British Columbia Securities Commission

British Columbia Securities Commission

May 14, 2008 13:07 ET

BCSC Releases Revisions to Proposed Rule for U.S. OTC Issuers

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2008) - The British Columbia Securities Commission today re-published for comment its proposed rule for issuers quoted in the U.S. over-the-counter markets along with the related companion policy and forms.

The changes to B.C. Instrument (BCI) 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets reflect comments from the initial public consultation.

On Oct. 29, 2007, the BCSC published for comment changes it was considering to apply to U.S. OTC issuers with significant connections to the province. The comment period ended on Dec. 31, 2007, and the BCSC received 19 comment letters for consideration. A summary of these comments and the commission's responses are included in Appendix A to the notice re-publishing the proposed rule.

Under the proposed BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets, the BCSC will have better legal tools to improve disclosure of B.C.-connected OTC issuers. The proposed rule also discourages the manufacture and sale of shell companies that may be used for abusive purposes.

The 30-day comment period for the proposed instrument will end on June 13, 2008.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You will find more information on the proposed rule by visiting the Securities Law and Policy section of our website at If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website:

BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets


What is the U.S. OTC securities market?

- The OTC market is composed of OTC Bulletin Board (OTC BB) and the Pink Sheets. These markets are legal and are home to legitimate businesses, but they are vulnerable to abuse because the level of regulatory scrutiny is very low.

Why is the BCSC concerned about the U.S. OTC securities market?

- A disproportionate number of players in the U.S. OTC markets who engage in abusive activities have visible connections to B.C. Their activities damage the reputation of the province's capital markets, harming the interests of legitimate issuers, investment dealers, and other market participants.

How does the Securities Act define an OTC issuer?

- Recent B.C. government amendments to the Securities Act allow the BCSC to designate OTC issuers as reporting issuers. The proposed instrument designates OTC issuers that have one or more of the substantial connections listed in

BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets as reporting issuers, and imposes substantive requirements, benefits and restrictions on these issuers.

What changes is the BCSC making to the proposed instrument?

- the Canadian Trading and Quotation System Inc. (CNQ) was added to the list of exchanges that exclude issuers from the proposed instrument

- changes were made to the significant connections requirement that will result in an OTC issuer being designated as a reporting issuer

- an OTC issuer that becomes a reporting issuer must remain a reporting issuer for at least one year after it no longer has a substantial connection to B.C.

- most foreign issuer and multi-jurisdictional disclosure system (MJDS) exemptions will apply, with the exception of the exemption regarding material change reporting

- there will be a legending requirement for securities that OTC reporting issuers distribute under exemptions

Contact Information

  • British Columbia Securities Commission
    Ken Gracey
    (604) 899-6577
    (B.C. & Alberta) 1-800-373-6393