The Securities Regulations

Transcription

1 1 The Securities Regulations being Chapter S-42.2 Reg 1 (effective November 7, 1988) as amended by Saskatchewan Regulations 28/89, 35/90, 87/92, 27/94, 21/96, 94/97, 91/2001, 129/2005 and 146/2005*. *NOTE: The sections for SR 146/2005 were incorrectly numbered, beginning with section 5, through section 35 see Historical Notes. NOTE: This consolidation is not official. Amendments have been incorporated for convenience of reference and the original statutes and regulations should be consulted for all purposes of interpretation and application of the law. In order to preserve the integrity of the original statutes and regulations, errors that may have appeared are reproduced in this consolidation.

2 2 Table of Contents PART I Title and Interpretation 1 Title 2 Interpretation 3 Disclosure of securities beneficially owned 4 Deemed holding company or parent company PART II Investigations 5 Practices and procedures applying to investigations PART III Self-regulation 6 Audit of registrants financial statements 7 Report by auditor PART IV Registration 8 Interpretation of Part 9 Market value of securities not listed on a stock exchange 10 Categories of registration dealers 11 Categories of registration advisors 12 Repealed 13 Portfolio manager 14 Compliance with Part 14.1 Repealed 15 Interest in others prohibited 16 Conditions prescribed by Commission 17 Registered dealer that is reporting issuer 18 Business office requirements 19 Capital requirements 20 Bonding 21 Change in bonding 22 Forfeiture of bond 23 Compensation fund or contingency trust fund 23.1 Repealed 24 Subordination agreement 25 Record keeping 26 Managing of accounts 27 Policies governing accounts 28 Separation of funds and securities held and not held pursuant to a written agreement 29 Free credit balances 30 Trust account 31 Reduction of debit balance in a commodity futures account 32 Transfer to exchange contracts account 32.1 Purchase or sale of exchange contract on margin 33 Certain exemptions 34 Statement of account 34.1 Written statement - outstanding exchange contract 35 Confirmation of trade - securities 35.1 Confirmation of purchase or sale - mutual funds 35.2 Risk disclosure statement 36 Designation of branch manager 37 Proficiency requirements for individuals 38 Proficiency requirements where registrant not an individual 39 Certain exemptions 40 Registration as salesperson 41 Application for registration 42 Repealed 43 Repealed 44 Repealed 45 Application for withdrawal from registration 46 Summons for an examination 47 Repealed 48 Repealed 49 Financial statements 50 Content of financial statements 51 Report of certain dealers 52 Repealed 53 Portfolio manager reports 54 Repealed 55 Repealed 56 Registrant not member of selfregulatory organization 57 Financial statements of registrants 58 Repealed 59 Mineral lease brokers PART V Exemptions from Registration 60 to 63 Repealed PART VI Commodity Futures 64 Repealed PART VII Prospectuses Distribution 65 General rules 66 Forms 67 Compliance with form 68 Prospectus format 69 Inapplicable items 70 No inference to be drawn 71 Immaterial information 72 Information to be included in prospectus 73 Repealed 74 Repealed 75 Form and content of pro forma prospectus 76 Consents 77 Further consents 78 Repealed

3 79 Content of prospectus financial matters 80 Contents of mutual fund prospectus financial statements 81 Pro forma balance sheet 82 Proceeds used to purchase business 83 Repealed 84 Repealed 85 Statement of assets and earnings coverage 86 Financial forecast 87 Financial statements of acquired business 88 Financial statements of subsidiary 89 Unconsolidated financial statements 90 Approval of financial statements 91 Exceptions re financial statements 92 Auditor s comfort letter 93 Repealed 94 Certificate portion of distribution underwritten 95 Prospectus requirements variation permitted 96 Restriction in use of terms 97 Prospectus information re issuer bid 97.1 Report re amending offering memorandum PART VIII Exemptions from Prospectus Requirements 98 to 116 Repealed PART IX Continuous Disclosure 117 to Repealed PART X Proxies and Proxy Solicitation 139 to 144 Repealed PART XI Take-over Bids and Issuer Bids 145 Interpretation of Part 146 Valuation 147 Market price 148 Exemption 149 Exemptions from section 103 of Act 150 Notice of intention to make an issuer bid 151 Press release under clause 103(3)(c) of the Act 152 Forms for circulars 153 Notice of change or variation 154 Notice of change re directors circular, etc. 155 Limitations on variation of terms 156 Consent 157 Press release under section 110 of Act 158 Press release under section 111 of Act 159 Exemption from press release 160 Statement of rights 161 Information to be provided 162 Exemption 163 Documents to be filed in triplicate PART XII Insider Trading 164 Disclosure by insiders of advisers 165 Reports pursuant to section 116 or 117 of Act 166 Exception to reports 167 Report pursuant to section 118 of the Act 168 Report pursuant to section 126 of the Act 169 Filing of reports by certain companies and persons not required 170 Reports by personal representatives 171 Filings by issuer 172 Filing in other jurisdiction 173 Signatures PART XII.1 Civil Liability 173.1Exemption from liability 174 Warrants PART XIII Enforcement PART XIV General Provisions 175 Execution and certification of documents Repealed Repealed 176 Fees and filing 3

