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Insider Report to Add an Insider-Defined Security Designation (e.g. Third Party Derivatives)

Requirements

An initial report recording the opening balance of securities held for the insider-defined security and ownership type is required to be completed prior to posting any related transactions on SEDI. The steps are similar to Filing an Opening Balance on Initial Report with the exception that an insider-defined security is added when filing the report instead of selecting a security from the issuer’s outstanding securities list.

Once a transaction has been posted as an insider-defined security designation, all other transactions for those securities must be filed under that security designation to ensure proper balances of securities. SEDI calculates separate balances for insider-defined securities and issuer-defined securities.

When to Use an Insider-Defined Security Designation

1. In most situations, insiders are required to add an insider-defined security designation when filing the acquisition of a third party derivative.

“Third party derivatives” are securities issued by a person or company other than the issuer. The price of third party derivatives is based on an underlying interest (such as common shares) issued by the issuer as the underlying security. Third party derivatives include exchange-traded call or put options, over-the-counter (OTC) call or put options (including private options to purchase or sell), equity swaps (long or short positions), forward purchases or sales and futures contracts (long or short positions). The insider, not the issuer, must define these securities in their insider profile.

2. On rare occasions, insiders may need to add an insider-defined security designation under extenuating or special circumstances.

For example, the insider may be required to add an insider-defined security if the issuer has not added an issuer-defined security to its outstanding securities list (e.g. stock options). In these situations, insiders or agents should contact the issuer first and request the issuer to add the security designation to its issuer profile supplement. If the issuer is unable to comply in a timely manner, the insider or agent should contact the appropriate Securities Commission immediately to resolve the filing problem. The insider may be required to add an insider-defined security as a last resort to avoid filing late.

How to File an Initial Opening Balance Report to Add an Insider-Defined Security Designation

Steps to file an opening balance on initial report follow:

Step

Action

Click Insider report in the top navigation bar

The Introduction to insider report activities (Form 55-102F2) screen opens

Click File insider report in the left navigation bar

The Select issuer screen opens

Click the radio button beside an issuer in the list to select it

Note: To view issuer information click on the magnifying glass under Issuer Information. An information window will display. Opting to view the issuer's information will not detour you from the filing process.

Click File insider report or View issuer reports

then

you choose to view issuer reports

SEDI will then display an information window that displays a list of issuer reports which have been filed since your last insider report filing, or, informs you that no issuer reports have been filed since your last filing. When finished click “Viewing completed”.

Note: It is recommended to view the issuer report, as the current list of issuer reports will not be displayed the next time you file an insider report. However, issuer reports are always accessible through the access public filings

you choose file insider report

you will be taken to the Select security designation screen

The Select security designation screen opens

Click the Add insider-defined security button located at the bottom of the screen

A warning message appears:

Warning: You are about to specify an insider-defined security. You must ensure that the security is not already listed. Click OK to add or click Cancel to make another selection.

Click OK

The Add insider-defined security designation screen opens

Select a Security category from the drop-down list box

Select a Security designation from the Security name drop-down list box

Note: For example, if Third Party derivatives is selected as a security category, an Underlying security designation section opens at the bottom of the screen. In this section, use the drop-down list boxes and fields to provide details about the underlying security (e.g. security category is equity, security name/designation is common shares of the issuer).

Third Party Derivatives could include OTC Calls (including Private Options to Purchase), OTC Puts (including Private Options to Sell), Exchange Traded Call Options or Exchange Traded Put Options. Please see the Related Documents section which contains links to how to file insider reports for these types of third party derivatives.

If necessary, fill in the Additional description field (optional) to better describe the particular type of security being created.

Maximum number of characters: 60

Note: If Other is chosen as a security name, text must be entered for the Additional description field and SEDI will display the information provided as the security designation.

Click Next

The Select ownership type screen opens

Use the drop-down list box to specify an Ownership type for the selected securities

If the ownership type is	then
direct (The insider holds the securities directly. For example, the insider can hold the securities in an account with a broker, but the account is in the insider’s name.)	click Next
indirect (The insider can hold the securities indirectly. For example, the insider can beneficially own common shares in X Co. but the registered owner is another entity such as a holding company, an RRSP or a family trust.)	select a registered holder from the Registered holder list and click Next
control or direction (An insider has control or direction over securities if the insider, has or shares voting power or investment power over those securities)	select a registered holder from the Registered holder list and click Next

Note: If the desired registered holder does not appear in the list, click the radio button beside Add new holder and type the name of the registered holder in the space provided.

Click Next

The Opening balance on initial SEDI report screen opens

Enter an opening balance in the Opening balance of securities or contracts held field.

Note: If the security is a derivative, enter an opening balance in the Opening balance of equivalent number or value of underlying securities field.

If this is an initial opening balance report to create an insider-defined security designation for a third party derivative, such as an OTC call or put option, the opening balance is typically 0 (zero) in both fields. The details of the third party derivative contract will be entered when the insider files a second report to record the transaction, immediately following the initial opening balance report, by selecting the same security and holder in Step 9.

Enter any remarks that you want to make public in the General remarks field (optional).

Enter any private comments in the Private remarks to securities regulatory authorities field (optional).

Maximum number of characters for remarks: 254

Click Next

The Final Review screen opens

Review the information:

then

the information is correct

click Certify

the information is incorrect

either:

click Cancel to return to the Enter Transaction Information screen
or identify which screen contains the information which needs to be changed and click on that screen name in the process tracker at the top of the screen.

When you return to a previous step, transaction information entered on the pages following that step is cleared and will have to be re-entered.

Note: When using the process tracker, the current screen is highlighted in green and underlined, completed steps are in black and upcoming steps are in grey.

Click Certify

The Certification dialog box opens

Click OK

The Completed screen opens

Clicking the “Printer friendly version” button will take you to a printer-friendly page and launch your browser’s print dialog box. Use the Back button on the page (not the browser ”back” button) to return to the “File insider report –Completed” page

Indicate whether you are finished filing insider reports.

If you

then

want to file another transaction

Select one of four available options to file another transaction:

Same security and holder
Same security and different holder
Different security
Different Issuer

Click Yes to file this part of the report.

don’t want to file another transaction

Click No to finish filing the report and return to the Introduction to insider report activities screen. Click Logout in the top navigation bar.

Related Documents

Instructions to file an insider report for a third party derivative is similar to filing other option transactions.

See:
Insider Report for Stock Options
Preliminary Information for Stock Option Filings

Security Designation List

The process for filing third party derivatives is described in the following documents: