best interests of the security holders of the issuer because of the past conduct of

(i) the issuer,

(ii) any of the issuer’s officers, directors, promoters, or control persons, or

(iii) the investment fund manager of the issuer or any of the investment fund manager’s officers, directors or control persons;

(f) a person or company that has prepared or certified any part of the prospectus, or that is named as having prepared or certified a report or valuation used in connection with the prospectus, is not acceptable;

(g) an escrow or pooling agreement in the form that the Director considers necessary or advisable with respect to the securities has not been entered into; or

(h) adequate arrangements have not been made for the holding in trust of the proceeds payable to the issuer from the sale of the securities pending the distribution of the securities.

(3) The Director shall not refuse to issue a receipt under subsection (1) or (2) without giving the person or company who filed the prospectus an opportunity to be heard.

(4) Where it appears to the Director that a preliminary prospectus, pro forma prospectus, or prospectus raises a material question involving the public interest under subsection (1) or a new or novel question of interpretation under subsection (2) that might result in the Director refusing to issue a receipt under subsection (1) or (2), the Director may refer the question to the Commission for determination.

(5) The Director shall state the question in writing setting out the facts upon which the question is based.

(6) The question, together with any additional material, shall be lodged by the Director with the Secretary of the Commission, and a copy of the question shall forthwith be served by the Secretary upon any interested person or company.

(7) The Commission, after giving the parties an opportunity to be heard, shall consider and determine the question and refer the matter back to the Director for final consideration under subsections (1) and (2).

(8) Subject to any order of the Federal Court made under section 20, the decision of the Commission on the question is binding on the Director.

77. (1) In this section,

“lapse date” means, with reference to a security that is being distributed under subsection 68(1) or this section, the date that is twelve months after the date of the most recent prospectus relating to the security.

(2) No distribution of a security to which subsection 68(1) applies shall continue after the lapse date, unless a new prospectus that complies with this Part is filed and a receipt for the new prospectus is obtained from the Director.

(3) A distribution may be continued for a further twelve months after a lapse date if

(a) a pro forma prospectus prepared in accordance with the regulations is filed not less than thirty days prior to the lapse date of the previous prospectus;

(b) a prospectus is filed not later than ten days following the lapse date of the previous prospectus; and

(c) a receipt for the prospectus is obtained from the Director within the twenty days following the lapse date of the previous prospectus.

(4) The continued distribution of securities after the lapse date does not contravene subsection (2) unless and until any of the conditions of subsection (3) are not complied with.

(5) Subject to any extension granted under subsection (6), all trades completed in reliance upon subsection (3) after the lapse date may be cancelled at the option of the purchaser within ninety days of the purchaser’s first knowledge of the failure to comply with such conditions where any of the conditions to the continuation of a distribution under subsection (3) are not complied with.

(6) The Commission may, upon an application of a reporting issuer, extend, subject to such terms and conditions as it may impose, the times provided by subsection (3) where in its opinion it would not be prejudicial to the public interest to do so.

78. (1) A person or company may, if permitted by the regulations, file a short form of preliminary prospectus, short form of prospectus, pro forma prospectus, preliminary simplified prospectus, simplified prospectus or pro forma simplified prospectus under section 68 or 77 in the prescribed form and any such prospectus that complies with the applicable regulations shall, for the purposes of section 71, be considered to provide sufficient disclosure of all material facts relating to the securities issued or proposed to be distributed under the prospectus.

(2) A short form prospectus may contain one or more forms of certificate to be signed as alternatives to the forms of certificate set out in subsections 73(1) and (2) and subsection 74(1) and, where any such certificate in a short form prospectus is used in accordance with the regulations, it is not necessary to use the alternative certificate required by subsections 73(1) and (2) and subsection 74(1), as the case may be.

(3) A person or company may, if permitted by the regulations, file a summary statement as a separate document in the prescribed form together with a prospectus filed under section 68 or 77.

(4) Where a summary statement is filed with a prospectus, the Director shall not issue a receipt for the prospectus if it appears to the Director that the summary statement does not comply with the regulations applicable thereto.

(5) A summary statement filed with a prospectus for which a receipt has been issued may be sent or delivered by a dealer to a purchaser of securities instead of a prospectus as required in section 86, and, where a dealer so elects, the provisions of sections 86 and 198 with respect to a prospectus apply with necessary modifications to a summary statement.