4 4 Appendix A TABLE 1 Fees Appendix B Form 1 Summons To a Witness Before a Person Appointed Under section 12 or 14 of The Securities Act, 1988 Form 2 Form 3 Form 4 Form 5 Form 6 Form 7 Form 8 Form 9 Form 10 Form 11 Form 12 Form 12.1 Form 12.2 Form 13 Form 14 Form 15 Form 16 Form 17 Form 18 Form 18.1 Form 18.2 Form 19 Form 20 Form 21 Form 22 Form 23 Form 24 Form 25 Form 26 Form 27 Form 28 Form 29 Form 30 Form 31 Form 32 Form 33 Form 34 Form 35 Form 36 Form 37 Form 38 Form 39 Form 40 Form 41 Affidavit of Service Application for Registration as Dealer or Advisor Uniform Application for Registration Approval Repealed Repealed Application for Amendment of Registration as Dealer, Adviser or Underwriter Application for Withdrawal From Registration Summons to a Witness Before a Person Designated under section 34 of the Act Financial Questionnaire and Report Annual Questionnaire to be Completed by a Portfolio Manager For Its Auditor Repealed Repealed Repealed Information Required in Prospectus of Industrial Company Information Required in Prospectus of Finance Company Information Required in Prospectus of a Natural Resource Company Information Required in Prospectus of a Mutual Fund Repealed Repealed Material Change Report Pursuant to Section 80.1 of the Act Repealed Repealed Repealed Repealed Repealed Repealed Repealed Repealed Repealed Repealed Repealed Take-over Bid Circular Directors Circular Director s or Officer s Circular Issuer Bid Circular Notice of Intention To Make an Issuer Bid Initial Report of Insider Report by a Registered Owner of Securities Beneficially Owned by an Insider Report Under Section 126 of the Act Endorsement of Warrant Repealed Surety Bond Repealed Repealed

5 5 CHAPTER The Securities Act, 1988 PART I Title and Interpretation Title 1 These regulations may be cited as The Securities Regulations. Interpretation 2(1) In these regulations: (a) Act means The Securities Act, 1988; (a.1) Repealed. 17 May 96 SR 21/96 s2. (a.2) Repealed. 17 May 96 SR 21/96 s2. (b) debt security means any bond, debenture, note or similar instrument representing indebtedness, whether secured or unsecured; (c) finance company means an issuer, including its subsidiaries and affiliates, that: (i) either: (A) has issued securities with respect to which a prospectus has been filed and a receipt obtained for it under the Act; (B) has issued securities on or after October 1, 1967 with respect to which a prospectus was filed and a receipt obtained for it under a predecessor of the Act; or (C) distributes its securities in Saskatchewan, without filing a prospectus with respect to that distribution, in reliance on the exemption in section 2.35 of National Instrument Prospectus and Registration Exemptions; and (ii) has a material business activity involving: (A) purchasing, discounting or otherwise acquiring promissory notes, acceptances, accounts receivable, bills of sale, chattel mortgages, conditional sales contracts, drafts and other obligations representing part or all of the sales price of merchandise or services; (B) factoring or purchasing and leasing personal property as part of a hire purchase or similar business; or (C) making secured and unsecured loans;

6 6 but does not include: (d) (iii) a bank to which the Bank Act (Canada) applies, the Federal Business Development Bank, a loan corporation or trust corporation licensed under The Trust and Loan Corporations Act or an insurance company; (iv) a credit union; (v) an underwriter or dealer; or (vi) any issuer that, in the opinion of the Director, carries on operations making it more appropriate that the issuer be designated as an industrial company or natural resource company; Form means a Form prescribed in Appendix B to these regulations; (e) industrial company means an issuer designated by the Director as an industrial company; (f) insurance company means an issuer licensed under The Saskatchewan Insurance Act; (g) natural resource company means a mining, gas, oil or exploration issuer designated by the Director as a natural resource company; (h) Repealed. 17 May 96 SR 21/96 s2. (2) For the purposes of these regulations, where a recommendation has been made in the Handbook of the Canadian Institute of Chartered Accountants which is applicable in the circumstances, the terms: (a) (b) (c) generally accepted accounting principles ; auditor s report ; and generally accepted auditing standards ; mean the principles, report and standards, respectively, recommended in the Handbook. (3) Repealed. 30 Dec 2005 SR 146/2005 s3. (4) Repealed. 30 Dec 2005 SR 146/2005 s3. (5) A reference in these regulations to an Act of the Parliament of Canada is deemed to be a reference to that Act as amended from time to time. (6) A reference in these regulations to a Local Instrument is deemed to be a reference to that Local Instrument adopted by The Securities Commission (Local Instruments) Regulations, as amended from time to time. (7) A reference in these regulations to a National Instrument or Multilateral Instrument is deemed to be a reference to that National Instrument or Multilateral Instrument adopted by The Securities Commission (Adoption of National Instruments) Regulations, as amended from time to time. 10 Nov 88 cs-42.2 Reg 1 s2; 2 Jne 89 SR 28/89 s3; 1 Jne 90 SR 35/90 s3; 17 May 96 SR 21/96 s2; 30 Dec 2005 SR 146/2005 s3.

