BCSC releases rule for U.S. OTC issuers

    VANCOUVER, Sept. 15 /CNW/ - The British Columbia Securities Commission
today published its new rule for companies quoted in the U.S. over-the-counter
    Under BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets,
most B.C.-connected companies quoted in the U.S. OTC markets are designated as
reporting issuers in British Columbia. The rule also discourages the
manufacture and sale of shell companies that are often used for abusive
purposes. The rule takes effect on Sept. 15, 2008.
    A notice published on June 25, 2007 outlined how the BCSC planned to deal
with those that engage in abusive activities in the U.S. OTC markets and have
connections to the province. The new rule is a key element of this plan.
    On Oct. 29, 2007, the BCSC published for comment changes it was
considering to apply to U.S. OTC companies with significant connections to the
province. The comment period ended on Dec. 31, 2007. The BCSC then published
the rule changes and opened a second comment period that ended June 13, 2008.
The new rule reflects the comments received throughout the process.
    The B.C. Securities Commission is the independent provincial government
agency responsible for regulating trading in securities within the province.
You may view the new rule by visiting the Securities Law and Policy section on
our website at www.bcsc.bc.ca. 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: www.investright.org.

       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 new 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.

    Under BCI 51-509 Issuers Quoted in the U.S. Over-the-Counter Markets
    -  issuers not cross-listed on another North American exchange or
       quotation system listed in the rule are subject to the instrument
    -  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 apply, with the exception of the exemption regarding
       material change reporting
    -  securities that OTC reporting issuers distribute under exemptions must
       contain a specified statement about restrictions on resale
    -  insiders of OTC issuers have to file insider reports and personal
       information forms

For further information:

For further information: Ken Gracey, (604) 899-6577 or (B.C. & Alberta)

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