BANK ACTProspectus (Federal Credit Unions) RegulationsP.C.2012-1624201212
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His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 273.1(2)a of the Bank Actb, makes the annexed Prospectus (Federal Credit Unions) Regulations.S.C. 2012, c. 5, s. 10S.C. 1991, c. 46Distribution of Securities — GeneralProspectusContentsThe information to be disclosed before a distribution of securities of a federal credit union must be set out in a prospectus and must include the contents that are required for a prospectus under the legislation set out in column 2 of the schedule for the relevant jurisdiction set out in column 1.ProceduresThe disclosure must be made in accordance with the procedures for disclosure by prospectus that are required under the legislation set out in column 2 of the schedule for the relevant jurisdiction set out in column 1.FormThe information to be disclosed must be in the form that is required for a prospectus under the legislation set out in column 2 of the schedule for the relevant jurisdiction set out in column 1.Other requirementsIn addition to the requirements set out in section 1, a prospectus filed under any legislation set out in column 2 of the schedule must comply with any other requirements that are set out in that legislation.ExemptionExemption from provincial requirementsA person that has been exempted under the legislation set out in column 2 of the schedule for the relevant jurisdiction set out in column 1, or by the relevant provincial regulator, from any prospectus requirements under that legislation is also exempt from those requirements for the purposes of sections 1 and 2.Distribution of Securities — Individual MembersApplicationExemption from requirement to provide prospectusA federal credit union that is exempt under section 3 from the requirement to provide a prospectus must comply with the requirements set out in sections 5 to 9 in respect of a distribution of its securities to any of its members who are individuals, other than an issuance of shares as a dividend or patronage allocation under subsection 79(1) of the Bank Act.DisclosureMannerAny disclosure that is required to be made by a federal credit union under these Regulations must be made in language that is clear and simple and in a manner that is not misleading.Written disclosure before distributionBefore a federal credit union enters into an agreement with one of its members respecting the distribution of its securities, it must provide that member with a disclosure document containingon the first page, prominently displayed,the statement “No official of the Government of Canada has considered the merits of the matters addressed in this disclosure”,a statement indicating that the securities are not eligible for deposit insurance coverage by the Canada Deposit Insurance Corporation,a statement indicating that the agreement is not binding on the member if the federal credit union receives written notice of the member’s intention not to be bound by the agreement not later than the second business day after the day on which the federal credit union provided the information required by this section, anda statement indicating that the security is not transferrable, except to another member;the name, date of incorporation, and head office address of the federal credit union;the name, municipality of residence and principal occupation of each of the federal credit union’s directors and senior officers, and the title of each senior officer;the name and location of each transfer agent;a brief description of the attributes of the securities being distributed;a description of the risks associated with the securities being distributed;a description of any business that the federal credit union or its subsidiaries, if any, carry on or intend to carry on;details of the capital structure of the federal credit union;details of the use to which the proceeds from the sale of the securities will be put;details of any securities ranking ahead of the securities being distributed;a description of any action, suit or other proceeding to which the federal credit union is a party;a description of any material interest of a director, officer or employee of the federal credit union or any of its subsidiaries in the operations of the federal credit union, generally, or in the securities being distributed, includingdetails of any options to purchase securities of the federal credit union that are held by a director or officer, and the name of any director or officer who holds such options, anddetails of any options to purchase securities of the federal credit union that are held by an employee who is not a director or an officer, without naming the employee;a description of every material contract entered into within the two-year period before the date of the distribution;a description of the risk factors associated with the federal credit union;an explanation of any substantial variations in the operating results of the federal credit union within the five-year period before the date of the distribution;the amount of any dividends or patronage allocations paid, or distributions made, by the federal credit union within the five-year period before the date of the distribution;the amount of any undeclared dividends on any shares with cumulative dividend rights;the name and address of the federal credit union’s auditor and a statement indicating that copies of the federal credit union’s most recent interim and annual financial statements are available upon the member’s request;details of the method of distributing the securities and of any commission payable or discount allowable on the distribution;any other material fact; anda statement indicating that the disclosure document constitutes full, true and plain disclosure of all material facts relating to the securities proposed to be distributed.Disclosure deemed providedIf the document is sent by mail, the federal credit union is deemed to have provided it five business days after the postmark date.Oral disclosure before distributionBefore a federal credit union enters into an agreement with one of its members respecting the distribution of its securities, it must provide the member with the information referred to in subparagraphs 6(1)(a)(ii) and (iii) and paragraphs 6(1)(e) and (i) orally, by means of a person who is knowledgeable about the terms and conditions of the security.Exception — agreements by electronic meansIf an agreement referred to in subsection (1) is entered into by electronic means, the federal credit union is not required to comply with that subsection, but it must, before entering into the agreement, provide the member with the telephone number of a person who is knowledgeable about the terms and conditions of the security.Other disclosureThe document referred to in section 6 must also be disclosed by a federal credit unionon each of its websites through which products or services are offered in Canada; andin written format to be sent to any person who requests it.Advertisements — required contentIn each of its advertisements for its securities, a federal credit union must disclose how the public may obtain information about the securities and must state that the securities are not eligible for deposit insurance coverage by the Canada Deposit Insurance Corporation.Market performanceA federal credit union that uses past market performance in an advertisement for a security must represent that performance fairly, must base any hypothetical examples used in the advertisement on realistic assumptions that are disclosed in the advertisement and must state in the advertisement that past market performance is not an indicator of future market performance.Coming into ForceS.C. 2012, c. 5These Regulations come into force on the day on which section 10 of the Financial System Review Act comes into force.[Note: Regulations in force December 19, 2012, see SI/2012-99.](Sections 1 to 3)
PROVINCIAL LEGISLATION
ItemColumn 1Column 2JurisdictionLegislation1OntarioSecurities Act, R.S.O. 1990, c. S.5, as amended from time to time2QuebecSecurities Act, R.S.Q., c. V-1.1, as amended from time to time3Nova ScotiaSecurities Act, R.S.N.S. 1989, c. 418, as amended from time to time4New BrunswickSecurities Act, S.N.B. 2004, c. S-5.5, as amended from time to time5ManitobaThe Securities Act, C.C.S.M. c. S50, as amended from time to time6British ColumbiaSecurities Act, R.S.B.C. 1996, c. 418, as amended from time to time7Prince Edward IslandSecurities Act, R.S.P.E.I. 1988, c. S-3.1, as amended from time to time 8SaskatchewanThe Securities Act, 1988, S.S. 1988-89, c. S-42.2, as amended from time to time 9AlbertaSecurities Act, R.S.A. 2000, c. S-4, as amended from time to time 10Newfoundland and LabradorSecurities Act, R.S.N.L. 1990, c. S-13, as amended from time to time11YukonSecurities Act, S.Y. 2007, c. 16, as amended from time to time12Northwest TerritoriesSecurities Act, S.N.W.T. 2008, c. 10, as amended from time to time 13NunavutSecurities Act, S.Nu. 2008, c. 12, as amended from time to time