7 7 Disclosure of securities beneficially owned 3(1) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a person and, by virtue of subsection 2(5) of the Act, one or more issuers will also have to be shown as beneficially owning the securities, a statement: (a) disclosing all the securities beneficially owned or deemed to be beneficially owned by the person; (b) indicating whether the ownership is direct or indirect; and (c) if ownership is indirect, indicating the name of the controlled issuer or issuer affiliated with the controlled issuer through which the securities are indirectly owned and the number or percentage of the securities so owned by the issuer; is deemed to be sufficient disclosure without disclosing the name of any other issuer which is deemed to beneficially own the same securities. (2) Where the Act or these regulations require the disclosure of the number or percentage of securities beneficially owned by a issuer and, by virtue of subsection 2(6) of the Act, one or more other companies will also have to be shown as beneficially owning the securities, a statement: (a) disclosing all securities beneficially owned or deemed to be beneficially owned by the parent issuer; (b) indicating whether the ownership is direct or indirect; and (c) if ownership is indirect, indicating the name of the subsidiary through which the securities are indirectly owned and the number or percentage of the securities so owned; is deemed to be sufficient disclosure without disclosing the name of any other issuer which is deemed to beneficially own the same securities. 10 Nov 88 cs-42.2 Reg 1 s3. Deemed holding company or parent company 4 An issuer is deemed to be another s holding issuer or parent issuer if that other is its subsidiary. 10 Nov 88 cs-42.2 Reg 1 s4. PART II Investigations Practices and procedures applying to investigations 5 The following practices and procedures apply to investigations conducted under the Act: (a) every summons issued by a person pursuant to subsection 12(5) or section 14 of the Act shall be served personally on the individual summoned; (b) every person summoned pursuant to subsection 12(5) or section 14 of the Act shall be paid the same fees and allowances for his attendance as are paid for the attendance of a witness summoned to attend before the Court of Queen s Bench;

8 8 (c) every summons to a witness to appear before a person appointed to make an investigation pursuant to section 12 or 14 of the Act shall be in Form 1; (d) the service of a summons on a witness, the payment or tender of fees and allowances to the witness and the service of a notice on a witness may be proved by an affidavit completed in accordance with Form Nov 88 cs-42.2 Reg 1 s5. PART III Self-regulation Audit of registrants financial statements 6 Every audit under section 23 of the Act shall: (a) (b) relate to the affairs of the registrant; and be performed in accordance with: (i) generally accepted auditing standards; and (ii) the audit requirements published by the Commission. 10 Nov 88 cs-42.2 Reg 1 s6. Report by auditor 7(1) Every report of an auditor under section 23 of the Act shall be prepared in accordance with generally accepted auditing standards. (2) No registrant shall withhold, destroy or conceal any information or documents or otherwise fail to co-operate with a reasonable request made by an auditor of a registrant in the course of an audit under section 23 of the Act. 10 Nov 88 cs-42.2 Reg 1 s7. Interpretation of Part 8(1) In this Part: PART IV Registration (a) Repealed. 17 May 96 SR 21/96 s2. (b) adjusted liabilities means total liabilities plus, where the securities accounts of the registrant are kept on a settlement date basis, any unrecorded securities purchase commitments minus, without duplication, the sum of: (i) cash; (ii) money on deposit in a client s trust account; (iii) any amounts deposited by the registrant pursuant to a compensation fund or contingency trust fund established pursuant to section 23; (iv) the cash surrender value of life insurance where the registrant is the beneficiary;

9 9 (v) the market value of any securities that the registrant owns or has contracted to purchase, and that, in either case, have a margin rate of 5% or less; (vi) interest accrued to the registrant with respect to the securities mentioned in clause (v); (vii) the sale price of securities for which the registrant has a sales commitment to a financial institution; (viii) any debit balances with any financial institution; and (ix) the market value of securities that have a margin rate of 5% or less that are: (A) included in non-segregated accounts of clients, partners, shareholders or dealers; or (B) held as collateral for secured loans receivable, not exceeding the debit balance of the account or the secured loan receivable; (c) Repealed. 14 Dec 2001 SR 91/2001 s3. (c.1) Repealed. 30 Dec 2005 SR 146/2005 s4. (d) Repealed. 30 Dec 2005 SR 146/2005 s4. (e) Repealed. 30 Dec 2005 SR 146/2005 s4. (f) Repealed. 30 Dec 2005 SR 146/2005 s4. (f.1) Canadian Investor Protection Fund means a fund established in 1969 by an agreement and declaration of trust, to which the present parties are the Alberta, Montreal, Toronto and Vancouver Stock Exchanges, The Toronto Futures Exchange and the Investment Dealers Association of Canada, for the purpose of protecting investors, within defined limits, from loss of securities and cash balances that may result from the insolvency of a member of a party to the agreement and declaration of trust; (g) Repealed. 30 Dec 2005 SR 146/2005 s4. (h) capital means moneys raised through the issuance of shares, certificates, bonds, debentures, long-term notes or any other long-term obligation, contributed or earned surplus and reserves; (i) Repealed. 30 Dec 2005 SR 146/2005 s4. (j) client s trust account means a trust account maintained by a registrant with: (i) a bank to which the Bank Act (Canada) applies; or (ii) a trust corporation licensed under The Trust and Loan Corporations Act or substantially similar laws of Canada or one of its provinces or territories;

