Securities Law & Instruments

 


NOTICE OF PROPOSED RULE 33-503,

COMPANION POLICY 33-503CP AND FORM 33-503F

CHANGE OF REGISTRATION INFORMATION,

RESCISSION OF NOTICE AND REVOCATION OF REGULATIONS

UNDER THE SECURITIES ACT

Substance and Purpose of Proposed Rule, Companion Policy, Form and Rescission of Notice

The substance and purpose of the proposed Rule are to require registrants to make application for amendments to theregistrant's registration in certain circumstances and to notify the Director of specified changes in information relevantto the registrant's registration.

The proposed Rule also sets out specific provisions relating to notice of a proposed change in ownership of a registrant.Under the proposed Rule, the Commission can issue an order prohibiting any proposed change in ownership beforethe Commission determines if it will exercise its powers under paragraph 1 of subsection 127(1) of the Act with respectto the change.

In December 1989, the Registration Section of the Capital Markets Branch of the Commission published OSCRegistration Section Clarification Note 4. In the notice accompanying the Clarification Note, the Commission noted thatnotices of changes under section 33 of the Securities Act (the "Act") were generally submitted in letter form with nostandardization in the way in which the information was presented and that Form 7 of the Regulation under the Act (the"Regulation") was rarely used and of limited application. In order to permit amendments to be dealt with moreexpeditiously, a new form entitled "Notice of Amendment" was developed to be filed with each amendment. The formwas designed to allow data entry functions to be separated from approval functions at an early stage in the reviewprocedure and amendments to be directed to support or senior staff as appropriate.

In July 1990, the form was updated and expanded to include reporting of changes in, and removal of terms andconditions to, a registration by a Commission notice entitled Revised Notice of Amendment or Change of InformationForm of Dealers and Advisers published in (1990), 13 OSCB 2971 (the "OSC Notice").

The proposed Rule replaces the OSC Notice and OSC Registration Section Clarification Note 4 but does not affectsection 33 of the Act. If section 33 of the Act is subsequently repealed, this proposed Rule would govern allrequirements for amendments for registration.

The proposed Rule clarifies the difference between amendments requiring approval and changes requiring notice onlyand does not change the substance of the OSC Notice or the OSC Regulation Section Clarification Note 4. Theproposed rule also requires that changes to registration information that were previously reported at the time of renewalbe reported within five days of the event.

The OSC Notice will be rescinded and the OSC Registration Section Clarification Note will no longer be effective.

The substance and purpose of the proposed Companion Policy are to provide guidance on what changes to a categoryof registration constitute an amendment and the difference between a reorganization requiring an amendment toregistration and a reorganization requiring a new registration. The proposed Companion Policy also provides guidanceon issues the Commission may consider in reviewing a proposed change of ownership of a registered firm. Theproposed Companion Policy also reminds registrants of the ability under section 31 of the Act for the Director to requestinformation from registrants.

The proposed Form 33-503F is intended to simplify and standardize amendment applications and notifications ofchanges.

Terms used in the Companion Policy that are defined or interpreted in the Rule or the definition instruments in forcein Ontario should be read in accordance with the Rule or those definition instruments, unless the context otherwiserequires.

Summary of Proposed Rule, Companion Policy, Form and Rescission of Notice

The proposed Rule requires that a registered firm notify the Director of changes in certain information provided to theCommission in connection with the registration of the registered firm and its individual registrants as well as informationrelating to its accepted persons. A notice of change is required to be delivered within five days of the change. Inaddition, the proposed Rule requires that a registered firm make an application for an amendment to the registrationof the registered firm or its individual registrants in certain circumstances. An application for amendment must be madebefore the amendment becoming effective. The proposed Rule defines "amendment" and "notifiable change".

The proposed Rule also sets out specific provisions relating to notice of certain proposed changes in ownership of aregistrant. Under the proposed Rule the Commission can issue a temporary order prohibiting any specified change inownership before the Commission determines if it will exercise its powers under paragraph 1 of subsection 127(1) ofthe Act in respect of the change.

Part 4 of the proposed Rule will replace sections 104 and 217 of the Regulations. The proposed Rule does not providespecific issues to be considered by the Commission in assessing the public interest of a transaction. Specific commentis requested as to whether the identification of specific issues to be considered by the Commission provide usefulguidance and therefore should be included.

