The Securities Commission granted exemptive relief to Telesat Corporation and Telesat Partnership LP (collectively, the Filers) from certain continuous disclosure, certification, audit committee, corporate governance, and insider reporting requirements, subject to conditions. The Filers are involved in a transaction that will result in an exchangeable security issuer structure, but they cannot rely on standard exemptions due to the Exchangeable Units not being designated exchangeable securities, as they only offer substantially equivalent economic rights to Issuer Shares.
Key facts include:
– The Filers are part of a transaction agreement to integrate Telesat Canada and Loral Space & Communications Inc. into their structure.
– The Issuer, Telesat Corporation, is a corporation incorporated under British Columbia law, and the Partnership is an Ontario limited partnership.
– The Issuer will become the publicly traded general partner of the Partnership post-transaction.
– The Partnership will indirectly acquire all equity interests in Telesat and Loral.
– The Issuer’s capital structure includes various classes of shares, with provisions to ensure Canadian control.
– The Exchangeable Units of the Partnership are economically and voting-wise equivalent to the Issuer Shares but are not exchangeable until six months post-transaction.
The reasoning for the decision is based on the inability of the Filers to meet the conditions for standard exemptions due to the Exchangeable Units not being designated exchangeable securities. However, the Commission recognized that the Exchangeable Units provide substantially equivalent economic rights and equivalent voting rights through Special Voting Shares.
The outcome is that the Filers are granted relief from the continuous disclosure, certification, audit committee, corporate governance, and insider reporting requirements, provided they meet certain conditions, including:
– The Issuer and Partnership must satisfy modified conditions of section 13.3(2) of NI 51-102.
– The consolidated financial positions of the Issuer and Partnership must remain materially identical.
– The Issuer must consolidate the Partnership’s financial information in its filings.
– The Issuer must not breach its representation to include specific disclosures in its circulars and annual information forms.
– The Issuer must deliver an undertaking pursuant to subsection 6.1 of National Policy – 41-201.
The relevant laws and regulations underpinning the outcome include:
– Securities Act, R.S.O. 1990, c. S.5, ss. 107 and 121(2)(a)(ii).
– National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), ss. 13.1(2) and 13.3.
– National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), ss. 8.4 and 8.6(2).
– National Instrument 52-110 Audit Committees (NI 52-110), ss. 1.2(f) and 8.1(2).
– National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI), s. 6.1(2).
– National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 10.1(2).
– National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101), ss. 1.3(c) and 3.1(2).
The decision was made by the Ontario Securities Commission, with Michael Balter and Vice-Chairs Tim Moseley and Wendy Berman rendering the decision.