The Securities Commission has granted an exemption to a wholly-owned subsidiary (the Subsidiary) of a parent company (the Parent) from certain reporting requirements under multiple National Instruments (NIs), subject to conditions. The Subsidiary, which is a reporting issuer with convertible securities outstanding, sought relief from continuous disclosure obligations under NI 51-102, certification of disclosure requirements under NI 52-109, audit committee composition and obligations under NI 52-110, and corporate governance disclosure requirements under NI 58-101.
The exemption was granted because the Subsidiary’s situation is similar to issuers with exchangeable security structures exempted under Section 13.3 of NI 51-102, but it could not directly rely on this exemption due to its lack of voting rights in the Parent and the potential issuance of additional securities beyond those described in the exemption.
The conditions for the exemption include that immediately following the arrangement, the Subsidiary will not have any securities outstanding other than those held by the Parent, the Preferred Stock, and the Exchangeable Shares. Additionally, the Subsidiary may not issue any securities except in connection with the arrangement or to maintain the economic equivalence of the Exchangeable Shares with the Parent’s shares. The Subsidiary and the Parent must comply with Section 13.3 of NI 51-102, except as modified by the exemption.
The decision is grounded in the Securities Act, R.S.O. 1990, c. S.5, and the relevant sections of the NIs mentioned above. The outcome allows the Subsidiary to operate with reduced reporting obligations, provided it adheres to the specified conditions.