The proposed Companion Policy provides guidance on what changes to a category of registration constitute anamendment and the difference between a reorganization requiring an amendment to registration and a reorganizationrequiring a new registration. The proposed Companion Policy also provides guidance on issues the Commission mayconsider in reviewing a proposed change of ownership of a registered firm. The proposed Companion Policy alsoreminds registrants of the ability under section 31 of the Act for the Director to request information from registrants.

The proposed Form 33-503F is intended to simplify and standardize amendment applications and notifications ofchanges.

The OSC Notice will no longer be relevant as it deals with the same subject matter as the proposed Rule.

Authority for Proposed Rule

The authority for the proposed Rule is found under the following paragraphs of the Act. Paragraph 143(1)1 of the Actauthorizes the Commission to make rules prescribing requirements in respect of applications for registration and therenewal, amendment, expiration or surrender of registration. Paragraph 143(1)2 of the Act authorizes the Commissionto make rules prescribing the conditions of registration or other requirements for registrants. Paragraph 143(1)5 of theAct authorizes the Commission to make rules prescribing requirements in respect of notification by a person orcompany in respect of a proposed change in beneficial ownership of, or control or direction over, securities of aregistrant and authorizing the Commission to make an order that a proposed change may not be effected before adecision by the Commission as to whether it will exercise its powers under paragraph 1 of subsection 127(1) of the Actas a result of the proposed change. Paragraph 143(1)7 of the Act authorizes the Commission to make rules prescribingrequirements in respect of the disclosure or furnishing of information to the Commission by registrants. Paragraph143(1)39 of the Act authorizes the Commission to make rules requiring or respecting the media, format, preparation,form, content, execution, certification, dissemination and other use, filing and review of all documents required underor governed by the Act, the regulations or the rules, including prospectuses.

Related Instruments

The proposed Companion Policy is related to the proposed Rule and sections 31 and 33 of the Act.

Alternatives Considered

Based on its experience of increased efficiency through the use of a standardized content and supporting materials, theCommission decided to maintain in part the system of notification implemented by the predecessor instrumentsdescribed above and to require the prescribed content and supporting materials. The Commission has determined toprescribe a simplified form to be used to report notifiable changes or to apply for an amendment. The Commission wasalso of the view that the additional reporting requirements in the proposed Rule should be mandatory. Accordingly, thisinstrument has been proposed as a rule. No alternative was considered.

Unpublished Materials

In proposing the Rule, the Companion Policy and the rescission of the OSC Notice, the Commission has not relied onany significant unpublished study, report, decisions or other written materials.

Anticipated Costs and Benefits

The updating of information required by the proposed Rule should assist the regulation of registrants. Although theproposed Rule imposes costs on registrants related to reporting and as a result of proposed amendments to Schedule1 to the Regulation, the Commission is of the view that these costs are generally not significant and are justified by theanticipated benefits.

Regulations to be Revoked

The Commission will revoke sections 104 and 109, subsections 135(1), 135(2) and 135(3), section 136, subsections217(1), 217(2), 217(3) and 217(4) and Form 7 of the Regulation as they are inconsistent with the proposed Rule.

The Commission will revoke subsections 12(1), 12(1.1), 12(2) and 12(3) of Schedule 1 to the Regulation and replacethem with the following:

"12(1) A registrant shall pay a fee of $125 upon any application required by Part 2 of Rule 33-503 Changesin Registration Information."

The Commission will revoke subsections 44(1), 44(2) and 44(3) of Schedule 1 to the Regulation and replace them withthe following:

"44(1) A notice under Part 4 of Rule 33-503 Changes in Registration Information shall be accompanied bya fee of $500."

Comments

Interested parties are invited to make written submissions with respect to the proposed Rule. Submissions receivedby December 17, 1999 will be considered.

Submissions should be made in duplicate to:

Daniel P. Iggers
Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8

A diskette containing the submissions (in DOS for Windows format, preferably WordPerfect) should also be submitted.As the Act requires that a summary of written comments received during the comment period be published,confidentiality of submissions cannot be maintained.

