osc bulletin volume 38, issue 25 (june 25, 2015)...2015/06/25 · june 25, 2015 volume 38, issue 25...

The Ontario Securities Commission

OSC Bulletin

June 25, 2015

Volume 38, Issue 25

(2015), 38 OSCB

The Ontario Securities Commission administers the Securities Act of Ontario (R.S.O. 1990, c. S.5) and the

Commodity Futures Act of Ontario (R.S.O. 1990, c. C.20)

The Ontario Securities Commission Published under the authority of the Commission by: Cadillac Fairview Tower Carswell, a Thomson Reuters business 22nd Floor, Box 55 One Corporate Plaza 20 Queen Street West 2075 Kennedy Road Toronto, Ontario Toronto, Ontario M5H 3S8 M1T 3V4 416-593-8314 or Toll Free 1-877-785-1555 416-609-3800 or 1-800-387-5164 Contact Centre – Inquiries, Complaints: Fax: 416-593-8122 TTY: 1-866-827-1295 Office of the Secretary: Fax: 416-593-2318

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June 25, 2015 (2015), 38 OSCB

Table of Contents

Chapter 1 Notices / News Releases ...................... 5673 1.1 Notices .......................................................... 5673 1.1.1 CSA Staff Notice 45-308 (Revised) – Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions ..................................................... 5673 1.1.2 OSC Staff Notice 81-727 – Report on Staff’s Continuous Disclosure Review of Mutual Fund Practices Relating to Portfolio Liquidity ............................................ 5678 1.1.3 Practice Guideline – Electronic Copies of Written Submissions ................................... 5683 1.2 Notices of Hearing ........................................ 5684 1.2.1 David M. O'Brien – ss. 127 and 127.1 of the Act and Rule 12 of the OSC Rules of Procedure ......................................... 5684 1.2.2 Good Mining Exploration Inc. – s. 127 .......................................................... 5685 1.3 News Releases .............................................. (nil) 1.4 Notices from the Office of the Secretary ............................................ 5687 1.4.1 Practice Guideline – Electronic Copies of Written Submissions ................................... 5687 1.4.2 1415409 Ontario Inc. et al. ............................. 5687 1.4.3 David M. O’Brien ............................................ 5688 1.4.4 Good Mining Exploration Inc. ......................... 5688 1.4.5 Good Mining Exploration Inc. ......................... 5689 Chapter 2 Decisions, Orders and Rulings ............ 5691 2.1 Decisions ...................................................... 5691 2.1.1 NorthWest International Healthcare Properties Real Estate Investment Trust – s. 1(10)(a)(ii) ....................................... 5691 2.1.2 Middlefield Limited et al. ................................. 5692 2.1.3 Enbridge Inc. .................................................. 5696 2.1.4 Santacruz Silver Mining Ltd. ........................... 5702 2.1.5 Cardinal Energy Ltd. ...................................... 5705 2.1.6 JDS Uniphase Corporation ............................. 5708 2.1.7 Sentry Investments Inc. and certain other registered firms as of July 15, 2015 ................ 5711 2.1.8 TD Investment Services Inc. and MFDA member firms registered as of July 15, 2015 .................................................. 5714 2.1.9 Desjardins Securities Inc. and IIROC member firms registered as of July 15, 2015 .................................................. 5716 2.2 Orders............................................................ 5718 2.2.1 Canadian Pacific Railway Limited – s. 104(2)(c) ................................................. 5718 2.2.2 Canadian Pacific Railway Limited – s. 104(2)(c) ................................................. 5722 2.2.3 Canadian Pacific Railway Limited – s. 104(2)(c) ................................................. 5726 2.2.4 Dollarama Inc. – s. 104(2)(c) .......................... 5730 2.2.5 Pyramis Global Advisors, LLC et al. – s. 80 of the CFA .................................. 5734

2.2.6 Russell Investments Canada Limited – s. 80 of the CFA ......................................... 5739 2.2.7 BlackRock Asset Management Canada Limited and BlackRock Institutional Trust Company, N.A. – s. 80 of the CFA ................. 5743 2.2.8 BNY Mellon Asset Management Canada Limited and Standish Mellon Asset Management Company LLC – s. 80 of the CFA ......................................... 5747 2.2.9 1415409 Ontario Inc. et al. – ss. 127, 127.1 ............................................ 5751 2.2.10 Good Mining Exploration Inc. – s. 127(1) ..................................................... 5752 2.2.11 Lucy Marie Pariak-Lukic – ss. 8(3), 21.7 ............................................. 5753 2.3 Rulings ............................................................ (nil) Chapter 3 Reasons: Decisions, Orders and Rulings .................................................. 5755 3.1 OSC Decisions, Orders and Rulings .......... 5755 3.1.1 Lucy Marie Pariak-Lukic – ss. 8(3), 27.1 .............................................. 5755 3.2 Court Decisions, Order and Rulings ............ (nil) Chapter 4 Cease Trading Orders .......................... 5771 4.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders ......................... 5771 4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders ............. 5771 4.2.2 Outstanding Management & Insider Cease Trading Orders ................................... 5771 Chapter 5 Rules and Policies ................................ 5773 5.1.1 CSA Notice of Amendments to NI 33-105 Underwriting Conflicts ................... 5773 5.1.2 Notice of Amendments to OSC Rule 45-501 Ontario Prospectus and Registrations Exemptions and NI 45-106 Prospectus Exemptions ................ 5795 5.1.3 Unofficial Consolidation of NI 55-104 Insider Reporting Requirements and Exemptions and Companion Policy 55-104CP ....................................................... 5814 Chapter 6 Request for Comments .......................... (nil) Chapter 7 Insider Reporting .................................. 5837 Chapter 8 Notice of Exempt Financings............... 5919

Reports of Trades Submitted on Forms 45-106F1 and 45-501F1 .............. 5919

Chapter 9 Legislation ............................................... (nil) Chapter 11 IPOs, New Issues and Secondary Financings ............................................. 5921

Table of Contents

June 25, 2015 (2015), 38 OSCB

Chapter 12 Registrations ......................................... 5927 12.1.1 Registrants ..................................................... 5927 Chapter 13 SROs, Marketplaces,

Clearing Agencies and5729 Trade Repositories ................................ 5929

13.1 SROs.............................................................. 5929 13.1.1 MFDA – Client Relationship Model – Phase 2 – Housekeeping Amendments to MFDA Rule 5.3 (Client Reporting) and MFDA Policy No. 7 (Performance Reporting) ....................................................... 5929 13.2 Marketplaces .................................................. (nil) 13.3 Clearing Agencies ......................................... (nil) 13.4 Trade Repositories ........................................ (nil) Chapter 25 Other Information ................................... (nil) Index ............................................................................ 5931

June 25, 2015

(2015), 38 OSCB 5673

Chapter 1

Notices / News Releases 1.1 Notices 1.1.1 CSA Staff Notice 45-308 (Revised) – Guidance for Preparing and Filing Reports of Exempt Distribution under

National Instrument 45-106 Prospectus Exemptions

CSA Staff Notice 45-308 Guidance for Preparing and Filing Reports of Exempt Distribution

under National Instrument 45-106 Prospectus Exemptions Revised

June 25, 2015 Introduction and Purpose Staff of the Canadian Securities Administrators (Staff or we) are publishing this Staff Notice (the Notice) to highlight issues identified in some reports of exempt distribution filed in Form 45-106F1 Report of Exempt Distribution (the F1) under National Instrument 45-106 Prospectus Exemptions (NI 45-106). The Notice also provides guidance to issuers, underwriters and their advisors for preparing and filing the F1. Staff are replacing a prior notice issued in April 2012 with this Notice. Background Securities legislation prohibits issuers and underwriters from distributing securities without a prospectus for which a receipt has been issued. NI 45-106 contains a number of exemptions from the prospectus requirement. Part 6 of NI 45-106 requires issuers or underwriters relying on prospectus exemptions specified in that Part to report exempt distributions, and sets out the form required to be filed and the deadlines for filing. Responsibility for compliance with NI 45-106 rests with the issuer or underwriter purporting to rely on the applicable exemption(s). The use of a prospectus exemption under NI 45-106 is subject to regulatory oversight and monitoring. Staff may review filings required by NI 45-106 and/or an issuer’s or underwriter’s reliance on a prospectus exemption as a result of planned compliance-monitoring programmes, observed market activity, or following specific complaints or referrals. Identified non-compliance may result in appropriate corrective action. Guidance and Identified Issues Outlined below are issues we have observed when reviewing F1s filed with us. We are communicating these issues to assist issuers, underwriters and their advisors in avoiding similar deficiencies when preparing and filing the F1.

1. Failing to use the correct form

The required form for a report of exempt distribution is the F1, except in British Columbia (BC). Effective October 3, 2011, the British Columbia Securities Commission (the BCSC) introduced a new form of report of exempt distribution, Form 45-106F6 British Columbia Report of Exempt Distribution (the F6).1 We have seen instances of issuers or underwriters filing the F6 outside BC. The filing of the F6 is only accepted in BC. If a distribution occurs in BC and elsewhere, the issuer or underwriter is required to file the F6 with the BCSC2 and file the F1 in the other applicable jurisdictions.

1 In BC, the F6 generally must be filed electronically using the BCSC’s E-services filing system. See BC Instrument 13-502 Electronic filing of

reports of exempt distribution. Except in limited circumstances, the BCSC will not accept F6s delivered in paper or via other electronic means (such as a PDF attachment to an email).

2 In limited cases, the BCSC will accept the F1 instead of the F6. Issuers that have distributed securities in BC should review BC Instrument 45-533 Exemptions from Form 45-106F6 requirements to determine if they may file the F1 in BC instead of the F6.

Notices / News Releases

June 25, 2015

(2015), 38 OSCB 5674

2. Failing to file the F1 on time Part 6 of NI 45-106 requires issuers or underwriters relying on certain prospectus exemptions to file the F1 in each applicable jurisdiction where the distribution takes place. Some (but not all) of these prospectus exemptions include:

• the accredited investor exemption (section 2.3 of NI 45-106)3 • the family, friends and business associates exemption (section 2.5 of NI 45-106) • the offering memorandum exemption (section 2.9 of NI 45-106, the OM exemption) • the minimum amount investment exemption (section 2.10 of NI 45-106) • the additional investment in investment funds exemption (section 2.19 of NI 45-106)

The deadline for filing the F1 is generally 10 days after the distribution. Investment funds have the option of filing the F1 on an annual basis, within 30 days of their financial year-end, when relying on section 2.3, 2.10 or 2.19 of NI 45-106. This option is not available for investment funds using the OM exemption (in jurisdictions where such exemption is available). Staff have observed that many issuers or underwriters have filed the F1 late and, in some cases, not at all.

3. Failing to pay the required fee Some issuers or underwriters have filed the F1 with an incorrect fee or with no fee. Issuers or underwriters must pay the applicable fee in each jurisdiction in which a distribution is made, when the report is filed.

4. Failing to include a complete list of purchasers in the F1

Some F1s filed by issuers or underwriters only identified purchasers from the jurisdiction in which the F1 was filed, even though the distribution included purchasers from other jurisdictions. If distributions are made in more than one jurisdiction, the issuer or underwriter must complete a single F1 identifying all purchasers, including purchasers that reside in the jurisdiction and those that do not, and file that report in each of the jurisdictions in which the distribution is made (see Instruction 2 of the F1).

5. Failing to reconcile information in the F1

Issuers or underwriters have frequently reported a different total number of securities distributed, total dollar value raised, number of purchasers and/or exemptions used in items 6 and 7 of the F1 when compared to Schedule I of the F1 (Schedule I). Information in items 5, 6, and 7 of the F1 must reconcile with the information in Schedule I (see Instruction 5 of the F1).

6. Incorrectly identifying the number of purchasers

Item 7 of the F1 requires the total number of purchasers in each jurisdiction to be reported. The number of purchasers refers to the number of investors and not to the number of securities each purchaser purchased.

7. Relying on unavailable exemptions In certain instances, issuers distributing in more than one jurisdiction have reported in the F1 distributions under an exemption that is not available in one of the jurisdictions. Issuers or underwriters should note that not all exemptions are available in all jurisdictions. An issuer or underwriter should indicate in Schedule I the appropriate exemption for each purchaser. This may require the issuer or underwriter to report (in Schedule I) multiple exemptions relied on for the same purchaser in circumstances where the distribution is made in more than one jurisdiction and the same exemption is not available in those jurisdictions.

8. Failing to disclose all commissions and finder’s fees We have observed that some issuers or underwriters are not reporting compensation paid in connection with a distribution. In some of these cases, the payment was not disclosed because it was not called a “commission” or a “finder’s fee”.

3 In Ontario, subsection 73.3(2) of the Securities Act (Ontario) provides a similar exemption.


June 25, 2015

(2015), 38 OSCB 5675

Item 8 of the F1 requires an issuer or underwriter to disclose compensation received or to be received by any person in connection with the distribution. Compensation includes commissions, discounts or other fees or payments of a similar nature, which result from a distribution of securities, regardless of what the payment is called. For example, a “brokerage fee” or “finance fee” for a syndicated mortgage is compensation in connection with a distribution. Compensation does not include payments for services incidental to the distribution (such as clerical, printing, legal or accounting services).

9. Failing to provide complete information regarding convertible or exchangeable securities distributed Item 6 of the F1 requires information regarding the security distributed. If the security is convertible or exchangeable into an underlying security, the F1 states that the issuer or underwriter must include:

• a description of the underlying security, • the terms of conversion or exercise, and • any expiry date.

10. Improperly reporting distributions under the minimum amount exemption

In order to rely on the prospectus exemption in section 2.10 [Minimum amount investment] of NI 45-106, the purchase price must be at least $150,000 by a purchaser other than an individual (among other conditions).4 If an issuer or underwriter relies on this exemption, it should ensure that the purchase price reported is at least that minimum amount. We also remind issuers or underwriters that it is not permitted to distribute securities under this exemption to multiple purchasers acting in concert or as a “syndicate” in order to pool separate purchases and reach the $150,000 minimum.

11. Failing to certify the F1 We have received some reports with unsigned certificates. An issuer or underwriter must include the date and the signature of the person identified as signing the F1 in the certificate section of the F1.

4 Effective May 5, 2015, the minimum amount exemption is no longer available for individuals.


June 25, 2015

(2015), 38 OSCB 5676

Questions Alberta Jonathan Taylor Manager, CD Compliance & Market Analysis Alberta Securities Commission Direct Line: 403-297-4770 Fax: 403-297-2082 Email: [email protected] Manitoba Chris Besko Director, General Counsel The Manitoba Securities Commission Direct Line: 204-945-2561 Fax: 204-945-0330 Email: [email protected] New Brunswick Susan Powell Deputy Director, Securities Financial and Consumer Services Commission Direct Line: 506-643-7697 Fax: 506-658-3059 Email: [email protected] Newfoundland and Labrador Don Boyles Deputy Superintendent of Securities Office of the Superintendent of Securities Government of Newfoundland and Labrador Direct Line: 709-729-4501 Fax: 709-729-6187 Email: [email protected] Northwest Territories Gary MacDougall Superintendent of Securities Office of the Superintendent of Securities Government of the Northwest Territories Direct Line: 867-873-7490 Fax: 867-873-0243 Email: [email protected] Nova Scotia Kevin Redden Director, Corporate Finance Nova Scotia Securities Commission Direct Line: 902-424-5343 Fax: 902-424-4625 Email: [email protected] Nunavut Shamus Armstrong Acting Director, Legal Registries Department of Justice Government of Nunavut Direct Line: 867-975-6598 Fax: 867-975-6594 Email: [email protected]

Ontario Jo-Anne Matear Ontario Securities Commission Manager, Corporate Finance Direct Line: 416-593-2323 Email: [email protected]

Elizabeth Topp Ontario Securities Commission Senior Legal Counsel, Corporate Finance Direct Line: 416-593-2377 Email: [email protected]

Aba Stevens Ontario Securities Commission Legal Counsel, Corporate Finance Direct Line: 416-263-3867 Email: [email protected]

Frederick Gerra Ontario Securities Commission Legal Counsel, Investment Funds and Structured Products Direct Line: 416-204-4956 Email: [email protected]

Prince Edward Island Steve Dowling General Counsel Prince Edward Island Securities Office Direct Line: 902-368-4551 Fax: 902-368-5283 Email: [email protected]

Québec Georgia Koutrikas Analyst, Corporate Finance Autorité des marchés financiers Tel: 514-395-0337, ext. 4393 Fax: 514-873-6155 Email: [email protected]

Valérie Dufour Analyst, Corporate Finance Autorité des marchés financiers Tel: 514-395-0337, ext. 4389 Fax: 514-873-6155 Email: [email protected]

Saskatchewan Sonne Udemgba Deputy Director, Legal Financial and Consumer Affairs Authority of Saskatchewan Direct Line: 306-787-5879 Fax: 306-787-5899 Email: [email protected]

Yukon Rhonda Horte Securities Officer Office of the Yukon Superintendent of Securities Direct Line: 867-667-5466 Fax: 867-393-6251 Email: [email protected]


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(2015), 38 OSCB 5677

British Columbia – for questions on F6 only Leslie Rose Senior Legal Counsel, Corporate Finance British Columbia Securities Commission Direct Line: 604-899-6654 Toll free across Canada: 1-800-373-6393 Email: [email protected]


June 25, 2015

(2015), 38 OSCB 5678

1.1.2 OSC Staff Notice 81-727 – Report on Staff’s Continuous Disclosure Review of Mutual Fund Practices Relating to Portfolio Liquidity

OSC STAFF NOTICE 81-727 – REPORT ON STAFF’S CONTINUOUS DISCLOSURE REVIEW

OF MUTUAL FUND PRACTICES RELATING TO PORTFOLIO LIQUIDITY June 25, 2015 PURPOSE OF THIS NOTICE Staff of the Investment Funds and Structured Products Branch (Staff or we) of the Ontario Securities Commission (OSC) recently conducted targeted reviews focused on mutual fund practices relating to i) liquidity assessments of fund holdings, ii) liquidity stress testing, and iii) liquidity valuation considerations. This notice provides a summary of our findings and related guidance. OBJECTIVES AND SCOPE OF OUR REVIEW Units of mutual funds, including exchange-traded mutual funds (ETFs) (together, funds), are redeemable on demand, and funds generally offer their securities on a continuous basis. To facilitate purchases and redemptions of funds’ units on a daily basis, funds are required to invest primarily in liquid investments in accordance with National Instrument 81-102 – Investment Funds (NI 81-102). When holding primarily liquid investments, funds are able to provide reliable and objective valuations of the fund’s net asset value (NAV); which in turn enables the fund to meet investor redemption requests without significant disruption to the portfolio. In late 2014, we commenced a series of targeted reviews of funds investing in asset classes that may be more susceptible to liquidity concerns. Staff focused on the following three fund categories:

1. High yield debt funds, including funds that focus on senior loans investments; 2. Emerging market funds; and 3. Small capitalization equity funds.

Our review focused on the following three areas:

1. Liquidity assessments of fund holdings: Staff assessed whether funds have appropriate policies and procedures to identify potential illiquid assets.

2. Liquidity stress testing: Staff assessed whether funds have appropriate policies and procedures to manage

higher levels of redemption requests in an orderly manner under various stress scenarios. 3. Liquidity valuation considerations: Staff assessed whether funds’ valuation processes have appropriately

taken liquidity into consideration. In total, we reviewed 22 funds, consisting of conventional mutual funds and ETFs managed by 16 investment fund managers (IFMs). The 16 IFMs manage approximately $391 billion in assets under management (AUM). We did not find any practices or disclosures that resulted in a referral to either OSC’s Compliance and Registrant Regulation or Enforcement branches. BACKGROUND While the mutual fund industry consists largely of funds focused on traditional asset classes, such as equities and investment grade debt, staff have noted an increase in fund offerings with asset classes that may have higher liquidity risks. The mutual fund industry has approximately $1.3 trillion in AUM, while ETF AUM is approximately $81 billion. As of February 2015, approximately 7% of total industry AUM was held in high yield global fixed income funds, 4% in Canadian, U.S. or global small/mid cap funds and 1% in emerging market equity funds.


June 25, 2015

(2015), 38 OSCB 5679

REVIEW OBSERVATIONS AND RECOMMENDATIONS Liquidity Assessments of Fund Holdings Observations

Liquidity metrics We found IFMs monitor varying metrics across asset classes in assessing the liquidity of their funds’ holdings. As fixed income and debt holdings are not generally traded on exchanges, IFMs utilize a number of market quality metrics to determine the level of liquidity for these assets. These metrics include the number of dealers making a market, frequency of quotes, bid-ask spreads, outstanding issue size and frequency of price movements. For listed equity investments, most IFMs use liquidity metrics, such as trading volume and bid-ask spreads. We found that some IFMs have the view that equity investments are liquid as long as the investments are listed on an exchange, without further consideration of market activity and conditions. Many IFMs have established assessment or review committees to determine whether a security is illiquid. In addition to representations from the fund manager, these committees often consist of technical experts, such as portfolio advisors and fund accountants. Once a security is flagged as an illiquid asset, the review committee determines what actions need to be taken to ensure compliance with securities laws and the fund’s investment policies. Staff recognizes there is considerable judgment involved in liquidity assessments. Review committees can add objectivity and expertise into the assessment process for IFMs. Monitoring of Liquidity During our review we found instances, in particular funds focused on small capitalization issuers, where investment holdings have not exhibited trading volume or market activity needed to support the disposal of investments in a short period of time. These funds took corrective action and decreased their illiquid holdings to an appropriate level to ensure compliance with NI 81-102. To ensure compliance with securities laws, the IFMs for these funds developed policies and procedures to monitor a holdings’ liquidity on a frequent and timely basis. Illiquid investments, by their nature, can be difficult to dispose of. As a result, corrective actions can potentially cause significant disruption to a fund’s portfolio. Staff supports ongoing liquidity monitoring as an important preventive tool.

Recommendations

1. Written policies and procedures Funds should have robust written policies and procedures on liquidity assessments at the time of an investment purchase and on an ongoing basis. The liquidity assessments should be based on objective and relevant quantitative metrics on an ongoing basis as market activity and conditions can vary and decline over time. We expect funds to tailor their policies and procedures, as well as liquidity metrics, for different asset classes. While not an exhaustive list, they should consider the following metrics noted from the review that were used in making liquidity assessments:

• Volume metrics (e.g. average daily or weekly trading volume) • Bid-ask spreads • Number of participants making a market for the holding • Outstanding issue size

2. Market activity and conditions The definition of “illiquid asset” in NI 81-102 refers to the ability to readily dispose of a portfolio asset through a market facility on which public quotations are available at a price that approximates the amount at which the portfolio asset is valued. Being listed on a stock exchange with a quoted price alone, in staff’s view, is not generally sufficient to conclude that a particular holding is liquid. A stock listing does not necessarily mean that an equity investment could be readily disposed at a price that approximates the last market transaction or is within the current bid-ask spread.


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(2015), 38 OSCB 5680

Based on the redemption requirements set out in NI 81-102, specifically the requirement that redemption requests must be settled in 3 business days, IFMs should consider whether the funds’ investment holdings can be readily disposed of in this period without a significant adverse impact to the portfolio. In considering market activity, IFMs can compare the size of a particular investment holding with the trading volume of such investment.

Liquidity Stress Testing Observations

Current Practices We found most IFMs engaged in some type of stress testing on an ongoing basis to assess the ability of a fund to meet unexpected large redemptions. However, some did not. We noted others conducted scenario analysis to assess the ability of the portfolio to meet redemptions, but this analysis incorporated only historical redemption rates without consideration of higher levels. IFMs of funds investing in emerging market securities were generally more rigorous in stress testing their portfolios on an ongoing basis. Emerging market portfolios were typically subject to bi-weekly or ad-hoc discussions and analysis regarding their geographical and country specific exposure, geopolitical events and currency exposures. Further, we found that funds investing in asset classes that have higher liquidity risks generally had investment parameters designed to mitigate such risks. For example, funds that invest in senior loans typically held higher cash levels and had higher degrees of diversification in the fund’s holdings. We see stress testing as a prudent way for IFMs to ensure funds can manage unexpected large redemption requests together with stressed market conditions. Recommendations 1. Standalone stress testing Funds should have written stress testing policies and procedures in place to ensure the fund can effectively execute redemptions in stressed market conditions. Written procedures can speak to the order in which assets may be liquidated to minimize the negative impact to the portfolio and the remaining unitholders. 2. Scenario analysis When performing stress testing, IFMs should build into the scenario analysis redemption rates that exceed their past redemption experience. Together with liquidity stress testing, IFMs should consider stress testing for portfolio performance. As liquidity of underlying investments, large redemption requests and stressed market conditions tend to correlate with each other, effective stress testing should take into consideration different market conditions that would affect the performance of the funds. For example, for fixed income funds, consider the impact on the portfolio should interest rates change. Emerging market funds could consider the impact of a particular geopolitical uncertainty. 3. Risk discussion and investment parameters Funds with higher exposure to potentially illiquid assets should provide additional disclosure and ongoing discussion of the risk management policies and investment restrictions in place designed to mitigate liquidity risk. Funds can provide risk management discussion in the investment strategies section of the prospectus or management discussion and analysis in the management report of fund performance (MRFP). We think better risk management discussion provides clarity of the fund’s investment policies and can enhance investor understanding and expectations. Staff found that some funds investing in senior loans, for example, have disclosed more defined investment restrictions around cash and marketable investment holding levels, and use of liquidity metrics, such as minimum tranche size and credit quality, as part of their strategies to mitigate liquidity risk. To enhance investors’ understanding and expectation of the investment risk, funds should disclose material risks that would significantly impact their funds’ performance. For example, a potential increase in interest rates may negatively impact performance for fixed income funds.


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(2015), 38 OSCB 5681

Liquidity Valuation Considerations Observations

Valuation Practices With respect to valuation, we found that closing market values were generally used for equity investments, including small capitalization issuers, without any further consideration of market activity and conditions. For fixed income investments, we found IFMs accessed information helpful in assessing market activity and conditions. This included third party vendors providing over the counter broker quotes, and service providers who produce supplemental pricing information such as data freshness reports, quote sizes, and number of broker quotes. We found IFMs typically consider approximate price adjustments as a result of this supplemental information in the fair valuing of their fixed income holdings.

Recommendations 1. Fair value determination for NAV calculation purposes Fair value is defined in National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to mean (a) the market value based on reported prices and quotations in an active market, or (b) if the market value is not available, or the manager of the investment fund believes that it is unreliable, a value that is fair and reasonable in all the relevant circumstances. We refer funds to International Financial Reporting Standards 13 (IFRS 13) Fair Value Measurements which sets out guidance for determining fair value, as well as the accompanying disclosure requirements. IFRS has established a three level fair value hierarchy, based on the type of inputs used to measure fair value. For investment valuation purposes;

• Level 1 inputs are quoted prices (unadjusted) in an active market for identical investments. • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the

investment either directly or indirectly. • Level 3 inputs are unobservable inputs for the investment.

In order to measure an investment solely based on a quoted price, the fund must conclude that there is an ‘active market’ for the investment. IFRS 13 defines a market as active if transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. IFRS 13 also provides some guidance on when the volume or level of activity on a market may indicate that a transaction price or quoted price does not represent fair value. Staff takes the view that a fund’s determination of whether an investment is quoted in an active market under IFRS 13 must be a consideration in determining whether the investment meets the illiquid asset restrictions under NI 81-102. 2. Disclosure If an investment is not quoted in an active market, then fair value is determined based on a consideration of other inputs, and additional disclosure with respect to those investments is required in the funds’ financial statements in accordance with IFRS 13. We refer funds to IFRS 13 which sets out relevant disclosure requirements. We encourage funds to provide additional information when fair valuing fixed income and debt instruments, as level 2 inputs are often used. To the extent that the valuation procedures are different between NAV calculation and for financial statement purposes, item 5 of subsection 3.6(1) of NI 81-106 requires notes disclosure detailing and explaining the differences. 3. Independent Review Committee (IRC) input on valuation of illiquid assets Given the actual and/or perceived conflict of interest that arises when IFMs value illiquid assets (such as when the IFM overrides valuations provided by external pricing sources), we expect IFMs to obtain standing instructions from the


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(2015), 38 OSCB 5682

funds’ IRC in regard to their valuation policies and procedures to ensure that any conflicts of interest are appropriately identified and mitigated.

CONCLUSION We found that IFMs are generally aware of liquidity risks, and have taken liquidity risks into consideration in their day-to-day management of the funds. We did not find any practices or disclosures that resulted in a referral to either OSC’s Compliance and Registrant Regulation or Enforcement branches. We expect IFMs to use the guidance provided in this notice. Asset classes that may be more susceptible to liquidity concerns will remain a focus for Staff. We continue to monitor the development in this area, and will publish more guidance or take other regulatory action as needed. Questions may be referred to: Ritu Kalra Senior Accountant Investment Funds and Structured Products Branch (416) 593-8063 [email protected]

Abid Zaman Accountant Investment Funds and Structured Products Branch (416) 204-4955 [email protected]

Sovener Yu Accountant Investment Funds and Structured Products Branch (416) 593-2395 [email protected]

Raymond Chan Manager Investment Funds and Structured Products Branch (416) 593-8128 [email protected]


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(2015), 38 OSCB 5683

1.1.3 Practice Guideline – Electronic Copies of Written Submissions

PRACTICE GUIDELINE – JUNE 16, 2015

ELECTRONIC COPIES OF WRITTEN SUBMISSIONS

(Ontario Securities Commission Rules of Procedure (2014), 37 O.S.C.B. 4168 and Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended)

Preamble Pursuant to Rules 1.2(3), 1.3, 1.4, 1.5.4 and 1.5.8 of the Ontario Securities Commission Rules of Procedure (2014), 37 O.S.C.B. 4168, the Ontario Securities Commission (the “Commission”) is issuing this practice guideline relating to the filing of written submissions in electronic format (this “Practice Guideline”). This Practice Guideline will, effective July 1, 2015, apply to all proceedings before the Commission (“OSC Proceedings”), including proceedings commenced prior to such effective date. 1. General Principles and Application

The purpose of this Practice Guideline is to establish a uniform approach to the filing of written submissions in electronic format by the parties to OSC Proceedings to facilitate the review of such submissions by the Panel.

2. Electronic Written Submissions

All written submissions (including text and image/picture documents) that are filed with the Commission in connection with OSC Proceedings shall, on the same day, also be filed electronically as multi-page Portable Document Formatted (PDF) documents that will allow full text searching. Electronic written submissions shall be filed by e-mailing them to the Registrar of the Commission at [email protected]. The e-mail must include the title of the proceeding, the party’s name and that of counsel, if applicable, and a list of the attachments to the e-mail.

3. Consequences of Non-Compliance

A party which fails to comply with this Practice Guideline may be considered by the Panel, in its discretion, to have failed to file its written submissions within the prescribed period of time.

4. Power of the Panel

This Practice Guideline does not restrict in any way the discretion of the Panel to make rulings as it deems appropriate in the circumstances, including rulings permitting the filing of electronic copies of submissions in other formats.


June 25, 2015

(2015), 38 OSCB 5684

1.2 Notices of Hearing 1.2.1 David M. O'Brien – ss. 127 and 127.1 of the Act and Rule 12 of the OSC Rules of Procedure

IN THE MATTER OF THE SECURITIES ACT,

R.S.O. 1990, c. S.5 AS AMENDED

AND

IN THE MATTER OF DAVID M. O’BRIEN

AND

IN THE MATTER OF

A SETTLEMENT AGREEMENT BETWEEN STAFF OF THE ONTARIO SECURITIES COMMISSION AND

DAVID M. O’BRIEN

NOTICE OF HEARING (Sections 127 and 127.1 of the Act and Rule 12 of the Commission’s Rules of Procedure)

TAKE NOTICE THAT the Ontario Securities Commission (the “Commission”) will hold a hearing pursuant to sections 127 and 127.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”) at the offices of the Commission at 20 Queen Street West, 17th Floor, Toronto, Ontario, M5H 3S8, on June 23, 2015 at 2:30 p.m., or as soon thereafter as the hearing can be held; AND TAKE NOTICE that the purpose of the hearing is for the Commission to consider whether it is in the public interest to approve a Settlement Agreement between Staff of the Commission and David O’Brien; BY REASON OF the allegations set out in the Statement of Allegations of Staff of the Commission dated December 7, 2010, and such additional allegations as counsel may advise and the Commission may permit; AND TAKE FURTHER NOTICE that any party to the proceedings may be represented by counsel at the hearing; AND TAKE FURTHER NOTICE that upon failure of any party to attend at the time and place aforesaid, the hearing may proceed in the absence of that party and such party is not entitled to any further notice of the proceedings. AND TAKE FURTHER NOTICE that the Notice of Hearing is also available in French, participation may be in either French or English and participants must notify the Secretary’s Office in writing as soon as possible, and in any event, at least thirty (30) days before a hearing if the participant is requesting a proceeding to be conducted wholly or partly in French; and ET AVIS EST ÉGALEMENT DONNÉ PAR LA PRÉSENTE que l'avis d'audience est disponible en français, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Bureau du secrétaire par écrit le plut tôt possible et, dans tous les cas, au moins trente (30) jours avant l'audience si le participant demande qu'une instance soit tenue entièrement ou partiellement en français. DATED at Toronto this 19th day of June, 2015. “Josée Turcotte” Secretary to the Commission


June 25, 2015

(2015), 38 OSCB 5685

1.2.2 Good Mining Exploration Inc. – s. 127


R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF GOOD MINING EXPLORATION INC.

