Ontario Securities Commission Bulletin
Issue 45/10 - March 10, 2022
Ont. Sec. Bull. Issue 45/10
• Brookfield Business Partners L.P. and Brookfield Business Corporation
• Brookfield Business Corporation and Brookfield Asset Management Inc.
• National Bank Financial Inc.
• NISA Investment Advisors, LLC
• Kirkland Lake Gold Ltd. -- s. 1(6) of the OBCA
• Temporary, Permanent & Rescinding Issuer Cease Trading Orders
• Temporary, Permanent & Rescinding Management Cease Trading Orders
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FOR IMMEDIATE RELEASE
March 7, 2022
TORONTO -- The Applicants, Fraser MacDougall and Chris Bogart, filed an Application dated March 4, 2022 in the above named matter.
A copy of the Application dated March 4, 2022 is available at www.osc.ca.
For Media Inquiries:
For General Inquiries:
Stableview Asset Management Inc. and Colin Fisher
FOR IMMEDIATE RELEASE
March 8, 2022
TORONTO -- The Commission issued an Order in the above named matter.
A copy of the Order dated March 8, 2022 is available at www.osc.ca.
For Media Inquiries:
For General Inquiries:
Brookfield Business Partners L.P. and Brookfield Business Corporation
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions -- partnership creates corporation to provide investors with alternative way to hold its units -- corporation issues exchangeable shares whose terms are structured so that each exchangeable share is functionally and economically equivalent to a partnership unit -- each exchangeable share provides an equivalent economic return as a partnership unit -- both the partnership and the corporation are reporting issuers -- related party transactions between the partnership and the corporation are exempt from the related party transaction requirements, subject to conditions -- partnership may include corporation's exchangeable shares when calculating market capitalization for the purposes of using the 25% market capitalization exemption for certain related party transactions, subject to conditions.
Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, Part 5, ss. 5.5(a), 5.7(1)(a) and 9.1.
March 1, 2022
The principal regulator in the Jurisdiction has received an application from Brookfield Business Partners L.P. (BBU) and Brookfield Business Corporation (BBUC, and together with BBU, the Filers) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:
(a) BBU be exempt from the requirements of Part 5 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101, and such requirements, the Related Party Transaction Requirements) in connection with any related party transaction of BBU with BBUC or any of BBUC's subsidiary entities (the BBU Related Party Relief);
(b) BBUC be exempt from the Related Party Transaction Requirements in connection with any related party transaction of BBUC with BBU or any of BBU's subsidiary entities (the BBUC Related Party Relief); and
(c) BBU be exempt from the requirements of sections 5.4 and 5.6 of MI 61-101 (the Valuation and Minority Approval Requirements) in connection with any related party transaction of BBU entered into indirectly through Holding LP (as defined below) or any subsidiary entity of Holding LP, if that transaction would qualify for the transaction size exemptions set out in sections 5.5(a) and 5.7(1)(a) of MI 61-101 if the class A exchangeable subordinate voting shares of BBUC (the Exchangeable Shares) were included in the calculation of BBU's market capitalization (the Transaction Size Relief, collectively with the BBU Related Party Relief and the BBUC Related Party Relief, the Exemption Sought).
A decision granting the Exemption Sought to the Filers was issued by the principal regulator on October 8, 2021 (the Initial Decision) in connection with a preliminary prospectus filed by the Filers on July 30, 2021 to facilitate the Special Distribution (as defined below). The Filers were unable to file a final prospectus within the maximum time period prescribed by section 2.3 of National Instrument 41-101 General Prospectus Requirements and filed the New Prospectus (as defined below) on January 26, 2022.
Other than the filing of the New Prospectus, there have been no changes to the terms of the Special Distribution, the Exchangeable Share Provisions, or the ownership and control of BBUC that will exist upon completion of the Special Distribution. The representations of the Filers made in the Initial Decision have been repeated here and updated where appropriate given the passage of time since the date of the Initial Decision.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, Manitoba, New Brunswick, Quebec, and Saskatchewan.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 and MI 61-101 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filers:
Relevant Entities
BBU
1. BBU is an exempted limited partnership established, registered and in good standing under the laws of Bermuda. BBU's registered and head office is located at 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.
2. BBU is a reporting issuer in all of the provinces and territories of Canada and is an SEC foreign issuer within the meaning of section 1.1 of National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and satisfies its continuous disclosure obligations by complying with U.S. federal securities laws as permitted under NI 71-102. BBU is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.
3. The authorized capital of BBU consists of: (a) non-voting limited partnership units (the BBU Units); and (b) general partnership units.
4. The BBU Units are listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) under the symbols "BBU" and "BBU.UN", respectively.
5. BBU's only substantial asset is its limited partnership interest in Brookfield Business L.P. (Holding LP), a Bermuda exempted limited partnership established, registered and in good standing under the laws of Bermuda.
6. Brookfield Business Partners Limited, a wholly-owned subsidiary of Brookfield Asset Management Inc. (Brookfield), holds the general partner units in BBU.
Brookfield
7. Brookfield is a corporation existing and in good standing under the Business Corporations Act (Ontario). Brookfield's registered and head office is located at Suite 300, Brookfield Place, 181 Bay Street, Toronto, Ontario, M5J 2T3.
8. Brookfield is a reporting issuer in all of the provinces and territories of Canada and is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.
9. The Class A Limited Voting Shares of Brookfield are listed on the NYSE and the TSX under the symbols "BAM" and "BAM.A", respectively.
10. Brookfield holds an approximate 64.5% economic interest in BBU on a fully-exchanged basis through its indirect ownership of redeemable partnership units of Holding LP (the Redeemable Partnership Units).
11. Brookfield indirectly holds 100% of the voting interests in BBU through its ownership of the general partner units of BBU.
12. BBU, Holding LP and certain of their subsidiaries have retained Brookfield and its related entities to provide management, administrative and advisory services under a master services agreement.
BBUC
13. BBUC is a corporation existing and in good standing under the Business Corporations Act (British Columbia), and was incorporated on June 21, 2021. BBUC's registered office is located at 1500 Royal Centre, 1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7. BBUC's head office is located at 250 Vesey Street, 15th Floor, New York, New York, 10281, United States of America.
14. The authorized share capital of BBUC consists of an unlimited number of common shares (the BBUC Common Shares).
15. As at February 22, 2022, there are 7,345,846 BBUC Common Shares issued and outstanding, all of which are held, directly or indirectly, by Brookfield BBP Canada Holdings Inc. (CanHoldCo), a wholly-owned subsidiary of Holding LP.
16. BBUC's initial operations consist of business services and industrial operations primarily located in Australia, the United Kingdom, the United States and Brazil.
17. BBUC is not a reporting issuer in any jurisdiction and is not in default of any applicable requirement of securities legislation.
The Special Distribution
18. BBU believes that certain investors in certain jurisdictions may be dissuaded from investing in BBU because of the tax reporting framework that results from investing in units of a Bermuda exempted limited partnership.
19. BBUC was created, in part, to provide investors that would not otherwise invest in BBU with an opportunity to gain access to BBU's portfolio of services and industrial operations and their associated returns, and to provide investors with the flexibility to own, through the ownership of an Exchangeable Share, the economic equivalent of a BBU Unit.
20. BBU will be distributing Exchangeable Shares to holders of BBU Units (the Special Distribution). The Special Distribution is, in effect, a stock split of the BBU Units.
21. On January 26, 2022, (i) BBUC filed a preliminary long form prospectus to qualify the distribution of the Exchangeable Shares to be distributed pursuant to the Special Distribution, and (ii) BBU filed a preliminary short form prospectus to qualify the BBU Units issuable or deliverable upon the exchange, redemption or purchase of Exchangeable Shares pursuant to their terms (collectively, the New Prospectus).
22. Upon obtaining a receipt for the final prospectus, BBUC will become a reporting issuer in each of the provinces and territories of Canada.
23. BBUC has received conditional approval to have the Exchangeable Shares listed on the TSX, and the NYSE has conditionally authorized BBUC to list the Exchangeable Shares on the NYSE.
24. BBUC filed a registration statement on Form F-1 with the U.S. Securities and Exchange Commission (the SEC), to register the Exchangeable Shares that will be distributed pursuant to the Special Distribution, and BBU filed a registration statement of Form F-3 with the SEC, as amended, to register the BBU Units issuable or deliverable upon the exchange, redemption or purchase of Exchangeable Shares pursuant to their terms.
25. In November and December 2021, the following assets and ownership interests were transferred, directly or indirectly, by CanHoldCo to BBUC for consideration consisting of promissory notes (the 2021 Promissory Notes) and 7,345,846 BBUC Common Shares:
(a) an approximate 28% economic interest in Healthscope Pty Limited;
(b) an approximate 26% economic interest in BRK Ambiental Participações S.A.;
(c) an approximate 27% economic interest in Westinghouse Electric Company; and
(d) a 100% economic interest in Multiplex Global Limited.
26. Prior to the Special Distribution:
(a) BBUC will reclassify its share structure such that, following the reclassification, BBUC's authorized share capital will consist of: (i) an unlimited number of Exchangeable Shares; (ii) an unlimited number of class B multiple voting shares (the Class B Shares); (iii) an unlimited number of class C non-voting shares (the Class C Shares); (iv) an unlimited number of class A senior preferred shares (issuable in series); and (v) an unlimited number of class B junior preferred shares (issuable in series);
(b) the 2021 Promissory Notes and an additional promissory note issued to CanHoldCo in exchange for a contribution of cash will be settled in exchange for the issuance of up to 74 million Exchangeable Shares and cash;
(c) the 7,345,846 BBUC Common Shares held, directly or indirectly, by CanHoldCo will be converted into Class C Shares;
(d) CanHoldCo will subscribe for one (1) Class B Share for nominal consideration, following which all of BBUC's issued and outstanding securities will be held, directly or indirectly, by CanHoldCo;
(e) BBUC Holdings Inc., a wholly-owned subsidiary of BBUC, will loan an amount of cash currently estimated to be $391 million, to CanHoldCo in exchange for a promissory note;
(f) CanHoldCo will distribute all of the Exchangeable Shares to Holding LP as a return of capital; and
(g) BBU will receive Exchangeable Shares through a distribution by Holding LP of the Exchangeable Shares, on a proportionate basis, to all the holders of equity units of Holding LP, including Brookfield through its indirect ownership of Redeemable Partnership Units and special limited partnership units in Holding LP.
27. The distribution ratio of one (1) Exchangeable Share for every two (2) BBU Units was based on the fair market value of the businesses to be transferred by BBU to BBUC, the number of BBU Units outstanding at the time of the Special Distribution (assuming exchange of the Redeemable Partnership Units), and the market capitalization of BBU.
28. Each Exchangeable Share has been structured with the intention of providing an economic return equivalent to a BBU Unit and the rights, privileges, restrictions and conditions attached to each Exchangeable Share (the Exchangeable Share Provisions) are such that each Exchangeable Share is as nearly as practicable, functionally and economically, equivalent to a BBU Unit. In particular:
(a) each Exchangeable Share will be exchangeable at the option of a holder for one (1) BBU Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BBUC) (an Exchange);
(b) the Exchangeable Shares are redeemable by BBUC at any time (including following a notice requiring redemption having been given by BBU) for BBU Units (or its cash equivalent, at BBUC's election) on a one-for-one basis (subject to adjustment to reflect certain capital events) (a Redemption);
(c) upon a liquidation, dissolution or winding up of BBUC, holders of Exchangeable Shares will be entitled to receive BBU Units (or its cash equivalent, at BBUC's election) on a one-for-one basis (subject to adjustment to reflect certain capital events) and not any remaining property or assets of BBUC following such payment (a BBUC Liquidation);
(d) upon a liquidation, dissolution or winding up of BBU, including where substantially concurrent with a BBUC Liquidation, all of the Exchangeable Shares will be automatically redeemed for BBU Units (or its cash equivalent, at BBUC's election) on a one-for-one basis (subject to adjustment to reflect certain capital events) (a BBU Liquidation); and
(e) subject to applicable law and in accordance with the Exchangeable Share Provisions, each Exchangeable Share will entitle the holder to dividends from BBUC payable at the same time as, and equivalent to, each distribution on a BBU Unit. The Exchangeable Share Provisions also provide that if a distribution is declared on the BBU Units and an equivalent dividend is not declared and paid concurrently on the Exchangeable Shares, then the undeclared or unpaid amount of such dividend accrues and accumulates and is to be paid upon the first to occur of any of the circumstances contemplated by paragraphs (a) to (d) above, if not yet paid.
29. Upon being notified by BBUC that BBUC has received a request for an Exchange, BBU has an overriding call right to purchase (or have one of its affiliates purchase) all of the Exchangeable Shares that are the subject of the Exchange notice from the holder of Exchangeable Shares for BBU Units (or its cash equivalent, at BBU's election) on a one-for-one basis (subject to adjustment to reflect certain capital events).
30. Upon being notified by BBUC that it intends to conduct a Redemption, BBU has an overriding call right to purchase (or have one of its affiliates purchase) all but not less than all of the then outstanding Exchangeable Shares for BBU Units (or its cash equivalent, at BBU's election) on a one-for-one basis (subject to adjustment to reflect certain capital events).
31. Upon the occurrence of a BBU Liquidation or BBUC Liquidation, BBU will have an overriding liquidation call right to purchase (or have one of its affiliates purchase) all but not less than all of the then outstanding Exchangeable Shares on the day prior to the effective date of such BBU Liquidation or BBUC Liquidation for BBU Units on a one-for-one basis (subject to adjustment to reflect certain capital events).
32. Prior to the Special Distribution, Brookfield will enter into a rights agreement (the Rights Agreement) pursuant to which it will agree that, for the five-year period beginning on the date of the Special Distribution, Brookfield will guarantee BBUC's obligation to deliver BBU Units or its cash equivalent in connection with an Exchange.
33. An investment in Exchangeable Shares will be as nearly as practicable, functionally and economically, equivalent to an investment in BBU Units. BBU expects that:
(a) investors of Exchangeable Shares will purchase Exchangeable Shares as an alternative way of owning BBU Units rather than a separate and distinct investment; and
(b) the market price of the Exchangeable Shares will be significantly impacted by (i) the combined business performance of BBUC and BBU as a single economic unit, and (ii) the market price of the BBU Units, in a manner that should result in the market price of the Exchangeable Shares tracking the market price of the BBU Units.
34. BBUC is intended to be an entity through which persons who do not wish to hold BBU Units directly, may hold their interests in BBU, and BBU is the entity through which holders of Exchangeable Shares and BBU Units hold their interests in the collective operations of BBU and its subsidiaries, including BBUC and its subsidiaries.
Ownership and Control of BBUC
35. The Related Party Transaction Requirements do not apply to an issuer carrying out a related party transaction if:
(a) as provided under paragraph 5.1(d) of MI 61-101, the parties to the transaction consist solely of (i) an issuer and one or more of its wholly-owned subsidiary entities, or (ii) wholly-owned subsidiary entities of the same issuer. A person is considered to be a "wholly-owned subsidiary entity" of an issuer if the issuer owns, directly or indirectly, all of the voting and equity securities and securities convertible into voting and equity securities of the person; and/or
(b) as provided under paragraph 5.1(g) of MI 61-101 (the Downstream Transaction Carve-Out), the transaction is a downstream transaction for the issuer. A "downstream transaction" means, for an issuer, a transaction between the issuer and a related party of the issuer if, at the time the transaction is agreed to, (i) the issuer is a control person of the related party, and (ii) to the knowledge of the issuer after reasonable inquiry, no related party of the issuer, other than a wholly-owned subsidiary entity of the issuer, beneficially owns or exercises control or direction over, other than through its interest in the issuer, more than five per cent of any class of voting or equity securities of the related party that is a party to the transaction.
36. Section 1.3 of MI 61-101 provides that, for the purposes of MI 61-101, a transaction of a wholly-owned subsidiary entity of an issuer is deemed to be a transaction of the issuer.
37. Related party transactions among BBU and BBUC will be required for the operation of the Exchangeable Share Provisions and in connection with ordinary course financial support arrangements which may be entered into from time to time.
38. The only voting securities of BBUC are the Exchangeable Shares and the Class B Shares. Holders of Exchangeable Shares are entitled to one (1) vote per Exchangeable Share held and holders of Class B Shares are entitled to cast, in the aggregate, a number of votes equal to three (3) times the number of votes attached to the Exchangeable Shares.
39. Neither the Exchangeable Shares nor the Class B Shares carry a residual right to participate in the assets of BBUC upon liquidation or winding-up of BBUC, and accordingly, are not equity securities under the Legislation. The Class C Shares are the only equity securities of BBUC.
40. All of the Class B Shares and the Class C Shares will be indirectly owned by BBU and none of them will be transferable except to an affiliate of BBU. Accordingly, all of the equity securities of BBUC are held indirectly by BBU.
41. BBUC is not a wholly-owned subsidiary of BBU; BBU will not own, directly or indirectly, all of the voting securities of BBUC because Brookfield and members of the public will hold Exchangeable Shares. However, by virtue of the terms of the Class B Shares, BBU holds a 75% voting interest in BBUC, will control BBUC and the appointment and removal of directors of BBUC; the voting rights attached to the Exchangeable Shares do not allow holders of Exchangeable Shares to affect the control of BBUC. The voting right attached to each Exchangeable Share is expected to assist with index inclusion.
42. BBU is not able to rely on the Downstream Transaction Carve-Out because, upon completion of the Special Distribution, Brookfield will beneficially own or exercise control or direction over, more than five per cent of the Exchangeable Shares, as it will hold, directly or indirectly, approximately 64.5% of the Exchangeable Shares. Brookfield will accordingly have an approximate 16% voting interest in BBUC.
43. BBUC is a controlled subsidiary of BBU and BBU will consolidate BBUC and its businesses in BBU's financial statements.
44. By virtue of the Exchangeable Share Provisions, the economic rights of the holders of the Exchangeable Shares will not be affected by transactions between BBU and BBUC. BBU, as the sole holder of equity securities of BBUC, will receive any benefit and/or bear any detriment from related party transactions between BBU and BBUC.
45. Minority approval is required of every class of affected securities, being equity securities of the issuer. For BBUC, minority approval of a related party transaction of BBUC with BBU would be sought from the holders of its Class C Shares, all of which are held by BBU. BBU, as the counterparty to such a related party transaction, does not require the protections of MI 61-101.
Market Capitalization Calculation
46. It is anticipated that BBU will, from time to time, enter into transactions with certain related parties, including Brookfield and its affiliates (other than BBU and its related entities, including BBUC) indirectly through Holding LP and its subsidiaries (including BBUC and its subsidiaries).
47. The Valuation and Minority Approval Requirements require, subject to the availability of an exemption, that an issuer obtain: (a) a formal valuation of the transaction in a form satisfying the requirements of MI 61-101 by an independent valuator; and (b) approval of the transaction by disinterested holders of the affected securities of the issuer.
48. A related party transaction that is subject to MI 61-101 may be exempt from the Valuation and Minority Approval Requirements 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, exceeds 25% of the issuer's market capitalization (the Market Cap Exemption).
49. It is unclear whether BBU would be entitled to rely on the Market Cap Exemption available under the Legislation because the definition of market capitalization in the Legislation does not contemplate securities of another entity that are exchangeable into equity securities of the issuer.
50. The Exchangeable Shares represent part of the equity value of BBU and are functionally and economically equivalent to the BBU Units. As a result of the Exchangeable Share Provisions, holders of Exchangeable Shares have the ability to receive a BBU Unit or its cash equivalent (the form of payment to be determined at the election of BBUC) and will receive identical distributions to the BBU Units, as and when declared by the board of directors of BBUC. Moreover, the economic interests that underlie the Exchangeable Shares are identical to those underlying the BBU Units; namely, the assets and operations held directly or indirectly by BBU.