Questions may be referred to:

Dirk de Lint
Legal Advisor
Registration, Market Operations Branch
Ontario Securities Commission
(416) 593-8090

Proposed Rule, Companion Policy and Form

The text of the proposed Rule, Companion Policy and Form follow, together with footnotes that are not part of the Rulebut have been included to provide background and explanation.

Text of Rescission of Notice

The text of the proposed rescission of the Ontario Securities Commission Notice Revised Notice of Amendment orChange of Information Form of Dealers and Advisers follows:

"The Commission Notice entitled Revised Notice of Amendment or Change of Information Form of Dealers and Advisersis rescinded on the effective date of Rule 33-503 Changes in Registration Information."

DATED: September 17, 1999.

ONTARIO SECURITIES COMMISSION RULE 33-503

CHANGE OF REGISTRATION INFORMATION

PART 1 DEFINITION
1.1 Definitions

PART 2 AMENDMENTS
2.1 Amendments

PART 3 NOTICES OF CHANGES
3.1 Notice of Changes
3.2 Exception
3.3 Delivery of Notice

PART 4 ACQUISITION OF SECURITIES OF REGISTERED DEALER, UNDERWRITER OR ADVISER

4.1 Notice Required

4.2 Order Prohibiting Change

4.3 Completion Notice

PART 5 FORM OF NOTICE
5.1 Form of Notice

PART 6 EXEMPTIONS
6.1 Exemptions

APPENDIX A

FORM 33-503F

ONTARIO SECURITIES COMMISSION RULE 33-503

CHANGE OF REGISTRATION INFORMATION(1)

PART 1 DEFINITIONS(2)

1.1 Definitions - In this Rule

"accepted person" means an individual who is a director, partner or officer of

(a) a registered firm that is registered as an adviser, and who does not act as an adviser on theregistered firm's behalf, or

(b) a registered firm that is registered as a dealer, and who does not engage in trading securities on theregistered firm's behalf;

"amendment" means any change to information about a registrant for which approval of the Director isrequired before the change may be implemented, as set out in Part 2 of this Rule;

"individual registrant" means an individual that is registered under the dealer registration requirement(3) or theadviser registration requirement(4);

"notifiable change" means any change to information about a registrant for which notice to the Director isrequired after the change in information, as set out in Part 3 of this Rule; and

"registered firm" means a registrant that is registered as a dealer, underwriter or adviser but does not includean individual registrant.

(5)

PART 2 AMENDMENTS

2.1 Amendments

(1) A registered firm shall apply to the Director to effect an amendment to its registration or theregistration of any of its individual registrants for the following:

1. A change in the designation of a compliance officer by the registered firm under section 1.3of Rule 31-505 Conditions of Registration.

2. A change in the designation of a branch manager by the registered firm under section 1.4of Rule 31-505 Conditions of Registration(6).

3. The election of a director of the registered firm.

4. The appointment by the registered firm of an accepted person.

5. The reinstatement of a registration that was suspended for an individual registrant of theregistered firm.

6. A change in the name of the registered firm.

7. The use of a trade name or business name other than the name in which the registeredfirm's or any of the registered firm's individual registrants' registration is granted.

8. A change in registration category or the addition of a new registration category for theregistered firm or any of the registered firm's individual registrants.

9. The reorganization or amalgamation of the registered firm.

10. The voluntary surrender of registration by the registered firm.

11. A request to amend terms and conditions of the registration of the registered firm or any ofthe registered firm's individual registrants.

(2) If within thirty days of receipt of an application under subsection (1) the Director gives a written noticeof objection to the proposed amendment, the registrant to which the application relates shall not effectthe proposed amendment before receiving approval from the Director of the proposed amendment.(7)

(3) Following receipt of a notice of objection under subsection (2), the affected registrant may requestthe Director to hold a hearing on the matter.

PART 3 NOTICES OF CHANGES

3.1 Notice of Changes(8) - A registered firm shall notify the Director of the following notifiable changes toinformation about the registered firm or any of its individual registrants:

(1) The address of all business locations of the registered firm in Ontario.

(2) The residential address of any of the registered firm's individual registrants.

(3) The termination of office or employment of a salesperson, partner, director or officer of the registeredfirm.