NOTICE OF HEARING

(Section 127) TAKE NOTICE that the Ontario Securities Commission (the “Commission”) will hold a hearing pursuant to section 127 of the Securities Act, R.S.O., c. S.5, as amended (the “Act”), at the offices of the Commission at 20 Queen Street West, 17th Floor, Toronto, Ontario, commencing on June 22, 2015 at 10:00 a.m. or as soon thereafter as the hearing can be held, or in writing if the Commission gives permission pursuant to Rule 11 of the Ontario Securities Commission Rules of Procedure, as requested by Staff of the Commission; AND TAKE NOTICE that the purpose of the hearing is for the Commission to consider whether, in the Commission's opinion, it is in the public interest for the Commission to make the following orders:

a. that trading in any securities or derivatives by the Respondent cease permanently, pursuant to paragraph 2 of subsection 127(1) of the Act;

b. that trading in any securities of the Respondent cease permanently, pursuant to paragraph 2 of subsection

127(1) of the Act; and c. such further order as the Commission considers appropriate;

BY REASON OF the allegations set out in the Statement of Allegations of Staff of the Commission, dated June 18, 2015, and such further allegations as counsel may advise and the Commission may permit; AND TAKE FURTHER NOTICE that any party to the proceeding may be represented by counsel at the hearing; AND TAKE FURTHER NOTICE that upon failure of any party to attend at the time and place stated above, the hearing may proceed in the absence of that party, and such party is not entitled to any further notice of the proceedings; AND TAKE FURTHER NOTICE that the Notice of Hearing is also available in French, participation may be in either French or English and participants must notify the Secretary’s Office in writing as soon as possible, and in any event, at least thirty (30) days before a hearing if the participant is requesting a proceeding to be conducted wholly or partly in French; and ET AVIS EST ÉGALEMENT DONNÉ PAR LA PRÉSENTE que l'avis d'audience est disponible en français, que la participation à l'audience peut se faire en français ou en anglais et que les participants doivent aviser le Bureau du secrétaire par écrit le plut tôt possible et, dans tous les cas, au moins trente (30) jours avant l'audience si le participant demande qu'une instance soit tenue entièrement ou partiellement en français. DATED at Toronto, this 19th day of June, 2015. “Josée Turcotte” Secretary to the Commission


June 25, 2015

(2015), 38 OSCB 5686



AND


STATEMENT OF ALLEGATIONS OF

STAFF OF THE ONTARIO SECURITIES COMMISSION I. OVERVIEW 1. This proceeding concerns the failure of Good Mining Exploration Inc. to file a technical report as required pursuant to Ontario securities laws. II. THE RESPONDENT 2. GOOD Mining Exploration Inc. is a mining exploration company incorporated on October 5, 2012 whose head office is in Newmarket, Ontario (the “Respondent”). The Respondent is not a reporting issuer nor is it listed for trading on a recognized exchange. III. BACKGROUND TO ALLEGATONS 3. Between November 5, 2014 and May 12, 2015, the Respondent posted on its company website several press releases which disclosed the results of a series of inferred and indicated mineral resource estimates for its material mineral project located in Northern Ontario (the “Project”). 4. The Respondent did not file with the Commission a technical report prepared by an independent Qualified Person in connection with its disclosure of those mineral resource estimates within 45 days of the disclosure, as required by subsection 4.2(5)(a)(iii), and sections 5.1 and 5.3 of National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). 5. The Respondent completed a private placement of securities in December 2014 in the amount of approximately $650,000. The Respondent announced on March 19, 2015 in a press release posted on its website the launch of another private placement offering of $10,000,000 for common shares. IV. BREACHES OF ONTARIO SECURITIES LAW 6. The specific allegations advanced by Staff are:

(a) The Respondent failed to file a technical report prepared by an independent Qualified Person within 45 days of disclosing to the public mineral resource estimates contrary to subsection 4.2(5)(a)(iii) and sections 5.1 and 5.3 of NI 43-101 (“the Default”); and

(b) The Default continues to the present time.

7. By reason of the foregoing, the Respondent violated the requirements of Ontario securities law. 8. The Respondent also engaged in conduct contrary to the public interest by disclosing to the public results of a series of inferred and indicated mineral resource estimates for the Project and subsequently launching an offering of its securities without having filed a technical report to support the mineral resource estimates as required by NI 43-101. 9. Staff reserve the right to make such other allegations as Staff may advise and the Commission may permit. DATED at Toronto, June 18, 2015


June 25, 2015

(2015), 38 OSCB 5687

1.4 Notices from the Office of the Secretary 1.4.1 Practice Guideline – Electronic Copies of

Written Submissions

FOR IMMEDIATE RELEASE June 17, 2015

PRACTICE GUIDELINE –

ELECTRONIC COPIES OF WRITTEN SUBMISSIONS TORONTO – The Ontario Securities Commission (the “Commission”) has approved a practice guideline yesterday regarding the filing of electronic copies of written submissions (the “Practice Guideline”). The Practice Guideline establishes a uniform approach to the filing of written submissions in electronic format in OSC proceedings. The Practice Guideline was developed in accordance with the Commission’s Rules of Procedure (2014), 37 O.S.C.B. 4168 and the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22. The Practice Guideline will be effective July 1, 2015, and will apply to all proceedings before the Commission, including those commenced by a Notice of Hearing issued prior to that date. A copy of the Practice Guideline is available at www.osc.gov.on.ca. OFFICE OF THE SECRETARY JOSÉE TURCOTTE SECRETARY For media inquiries: [email protected] For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)

1.4.2 1415409 Ontario Inc. et al.


IN THE MATTER OF

THE SECURITIES ACT, R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF

1415409 ONTARIO INC., TITLE ONE CLOSING INC., RAVINDRA DAVE, CHANDRAMATTIE DAVE

and AMETRA DAVE TORONTO – The Commission issued an Order in the above named matter which provides that the hearing be adjourned until July 16, 2015, at 1:00 p.m. A copy of the Order dated June 17, 2015 is available at www.osc.gov.on.ca. OFFICE OF THE SECRETARY JOSÉE TURCOTTE SECRETARY For media inquiries: [email protected] For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)


June 25, 2015

(2015), 38 OSCB 5688

1.4.3 David M. O’Brien


IN THE MATTER OF


AND

IN THE MATTER OF DAVID M. O’BRIEN

AND

IN THE MATTER OF

A SETTLEMENT AGREEMENT BETWEEN STAFF OF THE ONTARIO SECURITIES COMMISSION

AND DAVID M. O’BRIEN TORONTO – The Office of the Secretary issued a Notice of Hearing for a hearing to consider whether it is in the public interest to approve a settlement agreement entered into by Staff of the Commission and the Respondent in the above named matter. The hearing will be held on June 23, 2015 at 2:30 p.m. on the 17th floor of the Commission's offices located at 20 Queen Street West, Toronto. A copy of the Notice of Hearing dated June 19, 2015 is available at www.osc.gov.on.ca. OFFICE OF THE SECRETARY JOSÉE TURCOTTE SECRETARY For media inquiries: [email protected] For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)

1.4.4 Good Mining Exploration Inc.


IN THE MATTER OF


AND

IN THE MATTER OF

GOOD MINING EXPLORATION INC. TORONTO – The Office of the Secretary issued a Notice of Hearing setting the matter down to be heard on June 22, 2015 at 10:00 a.m. or as soon thereafter as the hearing can be held in the above named matter. The hearing will be held at the offices of the Commission at 20 Queen Street West, 17th Floor, Toronto. A copy of the Notice of Hearing dated June 19, 2015 and Statement of Allegations of Staff of the Ontario Securities Commission dated June 18, 2015 are available at www.osc.gov.on.ca. OFFICE OF THE SECRETARY JOSÉE TURCOTTE SECRETARY For media inquiries: [email protected] For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)


June 25, 2015

(2015), 38 OSCB 5689

1.4.5 Good Mining Exploration Inc.


IN THE MATTER OF


AND

IN THE MATTER OF

GOOD MINING EXPLORATION INC. TORONTO – The Commission issued an Order which provides that, pursuant to paragraph 2 of subsection 127(1) of the Act that, effective immediately:

1. All trading in the securities of the Mining Issuer, whether direct or indirect, shall cease unless this order is varied or revoked on application of a person or company affected by the decision; and

2. All trading in securities or derivatives by

the Mining Issuer, whether direct or indirect, shall cease unless this order is varied or revoked on application of a person or company affected by the decision.

A copy of the Order dated June 22, 2015 is available at www.osc.gov.on.ca. OFFICE OF THE SECRETARY JOSÉE TURCOTTE SECRETARY For media inquiries: [email protected] For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)


June 25, 2015

(2015), 38 OSCB 5690

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June 25, 2015

(2015), 38 OSCB 5691

Chapter 2

Decisions, Orders and Rulings 2.1 Decisions 2.1.1 NorthWest International Healthcare Properties Real Estate Investment Trust – s. 1(10)(a)(ii) Headnote National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Issuer deemed to no longer be a reporting issuer under securities legislation. Applicable Legislative Provisions Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii). June 16, 2015 NorthWest International Healthcare Properties Real Estate Investment Trust c/o Goodmans LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7 Attention: David Wallace Dear Sirs/Mesdames: Re: NorthWest International Healthcare Properties Real Estate Investment Trust (the “Applicant”) – application for

a decision under the securi-ties legislation of Ontario, Alberta, Saskatch-ewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, Nunavut, Newfoundland and Labrador, Yukon and Northwest Territories (the “Jurisdictions”) that the Applicant is not a reporting issuer

The Applicant has applied to the local securities regulatory authority or regulator (the “Decision Maker”) in each of the Jurisdictions for a decision under the securities legislation (the “Legislation”) of the Jurisdictions that the Applicant is not a reporting issuer. In this decision, “securityholder” means, for a security, the beneficial owner of the security. The Applicant has represented to the Decision Makers that,

a) the outstanding securities of the Appli-cant, including debt securities, are bene-ficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;

b) no securities of the Applicant, including debt securities, are traded in Canada or another country on a

marketplace as defined in National Instrument 21-101 – Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;

c) the Applicant is applying for a decision that it is not a reporting issuer in all of the jurisdictions in Canada in

which it is currently a reporting issuer; and d) the Applicant is not in default of any of its obligations under the Legislation as a reporting issuer.

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met and orders that the Applicant is not a reporting issuer. “Shannon O’Hearn” Manager, Corporate Finance Ontario Securities Commission

Decisions, Orders and Rulings

June 25, 2015

(2015), 38 OSCB 5692

2.1.2 Middlefield Limited et al. Headnote MI 11-102 and NP 11-203 – fund manager proposes merging a non-redeemable investment fund into a mutual fund – merger requires approval under paragraph 5.5(1)(b) of NI 81-102 – approval granted. Applicable Legislative Provisions National Instrument 81-102 Investment Funds, s. 5.5. Citation: Re Middlefield Limited, 2015 ABASC 749

June 16, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO (the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF MIDDLEFIELD LIMITED

(the Filer)

AND

ENERGY INDEXPLUS DIVIDEND FUND (the Terminating Fund)

AND

MIDDLEFIELD GLOBAL INFRASTRUCTURE FUND

(the Continuing Fund)

DECISION Background The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filer on behalf of the Terminating Fund and the Continuing Fund (each a Fund and together, the Funds) for a decision under the securities legislation (the Legislation) of the Jurisdictions for approval (the Approval Sought), pursuant to section 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102), of the proposed merger (Merger) of the Terminating Fund into the Continuing Fund. Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application, (b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102)

is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and Yukon, and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory

authority or regulator in Ontario.


June 25, 2015

(2015), 38 OSCB 5693

Interpretation Terms defined in National Instrument 14-101 Definitions or in MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein. Representations This decision is based on the following facts represented by the Filer: The Filer and Fund Information 1. The Filer is a corporation governed by the laws of Alberta and is registered as an investment fund manager under

securities legislation in each of Alberta, Ontario, Québec and Newfoundland and Labrador. The Filer is the manager of the Funds.

2. The head office of the Filer is located in Calgary, Alberta. 3. The Terminating Fund completed its initial public offering of units on July 19, 2011 and is a non-redeemable investment

fund governed by a declaration of trust dated June 29, 2011. The units of the Terminating Fund are listed for trading on the Toronto Stock Exchange (TSX) under the symbol “IDE.UN”.

4. The Continuing Fund was launched on June 12, 2013 and is a mutual fund trust governed by a declaration of trust

dated June 12, 2013. 5. The Terminating Fund and the Continuing Fund are reporting issuers under the securities legislation of each jurisdiction

of Canada. 6. Neither the Filer nor the Funds are in default of any of the requirements of securities legislation in any jurisdiction of

Canada. 7. The Continuing Fund currently distributes its securities in all of the jurisdictions of Canada pursuant to a simplified

prospectus, annual information form and fund facts documents, each dated May 22, 2015. Details of the Merger 8. The proposed Merger was announced in a joint press release of the Funds dated April 10, 2015, which has been filed

by each Fund on SEDAR. It is expected that the Merger will be completed on or about June 17, 2015 (the date the Merger becomes effective being the Effective Date).

9. Pursuant to the Merger, units of the Terminating Fund will be exchanged for Series A units of the Continuing Fund at

an exchange ratio (the Exchange Ratio) which will be calculated by dividing the net asset value per unit of the Terminating Fund by the net asset value per Series A unit of the Continuing Fund, each as determined at the close of trading on the TSX on the business day prior to the Effective Date.

10. The proposed Merger will be structured as follows:

(a) The Terminating Fund and the Continuing Fund will amend their respective declarations of trust if and to the

extent necessary or appropriate to implement the Merger. (b) To the extent necessary, the Terminating Fund will make payable to its unitholders on the Effective Date

sufficient income and capital gains in order that the Terminating Fund will not be liable for any tax that would not be refundable to it for the stub taxation year ending on the Effective Date. Such distribution will be reinvested in additional units of the Terminating Fund and the then outstanding units will be consolidated such that the number of consolidated units outstanding is equal to the number of units outstanding before the distribution. The Continuing Fund will also take similar steps to ensure that it will not be liable for any tax that would not be refundable to it for the stub taxation year ending on the Effective Date.

(c) On the Effective Date, the Terminating Fund will transfer all of its assets and liabilities to the Continuing Fund

in exchange for an amount (the Purchase Price) equal to the value of the net assets transferred to the Continuing Fund on the Effective Date.

(d) The Continuing Fund will satisfy the Purchase Price by issuing that number of its Series A units as is equal to

the number of units in the Terminating Fund then outstanding multiplied by the Exchange Ratio.


June 25, 2015

(2015), 38 OSCB 5694

(e) The units of the Terminating Fund will then be redeemed without further action and the Terminating Fund will pay the redemption price therefor by distributing the applicable number of Series A units to its former unitholders, with each such unitholder receiving that number of Series A units as is equal to the Exchange Ratio multiplied by the number of units of the Terminating Fund held by such unitholder immediately prior to the completion of the Merger.

(f) Following the distribution of Series A units to former unitholders of the Terminating Fund, the Terminating

Fund and the Continuing Fund will file a joint tax election in respect of the transfer to the Continuing Fund of all of the assets and liabilities of the Terminating Fund.

(g) The Terminating Fund will be wound up as soon as reasonably practicable following the Merger.

11. The independent review committees of the Funds (the IRCs) established pursuant to National Instrument 81-107 Independent Review Committee for Investment Funds have reviewed the potential conflict of interest matters involved in mergers structured in the same manner as the Merger and, after reasonable inquiry, concluded that such mergers would achieve a fair and reasonable result for the funds involved and accordingly have granted standing approval to the Filer to effect such mergers.

12. The Manager will convene a special meeting (the Meeting) of the unitholders of the Terminating Fund in order to seek

approval of the Merger, as required by section 5.1(f) of NI 81-102. The Meeting will be held on or about June 10, 2015. In connection with the Meeting, the Manager will send to each unitholder of the Terminating Fund a management information circular, a related form of proxy and the fund facts document of the Continuing Fund relating to its Series A units.

13. If all required approvals for the Merger are obtained, it is intended that the Merger will occur and unitholders of the

Terminating Fund will become unitholders of the Continuing Fund at approximately 12:01 a.m. on the Effective Date. The Terminating Fund will be wound-up as soon as reasonably practicable following the Merger.

14. The cost of effecting the Merger (consisting primarily of proxy solicitation, printing, mailing, legal and regulatory fees

and brokerage commissions in connection with any realignment of the portfolios of the Continuing Fund or the Terminating Fund) will be borne by the Filer.

15. The units of the Terminating Fund are expected to be de-listed from trading on the TSX on the day prior to the Effective

Date. Upon completion of investment dealers’ back office operations in connection with the Merger, unitholders of the Terminating Fund will be able to redeem the Series A units of the Continuing Fund that they acquired pursuant to the Merger on a daily basis and for redemption proceeds per Series A unit equal to the net asset value per Series A unit next calculated. Any period of illiquidity following the Merger will be as short as is practicable. No fees or expenses will be payable by such unitholders in connection with a redemption of units of the Continuing Fund issued pursuant to the Merger.

16. In the opinion of the Filer the Merger satisfies all of the criteria for pre-approved reorganizations and transfers set forth

in section 5.6(1) of NI 81-102 except as follows: (a) In the opinion of the Filer, a reasonable person may not consider the fundamental investment objectives or fee

structure of the Terminating Fund to be substantially similar to those of the Continuing Fund. Accordingly, the Merger may not meet the criteria for pre-approved reorganizations and transfers under subsection 5.6(1)(a)(ii) of NI 81-102.

(b) The Terminating Fund’s unitholders will not have the opportunity to redeem their units of the Terminating Fund

for proceeds equal to the net asset value per unit between the date of the press release announcing the Merger and the Effective Date. Accordingly, the Merger may not meet the criteria for pre-approved reorganizations and transfers under subsections 5.6(1)(j)(ii) and (iii) of NI 81-102. However, the Filer believes that an additional redemption right is not necessary, since Series A units of the Continuing Fund are redeemable on a daily basis for redemption proceeds per Series A unit equal to the net asset value per Series A unit next calculated and no fees or expenses will be payable by such unitholders in connection with a redemption of units of the Continuing Fund issued pursuant to the Merger.

17. The Filer believes that the Merger will be beneficial to unitholders of the Funds for the following reasons:

(a) the Merger will reduce the duplication of administrative and regulatory costs involved in operating the

Terminating Fund and the Continuing Fund as separate investment funds;


June 25, 2015

(2015), 38 OSCB 5695

(b) the Continuing Fund will have a greater level of assets which in turn is expected to allow for increased portfolio diversification opportunities and greater liquidity of investments;

(c) unitholders of the Terminating Fund and the Continuing Fund may enjoy increased economies of scale for

operating expenses as part of a larger combined Continuing Fund; (d) the Series A units of the Continuing Fund issued pursuant to the Merger will be redeemable on a daily basis

and for redemption proceeds per Series A unit equal to the net asset value per Series A unit next calculated; and

(e) the Continuing Fund, as a result of its greater size, may benefit from its larger profile in the marketplace.

18. The management information circular prepared in connection with the Meeting provides a comparison of the fundamental investment objectives, fee structures and other material differences between the Funds.

Decision Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision. The decision of the Decision Makers under the Legislation is that the Approval Sought is granted. “Denise Weeres” Manager, Legal Corporate Finance


June 25, 2015

(2015), 38 OSCB 5696

2.1.3 Enbridge Inc. Headnote National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions – issuer proposing to transfer two of its wholly-owned subsidiaries to a related party in exchange for additional securities of the related party – exemptive relief granted to exempt the issuer from the formal valuation and minority approval requirements in MI 61-101 – if structure of the related parties were collapsed, transaction would meet the definition of “downstream transaction” in MI 61-101. Applicable Legislative Provisions Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions, ss. 5.4, 5.6, 6.3, 8.1, 9.1. Companion Policy 61-101CP Protection of Minority Shareholders in Special Transactions, s. 3.3.

June 18, 2015


ONTARIO (THE “JURISDICTION”)

AND

IN THE MATTER OF


AND

IN THE MATTER OF ENBRIDGE INC. (THE “FILER”)

DECISION

Background The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) exempting the Filer pursuant to section 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”) from: (i) the requirement in sections 5.4 and 6.3(1)(d) of MI 61-101 to obtain a formal valuation (as defined in MI 61-101) of certain non-cash assets in connection with the Transaction (as defined below); and (ii) the requirement in sections 5.6 and 8.1 of MI 61-101 for the Filer to obtain minority approval for any related party transaction (as defined in MI 61-101) in connection with the Transaction (as defined below) (collectively, the “Requested Relief”). Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator (“Principal Regulator”) for this application; and (b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-

102”) is intended to be relied upon in the Province of Québec. Interpretation Terms defined in National Instrument 14-101 Definitions, MI 11-102 and MI 61-101 have the same meaning if used in this decision, unless otherwise defined. Representations This decision is based on the following facts represented by the Filer: 1. The Filer is a corporation existing under the laws of Canada.


June 25, 2015

(2015), 38 OSCB 5697

2. The registered and head office of the Filer is located at 3000, 425 – 1st Street SW, Calgary, Alberta T2P 3L8. 3. The Filer is a reporting issuer in each of the provinces of Canada and is not currently in default of any applicable

requirements under the securities legislation therein. 4. The Filer’s authorized share capital consists of an unlimited number of common shares (“Common Shares”) and an

unlimited number of preference shares, issuable in series (collectively, “Preference Shares”). 5. Holders of Common Shares (“Common Shareholders”) are entitled to receive notice of, and to attend, all meetings of

the holders of Common Shares and are entitled to one vote per Common Share held at all such meetings. 6. Holders of Preference Shares of any series are not entitled to receive notice of, or to attend or vote at, any meeting of

the securityholders of the Filer, except as required by law, are not entitled to any dividend other than or in excess of the cumulative preferential cash dividends payable thereon in accordance with their terms and are not entitled to participate in the assets of the Filer on a liquidation, dissolution or winding up of the Filer beyond a prescribed payment amount together with an amount equal to the accrued but unpaid dividends thereon, in each case, as determined in accordance with their terms.

7. The Common Shares are “affected securities” of the Filer for the purposes of MI 61-101. 8. As at May 31, 2015, there were 856,826,034 Common Shares issued and outstanding and the following Preference

Shares issued and outstanding: 5,000,000 Series A; 20,000,000 Series B; 18,000,000 Series D; 20,000,000 Series F; 14,000,000 Series H; 8,000,000 Series J; 16,000,000 Series L; 18,000,000 Series N; 16,000,000 Series P; 16,000,000 Series R; 16,000,000 Series 1; 24,000,000 Series 3; 8,000,000 Series 5; 10,000,000 Series 7; 11,000,000 Series 9; 20,000,000 Series 11; 14,000,000 Series 13; and 11,000,000 Series 15.

9. The Common Shares are listed on the Toronto Stock Exchange and the New York Stock Exchange and all of the

issued and outstanding Preference Shares are listed on the Toronto Stock Exchange. 10. To the knowledge of the Filer, as at May 31, 2015, there were no holders of Common Shares holding greater than 10

percent of the issued and outstanding Common Shares. 11. Enbridge Income Fund Holdings Inc. (“EIFH”) is a corporation existing under the laws of the Province of Alberta. 12. EIFH is a reporting issuer in each of the provinces of Canada. 13. The authorized capital of EIFH consists of an unlimited number of common shares (“EIFH Common Shares”), first

preferred shares (“EIFH First Preferred Shares”), issuable in series and limited to one-half of the number of EIFH Common Shares issued and outstanding at the relevant time, and one special voting share (“Special Voting Share”).

14. As at May 31, 2015, there were an aggregate of 70,351,000 EIFH Common Shares, no EIFH First Preferred Shares

and one Special Voting Share issued and outstanding. 15. The EIFH Common Shares are listed on the Toronto Stock Exchange. 16. Holders of EIFH Common Shares are entitled to receive notice of, and to attend, all meetings of the holders of EIFH

Common Shares and are entitled to one vote per EIFH Common Share held at all such meetings. 17. The holder of the Special Voting Share is entitled to receive notice of, and to attend, all annual and special meetings of

holders of EIFH Common Shares and is entitled to elect one director to the board of directors of EIFH for so long as the holder beneficially owns or controls, directly or indirectly, between 15 percent and 39 percent of the issued and outstanding EIFH Common Shares, provided that if the holder of the Special Voting Share elects to exercise its right to elect one director, it will not be permitted to exercise the votes attaching to the portion of the EIFH Common Shares held by such holder representing its pro-rata representation on the EIFH board in respect of the election of the remaining directors of EIFH at meetings of holders of EIFH Common Shares.

18. Enbridge Income Fund (the “Fund”) is an unincorporated open-ended trust established under the laws of the Province

of Alberta on May 22, 2003. The Fund is governed pursuant to an amended and restated trust indenture dated December 17, 2010 (the “Fund Trust Indenture”).

19. The head office and registered office of the Fund is located at 3000, 425 – 1st Street SW, Calgary, Alberta T2P 3L8. 20. The Fund is a reporting issuer in each of the provinces of Canada.


June 25, 2015

(2015), 38 OSCB 5698

21. The authorized trust units of the Fund consist of an unlimited number of units designated as ordinary units of the Fund pursuant to the Fund Trust Indenture (“Fund Units”).

22. As at May 31, 2015, there were 79,851,000 Fund Units issued and outstanding. 23. The Fund Units are not listed on any exchange or marketplace. 24. The Fund has delegated to Enbridge Commercial Trust (“ECT”) all of its governance functions pursuant to the Fund

Trust Indenture and an amended and restated Fund Delegation Agreement dated December 17, 2010. 25. ECT is an unincorporated trust established under the laws of the Province of Alberta on December 20, 2002. ECT is

governed pursuant to an amended and restated trust indenture dated November 13, 2014 (the “ECT Trust Indenture”).

26. ECT is not a reporting issuer in any jurisdiction. 27. The authorized trust units of ECT consist of an unlimited number of units designated as common units pursuant to the

ECT Trust Indenture (“ECT Common Units”) and an unlimited number of units designed as preferred units pursuant to the ECT Trust Indenture (“ECT Preferred Units”).

28. As at May 31, 2015, there were 168,854,837 ECT Common Units and 87,665,750 ECT Preferred Units issued and

outstanding. 29. The ECT Common Units and ECT Preferred Units are not listed on any exchange or marketplace. 30. The ECT Preferred Units are convertible at any time and from time to time into Fund Units on a 1:1 basis at the option

of the holder. 31. Enbridge Income Partners LP (“EIPLP”) is a limited partnership established under the laws of the Province of Alberta

on December 20, 2002. EIPLP is governed pursuant to an amended and restated limited partnership agreement dated December 17, 2010 (the “LP Agreement”).

32. EIPLP is not a reporting issuer in any jurisdiction. 33. The authorized partnership units of EIPLP consist of an unlimited number of class A units (“EIPLP Class A Units”) and

an unlimited number of class B units (“EIPLP Class B Units”). 34. As at May 31, 2015, there were 245,391,503.768 EIPLP Class A Units and no EIPLP Class B Units issued and

outstanding. 35. The EIPLP Class A Units and EIPLP Class B Units are not listed on any exchange or marketplace. 36. Enbridge Income Partners GP Inc. (“EIPGP”), a corporation existing under the laws of Canada, is the general partner of

EIPLP. 37. The principal and head office of EIPGP is located at Suite 3000, 425 - 1st Street SW, Calgary, Alberta T2P 3L8. 38. EIPGP is not a reporting issuer in any jurisdiction. 39. The authorized capital of EIPGP consists of an unlimited number of common shares (“EIPGP Common Shares”) and

an unlimited number of first preferred shares (“EIPGP First Preferred Shares”). 40. As at May 31, 2015, there were 486,920 EIPGP Common Shares and no EIPGP First Preferred Shares issued and

outstanding. 41. The EIPGP Common Shares are not listed on any exchange or marketplace. 42. As at May 31, 2015, the Filer held an aggregate of 14,002,000 EIFH Common Shares (representing 19.9 percent of the

issued and outstanding EIFH Common Shares) and one Special Voting Share. 43. As at May 31, 2015, EIFH held an aggregate of 70,351,000 Fund Units (representing 88.1 percent of the issued and

outstanding Fund Units).


June 25, 2015

(2015), 38 OSCB 5699

44. As at May 31, 2015, the Filer held an aggregate of 9,500,000 Fund Units (representing 11.9 percent of the issued and outstanding Fund Units).

45. As at May 31, 2015, the Fund held an aggregate of 168,854,837 ECT Common Units (representing all of the issued

and outstanding ECT Common Units). 46. As at May 31, 2015, the Filer held an aggregate of 87,665,750 ECT Preferred Units (representing all of the issued and

outstanding ECT Preferred Units). 47. As at May 31, 2015, ECT held 245,366,964.690 EIPLP Class A Units (representing 99.99 percent of the issued and

outstanding EIPLP Class A Units. 48. As at May 31, 2015, EIPGP held 24,539.078 EIPLP Class A Units (representing 0.01 percent of the issued and

outstanding EIPLP Class A Units. 49. As at May 31, 2015, ECT held 486,920 EIPGP Common Shares (representing all of the issued and outstanding EIPGP

Common Shares). 50. EIFH, the Fund, ECT, EIPGP and EIPLP are collectively referred to herein as the “Fund Group”. 51. As at May 31, 2015, by virtue of its above-mentioned ownership interests, the Filer held a consolidated economic

interest in the Fund Group of approximately 66.4 percent. 52. The Filer and its affiliates manage the day-to-day business of the Fund Group pursuant to management contracts in

place between affiliates of the Filer and the Fund Group entities, including a management agreement dated December 17, 2010 between Enbridge Management Services Inc. (“EMSI”), a wholly-owned subsidiary entity (as defined in MI 61-101) of the Filer, and ECT (the “Management Agreement”) and an administrative services agreement dated December 17, 2010 between EMSI, ECT and the Fund (the “Administration Agreement”).

53. The Filer proposes to transfer the shares of two of its indirect and direct wholly-owned operating subsidiary entities,

Enbridge Pipelines Inc. (“EPI”) and Enbridge Pipelines (Athabasca) Inc. (“EPA” and, collectively with EPI, the “Assets”), to EIPLP in exchange for cash, securities of EIPLP, the distribution rights referred to in paragraphs 56(d) and (e) below and the assumption by the Fund Group of certain associated debt (all as more particularly described below). The fair market value shall be determined through negotiation between the Filer and a joint special committee (the “Special Committee”) of independent members of the board of directors of EIFH and the board of trustees of ECT (the “Transaction”).

54. The Assets have a book value of approximately $17 billion and have associated debt in the aggregate amount of

approximately $12.5 billion, composed of public debt of EPI and intercompany debt between EPI, EPA and the Filer. 55. It is anticipated that the acquisition price of the Assets will be financed as follows:

(a) the Fund will issue Fund Units to the Filer; (b) the Fund will use the proceeds from the issuance of the Fund Units to the Filer to subscribe for additional ECT

Common Units; (c) ECT will create a new class of trust units designated as “Class B Units” by the ECT Trust Indenture (“ECT

Class B Units”), which will have substantially the same distribution, redemption, conversion and liquidation rights as the ECT Preferred Units;

(d) ECT will use the proceeds from step (b) above to subscribe for EIPLP Class A Units; and (e) the consideration for the Assets will be comprised of the proceeds from the issuance of EIPLP Class A Units

to ECT, the creation and issuance to the Filer and one or more of its affiliates of limited partnership units designated as “Class C Units” by the LP Agreement (“EIPLP Class C Units”), which will entitle the holders thereof to receive distributions from the distributable cash of EIPLP and will be convertible at the option of the holder from time to time into ECT Preferred Units, ECT Class B Units, Fund Units or EIFH Common Shares on a 1:1 basis, the creation and issuance of the EIPLP Class D Units defined and described in paragraph 56(c)(ii) hereof and the creation of the “Special Interest Rights” described in paragraph 56(c)(v) hereof.


June 25, 2015

(2015), 38 OSCB 5700

56. As part of the Transaction, it is anticipated that: (a) the ECT Trust Indenture will be amended to provide: (i) the Filer with the right, subject to the maintenance of

certain ownership thresholds in the aggregate outstanding equity securities of the Fund Group, to appoint up to seven of the eleven trustees on the board of trustees of ECT; and (ii) that the ECT Preferred Units and ECT Class B Units will be convertible at the option of the holder from time to time into Fund Units or EIFH Common Shares on a 1:1 basis;

(b) the Fund Trust Indenture will be amended to provide that the Fund Units will be convertible at the option of the

holder from time to time into EIFH Common Shares on a 1:1 basis; (c) the LP Agreement will be amended to create:

(i) the EIPLP Class C Units; (ii) limited partnership units designated as “Class D Units” by the LP Agreement (“EIPLP Class D

Units”), which will entitle the holders thereof to receive distributions declared on the EIPLP Class D Units through the issuance of additional EIPLP Class D Units and will be convertible at the option of the holder from time to time at any time from and after January 1 of the year that is four years from the year of issuance into EIPLP Class C Units on a 1:1 basis;

(iii) one limited partnership unit designated as the “Class E Unit” by the LP Agreement, which will entitle

the Filer to receive a one-time amount equal to the actual amounts received by EPI as a result of the redemption of the preferred shares of Enbridge Employee Services Canada Inc. held by EPI net of all taxes payable by EPI as a result of the redemption of such preferred shares;

(iv) one limited partnership unit designated as the “Class F Unit” by the LP Agreement, which will entitle

the Filer to receive a tax balancing distribution amount each year calculated with reference to tax savings and dividends received by subsidiary entities of EIPLP in certain circumstances; and

(v) rights designated as “Special Interest Rights” in the LP Agreement, which will entitle the holders

thereof to receive certain incentive and performance distributions;

(d) an affiliate of the Filer will continue to have a right to receive an incentive fee equal to 25 percent of the amount of distributions that exceed $1.295 per Fund Unit but subject to a specified cap per Fund Unit;

(e) the LP Agreement will be amended to provide the Filer and one or more of its affiliates with:

(i) an incentive distribution right equal to 25 percent of the amount of distributions that exceed a

benchmarked amount per EIPLP Class A Unit; and (ii) a temporary performance distribution right equal to 33 percent of the amount of distributions that

exceed a benchmarked amount per EIPLP Class A Unit payable in EIPLP Class D Units;

(f) the ECT Trust Indenture and the Fund Trust Indenture will be amended to provide that the amount of per-unit distributions on the EIPLP Class C Units, ECT Preferred Units, ECT Class B Units and Fund Units will be the same;

(g) the Filer will acquire a majority of the EIPGP Common Shares; (h) the Filer will continue to manage the day-to-day business of the Fund Group pursuant to management

contracts in place between affiliates of the Filer and the Fund Group entities, including amended versions of the Management Agreement and the Administration Agreement; and

(i) the Filer’s economic interest in the Fund Group will increase from approximately 66 percent to approximately

89 percent.

57. The Transaction constitutes a related party transaction of the Filer because the Filer is a control person of the Fund, and consequently, of ECT and EIPLP, and therefore each of them is a related party of the Filer under MI 61-101.

58. No insider of the Filer, or other person that has control or influence over the Filer, has a significant ownership interest in

any entity (other than the Filer) that has a direct or indirect interest in the Transaction.


June 25, 2015

(2015), 38 OSCB 5701

59. No shareholders of the Filer have an identifiable interest in any of EIF, ECT or EIPLP, other than in their capacity as shareholders of the Filer.

60. Absent the Requested Relief, if “minority approval” were required for the Filer under MI 61-101 there would be no

shareholders to exclude from the vote, except for those directors and senior officers of the Filer and its affiliates who currently serve as directors or senior officers (or the equivalent) of EPI, EPA and those Fund Group entities that are parties to the Transaction. These individuals collectively own Common Shares representing less than one percent of the issued and outstanding Common Shares as at May 31, 2015.

61. All Common Shareholders of the Filer will be treated equally under the Transaction. 62. The Filer and its security holders will continue to maintain a substantial interest in the Assets being transferred through

the Filer’s interest in the Fund Group following completion of the Transaction. The Filer’s economic interest in the Fund Group will increase from approximately 66 percent to approximately 89 percent.

63. The Transaction will be consummated at the fair market value to be negotiated with the Special Committee and will not

result in any detriment in the economic value of the Common Shares of the Filer or in an enhancement of economic value to any separate group of Common Shareholders of the Filer.

64. The Filer owns Fund Units and ECT Preferred Units convertible into Fund Units sufficient to control the Fund for the

purposes of MI 61-101. The Fund owns all of the voting securities of ECT, which owns all of the voting securities of EIPLP. Accordingly, the Filer is a control person of EIPLP for the purposes of MI 61-101.

65. Each of ECT and EIPLP is a related party of the Filer. ECT owns all of the voting securities of EIPLP. ECT is not a

wholly-owned subsidiary of the Filer. The Transaction would constitute a “downstream transaction” for the purposes of MI 61-101 but for the fact that ECT currently owns all of the voting securities of EIPLP.

66. The value of the Transaction consideration, along with all other material details of the Transaction, will be disclosed by

the Filer in a material change report filed in compliance with National Instrument 51-102 Continuous Disclosure Obligations and MI 61-101.

