The Securities Commission has granted an exemption from the prospectus requirements for a U.S.-based company, General Electric Company (the Filer), to distribute shares of its U.S. subsidiary, GE Vernova LLC (SpinCo), to its Canadian shareholders. This distribution is part of a spin-off transaction where the Filer’s shareholders will receive shares of SpinCo as a dividend in specie, on a pro rata basis, without any action required on their part.
Key points include:
– The Filer is not a reporting issuer in Canada and has a minimal presence in the country, with Canadian shareholders holding approximately 0.02% of its shares.
– The spin-off is part of a larger corporate restructuring, where the Filer is creating three public companies focused on aviation, healthcare, and energy.
– The Filer’s shares are listed on the New York Stock Exchange (NYSE), and SpinCo shares will also be listed on the NYSE post-spin-off.
– The distribution of SpinCo shares to Canadian shareholders is not covered by legislative exemptions because SpinCo is not a reporting issuer in Canada.
– The Filer has filed a registration statement with the SEC, providing prospectus-level disclosure about SpinCo, which will be sent to Canadian shareholders.
– The spin-off is expected to be tax-free and will not require shareholder approval under New York law.
– The Filer has made equitable adjustments to its equity-based compensation awards to account for the spin-off’s impact on the value of the Filer’s shares.
The exemption is granted under sections 53 and 74(1) of the Securities Act (Ontario), with the condition that any first trade of SpinCo shares in Canada will be subject to section 2.6 of National Instrument 45-102 Resale of Securities. This decision allows the Filer to proceed with the spin-off without the need for a prospectus in Canada, recognizing the de minimis presence of Canadian shareholders and the comprehensive disclosure provided under U.S. securities laws.