Ontario Securities Commission Bulletin
Issue 43/35 - August 27, 2020
Ont. Sec. Bull. Issue 43/35
• Notice of Ministerial Approval of Amendments to National Instrument 44-102 Shelf Distributions
• Notice of Ministerial Approval of Amendments to National Instrument 21-101 Marketplace Operation
• CSA Staff Notice 31-359 -- OBSI Joint Regulators Committee Annual Report for 2019
• B
• Horizons ETFs Management (Canada) Inc. and Horizons Global Risk Parity ETF
• Green Rise Capital Corporation -- s. 9.1 of MI 61-101 and s. 6.1 of NI 62-104
• ESW Capital, LLC and Optiva Inc. -- s. 104
• Torstar Corporation -- s. 1(6) of the OBCA
• Investment Industry Regulatory Organization of Canada (IIROC) -- s. 21.2.3
• Majd Kitmitto et al. -- Rule 29 of OSC Rules of Procedure and Forms
• Temporary, Permanent & Rescinding Issuer Cease Trading Orders
• Temporary, Permanent & Rescinding Management Cease Trading Orders
• National Instrument 21-101 Marketplace Operation and Companion Policy 21-101CP Marketplace Operation
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notice of Ministerial Approval of Amendments to National Instrument 44-102 Shelf Distributions
The Ontario Minister of Finance recently approved amendments (the Rule Amendments) made by the Ontario Securities Commission to the following rule:
• National Instrument 44-102 Shelf Distributions (NI 44-102)
The Rule Amendments, as well as corresponding changes to Companion Policy 44-102 Shelf Distributions (the CP Change), were published in Chapter 5 of the Bulletin on June 4, 2020. The same material is being published today in Chapter 5 of this Bulletin. The Rule Amendments and the CP Change become effective on August 31, 2020.
Notice of Ministerial Approval of Amendments to National Instrument 21-101 Marketplace Operation
August 27, 2020
On August 7, 2020, the Minister of Finance approved amendments (the Rule Amendments) made by the Ontario Securities Commission (OSC or the Commission) to National Instrument 21-101 Marketplace Operation. The Rule Amendments were made by the Commission on May 28, 2020.
On May 28, 2020, the Commission also adopted changes (the Policy Changes) to Companion Policy 21-101CP Companion Policy to National Instrument 21-101 Marketplace Operation.
The Rule Amendments and the Policy Changes (collectively, the Amendments) were published on the OSC website at http://www.osc.gov.on.ca and in the OSC Bulletin at (2020), 43 OSCB 4579 on June 4, 2020. The Amendments come into force on August 31, 2020. The text of the Amendments is reproduced in Chapter 5 of this Bulletin.
CSA Staff Notice 31-359 -- OBSI Joint Regulators Committee Annual Report for 2019
August 27, 2020
This notice is being published jointly by the Canadian Securities Administrators (CSA), the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) to serve as the Annual Report of the Joint Regulators Committee (JRC) of the Ombudsman for Banking Services and Investments (OBSI).
Members of the JRC are representatives from the CSA (in 2019, CSA designated representatives were from British Columbia, Alberta, Ontario and Québec) and the two self-regulatory organizations (SROs), IIROC and MFDA.
The JRC believes that a fair and effective independent dispute resolution service is important for investor protection in Canada and is vital to the integrity and confidence of the capital markets. The JRC supports a fair, accessible and effective OBSI dispute resolution process. The JRC meets regularly with OBSI to discuss governance and operational matters and other significant issues that could influence the effectiveness of the dispute resolution system.
The purpose of this notice is to provide an overview of the JRC and to highlight the major activities conducted by the JRC in 2019.
In May 2014, amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the Amendments) came into force requiring all registered dealers and advisers to make OBSI available to their clients as their dispute resolution service, except in Québec where the dispute resolution services administered by the Autorité des marchés financiers (AMF) would continue to apply. In Québec, the AMF provides dispute resolution services to those clients of all registered dealers and advisers who reside in Québec. The Québec regime remains unchanged and firms registered in Québec have to inform clients residing in Québec of the availability of the AMF's dispute resolution services. Investors in Québec are nevertheless entitled to use the services of OBSI for disputes that fall within OBSI's mandate, in lieu of the dispute resolution services provided by the AMF.
Memorandum of Understanding / Amendments: In conjunction with the passing of the Amendments, the CSA and OBSI signed a Memorandum of Understanding (MOU) which provides an oversight framework intended to ensure that OBSI continues to meet the standards set by the CSA.{1} The MOU also provides a framework for the CSA members and OBSI to cooperate and communicate constructively.
In 2015, the MOU was amended to include the AMF as a signatory,{2} with it joining all other CSA members. The amended MOU also clarifies certain provisions, including those relating to information sharing and the requirement for an independent evaluation of OBSI.{3} In particular, the amendments: (1) clarify that the restriction on sharing of information in the MOU does not apply to information sharing relating to issues that appear likely to have significant regulatory implications, including issues that appear to affect multiple clients of one or more firms (referred to as Systemic Issues) and that OBSI will share information about individual complaints when it relates to Systemic Issues; and (2) require an independent evaluation of OBSI's operations and practices to commence within two years of the Amendments coming into force (that is, commencement by May 1, 2016) and every five years thereafter.
JRC Mandate: The CSA jurisdictions and OBSI agreed with the SROs to form the JRC with a mandate to:
• facilitate a holistic approach to information sharing and monitor the dispute resolution process with an overall view to promoting investor protection and confidence in the external dispute resolution system;
• support fairness, accessibility and effectiveness of the dispute resolution process; and
• facilitate regular communication and consultation among JRC members and OBSI.
In 2019, four regularly scheduled meetings were held in April, June, September and December. The JRC also held a meeting with OBSI's Board of Directors, and engaged with OBSI on an ad hoc basis. These meetings provided OBSI with an opportunity to update the JRC on specific matters as contemplated by the MOU.
The following matters were considered and advanced by the JRC:
1. Systemic issues protocol: Under the MOU, the Chair of OBSI is to inform the CSA Designates of any Systemic Issues. In 2015, the JRC finalized with OBSI a protocol to define potential Systemic Issues and to set out a regulatory approach to address these issues when reported by OBSI under the MOU. In 2019, no Systemic Issues were reported to the JRC by OBSI. Information on the OBSI and JRC Protocol for Handling Systemic Issues is available at: https://bit.ly/2D3xJSy.
2. Continuous monitoring of OBSI quarterly reports, compensation refusals and settling for lower amounts than recommended by OBSI: The JRC continues to monitor data on investment-related complaints, including compensation refusals and settlements below OBSI's recommendations, through the review of OBSI's quarterly reports. The JRC considers patterns and issues raised by the data. As in 2018, there were no compensation refusals in 2019. According to OBSI statistics for the fiscal years of 2018 and 2019, out of 316 cases that ended with monetary compensation, there were 23 cases (approximately 7%) that were settled below OBSI recommendations involving 15 firms. About 70% of these cases involved recommendations over $50,000 with an average settlement rate at about 62%. Of the 15 firms, four firms settled below OBSI's recommended amount more than once. Overall, in 2018 and 2019, clients received approximately $1.04 million less than what OBSI recommended. This is an area of concern for the JRC.
The JRC will continue to monitor for complaint trends and patterns, including refusals to compensate clients consistent with OBSI recommendations, or repeatedly settling for lower amounts than recommended by OBSI. The JRC believes this data can sometimes provide risk-based indications of potential problems with a firm's complaint handling practices, or raise questions about whether the firm is participating in OBSI's services in good faith or consistently with the applicable standard of care. Further, such patterns could suggest the possibility that the firm may not have implemented and maintained effective complaint handling procedures. As set out in Joint CSA Staff Notice 31-351, IIROC Notice 17-0229, MFDA Bulletin #0736-M Complying with requirements regarding the Ombudsman for Banking Services and Investments (OBSI), the CSA or SROs may conclude that enquiries are appropriate if a firm shows a pattern of either refusing to compensate clients after recommendations by OBSI or settling for lower amounts than recommended by OBSI. CSA jurisdictions or SROs may pursue regulatory responses where warranted.
3. Information on complaint handling: For consistency of complaint handling information across various CSA member websites, the JRC is considering a review of the information currently available on each member's website.
The JRC also discussed IIROC's plan to conduct research with complainants{4} outlined in its Strategic Plan.
4. Monitoring of general inquiries and complaints: The JRC continues to monitor and respond to general inquiries and complaints relating to OBSI received by the JRC members or through the JRC email address.
5. Amendments to MFDA By-law No. 1, Section 24.A (Ombudservice) and IIROC Rule 9500 Alternative Dispute Resolution: In 2019, the MFDA published for comment and received approval of the proposed amendments to MFDA By-law No. 1, Section 24.A (Ombudservice){5} and IIROC published for comment proposed amendments to IIROC Rule 9500 Alternative Dispute Resolution{6} The purpose of these proposed amendments is to remove inconsistencies between their respective rules and OBSI's Terms of Reference in relation to information sharing by OBSI.
The following are a few of the initiatives that OBSI updated the JRC on:
1. OBSI Video: In 2019, OBSI released a video as part of their awareness campaign, and as a tool to inform customers and firms about OBSI's services. This video is available on OBSI's website at: https://bit.ly/36SJtnT.
2. OBSI Seniors Report: On July 18, 2019, OBSI published its first Seniors Report documenting the experiences of seniors using OBSI's services. The report shows that 38% of OBSI complainants were over the age of 60 and over half of these senior complainants report having household incomes below $60,000. The report also includes types of complaints received from seniors, case studies, observations and possible solutions to reduce challenges faced by seniors. A copy of the report is available at: https://bit.ly/3bccq1J.
3. Firm Portal: On September 26, 2019, OBSI announced the launch of a new Firm Portal that would provide OBSI's participating firms with web-based access to a broad range of features and services. Additional information about the features and services is available at: https://bit.ly/3985Lnj.
4. Knowledge Management System: In 2019, OBSI launched an internal knowledge management system for staff to share information and access key resources. Developing a business case for a knowledge management system was one of the recommendations in the 2016 report Independent Evaluation of the Canadian Ombudsman for Banking Services and Investments' (OBSI) Investment Mandate.
5. OBSI's Loss Calculation Methodology Presentations: As part of OBSI's broader outreach initiative, OBSI presented to several JRC members and their staff on OBSI's loss calculation methodology, which provided a good opportunity for JRC members and their staff to gain a better understanding about OBSI's loss calculation methodology and have a dialogue with OBSI.
As required by the MOU, an annual meeting of the JRC with OBSI's Board of Directors was held on December 5, 2019. The meeting included discussions on operating and governance issues and the effectiveness of OBSI's processes.
For additional information on OBSI, readers may wish to review OBSI's Annual Report for its fiscal year ending October 31, 2019, available at: https://bit.ly/2Uho3gf.
We appreciate the feedback received on previous years' annual reports from various stakeholders and welcome comments on this annual report and any matter relating to the JRC's oversight of OBSI. Please send your comments to: ContactJRC-CMOR@acvm-csa.ca.
Please refer your questions regarding this CSA Staff Notice to any of the following CSA staff:
{1} The MOU sets out the standards that OBSI is expected to meet on: governance, independence and standard of fairness, processes to perform functions on a timely and fair basis, fees and costs, resources, accessibility, systems and controls, core methodologies, information sharing, and transparency.
{2} The AMF became a party to the MOU effective as of December 1, 2015.
{3} To review the MOU, please see: https://bit.ly/2DPY3Br (English version) or https://bit.ly/2Opq9YY (French version).
{4} IIROC Notice 19-0099, IIROC's Three-Year Strategic Plan and Priorities for Fiscal 2020 (2019), https://bit.ly/2UlGSAp.
{5} MFDA Bulletin #0800-P, Approval of Proposed Amendment to MFDA By-Law No. 1, Subsection 24.A (Ombudservice) (2019), https://bit.ly/2GVg3uY.
{6} IIROC Notice 19-0181, Proposed Amendments Respecting Disclosure of Information by Ombudsman Service to IIROC (2019), https://bit.ly/36QrGOk.
FOR IMMEDIATE RELEASE
August 19, 2020
TORONTO -- The Commission issued its Reasons for Decision in the above named matter.
A copy of the Reasons for Decision dated August 18, 2020 is available at www.osc.gov.on.ca.
For Media Inquiries:
For General Inquiries:
FOR IMMEDIATE RELEASE
August 21, 2020
TORONTO -- The Commission issued its Reasons for Decision on a Motion in the above named matter.
A copy of the Reasons for Decision on a Motion dated August 20, 2020 is available at www.osc.gov.on.ca.