10 10 and designated as a client s trust account; (j.1) Repealed. 14 Dec 2001 SR 91/2001 s3. (j.2) Repealed. 14 Dec 2001 SR 91/2001 s3. (j.21) Repealed. 30 Dec 2005 SR 146/2005 s4. (j.3) excess risk adjusted capital means the amount of capital determined pursuant to the Joint Regulatory Financial Questionnaire and Report as adopted by the Investment Dealer s Association of Canada and the various Canadian exchanges to calculate required capital; (k) financial institution means: (i) the Government of Canada, the government of any province or territory of Canada, any municipal corporation, Crown corporation or public board or commission in Canada; (ii) the Bank of Canada, a bank to which the Bank Act (Canada) applies, any Quebec Savings bank and the pension funds of those banks; (iii) a trust corporation or insurance company if the corporation or company: (A) is licensed to do business in Canada; and (B) has a minimum paid-up capital and surplus of $5,000,000; and the pension funds of those corporations or companies; (iv) a credit union with a minimum paid-up capital and surplus of $5,000,000; (v) a mutual fund with net assets of $5,000,000; and (vi) a company, other than a dealer, that: (A) has a minimum net worth of $25,000,000 on the last audited balance sheet; and (B) whose balance sheet is available for inspection by the Commission; and any trusteed pension plan of that company; (l) free credit balances includes moneys received from, or held for the account of, clients by a registrant: (i) for investment pending the investment and payment for securities or exchange contracts purchased by the clients from or through the registrant where the registrant: (A) does not own those securities or exchange contracts at the time of purchase; or (B) has not purchased them on behalf of the client, pending the purchase of them by the registrant; and

11 11 (ii) as proceeds of securities or exchange contracts purchased from clients or sold by the registrant for the account of clients where securities have been delivered to the registrant but payment has not been made, pending payment of those proceeds to the clients; (l.1) Repealed. 30 Dec 2005 SR 146/2005 s4. (m) Repealed. 17 May 96 SR 21/96 s4. (n) Repealed. 17 May 96 SR 21/96 s4. (o) margin, margin agreement, margin deficiency, margin rate and margin requirements means those terms: (p) (i) subject to subclause (ii), within the meaning of the bylaws of the Toronto Stock Exchange; or (ii) where used with respect to commodity futures contracts or cash commodities, within the meaning of the Co mmodity Futures Act of Ontario; market value where used with respect to: (i) an exchange contract means the settlement price on the date of valuation or last trading day prior to that date; (ii) a security means: (A) where the security is listed and posted for trading on an exchange: (I) the bid price; or (II) if the security is sold short, the ask price; as shown on the exchange quotation sheets as of the close of business on the date of valuation or last trading day prior to that date, as the case may be, subject to an appropriate adjustment where an unusually large or unusually small quantity of securities is being valued; or (B) where the security is not listed and posted for trading on an exchange, a value determined in accordance with section 9; (q) material change in ownership, with respect to a registrant, includes any material change in the beneficial ownership of: (i) the registrant; or (ii) any person or company that directly or indirectly controls capital of the registrant; but does not include any change in ownership resulting from the sale and issuance of voting and fully participating common shares for which notice has been filed; (r) Repealed. 17 May 96 SR 21/96 s4. (s) money market dealers means those dealers who are approved from time to time by the Bank of Canada as money market dealers;

12 12 (t) Repealed. 30 Dec 2005 SR 146/2005 s4. (t.1) Repealed. 30 Dec 2005 SR 146/2005 s4. (u) Repealed. 17 May 96 SR 21/96 s4. (v) Repealed. 14 Dec 2001 SR 91/2001 s3. (v.1) offsetting transaction means: (i) the expiry of a security or the exercise or expiry of an exchange contract; (ii) a purchase of an exchange contract in which the purchaser, immediately before the purchase, had an outstanding short position in the exchange contract; or (iii) a sale of an exchange contract in which the seller, immediately before the sale, had an outstanding long position in the exchange contract; (w) Repealed. 30 Dec 2005 SR 146/2005 s4. (x) Repealed. 14 Dec 2001 SR 91/2001 s3. (y) Repealed. 17 May 96 SR 21/96 s4. but excluding debts the payment of which is postponed in favour of other creditors pursuant to a subordination agreement in a form approved by the Commission and deferred income taxes relating to non-active assets; (z) working capital means the excess of current assets over current liabilities. (2) Repealed. 14 Dec 2001 SR 91/2001 s3. (3) In this Part, a registrant is considered to hold funds or securities for a client if the registrant: (a) holds funds or securities on behalf of the client; (b) receives from the client funds or securities for payment or settlement of trades in securities or exchange contracts on behalf of the client; (c) receives from the client cheques made out to the registrant for the payment of or settlement of trades in securities or exchange contracts on behalf of the client; (d) receives from persons other than the client funds payable to the client on account of the sale of, or settlement of trades in, securities or exchange contracts on behalf of the client; or (e) receives from persons other than the client cheques made out to the registrant for the payment for the sale of, or settlement of, trades in securities or exchange contracts on behalf of the client. 10 Nov 88 cs-42.2 Reg 1 s8; 17 May 96 SR 21/ 96 s4; 14 Dec 2001 SR 91/2001 s3; 30 Dec 2005 SR 146/2005 s4.

13 13 Market value of securities not listed on a stock exchange 9(1) Subject to subsections (2) to (4), the market value of a security not listed and posted for trading on an exchange shall be determined by assigning a reasonable value on the basis of values shown on: (a) published market reports; or (b) inter-dealer quotation sheets; on the relevant date or last trading day prior to the relevant date. (2) The registrant may vary a value from that shown on published market reports or inter-dealer quotation sheets where, in light of all the circumstances, some other value would be more appropriate. (3) The Director may require that a different value from that determined under subsection (1) or (2) be assigned, where in light of all the circumstances and in his opinion, some other value would be more appropriate. (4) Where no published market report or inter-dealer quotation sheet exists with respect to the security, the security shall be assigned a market value of zero unless the Director agrees otherwise. 10 Nov 88 cs-42.2 Reg 1 s9; 17 May 96 SR 21/ 96 s5. Categories of registration - dealers 10 Every registrant who is a dealer shall be classified into one or more of the following categories: (a) Repealed. 14 Dec 2001 SR 91/2001 s4. (b) an investment dealer, being a person who or company that: (i) is a member, branch office member or associate member of the Saskatchewan District of the Investment Dealer s Association of Canada; and (ii) engages in the business of trading in securities, exchange contracts or both in the capacity of an agent or principal; (c) a mutual fund dealer, being a person who or company that is registered exclusively for the purpose of trading in the shares or units of mutual funds; (d) a scholarship plan dealer, being a person who or company that is registered exclusively for the purpose of trading in securities of a scholarship or educational plan or trust; (e) Repealed. 14 Dec 2001 SR 91/2001 s4. (f) Repealed. 14 Dec 2001 SR 91/2001 s4.