(4) A change in name of any of the registered firm's individual registrants or accepted persons.

(5) A change in the registered firm's banking arrangements.

(6) A change in the custodian of securities held by the registered firm on behalf of clients.

(7) A change in a registered firm's depository.

(8) The registration or licensing of the registered firm or an affiliate, individual registrant or acceptedperson of the registered firm with any securities regulatory authority.

(9) The membership of the registered firm or an affiliate or accepted person of the registered firm in anSRO(9) and the name of the SRO that has the primary audit jurisdiction for the registered firm, affiliateor accepted person.

(10) The receipt of notification by the registered firm or any of the registered firm's individual registrantsor accepted persons from a securities regulatory authority or an SRO that it has, or if the registeredfirm knows or has reason to believe that a securities regulatory authority or SRO has,

1. refused to grant registration, licensing or membership in the SRO to the registered firm oran affiliate, individual registrant or accepted person of the registered firm;

2. suspended or terminated registration or licensing, or membership in the SRO, of theregistered firm or an affiliate, individual registrant or accepted person of the registered firm;

3. imposed terms or conditions on the registration or licensing, or membership in the SRO, ofthe registered firm or an affiliate, individual registrant or accepted person of the registeredfirm; or

4. commenced any action, investigation or administrative, criminal, quasi-criminal, penal orother proceeding against the registered firm or an affiliate, individual registrant or acceptedperson of the registered firm.

(11) The commencement of any other regulatory proceedings against the registered firm or an affiliate,individual registrant or accepted person of the registered firm.

(12) The commencement of any civil proceedings against the registered firm or an affiliate, individualregistrant or accepted person of the registered firm under which damages in excess of twenty-fivethousand dollars are claimed against the registered firm, the affiliate, the individual registrant or theaccepted person.

(13) The notification of any criminal or quasi-criminal charges under the laws of Canada, a jurisdiction(10)or a foreign jurisdiction(11) against the registered firm an affiliate, individual registrant or acceptedperson of a registered firm.

(14) The conviction of the registered firm or an affiliate, individual registrant or accepted person of theregistered firm on any criminal or quasi-criminal charge under the laws of Canada, a jurisdiction ora foreign jurisdiction.

(15) The acquittal of the registered firm or an affiliate, individual registrant or accepted person of theregistered firm on any criminal or quasi-criminal charges under the laws of Canada, a jurisdiction ora foreign jurisdiction.

(16) The issuance of a judgment or garnishment order against the registered firm or an affiliate, individualregistrant or accepted person of the registered firm for an amount in excess of twenty-five thousanddollars.

(17) The entering into of any settlement agreement by the registered firm or an affiliate, individualregistrant or accepted person of the registered firm with a securities regulatory authority or an SRO.

(18) The entering into of any settlement agreement by the registered firm or an affiliate, individualregistrant or accepted person of the registered firm with a person or company other than a securitiesregulatory authority or an SRO under which the registered firm or the affiliate, individual registrantor accepted person agrees to pay a person or company in excess of twenty-five thousand dollars.

(19) The making of a declaration, assignment or petition in bankruptcy, or of a proposal to creditors,relating to the registered firm or an affiliate, individual registrant or accepted person of the registeredfirm.

(20) The appointment of a receiver or receiver manager for the business of the registered firm or of anaffiliate, individual registrant or accepted person of the registered firm.

(21) The making of a declaration, assignment or petition in bankruptcy or a proposal to creditors relatingto a company for which any of the registered firm's individual registrants or accepted persons is, orwas within a three-month period before such declaration, assignment, petition or proposal, a director.

(22) The receipt of notification by the registered firm of a refusal of an application by the registered firmor an affiliate, individual registrant or accepted person of the registered firm for a fidelity or suretybond.

(23) The change or addition of a guarantor of any debts of the registered firm.

(24) A change in the types of business activities of the registered firm or any of the registered firm'sindividual registrants or accepted persons.

(25) A change in the auditor of the registered firm.

(26) A change in the financial year end of the registered firm.

3.2 Exception. A notice required by section 3.1 is only required for changes to information provided in theforms that were most recently executed by the registrant or accepted person and delivered by the registrantor accepted person to the Commission.

