Hot off the presses. The first review of the new 51-509 revised rule by a law firm. This Securities Law Bulletin article was written by Clark Wilson LLP. According to this article it appears the newly revised rule is definitely going into effect on September 15, 2008.

U.S. OTC ISSUERS WITH CONNECTION TO BC BECOME SUBJECT TO BC REGULATORY REQUIREMENTS

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On September 15, 2008, the new BC Instrument 51-509 – Issuers Quoted in the U.S. Over-the-Counter Markets (“51-509”) will come into force. According to the British Columbia Securities Commission (the “BCSC”), 51-509 was adopted primarily to improve disclosure and compliance by United States Over-the-Counter (“OTC”) issuers with significant connections to British Columbia (“BC OTC Issuers”), discourage the manufacture and sale of OTC shell companies for abusive purposes, disrupt abusive promotions and hold dealers responsible for their trading activities in the OTC market.

Issuers subject to the new rules will be required to comply with British Columbia’s continuous disclosure requirements for reporting issuers, including timely disclosure of material changes and many other requirements. Directors and officers of these issuers will be required to file personal information forms disclosing their qualifications and backgrounds and file insider reports.

BC OTC Issuers that report under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) will be able to use the documents they file with the U.S. Securities and Exchange Commission (the “SEC”) to satisfy most of the 51-509 continuous disclosure requirements. BC OTC Issuers whose securities are quoted on the Pink Sheets LLC that do not report under the Exchange Act will be required to comply with applicable financial statement, disclosure and other reporting requirements or will be in breach of British Columbia law.

Once the new filing requirements are in force, the BCSC has stated that it intends to carry out continuous disclosure reviews of BC OTC Issuers. Significant non-compliance will likely result in, among other things, a cease trade order of the issuer’s securities in British Columbia, and possibly other sanctions. Further, the BCSC has gone to lengths to show that they are co-operating with the SEC in this new endeavor, and we expect that sanctions imposed by the BCSC on a BC OTC Issuer will likely result in increased SEC scrutiny of the company and its insiders.

For the rest of the article please go to:

http://www.cwilson.com/newsletters/securities/slb-aug08.htm

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