14 14 (g) a security issuer, being an issuer registered for trading in securities for the purpose of distributing securities of its own issue exclusively for its own account; (h) Repealed. 14 Dec 2001 SR 91/2001 s4. 17 May 96 SR 21/96 s6; 14 Dec 2001 SR 91/ 2001 s4. Categories of registration advisors 11 Every registrant who is an adviser shall be classified into one or more of the following categories: (a) Repealed. 14 Dec 2001 SR 91/2001 s5. (b) an investment counsel, being a person who or company that: (i) engages in or holds himself or itself out as engaging in the business of advising others as to the investing in or the buying or selling of specific securities, exchange contracts or both; or (ii) is primarily engaged in giving continuous advice as to the investment of funds on the basis of the particular objectives of each client; (c) portfolio manager, being a person or company registered for the purpose of managing the investment portfolio of clients through discretionary authority granted by one or more clients; (d) securities adviser, being a person who or company that holds himself or itself out as: (i) engaging in the business of advising others, either through direct advice or through publications or writings, as to the investing in or the buying or selling of specific securities, exchange contracts or both; and (ii) not purporting to tailor his or its advice to the needs of specific clients. 10 Nov 88 cs-42.2 Reg 1 s11; 17 May 96 SR 21/ 96 s7; 14 Dec 2001 SR 91/2001 s5. 12 Repealed. 14 Dec 2001 SR 91/2001 s6. Portfolio manager 13(1) Where section 3.8 of National Instrument Prospectus and Registration Exemptions applies and the provisions of that section have been complied with, the provisions of this Part as they relate to a portfolio manager do not apply to a investment dealer acting as a portfolio manager. (2) The provisions of this Part apply to portfolio managers where they act as investment counsel. 10 Nov 88 cs-42.2 Reg 1 s13; 14 Dec 2001 SR 91/2001 s7; 30 Dec 2005 SR 146/2005 s5.

15 15 Compliance with Part 14(1) No registration shall be granted unless the applicant has complied with the application requirements of this Part at the time of the granting of the registration. (2) Each registrant shall comply with the applicable requirements of this Part and the Commission shall take into consideration any failure to do so in any proceedings under section 134 of the Act. 10 Nov 88 cs-42.2 Reg 1 s14; 17 May 96 SR 21/ 96 s8; 14 Dec 2001 SR 91/2001 s Repealed. 17 May 96 SR 21/96 s9. Interest in others prohibited 15(1) No registrant or partner, officer or associate of a registrant shall have a direct or indirect interest in any other registrant without the approval of the Director. (2) For the purposes of subsection (1), affiliated companies shall be treated as one company. 10 Nov 88 cs-42.2 Reg 1 s15. Conditions prescribed by Commission 16 The Commission may prescribe conditions of registration for a registrant or group of registrants that are in lieu of some or all of the conditions of registration prescribed in sections 6, 7, 19, 20 to 35.1, 37, 38, 49 to 56 and 59, where it: (a) gives prior notice of the proposed conditions to registrants affected; (b) affords the registrants an opportunity to be heard; and (c) publishes notice in a publication published by the Commission of each instance when it so prescribes. 10 Nov 88 cs-42.2 Reg 1 s16; 17 May 96 SR 21/ 96 s10. Registered dealer that is reporting issuer 17 Every registered dealer that is a reporting issuer shall comply with the applicable conditions of registration pursuant to the Act and these regulations. 10 Nov 88 cs-42.2 Reg 1 s17. Business office requirements 18(1) Subject to subsection (3), every person or company registered as dealer or adviser shall establish and maintain a business office in Saskatchewan. (2) For the purposes of subsection (1), the manager of the business office shall be approved by the Commission. (3) When the business of a person or company is restricted to dealing with institutional clients exempt pursuant to clause 39(1)(c), (d), (e) or (t) of the Act, a person or company may be registered as an adviser and is not required to maintain a business office in Saskatchewan. 10 Nov 88 cs-42.2 Reg 1 s18.

16 16 Capital requirements 19(1) Every investment dealer must maintain excess risk adjusted capital. (2) Repealed. 14 Dec 2001 SR 91/2001 s9. (3) Every mutual fund dealer and scholarship plan dealer must maintain working capital, calculated according to generally accepted accounting principles, equal to the aggregate of: (a) the maximum amount, if any, that is deductible under any clause of a bond or insurance policy required pursuant to section 20; and (b) the greater of: (i) $25,000; and (ii) an amount equal to the sum of: (A) 10% of the first $2,500,000 of adjusted liabilities; (B) 8% of the next $2,500,000 of adjusted liabilities; (C) 7% of the next $2,500,000 of adjusted liabilities; (D) 6% of the next $2,500,000 of adjusted liabilities; and (E) 5% of adjusted liabilities in excess of $10,000,000. (4) Every adviser must maintain a working capital, calculated according to generally accepted accounting principles, equal to the aggregate of: (a) the maximum amount, if any, that is deductible under any clause of a bond or insurance policy required pursuant to section 20; and (b) either: (i) $5,000; or (ii) any greater amount that the Director considers necessary where the adviser holds clients funds or securities. (5) Every registrant required to maintain the capital level prescribed in this section shall: (a) promptly report to the Director every failure to maintain the required level; and (b) provide those other details of the failure that the Director may require. 17 May 96 SR 21/96 s11; 14 Dec 2001 SR 91/ 2001 s9. Bonding 20(1) Except where the Director is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every investment dealer shall maintain bonding and insurance by means of a broker s blanket bond that: (a) contains terms acceptable to the Director; (b) is in the amount of not less than $200,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7); and