3.3 Delivery of Notice. A notice required by section 3.1 shall be delivered to the Director within five days afterthe change to which it relates has occurred.

PART 4 ACQUISITION OF SECURITIES OF REGISTERED DEALER, UNDERWRITER OR ADVISER(12)

4.1 Notice Required

(1) A person or company shall give written notice to the Director if the person or company proposes toacquire, directly or indirectly, beneficial ownership of or control or direction over, or a combinationof beneficial ownership and control or direction over, ten per cent or more of any class or series ofvoting securities of a registered dealer or adviser.

(2) The notice required by subsection (1) shall provide all relevant facts about the acquisition that areknown to the person or company providing the notice.(13)

(3) The notice required under subsection (1) shall be given to the Director at least fifteen business daysbefore the scheduled closing date of the proposed acquisition to which it relates.

(4) Despite subsection (1) no notice is required for a proposed acquisition if an application for approvalof the acquisition is made under Rule 81-102 Mutual Funds at least fifteen business days before thescheduled closing date of the proposed acquisition.

4.2 Order Prohibiting Change

(1) Within fifteen(14) business days of the receipt of a notice under subsection 4.1(1) the Commission mayissue a temporary order prohibiting the completion of the transaction to which the notice relatesbefore a decision is made by the Commission as to whether it will exercise its powers underparagraph 1 of subsection 127(1) of the Act.

(2) An order made under subsection (1) shall take effect immediately and shall expire on the fifteenthbusiness day after its making unless extended by the Commission.(15)

(3) The Commission may extend a temporary order made under subsection (1) until the hearing isconcluded if a hearing is commenced under subsection 127(4) of the Act within the fifteen-businessday period.

(4) Despite subsection (3), the Commission may extend a temporary order under subsection (1) for suchperiod as it considers necessary if satisfactory information is not provided to the Commission withinthe fifteen-business day period.

(5) The Commission shall give written notice of every temporary order made under subsection (1),together with a notice of hearing, to any person or company directly affected by the temporary order.

4.3 Completion Notice

(1) A registrant shall deliver a written notice to the Director that a transaction for which a notice by it orrelating to an acquisition of its securities was delivered under section 4.1 has been completed inaccordance with the terms set out in the notice.

(2) The notice required under subsection (1) shall be delivered to the Director within five days ofcompletion of the transaction to which it relates.

PART 5 FORM OF NOTICE

5.1 Form of Notice(16)

(1) An application for an amendment to registration and a notice of change in information about aregistrant under this Rule shall contain the information specified in Appendix A for the type ofamendment or change in information and shall be accompanied by the documents listed in AppendixA for the amendment requested or change being reported.

(2) Each application for an amendment and each notice of change shall be made in a separatedocument.

PART 6 EXEMPTIONS

6.1 Exemptions - The Director may grant an exemption to this Rule, in whole or in part, subject to suchconditions or restrictions as may be imposed in the exemption.

 

APPENDIX A TO RULE 33-503

 

 

CHANGES TO REGISTRATION INFORMATION

 

I. AMENDMENT TO REGISTRATION

General - Each amendment requested or notifiable change reported on Form 33-503F should includesufficient information for the regulator to understand and verify the amendment being requested or notifiablechange being reported.

A. New Appointments of Accepted Persons:

-- 2 copies of Form 4 with photos except for a non-resident, non-trading officer, or

if Form 4 filed previously in Ontario within 5 years, a sworn affidavit indicating all changes to theinformation contained in the previously filed Form 4, or

if non-resident and Form 4 filed with another Canadian securities regulatory authority, a letter statingthe full name, residential address, birth date, birth place and position with the registered firm of theappointee and the jurisdiction in which a Form 4 was previously filed.