51. Any costs related to a transaction occurring within the BBUC group would be borne by BBU as the sole holder of the equity securities of BBUC. BBU will consolidate BBU and its businesses in its financial statements and the business of BBU (including BBUC and its subsidiaries) will be the same as it was before the creation of BBUC and the transactions conducted in connection with, and to facilitate, the Special Distribution.
52. If the Exchangeable Shares are not included in the market capitalization of BBU, the equity value of BBU will be understated initially by the value of the Exchangeable Shares, being approximately 33% (assuming a one-for-two distribution ratio). As a result, related party transactions of BBU that are entered into through a subsidiary entity of BBUC may be subject to the Valuation and Minority Approval Requirements in circumstances where the fair market value of the transactions are effectively less than 25% of the fully diluted market capitalization of BBU.
53. BBU has already received relief similar to the Transaction Size Relief in respect of the Redeemable Partnership Units. On June 20, 2016, the Ontario Securities Commission granted BBU an exemption from the Valuation and Minority Approval Requirements in connection with any related party transaction of BBU entered into indirectly through Holding LP or a subsidiary of Holding LP if that transaction would qualify for the Market Cap Exemption if the Redeemable Partnership Units were included in the calculation of BBU's market capitalization.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Initial Decision is revoked and the Exemption Sought is granted provided that:
1. in respect of the BBU Related Party Relief and BBUC Related Party Relief:
(a) all of the equity securities of BBUC are owned, directly or indirectly, by BBU;
(b) all of the voting securities of BBUC (other than the Exchangeable Shares) are owned, directly or indirectly, by BBU;
(c) there are no material changes to the Exchangeable Share Provisions, as described above; and
(d) BBU consolidates BBUC and its businesses in BBU's financial statements;
2. in respect of the Transaction Size Relief:
(a) the transaction would qualify for the Market Cap Exemption if the Exchangeable Shares were considered an outstanding class of equity securities of BBU that were convertible into BBU Units;
(b) there are no material changes to the Exchangeable Share Provisions, as described above; and
(c) any annual information form or equivalent of BBU that is required to be filed in accordance with applicable securities laws contain the following disclosure, with any immaterial modifications as the context may require:
Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") provides a number of circumstances in which a transaction between an issuer and a related party may be subject to valuation and minority approval requirements. An exemption from such requirements is available when the fair market value of the transaction is not more than 25% of the market capitalization of the issuer. Brookfield Business Partners L.P. ("BBU") has been granted exemptive relief from the requirements of MI 61-101 that, subject to certain conditions, permits it to be exempt from the minority approval and valuation requirements for transactions that would have a value of less than 25% of BBU's market capitalization, if Brookfield Asset Management Inc.'s ("Brookfield") indirect equity interest in BBU, and the class A exchangeable subordinate voting shares of Brookfield Business Corporation ("BBUC") are included in the calculation of BBU's market capitalization. As a result, the 25% threshold, above which the minority approval and valuation requirements apply, is increased to include the approximately 48% indirect interest in BBU in the form of redeemable partnership units of Brookfield Business L.P. (assuming exchange of such redeemable partnership units) held by Brookfield and the approximately 33% indirect interest in BBU in the form of class A exchangeable subordinate voting shares of BBUC held by Brookfield and the public.
Brookfield Business Corporation and Brookfield Asset Management Inc.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from the prospectus requirements pursuant to the terms of a rights agreement -- relief granted from the requirements of subsection 2.2(e) of National Instrument 44-101 Short Form Prospectus Distributions requiring an issuer's equity securities to be listed and posted for trading on short form eligible exchange -- relief granted from the requirements of paragraph 9.3(1)(b) of National Instrument 44-102 Shelf Distributions requiring the securities distributed under an ATM prospectus be equity securities -- relief granted on terms and conditions.
National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.2(e) and 8.1.
National Instrument 44-102 Shelf Distributions, ss. 9.3(1)(b) and 11.1.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53 and 74.
March 1, 2022
The principal regulator in the Jurisdiction has received an application from Brookfield Business Corporation (BBUC) and Brookfield Asset Management Inc. (Brookfield, and together with BBUC, the Filers) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:
(a) the requirements contained in the Legislation to file a preliminary prospectus and a final prospectus and receive receipts therefor (the Prospectus Requirement) shall not apply to specific trades in non-voting limited partnership units of Brookfield Business Partners L.P. (BBU), to be made in connection with the distribution and exchange of class A exchangeable subordinate voting shares of BBUC (the Exchangeable Shares) by Brookfield pursuant to the terms of the Rights Agreement (each as defined below);
(b) BBUC be exempt from the requirements contained in section 2.2(e) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) with respect to equity securities (the Short Form Prospectus Eligibility Requirements); and
(c) BBUC be exempt from requirements contained in section 9.3(1)(b) of National Instrument 44-102 -- Shelf Distributions (NI 44-102), that distributions by way of an at-the-market distribution using the shelf procedures be limited to distributions of equity securities (the At-the-Market Distribution Eligibility Requirements),
(collectively, the Exemption Sought).
A decision granting the Exemption Sought to the Filers was issued by the principal regulator on November 26, 2021 (the Initial Decision) in connection with a preliminary prospectus filed by the Filers on July 30, 2021 to facilitate the Special Distribution (as defined below). The Filers were unable to file a final prospectus within the maximum time period prescribed by section 2.3 of National Instrument 41-101 General Prospectus Requirements and filed the New Prospectus (as defined below) on January 26, 2022.
Other than the filing of the New Prospectus, there have been no changes to the terms of the Special Distribution, the Exchangeable Share Provisions, or the ownership and control of BBUC that will exist upon completion of the Special Distribution. The representations of the Filers made in the Initial Decision have been repeated here and updated where appropriate given the passage of time since the date of the Initial Decision.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (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 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut, as applicable.
Terms defined in National Instrument 14-101 Definitions (NI 14-101), MI 11-102 and NI 44-101 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filers:
Relevant Entities
BBU
1. BBU is an exempted limited partnership established, registered and in good standing under the laws of Bermuda. BBU's registered and head office is located at 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.
2. BBU is a reporting issuer in all of the provinces and territories of Canada and is an SEC foreign issuer within the meaning of section 1.1 of National Instrument 71-102 -- Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and satisfies its continuous disclosure obligations by complying with U.S. federal securities laws as is permitted under NI 71-102. BBU is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.
3. The authorized capital of BBU consists of: (a) non-voting limited partnership units (the BBU Units); and (b) general partnership units.
4. The BBU Units are listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) under the symbols "BBU" and "BBU.UN", respectively.
5. BBU's only substantial asset is its limited partnership interest in Brookfield Business L.P. (Holding LP), a Bermuda exempted limited partnership established, registered and in good standing under the laws of Bermuda.
6. Brookfield Business Partners Limited, a wholly-owned subsidiary of Brookfield, holds the general partner units in BBU.
Brookfield
7. Brookfield is a corporation existing and in good standing under the Business Corporations Act (Ontario). Brookfield's registered and head office is located at Suite 300, Brookfield Place, 181 Bay Street, Toronto, Ontario M5J 2T3.
8. Brookfield is a reporting issuer in all of the provinces and territories of Canada and is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.
9. The Class A Limited Voting Shares of Brookfield are listed on the NYSE and the TSX under the symbols "BAM" and "BAM.A", respectively.
10. Brookfield holds an approximate 64.5% economic interest in BBU on a fully-exchanged basis through its indirect ownership of redeemable partnership units of Holding LP (the Redeemable Partnership Units).
11. Brookfield indirectly holds a 100% voting interest in BBU through its ownership of the general partner units of BBU.
12. BBU, Holding LP and certain of their subsidiaries have retained Brookfield and its related entities to provide management, administrative and advisory services under a master services agreement (the Master Services Agreement).
BBUC
13. BBUC is a corporation existing and in good standing under the Business Corporations Act (British Columbia), and was incorporated on June 21, 2021. BBUC's registered office is located at 1500 Royal Centre, 1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7. BBUC's head office is located at 250 Vesey Street, 15th Floor, New York, New York, 10281, United States of America.
14. The authorized share capital of BBUC currently consists of an unlimited number of common shares (the BBUC Common Shares).
15. As at February 22, 2022, there are 7,345,846 BBUC Common Shares issued and outstanding, all of which are held, directly or indirectly, by Brookfield BBP Canada Holdings Inc. (CanHoldCo), a wholly-owned subsidiary of Holding LP.
16. BBUC owns and operates, through operating subsidiaries, high-quality businesses that are low-cost producers and/or benefit from high barriers to entry. BBUC's initial operations consist of business services and industrial operations primarily located in Australia, the United Kingdom, the United States, and Brazil.
17. BBUC is not a reporting issuer in any jurisdiction and is not in default of any applicable requirement of securities legislation.
The Special Distribution
18. On January 26, 2022, (i) BBUC filed a long form prospectus to qualify the distribution of Exchangeable Shares to be distributed by BBU to holders of BBU Units (the Special Distribution) and (ii) BBU filed a short form prospectus on the same day for the distribution of BBU Units issuable or deliverable upon the exchange, redemption or purchase of Exchangeable Shares pursuant to their terms. (collectively, the New Prospectus).
19. Upon obtaining a receipt for the final prospectus, BBUC will become a reporting issuer in each of the provinces and territories of Canada.
20. BBU and BBUC filed a registration statement on Form F-1 with the U.S. Securities and Exchange Commission (the SEC) on July 30, 2021, as thereafter amended, to register the Exchangeable Shares that will be distributed pursuant to the Special Distribution; and BBU filed a registration on Form F-3 with the SEC on August 12, 2021, as thereafter amended, to register the BBU Units issuable or deliverable upon the exchange, redemption or purchase of Exchangeable Shares pursuant to their terms.
21. The only voting securities of BBUC are the Exchangeable Shares and the Class B Shares. Holders of Exchangeable Shares are entitled to one (1) vote per Exchangeable Share held and holders of Class B Shares are entitled to cast, in the aggregate, a number of votes equal to three (3) times the number of votes attached to the Exchangeable Shares.
22. Neither the Exchangeable Shares nor the Class B Shares carry a residual right to participate in the assets of BBUC upon liquidation or winding-up of BBUC, and accordingly, are not equity securities under the Legislation. The Class C Shares are the only equity securities of BBUC.
23. In November and December 2021, the following assets and ownership interests were transferred, directly or indirectly, by CanHoldCo to BBUC for consideration consisting of promissory notes (the 2021 Promissory Notes) and 7,345,846 BBUC Common Shares:
(a) an approximate 28% economic interest in Healthscope Pty Limited;
(b) an approximate 26% economic interest in BRK Ambiental Participações S.A.;
(c) an approximate 27% economic interest in Westinghouse Electric Company; and
(d) a 100% economic interest in Multiplex Global Limited.
24. Prior to the Special Distribution,
(a) BBUC will reclassify its share structure such that, following the reclassification, BBUC's authorized share capital will consist of: (i) an unlimited number of Exchangeable Shares; (ii) an unlimited number of class B multiple voting shares (the Class B Shares); (iii) an unlimited number of class C non-voting shares (the Class C Shares); (iv) an unlimited number of class A senior preferred shares (issuable in series); and (v) an unlimited number of class B junior preferred shares (issuable in series); and
(b) the 2021 Promissory Notes and an additional promissory note issued to CanHoldCo in exchange for a contribution of cash will be settled in exchange for the issuance of approximately up to 74 million Exchangeable Shares and cash;
(c) the 7,345,846 BBUC Common Shares held, directly or indirectly, by CanHoldCo will be converted into Class C Shares;
(d) CanHoldCo will subscribe for one (1) Class B Share for nominal consideration, following which all of BBUC's issued and outstanding securities will be held, directly or indirectly, by CanHoldCo;
(e) BBUC Holdings Inc., a wholly-owned subsidiary of BBUC, will loan an amount of cash currently estimated to be $391 million, to CanHoldCo in exchange for a promissory note;
(f) CanHoldCo will distribute all of the Exchangeable Shares to Holding LP as a return of capital; and
(g) BBU will receive Exchangeable Shares through a distribution in specie by Holding LP of Exchangeable Shares to its unitholders, including BAM through its indirect ownership of Redeemable Partnership Units.
25. The distribution ratio of Exchangeable Shares for each BBU Unit has been determined using: (i) the fair market value of the businesses to be transferred by BBU to BBUC, (ii) the number of the BBU Units outstanding at the time of the Special Distribution (assuming the exchange of all Redemption-Exchange Units into BBU Units) and (iii) the market capitalization of BBU. Holders of BBU Units will receive one (1) Exchangeable Share (less any Exchangeable Shares withheld to satisfy withholding tax obligations) for every two (2) BBU Units held as of the record date of the Special Distribution.
26. No unitholder will be entitled to receive any fractional interest in Exchangeable Shares in connection with the Special Distribution. Unitholders who would otherwise be entitled to a fractional Exchangeable Share will receive a cash payment. BBU will use the volume-weighted average trading price of the Exchangeable Shares for the five (5) trading days immediately following the Special Distribution date to determine the value of the Exchangeable Shares for the purpose of calculating the cash payable in lieu of any fractional interests.
27. BBUC has received conditional approval to list the Exchangeable Shares on the TSX, and the NYSE has conditionally authorized BBUC to list the Exchangeable Shares on the NYSE.
28. BBU believes that certain investors in certain jurisdictions may be dissuaded from investing in BBU because of the tax reporting framework that results from investing in units of a Bermuda exempted limited partnership. With the objective of providing investors that would not otherwise invest in BBU with an opportunity to gain access to BBU's portfolio of infrastructure assets, BBU created BBUC and is distributing Exchangeable Shares pursuant to the Special Distribution.
29. Each Exchangeable Share has been structured with the intention of providing an economic return equivalent to a BBU Unit and the rights, privileges, restrictions and conditions attached to each Exchangeable Share (the Exchangeable Share Provisions) are such that each Exchangeable Share is intended to be, as nearly as practicable, functionally and economically, equivalent to a BBU Unit. In particular:
(a) each Exchangeable Share will be exchangeable at the option of a holder for one (1) BBU Unit (subject to adjustment to reflect certain capital events) or its cash equivalent (the form of payment to be determined at the election of BBUC) (an Exchange);
(b) the Exchangeable Shares are redeemable by BBUC at any time (including following a notice requiring redemption having been given by BBU) for BBU Units (or its cash equivalent, at BBUC's election) on a one-for-one basis (subject to adjustment to reflect certain capital events) (a Redemption);
(c) upon a liquidation, dissolution or winding up of BBUC, holders of Exchangeable Shares will be entitled to receive BBU Units on a one-for-one basis (subject to adjustment to reflect certain capital events) and not any remaining property or assets of BBUC following such payment (a BBUC Liquidation);
(d) upon a liquidation, dissolution or winding up of BBU, including where substantially concurrent with a BBUC Liquidation, all of the Exchangeable Shares will be automatically redeemed for BBU Units (or its cash equivalent, at BBUC's election) on a one-for-one basis (subject to adjustment to reflect certain capital events) (a BBU Liquidation); and
(e) subject to applicable law and in accordance with the Exchangeable Share Provisions, each Exchangeable Share will entitle the holder to dividends from BBUC payable at the same time as, and equivalent to, each distribution on a BBU Unit. The Exchangeable Share Provisions also provide that if a distribution is declared on the BBU Units and an equivalent dividend is not declared and paid concurrently on the Exchangeable Shares, then the undeclared or unpaid amount of such dividend accrues and accumulates and is to be paid upon the first to occur of any of the circumstances contemplated by paragraphs (a) to (d) above, if not yet paid.
30. Upon being notified by BBUC that BBUC has received a request for an Exchange, BBU has an overriding call right to purchase (or have one of its affiliates purchase) all of the Exchangeable Shares that are the subject of the Exchange notice from the holder of Exchangeable Shares for BBU Units (or its cash equivalent, at BBU's election) on a one-for-one basis (subject to adjustment to reflect certain capital events).
31. Upon being notified by BBUC that it intends to conduct a Redemption, BBU has an overriding call right to purchase (or have one of its affiliates purchase) all but not less than all of the then outstanding Exchangeable Shares for BBU Units on a one-for-one basis (subject to adjustment to reflect certain capital events).
32. Upon the occurrence of a BBU Liquidation or BBUC Liquidation, BBU will have an overriding liquidation call right to purchase (or have one of its affiliates purchase) all but not less than all of the then outstanding Exchangeable Shares on the day prior to the effective date of such BBU Liquidation or BBUC Liquidation for BBU Units on a one-for-one basis (subject to adjustment to reflect certain capital events).
33. Prior to the Special Distribution, Brookfield will enter into a rights agreement (the Rights Agreement) pursuant to which it will agree that, for the five-year period beginning on the date of the Special Distribution, Brookfield will guarantee BBUC's obligation to deliver BBU Units or its cash equivalent in connection with a redemption or Exchange.
34. An investment in Exchangeable Shares is intended to be, as nearly as practicable, functionally and economically, equivalent to an investment in BBU Units. BBU expects that:
(a) investors of Exchangeable Shares may purchase Exchangeable Shares as an alternative way of owning BBU Units rather than a separate and distinct investment; and
(b) the market price of the Exchangeable Shares will be significantly impacted by (i) the combined business performance of BBUC and BBU as a single economic unit and (ii) the market price of BBU Units, in a manner that should result in the market price of the Exchangeable Shares closely tracking the market price of the BBU Units.
35. A holder of Exchangeable Shares would be able to terminate its investment by either (i) selling the Exchangeable Shares on the TSX or on the NYSE, or (ii) selling the BBU Units received by operation of the Exchangeable Share Provisions on the TSX or on the NYSE.
Issuance of BBU Units Under the Rights Agreement
36. The attributes of the Exchangeable Shares, as set out in the Exchangeable Share Provisions, and the trades contemplated by the Rights Agreement involve or may involve:
(a) the delivery by Brookfield of BBU Units to a holder of Exchangeable Shares; and
(b) the first trade of BBU Units received by a holder of Exchangeable Shares in connection with the Rights Agreement.
37. Under section 2.42 of National Instrument 45-106 Prospectus Exemptions and in connection with the conversion, exchange, or exercise of a security, the Prospectus Requirement does not apply to a distribution by an issuer if (a) the issuer distributes a security of its own issue to a security holder of the issuer in accordance with the terms and conditions of a security previously issued by that issuer, or (b) subject to certain notification requirements, the issuer distributes a security of a reporting issuer held by it to a security holder of the issuer in accordance with the terms and conditions of a security previously issued by that issuer.
38. If Brookfield were required to deliver the BBU Units pursuant to the Rights Agreement in the future, it could not rely on paragraph 2.42(b) of NI 45-106, because Brookfield would be delivering BBU Units to a security holder of BBUC, not of Brookfield.
39. In absence of an exemption, the delivery by Brookfield of BBU Units to a holder of Exchangeable Shares, must comply with the Prospectus Requirement under the Legislation in each jurisdiction of Canada where the delivery occurs.
40. The Exchangeable Shares represent part of the equity value of BBU and are intended to be, in all material respects, functionally and economically equivalent to the BBU Units. As a result of the Exchangeable Share Provisions, holders of Exchangeable Shares are able to receive a BBU Unit or its cash equivalent (the form of payment to be determined at the election of BBUC) and will receive identical distributions to the BBU Units. Investors may purchase Exchangeable Shares as an alternative way of owning BBU Units rather than a separate and distinct investment.
41. A key factor in ensuring that an investment in the Exchangeable Shares will be as nearly as practicable, functionally and economically equivalent to an investment in BBU Units is the ability of holders of Exchangeable Shares to (i) exchange their Exchangeable Shares, (ii) receive BBU Units on the exchange, and (iii) sell the BBU Units on the TSX or the NYSE.
42. Relief from the Prospectus Requirement for the delivery by Brookfield of BBU Units to holders of Exchangeable Shares is necessary for the operation of the backstop provided by Brookfield to holders of Exchangeable Shares. As such, granting relief from the Prospectus Requirement is not contrary to the public interest.