(6) Every summary statement sent or delivered to a purchaser shall contain a statement informing the purchaser that a copy of the prospectus which was filed with the summary statement will be provided to the purchaser on request, and each person or company who signs or causes to be signed, as the case may be, the certificate contained in the prospectus shall ensure compliance with any such request.

(7) Where, during the distribution or distribution to the public of a security under a prospectus, an order is made to cease trading in the security, or the receipt issued by the Director for the prospectus is revoked or the prospectus lapses or the use of a prospectus is otherwise prohibited by this Act, the regulations or by a decision of the Commission or an order of a court, a summary statement filed with the prospectus shall cease to have force and effect for the purposes of section 86 unless the Director otherwise orders.

(8) Nothing in this section shall be construed to provide relief from liability arising under section 193 where a misrepresentation is contained in a prescribed short form prospectus and, for the purposes of section 193, where a misrepresentation is contained in a summary statement filed with a prospectus, the misrepresentation shall be deemed to be contained in the prospectus.

79. (1) Where a person or company proposing to make a distribution of previously issued securities of an issuer is unable to obtain from the issuer of the securities information or material that is necessary for the purpose of complying with this Part or the regulations, the Director may order the issuer of the securities to furnish to the person or company that proposes to make the distribution such information and material as the Director considers necessary for the purposes of the distribution, upon such terms and subject to such conditions as the Director considers proper, and all such information and material may be used by the person or company to whom it is furnished for the purpose of complying with this Part and the regulations.

(2) Where a person or company proposing to make a distribution of previously issued securities of an issuer is unable to obtain any or all of the signatures to the certificates required by this Act or the regulations, or otherwise to comply with this Part or the regulations, the Director may, upon being satisfied that all reasonable efforts have been made to comply with this Part and the regulations and that no person or company is likely to be prejudicially affected by such failure to comply, make such order waiving any of the provisions of this Part or the regulations as the Director considers advisable, upon such terms and subject to such conditions as he or she considers proper.

80. (1) In this section,

“waiting period” means the period prescribed by regulation or, if no period is prescribed, the period between the Director’s issuance of a receipt for a preliminary prospectus relating to the offering of a security and the Director’s issuance of a receipt for the prospectus.

(2) Despite section 68, but subject to Part XI, it is permissible during the waiting period

(a) to distribute a notice, circular, advertisement or letter to or otherwise communicate with any person or company identifying the security proposed to be issued, stating the price thereof, if then determined, the name and address of a person or company from whom purchases of the security may be made and containing such further information as may be permitted or required by the regulations, if every such notice, circular, advertisement, letter or other communication states the name and address of a person or company from whom a preliminary prospectus may be obtained;

(b) to distribute a preliminary prospectus; and

(c) to solicit expressions of interest from a prospective purchaser if, prior to such solicitation or forthwith after the prospective purchaser indicates an interest in purchasing the security, a copy of the preliminary prospectus is forwarded to him, her or it.

81. Any dealer distributing a security to which section 80 applies shall, in addition to the requirements of paragraph 80(2)(c), send a copy of the preliminary prospectus to each prospective purchaser who, without solicitation, indicates an interest in purchasing the security and requests a copy of such preliminary prospectus.

82. Any dealer distributing a security to which section 80 applies shall maintain a record of the names and addresses of all persons and companies to whom the preliminary prospectus has been forwarded.

83. Where it appears to the Director that a preliminary prospectus is defective in that it does not substantially comply with the requirements of Canadian securities law as to form and content, the Director may, without giving notice, order that the trading permitted by subsection 80(2) in the security to which the preliminary prospectus relates shall cease until a revised preliminary prospectus satisfactory to the Director is filed and forwarded to each recipient of the defective preliminary prospectus according to the record maintained under section 82.

84. From the date of the issuance by the Director of a receipt for a prospectus relating to a security, a person or company trading in the security in a distribution, either on his, her or its own account or on behalf of any other person or company, may distribute the prospectus, any document filed with or referred to in the prospectus and any notice, circular, advertisement or letter of the nature described in paragraph 80(2)(a) or in the regulations, but shall not distribute any other printed or written material respecting the security that is prohibited by the regulations.

