ARTICLE FOR AME BC MONTHLY NEWSLETTER
BCSC REDUCES REGULATORY BURDEN FOR RESOURCE COMPANIES
As the capital markets regulator for British Columbia, the BC Securities Commission (BCSC) is
keenly aware that public resource companies are struggling with capital raising and regulatory
burden. The good news is that the BCSC is spearheading a series of initiatives aimed at
lightening the load.
Capital Raising
The BCSC has recently adopted or proposed three significant changes to capital raising rules:
Existing security holder prospectus exemption: This new rule allows companies listed on a
Canadian exchange to raise capital from their existing security holders without preparing an
offering document. Investors are limited to acquiring $15,000 worth of securities from the issuer
in a 12-month period, but can exceed this limit if they receive suitability advice from an
investment dealer. We hope this exemption will help companies secure survival funding and
keep their regulatory filings up to date. This exemption is now available in all jurisdictions of
Canada.
Investment dealer prospectus exemption: On April 16, 2015, BC, Saskatchewan and New
Brunswick published for comment a new rule that would allow a company listed on a Canadian
exchange to raise capital from any investor in any amount without a disclosure document
provided the investor receives suitability advice from an investment dealer. If an investor can
buy shares on the stock exchange with no advice, why can they not provide funding directly to
the company, especially with advice from a professional? For more details, please see
https://www.bcsc.bc.ca/45-315_[Multilateral_CSA_Notice]_04162015/. We encourage you to
comment on the proposal.
Rights offering prospectus exemption: All jurisdictions of Canada have proposed a streamlined
rights offering regime for public companies that would significantly reduce the time to conduct a
rights offering. Rights offerings are one of the fairest ways to raise capital because they allow all
investors to retain their proportionate share of a company. Key aspects of the proposal are
 securities regulators would no longer review rights offering circulars
 the dilution limit would be increased from 25% to 100%
 issuers would be required to send to security holders only a brief form of notice
 issuers will be required to file (but not send to security holders) a new brief, user-friendly
disclosure document
 the issuer would be liable for the accuracy of its continuous disclosure including the circular
These proposals were published for a 90-day comment period at the end of November 2014.
Subject to commission and ministerial approvals, we anticipate the amendments will be adopted
in late 2015.
Disclosure Burden
Effective June 30, 2015, the BCSC will implement new streamlined and tailored disclosure
requirements for all issuers listed on the TSX Venture Exchange and Canadian Securities
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Exchange. The changes are intended to focus disclosure on information that investors need while
eliminating disclosure that may be less valuable to them. The key changes are:
Quarterly highlights disclosure: All venture issuers will have the option of providing a short
“quarterly highlights” document instead of interim MD&A for their first three quarters, The
quarterly highlights will consist primarily of a short discussion about the issuer’s operations,
liquidity and capital resources. We anticipate that a small mining issuer with a limited number of
properties could meet the quarterly highlights requirement by providing a 1-2 page discussion.
This option is available for financial years beginning on or after July 1, 2015.
New venture issuer executive compensation disclosure form: All venture issuers will have the
option of using a new executive compensation disclosure form that
 reduces the number of individuals for whom disclosure is required from a maximum of five
to a maximum of three (the CEO, CFO and one additional highest-paid executive officer)
 reduces the number of years of disclosure from three to two
 eliminates the requirement for venture issuers to calculate and disclose the grant date fair
value of stock options and other share-based awards in the summary compensation table.
Instead, venture issuers would disclose detailed information about stock options.
Business acquisition reports (BARs): The threshold above which venture issuers will have to
file a BAR will be increased from 40% to 100% significance. This means that venture issuers
will only have to file BARs, including audited financial statements, for acquisitions that are
100% significant to them. In addition, we are eliminating the requirement for pro forma financial
statements to be included in a BAR.
IPOs for venture issuers: Venture issuers filing initial public offerings (IPOs) will only have to
provide two (instead of three) years of audited financial statements in their IPO prospectus.
Two other key changes for venture issuers are:
Audit committees: Audit committees of venture issuers will be required to have a majority of
members that are not executive officers, employees or control persons of the issuer or its
affiliate. This is not a new requirement for TSXV-listed issuers as it is already required as part of
the Exchange’s policies. This requirement will apply for financial years beginning on or after
January 1, 2016.
Executive compensation filing deadline: All venture issuers will be required to file their
executive compensation within 180 days of their financial year-end. The executive compensation
disclosure for most venture issuers is included in their information circular. We understand that
most venture issuers file their information circulars within 180 days of year-end. This will result
in no change for those issuers. If an issuer does not file their information circular within 180 days
of year-end, the issuer will need to file their executive compensation disclosure in a separate
filing. This deadline will apply for financial years beginning on or after July 1, 2015.
If you would like more information on any of the above initiatives, please contact the BCSC
Inquiries line at 1-800-373-6393 or visit http://www.bcsc.bc.ca/.