Qualification to File Short Form Prospectus
43. BBUC wishes to be eligible to file short form prospectuses under NI 44-101 upon completion of the Special Distribution. While BBUC does not currently intend to complete a distribution immediately following the completion of the Special Distribution, BBUC's eligibility to file short form and shelf prospectuses is critical to its viability as an issuer of a security offering an alternative way of owning BBU Units. In addition, there are short time frames associated with financings undertaken in current market conditions. As a result, the relief from the Short Form Prospectus Eligibility Requirements is being sought in advance of the completion of the Special Distribution and any possible follow on distribution of BBUC securities.
44. The qualification criteria for short form prospectus eligibility are outlined in section 2.2 of NI 44-101. Once BBUC becomes a reporting issuer, it will satisfy all of the qualification criteria for short form prospectus eligibility in section 2.2 of NI 44-101 with the exception of subsection 2.2(e) which requires that an issuer's equity securities are listed and posted for trading on a short form eligible exchange and that an issuer is not an issuer whose (i) operations have ceased, or (ii) whose principal asset is cash, cash equivalents, or its exchange listing (the Equity Security Requirement). The term "equity security" is defined under the Legislation as a security that carries a residual right to participate in the earnings of the issuer and, on the liquidation or winding up of the issuer, in its assets. The Exchangeable Shares do not carry a residual right to participate in the assets of BBUC upon liquidation or winding-up of BBUC, and accordingly, are not equity securities under the Legislation.
45. In the event that BBUC undertakes an offering or other distribution of its securities prior to the filing of its audited financial statements for the year ended December 31, 2021, BBUC intends to rely on the exemption in subsection 2.7(1) of NI 44-101 from the requirements to have (i) current annual financial statements and (ii) a current AIF.
46. BBUC is not eligible for the exemption for alternative qualification criteria for conventional preferred shares under Part 2 of NI 44-101 because the Exchangeable Shares are not conventional preferred shares.
47. It is appropriate for the Exchangeable Shares to be treated as equity securities for the purposes of NI 44-101 since the Exchangeable Shares are, in effect, the economic and voting equivalent of the BBU Units and the BBU Units do qualify as equity securities under NI 44-101.
48. Except for not meeting the Equity Security Requirement, BBUC would otherwise be qualified to file a prospectus in the form of a short form prospectus pursuant to, and in accordance with, NI 44-101.
Qualification of At-the-Market Distribution
49. Pursuant to section 9.3(1)(b) of NI 44-102, only equity securities may be distributed by way of an at-the-market distribution using the shelf procedures.
50. Based upon the rationale provided in paragraphs 44, 34, 47, and 48 above, it is not prejudicial to the public interest to exempt the company from the At-the-Market Distribution Requirements.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Initial Decision is revoked and the Exemption Sought is granted provided that:
1. the Prospectus Requirement shall not apply to the delivery by Brookfield of BBU Units to holders of Exchangeable Shares for the duration of the Rights Agreement, provided that:
(a) such BBU Units are delivered strictly pursuant to Brookfield's agreement to guarantee BBUC's obligation to deliver BBU Units in connection with an Exchange under the terms of the Rights Agreement;
(b) BBU is a reporting issuer, as defined in the Legislation, in a jurisdiction of Canada at the time such relief is relied upon for the delivery of BBU Units;
(c) the terms of the Rights Agreement are not materially amended; and
(d) Brookfield has provided prior written notice of the distribution to the principal regulator;
2. any first trade in BBU Units acquired by a holder of Exchangeable Shares in connection with Brookfield satisfying its obligations under the Rights Agreement shall not be a distribution under the Legislation, provided that:
(a) BBU is and has been a reporting issuer, as defined in the Legislation, in a jurisdiction of Canada for the four months immediately preceding the trade;
(b) the trade is not in previously issued securities of an issuer from the holdings of any control person, as that term is defined in subsection 1(1) of the Securities Act (Ontario);
(c) no unusual effort is made to prepare the market or to create a demand for the BBU Units;
(d) no extraordinary commission or consideration is paid to a person or company in respect of the trade;
(e) if the selling securityholder is an insider or officer of BBU, the selling security holder has no reasonable grounds to believe that BBU is in default of securities legislation; and
(f) the terms of the Rights Agreement are not materially amended;
3. the decision as it relates to the Prospectus Requirement shall terminate on the day on which the Rights Agreement is terminated.
4. BBUC does not have to comply with the Short Form Prospectus Eligibility Requirements so long as:
(a) BBUC is otherwise qualified to file a preliminary short form prospectus under section 2.2 of NI 44-101;
(b) the Exchangeable Shares are listed and posted for trading on a short form eligible exchange (as defined in NI 44-101);
(c) BBUC is not an issuer whose operations have ceased; and
(d) BBUC is not an issuer whose principal asset is cash, cash equivalents, or its exchange listing.
5. BBUC does not have to comply with the At-the-Market Distribution Requirements so long as:
(a) BBUC otherwise satisfies the conditions set out in section 9.3 of NI 44-102 to distribute securities under an ATM prospectus (as defined in NI 44-102) as part of an at-the-market distribution;
(b) the security being distributed is an Exchangeable Share; and
(c) the BBU Units qualify as equity securities under NI 44-102.
As to the Prospectus Requirement,
"Frances Kordyback" |
"Cathy Singer" |
Commissioner |
Commissioner |
Ontario Securities Commission |
Ontario Securities Commission |
As to the Short Form Eligibility Requirements and the At-the-Market Distribution Requirements,
NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemptive relief granted from s. 9.4(2) of NI 81-102 to an exchange-traded fund in order to permit the fund to accept certain digital assets as subscription proceeds for units of the fund -- subject to conditions.
National Instrument 81-102 Investment Funds, ss. 9.4(2) and 19.1.
February 22, 2022
The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of the ETFs (as defined below) for a decision under the securities legislation of the Jurisdiction (the Legislation) that exempts the ETFs from subsection 9.4(2) of National Instrument 81-102 Investment Funds (NI 81-102), to permit each ETF to accept Digital Assets (as defined below) as subscription proceeds for Creation Units (as defined below) (the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 -- Definitions, NI 81-102 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined. The following terms have the following meanings:
(a) Authorized Dealer means a registered dealer that has entered, or intends to enter, into an agreement with the Filer, authorizing the dealer to subscribe for, purchase and redeem Creation Units from one or more ETFs on a continuous basis from time to time.
(b) Creation Units means Listed Securities that are subscribed for or purchased directly from the ETFs by Authorized Dealers, Designated Brokers and other permitted purchasers.
(c) Digital Asset means bitcoin or ether.
(d) Designated Broker means a registered dealer that has entered, or intends to enter, into an agreement with the Filer to perform certain duties in relation to the ETF, including the posting of a liquid two-way market for the trading of the ETF's Listed Securities on an Exchange.
(e) Exchange means the Toronto Stock Exchange or another stock exchange recognized by the Ontario Securities Commission.
(f) ETF means each of the Representative ETFs and other exchange-traded funds now, or in the future, that intends to hold Digital Assets in its investment portfolio and that is, or will be, managed by the Filer and that offers or will offer Listed Securities.
(g) Filer means CI Investments Inc. or its affiliate.
(h) Listed Securities means a series of securities of an ETF distributed pursuant to a long form prospectus that is listed on an Exchange.
(i) Prescribed Number of Listed Securities means the number of Listed Securities of an ETF determined by the Filer from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.
(j) Representative ETF means CI Galaxy Bitcoin ETF or CI Galaxy Ethereum ETF.
(k) Unlisted Securities means a series of securities of an ETF offered only on a private placement basis pursuant to available prospectus exemptions, including the accredited investor exemption, under securities laws.
This decision is based on the following facts represented by the Filer.
The Filer
1. The Filer is a corporation amalgamated under the laws of Ontario with its head office located in Toronto, Ontario.
2. The registered office of the Filer is located in Toronto, Ontario.
3. The Filer is registered:
(a) as an investment fund manager under the securities legislation in Ontario, Québec and Newfoundland and Labrador;
(b) as a portfolio manager and exempt market dealer under the securities legislation of each of the Jurisdictions; and
(c) as a commodity trading counsel and commodity trading manager under the Commodity Futures Act (Ontario).
4. The Filer will be the trustee and investment fund manager of each ETF.
5. The Filer is not in default of securities legislation in any of the Jurisdictions.
The Representative ETFs
6. Each Representative ETF is a reporting issuer under the laws of all of the Jurisdictions and is an open-ended mutual fund subject to NI 81-102.
7. Each Representative ETF may issue more than one series of securities, including, but not limited to, Listed Securities and Unlisted Securities.
8. CI Galaxy Bitcoin ETF filed a final long form prospectus on March 4, 2021 with the securities regulatory authorities, and CI Galaxy Ethereum ETF filed the same on April 16, 2021, in each of the Jurisdictions to qualify the issuance of its Listed Securities in each of the Jurisdictions on a continuous basis.
9. Neither of the Representative ETFs is in default of securities legislation in any of the Jurisdictions.
10. The investment objective of CI Galaxy Bitcoin ETF is to provide unitholders exposure to bitcoin through an institutional-quality fund platform. This Representative ETF seeks to buy and hold substantially all of its assets in bitcoin.
11. The investment objective of CI Galaxy Ethereum ETF is to provide unitholders exposure to ether through an institutional-quality fund platform. This Representative ETF seeks to buy and hold substantially all of its assets in ether.
In-Kind Subscriptions and Redemptions
12. Generally, subscriptions or purchases of Creation Units may only be placed for a Prescribed Number of Listed Securities (or a multiple thereof) on any day when there is a trading session on an Exchange. Authorized Dealers or Designated Brokers subscribe for Creation Units for the purpose of facilitating investor purchases of Listed Securities on the Exchange.
13. Subsection 9.4(2) of NI 81-102 provides that a mutual fund may accept as subscription proceeds for its securities either cash or securities. Digital Assets are neither cash nor securities.
14. Absent exemptive relief, each ETF is prohibited under subsection 9.4(2) of NI 81-102 from accepting Digital Assets as payment, in whole or in part, for Creation Units.
15. The price that investors can purchase the Listed Securities of an ETF for on an Exchange is largely determined by the hedging costs of the Authorized Dealers and Designated Broker. The lower the cost of the hedging instruments, the closer the trading price that the investor receives for their Listed Securities will be to the net asset value per security of the ETF.
16. In the case of each ETF, if the Authorized Dealers and the Designated Broker are not able to hedge with the applicable Digital Asset itself and if these parties cannot deliver that Digital Asset in kind to the ETF, the trading price for the Listed Securities of the ETF will be determined based on the price of those futures contracts where the underlying interest is the applicable Digital Asset. The difference between the price of the Digital Asset and the price of the futures contract is reflected in the premium or the discount that the trading price of the Listed Securities bears to the net asset value per security of the Listed Securities. This differential is borne by the investors in the ETF.
17. Permitting Digital Assets to be used to satisfy in-kind subscriptions of Creation Units of each ETF will result in the trading price of the Listed Securities being more closely aligned to the net asset value per security of the ETF.
18. The Digital Asset delivered to an ETF to satisfy the issue price for in-kind subscriptions of Creation Units will be valued by the ETF for purposes of determining the net asset value of the ETF in accordance with the valuation principles of the ETF disclosed in its most recent prospectus.
19. Each ETF may also accept cash as subscription proceeds for its securities, including Creation Units. To the extent that an ETF holds cash and consistent with its investment objective, it may use that cash to purchase Digital Assets.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Requested Relief is granted, provided that:
(a) the acceptance of Digital Assets as payment, in whole or in part, for the issue price of Creation Units is made in accordance with paragraph 9.4(2)(b) of NI 81-102; and
(b) the Filer enter into an agreement with the Designated Broker, each Authorized Dealer and any other person that is permitted to pay for Listed Securities or Unlisted Securities purchased directly from an ETF by delivering Digital Assets to the ETF that requires, among other things, that all Digital Assets delivered in kind to an ETF as payment for the issue price of securities of the ETF:
(i) be acquired only on an exchange, trading platform or trading venue, or from an OTC counterparty, that (A) is registered as a dealer or a marketplace in Canada, or (B) is regulated as a trust company or a broker-dealer under the laws of a state of the United States, and, in each case, is required under such registration or by its regulator, as the case may be, to comply with the laws of the applicable jurisdiction aimed at the prevention and detection of money laundering and terrorist financing activities; and
(ii) be delivered directly from the exchange, trading venue or counterparty to the digital wallet of the ETF at its custodian or sub-custodian.
Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the prohibition on the use of corporate officer titles by certain registered individuals in respect of institutional clients -- Relief does not extend to interactions by registered individuals with retail clients.
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.18(2)(b) and 15.1(2).
COURTESY TRANSLATION
December 31, 2021
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), the Filer and its Registered Individuals (as defined below) are exempt from the prohibition in paragraph 13.18(2)(b) of NI 31-103 that a registered individual may not use a corporate officer title when interacting with clients, unless the individual has been appointed to that corporate office by their sponsoring firm pursuant to applicable corporate law, in respect of Clients (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application,
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer and its Registered Individuals (as defined below) in each of the other provinces and territories of Canada (the Other Jurisdictions) in respect of the Exemption Sought, 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 MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation formed under the laws of Canada and has its head office in Montréal, Québec.
2. The Filer is registered in the category of "investment dealer" in each of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, and Yukon. The Filer is also registered in the category of "futures commission merchant" in each of Manitoba and Ontario, and in the category of "derivatives dealer" in Québec.
3. The Filer is a "participating organization" of the Toronto Stock Exchange, an "approved participant" of the Montréal Exchange, a member of each of the TSX Venture Exchange and the Canadian National Stock Exchange, and a "dealer member" of the Investment Industry Regulatory Organization of Canada (IIROC).
4. The Filer is not in default of securities or commodity futures legislation in any of the Jurisdictions.
5. The Filer is an indirect wholly-owned subsidiary of National Bank of Canada (National Bank), a Schedule I Canadian chartered bank.
6. The Filer is a legal entity comprising four business units: National Bank Independent Network, National Bank Direct Brokerage, National Bank Financial Wealth Management (NBFWM) and National Bank Financial Markets (NBFM). NBFWM carries out the retail brokerage activities, and NBFM carries out the institutional brokerage business and corporate and investment banking business, respectively, of the Filer.
7. NBFM has offices in Montréal, Toronto, Calgary, Vancouver, and London, England, with the employees across the various offices operating as one team, to ensure that it provides the needed expertise to NBFM's broad client base. NBFM offers a wide range of financial products and services, including research, investment banking services (including mergers and acquisitions advisory services), equities, fixed income, options, futures, sales, and trading.
8. The Filer is the sponsoring firm for registered individuals that interact with clients of NBFM and use a corporate officer title without being appointed to the corporate office of the Filer pursuant to applicable corporate law (the Registered Individuals). The number of Registered Individuals may increase or decrease from time to time as the business of the Filer changes. As of the date of this decision, the Filer has approximately 130 Registered Individuals.
9. The current titles used by the Registered Individuals include the words "Vice-President", "Director", and variations thereof such as "Associate Director", "Managing Director" and "Managing Director and (Co-)Head", and the Registered Individuals may use additional corporate officer titles in the future (collectively, the Titles).
10. The Filer has a process in place for awarding the Titles, which sets out the criteria for each of the Titles. The Titles are based on criteria including seniority and experience, and a Registered Individual's sales activity or revenue generation is not a primary factor in the decision by the Filer to award one of the Titles.
11. The Registered Individuals interact only with institutional clients that are, each, a non-individual "institutional client", as defined in IIROC Rule 1201 (the Clients).
12. Section 13.18 of NI 31-103 prohibits registered individuals in their client-facing relationships from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients. Paragraph 13.18(2)(b) of NI 31-103 specifically prohibits the use of corporate officer titles by registered individuals who interact with clients unless the individuals have been appointed to those corporate offices by their sponsoring firms pursuant to applicable corporate law.
13. There would be significant operational and human resources challenges for the Filer to comply with the prohibition in paragraph 13.18(2)(b). In addition, the Titles are widely used and recognized throughout the institutional segment of the financial services industry within Canada and globally, and being unable to use the Titles has the potential to put the Filer and its Registered Individuals at a competitive disadvantage as compared to non-Canadian firms that are not subject to the prohibition and who compete for the same institutional clients.
14. Given their nature and sophistication, the use of the Titles by the Registered Individuals would not be expected to deceive or mislead existing and prospective Clients.
15. For the reasons provided above, it would not be prejudicial to the public interest to grant the Exemption Sought.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for 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, when using the Titles, the Filer and its Registered Individuals interact only with existing and prospective clients that are exclusively non-individual "institutional clients", as defined in IIROC Rule 1201.
This decision will terminate six months, or such other transition period as may be provided by law, after the coming into force of any amendment to NI 31-103 or other applicable securities law that affects the ability of the Registered Individuals to use the Titles in the circumstances described in this decision.
French version signed by:
"Éric Jacob"SuperintendentClient Services and Distribution OversightAutorité des marchés financiersOSC File #: 2021-0581
Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the prohibition on the use of corporate officer titles by certain registered individuals in respect of institutional clients -- Relief does not extend to interactions by registered individuals with retail clients
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss.13.18(2)(b) and 15.1(2).
December 31, 2021
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) that pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), the Filer and its Registered Individuals (as defined below) are exempt from the prohibition in paragraph 13.18(2)(b) of NI 31-103 that a registered individual may not use a corporate officer title when interacting with clients, unless the individual has been appointed to that corporate office by their sponsoring firm pursuant to applicable corporate law, in respect of Clients (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (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 4.7(1) of Multilateral Instrument 11102 Passport System (MI 11-102) is intended to be relied upon by the Filer and its Registered Individuals (as defined below) in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions) in respect of the Exemption Sought.
Terms defined in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a limited liability company formed under the laws of Kansas, USA and is headquartered in St. Louis, Missouri, USA. NISA provides investment management services for large institutional clients and primarily conducts business outside of Canada.
2. The Filer is registered in Alberta, British Columbia, Manitoba, Ontario and Quebec in the categories of portfolio manager and as a commodity trading manager in Ontario. In the future, NISA may seek registration in similar categories of registration in the other Jurisdictions.
3. The Filer is not in default of securities legislation in any of the Jurisdictions.
4. NISA focuses on active management of fixed-income assets and derivatives overlay strategies for large institutional clients. As of September 30, 2021, NISA managed approximately US $317 billion in physical assets and US $174 billion in derivative notional value in separate account overlay portfolios.
5. The Filer is the sponsoring firm for registered individuals that interact with clients and use a corporate officer title without being appointed to the corporate office of the Filer pursuant to applicable corporate law (the Registered Individuals). The number of Registered Individuals may increase or decrease from time to time as the business of the Filer changes. As of the date of this decision, the Filer has approximately eight Registered Individuals.
6. The current titles used by the Registered Individuals include the words "Director" and "Managing Director" and the Registered Individuals may use additional corporate officer titles in the future (collectively, the Titles). The employment titles of the Registered Representatives are consistent with the employment titles used by other employees of the Filer who conduct business outside of Canada.
7. The Filer has a process in place for awarding the Titles, which sets out the criteria for each of the Titles. The Titles are based on criteria including seniority and experience, and a Registered Individual's sales activity or revenue generation is not a primary factor in the decision by the Filer to award one of the Titles.
8. The Registered Individuals interact only with institutional clients that are, each, a non-individual "permitted client", as defined in subsection 1.1 of NI 31-103 (the Clients).
9. Section 13.18 of NI 31-103 prohibits registered individuals in their client-facing relationships from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients. Paragraph 13.18(2)(b) of NI 31-103 specifically prohibits the use of corporate officer titles by registered individuals who interact with clients unless the individuals have been appointed to those corporate offices by their sponsoring firms pursuant to applicable corporate law.
10. There would be significant operational and human resources challenges for the Filer to comply with the prohibition in paragraph 13.18(2)(b). In addition, the Titles are widely used and recognized throughout the institutional segment of the financial services industry within Canada and globally, and being unable to use the Titles has the potential to put the Filer and its Registered Individuals at a competitive disadvantage as compared to non-Canadian firms that are not subject to the prohibition and who compete for the same institutional clients.