Decision The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision. The decision of the Principal Regulator under the Legislation is that the Requested Relief is granted, provided that:

(a) neither the Filer nor, to the knowledge of the Filer after reasonable inquiry, any of the Fund Group or any of its affiliates has knowledge of any material information concerning the Filer, the Fund Group or their respective securities that has not been generally disclosed and the material change report includes a statement to this effect, and

(b) there continues to be no insider of the Filer, or other person that has control or influence over the Filer, that

has a significant ownership interest in any entity (other than the Filer) that has a direct or indirect interest in the Transaction.

“Naizam Kanji” Director Office of Mergers & Acquisitions Ontario Securities Commission


June 25, 2015

(2015), 38 OSCB 5702

2.1.4 Santacruz Silver Mining Ltd. Headnote Relief from the requirements otherwise applicable to the Filer as a reporting issuer who is not a venture issuer – Filer is cross listed on the TSX Venture Exchange and the Bolsa de Comercio de Santiago, Venture marketplace of the Santiago Stock Exchange – filing obligations of both exchanges are identical – listing on venture marketplace of the Santiago Stock Exchange is available only as a secondary listing to entities listed on the TSX Venture Exchange – relief granted subject to conditions, including that the Filer complies with the requirements of Canadian securities legislation applicable to a venture issuer Applicable Legislative Provisions National Instrument 41-101 General Prospectus Requirements, s. 19.1. National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1. National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, s. 5.1. National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, s. 8.6. National Instrument 52-110 Audit Committees, s. 8.1. National Instrument 58-101 Disclosure of Corporate Governance Practices, s. 3.1. Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, s. 9.1.

June 19, 2015


ONTARIO (the “Jurisdiction”)

AND

IN THE MATTER OF


AND

IN THE MATTER OF SANTACRUZ SILVER MINING LTD.

(the “Filer”)

DECISION Background The securities regulatory authority or regulator in the Jurisdiction (the “principal regulator”) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) for relief from:

(i) the requirements otherwise applicable to the Filer as a reporting issuer who is not a venture issuer in each of

the following instruments, including the forms thereof (collectively, the “Instruments”):

a. National Instrument 41-101 General Prospectus Requirements; b. National Instrument 51-102 Continuous Disclosure Obligations; c. National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards; d. National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings; e. National Instrument 52-110 Audit Committees; and f. National Instrument 58-101 Disclosure of Corporate Governance Practices (the “Disclosure Relief”);


June 25, 2015

(2015), 38 OSCB 5703

(ii) the formal valuation requirements under sections 4.3 and 5.4 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ( “MI 61-101”) (the “Valuation Relief”); and

(iii) the minority approval requirements under section 5.6 of MI 61-101 (the “Minority Approval Relief”, and

together with the Disclosure Relief and the Valuation Relief, the “Exemption Sought”) Securities legislation imposes obligations for all reporting issuers. There are different obligations applicable to reporting issuers who are venture issuers and to those that are non-venture issuers. The Exemption Sought, if granted, would permit the Filer to comply with the obligations applicable to venture issuers notwithstanding that the Filer does not meet the criteria in the definition of “venture issuer”. Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and (b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102)

is intended to be relied upon in Manitoba, Prince Edward Island and Newfoundland and Labrador. Interpretation Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined. Representations This decision is based on the following facts represented by the Filer: 1. The Filer is a corporation governed by the Business Corporations Act (British Columbia); the Filer's registered office is

located in Vancouver, British Columbia and its head office is located in San Pedro Garza Garcia, Mexico. 2. The Filer's common shares (the “Shares”) are listed on the TSX Venture Exchange (the “TSXV”) under the symbol

“SCZ”. The Filer is a reporting issuer in British Columbia, Alberta, Manitoba, Saskatchewan, Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

3. In certain of the Instruments, the definition of “venture issuer” excludes, a reporting issuer, who at the applicable time,

has any of its securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace, or a marketplace outside of Canada or the United States of America other than the Alternative Investment Market of the London Stock Exchange of the PLUS markets operating by PLUS Markets Group plc. (the “Venture Issuer Definition”).

4. The Filer has obtained, effective May 8, 2015, a secondary listing on the Bolsa de Comercio de Santiago, Venture

marketplace of the Santiago Stock Exchange (the “Santiago Venture Market”). The Filer obtained a secondary listing on the Santiago Venture Market on the belief that this listing will provide beneficial exposure to another junior market and investment community. As the Santiago Venture Market is a marketplace and hence a “marketplace outside of Canada”, the Filer does not, subsequent to May 8, 2015, meet the criteria in the Venture Issuer Definition.

5. The Santiago Venture Market is a venture capital market for small and early stage companies in the mining sector. A

listing on the Santiago Venture Market is available only as a secondary listing to entities listed on the TSXV. Pursuant to the Santiago Venture Market listing requirements (the “Listing Requirements”) and pursuant to the agreement entered into between the Santiago Venture Market and the TSXV, securities which are listed on the Santiago Venture Market must also be listed on the TSXV. The filing obligations of the TSXV and the Santiago Venture Market are identical. The Santiago Venture Market defers to the TSXV policy manual in respect of any filing obligations. There are no additional filing obligations with Chilean regulators and no additional ongoing filing obligations with the Santiago Venture Market arising from the listing on the Santiago Venture Market.

Decision The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. the Filer complies with the conditions and requirements of Canadian securities legislation applicable to a venture issuer;


June 25, 2015

(2015), 38 OSCB 5704

2. the representation listed in paragraph 5, including for greater certainty, that the filing obligations of the TSXV and the Santiago Venture Market are identical, continue to be true;

3. the Filer has Shares listed on the TSXV; 4. the Filer does not have any securities listed or quoted on any of the Toronto Stock Exchange, a U.S.

marketplace or a marketplace outside of Canada and the United States of America other than the Santiago Venture Market, the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc;

5. in the event an exemption under Canadian securities legislation applies to a requirement in the Instruments

applicable to the Filer, and a condition to the exemption requires the issuer to be a venture issuer, the Filer may invoke the benefit of that exemption if the Filer meets the conditions required by the exemption except for the condition that the Filer be a venture issuer;

6. in the event an exemption under Canadian securities legislation applies to a requirement applicable to the

Filer as a reporting issuer who is not a venture issuer in the Instruments, and a condition to the exemption requires the issuer to not be a venture issuer, the Filer does not invoke the benefit of the exemption; and

7. in addition to the foregoing, the Minority Approval Relief is granted provided that, the Filer would be exempt

from the minority approval requirements in section 5.6 of MI 61-101, but for the fact that it does not meet the requirements of subparagraph 5.7(1)(b)(i) of MI 61-101.

“Kathryn Daniels” Deputy Director, Corporate Finance Ontario Securities Commission


June 25, 2015

(2015), 38 OSCB 5705

2.1.5 Cardinal Energy Ltd. Headnote Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – issuer made acquisition that satisfied the profit or loss test under Part 8 of NI 51-102, necessitating the filing of a business acquisition report – prior to acquisition acquired company underwent an arrangement resulting in it owning approximately 10% of what it previously owned – if acquisition considered in view of the arrangement the results of the significance tests would be lower – issuer submitted that acquisition not significant from a practical, commercial or financial perspective – in addition to significance test results, issuer supplied information about the volume and net present value of its proved and probable reserves – issuer relieved from the obligation to file a business acquisition report and other related obligations. Applicable Legislative Provisions National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.2(1), 8.4(5), 13. Form 44-101F1 Short Form Prospectus, ss. 10.2(1), (3) and (4). Citation: Re Cardinal Energy Ltd., 2015 ABASC 739

June 9, 2015


ALBERTA AND ONTARIO (the Jurisdictions)

AND

IN THE MATTER OF


AND

IN THE MATTER OF CARDINAL ENERGY LTD.

(the Filer)

DECISION Background The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision (the Exemption Sought) under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from all of the following requirements:

(a) the requirement under subsection 8.2(1) of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) to file a business acquisition report (BAR) in connection with the Acquisition (as defined below);

(b) the requirement to disclose the Acquisition in any pro forma statements prepared for a future BAR pursuant to

subsections 8.4(5) and (7) of NI 51-102; and (c) the requirement to disclose the Acquisition under subsections 10.2(1), (3) and (4) of Form 44-101F1 Short

Form Prospectus.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application; (b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-

102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador; and


June 25, 2015

(2015), 38 OSCB 5706

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein. Representations This decision is based on the following facts represented by the Filer: The Filer 1. The Filer, a corporation formed under the Business Corporations Act (Alberta) with its head office in Alberta, is a

reporting issuer in each of the provinces of Canada. The Filer is not in default of securities legislation in any jurisdiction. The Acquisition 2. The Filer acquired all of the issued and outstanding shares (the Purchased Shares) of Pinecrest Energy Inc.

(Pinecrest) from Virginia Hills Oil Corp. (the Seller), pursuant to a plan of arrangement (the Acquisition) in accordance with the terms of an arrangement agreement dated January 26, 2015, for a purchase price of $23.5 million. The Filer agreed to pay the Seller an additional $5 million in cash subject to certain conditions being met.

3. The Acquisition proceeded by way of a plan of arrangement (the Arrangement) pursuant to section 193 of the

Business Corporations Act (Alberta) through various steps, including: (i) all of the issued and outstanding shares of Pinecrest being transferred to the Seller in exchange for common shares of the Seller; (ii) all of the assets of Pinecrest other than the Retained Assets (defined below) being conveyed to the Seller; and (iii) all of the common shares of Pinecrest held by the Seller being acquired by the Filer.

4. At the time the Purchased Shares were acquired by the Filer, the only assets held by Pinecrest (the Retained Assets)

were a 10% interest in the assets it held prior to the Arrangement and a 100% interest in certain lands (the Unitized Lands) that are included in either the Loon Slave Point A Unit or the Red Earth Slave Point Unit #2. The Unitized Lands were transferred to the Filer as a 100% interest rather than a 10% interest in order to simplify the process of conveying lands that are unitized. The Unitized Lands are of very low value to the Filer and thus are immaterial. The Filer attributes no value to the Unitized Lands within the consideration paid to the Seller in connection with the Acquisition.

Significance of the Acquisition 5. Pursuant to subsection 8.2(1) of NI 51-102, if a reporting issuer makes a “significant acquisition” as contemplated in NI

51-102 it must file a BAR within 75 days after the acquisition date. The tests for determining whether an acquisition is a significant acquisition are set out in section 8.3 of NI 51-102 and are referred to as the asset test, the investment test and the profit or loss test. An acquisition by the Filer is a significant acquisition if any of the three foregoing tests yield a result that exceeds 20%.

6. The Acquisition is not a significant acquisition under the asset test in paragraph 8.3(2)(a) of NI 51-102, as the

consolidated assets of Pinecrest represent approximately 13.3% of the Filer's consolidated assets as of December 31, 2014.

7. The Acquisition is not a significant acquisition under the investment test in paragraph 8.3(2)(b) of NI 51-102 as the

Filer's consolidated investment in Pinecrest represents approximately 2.6% of the consolidated assets of the Filer as of December 31, 2014.

8. The Acquisition is a significant acquisition under the profit or loss test in paragraph 8.3(2)(c) of NI 51-102, as the loss

from continuing operations of Pinecrest represents approximately 326.6% of the Filer's income from continuing operations as of December 31, 2014.

9. Under Item 10 of Form 44-101F1 Short Form Prospectus, in certain circumstances, an issuer must disclose in a short

form prospectus a completed acquisition that is considered a significant acquisition for the purposes of Part 8 of NI 51-102 and, if applicable, include in the short form prospectus financial statements or other information about the acquisition.


June 25, 2015

(2015), 38 OSCB 5707

The Effect of the Arrangement 10. The audited financial statements of Pinecrest for the year ended December 31, 2014 do not reflect the Arrangement.

Bearing in mind the immateriality of the Unitized Lands, the result of the Arrangement was that Pinecrest as it existed at the time it was acquired by the Filer had assets equal in value to approximately 10% of its consolidated assets as at December 31, 2014. On such basis, the income (loss) associated with the business actually acquired by the Filer would be expected to be approximately 10% of the consolidated loss from the continuing operations of Pinecrest as at December 31, 2014.

11. If the aforementioned profit or loss test could be carried out using 10% of the loss from continuing operations of

Pinecrest, the test would yield a result of 32.6%. The Significance of the Acquisition from a Practical, Commercial or Financial Perspective 12. The Filer is of the view that Pinecrest's financial statements for the year ended December 31, 2014 are not

representative of Pinecrest as at the time it was acquired by the Filer. 13. Overall, the Filer is of the view that the Acquisition is not a significant acquisition to it from a practical, commercial or

financial perspective when the results of the asset test, investment test and profit or loss test are considered in light of the Arrangement, and considering other metrics provided by the Filer, namely the volume and net present value of the Filer’s proved and probable reserves compared to that of the Retained Assets.

Decision The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted. “Denise Weeres” Manager, Legal Corporate Finance


June 25, 2015

(2015), 38 OSCB 5708

2.1.6 JDS Uniphase Corporation Headnote Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Securities Act, s. 53(1) – Prospectus Requirements – Trades by an issuer to its shareholders in securities of another company that it owns (e.g. spin-off transactions) – The issuer will distribute the shares of the other company as a dividend to the issuer’s shareholders; the other company is not a reporting issuer; the issuer has a de minimis connection to Canada; as a result of the transfer, the shareholders of the issuer will hold their interests in the subsidiary directly as opposed to indirectly through their shareholdings of the issuer. Applicable Legislative Provisions Securities Act, R.S.O. 1990, c. S.5, as am., s. 53(1).

June 19, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

JDS UNIPHASE CORPORATION (the Filer)

DECISION

Background 1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application

from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption (the Exemption Sought) from the prospectus requirement in connection with the distribution (the Spin Off) by the Filer of shares of common stock of Lumentum Holdings Inc. (SpinCo), a wholly-owned subsidiary of the Filer, on a pro rata basis and by way of a dividend in specie, to the Filer’s stockholders resident in Canada. Under the process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the British Columbia Securities Commission is the principal regulator for this application; (b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System

(MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (other than Ontario); and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities

regulatory authority or regulator in Ontario.

Interpretation 2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision,

unless otherwise defined. Representations 3 This decision is based on the following facts represented by the Filer:


June 25, 2015

(2015), 38 OSCB 5709

1. the Filer was incorporated as Uniphase Corporation in California in 1979, and reincorporated in Delaware in 1993;

2. the Filer’s head office is located in Milpitas, California; 3. the Filer is a reporting issuer under the securities legislation of the provinces of British Columbia,

Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador; 4. the Filer’s authorized capital stock consists of 1,000,000,000 shares of common stock (Filer Common Stock)

and 1,000,000 shares of preferred stock; as of May 20, 2015, 234,469,331 shares of Filer Common Stock were issued and outstanding, and one share of preferred stock was issued and outstanding;

5. shares of Filer Common Stock are listed on the NASDAQ Global Select Market (the NASDAQ) and trade

under the symbol “JDSU”; shares of Filer Common Stock are not listed on any Canadian stock exchange and the Filer has no intention of listing its securities on any Canadian stock exchange;

6. the Filer is currently subject to the U.S. Securities Exchange Act of 1934, as amended, and the rules,

regulations and orders promulgated thereunder; 7. as of May 20, 2015:

(a) there were 374 registered holders of Filer Common Stock in Canada holding 32,833 shares of Filer

Common Stock, representing approximately 9.415% of the registered holders of Filer Common Stock worldwide and holdings of approximately 0.014% of the outstanding shares of Filer Common Stock; and

(b) there were 20,716 beneficial holders of Filer Common Stock in Canada holding 6,771,747 shares of

Filer Common Stock, representing approximately 6.62% of the beneficial holders of Filer Common Stock worldwide and holdings of approximately 2.88% of the outstanding shares of Filer Common Stock, and

these numbers are not expected to have materially changed from such date;

8. based on the information above, the number of registered and beneficial holders of the Filer and the proportion of Filer Common Stock held by such shareholders in Canada is de minimis;

9. SpinCo is currently a wholly-owned subsidiary of JDSU incorporated in Delaware on February 10, 2015; 10. SpinCo’s head office will be located in Milpitas, California; 11. SpinCo’s authorized capital stock consists of 1,000 shares of common stock (SpinCo Common Stock); as of

May 20, 2015, 1,000 shares of SpinCo Common Stock were issued and outstanding; prior to completion of the Spin Off, SpinCo will increase its authorized share capital by increasing the authorized number of shares of SpinCo Common Stock and creating a class of preferred stock, issuable in series, the terms of which may be fixed by the board of directors of SpinCo in accordance with applicable law; no such preferred stock will be issued to Canadian resident investors in connection with the Spin Off;

12. neither the Filer nor SpinCo is in default of any of its obligations under the securities legislation of any

jurisdiction of Canada; 13. the purpose of the Spin Off is to spin out the business carried on by the Filer’s communications and

commercial optical products segment into an independent public company; 14. the Spin Off will be effected by the following principal steps:

(a) by means of a stock distribution that is intended to be tax-free for United States federal income tax

purposes, the Filer will distribute more than 80% of the outstanding shares of SpinCo Common Stock to holders of Filer Common Stock at a to-be-determined rate of shares of SpinCo Common Stock for each share of Filer Common Stock held;

(b) fractional shares of SpinCo Common Stock will not be issued to holders of Filer Common Stock in

connection with the Spin Off; all fractional shares of SpinCo Common Stock will be aggregated into whole shares and sold in the U.S. public market by a distribution agent, and holders of Filer Common


June 25, 2015

(2015), 38 OSCB 5710

Stock who would otherwise be entitled to receive a fractional share of SpinCo Common Stock will receive their pro rata share of the proceeds of such sale in lieuof SpinCo Common Stock;

15. following completion of the Spin Off, SpinCo will cease to be a subsidiary of JDSU and is expected to become

an independent publicly-traded company; the Filer anticipates retaining up to an approximately 20% interest in SpinCo;

16. it is expected that shares of the SpinCo Common Stock will be listed for trading on the NASDAQ under the

symbol “LITE”; 17. SpinCo is not a reporting issuer in any province or territory in Canada, nor are its securities listed on any stock

exchange in Canada; by virtue of the Spin Off, SpinCo will become a reporting issuer under the Securities Act (Québec); SpinCo has no intention to become a reporting issuer in any other province or territory in Canada or to list its securities on any Canadian stock exchange;

18. the Spin Off will be effected under the laws of the State of Delaware; 19. because the Spin Off will be effected by way of a dividend to the holders of Filer Common Stock, no

stockholder approval of the Spin Off is required (or being sought) under Delaware law; 20. on February 26, 2015, SpinCo filed a registration statement on Form 10 with the United States Securities and

Exchange Commission (the SEC) detailing the planned Spin Off (the registration statement, as may be amended, the Registration Statement); SpinCo filed an amendment to the Registration Statement on April 23, 2015;

21. after the SEC has completed its review of the Registration Statement, holders of Filer Common Stock will

receive a copy of the information statement (the Information Statement) comprising part of the Registration Statement; all materials relating to the Spin Off and the dividend sent by or on behalf of the Filer and SpinCo in the United States (including the Information Statement) will be sent concurrently to the holders of Filer Common Stock resident in Canada;

22. the Information Statement will contain prospectus level disclosure about SpinCo; 23. holders of Filer Common Stock resident in Canada who receive shares of SpinCo Common Stock as a

dividend pursuant to the Spin Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin Off that are available to holders of Filer Common Stock resident in the United States;

24. following completion of the Spin Off, SpinCo will send concurrently to the holders of SpinCo Common Stock

resident in Canada the same disclosure materials required to be sent under applicable United States laws to holders of SpinCo Common Stock resident in the United States;

25. the holders of Filer Common Stock will not be required to pay any consideration for shares of SpinCo

Common Stock received in the Spin Off, or to surrender or exchange their shares of Filer Common Stock or take any other action to be entitled to receive shares of SpinCo Common Stock; the Spin Off will occur automatically without any investment decision on the part of the holders of Filer Common Stock; and

26. the proposed distributions of SpinCo Common Stock to Canadian shareholders would be exempt from the

prospectus requirements under subsection 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that SpinCo is not a reporting issuer.

Decision 4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislationfor the Decision

Maker to make the decision. The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that the first trade in shares of SpinCo Common Stock issued in connection with the Spin-Off is deemed to be a distribution unless the conditions in section 2.6 or subsection 2.14(1) of National Instrument 45-102 Resale of Securities are satisfied.

“Peter J. Brady” Director, Corporate Finance British Columbia Securities Commission


June 25, 2015

(2015), 38 OSCB 5711

2.1.7 Sentry Investments Inc. and certain other registered firms as of July 15, 2015 Headnote Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a firm registered in any jurisdiction of Canada must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another firm registered in any jurisdiction of Canada. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition. Applicable Legislative Provisions Multilateral Instrument 11-102 Passport System, s. 4.7. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

May 8, 2015

IN THE MATTER OF NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS

AND ONGOING REGISTRANT OBLIGATIONS

AND

IN THE MATTER OF SENTRY INVESTMENTS INC. (the Lead Filer)

AND CERTAIN OTHER REGISTERED FIRMS AS OF JULY 15, 2015

DECISION Interpretation 1. Terms defined in the Securities Act (Ontario), National Instrument 31-103 Registration Requirements, Exemptions and

Ongoing Registrant Obligations (NI 31-103) and National Instrument 14-101 Definitions have the same meaning in this decision.

Background 2. Certain NI 31-103 provisions related to the implementation of Client Relationship Model – Phase 2 will come into effect

on July 15, 2015 and July 15, 2016 (the 2015/2016 CRM2 Amendments). 3. Some registered firms have indicated they may experience difficulty in implementing the 2015/2016 CRM2

Amendments by their effective dates. 4. Certain technical issues have also been identified relating to the delivery of information prescribed in the 2015/2016

CRM2 Amendments. 5. Under subsection 15.1(2) of NI 31-103 the Director may grant an exemption from that Instrument, in whole or in part,

subject to such conditions or restrictions as may be imposed in the exemption. Application 6. The Lead Filer has applied to the Director, under section 15.1 of NI 31-103, for exemptions for itself and each

registered firm as of July 15, 2015, other than a member of IIROC or the MFDA in respect of its activities as an investment dealer or mutual fund dealer, (Non-SRO Member) from the 2015/2016 CRM2 Amendments, subject to the conditions and restrictions set out in this decision.

7. Additionally, the Lead Filer has applied to the Director, under section 8.1 of Ontario Securities Commission Rule 13-

502 Fees (Fee Rule), for an exemption from the requirement in section 6.1 to pay a fee for its filing of this exemption application on behalf of itself and other Non-SRO Members.


June 25, 2015

(2015), 38 OSCB 5712

Decision 8. The Lead Filer or any Non-SRO Member as of July 15, 2015 is exempt

(a) from the following NI 31-103 provisions that come into effect on July 15, 2015 if it complies with the provisions

beginning with client statements delivered for the period ending December 31, 2015: (i) section 14.11.1 [determining market value]; (ii) section 14.14 [account statements] provided that for periods ending before December 31, 2015, it

delivers statements under section 14.14 as that provision was in force on July 14, 2015; (iii) section 14.14.1 [additional statements] except for paragraph 14.14.1(2)(g); (iv) section 14.14.2 [position cost information] provided that if it discloses market value instead of security

position cost

(A) under subparagraph 14.14.2(2)(a)(ii), it is not required to specify that the market value being disclosed is as of the transfer date, and

(B) under subparagraph 14.14.2(2)(b)(ii), it may disclose market value as at December 31, 2015

or an earlier date, using the same date and value for all similar clients of the firm; (v) section 14.15 [security holder statements]; (vi) section 14.16 [scholarship plan dealer statements];

(b) from the requirement in paragraph 14.14.1(2)(g) of NI 31-103 to identify securities that may be covered under an investor protection fund;

(c) from the requirement in paragraphs 14.19(1)(e) and (h) of NI 31-103 to include market value information as at

and since July 15, 2015 if instead

(i) an investment performance report is delivered that provides the information for the 12-month period ending December 31, 2016 and the included market value information is as at and since (A) January 1, 2016, or (B) a date earlier than January 1, 2016, if the same date is used for all similar clients, or

(ii) the included market value information is as at and since July 15, 2015 or an earlier date used for all similar clients;

(d) from the requirement in paragraph 14.19(2)(e) of NI 31-103 to provide annualized total percentage return

information if instead (i) an investment performance report is delivered that provides the information for the 12-month period

ending December 31, 2016, or (ii) an investment performance report is delivered that provides the information

(A) for the period since the account was opened, if the account has been open for more than one year before the date of the report, or

(B) for the period since July 15, 2015 or an earlier date used for all similar clients, if the account

was opened before July 15, 2015.

9. For purposes of this decision, “similar clients” means any of the following: (a) clients whose accounts or security positions were transferred together to a registered firm, (b) clients whose accounts or security positions are on the same reporting system if a registered firm has more

than one reporting system,


June 25, 2015

(2015), 38 OSCB 5713

(c) other clients whose accounts or security positions would appear to a reasonable person to be similar in a way that relates to the recording or calculation of market value or position cost.

10. The relief in section 8 of this order comes into effect on July 15, 2015. 11. The exemptions in subparagraphs (8)(a)(i) to (iii), (v) and (vi) of this order expire on January 1, 2016. 12. The exemptions in subparagraphs (8)(a)(iv) and paragraphs (8)(b) to (d) of this order expire on the coming into effect of

amendments to NI 31-103 dealing with the same matters. 13. Pursuant to section 8.1 of the Fee Rule, the Lead Filer is exempt from the requirement in section 6.1 of the Fee Rule to

pay an activity fee for its filing of this exemption application. May 8, 2015 “Marrianne Bridge” Deputy Director, Compliance and Registrant Regulation


June 25, 2015

(2015), 38 OSCB 5714

2.1.8 TD Investment Services Inc. and MFDA member firms registered as of July 15, 2015 Headnote Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a firm registered in any jurisdiction of Canada must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another firm registered in any jurisdiction of Canada. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition. Applicable Legislative Provisions Multilateral Instrument 11-102 Passport System, s. 4.7. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

May 8, 2015



AND

IN THE MATTER OF TD INVESTMENT SERVICES INC. (the Lead Filer)

AND MFDA MEMBER FIRMS REGISTERED AS OF JULY 15, 2015




on July 15, 2015 and July 15, 2016 (the 2015/2016 CRM2 Amendments). Corresponding MFDA provisions have been adopted.

3. Under section 9.4 [exemptions from certain requirements for MFDA members] of NI 31-103, a registered firm that is an

MFDA member (MFDA Member) is exempt from certain requirements in NI 31-103 if it complies with the corresponding MFDA provisions in Appendix H of NI 31-103 that are in effect.

4. Amendments to section 9.4 and Appendix H of NI 31-103 are planned to provide relief for MFDA Members from the

2015/2016 CRM2 Amendments if they comply with the corresponding MFDA provisions applicable to them. 5. Under subsection 15.1(2) of NI 31-103 the Director may grant an exemption from that Instrument, in whole or in part,


registered firm that is an MFDA Member as of July 15, 2015 from the 2015/2016 CRM2 Amendments, subject to the conditions and restrictions set out in this decision.


502 Fees (Fee Rule), for an exemption from the requirement in section 6.1 to pay a fee for its filing of this exemption application on behalf of itself and other MFDA member firms.


June 25, 2015

(2015), 38 OSCB 5715

Decision 8. The Lead Filer or any registered firm that is an MFDA Member as of July 15, 2015 is exempt from the NI 31-103

provisions specified in the table below if it complies with the corresponding MFDA provisions that are applicable to it.

NI 31-103 Provision MFDA Provision

section 14.11.1 [determining market value] and Form 31-103F1 which mandates use of “fair value”

MFDA Rule 5.3(1)(f) [definition of “market value”] and Definitions to Form 1 Financial Questionnaire and Report [definition of “market value of a security”]

section 14.14 [account statements] MFDA Rule 5.3.1 [delivery of account statement] and MFDA Rule 5.3.2 [content of account statement]

section 14.14.1 [additional statements] MFDA Rule 5.3.1 [delivery of account statement] and MFDA Rule 5.3.2 [content of account statement]

section 14.14.2 [position cost information] MFDA Rules 5.3(1)(a) [definition of “book cost”], 5.3(1)(c) [definition of “cost”], 5.3(1)(h) [definition of “original cost”], and MFDA Rule 5.3.2(c) [content of account statement – market value and cost reporting]

section 14.17 [report on charges and other compensation]

Rule 5.3.3 [report on charges and other compensation]

section 14.18 [investment performance report] and section 14.19 [content of investment performance report]

Rule 5.3.4 [performance report] and MFDA Policy No. 7 Performance Reporting

section 14.20 [delivery of report on charges and other compensation and investment performance report]

Rule 5.3.5 [delivery of report on charges and other compensation and performance report]

9. The relief in section 8 of this order comes into effect on July 15, 2015 and expires on the date on which amendments to

section 9.4 and Appendix H of NI 31-103 come into force providing exemptions for MFDA Members that comply with corresponding MFDA provisions that are applicable to them.

10. Pursuant to section 8.1 of the Fee Rule, the Lead Filer is exempt from the requirement in section 6.1 of the Fee Rule to



June 25, 2015

(2015), 38 OSCB 5716

2.1.9 Desjardins Securities Inc. and IIROC member firms registered as of July 15, 2015 Headnote Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a firm registered in any jurisdiction of Canada must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another firm registered in any jurisdiction of Canada. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition. Applicable Legislative Provisions Multilateral Instrument 11-102 Passport System, s. 4.7. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

May 8, 2015



AND

IN THE MATTER OF DESJARDINS SECURITIES INC. (the Lead Filer)

AND IIROC MEMBER FIRMS REGISTERED AS OF JULY 15, 2015




on July 15, 2015 and July 15, 2016 (the 2015/2016 CRM2 Amendments). Corresponding IIROC provisions have been adopted.

3. Under section 9.3 [exemptions from certain requirements for IIROC members] of NI 31-103, a registered firm that is an

IIROC member (IIROC Member) is exempt from certain requirements in NI 31-103 if it complies with the corresponding IIROC provisions in Appendix G of NI 31-103 that are in effect.

4. Amendments to section 9.3 and Appendix G of NI 31-103 are planned to provide relief for IIROC Members from the

2015/2016 CRM2 Amendments if they comply with the corresponding IIROC provisions applicable to them. 5. Under subsection 15.1(2) of NI 31-103 the Director may grant an exemption from that Instrument, in whole or in part,


registered firm that is an IIROC Member as of July 15, 2015 from the 2015/2016 CRM2 Amendments, subject to the conditions and restrictions set out in this decision.


502 Fees (Fee Rule), for an exemption from the requirement in section 6.1 to pay a fee for its filing of this exemption application on behalf of itself and other IIROC member firms.


June 25, 2015

(2015), 38 OSCB 5717

Decision 8. The Lead Filer or any registered firm that is an IIROC Member as of July 15, 2015 is exempt from the NI 31-103

provisions specified in the table below if it complies with the corresponding IIROC provisions that are applicable to it.

NI 31-103 Provision IIROC Provision

section 14.11.1 [determining market value] and Form 31-103F1 which mandates use of “fair value”

Dealer Member Rule subsection 200.1(c) [definition of “market value”], and Definition (g) of the General Notes and Definitions to Form 1 [definition of “market value” for the purposes of regulatory reporting to IIROC]

section 14.14 [account statements] Dealer Member Rule subsection 200.2(d) [client account statements], and “Guide to Interpretation of Rule 200.2”, Item (d) [client account statements]

section 14.14.1 [additional statements] Dealer Member Rule subsection 200.2(e) [report on client positions held outside of the Dealer Member], and section 200.4 [timing of sending documents to clients], and “Guide to Interpretation of Rule 200.2”, Item (e) [report on client positions held outside of the Dealer Member]

section 14.14.2 [position cost information] Dealer Member Rule subsections 200.1(a) [definition of “book cost”], 200.1(b) [definition of “cost”], and 200.1(e) [definition of “original cost”], and subclauses 200.2(d)(ii)(F) and (H) [client account statements], and subclauses 200.2 (e)(ii)(C) and (E) [report on client positions held outside of the Dealer Member]

section 14.17 [report on charges and other compensation]

Dealer Member Rule subsection 200.2(g) [fee/charge report] and “Guide to Interpretation of Rule 200.2”, Item (g) [fee/charge report]

section 14.18 [investment performance report] and section 14.19 [content of investment performance report]

Dealer Member Rule subsection 200.2(f) [performance report] and “Guide to Interpretation of Rule 200.2”, Item (f) [performance report]

section 14.20 [delivery of report on charges and other compensation and investment performance report]

Dealer Member Rule 200.4 [timing of sending documents to clients]

9. The relief in section 8 of this order comes into effect on July 15, 2015 and expires on the date on which amendments to

section 9.3 and Appendix G of NI 31-103 come into force providing exemptions for IIROC Members that comply with corresponding IIROC provisions that are applicable to them.

10. Pursuant to section 8.1 of the Fee Rule, the Lead Filer is exempt from the requirement in section 6.1 of the Fee Rule to



June 25, 2015

(2015), 38 OSCB 5718

2.2 Orders 2.2.1 Canadian Pacific Railway Limited – s. 104(2)(c) Headnote Subsection 104(2)(c) of the Act – Issuer bid – relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act – Issuer proposes to purchase, at a discounted purchase price, up to 308,000 of its common shares from one of its shareholders – due to the discounted purchase price, proposed purchases cannot be made through the TSX trading system – but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases – the selling shareholder did not purchase the subject shares in anticipation or contemplation of resale to the Issuer and has not, for a minimum of 30 days prior to the date of the application seeking the requested relief, purchased common shares of the Issuer in anticipation or contemplation of a sale of common shares to the Issuer – no adverse economic impact on, or prejudice to, the Issuer or public shareholders – proposed purchases exempt from the issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the Issuer not purchase, in the aggregate, more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases, and that the Issuer will not make any proposed purchase unless it has first obtained written confirmation from the selling shareholder that between the date of the order and the date on which the proposed purchase is completed, the selling shareholder has not purchased, had purchased on its behalf, or otherwise accumulated, any common shares of the Issuer to re-establish its holdings of common shares which will have been reduced as a result of the sale of the subject shares pursuant to the proposed purchases. Statutes Cited Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8,

97 to 98.7 and 104(2)(c).



AND

IN THE MATTER OF CANADIAN PACIFIC RAILWAY LIMITED

ORDER

(Clause 104(2)(c)) UPON the application (the “Application”) of Canadian Pacific Railway Limited (the “Issuer”) to the Ontario Securities Commission (the “Commission”) for an order under clause 104(2)(c) of the Securities Act (Ontario)

(the “Act”) exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and 97 to 98.7, inclusive, of the Act (the “Issuer Bid Requirements”) in connection with the proposed purchases by the Issuer of up to 308,000 common shares in the capital of the Issuer (collectively, the “Subject Shares”) in one or more trades with The Toronto-Dominion Bank (the “Selling Shareholder”); AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Issuer (and the Selling Shareholder in respect of paragraphs 5, 6, 7, 8, 9, 10, 13, 24 and 25 as they relate to the Selling Shareholder) having represented to the Commission that: 1. The Issuer is a corporation incorporated under the

Canada Business Corporations Act. 2. The registered, executive and head office of the

Issuer is located at 7550 Ogden Dale Road S.E., Calgary, Alberta, T2C 4X9.