85. (1) Where it appears to the Commission, after the filing of a prospectus under this Part and the issuance of a receipt therefor, that any of the circumstances set out in subsection 76(2) exist, the Commission may order that the distribution of the securities under the prospectus shall cease.

(2) No order shall be made under subsection (1) without a hearing unless in the opinion of the Commission the length of time required for a hearing could be prejudicial to the public interest, in which event a temporary order may be made which shall expire fifteen days from the date of the making thereof unless the hearing is commenced in which case the Commission may extend the order until the hearing is concluded.

(3) A notice of every order made under this section shall be served upon the issuer to whose securities the prospectus relates, and forthwith upon the receipt of the notice,

(a) distribution of the securities under prospectus by the person or company named in the order shall cease; and

(b) any receipt issued by the Director for the prospectus is revoked.

86. (1) A dealer not acting as agent of the purchaser who receives an order or subscription for a security offered in a distribution to which subsection 68(1) or section 77 is applicable shall, unless the dealer has previously done so, send by prepaid mail or deliver to the purchaser the latest prospectus and any amendment to the prospectus filed either before entering into an agreement of purchase and sale resulting from the order or subscription or not later than midnight on the second day, exclusive of Saturdays and holidays, after entering into such agreement.

(2) An agreement of purchase and sale referred to in subsection (1) is not binding upon the purchaser, if the dealer from whom the purchaser purchases the security receives written or telegraphic notice evidencing the intention of the purchaser not to be bound by the agreement of purchase and sale not later than midnight on the second day, exclusive of Saturdays and holidays, after receipt by the purchaser of the latest prospectus and any amendment to the prospectus.

(3) Subsection (2) does not apply if the purchaser is a registrant or if the purchaser sells or otherwise transfers beneficial ownership of the security referred to in subsection (2), otherwise than to secure indebtedness, before the expiration of the time referred to in subsection (2).

(4) For the purpose of this section, where the latest prospectus and any amendment to the prospectus is sent by prepaid mail, the latest prospectus and any amendment to the prospectus shall be deemed conclusively to have been received in the ordinary course of mail by the person or company to whom it was addressed.

(5) The receipt of the latest prospectus or any amendment to the prospectus by a dealer who is acting as agent of or who thereafter commences to act as agent of the purchaser with respect to the purchase of a security referred to in subsection (1) shall, for the purpose of this section, be receipt by the purchaser as of the date on which the agent received such latest prospectus and any amendment to the prospectus.

(6) The receipt of the notice referred to in subsection (2) by a dealer who acted as agent of the vendor with respect to the sale of the security referred to in subsection (1) shall, for the purpose of this section, be receipt by the vendor as of the date on which the agent received such notice.

(7) For the purpose of this section, a dealer shall not be considered to be acting as agent of the purchaser unless the dealer is acting solely as agent of the purchaser with respect to the purchase and sale in question and has not received and has no agreement to receive compensation from or on behalf of the vendor with respect to the purchase and sale.

(8) The onus of proving that the time for giving notice under subsection (2) has expired is upon the dealer from whom the purchaser has agreed to purchase the security.

87. (1) Subject to the regulations, sections 68 and 77 do not apply to a distribution where

(a) the purchaser is

(i) a bank or the Business Development Bank of Canada,

(ii) an association to which the Cooperative Credit Associations Act applies, a central cooperative credit society for which an order has been made under subsection 473(1) of that Act or a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

(iii) a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province,

(iv) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act or an insurance corporation incorporated by or under an Act of the legislature of a province,

(v) a subsidiary of any company referred to in subparagraph (i), (ii), (iii) or (iv), where the company owns all of the voting shares of the subsidiary,

(vi) a dealer registered in the category of broker, investment dealer or securities dealer,

(vii) Her Majesty in right of Canada or any province, or

(viii) any municipal corporation or public board or commission in Canada,

who purchases as principal;

(b) the trade is an isolated trade by or on behalf of an issuer in a specific security of its own issue, for the issuer’s account, where the trade is not made in the course of continued and successive transactions of a like nature, and is not made by a person or company whose usual business is trading in securities;

