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 with ThinkMarkets, which is considered a related party transaction.
Key facts include:
– The Filer has no operations or revenue until it completes a qualifying acquisition.
– Its capital consists of Class A restricted voting shares with redemption rights and Class B shares without such rights but with residual claims on assets upon liquidation.
– Gross proceeds from the IPO of Class A shares are in escrow for redemptions and funding the qualifying acquisition.
– Class A shares are publicly traded, while Class B shares are not.
– The Filer has a deadline to complete a qualifying acquisition, which can be extended with shareholder approval.
The reasoning for the exemption is based on the unique structure of the SPAC, where Class A shares do not meet the definition of equity security under MI 61-101 due to their redemption feature. The exemption is contingent on the proposed transaction qualifying for the 25% market capitalization exemption if only Class A shares were considered the Filer’s outstanding equity securities.
The outcome is that the Filer is exempt from the minority approval and formal valuation requirements, subject to conditions including disclosure in relevant documents and no material changes to the terms of the Class A shares.
The decision is underpinned by sections 5.4, 5.6, and 9.1(2) of MI 61-101, which govern the protection of minority security holders in special transactions.