For Media Inquiries:
For General Inquiries:
ESW Capital, LLC and Optiva Inc.
FOR IMMEDIATE RELEASE
August 21, 2020
TORONTO -- The Commission issued an Order in the above named matter.
A copy of the Order dated August 21, 2020 is available at www.osc.gov.on.ca.
For Media Inquiries:
For General Inquiries:
I.G. Investment Management, Ltd.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from subsections 2.1(1), 2.2(1) and 2.5(2)(a), (a.1),(b), (c), and (f) of NI 81-102 in connection with the purchase of UK IPUs.
National Instrument 81-102 Investment Funds -- ss. 2.1(1), 2.2(1), 2.5(2)(a), 2.5(2)(a.1), 2.5(2)(b), 2.5(2)(c), 2.5(2)(f) and 19.1.
Order No. 7526
August 5, 2020
The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer on behalf of BlackRock- IG Active Allocation Pool I, BlackRock- IG Active Allocation Pool II, BlackRock- IG Active Allocation Pool III (the "Existing Funds") and any future mutual funds the Manager may launch that are sub-advised by BlackRock Asset Management Canada Limited or its affiliates (collectively with the Existing Funds, the "Funds"), for a decision under the securities legislation of the Jurisdictions (the "Legislations") for an exemption pursuant to Section 19.1 of National instrument 81-102 Investment Funds ("NI 81-102") from the prohibitions in:
(a) subsections 2.1(1), 2.2(1) and 2.5(2)(a), (a.1), (b), and (c) of NI 81-102 to permit the Funds to invest in securities of any mutual fund that is an exchange-traded fund (an "ETF") that, but for the fact that they are listed on a stock exchange in the United Kingdom and not on a stock exchange in Canada or the United States, would otherwise qualify as "index participation units" ("IPU") as defined in NI 81-102 (such ETF, a "UK IPU"); and
(b) subsection 2.5(2)(b) of NI 81-102 to allow other mutual funds managed by the Filer to invest in the Funds, which may invest more than 10% of the market value of their net assets in securities of UK IPUs.
(the "Exemption Sought")
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) The Manitoba Securities Commission is the principal regulator for this application;
(b) the Filer has provided notice that subparagraph 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Nunavut and the Northwest Territories; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless they are otherwise defined.
This decision is based on the following facts represented by the Filer:
The Filer and the Funds
1. IGIM is a corporation continued under the laws of Ontario. It is or will be the trustee, the portfolio advisor and the manager of the Funds. The head office of the Manager is in Winnipeg, Manitoba.
2. IGIM is registered as a Portfolio Manager and an Investment Fund Manager in Manitoba, Ontario, and Quebec and as an Investment Fund Manager in Newfoundland and Labrador.
3. IGIM acts, or will act, as portfolio manager and investment fund manager of each of the Funds.
4. Each Fund is, or will be, an open-ended mutual fund governed by the laws of the province of Manitoba.
5. Each Fund distributes, or will distribute, its securities pursuant to simplified prospectus prepared pursuant to National Instrument 81-101 Mutual Fund Prospectus Disclosure ("NI 81-101") and Form 81-101F1 Contents of Simplified Prospectus ("Form 81-101F1"), as applicable, and is, or will be, governed by the applicable provisions of NI 81-102, subject to any exemptions therefrom granted by the securities regulatory authorities.
Each Fund is, or will be, a reporting issuer in each of the provinces and territories of Canada, and sub-advised by BlackRock Asset Management Canada Limited or one of its affiliates.
6. IGIM and the Existing Funds are not in default of any of the requirements of securities legislation of any of the provinces and territories of Canada.
7. The investment objectives of the Existing Funds are to provide long-term capital appreciation by primary investing in, or gaining exposure to, equity and/or fixed income securities. In order to achieve its investment objectives each Existing Fund will invest primarily in ETFs.
8. Blackrock -- IG Active Allocation Pool I targets a neutral mix of 40% fixed income and 60% equity. BlackRock -- IG Active Allocation Pool II targets a neutral mix of 30% fixed income and 70% equity. BlackRock -- IG Active Allocation Pool III targets a neutral mix of 20% fixed income and 80% equity. BlackRock -- IG Active Allocation Pool I, BlackRock -- IG Active Allocation Pool II and BlackRock -- IG Active Allocation Pool III also each have the flexibility to invest all of their assets in any asset class.
The UK IPUs
9. Each UK IPU is, or will be, a "mutual fund" within the meaning of applicable Canadian securities legislation and an ETF traded on a stock exchange in the United Kingdom that is authorized by the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, as amended by the European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations 2016, as may be amended or replaced (the "UCITS Regulations"). Each UK IPU therefore is, or will be, a "UCITS" and will therefore comply with UCITS Regulations.
10. The managers of the UK IPUs are subject to substantially equivalent regulatory oversight to IGIM, which is primarily regulated by the MSC.
11. Securities of each UK IPU are, or will be, offered in their primary market in a manner similar to the Funds pursuant to a prospectus for each investment company.
12. Each UK IPU is listed on the London Stock Exchange ("LSE") and, in addition, may be listed on one or more additional stock exchanges.
13. The LSE is subject to regulatory oversight by the Financial Conduct Authority of the United Kingdom. The LSE is subject to substantially equivalent regulatory oversight to securities exchanges in Canada and the United States, and the listing requirements to be complied with by the UK IPUs are consistent with the listing requirements of the Toronto Stock Exchange.
14. The fundamental investment objective of each of the UK IPUs is, or will be, to seek to track the performance of an index, net of expenses, and to provide investors with a total return or net total return, taking into account both capital and income returns.
15. In replicating the performance of an index, a UK IPU may purchase securities of other mutual funds.
16. Each UK IPU achieves, or will achieve, its investment objective by holding the component securities of the applicable index or otherwise investing in securities in a manner that will enable the UK IPU to track the performance of the applicable index in accordance with the rules on eligible assets prescribed by the UCITS Regulations.
17. The index tracked by each UK IPU is, or will be, transparent, in that the methodology for the selection and weighting of index components is, or will be, publicly available. Details of the components of the index tracked by a UK IPU, such as issuer name and weighting within the index, are, or will be, publicly available by the applicable index provider and updated from time to time or when requested of the applicable index provider.
18. Each UK IPU will makes, or will make, the net asset value of its holdings available to the public through at least one price information system associated with the stock exchange on which it is listed.
19. No UK IPU is a "synthetic ETF", meaning that no UK IPU will principally rely on an investment strategy that makes use of swaps or other derivatives to gain an indirect financial exposure to the return of an index.
20. Each UK IPU is, or will be, an "investment fund" and a "mutual fund" within the meaning of applicable Canadian securities legislation.
21. The UK IPUs are, or will be, subject to the following regulatory requirements:
(a) each UK IPU is subject to a robust management framework through prescribed rules on governance, risk, regulation of service providers and safekeeping of assets;
(b) each UK IPU is restricted to investments permitted by the UCITS Regulations and/or authorized by the Financial Conduct Authority / Central Bank of Ireland (including any exemptive relief obtained by the UK IPUs therefrom);
(c) each UK IPU is subject to investment restrictions limiting its holdings of illiquid securities which are not listed on a stock exchange or regulated market to no more than 10% of the UK IPU's NAV;
(d) each UK IPU is subject to investment restrictions limiting its holdings of other collective investment undertakings to no more than 10% of the UK IPU's net asset value ("NAV");
(e) each UK IPU is subject to restrictions regarding the use of derivatives, including the types of derivatives in which it may transact, limits on counterparty risk, and limits on increases to overall market risk resulting from the use of derivatives;
(f) each UK IPU is required to prepare a prospectus which discloses material facts, similar to the disclosure requirements under Form 41-101F2 and Form 81-101F1;
(g) each UK IPU is required to prepare key investor information documents which provide disclosure that is substantially similar to the disclosure required to be included in the ETF facts document required by Form 41-101F4 Information Required in an ETF Facts Document;
(h) each UK IPU is subject to continuous disclosure obligations which are similar to the disclosure obligations under National Instrument 81-106 -- Investment Fund Continuous Disclosure;
(i) each UK IPU is required to update information of material significance in the prospectus, to prepare management reports and management reports and an audited set of financial statements annually; and
(j) each UK IPU has a board of directors and a manager that are subject to a governance framework which sets out the duty of care and standard of care, which require the board of directors of both the manager and the UK IPU to act in the best interest of security holders of the UK IPU.
Reasons for the Exemption Sought
22. The amount of the loss that can result from an investment by a Fund in a UK IPU will be limited to the amount invested by the Fund in the UK IPUs.
23. IGIM considers that investments by the Funds in UK IPUs provide an efficient and cost-effective, including in relation to withholding tax, means of obtaining exposure to the markets and asset classes in which the UK IPUs invest and achieving diversification and, in the case of certain UK IPUs, unique investment exposures. In particular, UK IPUs can provide a cost-effective way to achieve the Funds' desired allocations to various sectors, as well as desired exposure to certain countries, which in some cases may not be possible through reliance on North American ETFs alone due to the relative size of the ETFs and/or the makeup of the available ETFs.
24. Because the definition of IPU only includes securities that are traded on an exchange in Canada or the United States, in the absence of the Exemption Sought:
(a) a Fund would not be able to rely upon the IPU exemption in paragraph 2.1(2)(d) of NI 81-102 from the concentration restriction in paragraph 2.1(1) to purchase or hold more than 10% of its net assets in securities of UK IPUs;
(b) a Fund would not be able to rely upon the IPU exemption in paragraph 2.2(1.1)(b) of NI 81-102 from the control restriction in paragraph 2.2(1) to purchase or hold securities representing more than 10% of the votes attaching to the outstanding voting securities of a UK IPU or from purchasing securities of a UK IPU for the purpose of exercising control over or management of the UK IPU;
(c) a Fund would not be able to rely upon the IPU exemption in paragraph 2.5(3)(a) of NI 81-102 from the investment restrictions in paragraphs 2.5(2)(a) and 2.5(2)(a.1) against purchasing or holding securities of the UK IPU unless the UK IPU is subject to NI 81-102 and National Instrument 81-101 Mutual Fund Prospectus Disclosure;
(d) a Fund would not be able to rely upon the IPU exemption in paragraph 2.5(4)(b)(ii) of NI 81-102 from the investment restriction in paragraph 2.5(2)(b) against purchasing or holding securities of a Fund or a UK IPU unless at the time of the purchase of that security, the Fund or UK IPU holds no more than 10% of the market value of its net assets in securities of other mutual funds; and
(e) a Fund would not be able to rely upon the IPU exemption in paragraph 2.5(3)(a) of NI 81-102 from the investment restriction in paragraph 2.5(2)(c) against purchasing or holding securities of the UK IPU unless securities of the UK IPU were qualified for distribution in the local jurisdiction.
25. Each investment by a Fund in securities of a UK IPU will represent the business judgement of responsible persons uninfluenced by considerations other than the best interests of the Fund.
26. In respect of the Exemption Sought, similar exemptive relief has been granted previously. Examples of the decisions rendered are attached to this application.
27. The Exemption Sought is in the best interests of the Funds, is not prejudicial to the public interest or to securityholders of the Funds and is consistent with prior decisions of the securities regulatory authorities.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation of the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
(a) the investment by a Fund in securities of a UK IPU is made in accordance with the fundamental investment objectives of the Fund;
(b) securities of the UK IPUs qualify as IPUs within the meaning of NI 81-102 but for the fact that they are trade on a stock exchange in the United Kingdom and not a stock exchange in Canada or the United States;
(c) none of the UK IPUs are "synthetic ETFs", meaning that they will not principally rely on an investment strategy that makes use of swaps or other derivatives to gain an indirect financial exposure to the return of an index;
(d) investments by a Fund in securities of one or more UK IPUs comply with NI 81-102 as if securities of the UK IPUs were IPUs within the meaning of NI 81-102;
(d) the relevant offering documents of each Fund discloses, or will disclose the next time it is renewed after the date of this decision, the fact that the Fund has obtained relief to invest in UK IPUs; and
(e) in the event there is a significant change to the regulatory regime applicable to the UK IPUs that results in a less restrictive regulatory regime compared to the current regime and that has a material impact on the management or operation of the UK IPUs in which the Funds are invested, the Funds do not acquire any additional securities of such UK IPUs, and dispose of any securities of such UK IPUs in an orderly and prudent manner. The Exemption Sought will terminate six months after the coming into force of any amendments to NI 81-102 that restrict or regulate a Fund's ability to invest in UK IPUs.
