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BILL NO. 2





Government Bill




4th Session, 56th General Assembly
Nova Scotia




45 Elizabeth II, 1996

An Act to Amend Chapter 418

of the Revised Statutes, 1989,

the Securities Act





CHAPTER 32
ACTS OF 1996




The Honourable William Gillis
Minister of Justice




AS ASSENTED TO BY THE LIEUTENANT GOVERNOR
DECEMBER 20, 1996




Halifax
Printed by Queen s Printer for Nova Scotia







An Act to Amend Chapter 418

of the Revised Statutes, 1989,

the Securities Act





Be it enacted by the Governor and Assembly as follows:

1 Chapter 418 of the Revised Statutes, 1989, the Securities Act, is amended by adding immediately after Section 1 the following Section:

1A (1) The purpose of this Act is to provide investors with protection from practices and activities that tend to undermine investor confidence in the fairness and efficiency of capital markets and, where it would not be inconsistent with an adequate level of investor protection, to foster the process of capital formation.

(2) In pursuing the purpose of this Act, the Commission shall have regard to such factors as may be viewed by the Commission as appropriate in the circumstances, including any principles enunciated in the regulations.

2 Subsection 2(1) of Chapter 418, as amended by Chapter 15 of the Acts of 1990, is further amended by

(a) striking out "or" immediately after subclause (ab)(i);

(b) striking out the semicolon immediately after subclause (ab)(ii) and substituting ", or";

(c) adding immediately after subclause (ab)(ii) the following subclause:

(iii) a document or type of document specified by the Commission;

(d) repealing clause (ae) and substituting the following clause:

(ae) "portfolio manager" means an adviser who manages the investment portfolio of a client through discretionary authority granted by the client;

(e) adding "and, except in Sections 150, 150A and 150B, includes the rules" immediately after "Act" in the second line of clause (an); and

(f) adding immediately after clause (ao) the following clause:

(aoa) "rules" means, unless the context otherwise requires, the rules of the Commission made pursuant to this Act;

3 Section 19 of Chapter 418 is repealed and the following Section substituted:

19 (1) The Commission may

(a) issue and publish, in such manner as the Commission deems appropriate, policy statements and interpretation notes;

(b) assign or delegate any of the powers or duties of the Commission to the Director;

(c) publish decisions of the Commission and the Director and publish rulings, orders, motions and other information which the Commission considers ought to be published.

(2) Policy statements and interpretation notes issued pursuant to clause (a) of subsection (1) are not regulations within the meaning of the Regulations Act and do not constitute a predetermined exercise of discretion pursuant to this Act.

4 Subsection 26(1) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by striking out "or subsection (2) of Section 128" in the eighth line and substituting ", subsection (2) of Section 128 or subsection (1) of Section 151A".

5 (1) Subsection 27(1) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by striking out "a person" in the second line and substituting "one or more persons".

(2) Subsection 27(2) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by striking out "the" in the second line and substituting "any".

(3) Subsection 27(3) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by

(a) striking out "The" in the first line and substituting "Any"; and

(b) striking out "and the failure or refusal of a person to attend, to answer questions or to produce such documents, records and things as are in his custody or possession makes the person liable to be committed for contempt" in the seventh, eighth, ninth and tenth lines and substituting "and the failure or refusal of a person or company to attend, to answer questions or to produce such documents, records or things as are in the person s or company's custody, control or possession makes the person or company liable to be committed for contempt".

(4) Subsection 27(7) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by striking out "shall" in the second line and substituting "may".

6 Clause 41(2)(d) of Chapter 418 is amended by adding "and has a rating as prescribed in the regulations" immediately after "dollars" in the last line.

7 Subsection 80(1) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by striking out "or person" in the second line and substituting ", person or company".

8 Subsection 110(2) of Chapter 418, as enacted by Chapter 15 of the Acts of 1990, is amended by adding "or company" immediately after "person" in the second line.

9 Section 135A of Chapter 418 is repealed and the following Section substituted:

135A The Commission may, after a hearing, order a person or company convicted of an offence or against whom an order has been made pursuant to Section 133, 134 or 135 to pay costs in connection with the investigation and prosecution of the offence or the investigation and conduct of the proceeding in respect of which the order was made pursuant to Section 133, 134 or 135, such costs not to exceed the costs prescribed in the regulations.

10 Chapter 418 is further amended by adding immediately after Section 136 the following Section:

136A Where the Commission makes an order pursuant to Section 134 or 135, the Commission may do so on such terms and conditions as the Commission considers necessary or appropriate.