11. Given their nature and sophistication, the use of the Titles by the Registered Individuals would not be expected to deceive or mislead existing and prospective Clients.
12. For the reasons provided above, it would not be prejudicial to the public interest to grant the Exemption Sought.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that, when using the Titles, the Filer and its Registered Individuals interact only with existing and prospective clients that are exclusively non-individual "permitted clients" as defined in NI 31-103.
This decision will terminate six months, or such other transition period as may be provided by law, after the coming into force of any amendment to NI 31-103 or other applicable securities law that affects the ability of the Registered Individuals to use the Titles in the circumstances described in this decision.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from prospectus requirements to allow Australian company to distribute shares of another Australian entity to shareholders of the company on a pro rata basis and by way of a dividend in specie -- distribution not covered by legislative exemptions -- company is a public company in Australia but is not a reporting issuer in Canada -- company has a de minimis presence in Canada -- no investment decision required from Canadian shareholders in order to receive distributions.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53 and 74(1).
February 18, 2022
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption (the Exemption Sought) from the prospectus requirement in section 53 of the Securities Act (Ontario) in connection with the proposed distribution (the Dividend Distribution) by the Filer of ordinary shares (Woodside Shares) of Woodside Petroleum Ltd. (Woodside), by way of a dividend in specie to holders (Filer Shareholders) of shares of ordinary shares of the Filer (Filer Shares) resident in Canada (Filer Canadian Shareholders).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (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 4.7(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 decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is an Australian corporation and is a global resources company that produces essential commodities including iron ore, copper, nickel, metallurgical coal and petroleum. The Filer's principal executive office is located at 171 Collins Street, Melbourne, Victoria, 3000 Australia.
2. The Filer formerly operated under a Dual Listed Company Structure where two parent companies, the Filer and BHP Group Plc (Plc) , a company incorporated under the laws of England and Wales, operated as a single entity.
3. On January 31, 2022, the Filer completed a UK scheme of arrangement in order to unify the BHP corporate group structure under a single parent, being the Filer (the Unification Transaction). The Unification Transaction essentially resulted in each ordinary share in the capital of Plc (Plc Share) being exchanged for one Filer Share.
4. The Filer is not a reporting issuer in any province or territory of Canada and does not have a current intention of becoming a reporting issuer in any province or territory of Canada.
5. As at January 10, 2022, there were 2,950,251,394 Filer Shares and a further 2,112,071,796 Plc Shares issued and outstanding.
6. The Filer Shares are listed for trading on the Australian Securities Exchange (ASX), the London Stock Exchange (LSE) and the Johannesburg Stock Exchange (JSE) under the symbol "BHP". In addition, American Depositary Shares (each representing two Filer Shares) evidenced by American Depositary Receipts (ADRs) trade on the New York Stock Exchange (NYSE) under the symbol "BHP". Other than the foregoing listings, no securities of the Filer are listed or posted for trading on any exchange or market in Canada or outside of Canada. The Filer has no current intention of listing its securities on any Canadian exchange.
7. The Filer is registered with the Australian Securities and Investments Commission (the ASIC) and is subject to the requirements of the Corporations Act of 2001 (Cth), as amended (the Corporations Act). It is also subject to the rules and regulations of the ASX, LSE and JSE.
8. The Filer is a registrant with the United States Securities and Exchange Commission (SEC) and is subject to the requirements of the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the NYSE.
9. According to a registered shareholder report prepared for the Filer by Computershare Limited, as at December 31, 2021, there were 533 registered holders of Filer Shares and Plc Shares resident in Canada, representing approximately 0.09% of the registered holders of Filer Shares and Plc Shares worldwide, and holding an aggregate of approximately 935,047 Filer Shares and Plc Shares, representing approximately 0.02% of the total outstanding Filer Shares and Plc Shares as at such date. The Filer does not expect these numbers to have materially changed since that date.
10. According to a beneficial ownership report (the Beneficial Ownership Report) prepared for the Filer by Nasdaq Inc, as at December 15, 2021, there were 62 beneficial holders of Filer Shares and Plc Shares resident in Canada, representing approximately 0.06% of the beneficial holders of Filer Shares and Plc Shares identified in the Beneficial Ownership Report, and holding an aggregate of approximately 59,395,319 Filer Shares and Plc Shares, representing approximately 1.2% of the total outstanding Filer Shares and Plc Shares as at such date. The Beneficial Ownership Report accounts for approximately 80% of the total outstanding Filer Shares and Plc Shares as at such date and while indicative, is the most comprehensive source of information available to the Filer regarding the holdings and jurisdictions of residence of the beneficial holders of Filer Shares and Plc Shares. The Filer does not expect these numbers to have materially changed since the date of the Beneficial Ownership Report.
11. Based on the information above relating to holders of Filer Shares and Plc Shares, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders is de minimis after giving effect to the Unification Transaction.
12. On November 22, 2021, the Filer announced that it signed a binding share sale agreement with Woodside for the merger of the Filer's oil and gas portfolio with Woodside. Pursuant to the merger, Woodside will acquire all the issued and outstanding shares of BHP Petroleum International Pty Ltd. (BHP Petroleum) from the Filer in exchange for the issuance by Woodside to the Filer of Woodside Shares (Consideration Shares), which are expected to represent approximately 48% of the issued and outstanding Woodside Shares, on a post-issue basis (the Woodside Transaction). Immediately following receipt of the Consideration Shares, the Filer will complete the Dividend Distribution of the Consideration Shares to the Filer Shareholders as of the record date for such dividend on the basis of a fixed distribution ratio to be determined, subject to restrictions in any jurisdiction that prevent the distribution of the Consideration Shares pursuant to the Dividend Distribution in such jurisdiction.
13. Woodside is an Australian corporation and is a petroleum exploration and production company. Woodside's principal executive office is located at 11 Mount Street, Perth, Western Australia, 6000 Australia.
14. Woodside is not a reporting issuer in any province or territory of Canada and does not have a current intention of becoming a reporting issuer in any province or territory of Canada.
15. As at January 10, 2022, there were 969,631,826 Woodside Shares issued and outstanding.
16. The Woodside Shares are listed for trading on the ASX under the symbol "WPL". Other than the foregoing listing on the ASX, no securities of Woodside are listed or posted for trading on any exchange or market in Canada or outside of Canada. Woodside is currently pursuing a secondary listing on the NYSE through an ADR arrangement and admission to trading on the standard segment of the Main Market of the LSE, with a target of being active by completion of the Woodside Transaction. Woodside has no current intention of listing its securities on any Canadian exchange.
17. Woodside is registered with the ASIC and is subject to the requirements of the Corporations Act, and the rules and regulations of the ASX.
18. Woodside has informed the Filer that, according to a registered shareholder report prepared by Computershare Limited, as at January 7, 2022, there were 73 registered holders of Woodside Shares resident in Canada, representing approximately 0.03% of the registered holders of Woodside Shares worldwide, and holding an aggregate of approximately 131,953 Woodside Shares, representing approximately 0.01% of the total outstanding Woodside Shares as at such date.
19. Woodside has informed the Filer that Woodside engaged Orient Capital to run an indicative beneficial ownership analysis of shareholders where the beneficial ownership differs from the registered owners above a certain threshold (Beneficial Ownership Analysis). According to the Beneficial Ownership Analysis, as at November 30, 2021, there were 16 beneficial holders identified of Woodside Shares resident in Canada, representing approximately 2.3% of the beneficial holders of Woodside Shares worldwide that were identified in that report, and holding an aggregate of approximately 1,665.061 Woodside Shares, representing approximately 0.17% of the total outstanding Woodside Shares as at such date..
20. Based on the information above relating to Filer Canadian Shareholders and holders of Woodside Shares resident in Canada (Woodside Canadian Shareholders), the number of Woodside Canadian Shareholders and the proportion of Woodside Shares held by such shareholders is de minimis before, and is expected to remain de minimis after, giving effect to the Dividend Distribution.
21. The Woodside Transaction and the Dividend Distribution are inter-dependent and are expected to be completed in the second quarter of 2022.
22. Filer Shareholders will not be required to pay any cash, deliver any other consideration or surrender or exchange their Filer Shares, or take any other action in order to receive Consideration Shares in connection with the Dividend Distribution. The Dividend Distribution will occur automatically without any investment decision on the part of Filer Shareholders.
23. The Woodside Transaction and the Dividend Distribution are being effected in accordance with the laws of Australia.
24. The Filer is not required to obtain shareholder approval for the Woodside Transaction or the Dividend Distribution.
25. Filer Canadian Shareholders will be treated the same as Filer Shareholders resident in Australia in connection with the Woodside Transaction and Dividend Distribution. No changes to the Filer Shares will result from the Woodside Transaction and Dividend Distribution. Following such transactions, Filer Shareholders will continue to hold their Filer Shares, the Filer Shares will continue to be listed for trading on those stock exchanges on which they are listed immediately prior to the transactions, and Filer Shareholders, including Filer Canadian Shareholders, will continue to receive the continuous and periodic disclosure materials required to be sent by the Filer to its shareholders under applicable Australian law.
26. Pursuant to Australian law, the Filer will be producing an exchange announcement (the Exchange Announcement) on or about March 10, 2022 that describes the Woodside Transaction and the Dividend Distribution and their impact on the Filer and the Filer Shareholders, including information about the number of Consideration Shares expected to be distributed to Filer Shareholders and how the distribution ratio will be calculated, the expected tax consequences of the Dividend Distribution and other material information concerning the transactions. The Exchange Announcement will be publicly available.
27. Pursuant to the rules and regulations of the ASX, Woodside is required to obtain shareholder approval for the Woodside Transaction. In connection therewith, Woodside will be issuing a Notice of Meeting and Explanatory Memorandum to the holders of Woodside Shares to inform them of the Woodside Transaction (the Explanatory Memorandum) on or about March 10, 2022. The Explanatory Memorandum will be publicly available. In connection with the additional exchange listings which it is pursuing, Woodside will also be preparing and filing a registration statement with the SEC (United States) and a prospectus with the Financial Conduct Authority (United Kingdom), both of which will be publicly available.
28. Following the completion of the Dividend Distribution, Filer Canadian Shareholders who receive Consideration Shares pursuant to the Dividend Distribution, to the extent they continue to hold such shares, will be treated as any other Woodside shareholders and will thereafter be concurrently sent the same continuous and periodic disclosure materials required to be sent by Woodside under applicable Australian law to all other holders of Woodside Shares.
29. There will be no active trading market for the Woodside Shares in Canada following the Dividend Distribution and none is expected to develop. Consequently, it is expected that any resale of Woodside Shares distributed in the Dividend Distribution will occur through the facilities of the ASX or any other exchange or market outside of Canada on which the Woodside Shares may be quoted or listed at the time that the trade occurs or to a person or company outside of Canada.
30. The distribution by the Filer of the Consideration Shares to Filer Canadian Shareholders pursuant to the Dividend Distribution would be exempt from the prospectus requirement pursuant to section 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that Woodside is not a reporting issuer under the securities legislation of any jurisdiction in Canada.
31. Neither the Filer nor, to the knowledge of the Filer, Woodside is in default of any of its obligations under the securities legislation of any jurisdiction in Canada.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the first trade in the Consideration Shares acquired pursuant to the Dividend Distribution will be deemed to be a distribution that is subject to section 2.6 of National Instrument 45-102 Resale of Securities.
DATED at Toronto this 18th day of February, 2022.
"Cecilia Williams" |
"Frances Kordyback" |
Commissioner |
Commissioner |
Ontario Securities Commission |
Ontario Securities Commission |
Enriched Investing Incorporated et al.
Exemption from paragraphs 4.1(1)(a) and (b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations to permit an individual to act as a dealing, advising or associate advising representative of a registered firm while the individual acts as an advising representative, officer, partner or director of another registered firm that is not an affiliate. One registered firm is acquiring the client accounts of another registered firm prior to the latter's winding up and subsequent suspension as a portfolio manager. The filers have valid business reasons for the individuals to be registered with both firms; the individuals will have sufficient time to adequately serve both firms; conflicts of interest are unlikely to arise as one of the firms is winding up; and there are policies and procedures in place to handle any potential conflicts of interest. The firms are exempted from the prohibition in paragraphs 4.1(1)(a) and (b) for a limited time period.
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 13.4 and 15.1.
February 28, 2022
The principal regulator in the Jurisdiction (the Decision Maker) has received an application from Enriched and FirmInvest (collectively, the Filers) for a decision under the securities legislation of the Jurisdiction (the Legislation), pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), for an exemption from the restrictions in paragraphs 4.1(1)(a) and (b) of NI 31-103 to permit Ratcliffe to act as an advising representative of Enriched while also acting as an advising representative, director and officer of FirmInvest for a limited period of time following the acquisition of all the client accounts of FirmInvest by Enriched (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and
(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia and Quebec.
Terms defined in MI 11-102, NI 31-103 and National Instrument 14-101 Definitions have the same meaning in this decision unless otherwise defined.
This decision is based on the following facts represented by the Filers:
Enriched
1. Enriched is a company organized under the laws of Alberta with its head office in Alberta. Enriched is currently registered in the categories of portfolio manager and investment fund manager under the securities legislation of the Jurisdictions.
2. Enriched provides discretionary portfolio management services to its clients.
3. The principal regulator of Enriched is the OSC.
4. Enriched is not in default of any requirement of securities legislation in any jurisdiction of Canada.
FirmInvest
5. FirmInvest is a company organized under the laws of Ontario, with its head office in Ontario. FirmInvest is registered in the categories of portfolio manager and exempt market dealer under the securities legislation of each of the Jurisdictions.
6. The principal regulator of FirmInvest is the OSC.
7. FirmInvest provides discretionary portfolio management services to its clients.
8. Ratcliffe is the sole shareholder of FirmInvest. He is also the firm's president and is registered as its ultimate designated person, chief compliance officer and sole advising representative.
9. On February 25, 2022, FirmInvest, David Ratcliffe and staff of the OSC entered into a settlement agreement in relation to FirmInvest's failure to comply with sections 11.1 and 11.5 of NI 31-103 and Ratcliffe's failure to comply with sections 5.1, 5.2 and 13.3 of NI 31-103 (the Settlement Agreement). As a condition, FirmInvest's registration will be suspended, and immediately thereafter revoked, 60 days after the Settlement Agreement is signed in order to permit an orderly transfer of its clients to a different registered firm (the FirmInvest Suspension Date).
10. Other than the matters set out in the Settlement Agreement, FirmInvest is not in default of any requirement of securities legislation in any jurisdiction of Canada.
The Transaction
11. The Filers are each independently owned and are not affiliates of one another.
12. The application for the Exemption Sought is made in relation to the transfer of all of the client accounts of FirmInvest to Enriched (the Transaction). In connection with the Transaction, Ratcliffe is seeking registration as an advising representative of Enriched under the securities legislation of each of the Jurisdictions.
13. FirmInvest will transfer all of its client accounts to Enriched in or about March 2022 (the Account Transfer Date).
Dual Registration
14. During the period from the Account Transfer Date to the FirmInvest Suspension Date, Enriched and FirmInvest require Ratcliffe to be:
a. an officer, director and advising representative of FirmInvest, to facilitate the orderly wind-up of FirmInvest's registerable business and operations; and
b. an advising representative of Enriched, to provide services in relation to former clients of FirmInvest who will become clients of Enriched that are similar to the services he performed on behalf of FirmInvest.
15. After the Account Transfer Date, Ratcliffe, as FirmInvest's sole director, officer, ultimate designated person and chief compliance officer, will act in such capacity only to comply with regulatory requirements, including working to transfer FirmInvest's client accounts to Enriched or to another registered firm.
16. Ratcliffe will have sufficient time and resources to adequately meet his obligations to each of Enriched and FirmInvest. The chief compliance officer and ultimate designated person of each Filer will ensure that Ratcliffe has sufficient time and resources to adequately serve the respective Filer and its clients.
17. Enriched will ensure that Ratcliffe adheres to any terms and conditions imposed on the registration of FirmInvest.
18. The Filers have in place policies and procedures to address any conflicts of interest that may arise as a result of the dual registration of Ratcliffe. Following the transfer of its client accounts to Enriched, the activities of FirmInvest will be administrative in nature which should result in there being few, if any, conflicts of interest.
19. Ratcliffe will be subject to supervision by, and the applicable compliance requirements of, both Filers.
20. Enriched has compliance and supervisory policies and procedures in place to monitor the conduct of its representatives, including Ratcliffe, and to ensure Enriched can deal appropriately with any conflicts of interest that may arise.
21. Enriched will supervise the activities that Ratcliffe will conduct on behalf of FirmInvest in the same way that it does other outside business activities of its registered individuals, including by holding meetings regularly with him and obtaining regular status reports from him.
22. The relationship of the Filers and the fact that Ratcliffe is dually registered with both Filers will be fully disclosed in writing to clients who deal with Ratcliffe.
23. In the absence of the Exemption Sought, the Filers would be prohibited under paragraphs 4.1(1)(a) and 4.1(1)(b) of NI 31-103 from permitting Ratcliffe to act as an advising representative, director and officer of FirmInvest while also acting as an advising representative of Enriched.
The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted on the following conditions:
a. Ratcliffe is subject to the supervision by, and compliance requirements of, both Filers;
b. The chief compliance officer and ultimate designated person of each Filer ensures that Ratcliffe has sufficient time and resources to adequately serve each Filer and its respective clients;
c. Each Filer has adequate policies and procedures in place to address any potential conflicts of interest that may arise as a result of the dual registration of Ratcliffe, and deal appropriately with any such conflicts;
d. The relationship between the Filers and the fact that Ratcliffe is dually registered with both of them is fully disclosed in writing to clients of each of them that deal with Ratcliffe; and
e. the Exemption Sought expires on the date on which FirmInvest's registration is revoked.
Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the prohibition on the use of corporate officer titles by certain registered individuals in respect of institutional clients -- Relief does not extend to interactions by registered individuals with retail clients.
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.18(2)(b) and 15.1(2).
December 31, 2021
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), the Filer and its Registered Individuals (as defined below) are exempt from the prohibition in paragraph 13.18(2)(b) of NI 31-103 that a registered individual may not use a corporate officer title when interacting with clients, unless the individual has been appointed to that corporate office by their sponsoring firm pursuant to applicable corporate law, in respect of Institutional Clients (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the British Columbia Securities Commission is the principal regulator for this application;
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer and its Registered Individuals (as defined below) in each of the other provinces and territories of Canada; 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 MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation formed under the laws of British Columbia and has its head office in Vancouver, British Columbia.
2. The Filer is registered as: (i) an investment dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan and Yukon; (ii) a dealer (futures commission merchant) in Manitoba; (iii) a futures commission merchant in the Province of Ontario; and (iv) a derivatives dealer in Québec.
3. The Filer is not in default of securities legislation in any province or territory of Canada.
4. The Filer's principal business is acting as an investment dealer providing investment products and services to individual, corporate and institutional clients.
5. The Filer also conducts business through its subsidiary PI Financial (US) Corp., which is registered with the Financial Industry Regulatory Authority.
6. The Filer is the sponsoring firm for registered individuals that interact with clients and use a corporate officer title without being appointed to the corporate office of the Filer pursuant to applicable corporate law (the Registered Individuals). The number of Registered Individuals may increase or decrease from time to time as the business of the Filer changes. As of the date of this decision, the Filer has approximately seven Registered Individuals.
7. The current titles used by the Registered Individuals include the words "Vice President", "Associate Director", "Director" and "Managing Director", and the Registered Individuals may use additional corporate officer titles in the future (collectively, the Titles). The Titles used by the Registered Individuals are consistent with the titles used by PI Financial (US) Corp.
8. The Filer has a process in place for awarding the Titles, which sets out the criteria for each of the Titles. The Titles are based on criteria including seniority and experience, and a Registered Individual's sales activity or revenue generation is not a primary factor in the decision by the Filer to award one of the Titles.
