The Ontario Securities Commission granted an exemption to Definity Financial Corporation from the issuer bid requirements stipulated in Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104), specifically in relation to the purchase and cancellation of a common share held by Economical Mutual Insurance Company as part of its demutualization process.
Key facts include:
– Economical Insurance, a mutual property and casualty insurance company, is demutualizing to become a company with common shares, wholly-owned by Definity Financial Corporation post-demutualization.
– Economical Insurance is not a reporting issuer and is governed by the Insurance Companies Act (Canada) (ICA).
– The demutualization process is regulated under the ICA and involves several steps, including the approval of a conversion plan by eligible policyholders and the Minister of Finance.
– As part of the demutualization, Definity Financial Corporation will repurchase and cancel the initial common share held by Economical Insurance (the Purchase for Cancellation).
– The Purchase for Cancellation is necessary to comply with the ICA, which prohibits a subsidiary from owning shares in its parent company.
– The Purchase for Cancellation may be considered an issuer bid under NI 62-104, but it is a technical step in the demutualization process and eligible policyholders have approved it as part of the conversion plan.
– Definity Financial Corporation will become a reporting issuer upon issuing a receipt for the final prospectus for an initial public offering (IPO).
– The exemption was granted on the basis that it would not be prejudicial to the public interest.
The outcome is that Definity Financial Corporation is exempt from the issuer bid requirements in connection with the Purchase for Cancellation, facilitating the demutualization of Economical Insurance and its subsequent IPO.