3. The Issuer is a reporting issuer in each of the

provinces and territories of Canada and the common shares of the Issuer (the “Common Shares”) are listed for trading on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange (the “NYSE”) under the symbol “CP”. The Issuer is not in default of any require-ment of the securities legislation in the jurisdic-tions in which it is a reporting issuer.

4. The Issuer’s authorized share capital consists of

an unlimited number of Common Shares, an unlimited number of First Preferred Shares and an unlimited number of Second Preferred Shares, of which 164,092,766 Common Shares and no First Preferred Shares or Second Preferred Shares were issued and outstanding as of May 29, 2015.

5. The Selling Shareholder has its corporate

headquarters in Toronto, Ontario. 6. The Selling Shareholder does not, directly or

indirectly, own more than 5% of the issued and outstanding Common Shares, is at arm’s length to the Issuer and is not an “insider” of the Issuer, an “associate” of an “insider” of the Issuer, or an “associate” or “affiliate” of the Issuer, as such terms are defined in the Act.

7. The Selling Shareholder is an “accredited inves-

tor” within the meaning of National Instrument 45-106 Prospectus Exemptions.

8. The Selling Shareholder is the beneficial owner of

at least 308,000 Common Shares. None of the Subject Shares were acquired by, or on behalf of, the Selling Shareholder in anticipation or contem-plation of resale to the Issuer.


June 25, 2015

(2015), 38 OSCB 5719

9. No Common Shares were purchased by, or on behalf of, the Selling Shareholder on or after May 4, 2015, being the date that was 30 days prior to the date of the Application, in anticipation or contemplation of a sale of Common Shares to the Issuer.

10. The Subject Shares are held by the Selling

Shareholder in connection with arrangements to hedge client transactions in respect of the Common Shares. Between the date of this Order and the date on which a Proposed Purchase (as defined below) is to be completed, the Selling Shareholder will not purchase, have purchased on its behalf, or otherwise accumulate, any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.

11. On March 16, 2015, the Issuer announced a

normal course issuer bid (the “Normal Course Issuer Bid”) to purchase up to 9,140,000 Common Shares (or approximately 6.1% of the Issuer’s “public float” as at March 6, 2015) during the period from March 18, 2015 to March 17, 2016 pursuant to the terms of a “Notice of Intention to Make a Normal Course Issuer Bid” (the “Notice”) submitted to, and accepted by, the TSX.

12. In accordance with the Notice, purchases under

the Normal Course Issuer Bid may be conducted through the facilities of the TSX, the NYSE or alternative trading systems, if eligible, or by such other means as may be permitted by the TSX and/or the NYSE in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the “TSX Rules”). On June 9, 2015, the TSX provided its consent to the Issuer making the Proposed Purchases under the Normal Course Issuer Bid, subject to the granting of this Order and receipt of a copy of the press release referred to in condition (g) of this Order.

13. The Issuer intends to enter into one or more

agreements of purchase and sale with the Selling Shareholder (each an “Agreement”), pursuant to which the Issuer will agree to purchase Subject Shares from the Selling Shareholder by way of one or more purchases, each occurring by March 17, 2016 (each such purchase, a “Proposed Purchase”) for a purchase price that will be negotiated at arm’s length between the Issuer and the Selling Shareholder (each such price, a “Purchase Price” in respect of such Proposed Purchase). The Purchase Price will, in each case, be at a discount to the prevailing market price and below the prevailing bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase.

14. The Subject Shares acquired under each Proposed Purchase will constitute a “block” as that term is defined in section 628 of the TSX Rules.

15. The purchase of any of the Subject Shares by the

Issuer pursuant to an Agreement will constitute an “issuer bid” for the purposes of the Act, to which the applicable Issuer Bid Requirements would apply.

16. Because the Purchase Price will, in each case, be

at a discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, none of the Proposed Purchases can be made through the TSX trading system and, therefore, will not occur “through the facilities” of the TSX. As a result, the Issuer will be unable to acquire Subject Shares from the Selling Share-holder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.

17. But for the fact that the Purchase Price will be at a

discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, the Issuer could otherwise acquire the applicable Subject Shares on the TSX as a “block purchase” (a “Block Purchase”) in accordance with the block purchase exception in clause 629(l)7 of the TSX Rules and the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.

18. The sale of any of the Subject Shares to the

Issuer will not be a “distribution” (as defined in the Act).

19. For each Proposed Purchase, the Issuer will be

able to acquire the applicable Subject Shares from the Selling Shareholder without the Issuer being subject to the dealer registration requirements of the Act.

20. Management of the Issuer is of the view that

through the Proposed Purchase(s), the Issuer will be able to purchase the Subject Shares at a lower price than the price at which it would otherwise be able to purchase Common Shares under the Normal Course Issuer Bid through the facilities of the TSX and management of the Issuer is of the view that this is an appropriate use of the Issuer’s funds.

21. The purchase of the Subject Shares will not

adversely affect the Issuer or the rights of any of the Issuer’s security holders and it will not materially affect the control of the Issuer. To the knowledge of the Issuer, the Proposed Purchases will not prejudice the ability of other security holders of the Issuer to otherwise sell Common Shares in the open market at the then-prevailing


June 25, 2015

(2015), 38 OSCB 5720

market price. The Proposed Purchases will be carried out at minimal cost to the Issuer.

22. To the best of the Issuer’s knowledge, as of May

29, 2015, the “public float” of the Common Shares represented approximately 90.9% of all issued and outstanding Common Shares for purposes of the TSX Rules.

23. The Common Shares are “highly-liquid securities”

within the meaning of section 1.1 of OSC Rule 48-501 Trading during Distributions, Formal Bids and Share Exchange Transactions and section 1.1 of the Universal Market Integrity Rules.

24. Other than the Purchase Price, no fee or other

consideration will be paid in connection with the Proposed Purchases.

25. At the time that each Agreement is entered into by

the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Equity Derivatives Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.

26. The Issuer will not make any Proposed Purchase

unless it has first obtained confirmation in writing from the Selling Shareholder that between the date of this Order and the date on which a Proposed Purchase is to be completed, the Selling Shareholder has not purchased, had purchased on its behalf, or otherwise accumulated any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.

27. The Issuer has made two other applications to the

Commission for exemptive relief from the Issuer Bid Requirements in connection with the proposed purchase by the Issuer of up to 295,000 Common Shares from one holder of Common Shares and up to 250,000 Common Shares from another holder of Common Shares, each pursuant to one or more private agreements (the “Concurrent Applications”).

28. The Commission granted the Issuer two orders on

May 29, 2015 pursuant to clause 104(2)(c) of the Act exempting the Issuer from the Issuer Bid Requirements in connection with purchases by the Issuer pursuant to private agreements of up to 665,000 Common Shares from the Canadian Imperial Bank of Commerce (the “CIBC Order”) and up to 760,000 Common Shares from The

Bank of Nova Scotia (the “BNS Order”, and together with the CIBC Order, the “Existing Orders”). As at June 10, 2015, the Issuer has acquired 760,000 Common Shares under the BNS Order. The Issuer intends to acquire Common Shares under the CIBC Order but, as at June 10, 2015, has yet to do so.

29. The Issuer will not purchase, pursuant to private

agreements under issuer bid exemption orders issued by securities regulatory authorities (each, an “Off-Exchange Block Purchase”), in aggre-gate, more than one-third of the maximum number of Common Shares that the Issuer can purchase under its Normal Course Issuer Bid, such one-third being equal to 3,046,667 Common Shares as of the date of this Order, taking into account, for greater certainty, the Subject Shares and the Common Shares which are the subject of the Concurrent Applications and the Existing Orders.

30. Assuming completion of the purchase of the maxi-

mum number of Subject Shares, being 308,000 Subject Shares, the maximum number of Com-mon Shares that are the subject of the Concurrent Applications, being 545,000 Common Shares, and the maximum number of Common Shares that are the subject of the Existing Orders, being 1,425,000 Common Shares, the Issuer will have purchased under the Normal Course Issuer Bid an aggregate of 2,278,000 Common Shares pursuant to Off-Exchange Block Purchases, representing approximately 24.9% of the maximum of 9,140,000 Common Shares authorized to be purchased under the Normal Course Issuer Bid.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest; IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchases, provided that:

(a) the Proposed Purchases will be taken into account by the Issuer when calcu-lating the maximum annual aggregate limit that is imposed upon the Issuer’s Normal Course Issuer Bid in accordance with the TSX Rules;

(b) the Issuer will refrain from conducting

either a Block Purchase in accordance with the TSX Rules, or another Off-Exchange Block Purchase, during the calendar week in which it completes a Proposed Purchase and will not make any further purchases under its Normal Course Issuer Bid for the remainder of the calendar day on which it completes a Proposed Purchase;


June 25, 2015

(2015), 38 OSCB 5721

(c) the Purchase Price in respect of each Proposed Purchase will be at a discount to the last “independent trade” (as that term is used in paragraph 629(l)1 of the TSX Rules) of a board lot of Common Shares immediately prior to the execution of such Proposed Purchase;

(d) the Issuer will otherwise acquire any

additional Common Shares pursuant to its Normal Course Issuer Bid in accor-dance with the Notice and the TSX Rules, including by means of open market transactions and by such other means as may be permitted by the TSX, and, subject to condition (i) below, by Off-Exchange Block Purchases;

(e) immediately following each Proposed

Purchase of Subject Shares from the Selling Shareholder, the Issuer will report the purchase of Subject Shares to the TSX;

(f) at the time that each Agreement is

entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Equity Derivatives Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) in advance of the first Proposed Pur-

chase, the Issuer will issue a press release disclosing (i) its intention to make the Proposed Purchases, and (ii) that information regarding each Proposed Purchase, including the number of Com-mon Shares purchased and the aggre-gate Purchase Price, will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) follow-ing the completion of each such purchase;

(h) the Issuer will report information regard-

ing each Proposed Purchase, including the number of Subject Shares purchased and the aggregate Purchase Price, on SEDAR before 5:00 p.m. (Toronto time) on the business day following such purchase;

(i) the Issuer does not purchase, pursuant to Off-Exchange Block Purchases, in the aggregate more than one-third of the maximum number of Common Shares the Issuer can purchase under its Normal Course Issuer Bid, such one-third being equal to 3,046,667 Common Shares as of the date of this Order; and

(j) the Issuer will not make any Proposed

Purchase unless it has first obtained confirmation in writing from the Selling Shareholder that between the date of this Order and the date on which a Proposed Purchase is to be completed, the Selling Shareholder has not purchased, had purchased on its behalf, or otherwise accumulated, any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.

DATED at Toronto, Ontario this 16th day of June, 2015. “Anne Marie Ryan” Commissioner Ontario Securities Commission “Mary Condon” Commissioner Ontario Securities Commission


June 25, 2015

(2015), 38 OSCB 5722

2.2.2 Canadian Pacific Railway Limited – s. 104(2)(c) Headnote Subsection 104(2)(c) of the Act – Issuer bid – relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act – Issuer proposes to purchase, at a discounted purchase price, up to 250,000 of its common shares from one of its shareholders – due to the discounted purchase price, proposed purchases cannot be made through the TSX trading system – but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases – the selling shareholder did not purchase the subject shares in anticipation or contemplation of resale to the Issuer and has not, for a minimum of 30 days prior to the date of the application seeking the requested relief, purchased common shares of the Issuer in anticipation or contemplation of a sale of common shares to the Issuer – no adverse economic impact on, or prejudice to, the Issuer or public shareholders – proposed purchases exempt from the issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the Issuer not purchase, in the aggregate, more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases, and that the Issuer will not make any proposed purchase unless it has first obtained written confirmation from the selling shareholder that between the date of the order and the date on which the proposed purchase is completed, the selling shareholder has not purchased, had purchased on its behalf, or otherwise accumulated, any common shares of the Issuer to re-establish its holdings of common shares which will have been reduced as a result of the sale of the subject shares pursuant to the proposed purchases. Statutes Cited Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8,

97 to 98.7 and 104(2)(c).



AND


ORDER

(Clause 104(2)(c)) UPON the application (the “Application”) of Canadian Pacific Railway Limited (the “Issuer”) to the Ontario Securities Commission (the “Commission”) for an order under clause 104(2)(c) of the Securities Act (Ontario) (the “Act”) exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and 97 to 98.7, inclusive, of

the Act (the “Issuer Bid Requirements”) in connection with the proposed purchases by the Issuer of up to 250,000 common shares in the capital of the Issuer (collectively, the “Subject Shares”) in one or more trades with the Royal Bank of Canada (the “Selling Shareholder”); AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Issuer (and the Selling Shareholder in respect of paragraphs 5, 6, 7, 8, 9, 10, 13, 24 and 25 as they relate to the Selling Shareholder) having represented to the Commission that: 1. The Issuer is a corporation incorporated under the



3. The Issuer is a reporting issuer in each of the pro-

vinces and territories of Canada and the common shares of the Issuer (the “Common Shares”) are listed for trading on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange (the “NYSE”) under the symbol “CP”. The Issuer is not in default of any require-ment of the securities legislation in the juris-dictions in which it is a reporting issuer.









at least 250,000 Common Shares. None of the Subject Shares were acquired by, or on behalf of, the Selling Shareholder in anticipation or contemplation of resale to the Issuer.

9. No Common Shares were purchased by, or on

behalf of, the Selling Shareholder on or after May 4, 2015, being the date that was 30 days prior to


June 25, 2015

(2015), 38 OSCB 5723

the date of the Application, in anticipation or contemplation of a sale of Common Shares to the Issuer.

10. The Subject Shares are held by the Selling

Shareholder in connection with arrangements to hedge client transactions in respect of the Common Shares. Between the date of this Order and the date on which a Proposed Purchase (as defined below) is to be completed, the Selling Shareholder will not purchase, have purchased on its behalf, or otherwise accumulate, any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.







14. The Subject Shares acquired under each

Proposed Purchase will constitute a “block” as that term is defined in section 628 of the TSX Rules.

15. The purchase of any of the Subject Shares by the Issuer pursuant to an Agreement will constitute an “issuer bid” for the purposes of the Act, to which the applicable Issuer Bid Requirements would apply.


at a discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, none of the Proposed Purchases can be made through the TSX trading system and, therefore, will not occur “through the facilities” of the TSX. As a result, the Issuer will be unable to acquire Subject Shares from the Selling Share-holder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.










adversely affect the Issuer or the rights of any of the Issuer’s security holders and it will not materially affect the control of the Issuer. To the knowledge of the Issuer, the Proposed Purchases will not prejudice the ability of other security holders of the Issuer to otherwise sell Common Shares in the open market at the then-prevailing market price. The Proposed Purchases will be carried out at minimal cost to the Issuer.


June 25, 2015

(2015), 38 OSCB 5724

22. To the best of the Issuer’s knowledge, as of May 29, 2015, the “public float” of the Common Shares represented approximately 90.9% of all issued and outstanding Common Shares for purposes of the TSX Rules.






the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Global Equity Linked Products Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.






May 29, 2015 pursuant to clause 104(2)(c) of the Act exempting the Issuer from the Issuer Bid Requirements in connection with purchases by the Issuer pursuant to private agreements of up to 665,000 Common Shares from the Canadian Imperial Bank of Commerce (the “CIBC Order”) and up to 760,000 Common Shares from The Bank of Nova Scotia (the “BNS Order”, and together with the CIBC Order, the “Existing Orders”). As at June 10, 2015, the Issuer has

acquired 760,000 Common Shares under the BNS Order. The Issuer intends to acquire Common Shares under the CIBC Order but, as at June 10, 2015, has yet to do so.




mum number of Subject Shares, being 250,000 Subject Shares, the maximum number of Common Shares that are the subject of the Concurrent Applications, being 603,000 Common Shares, and the maximum number of Common Shares that are the subject of the Existing Orders, being 1,425,000 Common Shares, the Issuer will have purchased under the Normal Course Issuer Bid an aggregate of 2,278,000 Common Shares pursuant to Off-Exchange Block Purchases, repre-senting approximately 24.9% of the maximum of 9,140,000 Common Shares authorized to be purchased under the Normal Course Issuer Bid.





(c) the Purchase Price in respect of each

Proposed Purchase will be at a discount to the last “independent trade” (as that term is used in paragraph 629(l)1 of the


June 25, 2015

(2015), 38 OSCB 5725

TSX Rules) of a board lot of Common Shares immediately prior to the execution of such Proposed Purchase;






entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Global Equity Linked Products Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) in advance of the first Proposed

Purchase, the Issuer will issue a press release disclosing (i) its intention to make the Proposed Purchases, and (ii) that information regarding each Proposed Purchase, including the number of Com-mon Shares purchased and the aggre-gate Purchase Price, will be available on the System for Electronic Document Ana-lysis and Retrieval (SEDAR) following the completion of each such purchase;



(i) the Issuer does not purchase, pursuant

to Off-Exchange Block Purchases, in the aggregate more than one-third of the maximum number of Common Shares the Issuer can purchase under its Normal

Course Issuer Bid, such one-third being equal to 3,046,667 Common Shares as of the date of this Order; and





June 25, 2015

(2015), 38 OSCB 5726

2.2.3 Canadian Pacific Railway Limited – s. 104(2)(c) Headnote Subsection 104(2)(c) of the Act – Issuer bid – relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act – Issuer proposes to purchase, at a discounted purchase price, up to 295,000 of its common shares from one of its shareholders – due to the discounted purchase price, proposed purchases cannot be made through the TSX trading system – but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases – the selling shareholder did not purchase the subject shares in anticipation or contemplation of resale to the Issuer and has not, for a minimum of 30 days prior to the date of the application seeking the requested relief, purchased common shares of the Issuer in anticipation or contemplation of a sale of common shares to the Issuer – no adverse economic impact on, or prejudice to, the Issuer or public shareholders – proposed purchases exempt from the issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the Issuer not purchase, in the aggregate, more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases, and that the Issuer will not make any proposed purchase unless it has first obtained written confirmation from the selling shareholder that between the date of the order and the date on which the proposed purchase is completed, the selling shareholder has not purchased, had purchased on its behalf, or otherwise accumulated, any common shares of the Issuer to re-establish its holdings of common shares which will have been reduced as a result of the sale of the subject shares pursuant to the proposed purchases. Statutes Cited Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8,

97 to 98.7, 104(2)(c).



AND


ORDER

(Clause 104(2)(c))

UPON the application (the “Application”) of Canadian Pacific Railway Limited (the “Issuer”) to the Ontario Securities Commission (the “Commission”) for an order under clause 104(2)(c) of the Securities Act (Ontario) (the “Act”) exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and 97 to 98.7, inclusive, of

the Act (the “Issuer Bid Requirements”) in connection with the proposed purchases by the Issuer of up to 295,000 common shares in the capital of the Issuer (collectively, the “Subject Shares”) in one or more trades with Bank of Montreal (the “Selling Shareholder”); AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Issuer (and the Selling Share-holder in respect of paragraphs 5, 6, 7, 8, 9, 10, 13, 24 and 25 as they relate to the Selling Shareholder) having represented to the Commission that: 1. The Issuer is a corporation incorporated under the



3. The Issuer is a reporting issuer in each of the pro-

vinces and territories of Canada and the common shares of the Issuer (the “Common Shares”) are listed for trading on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange (the “NYSE”) under the symbol “CP”. The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.









at least 295,000 Common Shares. None of the Subject Shares were acquired by, or on behalf of, the Selling Shareholder in anticipation or contem-plation of resale to the Issuer.

9. No Common Shares were purchased by, or on

behalf of, the Selling Shareholder on or after May 4, 2015, being the date that was 30 days prior to


June 25, 2015

(2015), 38 OSCB 5727

the date of the Application, in anticipation or contemplation of a sale of Common Shares to the Issuer.

10. The Subject Shares are held by the Selling Share-

holder in connection with arrangements to hedge client transactions in respect of the Common Shares. Between the date of this Order and the date on which a Proposed Purchase (as defined below) is to be completed, the Selling Shareholder will not purchase, have purchased on its behalf, or otherwise accumulate, any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.







14. The Subject Shares acquired under each

Proposed Purchase will constitute a “block” as that term is defined in section 628 of the TSX Rules.

15. The purchase of any of the Subject Shares by the Issuer pursuant to an Agreement will constitute an “issuer bid” for the purposes of the Act, to which the applicable Issuer Bid Requirements would apply.


at a discount to the prevailing market price and below the bid-ask price for the Common Shares on the TSX at the time of the relevant Proposed Purchase, none of the Proposed Purchases can be made through the TSX trading system and, therefore, will not occur “through the facilities” of the TSX. As a result, the Issuer will be unable to acquire Subject Shares from the Selling Shareholder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.










adversely affect the Issuer or the rights of any of the Issuer’s security holders and it will not materially affect the control of the Issuer. To the knowledge of the Issuer, the Proposed Purchases will not prejudice the ability of other security holders of the Issuer to otherwise sell Common Shares in the open market at the then-prevailing market price. The Proposed Purchases will be carried out at minimal cost to the Issuer.


June 25, 2015

(2015), 38 OSCB 5728

22. To the best of the Issuer’s knowledge, as of May 29, 2015, the “public float” of the Common Shares represented approximately 90.9% of all issued and outstanding Common Shares for purposes of the TSX Rules.






the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Trading Products Group of the Selling Shareholder, nor any per-sonnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.






May 29, 2015 pursuant to clause 104(2)(c) of the Act exempting the Issuer from the Issuer Bid Requirements in connection with purchases by the Issuer pursuant to private agreements of up to 665,000 Common Shares from the Canadian Imperial Bank of Commerce (the “CIBC Order”) and up to 760,000 Common Shares from The Bank of Nova Scotia (the “BNS Order”, and together with the CIBC Order, the “Existing Orders”). As at June 10, 2015, the Issuer has

acquired 760,000 Common Shares under the BNS Order. The Issuer intends to acquire Common Shares under the CIBC Order but, as at June 10, 2015, has yet to do so.




mum number of Subject Shares, being 295,000 Subject Shares, the maximum number of Com-mon Shares that are the subject of the Concurrent Applications, being 558,000 Common Shares, and the maximum number of Common Shares that are the subject of the Existing Orders, being 1,425,000 Common Shares, the Issuer will have purchased under the Normal Course Issuer Bid an aggregate of 2,278,000 Common Shares pursuant to Off-Exchange Block Purchases, representing approximately 24.9% of the maximum of 9,140,000 Common Shares authorized to be purchased under the Normal Course Issuer Bid.





(c) the Purchase Price in respect of each

Proposed Purchase will be at a discount to the last “independent trade” (as that term is used in paragraph 629(l)1 of the


June 25, 2015

(2015), 38 OSCB 5729

TSX Rules) of a board lot of Common Shares immediately prior to the execution of such Proposed Purchase;






entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer, nor any member of the Trading Products Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) in advance of the first Proposed

Purchase, the Issuer will issue a press release disclosing (i) its intention to make the Proposed Purchases, and (ii) that information regarding each Proposed Purchase, including the number of Com-mon Shares purchased and the aggre-gate Purchase Price, will be available on the System for Electronic Document Ana-lysis and Retrieval (SEDAR) following the completion of each such purchase;



(i) the Issuer does not purchase, pursuant

to Off-Exchange Block Purchases, in the aggregate more than one-third of the maximum number of Common Shares the Issuer can purchase under its Normal Course Issuer Bid, such one-third being

equal to 3,046,667 Common Shares as of the date of this Order; and





June 25, 2015

(2015), 38 OSCB 5730

2.2.4 Dollarama Inc. – s. 104(2)(c) Headnote Subsection 104(2)(c) of the Act – Issuer bid – relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act – Issuer proposes to purchase, at a discounted purchase price, up to 200,000 of its common shares from one of its shareholders – due to the discounted purchase price, proposed purchases cannot be made through the TSX trading system – but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases – the selling shareholder did not purchase the subject shares in anticipation or contemplation of resale to the Issuer and has not, for a minimum of 30 days prior to the date of the application seeking the requested relief, purchased common shares of the Issuer in anticipation or contemplation of a sale of common shares to the Issuer – no adverse economic impact on, or prejudice to, the Issuer or public shareholders – proposed purchases exempt from the issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the Issuer not purchase, in the aggregate, more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases, and that the Issuer not make any proposed purchase unless it has first obtained written confirmation from the selling shareholder that between the date of the order and the date on which the proposed purchase is completed, the selling shareholder has not purchased, had purchased on its behalf, or otherwise accumulated, any common shares of the Issuer to re-establish its holdings of common shares which will have been reduced as a result of the sale of the subject shares pursuant to the proposed purchases. Statutes Cited Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8, 97 to 98.7,104(2)(c).


R.S.O. 1990, c.S.5, AS AMENDED

AND

IN THE MATTER OF DOLLARAMA INC.

ORDER

(Clause 104(2)(c))

UPON the application (the “Application”) of Dollarama Inc. (the “Issuer”) to the Ontario Securities Commission (the “Commission”) for an order pursuant to clause 104(2)(c) of the Securities Act (Ontario) (the “Act”) exempting the Issuer from the requirements of sections 94 to 94.8, inclusive, and 97 to 98.7, inclusive, of the Act (the “Issuer Bid Requirements”) in respect of the proposed purchases by the Issuer of up to 200,000 of its common shares (collectively, the “Subject Shares”) in one or more tranches from The Bank of Nova Scotia (the “Selling Shareholder”); AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Issuer (and the Selling Shareholder in respect of paragraphs 5, 6, 7, 8, 9, 10, 13, 24 and 25 as they relate to the Selling Shareholder) having represented to the Commission that: 1. The Issuer is a corporation governed by the Canada Business Corporations Act. 2. The registered and head office of the Issuer is located at 5805 Royalmount Avenue, Montreal, Quebec, Canada, H4P

0A1. 3. The Issuer is a reporting issuer in each of the provinces and territories of Canada and the common shares of the Issuer

(the “Common Shares”) are listed for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “DOL”. The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.

4. The authorized share capital of the Issuer consists of an unlimited number of Common Shares and an unlimited

number of Preferred Shares issuable in series. As of May 31, 2015, 128,593,309 Common Shares and no Preferred Shares were issued and outstanding.

5. The corporate headquarters of the Selling Shareholder are located in the Province of Ontario.


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(2015), 38 OSCB 5731

6. The Selling Shareholder does not, directly or indirectly, own more than 5% of the issued and outstanding Common Shares.

7. The Selling Shareholder is the beneficial owner of at least 200,000 Common Shares. None of the Subject Shares were

acquired by, or on behalf of, the Selling Shareholder in anticipation or contemplation of resale to the Issuer. 8. No Common Shares were purchased by, or on behalf of, the Selling Shareholder on or after May 2, 2015, being the

date that was 30 days prior to the date of the Application, in anticipation or contemplation of a sale of Common Shares to the Issuer.

9. The Subject Shares are held by the Selling Shareholder in connection with arrangements to hedge client transactions

in respect of the Common Shares. Between the date of this Order and the date on which a Proposed Purchase (as defined below) is to be completed, the Selling Shareholder will not purchase, have purchased on its behalf, or otherwise accumulate, any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.

10. The Selling Shareholder is at arm's length to the Issuer and is not an “insider” of the Issuer, an “associate” of an

“insider” of the Issuer, or an “associate” or “affiliate” of the Issuer, as such terms are defined in the Act. The Selling Shareholder is an “accredited investor” within the meaning of National Instrument 45-106 Prospectus Exemptions.

11. The Issuer announced on June 10, 2015 that it is renewing its normal course issuer bid (the “Normal Course Issuer

Bid”) for the purchase, during the 12-month period beginning on June 17, 2015 and ending on June 16, 2016, of up to 4,500,765 Common Shares, representing approximately 3.5% of the issued and outstanding Common Shares as of the date specified in the Notice of Intention to Make a Normal Course Issuer Bid (the “Notice”) submitted to, and accepted by, the TSX. The Notice specifies that purchases under the Normal Course Issuer Bid will be conducted through the facilities of the TSX or alternative trading systems, if eligible, or by such other means as may be permitted by the TSX or a securities regulatory authority in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the “TSX NCIB Rules”), including by private agreements under issuer bid exemption orders issued by securities regulatory authorities (each, an “Off-Exchange Block Purchase”).

12. The Issuer intends to implement an automatic share purchase plan (“ASPP”) to permit the Issuer to make purchases

under its Normal Course Issuer Bid at such times when the Issuer would not be permitted to trade in the Common Shares during internal blackout periods, including regularly scheduled quarterly blackout periods. Under the ASPP, at times it is not subject to blackout restrictions the Issuer may, but is not required to, instruct the designated broker to make purchases under its Normal Course Issuer Bid in accordance with the terms of the ASPP. Such purchases will be determined by the broker in its sole discretion based on parameters established by the Issuer prior to any blackout period in accordance with TSX rules, applicable securities laws (including this Order) and the terms of the agreement between the broker and the Issuer. The ASPP has been pre-cleared by the TSX and may be implemented as early as June 17, 2015, and from time to time thereafter.

13. The Issuer and the Selling Shareholder intend to enter into one or more agreements of purchase and sale (each, an

“Agreement”) pursuant to which the Issuer will agree to acquire some or all of the Subject Shares from the Selling Shareholder by way of one or more purchases, each occurring before June 16, 2016 (each such purchase, a “Proposed Purchase”) for a purchase price (each such price, a “Purchase Price” in respect of such Proposed Purchase) that will be negotiated at arm's length between the Issuer and the Selling Shareholder. The Purchase Price will, in each case, be at a discount to the prevailing market price and below the prevailing bid-ask price for the Common Shares on the TSX at the time of each Proposed Purchase.

14. The Subject Shares acquired under each Proposed Purchase will constitute a “block” as that term is defined in section

628 of the TSX NCIB Rules. 15. The purchase of any of the Subject Shares by the Issuer pursuant to an Agreement will constitute an “issuer bid” for the

purposes of the Act, to which the applicable Issuer Bid Requirements would apply. 16. Because the Purchase Price will, in each case, be at a discount to the prevailing market price and below the prevailing

bid-ask price for the Common Shares on the TSX at the time of each Proposed Purchase, none of the Proposed Purchases can be made through the TSX trading system and, therefore, will not occur “through the facilities” of the TSX. As a result, the Issuer will be unable to acquire Subject Shares from the Selling Shareholder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.

17. But for the fact that the Purchase Price will be at a discount to the prevailing market price and below the prevailing bid-

ask price for the Common Shares on the TSX at the time of each Proposed Purchase, the Issuer could otherwise acquire the applicable Subject Shares through the facilities of the TSX as a “block purchase” (a “Block Purchase”) in


June 25, 2015

(2015), 38 OSCB 5732

accordance with the block purchase exception in clause 629(l)7 of the TSX NCIB Rules and the exemption from the Issuer Bid Requirements that is available pursuant to subsection 101.2(1) of the Act.

18. The sale of any of the Subject Shares to the Issuer will not be a “distribution” (as defined in the Act). 19. For each Proposed Purchase, the Issuer will be able to acquire the applicable Subject Shares from the Selling

Shareholder without the Issuer being subject to the dealer registration requirements of the Act. 20. Management of the Issuer is of the view that: (a) the Issuer will be able to purchase the Subject Shares at a lower price

than the price at which it would otherwise be able to purchase Common Shares under the Normal Course Issuer Bid in accordance with the TSX NCIB Rules and the exemption from the Issuer Bid Requirements available pursuant to subsection 101.2(1) of the Act; and (b) the Proposed Purchases are an appropriate use of the Issuer's funds.

21. The purchase of the Subject Shares will not adversely affect the Issuer or the rights of any of the Issuer's security

holders and it will not materially affect the control of the Issuer. To the knowledge of the Issuer, the Proposed Purchases will not prejudice the ability of other security holders of the Issuer to otherwise sell Common Shares in the open market at the then-prevailing market price. The Proposed Purchases will be carried out at minimal cost to the Issuer.

22. To the best of the Issuer's knowledge, as of May 31, 2015, the “public float” for the Common Shares represented

approximately 92% of all the issued and outstanding Common Shares for the purposes of the TSX NCIB Rules. 23. The Common Shares are “highly-liquid securities” within the meaning of section 1.1 of OSC Rule 48-501 Trading

during Distributions, Formal Bids and Share Exchange Transactions and section 1.1 of the Universal Market Integrity Rules.

24. Other than the Purchase Price, no fee or other consideration will be paid by the Issuer in connection with the Proposed

Purchases. 25. At the time that each Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each

Proposed Purchase, neither the Issuer, nor any member of the Global Equity Derivatives and Investor Solutions Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.

26. The Issuer will not purchase, pursuant to Off-Exchange Block Purchases, in the aggregate, more than one-third of the

maximum number of Common Shares that the Issuer can purchase under the Normal Course Issuer Bid, such one-third being equal to 1,500,255 Common Shares as of the date of this Order.

27. Assuming the completion of the purchase of the maximum number of Subject Shares, the Issuer will have purchased,

under the Normal Course Issuer Bid, an aggregate of 200,000 Common Shares pursuant to Off-Exchange Block Purchases, representing approximately 4.4% of the 4,500,765 Common Shares authorized to be purchased under the Normal Course Issuer Bid.

28. The Issuer will not purchase Common Shares pursuant to the Proposed Purchases during blackout periods designated

and administered in accordance with the Issuer's corporate policies. AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest; IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchases, provided that:

(a) the Proposed Purchases will be taken into account by the Issuer when calculating the maximum annual aggregate limit that is imposed upon the Issuer's Normal Course Issuer Bid in accordance with the TSX NCIB Rules;

(b) the Issuer will refrain from conducting either a Block Purchase in accordance with the TSX NCIB Rules or

another Off-Exchange Block Purchase during the calendar week in which it completes a Proposed Purchase and will not make any further purchases under the Normal Course Issuer Bid for the remainder of the calendar day on which it completes a Proposed Purchase;


June 25, 2015

(2015), 38 OSCB 5733

(c) the Purchase Price in respect of each Proposed Purchase will be at a discount to the last “independent trade” (as that term is used in paragraph 629(l)1 of the TSX NCIB Rules) of a board lot of Common Shares immediately prior to the execution of such Proposed Purchase;

(d) the Issuer will otherwise acquire any additional Common Shares pursuant to the Normal Course Issuer Bid in

accordance with the Notice and the TSX NCIB Rules, including by means of open market transactions and by other means as may be permitted by the TSX, including under automatic trading plans and, subject to condition (i) below, by Off-Exchange Block Purchases;

(e) immediately following each Proposed Purchase of Subject Shares from the Selling Shareholder, the Issuer will

report the purchase of Subject Shares to the TSX; (f) at the time that each Agreement is entered into by the Issuer and the Selling Shareholder and at the time of

each Proposed Purchase, neither the Issuer, nor any member of the Global Equity Derivatives and Investor Solutions Group of the Selling Shareholder, nor any personnel of the Selling Shareholder that negotiated the Agreement or made, participated in the making of, or provided advice in connection with, the decision to enter into the Agreement and sell the Subject Shares, will be aware of any “material change” or “material fact” (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) in advance of the first Proposed Purchase, the Issuer will issue a press release disclosing (i) its intention to

make the Proposed Purchases, and (ii) that information regarding each Proposed Purchase, including the number of Subject Shares purchased and the aggregate Purchase Price, will be available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) following the completion of each Proposed Purchase;

(h) the Issuer will report information regarding each Proposed Purchase, including the number of Subject Shares

purchased and the aggregate Purchase Price, on SEDAR before 5:00 p.m. (Toronto time) on the business day following such purchase;

(i) the Issuer does not purchase, pursuant to Off-Exchange Block Purchases, in the aggregate, more than one-

third of the maximum number of Common Shares the Issuer can purchase under its Normal Course Issuer Bid, such one-third being equal to, as of the date of this Order, 1,500,255 Common Shares; and

(j) the Issuer will not make any Proposed Purchase unless it has first obtained confirmation in writing from the

Selling Shareholder that between the date of this Order and the date on which a Proposed Purchase is to be completed, the Selling Shareholder has not purchased, had purchased on its behalf, or otherwise accumulated any Common Shares to re-establish its holdings of Common Shares which will have been reduced as a result of the sale of the Subject Shares pursuant to the Proposed Purchases.