9. The Registered Individuals interact primarily with institutional clients that are, each, a non-individual "institutional client" as defined in IIROC Rule 1201 (the Institutional Clients).
10. To the extent a Registered Individual interacts with clients that are not Institutional Clients (the Retail Clients), the Filer has policies, procedures and controls in place to ensure that such Registered Individual will only use a Title when interacting with Institutional Clients, and will not use a Title in any interaction with Retail Clients, including in any communications, such as written and verbal communications, that are directed at, or may be received by, Retail Clients.
11. The Filer will not grant any registered individual that interacts primarily with Retail Clients, nor will such registered individual be permitted by the Filer to use, a corporate officer title other than in compliance with paragraph 13.18(2)(b) of NI 31-103.
12. Section 13.18 of NI 31-103 prohibits registered individuals in their client-facing relationships from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients. Paragraph 13.18(2)(b) of NI 31-103 specifically prohibits the use of corporate officer titles by registered individuals who interact with clients unless the individuals have been appointed to those corporate offices by their sponsoring firms pursuant to applicable corporate law.
13. There would be significant operational and human resources challenges for the Filer to comply with the prohibition in paragraph 13.18(2)(b). In addition, the Titles are widely used and recognized throughout the institutional segment of the financial services industry within Canada and globally, and being unable to use the Titles has the potential to put the Filer and its Registered Individuals at a competitive disadvantage as compared to non-Canadian firms that are not subject to the prohibition and who compete for the same institutional clients.
14. Given their nature and sophistication, the use of the Titles by the Registered Individuals would not be expected to deceive or mislead existing and prospective Institutional Clients.
15. For the reasons provided above, it would not be prejudicial to the public interest to grant the Exemption Sought.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Marker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that, when using the Titles, the Filer and its Registered Individuals interact only with existing and prospective clients that are exclusively non-individual "institutional clients" as defined in IIROC Rule 1201.
This decision will terminate six months, or such other transition period as may be provided by law, after the coming into force of any amendment to NI 31-103 or other applicable securities law that affects the ability of the Registered Individuals to use the Titles in the circumstances described in this decision.
U.S. registered broker-dealer exempted from the dealer registration requirement in subsection 25(1) of the Act to permit its provision of certain prime brokerage services (which do not include the execution of trades) -- Exemption limited to trades in "Canadian securities" (which the decision defines as a security that is not a "foreign security" as that term is defined in subsection 8.18(1) of NI 31-103) for certain (institutional) permitted clients -- Exemption is subject to a 5-year sunset clause.
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1), 19, 19(1), 19(2), 25(1), 74(1).
Instruments Cited
Multilateral Instrument 11-102 Passport System, ss. 4.4(c), 4.7, 4.7(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.5, 8.18, 8.18(1), 8.18(2), 8.21, Form 31-103F1 Calculation of Excess Working Capital.
National Instrument 81-102 Investment Funds, Part 6.
Ontario Securities Commission Rule 13-502 Fees.
March 5, 2022
The principal regulator in the Jurisdiction has received an application from the Filer (the Application) for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Filer from the dealer registration requirement under section 25(1) of the Securities Act (Ontario) (the Act) in respect of Prime Services (as defined below) relating to Canadian securities (as defined below) that are provided in Canada to Institutional Permitted Clients (as defined below) (the Exemption Sought).
The principal regulator granted similar relief to the Filer in a decision dated February 16, 2017, subject to a five-year sunset clause (the Previous Decision). The Previous Decision expired on February 15, 2022 (the Termination Date). The principal regulator received the Application prior to the Termination Date.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (OSC) is the principal regulator for this Application, and
(b) the Filer has provided notice that section 4.7(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 in which the Filer relies on the exemption found in section 8.18 [International dealer] of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) other than the province of Alberta (the Passport Jurisdictions and together with the Jurisdiction, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
For the purposes of this decision, the following terms have the following meanings:
"Canadian security" means a security that is not a foreign security;
"foreign security" has the meaning ascribed to that term in subsection 8.18(1) of NI 31-103;
"Institutional Permitted Client" means a "permitted client" as defined in section 1.1 of NI 31-103, except for: (a) an individual, (b) a person or company acting on behalf of a managed account of an individual, (c) a person or company referred to in paragraph (p) of that definition, unless that person or company qualifies as a permitted client under another paragraph of that definition, or (d) a person or company referred to in paragraph (q) of that definition unless that person or company has net assets of at least $100 million as shown on its most recently prepared financial statements or qualifies as a permitted client under another paragraph of that definition;
"Prime Services" means any of the following: (a) settlement, clearing and custody of trades, client cash and securities positions, (b) financing of long inventory; (c) lending and delivering securities on behalf of a client pursuant to a margin agreement to facilitate client short sales; (d) securities borrowing and/or lending pursuant to a securities lending agreement; (e) asset servicing, and (f) reporting of positions, margin and other balances and activity. For greater clarity, Prime Services do not include execution of trades in securities;
"Prime Services Clients" means an Institutional Permitted Client to whom the Filer provides Prime Services in the Jurisdictions in respect of Canadian securities in addition to foreign securities.
This decision is based on the following facts represented by the Filer:
1. The Filer is a limited liability company organized under the laws of the State of Delaware, United States of America (U.S.). Its head office is located at 1285 Avenue of the Americas, New York, NY 10019 U.S. The Filer is an indirect wholly owned subsidiary of UBS AG, a publicly owned Swiss banking corporation.
2. The Filer is registered as a broker-dealer with the U.S. Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). This registration and membership permits the Filer to provide Prime Services in the U.S.
3. The Filer is a member of a number of major U.S. securities exchanges, including the New York Stock Exchange and NASDAQ. The Filer is a Foreign Approved Participant of the Montreal Exchange and a Registered Futures Commission Merchant of ICE Futures Canada, Inc. The Filer is also a member of the Chicago Board of Trade, the Chicago Mercantile Exchange, ICE Futures Exchange, and other principal U.S. commodity exchanges and trades through affiliated or unaffiliated member firms on other exchanges, including exchanges in Canada, France, Italy, Japan, Singapore, Spain, Taiwan, Mexico, Korea and the United Kingdom.
4. The Filer provides a variety of capital raising, investment banking, market making, brokerage, and advisory services, including fixed income and equity sales and research, commodities trading, foreign exchange sales, emerging markets activities, securities lending, investment banking and derivatives dealing for governments, corporate and financial institutions. The Filer also conducts proprietary trading activities.
5. The Filer provides trade execution services and Prime Services through two different business units and the two business units are separated by information barriers. The Filer relies on section 8.18 [International dealer] of NI 31-103 to provide trade execution services in respect of "foreign securities" as defined in that section with Canadian resident "permitted client" as defined in NI 31-103. The Filer also relies on the exemptions found in section 8.5 [Trades through or to a registered dealer], in paragraphs (a), (b) and (f) of subsection 8.18(2) [International dealer], and in section 8.21 [Specified debt] of NI 31-103 to provide limited trade execution services in respect of securities of Canadian issuers.
6. The Prime Services provided by the Filer to its Prime Services Clients principally consist of the following: (a) settlement, clearing and custody of trades; (b) financing of long inventory; (c) securities borrowing and/or lending pursuant to a securities lending agreement or delivering securities on behalf of a client pursuant to a margin agreement, in each case, to facilitate client short sales; and (d) reporting of positions, margin and other balances and activity. For greater clarity, Prime Services do not include execution of trades in securities.
7. The Filer offers Prime Services in the Jurisdictions to Institutional Permitted Clients in respect of Canadian securities and securities of non-Canadian issuers.
8. In the case of a Prime Services Client that is an investment fund subject to Part 6 of National Instrument 81-102 Investment Funds (NI 81-102), the custodianship requirements in Part 6 of NI 81-102 would only permit the Filer to provide the Prime Services to the investment fund as a sub-custodian of the investment fund in respect of portfolio assets held outside Canada and the Filer would provide Prime Services to an investment fund in compliance with the securities laws applicable to the investment fund, including Part 6 of NI 81-102 and the custody requirements set out in NI 31-103.
9. Prime Services Clients seek Prime Services from the Filer in order to separate the execution of a trade from the clearing, settlement, custody and financing of a trade. This allows the Prime Services Client to use many executing brokers, without maintaining an active, ongoing custody account with each executing broker. It also allows the Prime Services Client to consolidate settlement, clearing, custody and financing of securities in an account with the Filer.
10. The Filer's Prime Services Clients directly select their executing brokers. The Filer does not require its Prime Services Clients to use specific executing brokers through which Prime Services Clients must execute trades. Prime Services Clients send trade orders to the executing broker who carries out the trade. The executing broker will be an appropriately registered dealer or a person or company relying on an exemption from the dealer registration requirement that permits such executing broker to execute the trade for Prime Services Clients.
11. The Filer provides the Prime Services after the execution of the trade, but any commitment to provide financing or to lend or borrow securities in relation to a trade may be made prior to the execution of the trade. The executing broker will communicate the trade details to a Prime Services Client and the Filer or the Filer's clearing agent, as applicable. A Prime Services Client will also communicate the trade details to the Filer. For trades executed on a Canadian marketplace, the Filer will typically need to clear and settle the trades through a participant of the Canadian depository, clearing and settlement hub, CDS Clearing and Depository Services Inc.
12. The Filer exchanges money or securities and holds the money or securities in an account for each Prime Services Client. If the Filer is clearing and settling the trade through a clearing agent, the Filer's clearing agent exchanges money or securities and holds the money or securities in an omnibus account for the Filer, who in turn maintains a record of the position held for the Prime Services Client on its books and records.
13. On or following settlement, the Filer provides the other Prime Services as set out in paragraph 6.
14. The Filer enters into written agreements with each of its Prime Services Clients for the provision of Prime Services.
15. The Filer currently relies on the "international dealer exemption" under section 8.18 [international dealer] of NI 31-103 in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Québec and Saskatchewan to provide Prime Services in respect of foreign securities.
16. The Filer has been providing Prime Services in the Jurisdictions in reliance on the Previous Decision since February 16, 2017. The Filer is not registered under the securities legislation of any jurisdiction of Canada, is in the business of trading, and in the absence of the Exemption Sought, cannot provide the full range of Prime Services in the Jurisdictions in respect of Canadian securities without registration, except as permitted under section 8.5 [trades through or to a registered dealer], under the exemptions found in paragraphs (a), (b) and (f) of subsection 8.18(2) [international dealer], and under section 8.21 [specified debt] of NI 31-103.
17. The Filer is subject to regulatory capital requirements under the 1934 Act, specifically SEC Rule 15c3-1 Net Capital Requirements for Brokers or Dealers (SEC Rule 15c3-1) and SEC Rule 17a-5 Reports to be Made by Certain Brokers and Dealers (SEC Rule 17a-5).
18. SEC Rule 15c3-1 requires that the Filer account for any guarantee of debt of a third party in calculating its excess net capital. In particular, in the event that the Filer provides a guarantee of any debt of a third party, it will be required to deduct the total amount of the guarantee in calculating its net capital. The Filer does not guarantee the debt of any third party.
19. SEC Rule 15c3-1 is designed to provide protections that are substantially similar to the protections provided by the capital formula requirements and specifically risk adjusted capital to which dealer members of IIROC are subject. The Filer is in compliance with SEC Rule 15c3-1 and is in compliance in all material respects with SEC Rule 17a-5. If the Filer's net capital declines below the minimum amount required, the Filer is required to notify the SEC and FINRA pursuant to SEC Rule 17a-11 Notification Provisions for Brokers and Dealers (SEC Rule 17a-11). The SEC and FINRA have the responsibility to provide oversight over the Filer's compliance with SEC Rule 15c3-1 and SEC Rule 17a-5.
20. The Filer is required to prepare and file a financial report, which includes Form X-17a-5 (the FOCUS Report), which is the financial and operational report containing a net capital calculation, and a compliance report annually with the SEC and FINRA pursuant to SEC Rule 17a-5(d). The FOCUS Report provides a more comprehensive description of the business activities of the Filer, and more accurately reflects those activities including client lending activity, than would be provided by Form 31-103F1 Calculation of Excess Working Capital (Form 31-103F1 under NI 31-103). The net capital requirements computed using methods prescribed by SEC Rule 15c3-1 are based on all assets and liabilities on the books and records of a broker-dealer whereas Form 31-103F1 is a calculation of excess working capital, which is a computation based primarily on the current assets and current liabilities on the books and records of the dealer. The Filer is up-to-date in its submissions of annual reports under SEC Rule 17a-5(d), including the FOCUS Report.
21. The Filer is subject to regulations of the Board of Governors of the Federal Reserve System (FRB), the SEC and FINRA regarding the lending of money, extension of credit and provision of margin to clients (the U.S. Margin Regulations) that provide protections that are substantially similar to the protections provided by the requirements regarding the lending of money, extension of credit and provision of margin to clients to which dealer members of IIROC are subject. In particular, the Filer is subject to the margin requirements imposed by the FRB, including Regulation T and under applicable SEC rules and under FINRA Rule 4210. The Filer is in compliance in all material respects with applicable U.S. Margin Regulations.
22. The Filer holds customer assets in accordance with Rule 15c3-3 of the 1934 Act (SEC Rule 15c3-3). SEC Rule 15c3-3 requires the Filer to segregate and keep segregated all "fully-paid securities" and "excess margin securities" (as such terms are defined in SEC Rule 15c3-3) of its customers from its proprietary assets. In addition to the segregation of customers' securities, SEC Rule 15c3-3 requires the Filer to deposit an amount of cash or qualified government securities determined in accordance with a reserve formula set forth in SEC Rule 15c3-3 in an account entitled "Special Reserve Account for the Exclusive Benefit of Customers" of the Filer at separate banks and/or custodians. The combination of segregated securities and cash reserve are designed to ensure that the Filer has sufficient assets to cover all net equity claims of its customers and provide protections that are substantially similar to the protections provided by the requirements to which dealer members of IIROC are subject. If the Filer fails to make an appropriate deposit, the Filer is required to notify the SEC and FINRA pursuant to SEC Rule 15c3-3(i). The Filer is in material compliance with the possession and control requirements of SEC Rule 15c3-3.
23. The Filer is a member of the Securities Investors Protection Corporation (SIPC) and, subject to the eligibility criteria of SIPC, Prime Services Clients' assets held by the Filer are insured by SIPC against loss due to insolvency.
24. Subject to the decision requested as a consequence of the recent expiry of the Previous Decision, the Filer is not in default of securities legislation or commodity futures legislation in any jurisdiction in Canada. The Filer is in compliance in all material respects with U.S. securities laws.
25. The Filer submits that the Exemption Sought would not be prejudicial to the public interest because:
(a) the Filer is regulated as a broker-dealer under the securities legislation of the U.S., and is subject to the requirements referred to in paragraphs 17 to 22;
(b) the availability of and access to Prime Services in respect of Canadian securities is important to Canadian institutional investors who are active participants in the international marketplace;
(c) the Filer provides Prime Services in the Jurisdictions in respect to Canadian securities only to Institutional Permitted Clients;
(d) the OSC has entered into a memorandum of understanding with the SEC regarding mutual assistance in the supervision and oversight of regulated entities that operate on a cross-border basis in the U.S. and Canada; and
(e) the OSC has entered into a memorandum of understanding with FINRA to provide a formal basis for the exchange of regulatory information and investigative assistance.
26. The Filer is a "market participant" as that term is defined under subsection 1(1) of the Act. As a market participant, among other requirements, the Filer is required to comply with the record keeping and provision of information provisions under section 19 of the Act, which include the requirement to keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs, and the transactions it executes on behalf of others and to deliver such records to the OSC if required.
27. If in the future the Filer wishes to offer Prime Services in Alberta, the Filer will not rely on subsection 4.7(1) of MI 11-102 to passport this decision into Alberta.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted so long as the Filer:
(a) has its head office or principal place of business in the U.S.;
(b) is registered as a broker-dealer under the securities legislation of the U.S., which permits the Filer to provide the Prime Services in the U.S.;
(c) is a member of FINRA;
(d) is a member of SIPC;
(e) is subject to requirements over regulatory capital, lending of money, extension of credit, provision of margin, financial reporting to the SEC and FINRA, and segregation and custody of assets which provide protections that are substantially similar to the protections provided by the rules to which dealer members of IIROC are subject;
(f) limits its provision of Prime Services in the Jurisdictions in respect of Canadian securities to Institutional Permitted Clients;
(g) does not execute trades in Canadian securities with or for Prime Services Clients, except as permitted under applicable Canadian securities laws;
(h) does not require its Prime Services Clients to use specific executing brokers through which Prime Services Clients must execute trades;
(i) submits the financial report and compliance report as described in SEC Rule 17a-5(d) to the OSC on an annual basis, at the same time such reports are filed with the SEC and FINRA;
(j) submits audited financial statements to the OSC on an annual basis, within 90 days of the Filer's financial year end;
(k) submits to the OSC immediately a copy of any notice it files under SEC Rule 17a-11 or under SEC Rule 15c3-3(i) with the SEC and FINRA;
(l) complies with the filing and fee payment requirements that would be applicable to the Filer if it were a registrant firm under OSC Rule 13-502 Fees;
(m) files in an electronic and searchable format with the OSC such reports as to any or all of its trading activities in Canada as the OSC may, upon notice, require from time to time; and
(n) pays the increased compliance and case assessment costs of the principal regulator due to the Filer's location outside Ontario, including, as required, the reasonable cost of hiring a third party to perform a compliance review on behalf of the principal regulator.
This decision shall expire five years after the date hereof.
This decision may be amended by the OSC from time to time upon prior written notice to the Filer.
Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the prohibition on the use of corporate officer titles by certain registered individuals in respect of institutional clients -- Relief does not extend to interactions by registered individuals with retail clients.
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.18(2)(b) and 15.1(2).
December 31, 2021
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) that pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), the Filer and its Registered Individuals (as defined below) are exempt from the prohibition in paragraph 13.18(2)(b) of NI 31-103 that a registered individual may not use a corporate officer title when interacting with clients, unless the individual has been appointed to that corporate office by their sponsoring firm pursuant to applicable corporate law, in respect of Clients (as defined below) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (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 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer and its Registered Individuals (as defined below) in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions) in respect of the Exemption Sought.
Terms defined in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of Ontario with its head office located in Toronto, Ontario.
2. The Filer is registered as an investment dealer in each of the Jurisdictions and is a member of the Investment Industry Regulatory Organization of Canada (IIROC).
3. The Filer is not in default of securities legislation in any of the Jurisdictions.
4. The Filer's principal business is providing services, including sales, trading and research services, to institutional clients. The Filer also provides investment banking services to corporate issuers.
5. The Filer is a subsidiary of Stifel Financial Corp. (Stifel), which is a diversified global wealth management and investment banking company, with offices in the United States, Europe and the United Kingdom.
6. The Filer is the sponsoring firm for registered individuals that interact with clients and use a corporate officer title without being appointed to the corporate office of the Filer pursuant to applicable corporate law (the Registered Individuals). The number of Registered Individuals may increase or decrease from time to time as the business of the Filer changes. As of the date of this decision, the Filer has approximately 35 Registered Individuals.
7. The current titles used by the Registered Individuals include the words "Director", "Managing Director", "Senior Vice President" and "Vice President", and the Registered Individuals may use additional corporate officer titles in the future (collectively, the Titles). As a global organization, the current titling model used by the Filer is similar across Stifel affiliates and subsidiaries (the Stifel Group).
8. The Filer has a process in place for awarding the Titles, which sets out the criteria for each of the Titles. The Titles are based on criteria including seniority and experience, and a Registered Individual's sales activity or revenue generation is not a primary factor in the decision by the Filer to award one of the Titles.
9. The Registered Individuals interact only with institutional clients that are, each, a non-individual "institutional client" as defined in IIROC Rule 1201 (the Institutional Clients), for which the Registered Individuals provide sales, trading and research services, as well as corporate issuer clients for which the Registered Individuals provide investment banking services (the Corporate Issuer Clients, and, together with the Institutional Clients, the Clients).
