Proposed National Continuous Disclosure Rules SEC

1
Proposed National Continuous Disclosure Rules
SEC Foreign IssuersJune 11, 2002

• Presentation by
• Carla-Marie Hait
• Chief Accountant, BCSC

2
US GAAP US GAAS Permitted for SEC Issuers

• SEC Issuer
• securities registered under sec.12 of 1934 Act or
  required to file under sec.15(d) of 1934 Act, and
  not an investment company
•  
• may be Canadian incorporated with majority of
  shareholders, assets or operations in Canada

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US GAAP US GAAS for SEC Issuers (Contd)

• For first year after switching from Canadian GAAP
  to US GAAP, comparatives using both Canadian GAAP
  and US GAAP
• Reconciliation from US GAAP to Canadian GAAP
  required for first 2 years after switch

4
Proposed NI 71-102 Continuous Disclosure and
Other Exemptions Relating to Foreign Issuers

• Exemptions from the CD Rule and other
  requirements
• for Eligible Foreign Issuers
• reporting issuer, other than an investment fund
• incorporated outside of Canada, unless
• a) gt50 voting securities owned by Canadian
  residents, and
• b) any one or more of
• i) majority officers/directors are Canadian
  residents
• ii) gt50 assets in Canada
• iii) business administered principally in
  Canada

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Proposed NI 71-102 Foreign Exemptions Rule

• Provides GAAP GAAS options for all Eligible
  Foreign Issuers
• Broad relief from CD Rule and provides other
  exemptions for 2 subcategories of Eligible
  Foreign Issuers
• SEC Foreign Issuers
• Designated Foreign Issuers

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Designated Foreign Issuer

• an Eligible Foreign Issuer, not an SEC Foreign
  Issuer
• maximum of 10 equity securities held by Canadian
  residents
• subject to the disclosure requirements of one of
  the following jurisdictions  
• Australia, France, Germany, Hong Kong, Italy,
  Japan, Mexico, The Netherlands, New Zealand,
  Singapore, South Africa, Spain, Sweden,
  Switzerland or the United Kingdom of Great
  Britain and Northern Ireland

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Accounting principlesfor Eligible Foreign Issuers

• Canadian GAAP
• US GAAP without reconciliation, if SEC Foreign
  Issuer
• International Accounting Standards without
  reconciliation
• Foreign accounting principles used in SEC Filing,
  if
• SEC foreign private issuer and lt 10
  Canadian shareholders
• Accounting Principles accepted in Designated
  Jurisdiction without reconciliation, if
  Designated Foreign Issuer
• Foreign comprehensive accounting
  principlesreconciled to Canadian GAAP

8
Auditing standardsfor Eligible Foreign Issuers

• Canadian GAAS
• US GAAS
• International Standards of Auditing with
  comparison to Canadian GAAS
• Auditing standards accepted in Designated
  Jurisdiction, if Designated Foreign Issuer
• Auditing standards substantially equivalent to
  Canadian GAAS with comparison to Canadian GAAS

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Broad relief from CD Rule and other exemptions
provided for SEC Foreign Issuers and Designated
Foreign Issuers

• May satisfy Canadian requirements by complying
  with requirements of SEC or Designated Foreign
  Jurisdiction, and filing sending to
  shareholders in Canada the applicable documents 
• Relief re material change reports, AIF, MDA,
  information circulars, proxies and proxy
  solicitation, restricted share disclosure, BAR,
  change of auditor, insider reports (if not a
  SEDAR filer), early warning
• No relief from NI 43-101 Standards of Disclosure
  for Mineral Projects or proposed NI 51-101
  Standards of Disclosure for Oil and Gas
  Activities

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We want your input 3. Recent SEC proposed
changes

• SEC Release No. 33-8098, 34-45907 May 10/02
  proposes to require MDA disclosure about
  accounting estimates made in applying its
  accounting policies and the initial adoption of
  an accounting policy that has a material impact
  on financial presentation.
•  
• Question Should we change the proposed CD Rule
  to reflect the proposed SEC requirements?

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For Questions or Comments about theProposed
National Continuous Disclosure Rulesplease
contact any of

• Carla-Marie Hait
• Chief Accountant, BCSC
• [phone], chait_at_bcsc.bc.ca
• Michael Moretto
• Associate Chief Accountant, BCSC
• [phone], mmoretto_at_bcsc.bc.ca
• Peter Brady
• Senior Legal Counsel, BCSC
• [phone], pbrady_at_bcsc.bc.ca