The Securities Commission granted an exemption from the prospectus requirement to IPH Limited, an Australian corporation, for the distribution of incentive securities to certain Canadian employees under its Employee Incentive Plan. The exemption was necessary because the employees are not directly employed by IPH but by its affiliate, New Legal LLP, and therefore IPH could not rely on the standard employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions.
Key points include:
– IPH’s ordinary shares are listed on the Australian Securities Exchange (ASX).
– IPH is not a reporting issuer in Canada and has no intention of listing its securities on any Canadian exchange.
– The incentive securities are part of a compensation plan for senior lawyers employed by New Legal LLP, an entity affiliated with IPH.
– The Canadian employees will have access to IPH’s disclosure documents and are not being induced to participate by the expectation of employment.
– There is no market for IPH’s securities in Canada.
The exemption is subject to conditions, including that eligible employees must acknowledge receipt of the decision and information on accessing IPH’s public disclosure record, and that IPH must comply with its continuous disclosure obligations in Australia.
The decision also stipulates that the first trade of any incentive security acquired under this exemption must either be made outside of Canada or to a person outside of Canada, unless IPH becomes a reporting issuer in Canada. In Ontario, the exemption for the first trade does not apply if the trade is part of a scheme to avoid prospectus requirements for trades within Canada.
The decision is grounded in the Securities Act, R.S.O. 1990, c. S.5, as amended, and related instruments including National Instrument 45-102 Resale of Securities, National Instrument 45-106 Prospectus Exemptions, and OSC Rule 72-503 Distributions Outside Canada.