The Securities Commission granted exemptive relief to an issuer from the prospectus requirement for the distribution of its common shares to employees, directors, executive officers, consultants, and associates of a partnership or a related entity of the partnership. The issuer’s sole business is to hold an interest in the partnership. The relief was granted under certain conditions, based on the Securities Act, R.S.O. 1990, c. S.5, as amended, sections 53(1) and 74(1).
The issuer, TSAG ESOP Inc., is part of a group operating a Canadian engineering firm through local partnerships. The group’s business in Calgary is conducted through Smith + Andersen (Calgary) Ltd., which employs about 50 people. To align the interests of employees with the group, TSAG implemented an Employee Share Ownership Plan (ESOP) allowing eligible employees to acquire shares in TSAG ESOP Inc., which in turn holds a partnership interest in TSAG.
TSAG ESOP Inc. is not a reporting issuer, does not intend to become one, and its securities are not traded on any marketplace. The exemptive relief was granted with the condition that Calgary employees are not induced to purchase shares by expectation of employment, the issuer complies with certain information delivery requirements, and the issuer’s sole business remains holding an interest in TSAG. Additionally, any subsequent trade of the issuer’s common shares must be a distribution unless it is to an eligible participant, and eligible Calgary employees must receive a copy of the decision before the issuance or trade of common shares.
The decision ensures that the distribution of shares to employees in Calgary is conducted without the need for a prospectus, under the condition that the issuer adheres to the specified operational and informational requirements.