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Canadian Imperial Bank of Commerce

2021-07-16 | Decision | 13-502 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/canadian-imperial-bank-commerce-3

: Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 59(1), 71(1), 71(2), 133 and 147. National Instrument 33-105 -- Underwriter Conflicts Requirements, ss. 2.1(1), 2.1(2) and 5.1(1). National Instrument 41-101 -- General Prospectus Requirements, ss. 7.2, 8.2 and 19.1. National Instrument 44-101 -- Short Form Prospectus Distributions, s. 8.1; and Item 20 of Form 44-101F1. National Instrument 44-102 -- Shelf Distributions, ss. 5.5(2) and 5.5(3), 6.7, 8.1 and 11.1. OSC Rule 48-501 -- Trading during Distributions, Formal Bids, and Share Exchange Transactions, ss. 2.2 and 5.1.


The Ontario Securities Commission granted the Canadian Imperial Bank of Commerce (CIBC) exemptions from several requirements under securities legislation to facilitate the distribution of Canadian Depositary Receipts (CDRs) through marketplace facilities. The exemptions include relief from the prospectus delivery requirement, pricing supplement filing, underwriter’s certificate inclusion, distribution time limits, and restrictions on underwriter conflicts and marketplace purchasing during the offering period.

Key points of the decision:

1. CIBC can distribute CDRs without delivering a prospectus to purchasers, bypassing the associated withdrawal rights and remedies for non-delivery.
2. CIBC is exempt from the requirement to distribute securities at a fixed price and to file a pricing supplement for continuous distributions.
3. The requirement to include certain statements in the prospectus regarding delivery and statutory rights is waived, provided CIBC includes a revised description of purchaser rights.
4. CIBC is not required to include an underwriter’s certificate in the prospectus, reflecting the role of dealers in providing liquidity rather than traditional underwriting.
5. The usual time limit for distribution on a best efforts basis does not apply to CDR distributions.
6. CIBC is exempt from the requirement that prohibits specified firm registrants from acting as direct underwriters for connected or related issuers, given the nature of CDR distributions.
7. Restrictions on issuer-restricted persons purchasing CDRs during the offering period are lifted, as CIBC does not materially benefit from temporary price manipulation.

Conditions for the exemptions include compliance with capitalization and liquidity standards, maintenance of a continuous disclosure website for the CDR program, non-cooperation with underlying issuers to use CDRs as a financing vehicle, and issuance of CDRs in exchange for deposited underlying shares based on the CDR ratio.

The exemptions are based on various securities regulations, including the Securities Act (Ontario), National Instruments 33-105, 41-101, 44-101, 44-102, and OSC Rule 48-501. The relief will terminate upon the introduction of specific legislation regulating CDRs.