Horizons ETFs Management (Canada) Inc. and Horizons Global Risk Parity ETF
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that a terminating exchange-traded fund is not a reporting issuer under applicable securities laws -- relief granted.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
August 12, 2020
The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Horizons Fund, for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Horizons Fund has ceased to be a reporting issuer in all jurisdictions of Canada in which the Horizons Fund is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
This order is based on the following facts represented by the Filer:
1. the Horizons Fund is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;
2. the outstanding securities of the Horizons Fund are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;
3. no securities of the Horizons Fund, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;
4. the Filer is applying for an order that the Horizons Fund has ceased to be a reporting issuer in all of the jurisdictions of Canada in which the Horizons Fund is currently a reporting issuer; and
5. the Horizons Fund is not in default of securities legislation in any jurisdiction.
The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
Green Rise Capital Corporation -- s. 9.1 of MI 61-101 and s. 6.1 of NI 62-104
Section 6.1 of NI 62-104 and section 9.1 of MI 61-101 -- Issuer bid-relief from requirements applicable to issuer bids in Part 2 of NI 62-104 and Part 3 of MI 61-101 -- issuer proposes to repurchase a specified number of its shares from certain of its shareholders as part of a settlement agreement at a discount to market price -- each of the selling shareholders is a related party of the issuer, but the repurchase is an exempt related party transaction under MI 61-101 -- selling shareholders are former officers, directors and/or shareholders of the issuer or the issuer's predecessor entity and are well informed about the issuer and the value of the subject shares -- issuer has received statements of support from disinterested shareholders in respect of the share repurchase holding a majority of the outstanding voting shares -- the independent members of the issuer's board have unanimously determined that the repurchase is in the best interests of the issuer and its shareholders (other than the selling shareholders), will not adversely affect the issuer's financial position, and will not cause the market for the issuer's common shares to be materially less liquid than the market that currently exists -- share repurchase is exempt from the requirements applicable to issuer bids in Part 2 of NI 62-104 and Part 3 of MI 61-101, subject to conditions, including that, at the time of the share repurchase, the purchase price thereunder, on a per share basis, is not greater than the market price of the issuer's shares, as determined in accordance with NI 62-104.
Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, Part 3 and s. 9.1.
National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.
UPON the application (the "Application") of Green Rise Capital Corporation (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids ("NI 62-104") and section 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") exempting the Issuer from the requirements applicable to issuer bids in Part 2 of NI 62-104 and Part 3 of MI 61-101 (the "Issuer Bid Requirements") in respect of the proposed purchase by the Issuer of an aggregate of 14,974,133 common shares of the Issuer (the "Subject Shares") owned by Galifi Inc. ("Galifi Holdco"), 851393 Ontario Ltd. ("Tatomir Holdco"), and 2626547 Ontario Limited ("Linnell Holdco", and together with Galifi Holdco and Tatomir Holdco, the "Selling Shareholders");
AND UPON considering the Application and the recommendation of Staff of the Commission;
AND UPON the Issuer having represented to the Commission that:
1. The Issuer is a corporation existing under the Business Corporations Act (Ontario) (the "OBCA") and is in good standing.
2. The head and registered office of the Issuer is located at 47 Colborne Street, Suite 301, Toronto, Ontario, M5E 1P8.
3. The Issuer is a reporting issuer in the Provinces of Ontario, British Columbia and Alberta, and is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.
4. The authorized share capital of the Issuer consists of an unlimited number of common shares (the "Common Shares"). As of August 6, 2020, there were 59,896,535 Common Shares issued and outstanding. The Common Shares are listed for trading on the TSX Venture Exchange (the "TSXV") under the symbol "GRF".
5. The Issuer was a capital pool company incorporated for the purpose of effecting a qualifying transaction under the policies of the TSXV.
6. On September 30, 2019, the Issuer announced the closing of a reverse takeover with Bull Market Farms Inc. ("Bull Market") pursuant to a definitive agreement (the "Acquisition Agreement") dated March 1, 2019 and amended June 7, 2019, August 2, 2019 and September 30, 2019, that constituted its qualifying transaction (the "Qualifying Transaction").
7. In connection with the Qualifying Transaction, the Issuer:
(a) issued 30,000,000 Common Shares at a price of $0.20 per share to Bull Market shareholders in consideration for the acquisition of Bull Market; and
(b) completed a non-brokered private placement of 18,343,000 subscription receipts (each, a "Subscription Receipt") at a price of $0.20 per Subscription Receipt on August 20, 2019, which Subscription Receipts automatically converted into 18,343,000 Common Shares upon the closing of the Qualifying Transaction (the "Private Placement").
8. The Selling Shareholders are holding companies controlled by individuals who were directors and shareholders of Bull Market prior to the Qualifying Transaction. As a result of the Qualifying Transaction and pursuant to the Acquisition Agreement, the Selling Shareholders exchanged their common shares in Bull Market for an aggregate of 26,210,527 Common Shares, representing approximately 43.7% of the issued and outstanding Common Shares as of August 6, 2020, which are held as follows:
(a) Galifi Holdco, which is controlled by Vito Galifi, holds 12,631,579 Common Shares, representing approximately 21.1% of the issued and outstanding Common Shares;
(b) Tatomir Holdco, which is controlled by Matthew Tatomir, holds 7,263,159 Common Shares, representing approximately 12.1% of the issued and outstanding Common Shares; and
(c) Linnell Holdco, which is controlled by Scott Linnell, holds 6,315,789 Common Shares, representing approximately 10.5% of the issued and outstanding Common Shares.
9. Galifi Holdco is a company existing under the OBCA and is in good standing. Galifi Holdco has its registered office at 2835 California Avenue, Windsor, Ontario, N9E 3K3. Galifi Holdco is not a reporting issuer in any jurisdiction.
10. Tatomir Holdco is a company existing under the OBCA and is in good standing. Tatomir Holdco has its registered office at 21 Beniuk Court, Leamington, Ontario, N8H 5K9. Tatomir Holdco is not a reporting issuer in any jurisdiction.
11. Linnell Holdco is a company existing under the OBCA and is in good standing. Linnell Holdco has its registered office at 1145 Deerview Crescent, LaSalle, Ontario, N9J 0A7. Linnell Holdco is not a reporting issuer in any jurisdiction.
12. Under the terms of the Acquisition Agreement, the Issuer agreed to use commercially reasonable efforts to nominate Messrs. Galifi, Tatomir, and Linnell for election to the Issuer's board of directors (the "Board") at the Issuer's 2020 annual and general meeting of shareholders held on July 8, 2020 (the "Meeting").
13. At the Meeting, notwithstanding the nomination by the Board of Messrs. Galifi, Tatomir, and Linnell for election to the Board, Messrs. Galifi, Tatomir, and Linnell, as well as a fourth nominee of the Issuer, failed to win election to the Board as a result of nominations for election to the Board submitted at the Meeting of four individuals not named in the Issuer's management information circular (the "Floor Nominees").
14. Each of the Floor Nominees received votes in favour of their election from proxyholders holding proxies representing greater than a majority of the outstanding Common Shares, including Common Shares held by former shareholders of Bull Market who had received Common Shares in connection with the Qualifying Transaction. As a result, none of Messrs. Galifi, Tatomir, or Linnell were elected to the Board at the Meeting.
15. On July 10, 2020, the Issuer terminated the employment of Messrs. Tatomir and Linnell as employees of the Issuer and Bull Market.
16. Following the Meeting, the Selling Shareholders and Messrs. Galifi, Tatomir, and Linnell asserted certain claims of breach of the Acquisition Agreement and oppression against the Issuer. The Issuer has also asserted certain claims against the Selling Shareholders in connection with the Acquisition Agreement.
17. On July 23, 2020, the Issuer executed a settlement and mutual release agreement (the "Settlement Agreement") with the Selling Shareholders, pursuant to which, subject to certain conditions:
(a) the Selling Shareholders agreed to sell all of the Common Shares held by them at a price of $0.11 per Common Share (the "Purchase Price"); and
(b) the Issuer, Bull Market, each of the Selling Shareholders, Vito Galifi, Matthew Tatomir and Scott Linnell agreed to certain mutual releases.
18. Under the terms of the Settlement Agreement, the Issuer has agreed to repurchase the Subject Shares for cancellation (the "Share Repurchase"), with the other 11,236,394 Common Shares held by the Selling Shareholders but not purchased by the Issuer (the "Remaining Shares") being purchased by other parties at the Purchase Price.
19. As of August 6, 2020, the Subject Shares represented approximately 25.00% of the issued and outstanding Common Shares. Assuming completion of the Share Repurchase and the cancellation of the Subject Shares, the Issuer would have 44,896,535 Common Shares issued and outstanding.
20. The Share Repurchase forming part of the Settlement Agreement constitutes an "issuer bid" for the purposes of NI 62-104 and MI 61-101, to which the Issuer Bid Requirements would apply.
21. Section 4.7 of NI 62-104 provides an exemption from the Issuer Bid Requirements where the securities are acquired from a current or former employee, executive officer, director or consultant of the issuer or of an affiliate of the issuer and, if there is a published market in respect of the securities provided that (a) the value of the consideration paid for any of the securities acquired is not greater than the market price of the securities at the date of the acquisition, and (b) the aggregate number of securities acquired by the issuer within any period of 12 months in reliance on this exemption does not exceed 5% of the securities of the class outstanding at the beginning of the 12 month period (the "Section 4.7 Exemption").
22. As of August 6, 2020, the Issuer has not purchased any Common Shares in reliance on the Section 4.7 Exemption. The Share Repurchase cannot be made in reliance upon the Section 4.7 Exemption as the Subject Shares represent greater than 5% of the Common Shares outstanding.
23. The Subject Shares will be purchased by the Issuer for cancellation at the Purchase Price per Common Share, which represents:
(a) an approximate 31.3% discount to the $0.16 per Common Share closing price on July 23, 2020, being the date on which the Settlement Agreement was entered into;
(b) a 45% discount to the price at which Common Shares were issued pursuant to the Private Placement and the Qualifying Transaction, being $0.20 per Common Share;
(c) an approximate 43.6% discount to the market price of $0.195 per Common Share (as determined in accordance with NI 62-104) as of July 23, 2020; and
(d) a 50% discount to the market price of $0.22 per Common Share as of the relevant time for the purposes of the market capitalization calculation in MI 61-101.
24. The Board has determined that the market for the Common Shares will not be materially less liquid than the market that currently exists for the Common Shares following the Share Repurchase. The Share Repurchase will have no impact on the liquidity of the Common Shares and the ability of holders of Common Shares (the "Shareholders") to trade in Common Shares because
(i) all of the Subject Shares are held by insiders of the Issuer and are accordingly excluded from the Issuer's public float;
(ii) the Common Shares owned by the Selling Shareholders are subject to the escrow agreement dated September 30, 2019, between the Issuer, TSX Trust Company and certain shareholders of the Issuer (the "Escrow Agreement"), with 25% of such Common Shares having been released from escrow (such released shares, the "Released Shares") in accordance with the terms of the Escrow Agreement; and
(iii) the Released Shares will continue to be freely tradeable and will not be subject to escrow conditions.
25. Each of the Selling Shareholders is a "related party" of the Issuer and the Share Repurchase is a "related party transaction" for the purposes of MI 61-101.
26. Paragraph 5.5(b) of MI 61-101 (the "Specified Markets Exemption") exempts related party transactions from the formal valuation requirement if no securities of the issuer are listed or quoted on the Toronto Stock Exchange, Aequitas NEO Exchange Inc., the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc. The Issuer is able to satisfy the Specified Markets Exemption and is relying on same in respect of the Share Repurchase.
27. Paragraph 5.7(1)(a) of MI 61-101 (the "25% Market Cap Exemption") exempts related party transactions from the minority approval requirement if, at the time the transaction is agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves interested parties, exceeds 25% of the issuer's market capitalization. The Share Repurchase is able to satisfy the conditions of the 25% Market Cap Exemption and accordingly, the Issuer is relying on same in respect of the Share Repurchase.
28. The members of the Board are independent directors within the meaning of MI 61-101 and they have unanimously determined, acting in good faith, that:
(a) the Settlement Agreement and the Share Repurchase are in the best interests of the Issuer and its shareholders (other than the Selling Shareholders);
(b) the agreement of the Selling Shareholders to sell, and the repurchase by the Issuer of, the Subject Shares for the Purchase Price, on a per share basis, constitutes a valuable opportunity for the Issuer in consideration for the Issuer's settlement of its claims against the Selling Shareholders;
(c) the terms of the Settlement Agreement and the Share Repurchase are reasonable;
(d) the Share Repurchase will not materially affect control of the Issuer; and
(e) the Share Repurchase will not adversely affect the financial position of the Issuer and, upon cancellation, is expected to increase the value of the equity ownership positions of its other shareholders, including by increasing the per Common Share book value to $0.145 from the March 31, 2020 value of $0.136.