17 17 (c) covers: (i) any loss through dishonest or fraudulent acts of employees, including loss of property and trading losses; (ii) any loss of money, securities, exchange contracts or other property occurring: (A) on or off the premises; and (B) in any form of transit including mail, messenger, courier or private or common carrier; and (iii) counterfeiting, forgery or alterations that are prejudicial to the client. (2) Repealed. 14 Dec 2001 SR 91/2001 s10. (3) Except where the Director is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every mutual fund dealer shall maintain bonding and insurance by means of: (a) a broker s blanket bond on terms acceptable to the Director in an amount of not less than $50,000 for each employee, or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7) and covering: (i) any loss through dishonest or fraudulent acts of employees including loss of property and trading losses; (ii) any loss of money, securities or other property occurring: (A) on or off the premises; and (B) in any form of transit including mail, messenger, courier or private or common carrier; and (iii) counterfeiting, forgery or alterations, which are prejudicial to the client; and (b) a surety bond for itself completed in accordance with Form 39 in an amount of not less than $100,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7). (3.1) Notwithstanding subsection (3), the surety bond mentioned in that subsection is not required if the mutual fund dealer is a participant in a contingency fund approved by the Commission. (4) Except where the Director is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every scholarship plan dealer shall maintain bonding and insurance by means of: (a) a broker s blanket bond on terms acceptable to the Director in an amount of not less than $5,000 for each employee, or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7) and covering: (i) any loss through dishonest or fraudulent acts of employees including loss of property and trading losses;

18 18 (ii) any loss of money, securities or other property occuring: (A) on or off the premises; and (B) in any form of transit, including mail, messenger, courier or private or common courier; and (iii) conterfeiting, forgery or alterations, which are prejudicial to the client; and (b) a surety bond for itself completed in accordance with Form 39 in an amount of not less than $100,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7). (5) Except where the Director is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every securities issuer shall maintain bonding and insurance on terms acceptable to the Director by means of: (a) a surety bond completed in accordance with Form 39 in an amount of not less than $5,000 for each salesperson or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7); and (b) a surety bond for itself completed in accordance with Form 39 in an amount of not less than $10,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7). (6) Except where the Director is satisfied in a particular case that reduced or no coverage would not be prejudicial to the public interest, every adviser shall maintain bonding and insurance on terms acceptable to the Director: (a) where that adviser does not hold client funds or securities, by means of a surety bond completed in accordance with Form 39 in an amount of not less than $10,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7); (b) where that adviser holds client funds or securities, by means of a surety bond completed in accordance with Form 39 in an amount of not less than $200,000 or any larger amount that is indicated to be necessary by the resolution mentioned in subsection (7). (7) Every person or company applying for registration as a dealer or advisor shall deliver to the Director, with the application, a certified copy of a resolution of its directors in the case of a company, and a statutory declaration in the case of a person, stating that: (a) full consideration has been given to the amount of bonding and insurance necessary to cover the insurable risks in the business of the applicant; and (b) either: (i) the minimum amount of coverage required by these regulations is sufficient; or (ii) the minimum amount of coverage required by these regulations is not sufficient and stating an amount of coverage that would be sufficient.

19 19 (8) The Director may exempt registrants who are members of the Investment Dealers Association of Canada or the Mutual Fund Dealers Association from compliance with subsection (7) if the Director is satisfied that the registrant is subject to requirements that: (a) are imposed by one or both of those organizations; and (b) provide protection for its clients that is at least equal to that provided under subsection (7). (9) Every person or company applying for registration as a dealer, other than a securities issuer, shall deliver to the Director, with the application, a certified copy of the broker s blanket bond maintained pursuant to the requirements of clause (1)(a), (3)(a) or (4)(a). (10) Every certified copy mentioned in subsection (9) is to be endorsed by the insurer stating that the insurer will give: (a) 15 days notice to the Director of any intended change in or intended cancellation of; and (b) prompt notice of any claim made under; the provision of any broker s blanket bond maintained by the person or company described in subsection (9). 10 Nov 88 cs-42.2 Reg 1 s20; 17 May 96 SR 21/ 96 s12; 14 Dec 2001 SR 91/2001 s10. Change in bonding 21 Every registrant shall promptly notify the Director in writing of any change in, or claim made under, the provisions of any bond or insurance policy maintained pursuant to the requirements of this Part. 10 Nov 88 cs-42.2 Reg 1 s21. Forfeiture of bond 22(1) In this section: (a) applicant means a person who or company that: (i) is a registrant; and (ii) is required to maintain a surety bond completed in accordance with Form 39; and includes the directors, officers, partners, salespersons, employees and agents of the applicant; (b) bond means a surety bond completed in accordance with Form 39; (c) client means a person on behalf of whom or company on behalf of which an applicant receives securities, exchange contracts or money in anticipation of buying or as a result of selling securities or exchange contracts from, to or through an applicant, but does not include any person or company that was a registrant or its equivalent in any jurisdiction at the time the applicant received the securities, exchange contracts or money on behalf of that person or company;

