The Securities Commission granted relief to a corporation (the Filer) from certain requirements related to take-over bids, early warning reporting, issuer bids, and share nomenclature. The Filer, a vertically-integrated cannabis company, has a multi-class share structure designed to maintain its status as a foreign private issuer under U.S. securities laws. The share classes are Subordinate Voting Shares, Restricted Voting Shares, Limited Voting Shares, Multiple Voting Shares, and Preferred Shares. The relief allows the Filer to calculate ownership thresholds and disclosure requirements on an aggregate basis across all classes of equity shares, rather than on a per-class basis, due to the shares’ identical economic attributes and mandatory inter-convertibility based on the shareholder’s status as a U.S. Person.
The relief was granted under the following conditions:
1. The Filer must publicly disclose the exemption and its terms in a news release and in its annual information forms, management information circulars, and other relevant filings.
2. For take-over bids, the combined ownership of all classes of equity shares must not represent 20% or more of the outstanding shares.
3. For early warning reporting, the combined ownership must not represent 5% or more of the outstanding shares.
4. For issuer bids, the Filer must comply with the normal course issuer bid exemption, with the threshold calculated on a combined basis.
5. The Filer must provide disclosure on significant shareholders in its information circular on a combined basis.
Additionally, the Filer was granted relief from using prescribed restricted security terms for its Limited Voting Shares, subject to the condition that they are referred to as Limited Voting Shares.
The decision is based on the Filer’s share structure, which was implemented solely to ensure its status as a foreign private issuer, and the fact that all classes of equity shares are freely tradable, have identical economic attributes, and are automatically inter-convertible based on the shareholder’s status as a U.S. Person.
The relevant laws and regulations underpinning the outcome include:
– National Instrument 62-104 Take-Over Bids and Issuer Bids
– National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues
– National Instrument 51-102 Continuous Disclosure Obligations
– National Instrument 41-101 General Prospectus Requirements
– Ontario Securities Commission Rule 56-501 Restricted Shares
The decision was made by the Ontario Securities Commission as the principal regulator, and the Filer is a reporting issuer in all Canadian provinces and territories except Quebec.