(May 1- 15:40 ET) – The Canadian Securities Administrators are finalizing a new national rule governing rights offerings.

The Ontario Securities Commission sent the rule to the Ontario Minister of Finance on April 27 for final approval. If he does not reject the rule or return it to the commission for further consideration by June 27, it will come into force on July 25, 2001.

The rule prescribes the basis on which an issuer may use a rights offering to sell additional securities of its own issue to its shareholders, either by prospectus or in reliance on the rights offering prospectus exemption.

In order to utilize the exemptions, the issuer must convince reviewing authority that securityholders have been provided with current information about the affairs of the issuer and are not in need of a prospectus for the rights offering.

This information will allow the reviewing authorities to assess whether the rights offering is being made in compliance with the rule and whether the terms of the offering are clearly stated in the rights offering circular.

The rules implement, in part, the recommendations of the CSA Task Force on Operational Efficiencies. The task force called for Canadian securities regulatory authorities to increase the co-ordination of regulation, including standardization of requirements.

The rule is an initiative of the CSA, and is expected to be adopted in all the jurisdictions represented by the CSA. The CSA published drafts of the rule for comments in November 1997 and more recently in August 2000.

The CSA received one submission during the most recent comment period, which ended on November 10. This comment came from Marcel de la Gorgendière, chair of the Saskatchewan Securities Commission. He supported the harmonization that the rule will create but suggested that a mutual reliance review system be immediately created as a companion to the rule.

The CSA agrees that a mutual reliance review system will increase the harmonization achieved by the rule, however, they believe that this harmonization will best be achieved by including rights offering circulars in the existing system, or by including the review of rights offering circulars under an MRRS initiative for continuous disclosure documentation.