-- proposed effective date of appointment

-- officer's title

-- Freedom of Information and Protection of Privacy Act consent form

-- police check form

B. Designation of New Branch Manager or Compliance Officer:

-- full address of the branch and sub-branches that the branch manager will supervise

-- proof of passing all necessary courses

C. Change of Name of Registered Firm:

-- articles of amendment or other documentation reflecting name change

-- proof of continued bonding or insurance coverage

-- signed copy of letter of direction to company's auditors

-- confirmation of continued participation in contingency fund

D. Merger Amalgamation or Re-organization:

-- Form 3

-- copy of articles of amalgamation or revised partnership agreement

-- up-to-date list of officers, directors, partners, salespersons, branch offices and their managers

-- proof of bonding or insurance, if necessary

-- signed copy of letter of direction to company's auditors

-- proof of continued participation in contingency fund

E. Change of Category of Registration for Registered Firm:

-- proof of meeting the additional registration requirements of the new category

F. Change of Category of Registration for Individual:

-- proof of meeting all necessary proficiency requirements

G. Voluntary Surrender of Registration:

-- specify if requesting surrender during year or if registration is to lapse on anniversary date ofregistration

-- audited statements to date of closing, if applicable

-- comfort letter from auditor that all obligations have been met

-- comfort letter from company directors or partners of firm registrant confirming that no furtherobligations have been incurred since date of closing

-- separate request for release of funds from contingency trust fund, if applicable

-- consent to suspension of registration under Rule 33-501

H. Change/Removal of Terms and Conditions:

-- submission supporting change and disclosing reasons for current terms and conditions of registration

II. CHANGE OF REGISTRATION INFORMATION

A. Change of Address for Office or Branch:

-- include effective date, new phone number, suite or apartment number, postal code

-- If opening of a Branch in Ontario or Redesignation as Branch:

-- include effective date, telephone number, suite or apartment number and postal code

-- name of manager (this person must already have Commission approval as a branch manager(17) orobtain approval before branch can be approved)

-- list of salespersons supervised from the branch

-- If closing of a Branch in Ontario:

-- intended destinations of remaining salespersons

B. Change of Status of or Termination of Salespersons, Officers and Accepted Persons:

-- completed uniform termination notice including reason for resignation, dismissal, severance ortermination of employment or office

-- if individual was compliance officer or branch manager, designate replacement(18)

C. Change of Holders of Voting Securities (Direct or Indirect) of Registered Dealer or Adviser or in Sizeof Holdings:

-- if change in the shareholders' holding ten per cent or more of the voting securities, currentshareholders' list showing proportional holdings of each class of equity and debt securities, andultimate individual beneficial holders of interest

-- copy of shareholders' agreement, if applicable

-- copies of any submissions made to Commission and approvals previously granted regarding change

-- impact of change on compliance personnel

-- organizational chart pre and post change

-- list of directors and officers pre and post change

-- plan for addressing potential conflicts

  • Change in Banking Information:

-- bank account number

-- name of financial institution

-- location of branch

E. Change of Auditor:

-- copy of direction to new auditor(19)

F. Change of Education of Salesperson:

-- proof of completion of courses required under clause 2.1(2)(b) of Rule 31-502 ProficiencyRequirements for Registrants

  • Change of Name of Individual Registrant or Accepted Person:

-- proof of name change

 

FORM 33-503F TO RULE 33-503

 

 

CHANGE IN REGISTRATION INFORMATION

 

1. This filing relates to

an amendment or a notifiable change

2. Section reference in the Rule:

3. List supporting documents:

NAME OF FIRM:

AUTHORIZED SIGNATURE:

DATE:

Print Name

Title

 

COMPANION POLICY 33-503CP

 

TO ONTARIO SECURITIES COMMISSION RULE 33-503

 

 

 

CHANGE OF REGISTRATION INFORMATION

 

PART 1 INTERPRETATION

1.1 Change in Category - The Commission is of the view that a change in category of registration by anindividual within the individual's current registration or on a transfer of registration to another registered firmconstitutes an amendment.

1.2 Reorganizations - The Commission is of the view that certain reorganizations of registrants effectivelycreate a new entity for which an application for registration must be provided, or are so fundamental so asnot to constitute an amendment and to require a new application for registration. In other circumstances,a reorganization may merely result in a requirement to file an application for amendment under Rule 33-503Changes in Registration Information (the "Rule").

PART 2 CHANGE OF OWNERSHIP OF REGISTRANT

2.1 Change of Ownership of Registrant - In determining whether or not to prohibit the acquisition of securitiesof a registered firm under Part 4 of the Rule, the Commission will consider, among other things, any conflictsof interest that could arise as a result of the proposed acquisition.