29. The Share Repurchase is an integral part of the Settlement Agreement. The terms of the Settlement Agreement were negotiated at arm's length with the Selling Shareholders and were not agreed to in order to give preferential treatment to the Selling Shareholders, either collectively or individually, or to provide a method for the Issuer to purchase the Subject Shares, but rather to facilitate the settlement of disputes and claims between the Selling Shareholders, the Issuer and the other parties to the Settlement Agreement, for the benefit of the Issuer and its shareholders.
30. As a result of the fact that no Shareholders other than the Selling Shareholders are parties to the Settlement Agreement, it is impossible for the Issuer to offer to acquire Common Shares from all Shareholders on the same terms and conditions as those contemplated by the Settlement Agreement.
31. Shareholders not offered the opportunity to sell their Common Shares to the Issuer as part of the Share Repurchase are otherwise entitled to sell their Common Shares into the market.
32. As former directors and shareholders of Bull Market prior to the Qualifying Transaction, and in the case of Messrs. Tatomir and Linnell, officers and directors of the Issuer prior to July 8, 2020, the Selling Shareholders are well informed about the Issuer and the value of the Subject Shares and do not require the protections of the Issuer Bid Requirements.
33. On July 27, 2020, the Issuer issued a press release (the "July 27 Press Release") announcing the Settlement Agreement and the intention of the Issuer to complete the Share Repurchase and cancel the Subject Shares, subject to the receipt of exemptive relief from the Issuer Bid Requirements from the Commission and the TSXV Approval (as defined below).
34. The Issuer has applied to the TSXV for approval to complete the Share Repurchase and to transfer the Remaining Shares, as required pursuant to the policies of the TSXV and the terms of the Escrow Agreement (the "TSXV Approval"). The Issuer expects to receive the TSXV Approval shortly following the issuance of this Order.
35. Other than the exemption from the Issuer Bid Requirements and the TSXV Approval, all third-party consents and approvals required by any of the Issuer or the Selling Shareholders in connection with the Settlement Agreement (including the Share Repurchase) have been obtained and have not been revoked.
36. Subsequent to the issuance of the July 27 Press Release:
(a) the Board received statements of support from holders of 55.7% of the outstanding Common Shares not owned by the Selling Shareholders indicating that they were supportive of the Share Repurchase;
(b) the Issuer has not received any complaints or expressions of concern about the Share Repurchase; and
(c) the closing price of the Common Shares on the TSXV has remained above the Purchase Price on a per share basis.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
IT IS ORDERED pursuant to section 6.1 of NI 62-104 and section 9.1 of MI 61-101 that the Issuer be exempt from the Issuer Bid Requirements in connection with the Share Repurchase, provided that:
(a) at the time of the closing of the Share Repurchase, the Board remains of the view that the Settlement Agreement is in the best interests of the Issuer and its Shareholders (other than the Selling Shareholders) and that the terms of the Settlement Agreement are reasonable;
(b) the Purchase Price, on a per share basis, is not greater than the market price (determined in accordance with NI 62-104) of the Common Shares;
(c) prior to closing of the Share Repurchase, the Issuer issues and files a press release on SEDAR disclosing that the Issuer has been granted exemptive relief from the Issuer Bid Requirements in connection with the Share Repurchase;
(d) at the time of the closing of the Share Repurchase, all third-party consents and approvals required by any of the Issuer or Selling Shareholders in connection with the Settlement Agreement (including the Share Repurchase) have been obtained and have not been revoked;
(e) there are no approvals required in respect of the Settlement Agreement (including the Share Repurchase) that must be obtained at a meeting of Shareholders; and
(f) the Subject Shares be included as Common Shares acquired by the Issuer in reliance on the Section 4.7 Exemption.
DATED at Toronto this 19th day of August, 2020.
ESW Capital, LLC and Optiva Inc. -- s. 104
File No. 2020-26
August 21, 2020
WHEREAS on August 21, 2020, the Ontario Securities Commission held a hearing by videoconference in this application brought by ESW Capital, LLC (ESW) requesting an order granting exemptive relief from the requirement set forth in section 2.29.1(c) of National Instrument 62-104 -- Take-Over Bids and Issuer Bids (the Application), to hear motions brought by EdgePoint Investment Group Inc. (EdgePoint) and Maple Rock Capital Partners (Maple Rock) regarding requests for intervenor status;
ON READING the motion records and submissions filed and on hearing the submissions of the representatives for ESW, Optiva Inc. (Optiva), EdgePoint, Maple Rock and Staff of the Commission (Staff);
IT IS ORDERED THAT:
1. the hearing of the Application shall commence at 10:00 a.m. on September 10, 2020, by videoconference and continue on September 11, 2020, or such other dates and times as agreed to by the parties and set by the Office of the Secretary;
2. pursuant to Rule 21(4) of the Commission's Rules of Procedure and Forms, (2019) 42 OSCB 9714, each of EdgePoint and Maple Rock is granted full intervenor status in the Application, including the right to adduce evidence, cross-examine witnesses and make oral and written submissions;
3. all direct evidence in the Application shall be adduced by way of affidavit;
4. Optiva, EdgePoint and Maple Rock shall file and serve their respective responding affidavits, if any, by no later than August 25, 2020;
5. ESW shall file and serve reply affidavits, if any, by no later than August 28, 2020;
6. all parties who file affidavit evidence shall make their affiants available for cross-examination by any adverse party at the hearing of the Application;
7. ESW shall serve and file written submissions and a book of authorities by no later than August 31, 2020;
8. Optiva, EdgePoint and Maple Rock shall file and serve their respective responding written submissions and books of authorities by no later than September 3, 2020;
9. ESW shall file and serve reply written submissions and book of authorities, if any, by no later than September 4, 2020; and
10. Staff shall file and serve written submissions and a book of authorities by no later than September 8, 2020.
Torstar Corporation -- s. 1(6) of the OBCA
Applicant deemed to have ceased to be offering its securities to the public under the Business Corporations Act (Ontario).
Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 1(6).
UPON the application of the Applicant to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 1(6) of the OBCA to be deemed to have ceased to be offering its securities to the public;
AND UPON the Applicant representing to the Commission that:
1. The Applicant is an "offering corporation" as defined in subsection 1(1) of the OBCA.
2. The Applicant's head office is located at One Yonge Street, 5th Floor, Toronto, Ontario, M5E 1E6.
3. The Applicant has an authorized capital consisting of an unlimited number of Class A shares, an unlimited number of Class B non-voting shares and 15,000,000 First Preference shares, of which 9,803,535 Class A shares; 71,615,373 Class B non-voting shares and nil First Preference shares are issued and outstanding as of the date hereof.
4. On August 5, 2020, NordStar Capital LP (the Purchaser) acquired all of the issued and outstanding shares of the Applicant pursuant to a plan of arrangement under section 182 of the OBCA (the Arrangement).
5. The Arrangement was approved by shareholders of the Applicant at a special meeting held on July 21, 2020.
6. The Arrangement was approved by the Ontario Superior Court of Justice (Commercial List) on July 27, 2020.
7. The Class B non-voting shares of the Applicant had been listed and posted for trading on the Toronto Stock Exchange (the TSX) under the symbol "TS.B". The Class B non-voting shares were delisted from the TSX as at the close of trading on August 6, 2020. Prior to the completion of the Arrangement, the Class A shares of the Applicant were not listed on any marketplace.
8. As of the date of this order and as a result of the Arrangement, all of the outstanding shares of the Applicant are beneficially owned, directly or indirectly, by the Purchaser.
9. No other securities of the Applicant, including debt securities, are listed, traded or quoted in Canada or another country on a "marketplace" as defined in National Instrument 21-101 -- Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.
10. The Applicant has no intention to seek public financing by way of an offering of securities.
11. The Applicant is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the Jurisdictions).
12. On August 12, 2020, the Applicant was granted an order (the Order) pursuant to subclause 1(10)(a)(ii) of the Securities Act (Ontario) that it is not a reporting issuer in Ontario and is not a reporting issuer or the equivalent in any other jurisdiction of Canada in accordance with National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.
13. The Applicant is not in default of any securities legislation in any Jurisdiction in Canada.
AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;
IT IS ORDERED by the Commission pursuant to subsection 1(6) of the OBCA, that the Applicant is deemed to have ceased to be offering its securities to the public.
DATED at Toronto on this 21st day of August, 2020.
Investment Industry Regulatory Organization of Canada (IIROC) -- s. 21.2.3
WHEREAS Part 8 of National Instrument 21-101 Marketplace Operation (NI 21-101) requires persons or companies to provide to an information processor (IP) accurate and timely information regarding trades in corporate and government debt securities (together Unlisted Debt Securities) executed by or through the person or company, as required by the IP;
AND WHEREAS The terms used in this order are defined in the Securities Act (Ontario) and/or NI 21-101, as the case may be;
AND WHEREAS The Investment Industry Regulatory Organization of Canada (IIROC or the Applicant) has filed an application dated June 24, 2020 (Application) with the Ontario Securities Commission (Commission) requesting an order pursuant to subsection 21.2.3(1) of the Act designating IIROC as an IP for Unlisted Debt Securities;
AND WHEREAS the Applicant is currently the IP for corporate debt securities as permitted by a letter dated July 4, 2016 and has operated in compliance with the undertakings (Undertakings) contained in that letter;
AND WHEREAS the Applicant has filed Form 21-101F5 with respect to Unlisted Debt Securities;
AND WHEREAS subsection 21.2.3 of the Act allows the Commission to designate a person or company as an IP if the Commission considers it to be in the public interest;
AND WHEREAS the Applicant has represented to the Commission that:
1. The Applicant has the necessary systems in place to collect and disseminate information regarding trades in Unlisted Debt Securities;
2. The Applicant currently disseminates information regarding trades in corporate debt securities in a manner approved by the Canadian Securities Administrators (CSA);
3. The Applicant has sufficient financial and human resources to comply with the requirements applicable to an IP to collect and disseminate consolidated information regarding trades in Unlisted Debt Securities;
4. The Applicant will make available comprehensive information regarding trades in Unlisted Debt Securities to all market participants, including investors, at no cost; and
5. The Applicant has an appropriate governance structure and conflicts of interest policies and procedures in place;
AND WHEREAS, based on the Application, the Commission has determined that it is in the public interest to designate the Applicant as an IP for Unlisted Debt Securities;
IT IS ORDERED by the Commission that, pursuant to section 21.2.3 of the Act, the Applicant is designated as an IP for Unlisted Debt Securities, effective August 31, 2020,
PROVIDED THAT the Applicant complies with the terms and conditions contained in Schedule A.
DATED August 24, 2020
"Bank" means a bank listed in Schedule I, II or III of the Bank Act (Canada);
"Data Contributor" means an IIROC Dealer Member that reports trades in debt securities to IIROC under IIROC Dealer Member Rule 2800C and a Bank;
"IIROC" means The Investment Industry Regulatory Organization of Canada;
"IIROC IP" means IIROC acting as an information processor;
(a) IIROC IP must conduct the business and operations of the designated IP for Unlisted Debt Securities in a manner that is consistent with the public interest.
(b) IIROC IP must provide a written report to the Commission, as required by the Commission, describing how, as the designated IP for Unlisted Debt Securities, it is meeting its regulatory and public interest functions.
(a) As required by section 14.2 of NI 21-101, IIROC IP must file with the Commission amendments to the information provided in Form F5. IIROC IP must not implement a significant change to the information in its Form F5 without the prior approval of the Commission.
(b) IIROC IP must file with Commission Staff all material contracts related to the IP services.
(a) IIROC IP must maintain sufficient financial resources to ensure its ability to conduct its operations.
(b) IIROC IP must ensure that sufficient human resources are available and appropriately trained to enable IIROC IP to properly perform its functions, including monitoring the timeliness and accuracy of data concerning Unlisted Debt Securities reported to IIROC and displayed by IIROC IP.
(a) IIROC IP must receive information from Data Contributors regarding trades executed by or through the Data Contributors no later than 10:00 p.m. on the same business day the trades were executed and in accordance with its Form F5.
(a) IIROC IP must ensure that all persons and companies are given access to IIROC IP on fair and reasonable terms.
(a) IIROC IP must make available, on its website, the fee schedule for the dissemination of Unlisted Debt Securities.
(b) IIROC IP must make available, on its website, any payment arrangements with Data Contributors.