June 25, 2015

(2015), 38 OSCB 5734

2.2.5 Pyramis Global Advisors, LLC et al. – s. 80 of the CFA Section 80 of the Commodity Futures Act (Ontario) – Relief from the adviser registration requirement of subsection 22(1)(b) of the CFA granted to sub-advisers headquartered in foreign jurisdictions in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions – Relief mirrors exemption available in section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations made under the Securities Act (Ontario). Applicable Legislative Provisions Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 1(1), 22(1)(b), 80. Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3). National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.26.1. Ontario Securities Commission Rule 35-502 Non-Resident Advisers, s. 7.11.

IN THE MATTER OF THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C.20, AS AMENDED (the CFA)

AND

IN THE MATTER OF

PYRAMIS GLOBAL ADVISORS, LLC, FIDELITY INVESTMENTS CANADA ULC,

PYRAMIS GLOBAL ADVISORS (CANADA) ULC, FMR CO., INC., FIL LIMITED,

FIDELITY INVESTMENTS MONEY MANAGEMENT, INC., FMR INVESTMENT MANAGEMENT (UK) LIMITED AND

PYRAMIS GLOBAL ADVISORS TRUST COMPANY

ORDER (Section 80 of the CFA)

UPON the application (the Application) of FMR Co., Inc. (FMRCo), FIL Limited (FIL), Fidelity Investments Money Management, Inc. (FIMM), FMR Investment Management (UK) Limited (FMR IM) and Pyramis Global Advisors Trust Company (PGATC and, together with FMRCo, FIL, FIMM and FMR IM, any one referred to individually as a Sub-Adviser and collectively as the Sub-Advisers) and Pyramis Global Advisors, LLC (Pyramis), Fidelity Investments Canada ULC (Fidelity) and Pyramis Global Advisors (Canada) ULC (Pyramis Canada and, together with Pyramis and Fidelity, any one referred to individually as a Principal Adviser and collectively as the Principal Advisers) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that each of the Sub-Advisers (and individuals engaging in, or holding themselves out as engaging in, the business of advising others when acting on behalf of their respective Sub-Advisers in respect of the Sub-Advisory Services (as defined below) (the Representatives)) be exempt, for a specified period of time, from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Advisers for the benefit of the Clients (as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Contracts) and cleared through clearing corporations; AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Sub-Advisers and the Principal Advisers having represented to the Commission that: Principal Advisers 1. Pyramis is a limited liability company organized under the laws of the State of Delaware. Pyramis is resident in the

United States, with a principal office and place of business in Smithfield, Rhode Island. Pyramis is registered as an investment adviser with the United States Securities and Exchange Commission (the SEC). Pyramis is an exempt commodity trading advisor and an exempt commodity pool operator with the U.S. National Futures Association (NFA).

2. Pyramis is registered as a portfolio manager under the Securities Act (Ontario) (the OSA) and as an adviser in the

category of commodity trading manager under the CFA in the province of Ontario. 3. Fidelity was incorporated under the laws of Canada and has subsequently continued under the laws of Alberta. Fidelity

is resident in Canada, with a head office in Toronto, Ontario.


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(2015), 38 OSCB 5735

4. Fidelity is registered as a mutual fund dealer and portfolio manager under the relevant securities legislation of each of the provinces and territories of Canada. Fidelity is also registered as an adviser in the category of commodity trading manager under the CFA in the province of Ontario. Further, Fidelity is registered as an investment fund manager under the relevant securities legislation of the provinces of Ontario, Quebec and Newfoundland and Labrador.

5. Pyramis Canada was incorporated under the laws of Alberta. Pyramis Canada is resident in Canada, with a head office

in Toronto, Ontario. 6. Pyramis Canada is registered as a portfolio manager under the relevant securities legislation of the provinces of

Ontario and Quebec and as an adviser in the category of commodity trading manager under the CFA in the province of Ontario.

Sub-Advisers 7. FMRCo is a corporation organized under the laws of the Commonwealth of Massachusetts. FMRCo is resident in the

United States of America, with a principal office and place of business in Boston, Massachusetts. FMRCo is registered as an investment adviser with the SEC. FMRCo engages in the business of an adviser in respect of Contracts in the United States.

8. FIMM is a corporation organized under the laws of the State of New Hampshire. FIMM is resident in the United States

of America, with a principal office and place of business in Boston, Massachusetts. FIMM is registered as an investment adviser with the SEC and is an exempt commodity trading advisor with the NFA. FIMM engages in the business of an adviser in respect of Contracts in the United States.

9. PGATC is a non-depository trust company chartered under the laws of the State of New Hampshire and is regulated by

the New Hampshire Banking Commission. PGATC is resident in the United States of America, with a principal office and place of business in Rhode Island. PGATC is an exempt commodity trading advisor and an exempt commodity pool operator with the NFA. PGATC engages in the business of an adviser in respect of Contracts in the United States.

10. Each of FMRCo, FIMM and PGATC is registered in a category of registration, or operates under an exemption from

registration, under the commodities futures or other applicable legislation of the United States that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, each of FMRCo, FIMM and PGATC is authorized and permitted to carry on the Sub-Advisory Services.

11. FMR IM is a private limited liability company organised and existing under the laws of England and Wales. The

principal place of business of FMR IM is located in London, England. FMR IM is authorized and regulated by the Financial Conduct Authority in the United Kingdom and is registered in the United States as an investment adviser with the SEC. FMR IM is an exempt commodity trading advisor with the NFA.

12. FMR IM engages in the business of an adviser in respect of Contracts in the United Kingdom. FMR IM is registered in a

category of registration, or operates under an exemption from registration, under the commodities futures or other applicable legislation of the United Kingdom that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

13. FIL is a corporation organized under the laws of Bermuda and is resident in Bermuda. FIL is registered with the

Bermuda Monetary Authority. FIL engages in the business of an adviser in respect of Contracts in Bermuda. FIL is registered in a category of registration, or operates under an exemption from registration, under the commodities futures or other applicable legislation of Bermuda that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

14. None of the Sub-Advisers is registered in any capacity under the CFA or the OSA. The Sub-Advisers each act in

reliance on the exemption from the requirement to register as an adviser under the OSA available to it pursuant to section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

15. There are two groups of Fidelity companies which operate independently of one another: (1) the international “FIL

Group”; and (2) the North American (Canada and US) “FMR Group.” FMR, LLC is the parent company of the FMR Group. All of the Principal Advisors and Sub-Advisers (with the exclusion of FIL) are subsidiaries of FMR, LLC and, as such, are affiliates. FIL is part of the FIL Group, which carries on business under the trading name Fidelity Worldwide Investment.


June 25, 2015

(2015), 38 OSCB 5736

16. The Principal Advisers and the Sub-Advisers are not in default of securities legislation, commodity futures legislation or derivatives legislation in any jurisdiction of Canada.

17. The Principal Advisers provide investment advice and/or discretionary portfolio management services in Ontario to (i)

investment funds, the securities of which are qualified by prospectus for distribution to the public in Ontario and the other provinces and territories of Canada (the Investment Funds); (ii) pooled funds, the securities of which are sold on a private placement basis in Ontario and certain other provinces and territories of Canada pursuant to prospectus exemptions contained in National Instrument 45-106 Prospectus and Registration Exemptions (the Pooled Funds); (iii) clients who have entered into investment management agreements with a Principal Adviser to establish managed accounts (the Managed Account Clients); and (iv) other Investment Funds, Pooled Funds and Managed Account Clients that may be established or retained in the future and in respect of which a Principal Adviser engages a Sub-Adviser to provide portfolio advisory services (the Future Clients) (each of the Investment Funds, Pooled Funds, Managed Account Clients and Future Clients being referred to individually as a Client and collectively as the Clients).

18. Certain of the Clients may, as part of their investment program, invest in Contracts. The Principal Advisers each act as

a commodity trading manager in respect of such Clients. 19. In connection with the Principal Advisers acting as advisers to Clients in respect of the purchase or sale of securities

and Contracts, each Principal Adviser, pursuant to written agreements made between the Principal Adviser and each respective Sub-Adviser, has retained the respective Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of securities and Contracts in which that Sub-Adviser has experience and expertise by exercising discretionary authority on behalf of the Principal Adviser, in respect of all or a portion of the assets of the investment portfolio of the respective Client, including discretionary authority to buy or sell Contracts for the Client (the Sub-Advisory Services), provided that: (a) in each case, the Contracts must be cleared through an “acceptable clearing corporation” (as defined in

National Instrument 81-102 Investment Funds, or any successor thereto (NI 81-102)) or a clearing corporation that clears and settles transactions made on a futures exchange listed in Appendix A of NI 81-102, or any successor thereto; and

(b) such investments are consistent with the investment objectives and strategies of the applicable Client.

20. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a representative or as partner or an officer of a registered adviser and is acting on behalf of a registered adviser.

21. By providing the Sub-Advisory Services, the Sub-Advisers will be engaging in, or holding themselves out as engaging

in, the business of advising others with respect to Contracts and, in the absence of being granted the requested relief, would be required to register as advisers under the CFA.

22. There is presently no rule or regulation under the CFA that provides an exemption from the adviser registration

requirement in paragraph 22(1)(b) of the CFA that is similar to the exemption from the adviser registration requirement in subsection 25(3) of the OSA which is provided under section 8.26.1 of NI 31-103.

23. The relationship among any Principal Adviser, the Sub-Advisers and any Client is consistent with the requirements of

section 8.26.1 of NI 31-103. 24. A Sub-Adviser will only provide the Sub-Advisory Services to a Principal Adviser as long as that Principal Adviser is,

and remains, registered under the CFA as an adviser in the category of commodity trading manager. 25. As would be required under section 8.26.1 of NI 31-103:

(a) the obligations and duties of each Sub-Adviser are set out in a written agreement with each Principal Adviser;

and (b) the relevant Principal Adviser or Principal Advisers have entered into a written contract with each Client,

agreeing to be responsible for any loss that arises out of the failure of any Sub-Adviser:

(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Principal Adviser and each Client; or

(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in

the circumstances (together with (i), the Assumed Obligations).


June 25, 2015

(2015), 38 OSCB 5737

26. The written agreement between a Principal Adviser and a Sub-Adviser sets out the obligations and duties of each party in connection with the Sub-Advisory Services and permits the Principal Adviser to exercise the degree of supervision and control it is required to exercise over the Sub-Adviser in respect of the Sub-Advisory Services.

27. The Principal Advisers will deliver to the Clients all required reports and statements under applicable securities,

commodity futures and derivatives legislation. 28. The prospectus or other offering document, if any, (in either case, the Offering Document) for each Client that is an

Investment Fund or a Pooled Fund and for which a Principal Adviser engages one or more Sub-Advisers to provide the Sub-Advisory Services will include the following disclosure (the Required Disclosure): (a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of any Sub-

Adviser to meet the Assumed Obligations; and (b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Advisers (or any of their

Representatives) because the Sub-Advisers are resident outside of Canada and all or substantially all of their assets are situated outside of Canada.

29. Prior to purchasing any securities of one or more of the Clients that are Investment Funds or Pooled Funds directly

from a Principal Adviser, all investors in the Investment Funds or Pooled Funds who are Ontario residents will receive, or have received, the Required Disclosure in writing (which may be in the form of an Offering Document).

30. Each Client that is a Managed Account Client for which a Principal Adviser engages one or more Sub-Advisers to

provide the Sub-Advisory Services will receive, or has received, the Required Disclosure in writing prior to the purchasing of any Contracts for such Client.

31. The Principal Advisers and the Sub-Advisers (with the exclusion of FMR IM) obtained substantially similar relief in four

previous orders dated December 17, 2013 (the Previous Orders), pursuant to which the Sub-Advisers provided Sub-Advisory Services to the Principal Advisers in respect of the Clients.

32. The repeal of section 7.3 of OSC Rule 35-502 Non-Resident Advisers triggered the revocation of the Previous Orders. AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested; IT IS ORDERED, pursuant to section 80 of the CFA, that each Sub-Adviser and its Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as sub-adviser to a Principal Adviser in respect of the Sub-Advisory Services provided that at the relevant time that such activities are engaged in:

(a) the Principal Adviser is registered under the CFA as an adviser in the category of commodity trading manager; (b) the Sub-Adviser’s head office or principal place of business is in a foreign jurisdiction; (c) the Sub-Adviser is registered in a category of registration, or operates under an exemption from registration,

under the commodities futures or other applicable legislation of the foreign jurisdiction in which its head office or principal place of business is located, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario;

(d) the Sub-Adviser engages in the business of an adviser in respect of Contracts in the foreign jurisdiction in

which its head office or principal place of business is located; (e) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; (f) the Principal Adviser has entered into a written agreement with the Clients, agreeing to be responsible for any

loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations; (g) the Offering Document of each Client that is an Investment Fund or Pooled Fund and for which a Principal

Adviser engages a Sub-Adviser to provide the Sub-Advisory Services will include the Required Disclosure; (h) prior to purchasing any securities of one or more of the Clients that are Investment Funds or Pooled Funds

directly from a Principal Adviser, all investors in the Investment Funds or Pooled Funds who are Ontario residents will receive, or have received, the Required Disclosure in writing; and


June 25, 2015

(2015), 38 OSCB 5738

(i) each Client that is a Managed Account Client for which a Principal Adviser engages a Sub-Adviser to provide the Sub-Advisory Services will receive, or has received, the Required Disclosure in writing prior to the purchasing of any Contracts for such Client; and

IT IS FURTHER ORDERED that this Order will terminate on the earliest of

(a) six months, or such other transition period as provided by operation of law, after the effective date of the repeal of the CFA;

(b) six months, or such other transition period as provided by operation of law, after the coming into force of any

amendment to Ontario commodity futures law or Ontario securities law (as defined in the OSA) that affects the ability of the Sub-Advisers to act as sub-advisers to the Principal Advisers in respect of the Sub-Advisory Services; and

(c) five years after the date of this Order.

DATED at Toronto, Ontario, this 17th day of June, 2015. “Tim Mosely” Commissioner Ontario Securities Commission “Edward P. Kerwin” Commissioner Ontario Securities Commission


June 25, 2015

(2015), 38 OSCB 5739

2.2.6 Russell Investments Canada Limited – s. 80 of the CFA Headnote Section 80 of the Commodity Futures Act (Ontario) – Relief from the adviser registration requirement of subsection 22(1)(b) of the CFA granted to sub-advisers headquartered in foreign jurisdictions in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions – Relief mirrors exemption available in section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations made under the Securities Act (Ontario). Applicable Legislative Provisions Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 1(1), 22(1)(b), 80. Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3). National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.26.1. Ontario Securities Commission Rule 35-502 Non-Resident Advisers, s. 7.11.



AND

IN THE MATTER OF RUSSELL INVESTMENTS CANADA LIMITED,

RUSSELL IMPLEMENTATION SERVICES INC. AND RUSSELL INVESTMENT MANAGEMENT COMPANY

ORDER

(Section 80 of the CFA) UPON the application (the Application) of Russell Implementation Services Inc. (RIS) and Russell Investment Management Company (RIMCo and, together with RIS, the Sub-Advisers and individually a Sub-Adviser) and Russell Investments Canada Limited (the Principal Adviser) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that each of the Sub-Advisers (and individuals engaging in, or holding themselves out as engaging in, the business of advising others when acting on behalf of their respective Sub-Adviser in respect of the Sub-Advisory Services (as defined below) (the Representatives)) be exempt, for a specified period of time, from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Adviser for the benefit of the Clients (as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Contracts) and cleared through clearing corporations; AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Sub-Advisers and the Principal Adviser having represented to the Commission that: 1. The Principal Adviser is a corporation organized under the laws of Canada, with its head office located in Toronto,

Ontario, Canada. The Principal Adviser is registered as (a) an investment fund manager, exempt market dealer and portfolio manager in all the provinces and territories of Canada under the relevant securities legislation of the respective jurisdiction, (b) a mutual fund dealer in Ontario, and (c) an adviser in Manitoba. The Principal Adviser is also registered under the CFA as a commodity trading manager.

2. RIS is a corporation organized under the laws of the State of Washington, United States. The principal place of

business of RIS is located in Seattle, Washington, United States. RIS is registered with the United States Securities and Exchange Commission (the SEC) as an investment adviser and a broker-dealer and is exempted from registration as a commodity trading adviser or commodity pool operator with the United States Commodity Futures Trading Commission (the CFTC).

3. RIS is registered in a category of registration, or operates under an exemption from registration, under the commodities

futures or other applicable legislation of the United States, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

4. RIS engages in the business of an adviser in respect of Contracts in the United States.


June 25, 2015

(2015), 38 OSCB 5740

5. RIMCo is a corporation organized under the laws of the State of Washington, United States. The principal place of business of RIMCo is located in Seattle, Washington, United States. RIMCo is registered with the SEC as an investment adviser. RIMCo is registered as a commodity pool operator, and is exempted from registration as a commodity trading adviser, with the CFTC.

6. RIMCo is registered in a category of registration, or operates under an exemption from registration, under the

commodities futures or other applicable legislation of the United States, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

7. RIMCo engages in the business of an adviser in respect of Contracts in the United States. 8. The Sub-Advisers are not registered in any capacity under the CFA or the Securities Act (Ontario) (the OSA). Each

Sub-Adviser acts in reliance on the exemption from the requirement to register as an adviser under the OSA available to it pursuant to section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

9. Each Sub-Adviser is an affiliate of the Principal Adviser. 10. The Principal Adviser and the Sub-Advisers are not in default of securities legislation, commodity futures legislation or

derivatives legislation in any jurisdiction of Canada. 11. The Principal Adviser provides investment advice and/or discretionary portfolio management services in Ontario to (i)

investment funds, the securities of which are qualified by prospectus for distribution to the public in Ontario (the Investment Funds); (ii) pooled funds, the securities of which are sold on a private placement basis in Ontario pursuant to prospectus exemptions contained in National Instrument 45-106 Prospectus and Registration Exemptions (the Pooled Funds); (iii) clients who have entered into investment management agreements with the Principal Adviser to establish managed accounts (the Managed Account Clients); and (iv) other Investment Funds, Pooled Funds and Managed Account Clients that may be established or retained in the future and in respect of which the Principal Adviser engages the Sub-Advisers to provide portfolio advisory services (the Future Clients) (each of the Investment Funds, Pooled Funds, Managed Account Clients and Future Clients being referred to individually as a Client and collectively as the Clients).

12. Certain of the Clients may, as part of their investment program, invest in Contracts. The Principal Adviser acts as a

commodity trading manager in respect of such Clients. 13. In connection with the Principal Adviser acting as an adviser to Clients in respect of the purchase or sale of securities

and Contracts, the Principal Adviser, pursuant to written agreements made between the Principal Adviser and each respective Sub-Adviser, has retained the respective Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of securities and Contracts in which that Sub-Adviser has experience and expertise by exercising discretionary authority on behalf of the Principal Adviser, in respect of all or a portion of the assets of the investment portfolio of the respective Client, including discretionary authority to buy or sell Contracts for the Client (the Sub-Advisory Services), provided that: (a) in each case, the Contracts must be cleared through a clearing corporation; and (b) such investments are consistent with the investment objectives and strategies of the applicable Client.


15. By providing the Sub-Advisory Services, the Sub-Advisers will be engaging in, or holding themselves out as engaging

in, the business of advising others with respect to Contracts and, in the absence of being granted the requested relief, would be required to register as advisers under the CFA.


requirement in paragraph 22(1)(b) of the CFA that is similar to the exemption from the adviser registration requirement in section 25(3) of the OSA which is provided under section 8.26.1 of NI 31-103.

17. The relationship among the Principal Adviser, the Sub-Advisers and any Client is consistent with the requirements of

section 8.26.1 of NI 31-103.


June 25, 2015

(2015), 38 OSCB 5741

18. The Sub-Advisers will only provide the Sub-Advisory Services as long as the Principal Adviser is, and remains, registered under the CFA as an adviser in the category of commodity trading manager.

19. As would be required under section 8.26.1 of NI 31-103:

(a) the obligations and duties of each Sub-Adviser are set out in a written agreement with the Principal Adviser;

and (b) the Principal Adviser has entered into a written contract with each Client, agreeing to be responsible for any

loss that arises out of the failure of any Sub-Adviser:




20. The written agreements between the Principal Adviser and each Sub-Adviser set out the obligations and duties of each party in connection with the Sub-Advisory Services and permits the Principal Adviser to exercise the degree of supervision and control it is required to exercise over the Sub-Adviser in respect of the Sub-Advisory Services.

21. The Principal Adviser will deliver to the Clients all required reports and statements under applicable securities,


Investment Fund or a Pooled Fund and for which the Principal Adviser engages one or more Sub-Advisers to provide the Sub-Advisory Services will include the following disclosure (the Required Disclosure): (a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of any Sub-

Adviser to meet the Assumed Obligations; and (b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Advisers (or any of their

Representatives) because the Sub-Advisers are resident outside of Canada and all or substantially all of their assets are situated outside of Canada.


from the Principal Adviser, all investors in the Investment Funds or Pooled Funds who are Ontario residents will receive, or have received, the Required Disclosure in writing (which may be in the form of an Offering Document).

24. Each Client that is a Managed Account Client for which the Principal Adviser engages one or more Sub-Advisers to


25. The Principal Adviser and the Sub-Advisers obtained substantially similar relief in an order dated June 17, 2014 (the

Previous Order), pursuant to which the Sub-Advisers provided Sub-Advisory Services to the Principal Adviser in respect of the Clients.

26. The repeal of section 7.3 of OSC Rule 35-502 Non-Resident Advisers triggered the revocation of the Previous Order. AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested; IT IS ORDERED, pursuant to section 80 of the CFA, that each Sub-Adviser and its Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services provided that at the relevant time that such activities are engaged in:


under the commodities futures or other applicable legislation of the foreign jurisdiction in which its head office


June 25, 2015

(2015), 38 OSCB 5742

or principal place of business is located, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario;


which its head office or principal place of business is located; (e) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; (f) the Principal Adviser has entered into a written agreement with the Clients, agreeing to be responsible for any

loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations; (g) the Offering Document of each Client that is an Investment Fund or Pooled Fund for which the Principal

Adviser engages a Sub-Adviser to provide the Sub-Advisory Services will include the Required Disclosure; (h) prior to purchasing any securities of one or more of the Clients that are Investment Funds or Pooled Funds

directly from the Principal Adviser, all investors in the Investment Funds or Pooled Funds who are Ontario residents will receive, or have received, the Required Disclosure in writing; and

(i) each Client that is a Managed Account Client for which the Principal Adviser engages a Sub-Adviser to

provide the Sub-Advisory Services will receive, or has received, the Required Disclosure in writing prior to the purchasing of any Contracts for such Client; and

IT IS FURTHER ORDERED that this Order will terminate on the earlier of

(a) six months, or such other transition period as provided by operation of law, after the effective date of the repeal of the CFA;

(b) six months, or such other transition period as provided by operation of law, after the coming into force of any

amendment to Ontario commodity futures law or Ontario securities law (as defined in the OSA) that affects the ability of the Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services; and


DATED at Toronto, Ontario, this 15th day of June, 2015. “Tim Moseley” Commissioner Ontario Securities Commission “Edward P. Kerwin” Commissioner Ontario Securities Commission


June 25, 2015

(2015), 38 OSCB 5743

2.2.7 BlackRock Asset Management Canada Limited and BlackRock Institutional Trust Company, N.A. – s. 80 of the CFA

Headnote Section 80 of the Commodity Futures Act (Ontario) – Relief from the adviser registration requirement of subsection 22(1)(b) of the CFA granted to a sub-adviser headquartered in a foreign jurisdiction in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions – Relief mirrors exemption available in section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations made under the Securities Act (Ontario). Applicable Legislative Provisions Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 1(1), 22(1)(b), 80. Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3). National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.26.1. Ontario Securities Commission Rule 35-502 Non-Resident Advisers, s. 7.11



AND

IN THE MATTER OF

BLACKROCK ASSET MANAGEMENT CANADA LIMITED AND BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A.

ORDER

(Section 80 of the CFA) UPON the application (the Application) of BlackRock Institutional Trust Company, N.A. (the Sub-Adviser) and BlackRock Asset Management Canada Limited (the Principal Adviser) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that the Sub-Adviser (and individuals engaging in, or holding themselves out as engaging in, the business of advising others when acting on behalf of the Sub-Adviser in respect of the Sub-Advisory Services (as defined below) (the Representatives)) be exempt, for a specified period of time, from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Adviser for the benefit of the Clients (as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Contracts) and cleared through clearing corporations; AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Sub-Adviser and the Principal Adviser having represented to the Commission that: 1. The Principal Adviser is a corporation amalgamated under the laws of Ontario, with its head office located in Toronto,

Ontario, Canada. The Principal Adviser is registered (a) as a dealer in the category of exempt market dealer, as an adviser in the category of portfolio manager, and as an investment fund manager in each jurisdiction in Canada under the relevant securities legislation of the jurisdiction, and (b) under the CFA as an adviser in the category of commodity trading manager.

2. The Sub-Adviser is a national banking association organized under the laws of the United States and operates as a

limited purpose trust company. It is primarily regulated in the United States by the Office of the Comptroller of the Currency, the agency of the U.S. Treasury Department that regulates U.S. national banks. The Sub-Adviser is also subject to the jurisdiction of the U.S. Department of Labor to the extent that its fiduciary clients are subject to the U.S. Employee Retirement Income Security Act of 1974, as amended. The head office of the Sub-Adviser is located in the United States.

3. The Sub-Adviser and the Principal Adviser are affiliates; for this purpose, an “affiliate” means any entity that is

controlled by BlackRock, Inc. or other ultimate parent company of the Principal Adviser, as the case may be, and “control” and any derivation thereof, means the possession, directly or indirectly, of the power to direct or significantly influence the management and policies/business or affairs of an entity whether through ownership of voting securities or otherwise.


June 25, 2015

(2015), 38 OSCB 5744

4. The Sub-Adviser is registered in the United States with the Commodity Futures Trading Commission as a commodity trading adviser. The Sub-Adviser is registered in a category of registration, or operates under an exemption from registration, under the commodities futures or other applicable legislation of the United States, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

5. The Sub-Adviser engages in the business of an adviser in respect of Contracts in the United States. 6. The Sub-Adviser is not registered in any capacity under the CFA or the Securities Act (Ontario) (the OSA). The Sub-

Adviser acts in reliance on the exemptions from the requirement to register as an adviser under the OSA available to it pursuant to sections 8.26 and 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

7. The Principal Adviser and the Sub-Adviser are not in default of securities legislation, commodity futures legislation or


investment funds, the securities of which are qualified by prospectus for distribution to the public in Ontario and the other provinces and territories of Canada (the Investment Funds); (ii) pooled funds, the securities of which are sold on a private placement basis in Ontario and certain other provinces and territories of Canada pursuant to prospectus exemptions contained in National Instrument 45-106 Prospectus and Registration Exemptions (the Pooled Funds); (iii) clients who have entered into investment management agreements with the Principal Adviser to establish managed accounts (the Managed Account Clients); and (iv) other Investment Funds, Pooled Funds and Managed Account Clients that may be established or retained in the future and in respect of which the Principal Adviser engages the Sub-Adviser to provide portfolio advisory services (the Future Clients) (each of the Investment Funds, Pooled Funds, Managed Account Clients and Future Clients being referred to individually as a Client and collectively as the Clients).



and Contracts, the Principal Adviser, pursuant to a written agreement made between the Principal Adviser and the Sub-Adviser, has retained the Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of securities and Contracts in which the Sub-Adviser has experience and expertise by exercising discretionary authority on behalf of the Principal Adviser, in respect of all or a portion of the assets of the investment portfolio of the respective Client, including discretionary authority to buy or sell Contracts for the Client (the Sub-Advisory Services), provided that: (a) in each case, the Contracts must be cleared through an “acceptable clearing corporation” (as defined in




12. By providing the Sub-Advisory Services, the Sub-Adviser will be engaging in, or holding itself out as engaging in, the

business of advising others in respect of Contracts and, in the absence of being granted the requested relief, would be required to register as an adviser under the CFA.



14. The relationship among the Principal Adviser, the Sub-Adviser and any Client is consistent with the requirements of

section 8.26.1 of NI 31-103. 15. The Sub-Adviser will only provide the Sub-Advisory Services as long as the Principal Adviser is, and remains,

registered under the CFA as an adviser in the category of commodity trading manager.


June 25, 2015

(2015), 38 OSCB 5745

16. As would be required under section 8.26.1 of NI 31-103: (a) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; and (b) the Principal Adviser has entered into a written contract with each Client, agreeing to be responsible for any

loss that arises out of the failure of the Sub-Adviser:



the circumstances (together with (i), the Assumed Obligations). 17. The written agreement between the Principal Adviser and the Sub-Adviser sets out the obligations and duties of each

party in connection with the Sub-Advisory Services and permits the Principal Adviser to exercise the degree of supervision and control it is required to exercise over the Sub-Adviser in respect of the Sub-Advisory Services.



Investment Fund or a Pooled Fund and for which the Principal Adviser engages one or more Sub-Advisers to provide the Sub-Advisory Services will include the following disclosure (the Required Disclosure): (a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-

Adviser to meet the Assumed Obligations; and (b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or any of its

Representatives) because the Sub-Adviser is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.



21. Each Client that is a Managed Account Client for which the Principal Adviser engages one or more Sub-Advisers to


22. The Principal Adviser and the Sub-Adviser obtained substantially similar relief in a previous order dated March 21,

2014 (the Previous Order), pursuant to which the Sub-Adviser provided Sub-Advisory Services to the Principal Adviser in respect of the Clients.

23. The repeal of section 7.3 of OSC Rule 35-502 Non-Resident Advisers triggered the revocation of the Previous Order. AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested; IT IS ORDERED, pursuant to section 80 of the CFA, that the Sub-Adviser and its Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services provided that at the relevant time that such activities are engaged in:




which its head office or principal place of business is located;


June 25, 2015

(2015), 38 OSCB 5746

(e) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; (f) the Principal Adviser has entered into a written agreement with the Clients, agreeing to be responsible for any

loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations; (g) the Offering Document of each Client that is an Investment Fund or Pooled Fund and for which the Principal

Adviser engages the Sub-Adviser to provide the Sub-Advisory Services will include the Required Disclosure; (h) prior to purchasing any securities of one or more of the Clients that are Investment Funds or Pooled Funds


(i) each Client that is a Managed Account Client for which the Principal Adviser engages the Sub-Adviser to



(a) six months, or such other transition period as provided by operation of law, after the effective date of the

repeal of the CFA; (b) six months, or such other transition period as provided by operation of law, after the coming into force of any





June 25, 2015

(2015), 38 OSCB 5747

2.2.8 BNY Mellon Asset Management Canada Limited and Standish Mellon Asset Management Company LLC – s. 80 of the CFA

Headnote Section 80 of the Commodity Futures Act (Ontario) – Relief from the adviser registration requirement of subsection 22(1)(b) of the CFA granted to a sub-adviser headquartered in a foreign jurisdiction in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions – Relief mirrors exemption available in section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations made under the Securities Act (Ontario). Applicable Legislative Provisions Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 1(1), 22(1)(b), 80. Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3). National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.26.1. Ontario Securities Commission Rule 35-502 Non-Resident Advisers, s. 7.11.



AND

IN THE MATTER OF

BNY MELLON ASSET MANAGEMENT CANADA LIMITED AND STANDISH MELLON ASSET MANAGEMENT COMPANY LLC

ORDER

(Section 80 of the CFA) UPON the application (the Application) of Standish Mellon Asset Management Company, LLC (the Sub-Adviser) and BNY Mellon Asset Management Canada Ltd. (the Principal Adviser) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that the Sub-Adviser (and individuals engaging in, or holding themselves out as engaging in, the business of advising others when acting on behalf of the Sub-Adviser in respect of the Sub-Advisory Services (as defined below) (the Representatives)) be exempt, for a specified period of time, from the adviser registration requirements of paragraph 22(1)(b) of the CFA when acting as a sub-adviser to the Principal Adviser for the benefit of the Clients (as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Contracts) and cleared through clearing corporations; AND UPON considering the Application and the recommendation of staff of the Commission; AND UPON the Sub-Adviser and the Principal Adviser having represented to the Commission that: 1. The Principal Adviser is a corporation organized under the laws of the Province of Ontario, with its head office located

in Toronto, Ontario, Canada. The Principal Adviser is registered (i) in each jurisdiction in Canada as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer under the relevant securities legislation of the jurisdiction, and (ii) in Ontario as an investment fund manager under the Securities Act (Ontario) (the OSA). The Principal Adviser is also registered under the CFA as an adviser in the category of commodity trading manager.

2. The Sub-Adviser is a limited liability company organized under the laws of the State of Delaware, United States of

America. The head office of the Sub-Adviser is located in Boston, Massachusetts. 3. The Sub-Adviser and the Principal Adviser are affiliates; for this purpose, an “affiliate” means any entity that is

controlled by The Bank of New York Mellon Corporation or other ultimate parent company of the Principal Adviser, as the case may be and “control” and any derivation thereof, means the possession, directly or indirectly, of the power to direct or significantly influence the management and policies/business or affairs of an entity whether through ownership of voting securities or otherwise.


June 25, 2015

(2015), 38 OSCB 5748

4. The Sub-Adviser is currently registered as an investment adviser with the U.S. Securities and Exchange Commission (the SEC) and is a registered commodity trading adviser with the U.S. Commodity Futures Trading Commission (the CFTC).

5. The Sub-Adviser is registered in a category of registration, or operates under an exemption from registration, under the

commodities futures or other applicable legislation of the United States, that permits it to carry on the activities in that jurisdiction that registration as an adviser under the CFA would permit it to carry on in Ontario. As such, it is authorized and permitted to carry on the Sub-Advisory Services.

6. The Sub-Adviser engages in the business of an adviser in respect of Contracts in the United States. 7. The Sub-Adviser is not registered in any capacity under the CFA or the OSA. The Sub-Adviser acts in reliance on the

exemption from the requirement to register as an adviser under the OSA available to it pursuant to section 8.26.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103).