10. Section 13.18 of NI 31-103 prohibits registered individuals in their client-facing relationships from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients. Paragraph 13.18(2)(b) of NI 31-103 specifically prohibits the use of corporate officer titles by registered individuals who interact with clients unless the individuals have been appointed to those corporate offices by their sponsoring firms pursuant to applicable corporate law.
11. There would be significant operational and human resources challenges for the Filer to comply with the prohibition in paragraph 13.18(2)(b). In addition, the Titles are widely used and recognized throughout the institutional segment of the financial services industry within Canada and globally, and being unable to use the Titles has the potential to put the Filer and its Registered Individuals at a competitive disadvantage as compared to non-Canadian firms that are not subject to the prohibition and who compete for the same institutional clients.
12. Given their nature and sophistication, the use of the Titles by the Registered Individuals would not be expected to deceive or mislead existing and prospective Clients.
13. For the reasons provided above, it would not be prejudicial to the public interest to grant the Exemption Sought.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that, when using the Titles, the Filer and its Registered Individuals interact only with existing and prospective Institutional Clients that are exclusively non-individual "institutional clients" as defined in IIROC Rule 1201, or existing and prospective Corporate Issuer Clients for which the Filer and its Registered Individuals provide investment banking services.
This decision will terminate six months, or such other transition period as may be provided by law, after the coming into force of any amendment to NI 31-103 or other applicable securities law that affects the ability of the Registered Individuals to use the Titles in the circumstances described in this decision.
Kirkland Lake Gold Ltd. -- 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 in Ontario;
3. The Applicant has no intention to seek public financing by way of an offering of securities;
4. On February 25, 2022, the Applicant was granted an order (the Reporting Issuer 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 equivalent in any other jurisdiction in Canada in accordance with the simplified procedure set out in National Policy 11-206 Process for Cease to be a Reporting Issuer Applications; and
5. The representations set out in the Reporting Issuer Order continue to be true.
AND UPON the Commission being satisfied that to grant this order would not be prejudicial to the public interest;
IT IS HEREBY ORDERED pursuant to subsection 1(6) of the OBCA, that the Applicant be deemed to have ceased to be offering its securities to the public.
DATED at Toronto this 25th day of February, 2022.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
March 4, 2022
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it 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 British Columbia, Alberta and Nova Scotia.
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 Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the US. Over-the-Counter Markets;
2. the outstanding securities of the Filer, including debt securities 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 Filer, 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 Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. the Filer 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.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
March 7, 2022
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it 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 all provinces of Canada other than Ontario.
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 Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the US. Over-the-Counter Markets;
2. the outstanding securities of the Filer including debt securities, 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 Filer, 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 Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. the Filer 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.
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
March 7, 2022
The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it 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 British Columbia, Alberta, and Quebec.
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 Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the US. Over-the-Counter Markets;
2. the outstanding securities of the Filer including debt securities, 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 Filer, 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 Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and
5. the Filer 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.
Nasdaq CXC Limited and Ensoleillement Inc. -- ss. 21, 144
Subsection 144(1) of the Securities Act (Ontario) -- application for order varying the Commission's order recognizing Nasdaq CXC Limited as an exchange -- variation required to include terms and conditions applicable to Nasdaq, Inc. -- requested order granted.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 21, 144(1).
March 7, 2022
WHEREAS the Ontario Securities Commission (Commission) issued an order dated December 21, 2017, which was varied on April 20, 2018, February 8, 2019, August 31, 2020, and December 2, 2021, recognizing Ensoleillement Inc. (CXCH) and Nasdaq CXC Limited (Nasdaq Canada) as exchanges pursuant to section 21 of the Act (Recognition Order);
AND WHEREAS CXCH is the sole shareholder of Nasdaq Canada and Nasdaq, Inc. (Nasdaq) is the sole shareholder of CXCH;
AND WHEREAS the Commission considers the proper operation of CXCH and Nasdaq Canada as essential to investor protection and maintaining a fair and efficient capital market, and therefore requires that any conflicts of interest in the operation of CXCH and Nasdaq Canada be dealt with appropriately, the fairness and efficiency of the market not be impaired by any anti-competitive activity, and that systemic risks are monitored and controlled;
AND WHEREAS CXCH, Nasdaq Canada and Nasdaq have agreed to the applicable terms and conditions set out in the Schedules to the Recognition Order;
AND WHEREAS the Commission has received an application under section 144 of the Act to vary and restate the Recognition Order to reflect the introduction of certain terms and conditions applicable to Nasdaq, as set out in Schedule 4 to the Recognition Order (Application);
AND WHEREAS based on the Application and the representations that CXCH and Nasdaq Canada have made to the Commission, the Commission has determined that:
(a) CXCH and Nasdaq Canada continue to satisfy the recognition criteria set out in Schedule 1 to the Recognition Order,
(b) it is in the public interest to continue to recognize each of CXCH and Nasdaq Canada as an exchange pursuant to section 21 of the Act, and
(c) it is not prejudicial to the public interest to vary and restate the Recognition Order pursuant to section 144 of the Act;
IT IS ORDERED, pursuant to section 144 of the Act, that the Application to vary and restate the Recognition Order is granted.
IT IS ORDERED, pursuant to section 21 of the Act, that:
(a) CXCH continues to be recognized as an exchange, and
(b) Nasdaq Canada continues to be recognized as an exchange,
provided that CXCH, Nasdaq Canada and Nasdaq comply with the terms and conditions set out in the Schedules to this Recognition Order, as applicable.
DATED this 7th day of March, 2022.
1.1 Compliance with NI 21-101 and NI 23-101
The exchange complies with the requirements set out in National Instrument 21-101 Marketplace Operation (NI 21-101) and in National Instrument 23-101 Trading Rules, each as amended from time to time, which include requirements relating to:
(a) access;
(b) marketplace operations;
(c) exchange rules, policies and other similar instruments;
(d) order and trade transparency;
(e) transparency of marketplace operations;
(f) record keeping;
(g) marketplace systems and business continuity planning;
(h) confidentiality of information;
(i) outsourcing;
(j) clearing and settlement;
(k) fair and orderly markets;
(l) the management of conflicts of interest; and
(m) filing of financial statements.
2.1 Governance
The governance structure and governance arrangements of the exchange ensure:
(a) effective oversight of the exchange;
(b) that business and regulatory decisions are in keeping with the exchange's public interest mandate;
(c) fair, meaningful and diverse representation on the board of directors (Board) and any committees of the Board, including:
(i) appropriate representation of independent directors, and
(ii) a proper balance among the interests of the different persons or companies using the services and facilities of the exchange;
(d) the exchange has policies and procedures to appropriately identify and manage conflicts of interest; and
(e) there are appropriate qualifications, remuneration, limitation of liability and indemnity provisions for directors, officers and employees of the exchange.
2.2 Fitness
The exchange has policies and procedures under which it will take reasonable steps, and has taken such reasonable steps, to ensure that each director and officer is a fit and proper person.
3.1 Fair Access
(a) The exchange has established appropriate written standards for access to its services including requirements to ensure participants are appropriately registered under Ontario securities laws, or exempted from these requirements.
(b) The access standards and the process for obtaining, limiting and denying access are fair, transparent and applied reasonably.
4.1 Regulation
The exchange has the authority, resources, capabilities, systems and processes to allow it to perform its regulation functions, whether directly or indirectly through a regulation services provider, including setting requirements governing the conduct of participants, monitoring their conduct, and appropriately disciplining them for violations of exchange requirements.
5.1 Rules and Rulemaking
(a) The exchange has rules, policies, and other similar instruments (Rules) that are designed to appropriately govern and regulate the operations and activities of participants.
(b) In addition to meeting the requirements of NI 21-101 relating to market operations and exchange rules, policies and other similar instruments as referred to in paragraphs 1.1(b) and (c) of this Schedule, respectively, the Rules are also designed to
(i) ensure a fair and orderly market; and
(ii) provide a framework for disciplinary and enforcement actions.
6.1 Due Process
For any decision made by the exchange that affects a participant, or an applicant to be a participant, including a decision in relation to access, exemptions, or discipline, the exchange ensures that:
(a) parties are given an opportunity to be heard or make representations, and
(b) it keeps a record of, gives reasons for and provides for appeals or reviews of its decisions.
7.1 Clearing and Settlement
The exchange has appropriate arrangements for the clearing and settlement of trades.
8.1 Information Technology Risk Management Procedures
The exchange has appropriate risk management procedures in place including those that handle trading errors, trading halts and circuit breakers.
9.1 Financial Viability
The exchange has sufficient financial resources for the proper performance of its functions and to meet its responsibilities.
10.1 Fees
(a) All fees imposed by the exchange are reasonable and equitably allocated and are consistent with the requirements in Ontario securities laws, including those requirements listed in paragraphs 1.1(a) and (e) of this Schedule.
(b) The process for setting fees is fair and appropriate, and the fee model is transparent.
11.1 Information Sharing and Regulatory Cooperation
The exchange has mechanisms in place to enable it to share information and otherwise co-operate with the Commission, recognized self-regulatory organizations, other recognized or exempt exchanges, clearing agencies, investor protection funds, and other appropriate regulatory bodies.
1. Definitions and Interpretation
(a) For the purposes of this Schedule:
"accounting principles" means accounting principles as defined in National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards;
"Nasdaq Canada dealer" means a dealer that is also a significant shareholder;
"Nasdaq Canada marketplace participant" means a marketplace participant of Nasdaq Canada;
"affiliated entity" has the meaning ascribed to it in section 1.3 of National Instrument 21-101 Marketplace Operation;
"associate" has the meaning ascribed to it in subsection 1(1) of the Act;
"Board" means the board of directors of CXCH or Nasdaq Canada, as the context requires;
"criteria for recognition" means all the criteria for recognition set out in Schedule 1 to the Order;
"Competitor" means a person whose consolidated business, operations or disclosed business plans are in competition, to a significant extent, with the trading functions, market data services or other material lines of business of Nasdaq Canada or its affiliated entities;
"dealer" means "investment dealer", as that term is defined in section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registration Obligations;
"IIROC" means the Investment Industry Regulatory Organization of Canada;
"marketplace" has the meaning ascribed to it in subsection 1(1) of the Act;
"marketplace participant" has the meaning ascribed to it in section 1.1 of NI 21-101;
"Nominating Committee" means the committee established by CXCH pursuant to section 26 of Schedule 3;
"officer" has the meaning ascribed to it in subsection 1(1) of the Act;
"Regulatory Oversight Committee" means the committee established by Nasdaq Canada pursuant to section 7 of this Schedule;
"Rule" means a rule, policy, or other similar instrument of Nasdaq Canada;
"shareholder" means a person or company that holds any class or series of voting shares of CXCH;
"significant shareholder" means:
(i) a person or company that beneficially owns or controls directly more than 10% of any class or series of voting shares of CXCH or Nasdaq; or
(ii) a shareholder whose nominee is on the Board, for as long as the nominee of that shareholder remains on the Board; and
"unaudited non-consolidated financial statements" means financial statements that are prepared in the same manner as audited consolidated financial statements, except that
(i) they are not audited; and
(ii) investments in subsidiary entities, jointly controlled entities and associates are accounted for as specified for separate financial statements in International Accounting Standard 27 Separate Financial Statements.
(b) For the purposes of this Schedule, an individual is independent if the individual is "independent" within the meaning of section 1.4 of National Instrument 52-110 Audit Committees, as amended from time to time, but is not independent if the individual:
(i) is a partner, officer, director or employee of a Nasdaq Canada marketplace participant, or of an affiliated entity of a Nasdaq Canada marketplace participant, who is responsible for or is actively engaged in the day-to-day operations or activities of that Nasdaq Canada marketplace participant;
(ii) is an officer or an employee of CXCH or any of its affiliated entities;
(iii) is a partner, officer or employee of Nasdaq, Inc. or an associate of that partner, officer or employee;
(iv) is a director of Nasdaq or an associate of that director;
(v) is a person who owns or controls, or is the officer or employee of a person or company that owns or controls, directly or indirectly, more than 10% of the shares of CXCH;
(vi) is a director of a person or company that beneficially owns or controls, directly or indirectly, more than 10% of any class or series of voting shares of Nasdaq; or
(vii) has any relationship with Nasdaq or a person or company that owns or controls, directly or indirectly, more than 10% of the shares of CXCH, that could, in the view of the Nominating Committee, having regard to all relevant circumstances, be reasonably perceived to interfere with the exercise of his or her independent judgment as a director of CXCH or Nasdaq Canada.
(c) For the purposes of paragraph (b), the Nominating Committee may waive the restrictions set out in subparagraphs (b)(iv) and (b)(vi) provided that:
(i) the individual being considered does not have, and has not had, any relationship with Nasdaq, Inc. that could, in the view of the Nominating Committee, having regard to all relevant circumstances, be reasonably perceived to interfere with the exercise of his or her independent judgement as a director of Nasdaq Canada or CXCH;
(ii) Nasdaq Canada publicly discloses the use of the waiver with reasons why the particular candidate was selected;
(iii) Nasdaq Canada provides advance notice to the Commission, at least 15 business days before the public disclosure in sub-paragraph (c)(ii) is made, and
(iv) the Commission does not object within 15 business days of its receipt of the notice provided under sub-paragraph (c)(iii) above.
2. Public Interest Responsibilities
(a) Nasdaq Canada must conduct its business and operations in a manner that is consistent with the public interest.
(b) The mandate of the Board must expressly include regulatory and public interest responsibilities of Nasdaq Canada.
3. Share Ownership Restrictions
(a) Without the prior approval of the Commission, and subject to terms and conditions considered appropriate by the Commission, no person or company and no combination of persons or companies acting jointly or in concert will beneficially own or exercise control or direction over:
(i) more than 10% of any class or series of voting shares of Nasdaq Canada and, thereafter,
(ii) more than 50% of any class or series of voting shares of Nasdaq Canada.
(b) The articles of Nasdaq Canada must contain the share ownership restrictions and provisions respecting the enforcement of such restrictions which, without limiting the foregoing, may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends, the refusal of the issue or registration of voting shares and the sale or redemption of voting shares held contrary to the restrictions and payment of net proceeds of the sale or redemption to the person entitled thereto.
4. Recognition Criteria
Nasdaq Canada must continue to meet the criteria for recognition set out in Schedule 1 to the Order.
5. Fitness
To ensure that Nasdaq Canada operates with integrity and in the public interest, Nasdaq Canada will take reasonable steps to ensure that each director or officer of Nasdaq Canada is a fit and proper person. As part of those steps, Nasdaq Canada will consider whether the past conduct of each director or officer of Nasdaq Canada affords reasonable grounds for the belief that the director or officer will perform their duties with integrity and in a manner that is consistent with Nasdaq Canada's public interest responsibilities.
6. Board of Directors
(a) Nasdaq Canada must ensure that at least 50% of its Board members are independent.
(b) The Chair of the Board must be independent.
(c) In the event that Nasdaq Canada fails to meet the requirement in paragraph (a) of this section, it must immediately advise the Commission and take appropriate measures to promptly remedy such failure.
(d) Nasdaq Canada must ensure that its Board is subject to requirements that the quorum for the Board consists of a majority of the Board members, at least 50% of whom must be independent directors.
7. Regulatory Oversight Committee
(a) Nasdaq Canada must establish and maintain a Regulatory Oversight Committee that, at a minimum:
(i) is made up of at least three directors, a majority of whom must be independent;
(ii) reviews and decides, or makes recommendations to the Board, on proposed regulations and rules that must be submitted to the Commission for review and approval under Schedule 5 Process for the Review and Approval of Rules and the Information Contained in Form 21-101F1 and the Exhibits Thereto of this Order;
(iii) considers real or perceived conflicts of interest that may arise, including but not limited to the following contexts:
(A) ownership interests in CXCH by any Nasdaq Canada marketplace participant with representation on the Board of CXCH or the Board of Nasdaq Canada,
(B) significant changes in ownership of Nasdaq Canada and CXCH, and
(C) the profit-making objective and the public interest responsibilities of Nasdaq Canada, including general oversight of the management of the regulatory and public interest responsibilities of Nasdaq Canada;
(iv) oversees the establishment of mechanisms to avoid and appropriately manage conflicts of interest or potential conflicts of interest, perceived or real, including any policies and procedures that are developed by Nasdaq Canada and CXCH, including those that are required to be established pursuant to the Schedules of the Order;
(v) reviews the effectiveness of the policies and procedures regarding conflicts of interest on a regular, and at least annual, basis;
(vi) reports in writing directly to the Commission on any matter that the Regulatory Oversight Committee deems appropriate or that is required by the Commission without first requiring Board approval for such reporting;
(vii) has a requirement that the quorum consist of a majority of the Regulatory Oversight Committee members, a majority of whom must be independent.
(b) The Regulatory Oversight Committee must provide such information as may be required by the Commission from time to time.
8. Conflicts of Interest and Confidentiality Procedures
(a) Nasdaq Canada must establish, maintain and require compliance with policies and procedures that:
(i) require that confidential information regarding marketplace operations, regulation functions, or a Nasdaq Canada marketplace participant that is obtained by a partner, director, officer or employee of a significant shareholder through that individual's involvement in the management or oversight of marketplace operations or regulation functions of Nasdaq Canada:
(A) be kept separate and confidential from the business or other operations of the significant shareholder and its affiliated entities, except with respect to information regarding marketplace operations where disclosure is necessary to carry out the individual's responsibilities for the management or oversight of marketplace operations and the individual can and does exercise due care in his or her disclosure of the information, and
(B) not be used to provide an advantage to the significant shareholder or its affiliated entities.
(b) Nasdaq Canada must regularly review compliance with the policies and procedures established under (a) and must document each review, and any deficiencies, and how those deficiencies were remedied.
9. Access
Nasdaq Canada's requirements must provide access to the facilities of Nasdaq Canada only to properly registered investment dealers that are members of IIROC and satisfy reasonable access requirements established by Nasdaq Canada.
10. Regulation of Nasdaq Canada Marketplace Participants
(a) Nasdaq Canada must establish, maintain and require compliance with policies and procedures that effectively monitor and enforce the Rules against Nasdaq Canada marketplace participants, either directly or indirectly through a regulation services provider.
(b) Nasdaq Canada has retained and will continue to retain IIROC as a regulation services provider to provide, as agent for Nasdaq Canada, certain regulation services that have been approved by the Commission.
(c) Nasdaq Canada must perform all other regulation functions not performed by IIROC, and must maintain adequate staffing, systems and other resources in support of those functions. Nasdaq Canada must obtain prior Commission approval before outsourcing such regulation functions to any party, including affiliated entities or associates of Nasdaq Canada.
(d) Nasdaq Canada must notify the Commission of any violations of Ontario securities law of which it becomes aware in the ordinary course of its business or otherwise.
11. Fees, Fee Models and Incentives
(a) Nasdaq Canada must not, through any fee schedule, any fee model or any contract, agreement or other arrangement with any marketplace participant or any other person or company, provide:
(i) any discount, rebate, allowance, price concession or other similar arrangement that is accessible only to, whether as designed or by implication, a particular marketplace participant or any other particular person or company, or
(ii) any discount, rebate, allowance, price concession or other similar arrangement for any service or product offered by Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders that is conditional upon:
(A) the requirement to have Nasdaq Canada be set as the default or first marketplace a marketplace participant routes orders to, or
(B) the router of Nasdaq Canada being used as the marketplace participant's primary order router.
(b) Except with the prior approval of the Commission, Nasdaq Canada must not, through any fee schedule, any fee model or any contract, agreement or other arrangement with any marketplace participant or any other person or company, provide:
(i) any discount, rebate, allowance, price concession or other similar arrangement on any services or products offered by Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders that is conditional upon the purchase of any other service or product provided by Nasdaq Canada or Nasdaq or any affiliated entity, or
(ii) any discount, rebate, allowance, price concession or other similar arrangement that is accessible only to, whether as designed or by implication, a class of marketplace participants or of any other persons or companies.