11 Section 150 of Chapter 418, as amended by Chapter 15 of the Acts of 1990, is further amended by

(a) adding "and the Commission may make rules" immediately after "regulations" in the first line;

(b) adding "or rules" immediately after "regulations" wherever that word appears in clauses (f), (q), (r), (t), (ae), (al), (ap), (ar), (au) and (av);

(c) striking out "as the Governor in Council determines" in the second and third lines of clause (am);

(d) striking out "and" immediately after clause (aah); and

(e) striking out clause (aai) and substituting the following clauses:

(aai) prescribing standards of practice and conduct of registrants and directors, partners, officers and employees of registrants in dealing with customers and clients, including prospective customers and clients;

(aaj) extending the application of subsection (3) of Section 30 to any member or employee of a member of a person or company described in subsection (1) of Section 30 that is not recognized by the Commission pursuant to subsection (1) of Section 30;

(aak) varying the application of this Act to establish procedures for or requirements in respect of the preparation, form, content and filing of preliminary prospectuses, prospectuses and other offering documents and the issuing of receipts therefor that facilitate or expedite the distribution of securities or the issuing of such receipts, including, without limiting the generality of the foregoing,

(i) procedures for and requirements in respect of the distribution of securities by means of a prospectus incorporating by reference other documents,

(ii) procedures for and requirements in respect of the distribution of securities by means of a simplified or summary prospectus,

(iii) procedures for and requirements in respect of the distribution of securities on a continuous or delayed basis,

(iv) procedures for and requirements in respect of the pricing of securities after the issuance of a receipt for the prospectus filed in relation thereto, and

(v) procedures for and requirements in respect of the expedited or selective review of any preliminary prospectuses or prospectuses;

(aal) designating activities, including the use of documents or advertising, in which persons or companies are permitted to engage or are prohibited from engaging in with respect to the trading or distribution of securities;

(aam) prescribing or respecting the media, format, preparation, form, content, execution, certification, dissemination and other use, filing and review of all documents required under or governed by this Act or the regulations or rules and all documents determined by the regulations or rules to be ancillary to any such documents, including, without limiting the generality of the foregoing,

(i) applications for registration and other purposes,

(ii) preliminary prospectuses and prospectuses,

(iii) interim financial statements and financial statements,

(iv) proxies and information circulars, and

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

and varying the form and content of any of the foregoing, and any regulations or rules made pursuant to this clause may substitute a form of document and its contents prescribed therein for any form of documents and its contents prescribed by this Act;

(aan) varying the application of this Act to permit or require, and establishing requirements for and procedures in respect of, the use of an electronic or computer-based system for the filing, delivery or deposit of all documents or information required under or governed by this Act or the regulations or rules and all documents determined by the regulations or rules to be ancillary to any such documents, including, without limiting the generality of the foregoing,

(i) prescribing the format and means of transmission of such documents or information,

(ii) prescribing the time at which documents or information filed, delivered or deposited to the use of such system are deemed to have been filed, delivered or deposited,

(iii) prescribing the circumstances in which persons or companies are deemed to have signed or certified documents filed, delivered or deposited through the use of such system for all purposes of this Act, including, without limiting the generality of the foregoing, the civil liability provisions of Sections 137, 138 and 139,

(iv) prescribing the use of one or more authorized service providers by persons or companies permitted or required to file, deliver or deposit documents or information with the Director or the Commission through the electronic or computer-based system, and prescribing or approving the fees payable by such persons or companies to such service providers;

(aao) respecting the conduct of the Commission and its employees in relation to duties and responsibilities and discretionary powers pursuant to this Act, including rules in relation to potential conflicts of interest of members of the Commission, the Director and staff of the Commission and providing that the rules are binding on and are a term of employment or appointment of such members, Director and staff;

(aap) enunciating principles to which the Commission shall have due regard in pursuing the purposes of this Act;

(aaq) providing for costs in respect of proceedings pursuant to this Act, and in respect of investigations, examinations or appointments made pursuant to this Act or the regulations;

(aar) prescribing the circumstances under which an offering memorandum is required to be delivered or furnished to a prospective purchaser of securities and filed with the Commission or the Director;

(aas) prescribing the uses or disposition of administrative penalties paid to the Commission pursuant to this Act;

(aat) prescribing procedures or practices to be followed in relation to matters coming before the Commission;