(a) IIROC IP staff must monitor the timeliness and accuracy of information received by and disseminated by the IP on an ongoing basis and take adequate measures to resolve any data integrity issues on a timely basis.
(b) Within 45 days from the end of each quarter, IIROC must provide Commission Staff quarterly reports on the timeliness and integrity of the information reported to and disseminated by IIROC IP, highlighting significant issues and proposed steps for resolution. These reports must include significant data integrity issues identified in the field examinations of Data Contributors conducted by IIROC.
(a) On request by the Commission, IIROC IP must
(i) review the continuing adequacy of the publication delay for the Unlisted Debt Securities trade data made available by IIROC IP (T+1 5:00 pm ET), and
(ii) review the continuing adequacy of the volume caps applied to trade data in Unlisted Debt Securities by IIROC IP.
(b) No later than 30 days following completion of the review, IIROC IP must file with the Commission the results of the review and any recommendations for changes to the publication delay or the volume caps.
Citation: B (Re), 2020 ONSEC 21
Date: August 18, 2020
File No.: 2020-23
Hearing: |
July 30, 2020 |
|
|
||
Decision: |
August 18, 2020 |
|
|
||
Panel: |
Timothy Moseley |
Vice-Chair of the Commission |
|
||
Appearances: |
Robert Stellick |
For the applicant B |
|
||
Rikin Morzaria |
For Staff of the Commission |
|
[1] Staff of the Ontario Securities Commission is conducting an investigation, assisted by an order of the Commission made under s. 11 of the Securities Act{1} (the Act). Such orders (Investigation Orders) empower individuals named in the order to issue a summons, pursuant to s. 13 of the Act, to compel an individual to provide oral testimony under oath and to provide documentary evidence.
[2] One such s. 13 summons has been directed to B, the applicant in this proceeding. B wishes to cooperate with Staff and wishes to testify in response to the summons. However, B is concerned that doing so would violate B's employment contract, which states that all matters relating to B's employment are confidential, and which does not explicitly provide a relevant exception.
[3] B seeks direction from the Commission that testifying in response to the summons will not breach the employment contract. If the Commission cannot give that direction, then B intends to ask the Superior Court of Justice for that same assurance.
[4] In order to apply to court, though, B would have to disclose to the court the existence of the investigation and the fact that B received a s. 13 summons. Section 16 of the Act prohibits B from doing so unless the Commission makes an order under s. 17 of the Act authorizing disclosure. B therefore seeks such an order.
[5] Staff contends that B is required to answer the s. 13 summons, that B's employment contract is no impediment, and that the Commission should not contribute to a delay of B's examination by making the order that B requests.
[6] Following a videoconference hearing of B's application, held in the absence of the public, I issued a confidential order authorizing B to disclose, on a confidential basis, such information as is necessary to commence a court application. The order provided that reasons for my decision were to follow. These are my reasons.
[7] I conclude that the Commission does not have the authority to give B the requested direction. B must seek that assurance from the court. It is in the public interest to facilitate B's application by granting a s. 17 order.
[8] As noted above, the hearing of this application was held in the absence of the public.
[9] The departure in this case from the usual practice of holding public hearings is authorized by s. 9(1)(b) of the Statutory Powers Procedure Act{2} and Rule 22 of the Commission's Rules of Procedure and Forms (Rules){3}. Those provisions contemplate a balancing of the desirability that Commission proceedings be open to the public, against other factors.
[10] In this case, the other factor is s. 16 of the Act, which achieves the important purpose of protecting the confidentiality of Investigation Orders and of information obtained pursuant to those orders.
[11] To the extent that the balance favours confidentiality, the Commission may hold a hearing in the absence of the public, and documents submitted may be withheld from the public.
[12] Hearing this application in public would have compromised the investigation, would have instantly defeated the confidentiality interest protected in B's employment contract, and would have rendered moot the issue at the heart of this application.
[13] The need for confidentiality therefore outweighed the need for transparency. For that reason, I ordered that this application be heard in the absence of the public, and that all materials in relation to the hearing be kept confidential, pursuant to Rule 22 of the Rules and s. 2(2) of the Tribunal Adjudicative Records Act, 2019.{4}
[14] Releasing these reasons publicly, without identifying information, achieves as much transparency as is possible without compromising the confidentiality interest described above.
[15] I turn now to the two main issues on this application. Can the Commission give B the requested assurance? If not, is it in the public interest to grant the necessary order to allow B to seek that assurance in court?
A. Can the Commission grant the requested order pursuant to the Act directing that B may answer questions in an examination with Staff without violating B's employment agreement?
[16] B's primary request is for an order pursuant to the Act directing that B may answer questions in an examination with Staff without violating the employment agreement. That request does not specify a section of the Act under which the Commission should make the requested order.
[17] The Commission is a statutory tribunal with no inherent jurisdiction. It can order only what it is empowered to order.{5} The Act contains no provision that provides the Commission with the kind of declaratory authority given to some courts by the Courts of Justice Act.{6} Without such authority, the Commission cannot make binding declarations of right as between B and B's employer.
[18] I reject B's submission that this tribunal's power to control its own process, granted by s. 25.0.1 of the Statutory Powers Procedure Act, provides a means for the Commission to give the requested assurance. That section empowers a tribunal to make orders relating to a "proceeding". At the hearing of this application, B's counsel rightly conceded that an Investigation Order does not commence a proceeding.
[19] I also reject B's submission that I can give the requested assurance because the Commission must be able to control the entire enforcement process. For example, asks B, shouldn't the Commission be able to resolve disputes about appropriate questions on an examination conducted pursuant to a s. 13 summons?
[20] That option might have some appeal for its efficiency. However, it is not provided for in the Act, it might well raise other questions about the tribunal's independence, and I was given no court or Commission decision that suggests it is available. In fact, s. 13(1) of the Act explicitly provides a different mechanism for resolving disputes about the propriety of questions put to a summonsed individual: "the refusal of a person to... answer questions... makes the person... liable to be committed for contempt by the Superior Court of Justice...".
[21] Staff's right to bring a contempt application may be viewed by some as being more forceful than is warranted in response to a person's refusal to answer certain questions. Even if that is true, it is not a sufficient basis for me to create a less forceful alternative.
[22] For these reasons, I dismissed B's request for directions.
B. Is it in the public interest to authorize B to disclose to the Superior Court of Justice such information as is necessary to bring an application for directions?
[23] I will now address B's alternative request for relief; namely, an order pursuant to s. 17 of the Act, authorizing B to disclose such information as is necessary to permit B to bring an application in the Superior Court of Justice for directions.
[24] Staff opposes this request for three reasons:
a. the order sought would unduly delay this and other investigations;
b. no employment contract would be relevant to a person's obligation to answer questions pursuant to a s. 13 summons; and
c. in any event, s. 154 of the Act provides that a person who discloses information to the Commission in good faith and in compliance with Ontario securities law does not thereby breach any contractual provision to which the person is subject.
[25] I reject all of these, as I explain below.
1. The requested s. 17 order would not unduly delay this or other investigations
[26] While Staff submitted that my granting the requested s. 17 order would unduly delay this and other investigations, Staff did not sufficiently explain how that would happen.
[27] Prior to the hearing of this application, Staff advised B's counsel that Staff intended to ask the Superior Court of Justice to find B in contempt if B continued to refuse to answer questions. It was evident at the time of the hearing of this application that Staff had not taken that step, but I heard no reason why Staff had not done so, or could not do so if it wished.
[28] I can speculate that Staff may think it inappropriate to bring a contempt application while B's application for directions is pending. However, Staff did not explicitly make that argument. Further, and understandably, neither Staff nor B's counsel could reliably predict how quickly either type of application would be resolved by a court.
[29] I see nothing that stands in the way of Staff proceeding as expeditiously as it thinks it should. Any argument that a contempt application ought to await B's application for directions necessarily presumes that B's concern is not frivolous. The issues B raises should be addressed by the court if the court sees fit to do so. It would not be in the public interest for me to prevent that inquiry.
[30] Staff also submits that authorizing disclosure here may delay other investigations, because others will want to follow B's path. I reject that submission. If the court resolves the interplay between the s. 13 summons and the employment contract, the question will have been answered, at least for those who are subject to similar confidentiality provisions.
2. Staff's submission that no employment contract would be relevant to a person's obligation to answer questions pursuant to a s. 13 summons
[31] Staff submits that it is not in the public interest to authorize disclosure pursuant to s. 17 of the Act, because the Act properly interpreted gives no basis to conclude that B's employment contract has any relevance to B's obligation to answer questions pursuant to the s. 13 summons.
[32] I reject that submission. I have already explained, in paragraphs [16] to [22] above, my conclusion that the Commission is not empowered to resolve that question directly. It would be inappropriate to invoke the public interest test in s. 17 of the Act to resolve that same question indirectly.
3. Does s. 154 of the Act, which provides that a person who discloses information to the Commission in good faith and in compliance with Ontario securities law does not thereby breach any contractual provision to which the person is subject, apply?
[33] Both Staff and B suggested that B might be protected by s. 154 of the Act, which states that the "disclosure of information to the Commission... that is made in good faith by a person... in compliance with Ontario securities law" does not constitute a breach of any contractual provision to which that person is subject. Staff submits that s. 154 solves the problem, obviating the need for an order authorizing disclosure to the court.
[34] I disagree. I was not persuaded that a person who answers questions in response to a s. 13 summons is doing so in compliance with "Ontario securities law", a term that is defined in s. 1(1) of the Act. The definition provides, in relevant part, that Ontario securities law includes the Act itself and, in respect of a person, a "decision" to which the person is subject. I deal with each of those two elements in turn.
(a) The Act
[35] The Act does not, in any direct way, require that a person who receives a s. 13 summons answer questions in response to that summons.
[36] The summonsed individual's obligation is indirect. The existence of the obligation is made explicit in the summons itself, and can be inferred from two portions of s. 13(1) of the Act:
a. the words that empower a person appointed under an Investigation Order to "summon and enforce the attendance of any person and to compel him or her to testify on oath or otherwise"; and
b. words later in that subsection, which provide that "the refusal of a person to attend or to answer questions... makes the person liable to be committed for contempt".
[37] Staff submits that compliance with a s. 13 summons is in substance compliance with s. 13(1) of the Act. Even if true, however, that submission obscures the binary question of whether a s. 13 summons can properly be described as being part of the Act.
[38] B's obligation to answer questions does not arise directly under the Act. It arises as a result of a power exercised under the Act. The words "this Act" in the definition of "Ontario securities law" are clear. Effectively, Staff's submission would have me interpret those words to mean "this Act and any obligations that arise from the exercise of a power under this Act".
[39] Such an interpretation would have many consequences. In the absence of clear legislative intent, I decline Staff's invitation to broaden the definition.
(b) A decision
[40] Staff also submits that a s. 13 summons is part of Ontario securities law because it is a "decision" of the Commission.
[41] Subsection 1(1) of the Act defines "decision" as follows:
'decision' means, in respect of a decision of the Commission or a Director, a direction, decision, order, ruling or other requirement made under a power or right conferred by this Act...
[42] In written submissions, Staff contends that a s. 13 summons "falls within the definition of 'decision' if viewed as a Commission requirement made under a power or right conferred by this Act...".
[43] There is some superficial appeal to Staff's submission, but I cannot accept it, for two reasons.
[44] First, the ordinary meaning of the word "decision" connotes the weighing of factors, resulting in a choice among options. A summons does not naturally fit that definition. The linguistic contortion necessary to conclude that a summons is a decision would, in my view, require a clear expression of legislative intent. There is none here.
[45] Second, while the words "requirement made under a power or right conferred by this Act" may seem to apply to a summons, those words cannot be viewed in isolation. They are qualified by the opening words of the definition, i.e., "in respect of a decision of the Commission or a Director".
[46] Can a s. 13 summons be said to be a decision "of the Commission"? Clearly not. The summons is not issued by the Commission. It is issued by a person who is named in an Investigation Order and who is thereby appointed to investigate the matters described in that order. Persons appointed need not even be a member of Staff of the Commission. To think of a s. 13 summons issued by such a person as a "decision of the Commission" is to stretch the phrase well beyond its breaking point.
4. Conclusion
[47] B ought to have the opportunity to ask a court to resolve the interplay between the summons and the employment contract. There is no compelling reason to prevent B from doing that. For these reasons, I issued the confidential order under s. 17 of the Act permitting B to disclose the necessary information to the Ontario Superior Court of Justice, on a confidential basis.
Dated at Toronto this 18th day of August, 2020.