(c) Except with the prior approval of the Commission, Nasdaq Canada must not require another person or company to purchase or otherwise obtain products or services from Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders as a condition of Nasdaq Canada supplying or continuing to supply a product or service.
(d) If the Commission considers that it would be in the public interest, the Commission may require Nasdaq Canada to submit for approval by the Commission a fee, fee model or incentive that has previously been submitted to and/or approved by the Commission.
(e) Where the Commission decides not to approve the fee, fee model or incentive submitted under (d), any previous approval for the fee, fee model or incentive must be revoked, if applicable, and Nasdaq Canada will no longer be permitted to offer the fee, fee model or incentive.
12. Order Routing
Nasdaq Canada must not support, encourage or incent, either through fee incentives or otherwise, Nasdaq Canada marketplace participants, Nasdaq affiliated entities or significant shareholders to coordinate the routing of their orders to Nasdaq Canada.
13. Financial Reporting
Nasdaq Canada must deliver to the Commission its annual financial budget, together with the underlying assumptions, that has been approved by its Board, within 30 days from the commencement of each fiscal year.
14. Financial Viability Monitoring
(a) Nasdaq Canada must maintain sufficient financial resources for the proper performance of its functions and to meet its responsibilities.
(b) Nasdaq Canada must calculate the following financial ratios monthly:
(i) a current ratio, being the ratio of current assets to current liabilities;
(ii) a debt to cash flow ratio, being the ratio of total debt (including any line of credit draw downs, and the current and long-term portions of any loans, but excluding accounts payable, accrued expenses and other liabilities) to EBITDA (earnings before interest, taxes, stock-based compensation, depreciation and amortization) for the most recent 12 months; and
(iii) a financial leverage ratio, being the ratio of total assets to shareholders' equity,
in each case following the same accounting principles as those used for the unaudited non-consolidated financial statements of Nasdaq Canada.
(c) Nasdaq Canada must report quarterly in writing to the Commission the monthly calculations for the previous quarter of the financial ratios as required to be calculated under (b).
(d) If Nasdaq Canada determines that it does not have, or anticipates that, in the next twelve months, it will not have sufficient financial resources for the proper performance of its functions and to meet its responsibilities, it will immediately notify the Commission along with the reasons and any impact on the financial viability of Nasdaq Canada.
(e) Upon receipt of a notification made by Nasdaq Canada under (d), the Commission may, as determined appropriate, impose additional terms and conditions on Nasdaq Canada.
15. Additional Information
(a) Nasdaq Canada must provide the Commission with:
(i) the information set out in Appendix A to this Schedule, as amended from time to time; and
(ii) any information required to be provided by Nasdaq Canada to IIROC, including all order and trade information, as required by the Commission.
16. Governance Review
(a) At the request of the Commission, Nasdaq Canada must engage an independent consultant, or independent consultants acceptable to the Commission to prepare a written report assessing the governance structure of Nasdaq Canada (Governance Review).
(b) The written report must be provided to the Board of Nasdaq Canada promptly after the report's completion and then to the Commission within 30 days of providing it to the Board.
(c) The scope of the Governance Review must be approved by the Commission.
17. Provision of Information
(a) Nasdaq Canada must, and must cause its affiliated entities, to promptly provide to the Commission, on request, any and all data, information and analyses in the custody or control of Nasdaq Canada or any of its affiliated entities, without limitations, redactions, restrictions or conditions, including, without limiting the generality of the foregoing:
(i) data, information and analyses relating to all of its or their businesses; and
(ii) data, information and analyses of third parties in its or their custody or control.
(b) Nasdaq Canada must share information and otherwise cooperate with other recognized or exempt exchanges, recognized self-regulatory organizations, recognized or exempt clearing agencies, investor protection funds, and other appropriate regulatory bodies.
18. Compliance with Terms and Conditions
(a) Nasdaq Canada must certify in writing to the Commission, in a certificate signed by its CEO and either its general counsel or chief compliance officer, within one year of the effective date of its recognition as an exchange pursuant to this Order and every year subsequent to that date, or at any times required by the Commission, that it is in compliance with the terms and conditions applicable to it in the Order and describe in detail:
(i) the steps taken to require compliance;
(ii) the controls in place to verify compliance;
(iii) the names and titles of employees who have oversight of compliance.
(b) If Nasdaq Canada or any of its directors, officers or employees become aware of a breach or a possible breach of any of the terms and conditions applicable to Nasdaq Canada under the Schedules to the Order, such person must, within two business days after becoming aware of the breach or possible breach, notify the Regulatory Oversight Committee of the breach or possible breach. The director, officer or employee of the recognized exchange must provide to the Regulatory Oversight Committee details sufficient to describe the nature, date and effect (actual and anticipated) of the breach or possible breach.
(c) The Regulatory Oversight Committee must, within two business days after being notified of the breach or possible breach, notify the Commission and confirm that the breach or possible breach is under investigation as required by (d).
(d) The Regulatory Oversight Committee must promptly cause to be conducted an investigation of the breach or possible breach reported under (b). Once the Regulatory Oversight Committee has made a determination as to whether there has been a breach, or that there is an impending breach, of any terms and conditions applicable to Nasdaq Canada under the Schedules to the Order, the Regulatory Oversight Committee must, within two business days of such determination, notify the Commission of its determination and must provide details sufficient to describe the nature, date and effect (actual and anticipated) of the breach or impending breach, and any actions that will be taken to address it.
19. Listings
Except with the prior approval of the Commission, no securities will be listed on Nasdaq Canada.
1. Ad Hoc
(a) Immediate notification of a decision to enter into a definitive agreement (including a binding letter of intent), memorandum of understanding or other similar agreement with any governmental or regulatory body, self-regulatory organization, clearing agency, stock exchange, other marketplace or market, except in the case where the agreement or arrangement: (i) is primarily intended to restrict the use or disclosure of confidential information, (ii) is primarily for the purpose of facilitating discussions in connection with a possible definitive agreement, (iii) is necessary to support the provision of the existing exchange services, (iv) relates to the provision of the existing exchange services and is also subject to the standard form agreements of the exchange (for example, data subscription agreements, etc.), or (v) relates to a business line other than exchange services.
(b) Immediate notification if Nasdaq Canada:
(i) becomes the subject of any order, directive or similar action of a governmental or regulatory authority;
(ii) becomes aware that it is the subject of a criminal or regulatory investigation; or
(iii) becomes, or it is notified in writing that it will become, the subject of a material lawsuit.
(c) Any strategic plan for Nasdaq Canada, within 30 days of approval by the Board.
(d) Any information submitted by Nasdaq Canada to a Canadian securities regulatory authority under a requirement of a recognition order, exemption order or NI 21-101, provided concurrently.
(e) Copies of all notices, bulletins and similar forms of communication that Nasdaq Canada sends to the Nasdaq Canada marketplace participants.
(f) Prompt notification of any application for exemption or waiver from Nasdaq Canada requirements received from a significant shareholder or any of its affiliated entities.
2. Quarterly Reporting
(a) A quarterly report summarizing all exemptions or waivers granted during the period pursuant to the Rules to any Nasdaq Canada marketplace participant, which must include the following information:
(i) the name of the Nasdaq Canada marketplace participant;
(ii) the type of exemption or waiver granted during the period;
(iii) the date of the exemption or waiver; and
(iv) a description of the recognized exchange's reason for the decision to grant the exemption or waiver.
(b) A quarterly report summarizing instances where conflicts of interest or potential conflicts of interest with respect to Competitors have been identified by Nasdaq Canada and how such conflicts were addressed.
3. Annual Reporting
At least annually, an assessment of the risks, including business risks, facing Nasdaq Canada and the plan for addressing such risks.
20. Definitions and Interpretation
Terms used in this Schedule have the same meanings and interpretation as in section 1 of Schedule 2. In addition:
21. Public Interest Responsibilities
(a) CXCH must conduct its business and operations in a manner that is consistent with the public interest.
(b) The mandate of the Board must expressly include CXCH's regulatory and public interest responsibilities.
22. Share Ownership Restrictions
(a) Without the prior approval of the Commission, and subject to terms and conditions considered appropriate by the Commission, no person or company and no combination of persons or companies acting jointly or in concert may beneficially own or exercise control or direction over more than 10% or more than 50% respectively of any class or series of voting shares of CXCH.
(b) The articles of CXCH must contain the share ownership restrictions and provisions respecting the enforcement of such restrictions which, without limiting the foregoing, may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends, the refusal of the issue or registration of voting shares and the sale or redemption of voting shares held contrary to the restrictions and payment of net proceeds of the sale or redemption to the person entitled thereto.
23. Recognition Criteria
CXCH must continue to meet the criteria for recognition set out in Schedule 1 to the Order.
24. Fitness
In order to ensure that CXCH and Nasdaq Canada operate with integrity and in the public interest, CXCH will take reasonable steps to ensure that each director or officer of CXCH is a fit and proper person. As part of those steps, CXCH will consider whether the past conduct of each director or officer of CXCH affords reasonable grounds for belief that the director or officer will perform their duties with integrity and in a manner that is consistent with CXCH's and Nasdaq Canada's public interest responsibilities.
25. Board of Directors
(a) CXCH must ensure that at least 50% of its Board members are independent.
(b) The Chair of the Board must be independent.
(c) In the event that CXCH fails to meet the requirement under (a) of this section, it must immediately advise the Commission and take appropriate measures to remedy such failure.
(d) CXCH must ensure that its Board is subject to requirements that the quorum for the Board consists of a majority of the Board members, at least 50% of whom must be independent.
26. Nominating Committee
CXCH must maintain a Nominating Committee that, at a minimum:
(a) is made up of at least three directors, a majority of whom must be independent, and has an independent Chair;
(b) confirms the status of a nominee to the Board as independent before the individual is appointed to the Board or the name of the individual is submitted to shareholders as a nominee for election to the Board, whichever comes first;
(c) confirms, on an annual basis, that the status of the directors that are independent has not changed;
(d) assesses and approves all nominees of management to the Board; and
(e) has a requirement that the quorum consist of a majority of the Nominating Committee members, a majority of whom must be independent.
27. Confidentiality Procedures
(a) CXCH must establish, maintain and require compliance with policies and procedures that:
(i) require that confidential information regarding marketplace operations, regulation functions, or a Nasdaq Canada marketplace participant that is obtained by a partner, director, officer or employee of CXCH or Nasdaq through that individual's involvement in the management or oversight of the marketplace operations or regulation functions of Nasdaq Canada:
(A) be kept separate and confidential from the business or other operations of the partner, director, officer or employee of CXCH or Nasdaq, except with respect to information regarding marketplace operations where disclosure is necessary to carry out the individual's responsibilities for the management or oversight of marketplace operations and the individual can and does exercise due care in his or her disclosure of the information, and
(B) not be used to provide an advantage to the partner, director, officer or employee of CXCH or Nasdaq or Nasdaq's affiliated entities,
provided that nothing in (a)(i) will be construed to limit CXCH or Nasdaq Canada from providing to Nasdaq necessary information.
(b) CXCH must regularly review compliance with the policies and procedures established under (a) and must document each review and any deficiencies and how those deficiencies were remedied.
28. Allocation of Resources
(a) CXCH must, for so long as Nasdaq Canada carries on business as an exchange, allocate sufficient financial and other resources to Nasdaq Canada to ensure that Nasdaq Canada can carry out its functions in a manner that is consistent with the public interest and in compliance with Ontario securities law.
(b) CXCH must notify the Commission immediately upon being aware that it is or will be unable to allocate sufficient financial and other resources, as required under (a), to Nasdaq Canada.
29. Fees, Fee Models and Incentives
(a) CXCH must ensure that its affiliated entities, including Nasdaq Canada, do not, through any fee schedule, any fee model or any contract, agreement or other arrangement with any marketplace participant or any other person, significant shareholder or company, provide:
(i) any discount, rebate, allowance, price concession or other similar arrangement on any services or products offered by Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders that is conditional upon the purchase of any other service or product provided by the affiliated entity; or
(ii) any discount, rebate, allowance, price concession or other similar arrangement that is accessible only to, whether as designed or by implication, a class of marketplace participants or of any other persons or companies,
unless prior approval has been granted by the Commission.
(b) CXCH must ensure that Nasdaq Canada does not require a person or company to purchase or otherwise obtain products or services from Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders as a condition of Nasdaq Canada supplying or continuing to supply a product or service unless prior approval has been granted by the Commission.
(c) CXCH must ensure that Nasdaq Canada or Nasdaq and its affiliated entities and significant shareholders do not require another person, significant shareholder or company to obtain products or services from Nasdaq Canada as a condition of the affiliated entity supplying or continuing to supply a product or service.
30. Order Routing
CXCH must not support, encourage or incent, either through fee incentives or otherwise, Nasdaq Canada marketplace participants, Nasdaq affiliated entities or significant shareholders to coordinate the routing of their order to Nasdaq Canada.
31. Financial Reporting
CXCH must deliver to the Commission its annual financial budget, together with the underlying assumptions, that has been approved by its Board, within 30 days from the commencement of each fiscal year.
32. Prior Commission Approval
CXCH must obtain prior Commission approval of any changes to any agreement between CXCH and its significant shareholders.
33. Reporting Requirements
CXCH must provide the Commission with the information set out in Appendix B to this Schedule, as amended from time to time.
34. Governance Review
(a) At the request of the Commission, CXCH must engage an independent consultant, or independent consultants, acceptable to the Commission to prepare a written report assessing the governance structure of CXCH (CXCH Governance Review).
(b) The written report must be provided to the Board of CXCH promptly after the report's completion and then to the Commission within 30 days of providing it to the Board.
(c) The scope of the CXCH Governance Review must be approved by the Commission.
35. Provision of Information
(a) CXCH must, and must cause its affiliated entities to promptly provide to the Commission, on request, any and all data, information and analyses in the custody or control or CXCH or any of its affiliated entities, without limitations, redactions, restrictions or conditions, including, without limiting the generality of the foregoing:
(i) data, information and analyses relating to all of its or their businesses; and
(ii) data, information and analyses of third parties in its or their custody or control.
(b) CXCH must share information and otherwise cooperate with other recognized or exempt exchanges, recognized self-regulatory organizations, recognized or exempt clearing agencies, investor protection funds, and other appropriate regulatory bodies.
36. Compliance with Terms and Conditions
(a) CXCH must certify in writing to the Commission, in a certificate signed by its CEO and either its Chairman of the Board, general counsel or chief compliance officer, within one year of the effective date of its recognition as an exchange pursuant to this Order and every year subsequent to that date, or at any times required by the Commission, that it is in compliance with the terms and conditions applicable to it in the Order and describe in detail:
(i) the steps taken to require compliance;
(ii) the controls in place to verify compliance; and
(iii) the names and titles of employees who have oversight of compliance.
(b) If CXCH or any of its directors, officers or employees become aware of a breach or a possible breach of any of the terms and conditions applicable to CXCH under the Schedules to the Order, such person must, within two business days after becoming aware of the breach or possible breach, notify the Board or committee designated by the Board and approved by the Commission of the breach or possible breach. The director, officer or employee of the recognized exchange must provide to the Board or committee designated by the Board details sufficient to describe the nature, date and effect (actual and anticipated) of the breach or possible breach.
(c) The Board or committee designated by the Board must, within two business days after being notified of the breach or possible breach, notify the Commission and confirm that the breach or possible breach is under investigation as required under (d).
(d) The Board or committee designated by the Board must promptly cause to be conducted an investigation of the breach or possible breach reported under (b). Once the Board or committee designated by the Board has made a determination as to whether there has been a breach, or that there is an impending breach, of any terms and conditions applicable to CXCH under the Schedules to the Order, the Board or committee designated by the Board must, within two business days of such determination, notify the Commission of its determination and must provide details sufficient to describe the nature, date and effect (actual and anticipated) of the breach or impending breach, and any actions that will be taken to address it.
1. Ad Hoc
(a) Immediate notification of a decision to enter into a definitive agreement (including a binding letter of intent), memorandum of understanding or other similar agreement with any governmental or regulatory body, self-regulatory organization, clearing agency, stock exchange, other marketplace or market, except in the case where the agreement or arrangement: (i) is primarily intended to restrict the use or disclosure of confidential information, (ii) is primarily for the purpose of facilitating discussions in connection with a possible definitive agreement, (iii) is necessary to support the provision of the existing exchange services, (iv) relates to the provision of the existing exchange services and is also subject to the standard form agreements of the exchange (for example, data subscription agreements, etc.), or (v) relates to a business line other than exchange services.
(b) Immediate notification if CXCH:
(i) becomes the subject of any order, directive or similar action of a governmental or regulatory authority;
(ii) becomes aware that it is the subject of a criminal or regulatory investigation; or
(iii) becomes, or it is notified in writing that it will become, the subject of a material lawsuit.
(c) Immediate notification if Nasdaq becomes, or it is notified in writing that it will become, the subject of a criminal, administrative or regulatory proceeding.
(d) Any strategic plan for CXCH, within 30 days of approval by the Board.
(e) Any information submitted by CXCH to a Canadian securities regulatory authority under a requirement of a recognition order, exemption order or NI 21-101, provided concurrently.
2. Annual Reporting
At least annually, or more frequently if required by the Commission, an assessment of the risks, including business risks, facing CXCH and Nasdaq Canada and the plan for addressing such risks.
37. Definitions and Interpretation
Terms used in this Schedule have the same meanings and interpretation as in section 1 of Schedule 2.
38. Public Interest Responsibilities
Nasdaq shall ensure that Nasdaq Canada and CXCH conduct the business and operations of recognized exchanges in a manner that is consistent with the public interest.
39. Allocation of Resources
(a) To ensure Nasdaq Canada and CXCH can carry out their functions in a manner that is consistent with the public interest and in compliance with Ontario securities law, Nasdaq must, for so long as Nasdaq Canada and CXCH carry on business as exchanges, facilitate the allocation of sufficient financial and non-financial resources for the operations of these exchanges.
(b) Nasdaq must notify the Commission immediately upon becoming aware that it is or will be unable to allocate sufficient financial or other resources to Nasdaq Canada or CXCH, as required under paragraph (a).
This Protocol sets out the procedures a recognized exchange (Exchange) must follow for any Rule or Change, both as defined in section 2 below, and describes the procedures for their review by Commission Staff (Staff) and approval by the Commission or the Director. This Protocol also establishes requirements regarding the time at which an Exchange may begin operations following recognition by the Commission.
For the purposes of this Protocol:
(a) Change means a Fee Change, a Housekeeping Change or a Significant Change.
(b) Director means "Director" as defined in subsection 1(1) of the Securities Act (Ontario).
(c) Fee Change means any new fee or fee model of the Exchange and any amendment to a fee or fee model.
(d) Fee Change subject to Public Comment means a Fee Change that, in Staff's view, may have a significant impact on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets or otherwise raises regulatory or public interest concerns and should be subject to public comment.
(e) Housekeeping Change means an amendment to the information in Form 21-101F1 that
(i) does not have a significant impact on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets, or
(ii) is of a housekeeping or administrative nature and is comparable to the types of housekeeping changes listed in subsection 6.1(5)(b) of Companion Policy 21-101CP.
(f) Housekeeping Rule means a new Rule or an amendment to a Rule that
(i) does not have a significant impact on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets, or
(ii) is of a housekeeping or administrative nature and is comparable to the types of housekeeping changes listed in subsection 6.1(5)(b) of Companion Policy 21-101CP.
(g) Public Interest Rule means a Rule or an amendment to a Rule that is not a Housekeeping Rule.
(h) Rule includes a rule, policy and other similar instrument of the Exchange.
(i) Significant Change means an amendment to the information in Form 21-101F1 other than
(i) a Housekeeping Change,
(ii) a Fee Change, or
(iii) a Rule,
and for greater certainty includes the matters listed in subsection 6.1(4) of Companion Policy 21-101 CP.
