The Securities Commission has granted an exemption to Brookfield Business Corporation (BBUC) from the requirements of Part 5 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101), which pertains to related party transactions. This exemption is conditional and applies to transactions with parties other than Brookfield Business Partners L.P. (BBU) or its subsidiaries.
BBUC, a controlled subsidiary of BBU, was established to offer investors an alternative means to indirectly invest in BBU units through exchangeable shares, which are economically equivalent to BBU units. BBUC is expected to engage in transactions with related parties that are not BBU or its subsidiaries, which would indirectly affect BBU as well.
The exemption is based on several conditions, including that all equity securities of BBUC are owned by BBU, BBU consolidates BBUC in its financial statements, and BBU will comply with the related party transaction requirements as if it directly entered into the transactions. Additionally, any formal valuation and disclosure documents related to these transactions must be identical for both BBU and BBUC and filed on both entities’ SEDAR profiles.
The decision is underpinned by the rationale that BBU and BBUC operate as a single economic entity and that the economic interests of BBU unit holders and BBUC exchangeable share holders are aligned. Therefore, the protections of MI 61-101 for minority shareholders are deemed unnecessary for BBUC’s related party transactions, provided the conditions are met.