8. The Principal Adviser and the Sub-Adviser are not in default of securities legislation, commodity futures legislation or


investment funds, the securities of which are qualified by prospectus for distribution to the public in Ontario and the other provinces and territories of Canada (the Investment Funds); (ii) pooled funds, the securities of which are sold on a private placement basis in Ontario and certain other provinces and territories of Canada pursuant to prospectus exemptions contained in National Instrument 45-106 Prospectus and Registration Exemptions (the Pooled Funds); (iii) clients who have entered into investment management agreements with the Principal Adviser to establish managed accounts (the Managed Account Clients); and (iv) other Investment Funds, Pooled Funds and Managed Account Clients that may be established or retained in the future and in respect of which the Principal Adviser engages the Sub-Adviser to provide portfolio advisory services (the Future Clients) (each of the Investment Funds, Pooled Funds, Managed Account Clients and Future Clients being referred to individually as a Client and collectively as the Clients).



and Contracts, the Principal Adviser, pursuant to a written agreement made between the Principal Adviser and the Sub-Adviser, has retained the Sub-Adviser to act as a sub-adviser to the Principal Adviser in respect of securities and Contracts in which the Sub-Adviser has experience and expertise by exercising discretionary authority on behalf of the Principal Adviser, in respect of all or a portion of the assets of the investment portfolio of the respective Client, including discretionary authority to buy or sell Contracts for the Client (the Sub-Advisory Services), provided that: (a) in each case, the Contracts must be cleared through an “acceptable clearing corporation” (as defined in




13. By providing the Sub-Advisory Services, the Sub-Adviser will be engaging in, or holding itself out as engaging in, the

business of advising others in respect of Contracts and, in the absence of being granted the requested relief, would be required to register as an adviser under the CFA.



15. The relationship among the Principal Adviser, the Sub-Adviser and any Client is consistent with the requirements of

section 8.26.1 of NI 31-103. 16. The Sub-Adviser will only provide the Sub-Advisory Services as long as the Principal Adviser is, and remains,

registered under the CFA as an adviser in the category of commodity trading manager.


June 25, 2015

(2015), 38 OSCB 5749

17. As would be required under section 8.26.1 of NI 31-103: (a) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; and (b) the Principal Adviser has entered into a written contract with each Client, agreeing to be responsible for any

loss that arises out of the failure of the Sub-Adviser:




18. The written agreement between the Principal Adviser and the Sub-Adviser sets out the obligations and duties of each party in connection with the Sub-Advisory Services and permits the Principal Adviser to exercise the degree of supervision and control it is required to exercise over the Sub-Adviser in respect of the Sub-Advisory Services.



Investment Fund or a Pooled Fund and for which the Principal Adviser engages the Sub-Adviser to provide the Sub-Advisory Services will include the following disclosure (the Required Disclosure): (a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-

Adviser to meet the Assumed Obligations; and (b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or any of its

Representatives) because the Sub-Adviser is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.



22. Each Client that is a Managed Account Client for which the Principal Adviser engages the Sub-Adviser to provide the

Sub-Advisory Services will receive, or has received, the Required Disclosure in writing prior to the purchasing of any Contracts for such Client.

23. The Principal Adviser and the Sub-Adviser obtained substantially similar relief in Re: BNY Mellon Asset Management

Canada Ltd. and Standish Mellon Asset Management Company LLC dated December 20, 2013 (the Previous Order), pursuant to which the Sub-Adviser provided Sub-Advisory Services to the Principal Adviser in respect of the Clients.

24. The repeal of section 7.3 of OSC Rule 35-502 Non-Resident Advisers triggered the revocation of the Previous Order. AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested; IT IS ORDERED, pursuant to section 80 of the CFA, that the Sub-Adviser and its Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as sub-adviser to the Principal Adviser in respect of the Sub-Advisory Services provided that at the relevant time that such activities are engaged in:




which its head office or principal place of business is located;


June 25, 2015

(2015), 38 OSCB 5750

(e) the obligations and duties of the Sub-Adviser are set out in a written agreement with the Principal Adviser; (f) the Principal Adviser has entered into a written agreement with the Clients, agreeing to be responsible for any

loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations; (g) the Offering Document of each Client that is an Investment Fund or Pooled Fund and for which the Principal

Adviser engages the Sub-Adviser to provide the Sub-Advisory Services will include the Required Disclosure; (h) prior to purchasing any securities of one or more of the Clients that are Investment Funds or Pooled Funds


(i) each Client that is a Managed Account Client for which the Principal Adviser engages the Sub-Adviser to



(a) six months, or such other transition period as provided by operation of law, after the effective date of the

repeal of the CFA; (b) six months, or such other transition period as provided by operation of law, after the coming into force of any





June 25, 2015

(2015), 38 OSCB 5751

2.2.9 1415409 Ontario Inc. et al. – ss. 127, 127.1



AND

IN THE MATTER OF 1415409 ONTARIO INC., TITLE ONE CLOSING INC.,

RAVINDRA DAVE, CHANDRAMATTIE DAVE, and AMETRA DAVE

ORDER (Sections 127 and 127.1 of the Securities Act)

WHEREAS: 1. On March 17, 2015, the Ontario Securities Commission (the “Commission”) issued a Notice of Hearing (the “Notice of

Hearing”) pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990 c.S.5, as amended (the “Act”) in connection with a Statement of Allegations filed by Staff of the Commission (“Staff”) on March 17, 2015 with respect to Chandramattie Dave (“Chandramattie”), Ravindra Dave (“Ravindra”), Ametra Dave (“Ametra”), 1415409 Ontario Inc., and Title One Closing Inc. (collectively, the “Respondents”);

2. The Notice of Hearing set April 15, 2015, as the hearing date in this matter; 3. The First Appearance in this matter was held on April 15, 2015, and Staff and some of the Respondents appeared; 4. On April 15, 2015, the Commission ordered that:

a. Staff shall provide disclosure to the Respondents by May 15, 2015, of documents and things in the

possession or control of Staff that are relevant to the hearing in this matter; b. The First Appearance in this matter be continued on June 17, 2015, at 10:00 a.m. for the purpose of providing

a status update with respect to service; and c. The Second Appearance in this matter be held on August 19, 2015, at 10:00 a.m.

5. On May 30, 2015, Staff provided disclosure of documents and things in the possession or control of Staff that are relevant to the hearing in this matter to Chandramattie, Ravindra, 1415409 Ontario Inc., and Title one Closing Inc.;

6. The First Appearance in this matter was continued on June 17, 2015 at 3:30 p.m. and Staff and some of the

Respondents appeared and made submissions, including with respect to the timing of disclosure; 7. Staff requested an adjournment of the hearing of Staff’s application, filed on June 12, 2015, seeking an order for

substituted service with respect to Ametra; and 8. The Commission is of the opinion that it is in the public interest to make this order. IT IS ORDERED that: 1. The hearing be adjourned until July 16, 2015, at 1:00 p.m. DATED at Toronto, this 17th day of June, 2015. “Mary Condon”


June 25, 2015

(2015), 38 OSCB 5752

2.2.10 Good Mining Exploration Inc. – s. 127(1)



AND


ORDER

(Paragraph 127(1))

WHEREAS it appears to the Ontario Securities Commission (the “Commission”) that: 1. GOOD Mining Exploration Inc. (the “Mining Issuer”) is a mining company and an issuer in Ontario but not a reporting

issuer or an issuer whose securities trade on a recognized exchange; 2. The Mining Issuer failed to file a technical report prepared by an independent qualified person, as such term is defined

in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), with respect to certain mineral resource estimates that the Mining Issuer made available to the public by posting them on its website beginning on November 5, 2014 and other mineral estimates made available on November 18, December 8 and 22, 2014 and May 5 and 12, 2015 as required by subsection 4.2(5)(a)(iii) and sections 5.1 and 5.3 of NI 43-101 (the “Default”);

3. On June 19, 2015, the Commission issued a Notice of Hearing (the “NOH”) which provided that, if the Default

continues, a hearing will be held pursuant to section 127 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”) to consider whether an order should be made under paragraph 2 of subsection 127(1) of the Act that all trading in the securities of the Mining Issuer and any trading in any securities or derivatives by the Mining Issuer, whether direct or indirect, cease permanently (the “Cease Trade Order”);

4. The NOH also gave written notice that, if the Mining Issuer notifies Staff of the Commission (“Staff”) that the Mining

Issuer intends to be present at the hearing referred to above (the “Hearing”) and fails to attend, the Hearing may proceed without that party and such party will not receive further notice of the proceeding;

5. The NOH further gave notice that Staff was seeking to proceed with the Hearing in writing pursuant to Rule 11 of the

Commission’s Rules of Procedure; 6. On June 22, 2015, the Hearing was held in writing before the Commission on the written consent of the Mining Issuer; 7. The Commission considered the evidence of Staff and the written consent of the Mining Issuer to the Cease Trade

Order; 8. By Authorization Order made April 21, 2015, pursuant to subsection 3.5(3) of the Act, each of Howard I. Wetston,

Monica Kowal, James D. Carnwath, Mary G. Condon, Edward P. Kerwin, Alan J. Lenczner, Timothy Moseley, and Christopher Portner, acting alone, is authorized to make orders under section 127 of the Act; and

9. The Commission is of the opinion that it is in the public interest to make this order. IT IS ORDERED that, pursuant to paragraph 2 of subsection 127(1) of the Act that, effective immediately: 1. All trading in the securities of the Mining Issuer, whether direct or indirect, shall cease unless this order is varied or

revoked on application of a person or company affected by the decision; and 2. All trading in securities or derivatives by the Mining Issuer, whether direct or indirect, shall cease unless this order is

varied or revoked on application of a person or company affected by the decision. DATED at Toronto, Ontario this 22nd day of June, 2015. “Christopher Portner”


June 25, 2015

(2015), 38 OSCB 5753

2.2.11 Lucy Marie Pariak-Lukic – ss. 8(3), 21.7



AND

IN THE MATTER OF LUCY MARIE PARIAK-LUKIC

AND

IN THE MATTER OF

A HEARING AND REVIEW OF DECISIONS OF A HEARING PANEL OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA

DATED JANUARY 2, 2014 AND MARCH 6, 2014

ORDER (Section 21.7 and Subsection 8(3) of the Securities Act)

WHEREAS: 1. On April 9, 2014, the Investment Industry Regulatory Organization of Canada (“IIROC”) filed with the Ontario Securities

Commission (the “Commission”) a notice of application (the “Application”) pursuant to section 21.7 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”) for a hearing and review of the decisions of a hearing panel (the “Hearing Panel”) of IIROC dated January 2, 2014 and March 6, 2014;

2. The Application was heard on January 15, 2015; 3. The Commission issued its Reasons and Decision on the Application on June 22, 2015; and 4. The Commission has concluded that it is in the public interest to make this order. IT IS ORDERED THAT: Lucy Marie Pariak-Lukic shall be suspended for two years from approval by, or registration with, IIROC in all categories anywhere in the industry, commencing 14 days after the date of this order. DATED at Toronto this 22nd day of June, 2015. “Christopher Portner”


June 25, 2015

(2015), 38 OSCB 5754


June 25, 2015

(2015), 38 OSCB 5755

Chapter 3

Reasons: Decisions, Orders and Rulings 3.1 OSC Decisions, Orders and Rulings 3.1.1 Lucy Marie Pariak-Lukic – ss. 8(3), 27.1



AND

IN THE MATTER OF LUCY MARIE PARIAK-LUKIC

AND

IN THE MATTER OF

A HEARING AND REVIEW OF A DECISION OF A PANEL OF THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA,

DATED JANUARY 2, 2014 AND MARCH 6, 2014

REASONS AND DECISION (Section 27.1 and Subsection 8(3) of the Act)

Hearing: January 15, 2015

Decision: June 22, 2015

Panel: Christopher Portner – Commissioner

Counsel: Alexandra Clark Rob DelFrate

– For Staff of the Investment Industry Regulatory Organization

Kevin Richard – For the Respondent, Lucy Marie Pariak-Lukic

Keir Wilmut – For Staff of the Ontario Securities Commission

TABLE OF CONTENTS

I. Background

A. Introduction B. The Application

II. The Issues III. Positions of the Parties

A. IIROC Staff 1. Principle of General Deterrence 2. Overlooked Material Evidence 3. Personal Benefit to Lukic 4. Attribution of Losses to Lukic 5. Trauma Suffered by Lukic 6. Overly Restrictive Approach to the Role of Suspensions 7. Sanctions Imposed Inconsistent with Decisions of Other Canadian Securities Regulators 8. Sanctions Imposed Inconsistent with the Public Interest 9. Costs

Reasons: Decisions, Orders and Rulings

June 25, 2015

(2015), 38 OSCB 5756

B. Lukic 1. Principle of General Deterrence 2. Overlooked Material Evidence 3. Personal Benefit to Lukic 4. Attribution of Losses to Lukic 5. Trauma Suffered by Lukic 6. Overly Restrictive Approach to the Role of Suspensions 7. Sanctions Imposed Inconsistent with Decisions of Other Canadian Securities Regulators 8. Sanctions Imposed Inconsistent with the Public Interest 9. Costs

C. OSC Staff IV. Review of Substantive Issues Raised by the Application

A. Jurisdiction to Intervene B. Standard of Review and Grounds for Intervention

V. Analysis

1. Overlooked Material Evidence 2. Personal Benefit to Lukic 3. Attribution of Losses to Lukic 4. Trauma Suffered by Lukic 5. Appropriate Sanctions 6. Costs

VI. Conclusion

REASONS AND DECISION I. BACKGROUND A. Introduction [1] On January 15, 2015, the Ontario Securities Commission (the “Commission”) held a hearing to consider an

application by Staff of the Investment Industry Regulatory Organization of Canada (“IIROC Staff”) dated April 9, 2014 (the “Application”) under section 27.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”) for a hearing and review of the decision on the merits of a hearing panel (the “Panel”) of the Investment Industry Regulatory Organization of Canada (“IIROC”) dated January 2, 2014, In the Matter of Lucy Marie Pariak-Lukic, 2014 IIROC 01 (the “Merits Decision”) and the Panel’s decision on sanctions dated March 6, 2014, In the matter of Lucy Marie Pariak-Lukic, 2014 IIROC 11 (the “Sanctions Decision”). The Merits Decision was issued by the Panel following the conclusion of the hearing on the merits on December 11, 2013 (the “Merits Hearing”) and the Sanctions Decision was issued by the Panel following the hearing relating to sanctions which was held on February 20, 2014 (the “Sanctions Hearing”).

[2] In the Merits Decision, the Panel stated that the Respondent, Lucy Marie Pariak-Lukic (“Lukic”), was a registered

representative with yourCFO Advisory Group Inc. Lukic advised clients regarding specific investments and also acted as a financial planner, advising clients with respect to appropriate asset-mix allocations, the use of leverage and other wealth-management and investment strategies relevant to a broad range of assets.

[3] Lukic made recommendations to certain clients about investment opportunities in second mortgages through Lakepoint

Mortgage Investment Fund 1 Inc. (“Lakepoint”), a single purpose private company established to make loans to Trinity Diversified North America Limited (“Trinity”). Trinity was an unrelated private company which used the proceeds of the loans from Lakepoint to invest in second mortgages on residential properties in the Toronto area.

[4] The owner and promoter of Lakepoint was Lukic’s husband, which fact and his remuneration were evidently disclosed

to Lukic’s clients. Lukic, her husband and her clients invested a total of approximately $3.0 million in Lakepoint. [5] In or around November 2010, Trinity stopped making distributions to Lakepoint and Lakepoint’s investors were advised

that there would be no further payments. It is considered unlikely that Lukic and her husband and clients will recover their respective investments.

[6] In the Notice of Hearing issued by IIROC on February 6, 2013 (the “Notice of Hearing”), IIROC Staff alleged that Lukic

had, between 2006 and 2007, recommended and/or facilitated off-book investments for clients:


June 25, 2015

(2015), 38 OSCB 5757

(a) Without the knowledge or approval of her employer firm; (b) Without fully disclosing a conflict of interest to her clients; and (c) Without ensuring that a prospectus had been filed for the investment, or that the distribution properly qualified

for a prospectus exemption; contrary to IDA1 by-law 29.1.

[7] IDA by-law 29.12 states that registered representatives, such as Lukic, “(i) shall observe high standards of ethics and

conduct in the transaction of their business, (ii) shall not engage in any business conduct or practice which is unbecoming or detrimental to the public interest, and (iii) shall be of such character and business repute and have such experience and training as is consistent with the standards described in clauses (i) and (ii) or as may be prescribed by the Board of Directors.”

[8] In the Merits Decision, the Panel determined that Lukic “did make recommendations to her clients concerning their

investments in Lakepoint; that she did not make reasonable inquiries to satisfy herself that the issue of the securities of Lakepoint to the clients was exempt from prospectus requirements under securities laws; and that this constituted conduct unbecoming and not in the public interest contrary to by-law 29.1.” (Merits Decision at para. 11.)

[9] In the Sanctions Decision, the Panel ordered that Lukic:

(a) Pay a fine of $50,000 to IIROC; (b) Be subject to close supervision by her employer for a period of six months; (c) Re-write and pass the Canadian Securities Course and the Conduct and Practices Handbook examinations

within one year; and (d) Pay $45,000 to IIROC in partial payment of IIROC’s costs.

[10] IIROC Staff requests that the Commission make an order:

(a) Imposing a two year suspension on the approval of Lukic with IIROC in addition to the sanctions imposed on her by the Panel; or

(b) Alternatively, remitting the question of the appropriate sanctions in this matter to the Panel for reconsideration

in light of the Commission’s decision. B. The Application [11] The Application is based on the following grounds:

(a) The Panel erred in law and proceeded on an incorrect principle by imposing a penalty that was unfit and

inappropriate in all of the circumstances and which failed to place sufficient weight on the principle of general deterrence;

(b) The Panel erred in law, proceeded on an incorrect principle and overlooked material evidence by adopting an

overly restrictive approach to the facts that should be considered in determining the appropriate penalty; (c) The Panel erred in law and proceeded on an incorrect principle in holding that Lukic derived no personal

benefit from the investments; (d) The Panel erred in law, proceeded on an incorrect principle and overlooked material evidence by failing to

attribute all of the losses suffered by Lukic’s clients to Lukic’s recommendation to invest; (e) The Panel erred in law and proceeded on an incorrect principle by considering the “trauma” suffered by Lukic

due to her participation in the IIROC hearing as a factor to be weighed in assessing sanctions;

1 The Investment Dealers Association of Canada , one of IRROC’s predecessor organizations. 2 Now IIROC Dealer Member Rule 29.1.


June 25, 2015

(2015), 38 OSCB 5758

(f) The Panel erred in law and proceeded on an incorrect principle by adopting a restrictive approach to the role of suspensions in determining appropriate disciplinary sanctions, which approach is inconsistent with the public interest;

(g) The Panel’s failure to impose a suspension on Lukic’s registration with IIROC is inconsistent with the

approach of other Ontario securities regulatory bodies, including the Commission, to the facilitation of off-book investments and to participation in the illegal distribution of securities; and

(h) The Panel’s failure to impose a suspension on Lukic’s registration with IIROC is inconsistent with the public

interest in light of the seriousness of her misconduct.

[12] Although the Application states that it is also made in respect of the Merits Decision, IIROC Staff confirmed in oral submissions that it was not seeking a review of the outcome of the Merits Decision on which IIROC Staff was successful although it takes issue with some of the comments and findings in the Merits Decision. An appeal lies from the Merits Decision and not from the reasons given for the Merits Decision (Canadian Express Ltd. v. Blair (1991), 6 O.R. 3(d) 212 (Div. Ct.)). IIROC Staff’s submissions, both in writing and orally, focussed on its position that the Panel erred in the Sanctions Decision because the Panel did not impose a suspension on Lukic.

[13] In addition to the issues raised by the Application, Lukic requests that the Commission reduce the amount of costs that

the Panel ordered her to pay (see paragraph [9](d) above). II. THE ISSUES [14] In considering the Application, I will address the following issues:

(a) The Commission’s jurisdiction to intervene in this matter; (b) The appropriate standard of review under section 21.7 of the Act; (c) Whether IIROC Staff has established any of the grounds on which the Commission may intervene in the

Sanctions Decision; and (d) If there are grounds to intervene in the Sanctions Decision, what the appropriate disposition of the matter by

the Commission should be in the circumstances. III. POSITIONS OF THE PARTIES A. IIROC Staff 1. Principle of General Deterrence [15] IIROC Staff submits that the Panel erred in law and proceeded on an incorrect principle because without a period of

suspension, the sanctions imposed by the Panel do not provide a sufficient general deterrent which should have been the Panel’s primary concern. The Respondent’s conduct was serious and had the potential to cause significant harm to both her clients and to the integrity of the markets generally. In IIROC Staff’s submission, a suspension is required to deter others from engaging in similar misconduct.

[16] I IROC Staff also submits that, for a penalty to have an appropriate general deterrent effect, it must be in line with

industry expectations and refers to Mills (Re), [2001] I.D.A.C.D. No 7 (“Mills”) in which a hearing panel of the IDA stated:

Industry expectations and understandings are particularly relevant to general deterrence. If a penalty is less than industry understandings would lead its members to expect for the conduct under consideration, it may undermine the goals of the Association’s disciplinary process; similarly, excessive penalties may reduce respect for the process and concomitantly diminish its deterrent effect. Thus the responsibility of the District Council in a penalty hearing is to determine a penalty appropriate to the conduct and respondent before it, reflecting that its primary purpose is prevention, rather than punishment. (Mills, supra at para. 6.)


June 25, 2015

(2015), 38 OSCB 5759

2. Overlooked Material Evidence [17] IIROC Staff submits that the Panel erred in law, proceeded on an incorrect principle and overlooked material evidence

because it failed to consider the following factors which IIROC Staff submits are aggravating factors that favour the imposition of a suspension, namely (i) the risks associated with the Lakepoint investment; (ii) the suitability of the Lakepoint investment for Lukic’s clients; and (iii) the level of due diligence that Lukic conducted with respect to both Lakepoint and Trinity. IIROC Staff refers to Guideline 3.10 of the IIROC Dealer Member Disciplinary Sanction Guidelines dated March 2009 (the “Sanction Guidelines”) which relates to outside business activities and states that suitability of the outside business activity if involving securities is one of the considerations in determining sanctions and that recommended sanctions include a “[p]eriod of suspension (in most egregious cases involving large value high risk off-book distributions).”

[18] IIROC Staff also submits that Lukic’s clients’ investments in Lakepoint consisted of illiquid common shares of a

company which did not trade on a public exchange, that Lakepoint’s only asset was an unsecured promissory note from Trinity and that the Lakepoint investment was clearly high risk in nature, and that it was open to the Panel to consider those facts in connection with the Sanctions Decision.

3. Personal Benefit to Lukic [19] IIROC Staff submits that the Panel erred in law and proceeded on an incorrect principle by not considering the fees

received by Lukic’s husband (who was the owner, promoter and a director of Lakepoint) to be a personal benefit to Lukic. Lukic’s husband earned a management fee of 1% per annum for managing Lakepoint, which fee exceeded $99,000 for the period from 2006 to 2010.

[20] IIROC Staff submits that the management fees earned by Lukic’s husband was a personal benefit to Lukic as she led

no evidence to the contrary and that, as set out in the Sanction Guidelines, the extent to which a respondent is enriched by the misconduct is a relevant consideration in determining an appropriate penalty.

4. Attribution of Losses to Lukic [21] IIROC Staff submits that the Panel erred in law, proceeded on an incorrect principle and overlooked material evidence

by failing to attribute all of the money lost by Lukic’s clients in the Lakepoint investment to her misconduct. Although the Panel appeared to consider this factor, it failed to attribute all of the losses to Lukic’s conduct stating that:

… although we have some difficulty linking the loss suffered by Ms. Lukic’s clients to the specific and narrow allegation in the count, we determine that the misconduct of Ms. Lukic was likely a contributing factor to the loss of the original investment in Lakepoint and that Ms. Lukic’s clients will likely suffer from the insolvency of Trinity. The harm has been substantial. [Emphasis added.] (Sanctions Decision, at para. 43.)

[22] IIROC Staff submits that, if the full extent of the losses had been considered by the Panel in determining the penalty, a period of suspension would have been imposed on Lukic’s registration status.

5. Trauma Suffered by Lukic [23] The Panel expressed the view in the Sanctions Decision that it was unlikely that Lukic’s misconduct would be repeated

in view of the trauma that the Panel believed the proceeding had on Lukick and the sanctions imposed by the Panel (Sanctions Decision, at para. 58).

[24] IIROC Staff submits that there was no evidence of the trauma suffered by Lukic, and that it was not an appropriate

factor to consider at the sanctions phase of the proceeding. In the latter regard, IIROC Staff refers to Re Johnson, 2007 LNBCSC 345 at para. 41 in which the British Columbia Securities Commission (the “B.C. Commission”) held that the embarrassment and costs borne by the respondent in connection with a hearing were not mitigating factors in the determination of an appropriate sanction.

6. Overly Restrictive Approach to the Role of Suspensions [25] IIROC Staff submits that the Panel erred in law and proceeded on an incorrect principle by giving insufficient

recognition to the harm that resulted from Lukic’s clients’ participation in an illegal distribution of securities and in the sale of securities outside Lukic’s firm. In the view of IIROC Staff, the Panel’s insufficient recognition of these harms is reflected in the following finding by the Panel:


June 25, 2015

(2015), 38 OSCB 5760

The misconduct of Ms Lukic was not as a result of her dishonesty, or acting in bad faith, or any other kind of moral turpitude. It was not without regard for, or with reckless disregard of, her understanding of the best interests of her clients. (Sanctions Decision, at para 56.)

7. Sanctions Imposed Inconsistent with Decisions of Other Canadian Securities Regulators [26] IIROC Staff submits that the Panel erred in law and principle and the Sanctions Decision is inconsistent with the public

interest because the Panel’s decision to not impose a suspension is inconsistent with decisions of other IIROC hearing panels, decisions of the Mutual Fund Dealers Association (“MFDA”) and decisions of the Commission in which suspensions were imposed for similar conduct.

8. Sanctions Imposed Inconsistent with the Public Interest [27] IIROC Staff submits that the sale of securities outside a dealer member constitutes a significant breach of the IIROC

Dealer Member Rules and refers in this regard to the following statement by an IDA hearing panel in Thomson (Re), [2004] I.D.A.C.D. No. 49 (“Thomson”):

When a transaction is done off the books, the Association member loses the ability to supervise the transaction and to take responsibility for the suitability of the transaction for the investor. (Thomson, supra at para. 60.)

[28] IIROC Staff also submits that the Panel’s approach was inconsistent with the public interest because it failed to place sufficient weight on the seriousness of Lukic’s involvement with an illegal distribution of securities which the Commission has consistently held constitutes serious misconduct as it denies Ontario investors the protection afforded by the Act.

9. Costs [29] IIROC Staff submits that there is no precedent that would support Lukic’s submission that the Commission should

reduce the costs award against Lukic to reflect her costs of responding to the Application. The costs award made by the Panel does not form part of the Application.

B. Lukic 1. Principle of General Deterrence [30] Lukic submits that the Panel’s approach to suspensions was appropriate, and that IIROC Staff is incorrect in its

submission that the only way to achieve general deterrence in the circumstances is through the imposition of a suspension.

[31] Lukic also submits that IIROC Staff failed to acknowledge the evidence of Mario Frankovich, the Chief Executive

Officer of Burgeonvest-Bick Securities Limited (“Frankovich”), which employed Lukic as a registered representative at the time of the Sanctions Hearing. Frankovich testified that the industry views suspension as a tool to deal with dishonesty and fines and other sanctions are a way to deal with honest people who make mistakes.

2. Overlooked Material Evidence [32] Lukic submits that it is unfair for IIROC Staff to suggest that the Panel erred because they failed to consider (i) the risks

associated with the Lakepoint investment; (ii) the suitability of the investment for Lukic’s clients; and (iii) the level of due diligence that Lukic conducted with respect to both Lakepoint and Trinity.

[33] Lukic further submits that no evidence was led by IIROC Staff at the Sanctions Hearing with respect to the issues

described in paragraph [32] above. In addition, IIROC Staff did not advise the Panel that they should consider these issues when questioned by the Panel during the Sanctions Hearing about whether the failure by Lukic to conduct due diligence on the underlying investment product was being asserted by IIROC Staff.


June 25, 2015

(2015), 38 OSCB 5761

3. Personal Benefit to Lukic [34] Lukic submits that it was a key observation of the Panel that Lukic received no personal benefit from her clients’

investments in Lakepoint and that the Commission will not substitute its own view of the evidence for that taken by a Self-Regulatory Organization just because the Commission might have reached a different conclusion.

4. Attribution of Losses to Lukic [35] Lukic submits that the Panel considered the issue of losses suffered by Lukic’s clients and made a finding that Lukic’s

misconduct was likely a contributing factor and that IIROC Staff has failed to show how this finding amounted to the Panel having overlooked material evidence or to an error in law or principle.

5. Trauma Suffered by Lukic [36] Lukic submits that the Panel appropriately considered the impact, trauma and anxiety caused by the IIROC proceeding

against her and the spectre of a suspension hanging over her head for nearly two years. Lukic relies in this regard on the decision of the B.C. Commission in Re Steinhoff, 2014 BCSECCOM 23, the second of two cases relating to the same matter (“Steinhoff No. 2”)3, in which the B.C. Commission stated:

¶33 In our opinion, the penalty we are imposing is appropriate in the circumstances and will adequately deter Steinhoff and other registrants from failing to meet suitability requirements. ¶34 It is worth noting that the proceedings in this matter covered nearly four years and cost Steinhoff thousands of dollars in legal fees. For a year and a half she has lived with the anxiety associated with a possible career-ending suspension. This is an experience Steinhoff will surely strive not to repeat. (Steinhoff No. 2, supra at paras. 33 and 34.)

[37] Lukic also relies on General Principle 3.5 of the Sanction Guidelines which includes the following statement:

A first conviction may be seen as a measure of punishment in and of itself, given the attendant stigma attached to the process of charging, finding of guilt, and imposition of sanction.

6. Overly Restrictive Approach to the Role of Suspensions [38] Lukic submits that, based on the findings of fact by the Panel and the decisions in Steinhoff No. 2 and Re Hazen,

[2006] IDACD No. 20 (“Hazen”)4, the Panel’s approach to the role of suspensions was appropriate and consistent with the approach of Canadian Securities Regulators.

7. Sanctions Imposed Inconsistent with Decisions of Other Canadian Securities Regulators [39] Lukic submits that the Commission should accord a high degree of deference to the Panel in its findings of fact. In

Lukic’s submission, the Sanctions Decision is consistent with other IIROC decisions and, as the decisions of the MFDA and the Commission to which IIROC Staff referred were not put to the Panel during the Sanctions Hearing, it is not appropriate to suggest that the Sanctions Decision is inconsistent with those decisions.

8. Sanctions Imposed Inconsistent with the Public Interest [40] Lukic submits that the Panel appropriately considered the protective and preventative purposes of sanctions for

securities violations and that the Panel’s perception of the public interest does not conflict with that of the Commission. [41] Lukic also submits that the Panel acted reasonably and in line with the public interest and referred in this regard to

paragraph 59 of the Sanctions Decision which is set out in paragraph [84] below. 9. Costs [42] Lukic submits that her costs award should be reduced because she has incurred costs responding to IIROC Staff’s

application for a hearing and review, and has had to draw to the Commission’s attention authorities not referred to by IIROC Staff. Lukic submits that a cross-application was not required, because the Commission may, pursuant to subsection 8(3) of the Act, make any order it considers proper.

3 See paragraphs 90 and 91 below for a brief discussion of the case. 4 See paragraph 89 below for a brief discussion of the case.


June 25, 2015

(2015), 38 OSCB 5762

C. OSC Staff [43] Staff of the Commission (“OSC Staff”) made submissions regarding the appropriate standard of review of the

Sanctions Decision and the grounds on which the Commission would intervene in the Sanctions Decision. OSC Staff did not take any position as to whether Lukic had demonstrated that her case meets any of the grounds for intervention.

IV. REVIEW OF SUBSTANTIVE ISSUES RAISED BY THE APPLICATION A. Jurisdiction to Intervene [44] The Commission has the authority to review any direction, decision, order or ruling of a self-regulatory organization

such as IIROC under section 21.7 of the Act which provides as follows: 21.7 (1) Review of Decisions – The Executive Director or a person or company directly affected by, or by the administration of, a direction, decision, order or ruling made under a by-law, rule, regulation, policy, procedure, interpretation or practice of a recognized stock exchange, recognized self-regulatory organization, recognized quotation and trade reporting system or recognized clearing agency may apply to the Commission for a hearing and review of the direction, decision, order or ruling. (2) Procedure – Section 8 applies to the hearing and review of the direction, decision, order or ruling in the same manner as it applies to a hearing and review of a decision of the Director.

[45] Subsection 8(3) of the Act provides that, on a hearing and review, the Commission may confirm the decision under review or make such other decision as the Commission considers proper.

B. Standard of Review and Grounds for Intervention [46] The Commission exercises original jurisdiction similar to conducting a new trial and may admit new evidence in a

hearing and review under section 21.7 of the Act. [47] The grounds on which the Commission will intervene in a decision of a self-regulatory organization were established in

Re Canada Malting Co. (1986), 9 0SCB 3566 (“Canada Malting”). Based on the principles set out in Canada Malting, IIROC Staff must demonstrate that the case fits squarely within at least one of the following grounds before the Commission will intervene in the Sanctions Decision: (a) The Panel proceeded on an incorrect principle; (b) The Panel erred in law; (c) The Panel overlooked material evidence; (d) New and compelling evidence is presented to the Commission that was not before the Panel; or (e) The Panel’s perception of the public interest conflicts with that of the Commission. (Canada Malting, supra at para. 21; Re Hudbay Minerals Inc. (2009), 32 OSCB 3733 (“Hudbay”) at para. 114.)

[48] IIROC Staff submits that the Panel committed the following errors thereby entitling the Commission to intervene based on the test set out in Canada Malting: (a) The Panel proceeded on an incorrect principle; (b) The Panel erred in law; (c) The Panel overlooked material evidence; and (d) The Panel’s perception of the public interest conflicts with that of the Commission.

[49] Although the scope of the Commission’s authority on a hearing and review is well established, in practice the Commission takes a restrained approach to applications under section 21.7 of the Act, and will only substitute its


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decision for that of an IIROC hearing panel in rare circumstances (Re Kasman (2009), 32 OSCB 5729 at para. 43 (“Kasman”); and Hudbay at paras. 103-4, 114).

[50] The Commission recognizes the specialized expertise of an IIROC hearing panel and accords deference to factual

determinations central to the panel’s specialized competence, including matters of sanction (Re Boulieris (2004), 27 OSCB 1597, aff’d (2005), 28 OSCB 5174 (Div. Ct.); McQuillan (Re) (2014), 37 OSCB 8580 (“McQuillan”) at paras. 39-43; Kasman, supra at para. 43).

V. ANALYSIS 1. Overlooked Material Evidence [51] In the Sanctions Decision, the Panel held that it would determine the appropriate sanctions based on the allegations

set out in the Notice of Hearing (see paragraph [6] above) and would not consider the issues of risk, suitability and due diligence because they were not part of the case on the merits. As noted by the Panel:

The allegation against Ms Lukic consist[s] of one count. The count is quite narrow and does not include allegations that the investments in Lakepoint were high risk, or unsuitable for her clients, or that Ms Lukic did not undertake adequate due diligence inquiries as to the risks involved with the investments, or the second mortgages on which they were based, or Trinity, or its promoter. None of these matters were part of the case which Ms Lukic had to meet. Accordingly, we are not prepared to make any unfavorable inferences or conclusions regarding such matters in determining appropriate sanctions. (Sanctions Decision, at para. 10.)