(aau) varying the application of this Act to establish procedures for or requirements in respect of the preparation, form, content and filing of registration documents and the issuing of registration certificates that facilitate or expedite the granting of registrations and the issuing of such certificates;

(aav) approving any agreement, memorandum of understanding or arrangement entered into with another securities or financial regulatory authority including any self-regulating body or organization whether recognized pursuant to Section 30 or not, or any jurisdiction;

(aaw) authorizing the Commission to delegate to a securities or financial regulatory authority in another jurisdiction any of the powers and duties of the Commission or the Director pursuant to this Act;

(aax) deeming any authority to whom a delegation has been made by the Commission in accordance with a regulation or rule to be the agent of the Commission for the purpose of Section 149;

(aay) prescribing the conditions and circumstances under which a company may undertake the duties, responsibilities and activities which a person who is a registrant and a shareholder of the company is authorized to undertake by virtue of being a registrant, including the establishment of a scheme for the registration of the company and the category of such registration;

(aaz) imposing liability on a registrant who is a dealer or adviser for acts or omissions, of the type prescribed, of a company which is a registrant pursuant to a scheme established pursuant to the authority in clause (aay) where the dealer or adviser has a prescribed contractual relationship with the company;

(ba) imposing liability on a person who is a registrant and a shareholder of a company for acts or omissions of the company where the company that performs the acts or fails to perform the acts is a registrant pursuant to a scheme established pursuant to the authority in clause (aay);

(bb) respecting any matter that the Governor in Council or the Commission considers necessary or advisable to carry out effectively the intent and purpose of this Act.

12 Chapter 418 is further amended by adding immediately after Section 150 the following Sections:

150A (1) The Governor in Council may

(a) make regulations prescribing the processes and procedures that the Commission shall abide by in exercising its power to make rules;

(b) by order, amend or repeal any rule made by the Commission.

(2) The Commission shall

(a) give notice to the Governor in Council of every rule approved by the Commission by sending a copy of the rule to the Minister within seven days of the date of approval by the Commission for consideration by the Governor in Council; and

(b) publish in the Royal Gazette, as soon as practicable, a rule made by the Commission and give notice of the effective date of the rule.

(3) A rule is effective in accordance with its terms, but, subject to subsection (4), is not effective prior to the expiration of seventy-five days after the Commission approves the rule and, if, within sixty days after the Commission approves the rule, the Governor in Council notifies the Commission through the Minister that it has disapproved the rule or if the Governor in Council returns the rule to the Commission for further consideration, the rule is not effective until approved by the Governor in Council.

(4) With the approval of the Governor in Council, the time limit for the effective date of a rule may be abridged and the rule becomes effective on the date specified by the Governor in Council.

(5) A rule has the force of law but is not a regulation within the meaning of the Regulations Act and is not subject to the Regulations Act.

(6) Where a rule conflicts with any regulation, the regulation shall, to the extent of the conflict, prevail.

(7) The Commission s General Rules of Practice and Procedure approved by order in council 88-188, dated February 23, 1988, and the Commission s Conflict of Interest Rules, adopted November 2, 1994, continue in effect until amended and are deemed to be rules made pursuant to Section 150.

(8) Regulations made pursuant to Section 150 prior to the coming into force of this Act are, on the coming into force of this Act, deemed to be rules made pursuant to Section 150.

150B (1) Where regulations or rules may be made pursuant to Section 150 in respect of registrants, issuers, other persons or companies, securities, trades or other matters or things, the regulations or rules may be made in respect of any class or category of registrants, issuers, other persons or companies, securities, trades or other matters or things.

(2) A regulation or rule may incorporate by reference, in whole or in part, any standard, procedure or guideline and may require compliance with any standard, procedure or guideline.

(3) A regulation or rule may be general or particular in its application, may be limited as to time and place and may exclude any place from the application of the regulation or rule.

13 Chapter 418 is further amended by adding immediately after Section 151 the following Section:

151A (1) Where, in the opinion of the Commission, it is not prejudicial to the public interest, the Commission may, on its own motion or on the application of any interested person or company, by order, on such terms or conditions as the Commission considers necessary or appropriate, exempt

(a) any person or company or category of persons or companies;

(b) any trade or distribution or category of trade or distribution,

from any or all of the provisions of this Act or the regulations.

(2) Subsection (1) is not limited or restricted in its application by virtue of the Commission having the power pursuant to this Act or the regulations to exempt any person, company, trade, intended trade or distribution from a particular provision of this Act or the regulations.