(j) Significant Change subject to Public Comment means a Significant Change that
(i) is listed in paragraphs 6.1(4)(a) or (b) of Companion Policy 21-101 CP, or
(ii) in Staff's view, may have a significant impact on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets or otherwise raises regulatory or public interest concerns and should be subject to public comment.
3. Scope
The Exchange and Staff will follow the process for review and approval set out in this Protocol for all Changes, new Rules and Rule amendments.
4. Board Approval
The Exchange's board of directors, or a duly authorized committee of the board, must approve all Rules prior to their submission under this Protocol.
5. Waiving or Varying the Protocol
(a) The Exchange may submit a written request with Staff to waive or vary any part of this Protocol. The request must provide reasons why granting the waiver is appropriate in the circumstances.
(b) Staff will use their best efforts to provide to the Exchange within five business days of receipt of its request either:
(i) written notice that Staff object to granting the waiver or variation; or
(ii) written notice that the waiver or variation has been granted by Staff.
6. Commencement of Exchange Operations
The Exchange must not begin operations until a reasonable period of time after the Exchange is notified that it has been recognized by the Commission.
7. Materials to be Submitted and Timelines
(a) Prior to the implementation of a Fee Change, Public Interest Rule or Significant Change, the Exchange will provide Staff with the following materials:
(i) a cover letter that, together with the notice for publication submitted under paragraph (a)(ii), if applicable, fully describes:
(A) the proposed Fee Change, Public Interest Rule or Significant Change;
(B) the expected date of implementation of the proposed Fee Change, Public Interest Rule or Significant Change;
(C) the rationale for the proposal and any relevant supporting analysis;
(D) the expected impact, including the quantitative impact, of the proposed Fee Change, Public Interest Rule or Significant Change on the market structure, members and, if applicable, on investors, issuers and the capital markets;
(E) the expected impact of the Fee Change, Public Interest Rule or Significant Change on the Exchange's compliance with Ontario securities law requirements and in particular requirements for fair access and maintenance of fair and orderly markets;
(F) a summary of any consultations, including consultations with external parties, undertaken in formulating the Fee Change, Public Interest Rule or Significant Change, and the internal governance process followed to approve the Rule or Change;
(G) for a proposed Fee Change:
1. the expected number of marketplace participants likely to be subject to the new fee, along with a description of the costs they will incur; and
2. if the proposed Fee Change applies differently across types of marketplace participants, a description of this difference, how it impacts each class of affected marketplace participant, including, where applicable, numerical examples, and any justification for the difference in treatment.
(H) if the Public Interest Rule or Significant Change will require members or service vendors to modify their systems after implementation of the Rule or Change, the expected impact of the Rule or Change on the systems of members and service vendors together with an estimate of the amount of time needed to perform the necessary work and how the estimated amount of time was deemed reasonable in light of the expected impact of the Public Interest Rule or Significant Change on the Exchange, its market structure, members, issuers, investors or the Canadian capital markets;
(I) where the proposed Significant Change is not a Significant Change subject to Public Comment, the rationale for why the proposed Significant Change is not considered a Significant Change subject to Public Comment;
(J) a discussion of any alternatives considered; and
(K) if applicable, whether the proposed Fee Change, Significant Change or Public Interest Rule would introduce a fee model, feature or Rule that currently exists in other markets or jurisdictions;
(ii) for a proposed Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, a notice for publication that generally includes the information required under paragraph (a)(i), except information that, if included in the notice, would result in the public disclosure of sensitive information or confidential or proprietary financial, commercial or technical information;
(iii) for a proposed Public Interest Rule, the text of the Rule and a blacklined version of the Rule indicating changes to any existing Rules, and if supplementary material relating to the Rule is contained in Form 21-101F1, blacklined and clean copies of Form 21-101F1; and
(iv) for a proposed Fee Change or Significant Change, blacklined and clean copies of Form 21-101F1 showing the proposed Change.
(b) The Exchange will submit the materials set out in subsection (a)
(i) at least 45 days prior to the expected implementation date of a proposed Public Interest Rule or Significant Change; and
(ii) at least fifteen business days prior to the expected implementation date of a proposed Fee Change.
(c) For a Housekeeping Rule, the Exchange will provide Staff with the following materials:
(i) a cover letter that fully describes the Rule and indicates that it was classified as a Housekeeping Rule and provides an analysis of the rationale for the classification, and the date or proposed date of implementation of the Rule;
(ii) the text of the Rule and a blacklined version of the Rule indicating changes to any existing Rules;
(iii) if supplementary material relating to the Rule is contained in Form 21-101F1, blacklined and clean copies of Form 21-101F1; and
(iv) a notice for publication on the OSC website or in the OSC Bulletin that contains the information in paragraph (ii) as well as the implementation date for the Rule and indicates that the Rule has been classified as a Housekeeping Rule and was not published for comment.
(d) For a Housekeeping Change, the Exchange will provide Staff with the following materials:
(i) a cover letter that indicates that the change was classified as a Housekeeping Change and, for each Housekeeping Change, provides an analysis of the rationale for the classification and the expected or actual date of implementation of the Change; and
(ii) blacklined and clean copies of Form 21-101F1 showing the Change.
(e) The Exchange will submit the materials set out in subsection (d) by the earlier of
(i) the Exchange's close of business on the 10th calendar day after the end of the calendar quarter in which the Housekeeping Change was implemented; and
(ii) the date on which the Exchange publicly announces a Housekeeping Change, if applicable.
8. Review by Staff of notice and materials to be published for comment
(a) Within 5 business days of the receipt of the notice and materials submitted by the Exchange relating to a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, in accordance with subsection 7(a), Staff will review the notice and materials to ensure that they contain an adequate level of detail, analysis and discussion to elicit meaningful public comment, and will promptly notify the Exchange of any deficiency requiring a resubmission of the notice and/or materials.
(i) Where the notice and/or materials are considered by Staff to be deficient, the Exchange will amend and resubmit the notice and/or materials accordingly, and the date of resubmission will serve as the submission date for the purposes of this Protocol.
(ii) Where the notice and materials are considered by Staff to be adequate for publication, Staff will proceed with the processes set out in section 9.
9. Publication of a Public Interest Rule, Significant Change Subject to Public Comment or Fee Change Subject to Public Comment
(a) As soon as practicable after the receipt of the notice and materials submitted by the Exchange relating to a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, in accordance with subsection 7(a), Staff will publish in the OSC Bulletin and/or on the OSC website, the notice prepared by the Exchange, along with a notice prepared by Staff, if necessary, that provides market participants with an opportunity to provide comments to Staff and to the Exchange within 30 days from the date the notice appears in the OSC Bulletin or on the OSC website, whichever comes first.
(b) If public comments are received
(i) the Exchange will forward copies of the comments promptly to Staff; and
(ii) the Exchange will prepare a summary of the public comments and a response to those comments and provide them to Staff promptly after the end of the comment period.
10. Review and Approval Process for Proposed Fee Changes, Public Interest Rules and Significant Changes
(a) Staff will use their best efforts to complete their review of a proposed Fee Change, Public Interest Rule or Significant Change within
(i) 45 days from the date of submission of a proposed Public Interest Rule or Significant Change; and
(ii) fifteen business days from the date of submission of a proposed Fee Change.
(b) Staff will notify the Exchange if they anticipate that their review of the proposed Fee Change, Public Interest Rule or Significant Change will exceed the timelines in subsection (a).
(c) If Staff have material comments or require additional information to complete their review of a proposed Fee Change, Public Interest Rule or Significant Change, Staff will use best efforts to provide the Exchange with a comment letter promptly by the end of the public comment period for a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, and promptly after the receipt of the materials submitted under section 7 for all other Changes.
(d) The Exchange will respond to any comments received from Staff in writing.
(e) Unless Staff agree to an extension of time, if the Exchange fails to respond to Staff's comments within 120 days after the receipt of Staff's comment letter, the Exchange will be deemed to have withdrawn the proposed Fee Change, Public Interest Rule or Significant Change. If the Exchange wishes to proceed with the Fee Change, Public Interest Rule or Significant Change after it has been deemed withdrawn, the Exchange will have to be re-submit it for review and approval in accordance with this Protocol.
(f) Upon completion of Staff's review of a Fee Change, Public Interest Rule or Significant Change, Staff will submit the Change or Rule to the Director or, in the circumstances described in subsection (g), to the Commission, for a decision within the following timelines:
(i) for a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, the later of 45 days from the date that the related materials were published for comment and the date that Staff's comments and public comments, including any concerns identified, have been adequately addressed by the Exchange;
(ii) for any other Significant Change, the later of 45 days from the date of submission of the Change and the date that Staff's comments and any concerns identified have been adequately addressed by the Exchange; or
(iii) for any other Fee Change, the later of fifteen business days from the date of submission of the change and the date that Staff's comments and any concerns identified have been adequately addressed by the Exchange.
(g) A Fee Change, Public Interest Rule or Significant Change may be submitted to the Commission for a decision, within the timelines in subsection (f),
(i) if the proposed Fee Change, Public Interest Rule or Significant Change introduces a novel feature to the Exchange or the capital markets;
(ii) if the proposed Fee Change, Public Interest Rule or Significant Change raises significant regulatory or public interest concerns; or
(iii) in any other situation where, in Staff's view, Commission approval is appropriate.
(h) Staff will promptly notify the Exchange of the decision.
(i) If a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment is approved, Staff will publish the following documents in the OSC Bulletin and/or on the OSC website promptly after the approval:
(i) a notice indicating that the proposed Rule or Change is approved;
(ii) the summary of public comments and responses prepared by the Exchange, if applicable; and
(iii) if non-material changes were made to the version published for public comment, a brief description of these changes prepared by the Exchange and a blacklined copy of the revised Rule or Change highlighting the revisions made.
11. Review Criteria for a Fee Change, Public Interest Rule and Significant Change
(a) Staff will review a proposed Fee Change, Public Interest Rule or Significant Change to assess whether it is in the public interest for the Director or the Commission to approve the Rule or Change. In making this determination, Staff will have regard for the purposes of the Securities Act (Ontario) (Act) as set out in section 1.1 of the Act. The factors that Staff will consider in making their determination also include whether:
(i) the Rule or Change would impact the Exchange's compliance with Ontario securities law;
(ii) the Exchange followed its established internal governance practices in approving the proposed Rule or Change;
(iii) the Exchange followed the requirements of this Protocol and has provided sufficient analysis of the nature, purpose and effect of the Rule or Change; and
(iv) the Exchange adequately addressed any comments received.
12. Effective Date of a Fee Change, Public Interest Rule or Significant Change
(a) A Public Interest Rule or Significant Change will be effective on the later of:
(i) the date that the Exchange is notified that the Change or Rule is approved;
(ii) if applicable, the date of publication of the notice of approval on the OSC website;
(iii) if applicable, the implementation date established by the Exchange's Rules, agreements, practices, policies or procedures; and
(iv) the date designated by the Exchange.
(b) The Exchange must not implement a Fee Change unless the Exchange has provided marketplace participants with notice of the Fee Change at least five business days prior to implementation.
(c) Where a Significant Change involves a material change to any of the systems, operated by or on behalf of the Exchange, described in section 12.1 of National Instrument 21-101, the Significant Change will not be effective until a reasonable period of time after the Exchange is notified that the Significant Change is approved.
(d) In determining what constitutes a reasonable period of time for purposes of implementing a Significant Change under paragraph (c), Staff will consider how the Significant Change will impact the Exchange, its market structure, members, issuers, investors or the Canadian capital markets or otherwise raises regulatory or public interest concerns.
(e) The Exchange must notify Staff promptly following the implementation of a Public Interest Rule, Significant Change or Fee Change that becomes effective under subsections (a) and (b).
(f) Where the Exchange does not implement a Public Interest Rule, Significant Change or Fee Change within 180 days of the effective date of the Fee Change, Public Interest Rule or Significant Change, as provided for in subsections (a) and (b), the Public Interest Rule, Significant Change or Fee Change will be deemed to be withdrawn.
13. Significant Revisions and Republication
(a) If, subsequent to its publication for comment, the Exchange revises a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment in a manner that results in a material change to the proposed substance or effect of the Rule or Change, Staff will, in consultation with the Exchange, determine whether or not the revised Rule or Change should be published for an additional 30-day comment period.
(b) If a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment is republished under subsection (a), the request for comments will include a blacklined version marked to the originally published version, a summary of comments and responses prepared by the Exchange, and an explanation of the revisions and the supporting rationale for the revisions.
14. Withdrawal of a Fee Change, Public Interest Rule or Significant Change
(a) If the Exchange withdraws a Fee Change, Public Interest Rule or a Significant Change that was previously submitted, it will provide a written notice of withdrawal to Staff.
(b) If the notice of withdrawal relates to a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment, Staff will publish the notice of withdrawal in the OSC Bulletin and/or on the OSC website as soon as practicable.
(c) If a Public Interest Rule, Significant Change subject to Public Comment or Fee Change subject to Public Comment is deemed to have been withdrawn as provided in subsection 10(e), Staff will prepare and publish a notice informing market participants that the Exchange did not proceed with the Rule or Change.
15. Effective Date of a Housekeeping Rule or Housekeeping Change
(a) Subject to subsections (c) and (d), a Housekeeping Rule will be effective on the later of
(i) the date of the publication of the notice to be published on the OSC website or in the OSC Bulletin, in accordance with subsection (e), and
(ii) the date designated by the Exchange.
(b) Subject to subsections (c) and (d), a Housekeeping Change will be effective on the date designated by the Exchange.
(c) Staff will review the materials submitted by the Exchange for a Housekeeping Change or Housekeeping Rule to assess the appropriateness of the categorization of the Rule or Change as housekeeping within five business days from the date that the Exchange submitted the documents in accordance with subsections 7(c) and 7(d). The Exchange will be notified in writing if there is disagreement with respect to the categorization of the Rule or Change as housekeeping.
(d) If Staff disagree with the categorization of the Rule or Change as housekeeping, the Exchange will immediately repeal the Change, if applicable, submit the proposed Rule as a Public Interest Rule or the proposed Change as a Significant Change, and follow the review and approval processes described in this Protocol as applying to a Public Interest Rule or Significant Change, including those processes applicable to a Significant Change subject to Public Comment, if applicable.
(e) If Staff do not disagree with the categorization of the Rule, Staff will publish a notice to that effect in the OSC Bulletin or on the OSC website as soon as is practicable.
16. Immediate Implementation of a Public Interest Rule or Significant Change
(a) The Exchange may need to make a Public Interest Rule or Significant Change effective immediately where the Exchange determines that there is an urgent need to implement the Rule or Change to maintain fair and orderly markets, or because of a substantial and imminent risk of material harm to the Exchange, its members, other market participants, issuers or investors.
(b) When the Exchange determines that immediate implementation is necessary, it will advise Staff in writing as soon as possible, but in any event, at least five business days prior to the proposed implementation of the Public Interest Rule or Significant Change. The written notice will include the expected effective date of the Public Interest Rule or Significant Change and an analysis to support the need for immediate implementation. An application for an exemption from the 45-day advance filing requirements in National Instrument 21-101 must follow within five business days following the Exchange receiving notice that Staff agree with immediate implementation of the Public Interest Rule or Significant Change.
(c) If Staff do not agree that immediate implementation is necessary, Staff will promptly notify the Exchange, in writing, of the disagreement no later than the end of the third business day following submission of the notice under subsection (b). If the disagreement is not resolved, the Exchange will submit the Public Interest Rule or Significant Change in accordance with the timelines in section 7.
17. Review of a Public Interest Rule or Significant Change Implemented Immediately
A Public Interest Rule or Significant Change that has been implemented immediately in accordance with section 16 will be published, if applicable, and reviewed and approved by the Director or by the Commission in accordance with the procedures set out in section 10, with necessary modifications. If the Director or the Commission does not approve the Public Interest Rule or Significant Change, the Exchange will immediately repeal the Rule or Change and inform its members of the decision.
18. Application of Section 21 of the Securities Act (Ontario)
The Commission's powers under subsection 21(5) of the Securities Act (Ontario) are not constrained in any way, notwithstanding a Rule or Change having been approved under this Protocol.
Stableview Asset Management Inc. and Colin Fisher
File No. 2020-40
March 8, 2022
WHEREAS on March 8, 2022, the Ontario Securities Commission held a hearing by videoconference;
ON HEARING the submissions of the representatives for Staff of the Commission and for Colin Fisher, no one appearing for Stableview Asset Management Inc.;
IT IS ORDERED THAT:
1. by 4:30 p.m. on March 8, 2022, the parties shall communicate with the Registrar for the purpose of scheduling a confidential conference on March 9, 10 or 11, 2022 and such conference to be continued on such other dates and times as the Commissioner presiding shall direct; and
2. a further attendance is scheduled for March 11, 2022 at 10:00 a.m. by videoconference or on such other date and time as may be agreed to by the parties and set by the Office of the Secretary.
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 |
|
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Heritage Cannabis Holdings Corp. |
March 2, 2022 |
__________ |
|
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MGX Minerals Inc. |
March 2, 2022 |
__________ |
|
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Northcore Resources Inc. |
March 7, 2022 |
__________ |
|
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RAMM Pharma Corp. |
March 4, 2022 |
__________ |
|
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Speakeasy Cannabis Club Ltd. |
March 2, 2022 |
__________ |
Temporary, Permanent & Rescinding Management Cease Trading Orders
Company Name |
Date of Order |
Date of Lapse |
|
||
THERE IS NOTHING TO REPORT. |
||
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 |
__________ |
__________ |
Company Name |
Date of Order |
Date of Lapse |
|
||
Agrios Global Holdings Ltd. |
September 17, 2020 |
__________ |
|
||
Reservoir Capital Corp. |
May 5, 2021 |
__________ |
Issuer Name:
Type and Date:
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Project #3240178
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Project #3278743
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Project #3237602
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Project #3231168
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Project #3231256
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Project #3347068
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Project #3347475
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Project #3346106
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Project #3343545
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Project #3347128
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Project #3346650
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Project #3347054
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Project #3346925
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Project #3346802
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Project #3346422
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Project #3314072
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Project #3344323
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Project #3341943
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Project #3347067
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Project #3306723
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Project #3344400
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Project #3336645
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Project #3347068
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Project #3347475
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Project #3330776
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Project #3330777
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Project #3276874
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Project #3209666
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Project #3340352
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Project #3312941
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Project #3323533
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Type |
Company |
Category of Registration |
Effective Date |
|
|||
Consent to Suspension (Pending Surrender) |
Mercury CAC Holdings Limited |
Exempt Market Dealer |
March 02, 2022 |
|
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Change in Registration Category |
Morgan Meighen & Associates Limited |
From: Investment Fund Manager, Exempt Market Dealer and Portfolio Manager |
March 07, 2022 |
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To: Investment Fund Manager and Portfolio Manager |
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Nasdaq CXC Limited and Ensoleillement Inc. -- Variation of the Recognition Order -- Notice of Commission Variation Order
On March 7, 2022, the Commission issued an order pursuant to section 144 of the Securities Act (Ontario) varying the current recognition order of Nasdaq CXC Limited (Nasdaq Canada) and its parent holding company, Ensoleillement Inc. (CXCH) to reintroduce terms and conditions applicable to Nasdaq Inc.
A copy of the variation order is published in Chapter 2 of this bulletin.
Canadian Derivatives Clearing Corporation (CDCC) -- Proposed Additional Amendments to the Operations Manual of the CDCC on the Gross Client Margin (GCM) Initiative -- OSC Staff Notice of Request for Comment
The Ontario Securities Commission is publishing for public comment the proposed additional amendments to the CDCC Operations Manual on the GCM initiative.
The purpose of the proposed amendments is to reflect the impacts of the GCM process on the operational timelines and the overnight monitoring and settlement processes.
The comment period ends on April 11, 2022.
A copy of the CDCC Notice is published on our website at www.osc.ca.