The Ontario Securities Commission granted FG Acquisition Corp. (the Filer), a special purpose acquisition corporation (SPAC), an exemption from the minority approval and formal valuation requirements typically mandated by Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101). This exemption pertains to the Filer’s proposed transaction involving the exchange of Class B shares for new exchange preferred shares as part of its qualifying acquisition of ThinkMarkets.
Key facts include:
– The Filer is a SPAC with no operations or revenue until it completes a qualifying acquisition.
– The Filer’s capital includes Class A restricted voting shares, which are redeemable and listed on the Toronto Stock Exchange (TSX), and Class B shares, which are not redeemable, do not have access to escrow funds, and are not publicly traded.
– The gross proceeds from the IPO of Class A shares are in escrow to fund the qualifying acquisition and satisfy any redemptions.
– The proposed transaction is a related party transaction under MI 61-101, as it involves an acquisition of shares from the Filer’s sponsors.
The reasoning for the exemption is based on the unique structure of the SPAC, where the Class A restricted voting shares do not meet the definition of equity security under MI 61-101 due to their redeemable nature and lack of residual rights. The exemption is conditional on the proposed transaction qualifying for the 25% market capitalization exemption under MI 61-101 if the Class A shares were considered the only outstanding equity securities of the Filer.
The outcome is that the Filer is exempt from the minority approval and formal valuation requirements, subject to conditions that include specific disclosure obligations in connection with the proposed transaction and the qualifying acquisition. The exemption is also contingent on no material changes to the terms of the Class A restricted voting shares.