{1} RSO 1990, c S.5
{2} RSO 1990, c S.22
{3} (2019), 42 OSCB 9714
{4} SO 2019, c 7, Sch 60
{5} Amato (Re), 2015 ONSEC 16 at para 18
{6} RSO 1990, c C.43, s 97
Majd Kitmitto et al. -- Rule 29 of OSC Rules of Procedure and Forms
Citation: Kitmitto (Re), 2020 ONSEC 22
Date: August 20, 2020
File No. 2018-70
Hearing: |
July 31, 2020 |
|
|
||
Decision: |
August 20, 2020 |
|
|
||
Panel: |
M. Cecilia Williams |
Commissioner and Chair of the Panel |
|
||
Appearances: |
Katrina Gustafson |
For Staff |
Matthew Britton |
||
|
||
Andrew Guaglio |
For Majd Kitmitto |
|
Ian Smith |
||
|
||
Christopher Kostopoulos |
For Steven Vannatta |
|
|
||
Janice Wright |
For Frank Fakhry |
|
and |
||
Agent for Christopher Candusso and Claudio Candusso |
||
|
||
John Picone |
For Donald Alexander (Sandy) Goss |
|
|
||
Frank Addario |
For John Fielding |
|
Lynda Morgan |
||
[1] The merits hearing in this proceeding was scheduled to begin on September 1, 2020.
[2] Due to the COVID-19 pandemic the Commission has suspended in-person hearings until further notice, and hearings are being conducted either in writing, by teleconference or by videoconference.
[3] At the final interlocutory attendance on July 31, 2020, Staff advised that all parties, except Goss, have reached an agreement regarding the presentation of evidence for some of Staff's witnesses. The agreement includes Staff presenting the evidence of their three investigators by affidavit and the adjournment of the start of the hearing to October 5, 2020.
[4] After considering the parties' submissions, I ordered that:
a. a further attendance in this proceeding be scheduled for August 7, 2020 by teleconference;
b. the merits hearing dates scheduled for September 1, 2, 3, 4, 8, 9, 10 and 11 are vacated and the previously ordered merits hearing dates remain as scheduled to be heard by videoconference;
c. Staff shall serve affidavits for Staff's investigator witnesses on the respondents by September 11, 2020; and
d. Staff shall file affidavits for Staff's investigator witnesses by September 25, 2020.
[5] I advised that my reasons for that decision would follow. These are my reasons.
[6] The issues I need to decide are:
a. is a motion for an adjournment required in this instance;
b. do the parties need to meet the Rule 29(1) test that there are "exceptional circumstances" if they have agreed amongst themselves to adjourn the start of a merits hearing; and
c. if the parties do need to establish that the circumstances are "exceptional", have they done so in this case?
A. Is a motion for an adjournment required in this instance?
[7] Rule 29(2) of the Commission's Rules of Procedures and Forms{1} provides that a party seeking an adjournment shall file and serve a motion.
[8] The parties' proposed approach involves the adjournment of eight days of the merits hearing from September 1, 2020 to October 5, 2020. However, no motion for an adjournment was brought. I asked the parties to address why a motion was not necessary in this instance.
[9] Staff's position is that such formality should be dispensed with in circumstances where the parties have agreed to the revised merits hearing schedule.
[10] Fakhry agrees with Staff's position. Goss submits that their proposed approach does not involve an adjournment; rather it involves vacation of dates with the agreement of the parties.
[11] Fielding's position is that the vacation of dates to allow Staff to provide a portion of its evidence by affidavit represented an agreed approach to address some of the respondents' concerns about the merits hearing format. If a formal motion for adjournment were to be required to approve this agreed approach, the likely result would be a contested motion for adjournment of the merits hearing until an in person hearing would be possible.
[12] The objective of the Rules, as set out in Rule 1, is to ensure that Commission proceedings are conducted in a just, expeditious and cost-effective manner.
[13] While the parties to a proceeding may have views about how a proceeding should be conducted, it is important to remember that the Panel has an overarching responsibility to ensure that the objectives of the Rules are met.
[14] The Commission encourages cooperation and collaboration among parties to ensure that proceedings before the Commission are fair and efficient. However, the fact that the parties have agreed on a course of action does not mean the Rules do not apply nor does it relieve the Panel of its responsibilities.
[15] In this circumstance, I agree that a motion for an adjournment is not required. As is set out in Rule 3, a panel can waive the requirements in the Rules. The merits hearing is scheduled to commence in a month. The scheduling of a motion for an adjournment, when there is no dispute among the parties about the timing, would be unnecessarily burdensome as it would require the parties to prepare and file motion materials while continuing to prepare for the hearing itself. More importantly, for the reasons set out below, the adjournment in this instance is unlikely to cause a delay in the overall proceeding and is intended to contribute to the efficiency of the hearing.
[16] Therefore, I conclude that a waiver of the requirement for a formal motion for an adjournment is consistent with the objective of ensuring this matter is conducted in a just, expeditious and cost-effective manner.
B. Do the parties need to meet the Rule 29(1) test that there are "exceptional circumstances" if they have agreed amongst themselves to delay the start of a hearing?
[17] Staff's position is that if "exceptional circumstances" was a hurdle that needed to be addressed, then the circumstances did meet the standard under Rule 29(1).
[18] Fakhry's position is that the Rule 29(1) test of "exceptional circumstances" is usually applied when an adjournment request by a party is contested. This case, in Fakhry's view, differs from a normal adjournment because the agreed approach reflects Staff's willingness to move forward in a way that takes into consideration the respondents' concerns about proceeding with a virtual hearing.
[19] In addition, Fakhry submits that, similar to Goss's position reflected at paragraph [10] above, this situation is more akin to vacating dates than adjourning a hearing. Fakhry cited, as an analogous example, when a hearing cannot continue as planned for a variety of reasons, such as witness availability, and dates are vacated.
[20] I do not accept the proposition that the requirement to establish "exceptional circumstances" only applies where there is a contested motion to adjourn a hearing.
[21] Rule 29(1) provides that "Every merits or sanctions hearing in an enforcement proceeding, and every hearing of a motion or application shall proceed on the scheduled date unless a Party satisfies the Panel that there are exceptional circumstances requiring an adjournment." There is nothing in the language of the Rule to suggest that the need to establish "exceptional circumstances" is only in those instances where the parties are not in agreement.
[22] The Rules require that the Panel needs to be satisfied that there are "exceptional circumstances" warranting an adjournment. The fact that the parties have agreed to delay the start of a hearing does not relieve the Panel of its Rule 1 objectives or the parties of their obligation to satisfy the Panel that the delay is warranted under Rule 29(1). In this instance, the request of the parties constitutes an adjournment as the start of the hearing is not proceeding as scheduled.
C. If the parties do need to establish that the circumstances are "exceptional", have they done so in this case?
[23] Having found that the test in Rule 29(1) applies I must now determine if the parties have met the threshold for "exceptional circumstances".
[24] The Commission has ruled that the standard set out in Rule 29(1) is a "high bar" that reflects the Rule 1 objective, that Commission proceedings be conducted in a "just, expeditious and cost-effective manner".{2} This objective must be balanced against parties' ability to participate meaningfully in the hearing and present their case.{3}
[25] Staff's position is that the circumstances are "exceptional". Staff submits that while proceeding virtually is feasible, it is not ideal to be introducing all of the evidence through videoconference. The agreement arrived at with the respondents, in Staff's view, is consistent with the objectives of the Rules as providing affidavit evidence for three investigator witnesses will greatly reduce the hearing time that needs to be dedicated to examination-in-chief of witnesses. Specifically, it eliminates eight days of live testimony without delaying the overall proceeding. Staff submits the time saved by eliminating those eight days is necessary to prepare, serve and file the very detailed affidavits for the three investigator witnesses in advance of the proposed first date of the merits hearing on October 5, 2020. In addition, in Staff's view, it is not anticipated that this approach will delay the overall hearing as the remaining, previously scheduled dates remain in place.
[26] Fakhry's position is that, to the extent there is an exceptional test to be applied in this instance, the threshold is met by the pandemic and the creative response that the parties have arrived at in this instance to address concerns about proceeding with the merits hearing in a virtual format.
[27] Generally, adjournments of merits hearings are only granted on an exceptional basis because they disrupt existing plans, consume resources unnecessarily, and/or (and often most significantly) delay the conclusion of the merits hearing. It is an exception when an adjournment effects no appreciable disruption.{4}
[28] This proceeding is a complex, insider trading case involving multiple respondents and scheduled for 45 days that, of necessity due to the suspension of in-person hearings, is going to proceed, by videoconference.
[29] The agreement to introduce the evidence of Staff's three investigators by affidavit will reduce the number of hearing days needed for testimony in-chief. Eliminating the eight initial days of the merits hearing to provide time to finalize, serve and file the affidavits is an efficient solution to allow the merits hearing to proceed. This approach is also not anticipated to delay the overall hearing, which will continue with the remaining, previously scheduled 37 days of merits hearing ending on December 11, 2020.
[30] Therefore, I conclude that the circumstances are "exceptional" and the adjournment of the hearing to the previously scheduled date of October 5, 2020 is warranted.
[31] There is one final point that warrants comment. The parties agreed to separate dates set for the serving and then filing of Staff's investigator affidavits, as reflected in my order dated July 31, 2020. While in the normal course the affidavits would be filed and served at the same time, I accepted this aspect of the parties agreed upon approach. The fact that the order contains a separation between the dates for service and filing of affidavit evidence was a procedural agreement of the parties in the unique circumstances of this case.
[32] For the reasons stated above, I made the July 31, 2020 order.
Dated at Toronto this 20th day of August, 2020.
{1} (2019) 42 OSCB 9714 (the Rules)
{2} Pro-Financial Asset Management Inc (Re), 2018 ONSEC 18, (2018) 41 OSCB 3512 at para 28; Money Gate Mortgage Investment Corporation (Re), 2019 ONSEC 40, (2020) 43 OSCB 35 (Money Gate) at para 54
{3} Money Gate at para 54
{4} Paramount (Re), 2020 ONSEC 7 at para. 21
Temporary, Permanent & Rescinding Issuer Cease Trading Orders
Company Name |
Date of Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/Revoke |
|
||||
THERE IS NOTHING TO REPORT THIS WEEK. |
||||
Company Name |
Date of Order |
Date of Revocation |
|
||
Enfield Exploration Corp. |
August 18, 2020 |
__________ |
|
||
Future Farm Technologies Inc. |
August 18, 2020 |
__________ |
|
||
Vatic Ventures Corp. |
August 18, 2020 |
__________ |
|
||
Vert Infrastructure Ltd. |
August 18, 2020 |
__________ |
|
||
Tantalex Resources Corporation |
August 19, 2020 |
__________ |
|
||
Rapid Dose Therapeutics Corp. |
August 19, 2020 |
__________ |
|
||
H-SOURCE HOLDINGS LTD. |
July 21, 2020 |
August 19, 2020 |
Temporary, Permanent & Rescinding Management Cease Trading Orders
Company Name |
Date of Order |
Date of Lapse |
|
||
Sproutly Canada, Inc. |
August 20, 2020 |
__________ |
Outstanding Management & Insider Cease Trading Orders
Company Name |
Date of Order or Temporary Order |
Date of Hearing |
Date of Permanent Order |
Date of Lapse/ Expire |
Date of Issuer Temporary Order |
|
|||||
Performance Sports Group Ltd. |
19 October 2016 |
31 October 2016 |
31 October 2016 |
__________ |
__________ |
Amendments to National Instrument 44-102 Shelf Distributions and Changes to Companion Policy 44-102CP Shelf Distributions relating to At-the-Market Distributions
1. National Instrument 44-102 Shelf Distributions is amended by this Instrument.
2. Part 9 is replaced with the following:
PART 9 -- AT-THE-MARKET DISTRIBUTIONS OF EQUITY SECURITIES UNDER SHELF
9.1 Definitions -- In this Part,
"ATM prospectus" means
(a) a base shelf prospectus for an at-the-market distribution,
(b) a shelf prospectus supplement to a base shelf prospectus referred to in paragraph (a), or
(c) a shelf prospectus supplement establishing an at-the-market distribution;
"investment dealer" has the meaning ascribed to it in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations;
"marketplace" has the meaning ascribed to it in National Instrument 21-101 Marketplace Operation.
9.2 Provisions Not Applicable to an At-the-Market Distribution
(1) The following provisions do not apply to an issuer distributing a security under an ATM prospectus:
(a) section 7.2 of NI 41-101;
(b) Item 20 of Form 44-101F1;
(c) item 8 of section 5.5 of this Instrument.