(c) the party purchasing as principal is a company or a person and is recognized by the Commission as an exempt purchaser;

(d) the purchaser purchases as principal, if the trade is in a security which has an aggregate acquisition cost to such purchaser of not less than $150,000 or such other amount as is prescribed;

(e) the trade is to a lender, pledgee, mortgagee or other encumbrancer from the holdings of any person, company or combination of persons or companies described in paragraph (c) of the definition of “distribution” in subsection 2(1) for the purpose of giving collateral for a debt made in good faith;

(f) the trade is made by an issuer

(i) in a security of its own issue that is distributed by it to holders of its securities as a stock dividend or other distribution out of earnings or surplus,

(ii) in a security whether of its own issue or not that is distributed by it to holders of its securities as incidental to a good faith reorganization or winding up of the issuer or distribution of its assets for the purpose of winding up its affairs pursuant to the laws of the jurisdiction in which the issuer was incorporated, organized or continued, or

(iii) in securities of its own issue transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

provided that no commission or other remuneration is paid or given to others in respect of such distribution except for ministerial or professional services or for services performed by a registered dealer;

(g) the trade is made by an issuer in a security of a reporting issuer held by it that is distributed by it to holders of its securities as a dividend in kind;

(h) the trade is made by an issuer

(i) in a right, transferable or otherwise granted by the issuer to holders of its securities to purchase additional securities of its own issue and the issue of securities pursuant to the exercise of the right, or

(ii) in securities of a reporting issuer held by it transferred or issued through the exercise of a right to purchase, convert or exchange previously granted by the issuer,

if the issuer has given the Commission written notice stating the date, amount, nature and conditions of the proposed trade, including the approximate net proceeds to be derived by the issuer on the basis of such additional securities being fully taken up and either

(iii) the Commission has not informed the issuer in writing within ten days of the giving of the notice that it objects to the proposed trade, or

(iv) the issuer has delivered to the Commission information relating to the securities that is satisfactory to and accepted by the Commission;

(i) the trade is made in a security of a company that is exchanged by or for the account of such company with another company or the holders of the securities of that other company in connection with

(i) a statutory amalgamation or arrangement, or

(ii) a statutory procedure under which one company takes title to the assets of the other company which in turn loses its existence by operation of law, or under which the existing companies merge into a new company;

(j) the trade is made in a security of an issuer that is exchanged by or for the account of the issuer with the security holders of another issuer in connection with a takeover bid as defined in Part XVIII;

(k) the trade is made in a security to a person or company pursuant to a takeover bid or issuer bid made by that person or company;

(l) the trade is made by an issuer in a security of its own issue as consideration for a portion or all of the assets of any person or company, if the fair value of the assets so purchased is not less than $150,000 or such other amount as is prescribed;

(m) the trade is made by an issuer in a security of its own issue in consideration of mining claims where the vendor enters into such escrow or pooling agreement as the Director considers necessary or where the security proposed to be issued, or the security underlying that security, is listed and posted for trading on a stock exchange recognized for the purpose of this paragraph by the Commission and the issuer has received, where required by the bylaws, rules or policies of that stock exchange, the consent of that stock exchange to the issuance of the security;

(n) the trade is made by an issuer in the securities of its own issue with its employees or the employees of an affiliate who are not induced to purchase by expectation of employment or continued employment, whether such trade takes place directly between the issuer and the employee or through a trustee or an administrator of a share purchase plan established for the benefit of employees of the issuer or its affiliates;

(o) the trade is made by an issuer in securities of its own issue where the trade is reasonably necessary to facilitate the incorporation or organization of the issuer and the securities are traded for a nominal consideration to not more than five incorporators or organizers unless the statute under which the issuer is incorporated or organized requires the trade to be for a greater consideration or to a larger number of incorporators or organizers, in which case the securities may be traded for that greater consideration or to that larger number of incorporators or organizers;

(p) the trade is made by an issuer with a view to the sale of securities of its own issue if solicitations are made to not more than fifty prospective purchasers resulting in sales to not more than twenty-five purchasers and

(i) each purchaser purchases as principal, and all of the purchases are completed within a period of six months of the first purchase except that subsequent sales to the same purchasers may be carried out if made in compliance with written agreements entered into during that six-month period,