20 20 (d) Clerk of the Court means the local registrar or deputy local registrar of the Court of Queen s Bench; (e) Court means the Court of Queen s Bench; (f) principal amount means the amount of the bond payable in Canadian money; (g) surety means a company duly registered and authorized to carry on the business of suretyship in Saskatchewan. (2) A bond maintained pursuant to the requirements of this Part is forfeited and the principal amount of it shall become due and payable by the person or company bound by it as a debt to Her Majesty in Right of Saskatchewan if any of the following events occurs on or before the effective date of the lapse or cancellation of the bond: (a) an order by the Commission suspending or cancelling the registration of the applicant if the order is based on the refusal or inability of the applicant to return to clients any securities, exchange contracts or money the applicant received from or on behalf of those clients; (b) the obtaining of a civil judgment by a client against the applicant based on: (c) (i) a finding of fraud; or (ii) for the return of, or for damages based on the non-return of, any securities, exchange contracts or money received by the applicant from or on behalf of the client; the conviction of the applicant for: (i) an offence pursuant to the Act or these regulations; or (ii) a securities or exchange contracts related offence under the Criminal Code, including fraud or theft; (d) the commencement of any proceedings with respect to the applicant pursuant to the Bankruptcy Act (Canada) to obtain any of the remedies provided in that Act. (3) On the principal amount of a bond becoming due and payable, the Court, pursuant to an application made by the Commission or the client, may make an order: (a) declaring that the principal amount has become due and payable; (b) directing the surety to pay the principal amount to the Clerk of the Court; (c) declaring the earlier of: (i) the date of an order made by the Commission suspending or cancelling the registration of the applicant based on the refusal or inability of the applicant to return to a client any securities, exchange contracts or money that the applicant received from or on behalf of the client;

21 21 (ii) the date of the lapse of registration of the applicant; or (iii) the effective date of the lapse or cancellation of the bond; as the date for the purposes of subsections (6), (7) and (9); and (d) directing the Clerk of the Court to pay to the Commission or the client, from the principal amount, the costs of the application as determined by the Court. (4) The Clerk of the Court shall hold the principal amount paid to him pursuant to an order made under subsection (3), less costs, in an interest bearing account. (5) The only persons or companies entitled to share in the principal amount held by the Clerk of the Court are: (a) those clients who have obtained judgments against the applicant; and (b) those persons or companies entitled to costs as determined by the Court. (6) For the purposes of subsection (5), the judgments mentioned in clause (5)(a) must: (a) be obtained prior to the expiry of 2 years from the date declared by the Court pursuant to clause (3)(c); and (b) be based on: (i) a finding of fraud; or (ii) for the return of, or for damages based on the non-return of, any securities, exchange contracts or money received by the applicant from or on behalf of the client. (7) On the expiry of 2 years from the date declared by the Court pursuant to clause (3)(c) or an earlier date that the Court may determine, the Commission or a client may apply to the Court for an order: (a) determining which judgments against the applicant are those judgments mentioned in clause (5)(a) and based on that determination settling a list of the clients entitled to share in the principal amount; (b) directing the Clerk of the Court to pay, from the principal amount held, the costs of the application to the persons or companies in an amount or amounts as determined by the Court; and (c) directing the Clerk of the Court to pay, from the remaining principal amount and interest, to those clients entitled to share in the principal amount, the amount of their judgments and costs. (8) If the principal amount plus interest held by the Clerk of the Court is not sufficient to satisfy all the client judgments and costs, the Clerk of the Court shall pay to the clients a pro rata share of those funds in the following order of priority: (a) firstly, the principal amounts of all judgments until, as the case may be, either: (i) (ii) the judgments are fully paid; or there are no funds left;

22 22 (b) secondly, any interest owing on the principal of judgments as set out in the judgments until, as the case may be, either: (i) the interest owing is fully paid; or (ii) there are no funds left; (c) thirdly, any costs as set out in the judgments until, as the case may be, either: (i) the costs are fully paid; or (ii) there are no funds left. (9) On the expiry of three years from the date declared by the Court pursuant to clause (3)(c), or an earlier date as the Court may determine, the surety or any person who or company that on forfeiture of the bond made any payments under it may apply to the Court for an order instructing the Clerk of the Court to pay the surety or that person or company the balance of the principal amount and interest still held by the Clerk of the Court. (10) Notwithstanding subsection (9), the amount of any expenses that have been incurred by the Commission or the Government of Saskatchewan in connection with any investigation or expenses otherwise relating to that surety, person or company, shall be paid to the Commission or the Government of Saskatchewan in priority to the payments mentioned in that subsection. (11) On becoming aware of any facts that may result in a claim being made against its bond, an applicant shall: (a) immediately notify the Director of the Commission of those facts; and (b) secure additional bond coverage to ensure that at all times the applicant has bond coverage of not less than the total of: (i) the amount prescribed pursuant to section 20; and (ii) the amount that may be claimed against the bond; unless the Director is satisfied that not securing additional bond coverage is not prejudicial to the public interest. (12) The Commission may suspend the registration of an applicant on: (a) becoming aware that an action exists that may result in a claim being made against the bond of that applicant; (b) receipt of a certified copy of a judgment against that applicant that may result in a claim being made against the bond of the applicant; or (c) becoming aware that the total bond coverage of that applicant has fallen below the amount prescribed by clause (11)(b). (13) A bond may be cancelled by any person bound by it by giving to the Director at least three months notice in writing of his intention to cancel. (14) Subject to subsection (15), the bond mentioned in subsection (13) is deemed to be cancelled on the date stated in the notice.