PART 3 ADDITIONAL INFORMATION

3.1 Additional Information - Registrants are reminded that in addition to the information set forth in AppendixA to the Rule, the Director may request that the registrant provide additional information under section 31of the Act.

Footnotes


 

1. 1 This proposed Rule is based on the OSC Notice entitled Notice of Amendment to Registration or Change inInformation (1990), 13 OSCB 2971 (which superseded OSC Registration Section Clarification Note 4) andsections 104, 135, 136 and 217 of the Regulation. This proposed Rule also requires (i) registrants to updatecertain information in Form 3, 4, 5 and 6; (ii) dealers and advisers to notify the Director of any change of aperson designated as a branch manager or compliance officer under section 1.3 or 1.4 of Rule 31-505Conditions of Registration; and (iii) notification to the Director of a proposed acquisition of securities of a dealeror adviser.

2. 2 A general definition rule has been adopted as Rule 14-501 Definitions. It contains definitions of certain termsused in more than one rule. Rule 14-501 also provides, among other things, that terms used in a rule anddefined in section 1 of the Securities Act or subsection 1(2) of the Regulation will have the respective meaninggiven to them in the Securities Act or the Regulation, as appropriate. Rule 14-501 also incorporates termsdefined in National Instrument 14-101 Definitions. National Instrument 14-101 contains, among other things,definitions for terms used in more than one national instrument.

3. 3 The term "dealer registration requirement" is defined in National Instrument 14-101 Definitions as "therequirement in securities legislation that prohibits a person or company from trading in a security unless theperson or company is registered in the appropriate category of registration under securities legislation".

4. 4 The term "adviser registration requirement" is defined in National Instrument 4-101 Definitions as "therequirement in securities legislation that prohibits a person or company from acting as an adviser unless theperson or company is registered in the appropriate category of registration under securities legislation".

5. 5 Section 33 of the Act is not affected by this Rule.

6. 6 Sections 1.3 and 1.4 of Rule 31-505, entitled Conditions of Registration, require dealers and advisers todesignate a compliance officer, and a branch manager for each branch office.

7. 7 Subsections (2) and (3) are based on format used for networking applications. See subsections 229(2) and(3) of the Regulation.

8. 8 This section establishes a requirement for registrants to report matters not formerly required to be reportedunder section 33 and subsections 132(2) and 132(3) of the Act.

9. 9 The term "SRO" is defined in National Instrument 14-101 Definitions as "a self-regulatory organization, a self-regulatory body or an exchange".

10. 10 The term "jurisdiction" is defined in National Instrument 14-101 Definitions as meaning a province or territoryof Canada, except when used in the term foreign jurisdiction.

11. 11 The term "foreign jurisdiction" is defined in National Instrument 14-101 Definitions. This definition is "a countryother than Canada, or a political subdivision of a country other than Canada".

12. 12 This section is derived from sections 104 and 217 of the Regulation. Paragraph 143(1)5 permits theCommission to make a rule requiring non-registrants to provide notice of a proposed acquisition of a registrant.This Rule has been extended to deal with all persons and companies.

13. 13 Criteria for review matches section 127 of the Act.

14. 14 Under section 104 of the Regulation there was a thirty day notice period.

15. 15 This subsection and the remaining subsections are based on the drafting in section 127 of the Act.

16. 16 Staff practice is not to require notice by way of a letter as provided for in subsection 135(1) and section 136of the Regulation or Form 7 as provided for in subsection 135(2) of the Regulation. Staff have proposed thatthe form be prescribed, and have also recommended the type of information and documentation to besubmitted be prescribed as set out in Appendix A to this proposed Rule. Accordingly, the Commission willrevoke subsections 135(1) and (2), section 136 and Form 7 of the Regulation as they are inconsistent with thisproposed Rule.

17. 17 The requirement to have a branch manager is in Rule 31-505 Conditions of Registration. The proficiencyrequirements for a branch manager are in Rule 31-502 Proficiency Requirements for Registrants.

18. 18 The requirement to have a compliance officer and branch manager is in Rule 31-505 Conditions ofRegistration.

19. 19 See section 145 of the Regulation.