(ii) each purchaser has access to substantially the same information concerning the issuer that a prospectus filed under this Act would provide and is

(A) an investor who, by virtue of net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the issuer whose securities are being offered and who is a registered adviser or a registered dealer, is able to evaluate the prospective investment on the basis of information respecting the investment presented by the issuer,

(B) a senior officer or director of the issuer,

(C) a parent, brother, sister or child of the person mentioned in sub-subparagraph (B), or

(D) a person to whom the person mentioned in sub-subparagraph (B) is married or with whom the person mentioned in sub-subparagraph (B) is living in a conjugal relationship outside marriage,

(iii) the offer and sale of the securities are not accompanied by an advertisement and no selling or promotional expenses have been paid or incurred in connection therewith, except for professional services or for services performed by a registered dealer, and

(iv) no promoter of the issuer, other than a registered dealer, has acted as a promoter of any other issuer which has traded in securities of its own issue pursuant to the exemption in this paragraph within the previous twelve months,

but an issuer which has relied upon this exemption may not again thereafter rely upon this exemption;

(q) the trade is made from one registered dealer to another registered dealer where the registered dealer making the purchase is acting as principal; or

(r) the trade is made between a person or company and an underwriter acting as purchaser or between or among underwriters.

(2) For the purpose of subsection (1), a trust company under the Trust and Loan Companies Act or a trust corporation incorporated by or under an Act of the legislature of a province, shall be deemed to be acting as principal when it trades as trustee or as agent for accounts fully managed by it.

(3) Subject to the regulations, where a trade has been made under paragraph (1)(a), (b), (c), (d), (l), (p) or (q), the vendor shall within ten days file a report prepared and executed in accordance with the regulations, but no report is required where, by a trade under paragraph (1)(a), a bank listed in Schedule I or II to the Bank Act or a body corporate to which the Trust and Loan Companies Act applies or a trust or loan corporation incorporated by or under an Act of the legislature of a province acquires from a customer an evidence of indebtedness of the customer or an equity investment in the customer acquired concurrently with an evidence of indebtedness.

(4) The first trade in securities previously acquired pursuant to an exemption contained in paragraph (1)(a), (b), (c), (d), (l), (m), (p) or (q), other than a further trade exempted by Canadian securities law, is a distribution, unless

(a) the issuer of the security is a reporting issuer and is not in default of any requirement of this Act or the regulations;

(b)(i) the securities are listed and posted for trading on a stock exchange recognized for this purpose by the Commission and comply with the requirements prescribed by the regulations and have been held at least six months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is the later, or

(ii) the securities are bonds, debentures or other evidences of indebtedness issued or guaranteed by an issuer or are preferred shares of an issuer and comply with the requirements prescribed by the regulations and have been held at least six months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is the later, or

(iii) the securities are listed and posted for trading on a stock exchange recognized for this purpose by the Commission or are bonds, debentures or other evidences of indebtedness issued or guaranteed by the reporting issuer whose securities are so listed, and have been held at least one year from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is later, or

(iv) the securities have been held at least eighteen months from the date of the initial exempt trade or the date the issuer became a reporting issuer, whichever is later; and

(c) the vendor files a report within ten days prepared and executed in accordance with the regulations,

provided that no unusual effort is made to prepare the market or to create a demand for such securities and no extraordinary commission or consideration is paid in respect of such trade.

(5) The first trade in securities previously acquired under an exemption contained in paragraph (1)(f), (i), (j), (k) or (n) and the first trade in previously issued securities of a company that has ceased to be a private company, other than a further trade exempted by Canadian securities law, is a distribution except that where

(a) the issuer of the securities is a reporting issuer and has been a reporting issuer for at least twelve months or, in the case of securities acquired under paragraph (1)(i), one of the amalgamating or merged corporations or one of the continuing corporations has been a reporting issuer for twelve months and the issuer is not in default of any requirement of this Act or the regulations;

(b) disclosure to the Commission has been made of its exempt trade or in the case of a company that has ceased to be a private company the issuer has filed with the Commission such report with respect to its outstanding securities as may be required by the regulations; and

(c) no unusual effort is made to prepare the market or to create a demand for the securities and no extraordinary commission or consideration is paid in respect of the trade,

then such first trade is a distribution only if it is a distribution as defined in paragraph (c) of the definition of “distribution” in subsection 2(1).

