The Securities Commission has granted a decision under multiple securities regulations to exempt a wholly-owned subsidiary (Subsidiary) of a parent company (Parent) from certain continuous disclosure and insider reporting requirements. The Subsidiary is a reporting issuer with convertible securities outstanding, which entitle holders to acquire shares of the Parent. However, these securities do not qualify for certain exemptions under National Instrument 51-102 (NI 51-102), as they are not designated exchangeable securities, and the Subsidiary has other securities outstanding not held by the Parent or its affiliates.
The relief granted is conditional and aligns with similar conditions contained in sections 13.3 and 13.4 of NI 51-102. The conditions include that the Parent must be a reporting issuer in good standing, the Subsidiary must not issue any new securities to the public except under specific circumstances, and the Subsidiary must file notices or copies of the Parent’s disclosure documents. Additionally, the Parent must send all disclosure materials to the holders of the Subsidiary’s warrants and must disclose material changes in its affairs.
The decision exempts the Subsidiary from the requirements of NI 51-102, National Instrument 52-109 (NI 52-109) regarding certification of disclosure in issuers’ annual and interim filings, and National Instrument 55-104 (NI 55-104) and National Instrument 55-102 (NI 55-102) concerning insider reporting requirements and the requirement to file an insider profile.
The decision is based on the understanding that the Subsidiary will not access capital markets by issuing new securities to the public and that information relating to the Parent is of primary importance to the holders of the Subsidiary’s convertible securities. The decision is made under the authority of the Securities Act, R.S.O. 1990, c. S.5, as amended, and the relevant National Instruments mentioned above.