[52] While acknowledging that the foregoing issues were not part of the case against Lukic on the merits, IIROC Staff submits that the Panel should have considered these issues when determining the appropriate sanctions and, by not doing so, the Panel erred in law, proceeded on an incorrect principle and overlooked material evidence. In support of its position, IIROC Staff submits that the Sanction Guidelines include various general considerations that a hearing panel can and should take into account in determining the appropriate sanctions including harm to the client, blameworthiness or the degree of participation, the prior disciplinary record, acceptance of responsibility, credit for cooperation and rehabilitative efforts.

[53] During the Sanctions Hearing, IIROC Staff did not apprise Lukic or the Panel of its intention to argue that the issues of

risk, suitability and due diligence should be considered by the Panel when determining the appropriate sanctions and did not adduce any evidence with respect to these issues. To the contrary, during IIROC Staff’s oral submissions at the Sanctions Hearing, the Panel sought to clarify the allegations against Lukic. Instead of advising the Panel and Lukic that IIROC Staff’s position was that the Panel should consider the issues of risk, suitability and due diligence, IIROC Staff agreed that these issues were not part of the allegations against Lukic (Transcript of Sanctions Hearing held on February 20, 2014, pages 39, line 2, to 42, line 1).

[54] Lukic was entitled to know the case she had to meet and might well have conducted her defence at the Merits Hearing

and at the Sanctions Hearing differently if she had notice of IIROC Staff’s intention to rely on the additional allegations relating to risk, suitability and due diligence in support of the sanctions sought.

[55] Based on the foregoing, I find that the Panel did not overlook material evidence, and did not err in law or proceed on an

incorrect principle by not considering the issues of risk, suitability and due diligence in determining the appropriate sanctions.

2. Personal Benefit to Lukic [56] The Panel found that Lukic received no personal benefit from her clients’ investments in Lakepoint notwithstanding the

fact that her husband received an annual fee equal to 1% of such investments in return for managing Lakepoint. (See also paragraph [19] above.)

[57] IIROC Staff, which did not allege that Lukic received compensation relating to her conduct, submits that the Panel

should have determined that the fee received by Lukic’s husband was a personal benefit to Lukic. IIROC Staff submits that, if the Panel had made that determination, the Panel should have imposed a period of suspension on Lukic. Although the Notice of Hearing alleged that Lukic had not disclosed the conflict of interest arising from her husband’s role in the Lakepoint investment, that allegation was struck on consent of the parties at the commencement of the Merits Hearing.


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[58] IIROC Staff submits that the extent to which a respondent is enriched by misconduct is a relevant consideration in determining the appropriate penalty. I note, however, that even if the matter of enrichment had been alleged, IIROC Staff has not established that a suspension must be imposed when the respondent personally benefits from the misconduct. General Principle 3.4 of the Sanction Guidelines only suggests that it may be appropriate to require disgorgement in cases where the registrant has benefitted financially from the misconduct.

[59] Based on the foregoing, I find that the Panel did not err in law or proceed on an incorrect principle by failing to impose a

suspension on Lukic solely because she may have received a personal benefit from the fee received by her husband for managing Lakepoint.

3. Attribution of Losses to Lukic [60] The Panel found that Lukic and her husband and clients will likely lose their original investments in Lakepoint in the

aggregate amount of $3,000,000 as the result of the insolvency of Trinity (Sanctions Decision, para. 16). [61] The Panel also made the following findings with respect to the losses suffered by Lukic’s clients:

¶42 We are not prepared to speculate what might have happened had Ms Lukic informed her employer firm about the investments and sought its approval, or if Lakepoint had provided to investors prospectus level disclosure about Trinity and Lakepoint and its shares. We are not prepared to speculate what might have happened had someone performed adequate due diligence inquiries about Trinity and its promoter. Nor are we prepared to attribute to specific causes the losses that flow from the insolvency of Trinity. ¶43 However, although we have some difficulty linking the loss suffered by Ms Lukic’s clients to the specific and narrow allegation in the count, we determine that the misconduct of Ms Lukic was likely a contributing factor to the loss of the original investment in Lakepoint and that Ms Lukic’s clients likely will suffer from the insolvency of Trinity. The harm has been substantial. [Emphasis added.] (Sanctions Decision, at paras. 42 and 43.)

[62] General Principle 3.14 of the Sanction Guidelines provides that significant monetary losses are an aggravating factor to be taken into account when determining the appropriate penalty:

The finding of a significant monetary loss by the respondent’s clients or the Dealer Member firm arising out of the respondent’s misconduct can be seen as an aggravating factor to the extent that investing has at its core capital preservation and returns. If that core function is significantly eroded by regulatory misconduct, then it should be taken into account when the appropriate penalty is imposed.

[63] Guidelines 1.5 (breaches of the Act) and 3.10 (Outside Business Activities) of the Sanction Guidelines also identify

client losses as a factor to be considered in determining appropriate sanctions. [64] In the Merits Decision, the Panel summarized Lukic’s advice to her clients with respect to an investment in Lakepoint

as follows:

She advised clients about the anticipated yield, cash flow and security of the investments in Lakepoint. She compared and contrasted Lakepoint to other investment options available to her clients, including REITS and principal protected products, GIC’s and bonds with their low current yields, and her unfavourable views on the stock market at the time. She discussed possible sources of funds for investments in Lakepoint, such as a mortgage on a client’s home, or selling securities held at yourCFO [Advisory Group Inc.]. This went beyond just providing factual information. (Merits Decision, at para. 58.)

[65] Having concluded that Lukic provided advice to her clients with respect to the Lakepoint investment, the Panel then “determined that ‘recommending’ meant giving advice as part of a business activity carried on by an adviser.” (Merits Decision, at para. 63.)


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[66] It is clear from the foregoing analysis by the Panel that Lukic provided advice and recommendations to her clients in connection with their investments in Lakepoint. Of equal importance is the fact that Lukic’s clients trusted and relied on her. As noted by the Panel:

Some of the clients, certainly those in litigation with Ms. Lukic and her husband, maintained that they relied on Ms. Lukic as to whether their investment in Lakepoint was a good investment. All the witnesses took comfort in the fact that Ms. Lukic and her husband had invested in Lakepoint, and that Ms. Lukic and her husband were enthusiastic about investing in Lakepoint. (Merits Decision, at para. 50.)

[67] In my view, the Panel’s finding that Lukic’s misconduct was “likely a contributing factor” to the loss of her clients’ investments in Lakepoint, understates what appears from the evidence to be Lukic’s primary responsibility for advising her clients to leave the relative security of securities that were traded on regulated capital markets and invest in Lakepoint instead. That said, the issue of suitability was not in issue in the proceeding.

[68] Based on the foregoing, I find that the Panel did not err in law or proceed on an incorrect principle by failing to attribute

the loss of the money invested by Lukic’s clients in Lakepoint to her misconduct. 4. Trauma Suffered by Lukic [69] The Panel referred to the effect of the proceeding on Lukic in its analysis of the appropriate sanctions as follows:

We accept that the fine recommended by staff is in the public interest as an appropriate specific deterrent to the respondent and as a general deterrent to others. It sends the message that there will be painful financial consequences to conduct unbecoming, regardless of the absence of dishonesty or bad faith, which will be in addition to the time, trouble, costs and heart-ache to a respondent entailed in an investigation in the hearing with IIROC and other litigation that may flow from not following the rules. (Sanctions Decision, at para. 45.)

[70] The Panel also noted that: In view of the trauma we believe this IIROC regulatory proceeding has had on Ms Lukic, and the sanctions we are imposing, and the fact that if she were to make the same or similar mistake again in the future the consequences next time would likely be a suspension that could effectively end her career in the industry, we believe it is unlikely that her misconduct will be repeated. We believe she will be more cautious and questioning (and consultative with her employer firm) in the future whenever any potential investment activity out of the ordinary and usual course of her business with her employer firm might arise. [Emphasis added.] (Sanctions Decision, at para. 58.)

[71] As noted in paragraph [37] above, Lukic relies on General Principle 3.5 of the Sanction Guidelines which provides that “A first conviction may be seen as a measure of punishment in and of itself, given the attendant stigma attached to the process of charging, finding of guilt, and imposition of sanction.” As submitted by IIROC Staff, there was no evidence that Lukic suffered any trauma which is consistent with the Panel’s belief that the IIROC regulatory proceeding had caused trauma to Lukic.

[72] It should also be noted that General Principle 3.5 of the Sanction Guidelines refers to the attendant stigma attached to

a regulatory proceeding and not trauma. As held by the B.C. Commission, the embarrassment and cost which a respondent incurs in connection with a hearing should not be viewed as mitigating factors in determining an appropriate sanction (Re Johnson, 2007 LNBCSC 345 at para. 41).

[73] In my view, the Panel’s assessment of the effect of the proceeding on Lukic, some of which was speculative on the part

of the Panel, should not have been a factor in the Panel’s determination of the appropriate sanctions to impose on Lukic, particularly in light of both her breaches of the Act, to which I refer below, and the significant losses suffered by her clients.

[74] Based on the foregoing, I find that the Panel’s apparent consideration of the effect of the IIROC regulatory proceeding

on Lukic, particularly in the absence of evidence to that effect, constitutes an error of law.


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5. Appropriate Sanctions [75] The underlying purposes of the Act, which are set out in section 1.1, are to provide protection to investors from unfair,

improper or fraudulent practices, and to foster fair and efficient capital markets and confidence in capital markets. [76] Pursuant to subsection 21.1(1) of the Act, IIROC is recognized by the Commission as a self-regulatory organization.

IIROC’s primary goals, as stated in the Commission’s Recognition Order, are the protection of the investing public and the integrity of the securities markets (In the Matter of Investment Industry Regulatory Organization of Canada (IIROC): Recognition Order, (2008) 31 OSCB 5615 at 5622-5623).

[77] The purpose of the Commission’s public interest jurisdiction, as stated by the Supreme Court of Canada, is to “restrain

future conduct that is likely to be prejudicial to the public interest in fair and efficient capital markets.” The Commission’s role in imposing sanctions “is to protect the public interest by removing from the capital markets those whose past conduct is so abusive as to warrant apprehension of future conduct detrimental to the integrity of the capital markets” (Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132, at para. 43; Re Mithras Management Ltd. (1990), 13 O.S.C.B. 1600).

[78] An IIROC hearing panel’s main concerns in determining appropriate sanctions are protective and preventive, namely:

(a) Protection of the investing public; (b) Protection of IIROC’s membership; (c) Protection of the integrity of IIROC’s process; (d) Protection of the integrity of the securities markets; and (e) Prevention of a repetition of conduct of the type under consideration. (Re Derivative Services Inc., [2000] I.D.A.C.D. No. 26; General Principle 1 of the Sanction Guidelines.)

[79] The Supreme Court of Canada has held that general deterrence is an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventive (Cartaway Resources Corp. (Re), 2004 SCC 26).

[80] As recognized by an IIROC hearing panel in Mills, the adequacy of the sanctions imposed may be assessed in light of

their deterrent effect on others: General deterrence may, however, provide a means of assessing the appropriateness of a penalty. In the course of its deliberations the District Council may consider the adequacy of a penalty in terms of its likely effect on others. Such consideration may indicate that a penalty is too low, or possibly too high, in the circumstances. General deterrence may thus serve as an additional factor assisting a District Counsel to weigh the appropriateness of the penalty under consideration and relate it more closely to industry understandings and expectations. (Mills, supra at para. 9.)

[81] As noted in paragraph [25] above, the Panel concluded that Lukic’s misconduct was not the result of her dishonesty, or acting in bad faith, or any other kind of moral turpitude and was not without regard for, or with reckless disregard of, her understanding of the best interests of her clients. Based on (i) the foregoing considerations; (ii) the trauma that the Panel believed the proceedings had caused Lukic; and (iii) the sanctions that the Panel imposed, the Panel concluded that it was unlikely that Lukic’s misconduct would be repeated.

[82] There are limited references in the Sanctions Decision to the protection of the investing public and to the issues of

specific and general deterrence. Although the Panel referred to the principle of general deterrence, it did not specifically address the need to deter others from conduct similar to Lukic’s and, accordingly, it is not clear what weight, if any, the Panel ascribed to the principle of general deterrence.

[83] The Panel stated its views relating to the appropriateness of a suspension as follows:

¶59 The panel do not believe that it is necessary for the protection of the public interest that Ms Lukic be removed from the capital markets, wholly or partially, or temporarily or permanently. In all the circumstances of this matter, including the sanctions we are imposing, we are not led to


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conclude that Ms Lukic’s conduct in the future may well be detrimental to the integrity of the capital markets. ¶60 The disruption of the career of Ms Lukic in the industry or of the reliance of her clients on her and of their established relationships with her that would result from a significant period of suspension is not necessary or desirable in this case. Consequently, we do not believe that any significant period of suspension is necessary in this case, taking into account the purposes and objectives of sanctions, including specific and general deterrence. ¶61 One of the panel members felt that a suspension for a period of two months would not be inappropriate having consideration to all of the facts, including the failure of Ms. Lukic to understand the nature and requirements of the Lakepoint investments, and the enormity of the clients’ losses. The majority of the panel, however, felt that a short suspension would not really add much to the other sanctions, would be unduly disruptive to Ms Lukic’ clients, and was unnecessary (Sanctions Decision, paras. 59, 60 and 61.)

[84] In support of its submission that the Panel should have imposed a suspension, IIROC Staff referred to two provisions of the Sanction Guidelines with respect to the type of conduct for which Lukic was sanctioned. The first is Guideline 1.5 of the Sanctions Guidelines relating to breaches of the Act and any related provincial or federal legislation which recommends a suspension of between three months and ten years and a permanent ban if the conduct is egregious. The second is Guideline 3.10 relating to outside business activities which recommends a period of suspension for the “most egregious cases involving large value high risk off-book distributions.”

[85] IIROC Staff referred to three decisions of IDA hearing panels which involved similar conduct and in which suspensions

were imposed, namely, Re Thomson, [2004] IDACD No. 49 (“Thomson”), Re Pandelidis, [2005] IDACD No. 16 (“Pandelidis”) and Re Morrison, [2004] IDACD No. 63 (“Morrison”).

[86] Thomson involved the sale of a single unregistered security to 17 investors for a total investment of between

US$252,000 and US$308,000 which, in the case of three of the investors, was also conducted off the books of Thomson’s employer. The IDA hearing panel held that, in trading the security, the respondent breached the Securities Act of British Columbia (Thomson, supra, at paras. 74 and 84). The panel also held “that a registered representative is required to take reasonable steps to ensure that the security he or she is selling has had a reasonable level of due diligence performed on it” and “is required to take reasonable precautions to ensure that any transaction in which he or she is involved is transacted to the benefit of and best interests of his or her client.” (para. 47). If there had not been certain mitigating factors, including the fact that the respondent was operating with the full knowledge and encouragement of his employer and utilized his own resources to recover the investors’ money, the panel would have imposed a ten year suspension (para. 90). In light of the mitigating factors, the panel imposed a seven year suspension commencing on the date the respondent was no longer employed in the industry.

[87] In Pandelidis, the respondent recommended an off-book private placement to a client without ensuring that the

investment complied with the Securities Act of Alberta. In imposing a five year suspension, the IDA hearing panel held that the respondent “had a high responsibility and duty to conduct due diligence on behalf of his clients before recommending the investment to his clients and…failed in this duty”. The panel also cited Thomson, supra, with approval (Pandelidis, supra, at para. 12).

[88] Morrison arose out of the same events as Thomson. The respondent’s conduct involved the sale of a single

unregistered security to five clients for a total investment of US$56,000. The IDA hearing panel was considering a settlement agreement and not imposing sanctions after a contested hearing. Even though the panel was of the view that Morrison played a lesser role than Thomson, the panel was unwilling to approve the original settlement agreement as it did not include a suspension. In the result, the panel amended the settlement agreement with the respondent’s consent to include a one year suspension, which was deemed served by the three years that the respondent had already been under close or strict supervision (Morrison, supra, at paras. 44, 56, 66 and 67).

[89] In Hazen, to which Lukic referred, the respondent recommended that a group of his Ontario clients invest in two private

placements which were available for distribution in the United States through an accredited investor exemption, but were not available for distribution in Ontario. The respondent and his spouse invested $60,000 and the respondent’s clients invested a total of $855,000. The IDA hearing panel, which conducted the hearing pursuant to an Agreed Statement of Facts and Penalty (with the exception of the issue of a period of suspension), found “that the imposition of a suspension, which by necessity causes a disruption in the ability to earn an income, is not required in a case where there has been no deliberate deception or reckless harmful behavior.” (Hazen, supra at page 6.)


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[90] Lukic also referred to the decision of the B.C. Commission in Steinhoff No. 2 which, as noted above, was the second of two decisions relating to the same matter. In the first decision, Re Steinhoff, 2013 BCSECCOM 308 (“Steinhoff No. 1”), the B.C. Commission confirmed an IIROC hearing panel’s findings that Steinhoff failed to meet suitability requirements and set aside the panel’s finding that Steinhoff knowingly made false statements to her employer and the panel’s decision on sanctions. In Steinhoff No. 2, in which the same panel considered the written submissions relating to penalties by the parties to Steinhoff No. 1, the B.C. Commission held that a suspension was not warranted in the circumstances and that Steinhoff’s misconduct could be appropriately addressed through a fine alone (paras. 29 and 31).

[91] Lukic relies, in particular, on the following observations with respect to suspensions made by the B.C. Commission in

Steinhoff No. 1 which, Lukic submits, support the Panel’s decision not to impose a suspension on her: ¶90 Suspension of any length beyond the range of a normal vacation is, for a registered representative, an extremely serious matter. A suspension of one year, what the IIROC panel ordered here, is tantamount to the termination of the registrant’s career. At a minimum, it requires a registrant to build a book from scratch, a process that takes years and enormous effort. That assumes a clean slate. A person in their mid-fifties, like Steinhoff, attempting the task following the expiry of a mandated suspension, even a person with Steinhoff’s apparent energy, is likely to find it impossible to build much more than a shadow of their former career. ¶91 Steinhoff made a serious mistake. Does the public interest demand she lose her career over it? She’s been in the business now for 25 years. She has no previous regulatory sanctions. There is no basis to conclude that she acted dishonestly or for an improper motive, or has ever done so. Although her mistake unquestionably harmed the Ks, there is no evidence that she represents any ongoing threat to her clients, to potential new clients, to the reputation of the securities markets or of IIROC or its members. Although a significant sanction is appropriate given Steinhoff’s contravention of the suitability requirements, the parties should address whether a suspension in these circumstances would be appropriate. (Steinhoff No.1, supra at paras. 90 and 91.)

[92] There are significant differences between the facts and findings in the Steinhoff matter and those relating to Lukic. The Steinhoff matter arose from the failure of Steinhoff to meet the suitability requirements of a couple in their 30s who had just sold their house for $125,000 and wanted to invest the proceeds of sale on a short-term basis. Lukic, on the other hand, was found by the Panel to have “failed to take reasonable steps to ensure that a prospectus had been filed for the investments in Lakepoint by [her] clients or that the distribution of securities to the clients had been properly qualified for a prospectus exemption.” (Merits Decision, para. 82.) Lukic was also found to have made recommendations to her clients concerning their investments in Lakepoint which, together with her aforementioned due diligence failure, “constituted conduct unbecoming and not in the public interest contrary to by-law 29.1.” (Sanctions Decision, para. 3.) It should also be noted that the losses incurred by Lukic and her husband and clients ($3.0 million) substantially exceeded the losses suffered by the investors in Steinhoff No. 1 ($125,000) and Hazen ($915,000).

[93] It is quite evident that the B.C. Commission in Steinhoff No. 2 and the IDA hearing panel in Hazen were strongly

influenced in coming to their respective decisions that suspensions were not warranted by two considerations. First, the respondent had not “acted dishonestly or for an improper motive” (Steinhoff No. 1) or that “there has been no deliberate deception or reckless harmful behavior” on the part of the respondent (Hazen). Second, that the effect of a lengthy suspension would risk the end of Steinhoff’s career (Steinhoff No. 2) or cause a disruption in the respondent’s ability to earn an income (Hazen).

[94] The Panel distinguished Thomson on the basis that:

… an IDA panel hearing panel found that Mr. Thomson distributed securities to clients without a receipt for a prospectus having been issued, distributed securities off the books of his firm, and recommended the purchase of the securities without using due diligence to ensure that the securities were a legitimate investment. The allegations in that case were wider than the allegations in the matter before us. (Sanctions Decision, para. 51.)

[95] In my view, the facts in Thomson are quite similar to those relating to Lukic although, in its determination of the appropriate sanctions, the panel in Thomson emphasized the respondent’s breach of the Securities Act of British Columbia (paras. 74 to 75 and 84), and not the respondent’s failure to conduct due diligence with respect to the merits of the investment, which was not alleged against Lukic. Further, with the exception of Hazen, Thomson and the other


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authorities that have been cited recognize that the seriousness of the legislative breach is a significant factor to be considered in the determination of the appropriate sanctions.

[96] The Panel did not address the seriousness of Lukic’s participation in an illegal distribution of securities contrary to the

Act and, instead, found that her conduct “was a result of an inexcusable, and to [the Panel], an incomprehensible lack of understanding” that the investments in Lakepoint were securities (Sanctions Decision, para. 57). The Panel also made only passing reference to the fact that Lukic’s misconduct took place over a two year period and was not an isolated occurrence.

[97] Similarly, in its considerations relating to the imposition of a fine, the Panel referred to the need to deter others from

“conduct unbecoming”, i.e., a contravention of by-law 29.1 which applies to a wide variety of conduct, and did not address the specific nature of Lukic’s conduct (Sanctions Decision, para. 45).

[98] The Panel was clearly influenced by the decisions in Steinhoff No. 2 and Hazen in concluding that the suspension of

Lukic was not warranted as her misconduct was not the result of her dishonesty or acting in bad faith or any other kind of moral turpitude and a significant period of suspension would disrupt her career and the reliance of her clients on her. (Sanctions Decision, paras. 56 and 60.)

[99] The Panel appears to have been influenced by the testimony of Frankovitch, the Chief Executive Officer of Lukic’s

employer at the time of the Sanctions Hearing, who wrote a letter of support for Lukic and also testified at the Sanctions Hearing. Frankovitch stated his belief that the industry views suspension as a tool to deal with dishonesty, and implied that he would not retain Lukic if she had been suspended (Sanctions Decision, at paras. 35 to 38). Frankovitch’s belief with respect to the industry’s views with respect to the circumstances that would lead to the imposition of suspensions is not persuasive, cannot be taken as representative and, in any event, would be subject to IIROC’s primary goals of protecting the investing public and the integrity of the securities markets.

[100] In Re Sterling Grace (2014), 37 OSCB at para. 164, the Commission disagreed with the position of the applicants in

that proceeding “that only matters of integrity merit periods of suspension” and, found that in “appropriate circumstances, a lack of proficiency may require regulatory responses beyond that of education and supervision.”

[101] The Panel’s approach to determining the appropriate sanctions for participation in an illegal distribution of securities

contrary to the Act, as illustrated by its finding that the conduct must be deliberate for a suspension to be imposed, is inconsistent with the Commission’s approach. The Commission has held that significant sanctions will be imposed for unregistered trading in securities and participation in the illegal distribution of securities, and has consistently imposed market bans for such conduct (see Re Innovative Gifting Inc. (2014), 37 OSCB 1461 at para. 28). The Commission has imposed five year market bans when the respondent engaged in an illegal distribution of securities but was not involved in fraud (Re Simply Wealth Financial Group Inc. (2013), 36 OSCB 5099). Industry expectations of the consequences of a breach of the Act should not significantly differ because a respondent appears before IIROC and not the Commission.

[102] The Panel quite clearly had to consider the specific allegation set out in the Notice of Hearing that Lukic had

recommended and/or facilitated off-book investments for clients without ensuring that a prospectus had been filed for the investment or that the distribution properly qualified for a prospectus exemption. In my view, the Panel has failed to adequately address this issue other than to state that Lukic’s conduct was a result of an inexcusable and incomprehensible lack of understanding that the investments in Lakepoint were securities.

[103] The Panel also failed to adequately address the issue of general deterrence and appeared to be more concerned about

the consequences of a suspension on Lukic and her clients’ continuing ability to rely on her than it was on investor protection and market integrity.

[104] It is also my view that, by failing to recognize that her clients received securities in connection with their investments in

Lakepoint, by failing to ensure that a prospectus had been filed or that the distribution properly qualified for a prospectus exemption and by both recommending and facilitating off-book investments which eliminated any oversight by her employer, Lukic demonstrated reckless disregard for the interests of her clients. In particular, the Panel should have given careful consideration to Guideline 1.5 of the Sanctions Guidelines, which recommends a period of suspension for breaches of the Act and a ban in egregious cases, and Guideline 3.10 of the Sanctions Guidelines, which recommends a period of suspension in egregious cases involving large value high risk off-book distributions.

[105] For the foregoing reasons, I find that the Panel erred in law and proceeded on an incorrect principle and that the

Sanctions Decision is inconsistent with decisions of the Commission in which suspensions have been imposed for conduct similar to that of Lukic. I also find that the Panel’s perception of the public interest conflicts with that of the Commission.


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6. Costs [106] In the Sanctions Decision, the Panel ordered that Lukic pay costs of $45,000 to IIROC (Sanctions Decision, para. 9). [107] Lukic submits that I should reduce the amount of the costs award to reflect the costs she has incurred responding to

IIROC Staff’s application for a hearing and review. Lukic made no submissions regarding the quantum of those costs. [108] In the Sanctions Decision, the Panel rejected Lukic’s submissions that no costs should be imposed because Lukic had

already incurred substantial costs of her own. With respect to Lukic’s submissions regarding the conduct of the hearing by IIROC Staff, the Panel stated that:

We found nothing in staff’s presentation of its case that would cause us to reduce or eliminate the costs award for IIROC. The amount of the costs award recommended by staff is conservative and appropriate in the circumstances. (Sanctions Decision, at para. 47.)

[109] Lukic did not apply for a hearing and review of the Panel’s costs award against her. In addition, she did not provide any authority in support of her submission that the Commission has a broad power under subsection 8(3) of the Act to engage in a hearing and review of a decision that is not the subject of the Application.

[110] Lukic did not make any submissions as to which of the Canada Malting factors entitles the Commission to intervene in

the Panel’s decision regarding costs and acknowledges that IIROC’s costs regime does not entitle a successful respondent to costs. The Commission’s costs regime similarly does not provide for an award of costs to a successful respondent.

[111] In any event, Lukic has not been successful in connection with the Application. [112] For the foregoing reasons, I reject Lukic’s submissions that I should engage in a review of the Panel’s costs award, and

that I should substitute my decision with respect to costs for that of the Panel. VI. CONCLUSION [113] For the foregoing reasons, I find that the Commission is entitled to intervene in the Sanctions Decision based on the

test set out in Canada Malting. The Panel erred in law and proceeded on an incorrect principle in determining that a suspension was not required in all of the circumstances. In addition, the Panel’s approach to determining the appropriate sanctions for Lukic’s misconduct illustrates that the Panel’s perception of the public interest is inconsistent with that of the Commission.

[114] I also find that it is in the public interest to allow the Application and to substitute my decision for that of the Panel to

avoid the unnecessary cost to the parties of a further hearing before the Panel. No further evidence or argument is required for me to do so.

[115] IIROC Staff requests that a two year suspension on Lukic’s registration be imposed. Having considered all of the

circumstances of Lukic’s conduct, I agree that it is appropriate and in the public interest that Lukic be suspended for two years from approval by, or registration with, IIROC in all categories anywhere in the industry, commencing 14 days from the date of the order which I will issue to that effect.

Dated at Toronto this 22nd day of June, 2015. “Christopher Portner”

June 25, 2015

(2015), 38 OSCB 5771

Chapter 4

Cease Trading Orders 4.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Company Name Date of Temporary Order

Date of Hearing Date of Permanent Order

Date of Lapse/Revoke

GAR Limited 9-June-15 22-June-15 23-June-15

IMRIS Inc. 9-June-15 22-June-15 22-June-15

Northland Resources SE 9-June-15 22-June-15 22-June-15

MagIndustries Corp. 2-June-15 15-June-15 15-June-15

Shoreline Energy Corp. 28-May-15 8-June-15*

* Shoreline Energy Corp. Temporary order was extended by the Commission on June 9, 2015 to July 3, 2015 4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders

Company Name Date of Order or Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer Temporary Order

San Gold Corporation 05-June-15 17-June-15

19-June-15

4.2.2 Outstanding Management & Insider Cease Trading Orders

Company Name Date of Order or Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer Temporary Order

Jourdan Resources Inc. 12-May-15 25-May-15 25-May-15

Pacific Coal Resources Ltd. 08-May-15 20-May-15 20-May-15

San Gold Corporation 5-June-15 17-June-

15 19-June-15

Viking Gold Exploration Inc. 12-May-15 25-May-15 25-May-15

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June 25, 2015

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Chapter 5

Rules and Policies 5.1.1 CSA Notice of Amendments to NI 33-105 Underwriting Conflicts

CSA Notice of Amendments to National Instrument 33-105 Underwriting Conflicts

June 25, 2015 Introduction The Canadian Securities Administrators (the CSA or we) are implementing amendments (the Rule Amendments) to National Instrument 33-105 Underwriting Conflicts (NI 33-105). The Rule Amendments have been made by each member of the CSA. In some jurisdictions, ministerial approvals are required for these changes. Provided all necessary ministerial approvals are obtained, the Rule Amendments will come into force on September 8, 2015. Substance and Purpose of the Rule Amendments The Rule Amendments provide an exemption from the disclosure requirements relating to conflicts of interest between an issuer and dealer in the context of an offering by a foreign issuer to sophisticated investors in Canada made on a private placement basis. The Rule Amendments will eliminate the requirement to provide connected and related issuer disclosure in the context of offerings of securities that qualify as “eligible foreign securities”. Eligible foreign securities are defined in the Rule Amendments as securities that are offered primarily in a foreign jurisdiction and that are:

• Issued by an issuer o that is incorporated, formed or created under the laws of a foreign jurisdiction, o that is not a reporting issuer in a jurisdiction of Canada, o that has its head office outside of Canada, and o that has a majority of the executive officers and a majority of the directors ordinarily resident outside

of Canada, or • Issued or guaranteed by the government of a foreign jurisdiction.

The Rule Amendments require that the purchaser of the securities must be a permitted client (as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations). The purpose of the Rule Amendments is to eliminate one of the disclosure requirements that results in the preparation of a “wrapper” when foreign securities are offered by way of prospectus exemption in Canada as part of a global offering. This may facilitate participation by sophisticated Canadian investors that qualify as permitted clients in foreign securities offerings. The Rule Amendments will apply to offerings of both non-investment fund issuers and non-redeemable investment funds that meet the above criteria. Under current paragraph 1.3(b) of NI 33-105, the rule does not apply to a distribution of mutual fund securities. Non-Canadian issuers that are investment funds are reminded that there are other Canadian regulatory requirements specific to investment funds, such as investment fund manager registration, that may still apply. Permitted clients that are investment funds are reminded that other Canadian regulatory requirements, such as fund on fund restrictions, may restrict a Canadian investment fund’s ability to purchase securities of a non-Canadian issuer that is an investment fund. Background The CSA previously requested comment on proposals reflected in the Rule Amendments. On November 28, 2013, we published a Notice and Request for Comment relating to the Rule Amendments (the November 2013 materials).

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In developing the November 2013 materials, we:

• Conducted research on the disclosure requirements related to conflicts of interest between issuers and dealers in the United States,

• Considered feedback received on the implementation of exemptive relief (the Wrapper Relief) previously granted to certain dealers that participate in private placement offerings of foreign securities in Canada, and

• Reviewed data compiled from monthly reports provided to us by dealers that obtained the Wrapper Relief. Summary of Written Comments Received by the CSA The comment period for the November 2013 materials ended on February 26, 2014 and the CSA received submissions from seven commenters. The comment letters on the November 2013 materials can be viewed on the OSC website at www.osc.gov.on.ca and on the Autorité des marchés financiers website at www.lautorite.qc.ca. We have considered the comments received and thank all of the commenters for their input. The names of the commenters are contained in Annex C and a summary of their comments, together with our responses, is contained at Annex D. Summary of Changes to the November 2013 materials After consideration of the comments received on the November 2013 materials we have made some revisions to the November 2013 materials. Those revisions are reflected in the Rule Amendments we are publishing concurrently with this notice. As these changes are not material, we are not republishing the Rule Amendments for a further comment period. Annex B contains a summary of notable changes between the Rule Amendments and the November 2013 materials. Related Amendments Also being published today is

• Multilateral Instrument 45-107 Listing Representation and Right of Action Disclosure Exemptions, • Ontario amendments to OSC Rule 45-501 Ontario Prospectus and Registration Exemptions, and • An Ontario-specific amendment to Form 45-106F1 Report of Exempt Distribution.

These amendments generally relate to disclosure of statutory rights of action and restrictions on the making of representations that securities will be listed or quoted on an exchange or quotation system. This information is also typically included in a wrapper prepared for foreign offerings. More information can be found in the notices accompanying these publications. Local Matters Annex E is being published in any local jurisdiction that is making related changes to local securities laws, including changes to local notices or other policy instruments in that jurisdiction. It also includes any additional information that is relevant to that jurisdiction only. Questions Please refer your questions to any of: Jo-Anne Matear Manager, Corporate Finance Branch Ontario Securities Commission 416-593-2323 [email protected] Elizabeth Topp Senior Legal Counsel, Corporate Finance Branch Ontario Securities Commission 416-593-2377 [email protected] Amy Tsai Legal Counsel, Compliance and Registrant Regulation Ontario Securities Commission 416-593-8074 [email protected]

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Georgia Koutrikas Analyst, Corporate Finance Autorité des marchés financiers 514-395-0337, ext. 4393 [email protected] Kristina Beauclair Senior Analyst, Corporate Finance Autorité des marchés financiers 514-395-0337, ext. 4397 [email protected] Tracy Clark Legal Counsel Alberta Securities Commission 403-355-4424 [email protected] Brian Murphy Deputy Director, Capital Markets Nova Scotia Securities Commission 902-424-7768 [email protected]

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(2015), 38 OSCB 5776

Annexes to Notice Annex A – Rule amendments Annex B – Summary of changes to the November 2013 materials Annex C – List of commenters Annex D – Summary of comments and responses Annex E – Local matters

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Annex A

Amendments to National Instrument 33-105 Underwriting Conflicts

1. National Instrument 33-105 Underwriting Conflicts is amended by this Instrument. 2. The following Part is added:

PART 3A – NON-DISCRETIONARY EXEMPTIONS – ELIGIBLE FOREIGN SECURITIES

3A.1 Definitions – In this Part, “eligible foreign security” means a security offered primarily in a foreign jurisdiction as part of a distribution of securities in either of the following circumstances:

(a) the security is issued by an issuer

(i) that is incorporated, formed or created under the laws of a foreign jurisdiction, (ii) that is not a reporting issuer in a jurisdiction of Canada, (iii) that has its head office outside of Canada, and (iv) that has a majority of the executive officers and a majority of the directors ordinarily resident

outside of Canada;

(b) the security is issued or guaranteed by the government of a foreign jurisdiction; “executive officer” means, for an issuer, an individual who

(a) is a chair, vice-chair or president, (b) is a chief executive officer or chief financial officer, (c) is a vice-president in charge of a principal business unit, division or function including sales, finance

or production, or (d) performs a policy-making function in respect of the issuer;

“exempt offering document” means:

(a) in New Brunswick, Nova Scotia, Ontario and Saskatchewan, an offering memorandum as defined under the securities legislation of that jurisdiction, and

(b) in all other jurisdictions, a document including any amendments to the document, that

(i) describes the business and affairs of an issuer, and (ii) has been prepared primarily for delivery to and review by a prospective purchaser to assist

the prospective purchaser in making an investment decision in respect of securities being distributed pursuant to an exemption from the prospectus requirement;

“FINRA” means the self regulatory organization in the United States of America known as the Financial Industry Regulatory Authority; “permitted client” has the same meaning as in section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. 3A.2 Application – This Part does not apply to a distribution if a prospectus has been filed with a Canadian securities regulatory authority for the distribution.