(2) Item 8 of section 5.5 of this Instrument does not apply to an investment dealer acting as an underwriter in connection with a distribution of a security under an ATM prospectus.
(3) The requirement to send or deliver a prospectus under securities legislation does not apply in connection with a distribution of a security under an ATM prospectus.
9.3 Requirements for Issuers and Underwriters Conducting an At-the-Market Distribution
(1) An issuer must not distribute a security under an ATM prospectus as part of an at-the-market distribution unless the following apply:
(a) a security of the same class being distributed is listed and trading on a short form eligible exchange;
(b) the security being distributed is an equity security;
(c) the security being distributed is distributed through an investment dealer acting as an underwriter in connection with the distribution;
(d) with respect to any agreement with an investment dealer referred to in paragraph (c) to distribute the security, the issuer
(i) has issued and filed a news release
(A) announcing that the issuer has entered into the agreement,
(B) indicating that an ATM prospectus has been or will be filed, and
(C) specifying where and how a purchaser of a security under the at-the-market distribution may obtain a copy of the agreement and the ATM prospectus, and
(ii) has filed a copy of the agreement;
(e) the issuer distributes the security through a marketplace;
(f) if applicable, the issuer has disclosed that the completion of the distribution would constitute a material fact or material change;
(g) the cover page of the base shelf prospectus states that it may qualify an at-the-market distribution;
(h) the ATM prospectus states in substantially the following words:
"Securities legislation in some provinces and territories of Canada provides purchasers of securities with the right to withdraw from an agreement to purchase securities and with remedies for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser are not sent or delivered to the purchaser. However, purchasers of [describe securities] distributed under an at-the-market distribution by [name of issuer] do not have the right to withdraw from an agreement to purchase the [describe securities] and do not have remedies of rescission or, in some jurisdictions, revisions of the price, or damages for non-delivery of the prospectus, prospectus supplement, and any amendment relating to [describe securities] purchased by such purchaser because the prospectus, prospectus supplement, and any amendment relating to the [describe securities] purchased by such purchaser will not be sent or delivered, as permitted under Part 9 of National Instrument 44-102 Shelf Distributions.
Securities legislation in some provinces and territories of Canada further provides purchasers with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser contains a misrepresentation. Those remedies must be exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of [describe securities] distributed under an at-the-market distribution by [name of issuer] may have against [name of issuer] or its agents for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser contain a misrepresentation will remain unaffected by the non-delivery of the prospectus referred to above.
A purchaser should refer to applicable securities legislation for the particulars of these rights and should consult a legal adviser.";
(i) if there has been a statement of a purchaser's rights contained in a previous version of the ATM prospectus, the issuer discloses in the current ATM prospectus a statement to the effect that, solely with regard to the at-the-market distribution, the statement of rights required to be included in the ATM prospectus, under paragraph (h), supersedes the previous statement;
(j) the ATM prospectus states:
"No underwriter of the at-the-market distribution, and no person or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price of the securities or securities of the same class as the securities distributed under the ATM prospectus, including selling an aggregate number or principal amount of securities that would result in the underwriter creating an over-allocation position in the securities.";
(k) the ATM prospectus includes the certificates required under Part 5 of NI 41-101, or other securities legislation in the form required under section 9.5 or 9.6 of this Instrument, as applicable;
(l) if the issuer is an investment fund, the ATM prospectus includes a statement that the at-the-market distribution will be conducted in accordance with paragraph 9.3(2)(a) of National Instrument 81-102 Investment Funds.
(2) An underwriter of an at-the-market distribution, or a person or company acting jointly or in concert with the underwriter, must not, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price of the same class of securities distributed under the at-the-market distribution, including for greater certainty, trading a security that would result in the underwriter creating an over-allocation position in that class of securities.
9.4 Reporting
(1) Subject to subsection (2), for each annual and interim period of the issuer during which the issuer distributes securities under an ATM prospectus, the issuer must, within 60 days after the end of the interim period or 120 days after the end of the annual period, as applicable, file a report, disclosing
(a) the number and average price of the securities distributed under the ATM prospectus, and
(b) the aggregate gross and aggregate net proceeds raised, and the aggregate commissions paid or payable, under the ATM prospectus during the annual or interim period, as applicable.
(2) Subsection (1) does not apply if, in each of its filed interim financial reports, annual financial statements, and management discussion and analysis, for the interim period or year, as applicable, following the distribution, the issuer discloses
(a) the number and average price of the securities distributed under the ATM prospectus, and
(b) the aggregate gross and aggregate net proceeds raised, and the aggregate commissions paid or payable, under the ATM prospectus during the annual or interim period, as applicable.
9.5 Form of Certificates -- Base Shelf Prospectus Establishing an At-the-Market Distribution
(1) If a base shelf prospectus establishes an at-the-market distribution, an issuer certificate form required under paragraph 9.3(1)(k) must state the following:
"This short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified]."
(2) If a base shelf prospectus establishes an at-the-market distribution, an underwriter certificate form required under paragraph 9.3 (1)(k) must state the following:
"To the best of our knowledge, information and belief, this short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified]."
(3) For an amendment to a base shelf prospectus that includes the form of certificates required under subsections (1) and (2), if the amendment does not restate the base shelf prospectus,
(a) the issuer certificate form must state the following:
"The short form prospectus dated [insert date] as amended by this amendment, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified].", and
(b) the underwriter certificate form must state the following:
"To the best of our knowledge, information and belief, the short form prospectus dated [insert date] as amended by this amendment, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified]."
(4) For an amended and restated base shelf prospectus, in respect of a base shelf prospectus that includes the certificates required under subsections (1) and (2),
(a) the issuer certificate form must state the following:
"This amended and restated short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified].", and
(b) the underwriter certificate form must state the following:
"To the best of our knowledge, information and belief, this amended and restated short form prospectus, together with the documents incorporated in this prospectus by reference, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement as required by the securities legislation of [insert name of each jurisdiction in which qualified]."
9.6 Form of Certificates -- Shelf Prospectus Supplement Establishing an At-the Market Distribution
(1) If the form of certificate required under subsection 9.5(1) was not included in the corresponding base shelf prospectus, the issuer certificate form required under paragraph 9.3(1)(k) must, in a shelf prospectus supplement that establishes an at-the-market distribution, state the following:
"The short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified]."
(2) If the form of certificate required under subsection 9.5(2) was not included in the corresponding base shelf prospectus, the underwriter certificate form required under paragraph 9.3(1)(k) must, in a shelf prospectus supplement that establishes an at-the-market distribution, state the following:
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified]."
(3) For an amendment to a shelf prospectus supplement that includes the certificates required under subsections (1) and (2), if the amendment does not restate the shelf prospectus supplement,
(a) the issuer certificate form must state the following:
"The short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing as it amends the shelf prospectus supplement dated [insert date], will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified].", and
(b) the underwriter certificate form must state the following:
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing as it amends the shelf prospectus supplement dated [insert date], will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified]."
(4) For an amended and restated shelf prospectus supplement in respect of a shelf prospectus supplement that includes the certificates required under subsections (1) and (2),
(a) the issuer certificate form must state the following:
"The short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified].", and
(b) the underwriter certificate form must state the following:
"To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, will, as of the date of a particular distribution of securities under the prospectus, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and the supplement as required by the securities legislation of [insert name of jurisdiction in which qualified].".
3. Paragraph 9.3(1)(g) of National Instrument 44-102 Shelf Distributions, as enacted by section 2 of this Instrument, does not apply in respect of a base shelf prospectus if the prospectus was filed
(a) before August 31, 2020, and
(b) for an at-the-market distribution in respect of which the issuer applied for and obtained an exemption from the requirement to send or deliver a prospectus.
4.
(1) This Instrument comes into force on August 31, 2020.
(2) In Saskatchewan, despite subsection (1), if these regulations are filed with the Registrar of Regulations after August 31, 2020, these regulations come into force on the day on which they are filed with the Registrar of Regulations.
1. Companion Policy 44-102CP Shelf Distributions is changed by this Document.
2. The following Part is added:
PART 5 AT-THE-MARKET DISTRIBUTIONS OF EQUITY SECURITIES UNDER SHELF
5.1 Purpose -- The purpose of Part 9 of NI 44-102 is to provide exemptions from certain regulatory requirements, subject to conditions, so that issuers and underwriters may distribute securities under an ATM prospectus.
5.2 Disclosure of Intention to Qualify At-the-Market Distribution
(1) Paragraph 9.3(1)(g) of Part 9 of NI 44-102 requires that an issuer disclose on the cover page of its base shelf prospectus that the prospectus may qualify an at-the-market distribution. An at-the-market distribution cannot be established by shelf prospectus supplement unless the base shelf prospectus has met this requirement. The securities regulatory authorities are of the view that a base shelf prospectus that is intended to qualify an at-the-market distribution may result in further review of certain factors that are considered during the review of a base shelf prospectus, such as the sufficiency of proceeds, an issuer's business or a recent reverse take-over of former shell companies. In connection with this review, the securities regulatory authorities may consider a number of factors, including
(a) the number of securities that may be qualified by the base shelf prospectus;
(b) the total number of issued and outstanding securities of the same class; and
(c) the trading volume of the securities of the same class.
(2) An issuer should qualify the statements required by paragraphs 2 and 3 of section 5.5 of NI 44-102 in its base shelf prospectus to indicate that delivery is not required where an exemption from the delivery requirements referred to in these provisions is available.
5.3 Material Fact or Material Change
(1) In determining whether a proposed distribution of securities under an ATM prospectus would constitute a material fact or material change under paragraph 9.3(1)(f) of NI 44-102, the issuer should take into account a number of factors including
(a) the parameters of the proposed distribution, including the number of securities proposed to be distributed and any price or timing restrictions that the issuer may impose with respect to the proposed distribution;
(b) the percentage of the outstanding securities of the same class that the number of securities proposed to be distributed represents;
(c) previous, and cumulative, distributions of securities under the ATM prospectus;
(d) whether the investment dealer has advised the issuer that the proposed distribution may have a significant impact on the market price of securities of the same class;
(e) trading volume and volatility of securities of the same class;
(f) recent developments in the business, operations or capital of the issuer; and
(g) prevailing market conditions generally.
(2) The issuer will have an interest in minimizing the market impact of an at-the-market distribution. If a proposed distribution of securities under an ATM prospectus could have a significant impact on the market price of securities of the same class as the securities proposed to be distributed, the proposed distribution may disrupt a fair and orderly market. The investment dealer selected by the issuer will have experience and expertise in managing orders to limit any negative effect on market integrity. An investment dealer is prohibited from engaging in conduct that may disrupt a fair and orderly market under IIROC rules and standards of conduct.
5.4 Selling Agent -- It is best practice to include language in an ATM prospectus that a purchaser's rights and remedies under applicable securities legislation against the dealer underwriting or acting as an agent for the issuer in an at-the-market distribution will not be affected by that dealer's decision to effect the distribution directly or through a selling agent.
5.5 Designated News Releases -- To ensure an ATM prospectus includes full, true and plain disclosure of all material facts related to the securities distributed under the ATM prospectus, the issuer may file a designated news release rather than filing a prospectus supplement or an amended prospectus. If an issuer disseminates a news release disclosing information that, in the issuer's determination, constitutes a "material fact", the issuer should identify the news release as a "designated news release" for the purposes of the ATM prospectus. This designation should be made on the face page of the version of the filed news release. An ATM prospectus should provide that any such designated news release will be deemed to be incorporated by reference into the ATM prospectus.
5.6 Prospectus Certificates -- The certificates required to be filed under paragraph 9.3(1)(k) of NI 44-102 or other securities legislation in the forms required under sections 9.5 and 9.6 of NI 44-102, as applicable, are forward-looking certificates confirming that the ATM prospectus provides full, true and plain disclosure of all material facts relating to the securities distributed under the ATM prospectus as of the date of each distribution under an ATM prospectus. For promoters of an at-the-market distribution, the certificate of promoter required under Part 5 of NI 41-101 should be in the form required by section 9.5 or 9.6 of NI 44-102, as applicable.
5.7 Filing Jurisdictions -- Issuers are required to file a prospectus in every jurisdiction where a distribution will occur. However, because purchases in an at-the-market distribution are made directly on a securities exchange, it is difficult to determine where a distribution will occur because issuers and dealers are unable to determine where a purchaser is located at the time of the trade. As a result, it is possible that a purchaser under an at-the-market distribution can be located in any jurisdiction of Canada.
