The Securities Commission granted an exemption to a corporation from the requirement to include certain financial statements in its business acquisition report (BAR) related to the acquisition of two related businesses. The exemption was based on the immateriality of the least significant acquisition to the corporation’s overall financial position and the fact that historical financial statements were not relied upon in the investment decision.
The corporation, a reporting issuer in multiple Canadian provinces, completed the acquisition of Psychedelitech Inc. (PsyTech) and subsequently acquired Advanced Psychiatric Management LLC (APM), which was a newly created subsidiary of Advanced Psychiatric Solutions, Ltd. (APS). Due to Illinois state laws, APM acquired non-medical assets from APS and entered into a management services agreement, rather than acquiring APS directly.
Under National Instrument 51-102 Continuous Disclosure Obligations, the corporation was required to file a BAR including financial statements for each business acquired. However, the corporation argued that the APM acquisition was significantly less material than the PsyTech acquisition and that historical financial statements of APS were not material to an investment decision in the corporation’s shares.
The commission agreed with the corporation’s assessment and granted the exemption, allowing the corporation to exclude the financial statements of APS from the BAR, provided that the report included the required financial statements for PsyTech. The exemption was made under Section 13.1 of National Instrument 51-102, based on the specific facts and circumstances of the acquisition.