The Securities Commission granted an exemption to United Corporations Limited (the Filer) from the requirement under subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104). This requirement stipulates that an issuer must take up all securities deposited and not withdrawn before extending an issuer bid, provided all terms and conditions have been met or waived.
The Filer, a corporation in good standing under the Business Corporations Act (Ontario), is a reporting issuer in Ontario and Quebec with shares listed on the Toronto Stock Exchange. The Filer initiated an issuer bid to purchase a portion of its outstanding common shares through a modified Dutch auction, proposing a purchase price range of $90.00 to $110.00 per share, with the intent to buy back up to $50,000,000 worth of shares.
The Board of the Filer believes this buyback is in the best interests of the company and its shareholders, as it provides value to shareholders and addresses the Board’s view that the market price does not fully reflect the company’s value.
The exemption was sought because the Filer wished to extend the offer without first taking up all shares, as the final purchase price could not be determined until the end of the offer period, which could potentially include an extension. This was in conflict with Regulation 14E under the U.S. Securities Exchange Act of 1934, which requires prompt payment for shares at the offer’s expiry without allowing for the extension procedure required by NI 62-104.
The exemption was granted subject to conditions, including that the Filer must take up and pay for the shares as described in the issuer bid circular and comply with Regulation 14E. The Filer must also be eligible to rely on the Liquid Market Exemption and issue a press release announcing the exemption within one business day of receipt.
The decision was made under the authority of the Ontario Securities Commission, with the Filer intending to rely on subsection 4.7(1) of Multilateral Instrument 11-102 Passport System in various Canadian jurisdictions. The exemption was granted based on the Filer’s representations and compliance with the conditions set by the principal regulator.