5.8 Transition Period -- An issuer with an outstanding base shelf prospectus filed prior to August 31, 2020 under which the issuer is qualified to make an at-the-market distribution pursuant to a discretionary relief order, will not be required to re-file the base shelf prospectus to comply with the cover page disclosure in paragraph 9.3(1)(g) of NI 44-102. Any other provisions of Part 9 of NI 44-102 that do not mirror the issuer's discretionary relief order may be addressed in the prospectus supplement.
3. These changes become effective on August 31, 2020.
On May 12, 2020, the Ontario Securities Commission:
• made the Amendments pursuant to section 143 of the Securities Act (Ontario) (the Act), and
• adopted the Changes pursuant to section 143.8 of the Act.
The Amendments and other required materials were delivered to the Minister of Finance on June 3, 2020. The Minister may approve or reject the Amendments or return them for further consideration. If the Minister approves the Amendments or does not take any further action by August 2, 2020, the Amendments and the Changes will come into force on August 31, 2020.
National Instrument 21-101 Marketplace Operation and Companion Policy 21-101CP Marketplace Operation
1. National Instrument 21-101 Marketplace Operation is amended by this Instrument.
2. Section 1.1 is amended by replacing the definition of "information processor" with the following:
""information processor",
(a) in every jurisdiction except for British Columbia, means any person or company that receives and provides information under this Instrument and has filed Form 21-101F5 and,
(b) in British Columbia, means a person or company that is designated as an information processor for the purposes of this Instrument;".
3. The title to Part 8 is replaced with "INFORMATION TRANSPARENCY REQUIREMENTS FOR PERSONS AND COMPANIES DEALING IN UNLISTED DEBT SECURITIES".
4. Subsection 8.1(1) is amended by replacing "marketplace as required by" with "marketplace, as required by".
5. Subsection 8.1(3) is repealed.
6. Subsection 8.1(4) is amended by replacing "inter-dealer bond broker as required by" with "inter-dealer bond broker, as required by".
7. Subsection 8.1(5) is replaced with the following:
(5) A person or company must provide to an information processor accurate and timely information regarding trades in government debt securities executed by or through the person or company, as required by the information processor.
8. Subsection 8.2(1) is replaced with the following:
(1) A marketplace that displays orders of corporate debt securities to a person or company must provide to an information processor accurate and timely information regarding orders for corporate debt securities displayed by the marketplace, as required by the information processor.
9. Subsection 8.2(3) is replaced with the following:
(3) A person or company must provide to an information processor accurate and timely information regarding trades in corporate debt securities executed by or through the person or company, as required by the information processor.
10. Subsections 8.2(4) and 8.2(5) are repealed.
11. Section 8.3 is amended by replacing "an accurate consolidated feed in real-time" with "accurate consolidated information on a timely basis".
12. Section 8.4 is amended by replacing "marketplace, inter-dealer bond broker or dealer" with "person or company".
13. Subsection 14.4(1) is replaced with the following:
(1) An information processor for exchange-traded securities must enter into an agreement with each marketplace that is required to provide information to the information processor which states that the marketplace will
(a) provide information to the information processor in accordance with Part 7 of this Instrument; and
(b) comply with any other reasonable requirements set by the information processor.
14. Subsection 14.4 (4) is amended by replacing "marketplace, inter-dealer bond broker or dealer" with "person or company".
15. Subsection 14.4(8) is repealed.
16. Subsection 14.4(9) is repealed.
17. Subparagraph 14.5(d)(ii) is amended by replacing the word "calendar" with "information processor's financial".
18. Subsection 14.7 is amended by replacing "marketplace, inter-dealer bond broker or dealer" with "person or company".
19. Paragraph 14.8(b) is replaced with the following:
(b) in the case of an information processor for government debt securities or corporate debt securities,
(i) the marketplaces that report orders for corporate debt securities or government debt securities to the information processor, as applicable,
(ii) the inter-dealer bond brokers that report orders for government debt securities to the information processor,
(iii) the persons and companies that report trades in corporate debt securities or government debt securities to the information processor, as applicable,
(iv) when trades in each corporate debt security or government debt security, as applicable, must be provided to the information processor by a person or company,
(v) when the information provided to the information processor will be publicly disseminated by the information processor, and
(vi) the cap on the displayed volume of trades for each corporate debt security or government debt security, as applicable,.
20. Subsection 14.8 is amended by deleting "and" at the end of paragraph (c), by adding "and" at the end of paragraph (d) and by adding the following paragraph:
(e) a list of the types of data elements relating to the order and trade information required to be provided under Part 7 or Part 8 of this Instrument.
21.
(1) This Instrument comes into force on August 31, 2020.
(2) In Saskatchewan, despite subsection (1), if this Instrument is filed with the Registrar of Regulations after August 31, 2020, this Instrument comes into force on the day on which it is filed with the Registrar of Regulations.
1. The changes to Companion Policy 21-101CP are set out in this Document.
2. Section 10.1 is replaced with:
(1) The requirements for pre-trade transparency of orders for unlisted debt securities set out in sections 8.1 and 8.2 of the Instrument have not been implemented by reason of the exception provided for in section 8.6 of the Instrument and the fact that no pre-trade requirements have been set by an information processor for corporate debt securities.
(2) The requirements for post-trade transparency of trades in unlisted debt securities are set out in sections 8.1 and 8.2 of the Instrument. The detailed reporting requirements, determined by the Canadian securities regulatory authorities and implemented through the information processor, such as who must report information, deadlines for reporting, delays in publication of information and caps on displayed volume, are articulated in this companion policy and in Form 21-101F5. ,
(3) Sections 8.1 and 8.2 of the Instrument require persons or companies executing trades in unlisted debt securities by or through that person or company to report these trades to the information processor. Specifically, such persons or companies are currently marketplaces, dealers, inter-dealer bond brokers and banks listed in Schedule I, II and III of the Bank Act (Canada).
(4) The detailed reporting requirements for trades in unlisted debt securities include, but are not limited to, details as to the type of issuer, coupon and maturity, last traded price, last traded yield, date and time of execution, settlement date, the type of transaction, the volume transacted (subject to volume caps), as required by the information processor.
(5) Details of the volume transacted will be subject to volume caps as follows:
(a) If the total par value of a trade of an investment grade corporate debt security is greater than $2 million, the information processor will display it as "$2 million+". If the total par value of a trade of a non-investment grade corporate debt security is greater than $200,000, the information processor will display it as "$200,000+".
(b) For government debt securities, the volume transacted will be displayed by the information processor in accordance with the chart below:
$10M
$5M
$2M
250K
Government of Canada Bills (GoC Bills)
Government of Canada nominal bonds with over 10 years remaining to maturity (GoC>10)
All provincial debt securities including Real Return Bonds, Strip Coupons and Residuals
Québec municipal debt securities
Government of Canada nominal bonds with 10 or less years remaining to maturity (GoC <=10)
All municipal debt securities, except those issued in Québec
All other agency debt securities
All Canada Mortgage Bonds (CMB)
Government of Canada Real Return Bonds
Government of Canada Strip Coupons and Residuals
(6) The information processor may propose changes to its transparency requirements by filing an amendment to Form 21-101F5 with the Canadian securities regulatory authorities pursuant to subsection 14.2(1) of the Instrument. The Canadian securities regulatory authorities will review the amendment to Form 21-101F5 to determine whether the proposed changes are contrary to the public interest, to ensure fairness and to ensure that there is an appropriate balance between the standards of transparency and market quality (defined in terms of market liquidity and efficiency) in each area of the market. Any initial transparency requirements and any proposed changes will be subject to consultation with market participants through a notice and comment process, prior to approval by the Canadian securities regulatory authorities.
3. Section 10.2 is deleted.
4. Section 10.3 is replaced with:
Consolidated Feed - Section 8.3 of the Instrument requires the information processor to produce accurate consolidated information on a timely basis showing the information provided to the information processor under sections 8.1 and 8.2 of the Instrument. The Canadian securities regulatory authorities have determined that information about trades in unlisted debt securities should be displayed by the information processor at 5:00 pm the day after the trade was executed by or through a person or company (T+1 at 5:00 pm ET).
5. Subsection 16.1(2) is changed by replacing "marketplaces, inter-dealer bond brokers and dealers" with "persons and companies" and "marketplace, inter-dealer bond broker or dealer" with "person or company".
6. Subsection 16.2(1) is changed by deleting "In Québec, a person or company may carry on the activity of an information processor only if it is recognized by the securities regulatory authority".
7. Section 16.2 is changed by adding paragraph (4) "The specific authority of securities regulatory authorities to allow a person or company to act as an information processor for the purposes of the Instrument may differ, depending on the relevant legislative framework. For instance, in Québec, a person or company may carry on the activity of an information processor, only if it is recognized or exempted by the securities regulatory authority. In certain other jurisdictions, a person or company may be designated an information processor, subject to the relevant requirements in securities legislation or may otherwise be allowed to act as an information processor, if it is in the public interest".
8. Paragraph 16.3(c) is changed by replacing "marketplaces, inter-dealer bond brokers and dealers" with "persons and companies".
9. Paragraph 16.3(k) is replaced with:
(k) in the case of an information processor for corporate debt securities or government debt securities, changes to the information referred to in paragraph 14.8(b) of the Instrument..
10. These changes become effective on August 31, 2020.
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3099698
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098363
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100234
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100241
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100317
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100727
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098363
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100975
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100242
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3072711
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3099165
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #2940823
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3002276
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #2940822
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3069832
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098811
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098513
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098638
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100021
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3100588
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3098580
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3097889
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3095345
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3095532
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3093189
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3095845
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3093239
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3093820
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3093452
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3023787
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Issuer Name:
Type and Date:
Offering Price and Description:
Underwriter(s) or Distributor(s):
Promoter(s):
Project #3087854
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Type |
Company |
Category of Registration |
Effective Date |
|
|||
Name Change |
From: OneSixtyTwo Capital Inc. |
Investment Fund Manager, Exempt Market Dealer and Portfolio Manager |
August 6, 2020 |
|
|||
To: Triumph Asset Management Inc. |
|||
|
|||
Name Change |
From: Alignvest Investment Management Corporation |
Commodity Trading Manager, Investment Fund Manager and Portfolio Manager |
July 28, 2020 |
|
|||
To: NorthPoint Investment Partners Limited |
|||
|
|||
New Registration |
DMAT Capital Management Inc. |
Commodity Trading Manager, Exempt Market Dealer, Investment Fund Manager and Portfolio Manager |
August 20, 2020 |
|
|||
Voluntary Surrender |
Disintermediate Technologies Inc. |
Exempt Market Dealer |
August 19, 2020 |
|
|||
Voluntary Surrender |
Kimelman & Baird, LLC |
Portfolio Manager |
August 20, 2020 |
|
|||
New Registration |
3L Capital Inc. |
Exempt Market Dealer |
August 24, 2020 |
Investment Industry Regulatory Organization of Canada (IIROC) -- IIROC IP -- Notice of Commission Order
On August 24, 2020, the Commission made an order under section 21.2.3 of the Securities Act (Ontario) designating the Investment Industry Regulatory Organization of Canada as the information processor for Unlisted Debt Securities.
The designation order constitutes the final step in the implementation of the government debt transparency framework and expanded corporate debt transparency framework (see CSA Notice of Approval Mandatory Post-Trade Transparency of Trades in Government Debt Securities and Expanded Transparency of Trades in Corporate Debt Securities and Amendments to National Instrument 21-101 Marketplace Operation and Related Companion Policy, published on June 4, 2020).
Investment Industry Regulatory Organization of Canada (IIROC) -- Amendments to Notes and Instructions to Schedules 1 and 7 of Form 1 Regarding Agency Tri-Party Arrangements -- Notice of Commission Approval
The Ontario Securities Commission has approved IIROC's proposed amendments to Notes and Instructions to Schedules 1 and 7 of Form 1 regarding the margin requirements for certain agency tri-party arrangements (the Amendments).
IIROC published the proposed amendments for comment on February 21, 2019 and no public comments were received. A copy of the IIROC Notice, including text of the Amendments, can be found at http://www.osc.gov.on.ca.
The Amendments will be effective on September 1, 2020 or as otherwise determined by IIROC.
In addition, the Alberta Securities Commission, the Autorité des marchés financiers, the British Columbia Securities Commission, the Financial and Consumer Affairs Authority of Saskatchewan, the Financial and Consumer Services Commission of New Brunswick, the Manitoba Securities Commission, the Northwest Territories Office of the Superintendent of Securities, the Nova Scotia Securities Commission, the Nunavut Securities Office, the Office of the Superintendent of Securities, Service Newfoundland and Labrador, the Office of the Yukon Superintendent of Securities, and the Prince Edward Island Office of the Superintendent of Securities have approved or not objected to the Amendments.