(6) The first trade in securities previously purchased under an exemption contained in paragraph (1)(o) or (r), other than a further trade exempted by Canadian securities law, is a distribution.

(7) Sections 68 and 77 do not apply to a distribution within the meaning of paragraph (c) of the definition of “distribution” in subsection 2(1) or by a lender, pledgee, mortgagee or other encumbrancer for the purpose of liquidating a debt made in good faith by selling or offering for sale a security pledged, mortgaged or otherwise encumbered in good faith as collateral for the debt in accordance with paragraph (1)(e), if

(a) the distribution is exempted by Canadian securities law; or

(b) the issuer of the security is a reporting issuer and has been a reporting issuer for at least eighteen months and is not in default of any requirement of this Act or the regulations and the seller, unless exempted by the regulations,

(i) files with the Commission and any stock exchange recognized by the Commission for this purpose on which the securities are listed at least seven days and not more than fourteen days prior to the first trade made to carry out the distribution

(A) a notice of intention to sell in the form prescribed by the regulations disclosing particulars of the control position known to the seller, the number of securities to be sold and the method of distribution, and

(B) a declaration signed by each seller as at a date not more than twenty-four hours prior to its filing and prepared and executed in accordance with the regulations and certified as follows:

“The seller for whose account the securities to which this certificate relates are to be sold hereby represents that the seller has no knowledge of any material change which has occurred in the affairs of the issuer of the securities which has not been generally disclosed and reported to the Commission, nor has the seller any knowledge of any other material adverse information in regard to the current and prospective operations of the issuer which have not been generally disclosed”,

and,

(ii) files within three days after the completion of any trade, a report of the trade in the form prescribed under Part XIX,

provided that the notice required to be filed under sub-subparagraph (i)(A) and the declaration required to be filed under sub-subparagraph (i)(B) shall be renewed and filed at the end of sixty days after the original date of filing and thereafter at the end of each twenty-eight day period so long as any of the securities specified under the original notice have not been sold or until notice has been filed that the securities so specified or any part thereof are no longer for sale; and

(c) no unusual effort is made to prepare the market or to create a demand for the securities and no extraordinary commission or other consideration is paid in respect of such trade.

(8) The Commission may publish a list of reporting issuers who are in default of any requirement of this Act or the regulations.

88. (1) Sections 68 and 77 do not apply to a distribution of securities

(a) referred to in subsection 52(2), excepting paragraphs (o) and (p) thereof;

(b) that are listed and posted for trading on any stock exchange recognized for the purpose of this section by the Commission where the securities are distributed through the facilities of the stock exchange pursuant to the rules of the stock exchange and the requirements of the Commission, provided that a statement of material facts, which shall comply as to form and content with the regulations, is filed with and is accepted for filing by the stock exchange and the Commission;

(c) that are options to sell or purchase securities known as puts and calls or any combination thereof which provide that the holder thereof may sell to or purchase from the writer of the option a specified amount of securities at a specific price, on or prior to a specified date or the occurrence of a specified event, provided

(i) the option has been written by a member of an exchange recognized by the Commission for this purpose or the performance under the option is guaranteed by a member of an exchange recognized by the Commission for this purpose,

(ii) the securities that are the subject of the option are listed and posted for trading on an exchange recognized by the Commission for this purpose, and

(iii) the option is in the form from time to time prescribed by the regulations; or

(d) that are exempted by the regulations.

(2) Sections 86 and 193 apply with necessary modifications to a distribution under paragraph (1)(b) as if sections 68 and 77 were applicable thereto, and the statement of material facts referred to in paragraph (1)(b) shall be deemed conclusively to be a prospectus for the purposes of sections 86 and 193.

89. (1) The Commission may, upon the application of an interested person or company, rule that any trade, intended trade, security, person or company is not subject to section 44 or 68 where it is satisfied that to do so would not be prejudicial to the public interest, and may impose such terms and conditions as are considered necessary.

(2) Where doubt exists whether a distribution of any security has been concluded or is currently in progress, the Commission may determine the question and rule accordingly.

(3) A decision of the Commission under this section is final and there is no appeal therefrom.