The Ontario Securities Commission has granted Brookfield Renewable Corporation (BEPC) an exemption from certain related party transaction requirements, subject to conditions. This decision is based on the unique structure of BEPC and its relationship with Brookfield Renewable Partners L.P. (BEP), both of which are reporting issuers. BEPC was created to offer investors an alternative way to hold units in BEP through exchangeable shares, which are economically and functionally equivalent to BEP units.
The exemption allows BEPC to engage in related party transactions with entities other than BEP or its subsidiaries without complying with the formal valuation and minority approval requirements typically mandated by Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101), Part 5. Instead, BEP will treat any such transaction as if it were a direct party and will comply with the related party transaction requirements as though it entered into the transaction itself.
The exemption is contingent on several conditions, including that BEP owns all equity securities of BEPC, BEP consolidates BEPC in its financial statements, and there are no material changes to the exchangeable share provisions. Additionally, any formal valuation and disclosure documents related to these transactions must be identical for both BEPC and BEP and filed on both entities’ SEDAR profiles.
This decision recognizes the intertwined economic interests of BEPC and BEP and their function as a single economic entity, with BEP controlling BEPC and its board of directors. It also acknowledges that investments in BEPC’s exchangeable shares are effectively investments in BEP units, and therefore, BEP’s compliance with related party transaction requirements sufficiently protects investors.