23 23 (15) For the purposes of every act and omission during the period of registration or the period prior to cancellation under subsection (14) every bond continues in force and the collateral security, if any, remains on deposit for a period of two years after: (a) the lapse or cancellation of the registration to which it relates; or (b) the cancellation of the bond; whichever occurs first. 10 Nov 88 cs-42.2 Reg 1 s22; 17 May 96 SR 21/ 96 s13. Compensation fund or contingency trust fund 23(1) The Commission may require that every dealer, other than a security issuer, participate in a compensation fund or contingency trust fund that is: (a) (b) approved by the Commission; and established by: (i) a self-regulatory organization recognized pursuant to section 21 of the Act; or (ii) a trust corporation licensed under The Trust and Loan Corporations Act. (2) The Commission may vary the amount required to be contributed by any participant where in its opinion it would not be prejudicial to the public interest to do so, and only where the variation is published by the Commission in a publication published by it prior to the variation taking effect. 10 Nov 88 cs-42.2 Reg 1 s Repealed. 14 Dec 2001 SR 91/2001 s11. Subordination agreement 24 At the request of the Commission, a registrant shall enter into a subordination agreement in the form prescribed by the Commission. 10 Nov 88 cs-42.2 Reg 1 s24. Record keeping 25(1) Every registrant shall maintain books and records necessary to properly record its business transactions and financial affairs. (2) All records may be kept by means of mechanical, electronic or other devices that are not prohibited under other applicable legislation where the registrant: (a) takes adequate precautions, appropriate to the means used, to guard against the risk of falsification of the information recorded; and (b) provides a means for making the information available in an accurate and intelligible form within a reasonable time to any person lawfully entitled to examine the records.

24 24 (3) Without restricting the generality of subsection (1), a registrant shall maintain each of the following books and records that, in the opinion of the Director, are appropriate to its business: (a) blotters, or other records of original entry, containing an itemized daily record of: (i) all purchases and sales of securities and exchange contracts; (ii) all receipts and deliveries of securities and exchange contracts, including certificate numbers; (iii) all receipts and disbursements of cash; (iv) all other debits and credits; (v) the account for which each transaction was effected; (vi) the name of the securities and exchange contracts purchased or sold and, with respect to that purchase or sale: (A) the class or designation of the securities or exchange contracts; (B) the number or value of the securities or exchange contracts; (C) the unit and aggregate purchase or sale price, if any; (D) the trade date; and (E) the name or other designation of the person from whom the securities or exchange contracts were purchased or received or to whom they were sold or delivered; (b) ledgers or other records maintained in detail reflecting all of the following: (i) assets and liabilities; (ii) income and expenses; and (iii) capital accounts; (c) ledger accounts or other records itemizing separately for each cash and margin account of every client: (d) (i) all purchases, sales, receipts and deliveries of securities or exchange contracts for the account; and (ii) all other debits and credits to the account; ledgers or other records reflecting: (i) securities or exchange contracts in transfer; (ii) dividends and interest received; (iii) securities or exchange contracts borrowed and securities or exchange contracts loaned; (iv) moneys borrowed and moneys loaned, together with a record of the collateral for them and any substitutions in the collateral; and (v) securities or exchange contracts that the registrant has failed to receive and failed to deliver;

25 25 (e) a securities and exchange contracts position report that shows separately for each security or exchange contract as of the end of each month or at any other date the Director may direct: (i) the name of the account holder, the account number and the type of account in which a position is held; (ii) all long and short positions, including securities in safekeeping, carried for the registrant s account or for the account of clients; (iii) the depository or other location of all securities bought long and position offsetting securities sold short; and (iv) the date of the last activity in the security or exchange account; (f) an adequate record of each order and of any other instruction, which may be a copy of the order or instruction, given or received for the purchase or sale of securities or exchange contracts, whether executed or unexecuted, showing: (i) the terms and conditions of the order or instruction and of any modification or cancellation of the order or instruction; (ii) the account to which the order or instruction relates; (iii) the name, sales number or designation of the individual placing the order or instruction, where the order or instruction is placed by an individual other than: (A) the person in whose name the account is operated; or (B) an individual duly authorized to place orders or instructions on behalf of a client that is a company; (iv) the time of the entry of the order or instruction and, where the order is entered pursuant to the exercise of discretionary power of a registrant or any employee of a registrant, a statement to that effect; (v) the price at which the order or instruction was executed; and (vi) to the extent feasible, the time of execution or cancellation; (g) a confirmation and statement record containing: (i) a copy of every risk disclosure statement furnished to prospective customers pursuant to section 55.2 of the Act; (ii) a copy of every confirmation for each purchase or sale of a security or exchange contract sent pursuant to subsection 42(1) of the Act; (iii) a copy of every statement of account sent pursuant to section 34; and (iv) notices of all other debits and credits of securities, exchange contracts, cash and other items for the accounts of clients; (h) subject to subsection 26(4), a client record with respect to each cash and margin account containing: (i) the name and address of the beneficial owner and the guarantor, if any, of the account; (ii) where trading instructions are accepted from a person or company other than the client, written authorization or ratification from the client naming the person or company; and