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3A.3 Exemption based on U.S. disclosure – Subsection 2.1(1) does not apply to a distribution of a security described in paragraph (a) of the definition of eligible foreign security if all of the following apply:

(a) the distribution is made to a permitted client through a registered dealer or international dealer; (b) the registered dealer or international dealer delivers a written notice to the permitted client before or

during the distribution of the eligible foreign security that specifies the exemption relied on and a reference to this section;

(c) an exempt offering document prepared with respect to the distribution is delivered to the permitted

client; (d) a concurrent distribution of the security is made by the issuer to investors in the U.S.; (e) the exempt offering document contains the same disclosure as that provided to investors in the U.S.; (f) if applicable, the disclosure provided in the exempt offering document for a distribution referred to in

paragraph (d) is made in compliance with FINRA rule 5121, as amended from time to time; (g) the distribution referred to in paragraph (d) is made in compliance with applicable U.S. federal

securities law.

3A.4 Exemption for foreign government securities – Subsection 2.1(1) does not apply to a distribution of a security described in paragraph (b) of the definition of eligible foreign security if:

(a) the distribution is made to a permitted client through a registered dealer or international dealer, and (b) the registered dealer or international dealer delivers a written notice to the permitted client, before or

during the distribution of the eligible foreign security that specifies the exemption relied on and a reference to this section.

3A.5 Manner of notice – For greater certainty, a notice required under paragraphs 3A.3(b) and 3A.4(b) may be incorporated into the exempt offering document delivered to the permitted client. 3A.6 Alternative compliance with notice requirement – A notice will be considered to have been delivered to a permitted client in compliance with paragraph 3A.3(b) or 3A.4(b), if

(a) the registered dealer or international dealer has previously delivered a notice to the permitted client in compliance with paragraph 3A.3(b) or 3A.4(b), and

(b) the notice stated that the registered dealer or international dealer intends to rely on the exemption in

paragraph 3A.3(b) or 3A.4(b), as applicable, for any distribution in the future of an eligible foreign security to the permitted client..

3. This Instrument comes into force on September 8, 2015.

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Annex B

Summary of changes to the November 2013 materials The following is a summary of notable changes between the Rule Amendments and the November 2013 materials. In addition to the notable changes identified below, please note that we have revised the drafting of the Rule Amendments to make the conditions of the exemption clearer. For example, rather than including a stand-alone provision on the requirement to provide notice of reliance on the exemption, the notice requirement has been included as a condition to the exemption provisions. Exemption based on U.S. disclosure for registered offerings The November 2013 materials contemplated providing an exemption from the connected and related issuer disclosure requirements of NI 33-105 provided that, among other things, the offering document complied with U.S. disclosure requirements on conflicts of interest applicable to registered offerings (whether or not the offering was in fact registered in the U.S.) and contained the same disclosure as that provided to U.S. investors. Many commenters expressed concern that this requirement was too narrow and would limit the utility of the exemption significantly. Commenters stated that the requirement to comply with underwriter conflicts of interest disclosure requirements applicable to U.S. registered offerings would continue to prevent Canadian investors from being able to participate in global offerings that are not registered offerings in the U.S. This approach would require Canadian investors to receive disclosure beyond that which is required to be provided to U.S. investors. Certain commenters recommended that the exemption should allow securities of non-Canadian issuers to be offered in Canada on the same basis as they are offered in the U.S. After considering these comments, we have revised the exemption provision to provide an exemption from the connected and related issuer disclosure requirements for all offerings (registered and unregistered) made into the U.S. to U.S. investors, provided that the same disclosure that is provided to U.S. investors is also provided to Canadian investors. Foreign government offerings The November 2013 materials proposed that offerings of foreign government securities would be exempted from the connected issuer disclosure requirements in their entirety, but not the related issuer disclosure requirements. However, relief was proposed to be provided from the requirement to provide cover page disclosure in the case of a related issuer. Commenters have stated that maintaining a distinction between connected and related disclosure requirements for foreign government securities will be difficult in practice and will result in foreign government securities not being offered in Canada. Some commenters referred to how the Wrapper Relief has operated in practice. They noted that foreign governments and underwriters often leave Canada out of an offering rather than consider the different meaning of the terms “related issuer” versus “connected issuer”. Because these terms are unique to Canadian requirements and are not well understood outside of Canada, there is a hesitation to rely on relief from the connected issuer disclosure requirements for offerings of foreign government securities. In response to these comments, we have revised the exemption for foreign government securities to provide relief from both the connected and related issuer disclosure requirements. In addition, we have included a reference to the definition of eligible foreign security, rather than refer to the security being “issued or guaranteed by the government of a foreign jurisdiction” directly in the exemption provision. Requirement to provide notice to permitted clients The November 2013 materials contemplated that a notice would be delivered to a permitted client by a dealer that intends to rely on one or both of the exemptions. The notice was to include a description of the terms and conditions of the exemption being relied on. One commenter pointed out that it is not necessary to require the notice to contain a description of the terms and conditions of the exemption being relied on, since the terms and conditions of the exemption will be contained in NI 33-105. At most, the requirement should be to indicate the exemption being relied on with a cross-reference to the relevant section in NI 33-105. After considering this comment, we removed the requirement to provide a description of the terms and conditions of the exemption being relied on in the notice delivered to a permitted client. Instead, the notice is only required to include a reference to the applicable section. We have also clarified that the notice must be a written notice. Exemption available to registered dealers and international dealers The November 2013 materials used the term “specified firm registrant” in the proposed exemption provisions. The term “specified firm registrant” is defined in NI 33-105 to include a person or company registered, or required to be registered, under securities legislation as a registered dealer, registered adviser or registered investment fund manager.

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Some commenters suggested that it would be more appropriate to use the term “registered dealer or international dealer” instead of “specified firm registrant”. The terms of the Wrapper Relief specifically referred to these categories of dealer. Some commenters also suggested that there was confusion as to whether an international dealer was caught by the definition of “specified firm registrant”, and that using the specific dealer terms would provide greater clarity. After considering these comments, and reviewing the categories of dealer that have applied to date for Wrapper Relief, we have revised the exemptions to use the terms “registered dealer” or “international dealer” rather than specified firm registrant. This will align the exemption with the terms of the Wrapper Relief orders that have been granted and also accords with our understanding of who is using the Wrapper Relief. We have not received any applications from registered advisers or registered investment fund managers. As a result, in our view, use of the term specified firm registrant in this context may be too broad.

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Annex C

List of commenters 1. AGF Investments Inc. 2. Alberta Investment Management Corporation 3. Caisse de dépôt et placement du Québec 4. Davies Ward Phillips & Vineberg LLP 5. Ontario Teachers’ Pension Plan Board 6. RBC Global Asset Management Inc. 7. Securities Industry and Financial Markets Association

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Annex D

National Instrument 33-105 Underwriting Conflicts (NI 33-105)

Summary of comments and CSA responses

No. Subject (references are to current or proposed sections, items and paragraphs)

Summarized Comment CSA Response

General comments on the proposed amendments

1. General support for the proposals

Five commenters1 expressed general support for the proposed amendments and the CSA’s efforts to provide better access to investment opportunities to sophisticated Canadian investors.

We acknowledge these comments of general support for the CSA’s efforts to provide better access to investment opportunities to sophisticated Canadian investors.

2. General concerns with the proposals

Six commenters noted that the proposed amendments would continue to limit the ability of sophisticated Canadian investors to purchase securities issued or guaranteed by foreign governments and offerings not registered in the United States. Five commenters cited concerns that the proposed amendments would continue to preclude Canadian investors from new issues, forcing them to purchase securities at higher prices on secondary markets. Two commenters stated that the proposed amendments are not sufficient because Canadian investors will continue to lose opportunities as a result of the need for dealers to determine whether or not a wrapper is required for an offering of international bonds into Canada and, if applicable, to prepare the wrapper. According to the commenters, this is exacerbated by the fact that the size of the Canadian investor base is such that issuers or dealers are often unable to justify the time and expense in addressing compliance with any additional Canadian requirements.

We acknowledge the general concerns raised with the proposed amendments. We are proposing changes to the amendments as originally published for comment, as described more fully below, in order to address certain concerns raised by commenters.

3. Overall approach to relief

One commenter stated that the proposed amendments should allow securities of non-Canadian issuers to be offered in Canada on the same basis as they are offered in the United States and elsewhere, not to create more onerous disclosure obligations for offerings to Canadian investors. Two commenters noted that in order for Canadian institutional investors to be provided with the same access to foreign offerings as is

We understand that in certain cases, the Canadian disclosure requirements on conflicts of interest are different from requirements in other international jurisdictions with respect to disclosure of conflicts of interest between issuers and dealers. The goal of this initiative is to facilitate participation by sophisticated Canadian investors that qualify as permitted clients

1 Four comment letters were received, however two letters were from multiple commenters. In all, seven commenters responded to the

proposal.

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provided to institutional investors in the United States and elsewhere around the world, it will be necessary for Canadian legal requirements to be capable of being addressed in the same manner as in other jurisdictions, namely through short, standardized disclosure that can be inserted into an offering document, without the necessity of making a determination whether or not the disclosure suffices for a particular distribution or requires customization. One commenter stated that Canadian requirements for the offering of foreign securities by private placement would remain the most onerous in the world if current proposals are put into effect.

in foreign securities offerings, including offerings by foreign governments and corporations. As a result of the comments received, we are proposing certain changes that are intended to address the concern that the proposed amendments will not achieve the stated objective of reducing barriers to sophisticated Canadian investors participating in foreign offerings. Please see the more detailed description of these changes below.

Commentary on the nature of the problem

4. General commentary on the market for foreign offerings

Foreign offerings generally One commenter stated that the major impetus for extending foreign offerings into Canada is dealers responding to demand from institutional investors in Canada, rather than issuer interest in expanding into Canada. Five commenters noted that demand for offerings of foreign securities (including foreign government securities) is usually strong and the entire offering sells quickly. As a result of this large demand, foreign issuers are usually unconcerned that Canadian investors are unable to purchase the securities. There is a willingness on the part of issuers and dealers to address Canadian disclosure requirements only if demand for an offering is poor. International bond markets Two commenters noted that Canadian bond markets represent 2.48% of the world’s total outstanding debt securities and that Canadian investors look to international investment alternatives for opportunities to enhance yield and to diversify and reduce risk. The vast majority of issuers, particularly governments and corporate issuers outside the United States, lack familiarity with Canadian securities laws, as do many of the dealers’ syndicate desks. The size of the Canadian investor base is not viewed by issuers or dealers as justifying any time and expense in

We thank commenters for providing this information on the foreign offering process and the international bond markets, including information on the problems faced by Canadian institutional investors in participating in international offerings.

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addressing compliance with Canadian requirements. Bond offerings are announced with little advance warning. This time constraint accentuates the problem of syndicate desks being unfamiliar with Canadian securities legislation and preferring not to deal with it. This is a market for which Canadian wrappers are rarely prepared. Lack of access to international investment opportunities Rather than preparing customized disclosure or even addressing the question of whether or not customized Canadian disclosure is required (including dealing with the distinction between connected issuers and related issuers), dealers find it easier to sell to Canadian investors in the secondary market immediately after a new offering. This means the initial attractive pricing is not available to the Canadian investors. This also results in Canadian investors acquiring the same securities they were unable to acquire in the primary offering, without receiving any of the disclosure required by Canadian legislation. When an existing issue is re-opened, Canadian investors may already hold the securities in one or more portfolios but are unable to add to a position at an attractive price due to the exclusion of Canadian investors from participating in the offering. Reduced access to favourable investment opportunities hurts the ability of Canadian fund managers to compete internationally with non-Canadian fund managers who have a performance advantage as a result of their greater ability to participate in new issues at favourable pricing. Investors look at performance when deciding how to allocate funds and even small performance differences can have a significant difference over time.

5. Impact of the Wrapper Relief2

Two commenters noted that use of the Wrapper Relief has been disappointing. There is a lack of

We acknowledge these comments and appreciate the input on how the Wrapper

2 A number of dealers have been granted exemptive relief from certain Canadian securities law disclosure requirements, including

requirements of NI 33-105, for offerings of foreign securities made on an exempt basis to permitted clients in Canada (the Wrapper Relief). The Wrapper Relief granted substantially the same relief as set out in the proposed amendments, and also granted relief that is reflected in proposed Ontario amendments to OSC Rule 45-501 Ontario Prospectus and Registration Exemptions (proposed amendments to OSC Rule 45-501) and National Instrument 45-106 Prospectus and Registration Exemptions published for comment on April 25, 2013 as well as proposed Multilateral Instrument 45-107 Listing Representation and Rights of Action Disclosure Exemptions (proposed MI 45-107) published for comment on November 28, 2013.

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understanding in the market as to how the Wrapper Relief works and an unwillingness to take the time to consider whether the relief applies to a particular offering. Dealers have little or no incentive to be educated on whether and how the Wrapper Relief will apply to a particular offering, given the speed of offerings and their popularity. Educating dealers would be a constant process due to the multitude of different markets in which such dealers are based and ongoing personnel changes. Two commenters noted that dealers who obtained exemptive relief as a result of the Wrapper Relief have been failing to take advantage of this relief because they find it to be overly confusing and they consider it to require a time-consuming, case-by-case analysis. Dealers are reluctant to incur the extra time and cost associated with preparing a wrapper or determining the possible availability of exemptive relief. The current Wrapper Relief is most likely to be relied on in the case of issuers having lower credit quality for which demand, including potential Canadian interest, is weak.

Relief is being used in practice. Based on data received from dealers that have obtained Wrapper Relief to date, we note that a certain number of transactions are occurring. It may be difficult to know to what extent the problem relates to the specifics of the Wrapper Relief versus the fact that the Canadian market is such a small part of the international markets. However, we have taken these comments into consideration in proposing further changes to the proposed amendments, as described more fully below.

Definitions

6. Definition of “designated foreign security” – issuer requirements (proposed section 3A.1 of NI 33-105)

Not a reporting issuer Six commenters stated that the condition that an issuer not be a ‘reporting issuer in a jurisdiction of Canada’ should be removed. A common concern with this requirement is that it necessitates checking the list of reporting issuers maintained by each provincial and territorial securities regulatory authority. Three commenters expressed the view that the status of an issuer as a reporting issuer in a Canadian jurisdiction does not make a class of its securities more “Canadian” (or less foreign) than a class of securities of a non-Canadian issuer that is not a reporting issuer. Four commenters noted that no policy basis has been suggested for the requirement that a designated foreign issuer cannot be a reporting issuer. They suggested that there is an insufficient policy rationale for excluding

We do not agree that the definition of “designated foreign security”3 should include securities issued by reporting issuers. In our view, the policy basis for excluding reporting issuers is the fact that by choosing to become reporting issuers, issuers take active steps to engage with and participate in the Canadian securities regulatory regime and as a result such issuers should be required to comply with NI 33-105 (and other applicable Canadian securities law requirements). In our view, issuers should know if they are a reporting issuer in a Canadian jurisdiction, as this will impact the various requirements (in addition to requirements under NI 33-105) that must be complied with under Canadian securities law.

3 Note that the term “eligible foreign security” is now proposed to be used instead of “designated foreign security”.

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securities of non-Canadian issuers from the benefits of the proposed amendments merely because of Canadian reporting issuer status. One commenter cited the same issue with proposed MI 45-107. Other conditions According to six of the commenters, the other restrictions in the definition of “designated foreign security” are acceptable.

7. Use of the term “specified firm registrant”

One commenter raised an issue with the use of the term “specified firm registrant”. The current definition of “specified firm registrant” in NI 33-105 includes a person or company registered, or required to be registered, under securities legislation as a registered dealer, registered advisor or registered investment fund manager, but does not refer to a person or company relying on the international dealer exemption. This definition is inconsistent with the Wrapper Relief. Based on the proposed amendments, it would suggest that an exempt international dealer would have to provide disclosure in a Canadian wrapper in respect of another underwriter in the transaction that is not selling into Canada but is a “specified firm registrant”. However, if that specified firm registrant itself chose to sell into Canada in that offering, it would not have to provide that disclosure because the exemption would be available to it. The commenter also noted that the definition in NI 33-105 is inconsistent with proposed amendments to OSC Rule 45-501 Ontario Prospectus and Registration Exemptions (proposed amendments to OSC Rule 45-501), which specifically uses the terms “registered dealer” and “international dealer” instead of the term “specified firm registrant”. The commenter recommends adopting the same approach as in the proposed amendments to OSC Rule 45-501. Another commenter noted that the definition of “specified firm registrant” may be interpreted to include persons or companies that rely on the international dealer exemption in s. 8.18 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, but that an interpretation that such persons are not specified firm registrants is also tenable on the basis that a

We have proposed to amend use of the term “specified firm registrant” and replace it with the terms “registered dealer” and “international dealer”. This approach aligns with the use of these terms in the proposed amendments to OSC Rule 45-501. We also note that this aligns with the exemptive relief in the Wrapper Relief which was granted specifically to certain registered dealers and international dealers.

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person or company relying on an exemption from the registration requirement has ceased to be a person required to be registered. As such, the definition should be amended to clarify whether it includes persons relying on an exemption from the registration requirement.

Exemption based on U.S. disclosure

8. Exemption based on U.S. disclosure (proposed section 3A.2 of NI 33-105) – General comments

All seven commenters expressed concerns with the proposed amendments regarding compliance with underwriter conflicts of interest disclosure requirements applicable to U.S. registered offerings, whether or not such offerings are in fact registered in the United States. Four commenters stated that the requirement to comply with underwriter conflicts of interest disclosure requirements applicable to a U.S. registered offering remains a major impediment to extending non-U.S. registered offerings into Canada. This approach will substantially limit the utility of the proposed amendments where a registered offering is not made in the U.S. and will continue to prevent Canadian investors from participating in global offerings in the same manner as U.S. institutional investors. Six commenters stated that the main problem is complying with the technical requirements for providing “prominent disclosure” applicable to a U.S. registered offering for disclosure of underwriter conflicts of interest. Six commenters noted that the requirement to impose U.S. registered offering standards regardless of whether the securities are registered in the U.S. requires issuers and dealers to provide Canadian investors with disclosure beyond that which is required to be provided to investors under the laws of the home jurisdiction of the issuer or primary jurisdiction of the offering. Three commenters stated that in a global offering made primarily outside of Canada, Canadian institutional investors do not need to receive additional disclosure than is provided to a U.S. institutional investor for securities distributed on a private placement basis. These commenters recommended that the exemption allow securities of non-Canadian issuers to be offered in Canada on the same basis as they are being offered in the United States and elsewhere.

We thank commenters for information on how this proposed requirement remains an impediment to extending non-U.S. registered offerings to Canadian investors. We have reconsidered this condition in light of the comments received and have amended the proposed exemption so that unregistered offerings also made to U.S. investors can also be offered in Canada, provided that the same disclosure that is provided to U.S. investors is also provided to Canadian investors. The purpose of these changes is to allow unregistered offerings that are made in the U.S. to U.S. investors to also be made to Canadian investors, without requiring the conflicts of interest disclosure required by NI 33-105. In our view, most offerings of interest to Canadian investors will also be made into the U.S. We agree with commenters that it is not necessary to impose more stringent requirements than those required for U.S. investors.

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Two commenters stated that compliance with the requirements of U.S. registered offerings should apply only to U.S. registered offerings. Two commenters stated that if the requirement to comply with the disclosure requirements relating to underwriter conflicts of interest for U.S. registered offerings is retained for distributions of non-government securities, compliance with the disclosure requirements for public offerings in other jurisdictions that apply to the offering document should be permitted as an alternative.

9. Applicability of U.S. disclosure requirements (proposed section 3A.2 of NI 33-105)

Two commenters stated that proposed section 3A.2 [exemption based on U.S. disclosure] should only apply to designated foreign securities other than foreign government securities and the relevant section should make this clear.

Proposed section 3A.2 was originally intended to also be available to offerings of foreign government securities, to the extent proposed section 3A.3 could not be relied on (for example, if a foreign government offering involved a related issuer). However, we have now proposed to broaden the exemption for offerings of foreign government securities. The proposed exemption will provide relief from both the related and connected issuer disclosure requirements for offerings of foreign government securities. As a result, we have clarified that proposed section 3A.4 is applicable to foreign government securities and proposed section 3A.3 is applicable to non-government foreign securities4.

10. Scope of U.S. disclosure requirements (proposed section 3A.2 of NI 33-105)

All commenters suggested that the scope of the U.S. disclosure requirements to be complied with is too broad. Proposed paragraph 3A.2(c) of NI 33-105 would require broad compliance with the requirements of section 229.508 of U.S. Securities Exchange Commission (SEC) Regulation S-K under the 1933 Act and FINRA Rule 5121. However, there are elements of 229.508 of SEC Regulation S-K and FINRA Rule 5121 that have nothing to do with underwriter conflicts of interest disclosure and are therefore outside the scope of NI 33-105. As well, one commenter pointed out that a situation can arise where an offering is subject to SEC Regulation S-K, but not subject to FINRA Rule 5121 and thus it may not be possible for the preliminary version of the offering document to comply with FINRA Rule

As a result of broadening the exemption to include non-registered offerings made in the U.S., we have removed these section references.

4 Section references have changed since publication of the proposed amendments for comment.

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5121 even though the document provides all material disclosure regarding underwriter conflicts. Some commenters stated that the wording of this section should be revised to specifically refer to disclosure of conflicts of interest between the dealer or issuer, rather than specific section references.

11. Alternatives to U.S. disclosure requirements

Six commenters were of the view that the exemption should be structured so that it can be used where the offering document is subject to the prospectus requirements of a jurisdiction other than the U.S. regarding the disclosure of underwriter conflicts of interest and where this offering document is sent to Canadian investors. Two commenters also stated that this should be provided with a standardized legend about the inapplicability of particular Canadian disclosure requirements. Two commenters stated that the level of disclosure in a U.S. private placement or global offering, a portion of which is privately placed with U.S. investors, should be considered adequate for Canadian permitted clients. One commenter suggested that the policy objective of the proposed amendments would be satisfied by adopting the materiality standard of section 229.508 of SEC Regulation S-K, which requires issuers to “identify each such underwriter having a material relationship with the registrant and state the nature of the relationship” without imposing a requirement to comply with other technical disclosure requirements.

In our view, an exemption based on alternative disclosure from a jurisdiction other than the U.S. is too broad. We agree with those commenters who noted that the level of disclosure provided in a U.S. private placement or global offering, a portion of which is privately placed with U.S. investors, should be adequate for Canadian permitted clients. We have proposed amending the proposed exemption to permit unregistered U.S. offerings made to U.S. investors to also be made to Canadian investors that are permitted clients. We do not believe adopting a materiality standard based on SEC Regulation S-K would address the concerns raised by commenters, as this would still require foreign issuers and dealers to consider whether the Canadian standard applied in the context of a foreign offering.

Exemption for foreign government securities

12. Exemption for foreign government securities – Distinction between “related” and “connected” issuers (proposed paragraph 3A.3(b) of NI 33-105)

Six commenters recommended deleting paragraph (b) from proposed section 3A.3, namely that a foreign government issuer cannot be a related issuer of a specified firm registrant. One commenter pointed out that foreign government issuers and underwriters often leave out Canada rather than deal with the distinction between related issuers and connected issuers. Two commenters noted that while the requirement to provide related issuer disclosure

We acknowledge the comments that suggest the distinction between a “connected” and “related” issuer has proved difficult for foreign issuers and dealers to understand and apply in the context of fast-moving global offerings. We agree that the exemption should provide relief from both the connected and related issuer disclosure requirements for foreign government issuers and have proposed changes to the proposed amendments.

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in the context of foreign government offerings will apply infrequently, the likelihood has increased following the bank bail-outs of the past several years. According to five commenters, the Canadian disclosure requirements for primary offerings of government securities differ from markets of comparable size, as no jurisdiction, other than the Canadian provinces and territories, imposes a disclosure requirement with respect to government securities that has the potential to require individualized analysis as to applicability and disclosure for one group of investors (i.e. Canadian permitted clients) that may require customization. According to these commenters, sophisticated Canadian investors would be protected by receiving the same disclosure received by sophisticated investors in the U.S. and elsewhere.

In our view, permitted clients would likely consider other factors to be more important than the existence of potential conflicts of interest when making a decision to invest in foreign government securities. For example, risks relating to conflicts of interest would likely be outweighed by other risks such as a foreign government's ability and/or willingness to make debt repayments. As a result, the existence of conflicts of interest between a government issuer and a related underwriter may not have the same impact on the permitted client's decision to invest.

Requirement to provide notice of exemption

13. Notice to permitted clients (proposed section 3A.5 of NI 33-105) – Requirement to describe terms and conditions

One commenter submitted that the requirement to describe the ‘terms and conditions of the exemptions being relied on’ is unnecessary. The commenter submitted that, at most, the requirement should be to provide a statement to the effect that the dealer is relying on an exemption from the disclosure requirements of NI 33-105 with a cross-reference to the applicable section number. Describing the exemption is unnecessary because any permitted client can read the exemption if they are provided with the appropriate section reference. As such, a description would add no value and be an unnecessary compliance burden for dealers.

We agree that it should not be necessary to describe the terms and conditions of the exemption being relied on, given that the exemptions will be specifically included in NI 33-105. We have made changes to the proposed amendments to remove the requirement to include a description of the terms and conditions of the exemption being relied on.

14. Manner of notice (proposed section 3A.6 of NI 33-105)

Six commenters were supportive of the proposed section 3A.6 that includes alternative ways for the notice required by section 3A.5 to be provided to investors, on the basis that it will facilitate use of the proposed exemptive relief. One commenter noted that the deletion of the requirement to obtain an acknowledgment from investors and the availability of alternatives for providing notice to investors is a marked improvement over the notice and acknowledgment conditions of the Wrapper Relief. Permitting the notice to be provided in the offering document and not requiring receipt of an acknowledgment will enable better centralization for particular offerings, including

We acknowledge the comments in support of alternative ways that notice can be provided. The proposed amendments were drafted to provide flexibility in how notice of reliance on the exemption was provided to permitted clients. Thus notice of reliance on the exemption may be provided in a separate stand-alone notice, or in the offering document itself. We note the comments with respect to disclosure of statutory rights of action and will consider those comments in our review of the comments received in response to the proposed amendments to

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assuring that all underwriters authorized to sell into the applicable jurisdiction are able to rely on the exemption. Three commenters stated that dealers may be reluctant to use the option in proposed section 3A.6 if they are required to include in an offering document the same lengthy description of statutory rights of action currently included in Canadian wrappers in order to comply with the requirements in New Brunswick, Nova Scotia, Ontario and Saskatchewan. Five commenters supported a requirement to provide only a notification of the existence of statutory rights of action, rather than a description of those rights.

OSC Rule 45-501 and proposed MI 45-107.

15. Inconsistencies between the notice requirements in proposed sections 3A.5 and 3A.6 of NI 33-105 and the disclosure requirements in proposed MI 45-107 and the proposed amendments to OSC Rule 45-501

One commenter cited inconsistencies between the notice requirement in section 3A.5 and disclosure requirements under proposed MI 45-107. The commenter recommended further amendments to section 3A.5 to include a form of notice as set out in a schedule attached to the commenter’s letter. Two commenters submitted that, while they are generally supportive of section 3A.6 (and, in particular, subparagraph (b)(ii)) on the basis that the provision enables notice to be provided in the offering document, the notice requirement is inconsistent with the disclosure requirement in proposed MI 45-107 and with the requirement in the proposed amendments to OSC Rule 45-501 because both continue to require a description of the statutory rights of action available in four provinces (New Brunswick, Nova Scotia, Ontario and Saskatchewan). The required notice disclosure should be limited to notification of the existence of statutory rights of action rather than a description of those rights. Proposed MI 45-107 and the proposed amendments to OSC Rule 45-501 only provide for alternative means by which the statutory rights of action could be described. This presents two difficulties:

• The statutory rights of action differ among the four provinces that have disclosure requirements for the statutory rights of action, resulting in excessively lengthy disclosures; and

• Although a fully comprehensive description of the statutory rights of action could be provided, it would be

We note the comments with respect to requirements related to the disclosure of statutory rights of action in an offering document and will consider those comments when reviewing the comments received on the proposed amendments to OSC Rule 45-501 and proposed MI 45-107.

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less useful to investors than a description of statutory rights of action tailored to the particular offering.

Other comments

16. Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI 51-101)

One commenter noted that MI 51-105 may impose substantial ongoing requirements on issuers whose securities are offered in a province other than Ontario and Québec if the issuer does not have securities listed on a specified exchange or a primary listing on a specified exchange on the basis of a U.S. OTC quotation at the time of the offering. The result is that provinces other than Ontario and Québec may be excluded from offerings even where an exemption may be available as a result of MI 51-105.

We thank commenters for these comments but they are outside the scope of this project.

17. Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers (MI 32-102)

One commenter pointed out that the requirement for a non-Canadian Investment Fund Manager (IFM) to complete and file Form 32-102F2 Notice of Regulatory Action and keep it updated, particularly for IFMs with large numbers of affiliates, can be sufficiently onerous for IFMs to decide not to offer securities into the provinces that have implemented MI 32-102. For example, IFM registration requirements may become onerous where special purpose investment funds are set up with the same adviser but different general partners. Just a single permitted client in each of the relevant jurisdictions investing in each fund would require each general partner acting as an IFM to make the required filings for exemptive relief under MI 32-102. Given the breadth of the definition of investment fund, which may extend to exchange listed, actively managed mortgage and real estate investment trusts, for example, the impact of MI 32-102 on the utility of the proposed amendments is greater than it might appear. As such, the commenter submitted that the CSA should reconsider the application of the IFM registration requirement to IFMs that manage foreign funds offshore.

We thank commenters for these comments but they are outside the scope of this project.

18. Concerns with approach to relief5

One commenter expressed concern about piecemeal changes to the applicable rules relating to foreign securities offerings in Canada and fragmentation in market practice.

We acknowledge the comment regarding piecemeal changes to applicable rules. Since the publication for comment of the NI 33-105 amendments, CSA staff have

5 These comments were included in one commenter’s submission in response to the proposed amendments to OSC Rule 45-501.

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The commenter noted that the exemptive relief granted to some dealers under NI 33-105 for offering documents prepared in compliance with U.S. disclosure requirements was premised on the assumption that those requirements are substantially similar to those mandated under the “connected issuer” and “related issuer” standards contained in NI 33-105. There are material and substantive differences between the U.S. disclosure standards and those contained in NI 33-105, with the effect that the Canadian disclosure requirements are more robust and provide investors with additional conflicts of interest disclosure.

endeavoured to work together on the NI 33-105 amendments, the proposed amendments to OSC Rule 45-501 and proposed MI 45-107. We are publishing all of these amendments in final form at the same time. We are aware that there are differences between Canadian and U.S. disclosure requirements related to conflicts of interest between issuers and dealers. However, in the context of the proposed exemption, which relates to foreign securities offered on a private placement basis to permitted clients, we are satisfied that disclosure provided in accordance with U.S. requirements is an appropriate alternative to the disclosure required by NI 33-105.

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Annex E

Local matters On June 16, 2015, the OSC made the Rule Amendments. The Rule Amendments and other required materials were delivered to the Ontario Minister of Finance on June 23, 2015. The Minister may approve or reject the Rule Amendments or return them for further consideration. If the Minister approves the Rule Amendments or does not take any further action by August 24, 2015, the Rule Amendments will come into force on September 8, 2015.

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5.1.2 Notice of Amendments to OSC Rule 45-501 Ontario Prospectus and Registrations Exemptions and NI 45-106 Prospectus Exemptions

NOTICE OF AMENDMENTS TO ONTARIO SECURITIES COMMISSION RULE 45-501 ONTARIO PROSPECTUS AND REGISTRATION EXEMPTIONS

AND NATIONAL INSTRUMENT 45-106 PROSPECTUS EXEMPTIONS

Introduction The Ontario Securities Commission (OSC) is implementing amendments (the Rule Amendments) to:

• Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions (OSC Rule 45-501), and

• An Ontario-specific requirement in National Instrument 45-106 Prospectus Exemptions (NI 45-106). On April 25, 2013, the OSC published for comment proposed amendments (the Proposed Amendments) to OSC Rule 45-501 and NI 45-106. On June 16, 2015, the OSC made the Rule Amendments pursuant to section 143 of the Securities Act (Ontario) (the Act). The Rule Amendments were delivered to the Minister of Finance on June 23, 2015. The Minister of Finance may approve or reject the Rule Amendments or return them for further consideration. If the Minister approves the Rule Amendments or does not take any further action by August 24, 2015, the Rule Amendments will come into force on September 8, 2015. The amending instruments are set out at Annexes A and B to this notice. Substance and purpose of the amendments The main purpose of the Rule Amendments is to amend requirements related to specific items of disclosure required to be included in an offering memorandum in the context of foreign private placements offered to sophisticated investors in Ontario. The Rule Amendments are intended to provide relief from certain Ontario-specific disclosure requirements that are typically included in a “wrapper” to a foreign offering document, when foreign securities are offered on a private placement basis in Canada. By removing these disclosure requirements, the goal is to facilitate the participation in foreign securities offerings by sophisticated Canadian investors that qualify as permitted clients. Background When a foreign offering document is used to distribute securities in Ontario, it falls under the definition of an “offering memorandum” under the Act. As a result, certain items of Ontario-specific disclosure must be included in the offering document before it can be provided to prospective purchasers. In order to have the prescribed Ontario disclosure included in the foreign offering document, the foreign document may either be amended to include the Ontario disclosure, or more commonly, a supplemental document known as a “wrapper” is prepared and attached to the face of the foreign offering document. The wrapper, together with the foreign offering document, form a single Ontario offering memorandum for the purposes of offering securities in Ontario. Additional background information about the Proposed Amendments is available in the notice and request for comment that was published on April 25, 2013.

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Prior exemptive relief decisions granted Prior to publication of the Proposed Amendments, a number of Canadian and foreign dealers applied for and obtained time-limited exemptive relief from the OSC with respect to the disclosure requirements that are the subject of the Proposed Amendments. At the time the Proposed Amendments were published for comment, the OSC stated that it intended to make rule amendments to place all market participants in the same position as those that obtained exemptive relief orders. Summary of changes to the proposed amendments After considering the comments received on the Proposed Amendments, we have made some revisions to the Proposed Amendments. Those revisions are reflected in the Rule Amendments being published today. As these changes are not material, we are not republishing the Rule Amendments for a further comment period. A summary of notable changes between the Proposed Amendments and the Rule Amendments is set out in Annex C. Summary of written comments received The comment period for the Proposed Amendments ended on July 24, 2013. We received written submissions on the Proposed Amendments from nine commenters. We have considered the comments received and thank all of the commenters for their comments. The names of the commenters are contained in Annex D and a summary of their comments, together with our responses, is contained in Annex E. The comment letters can be viewed on the OSC website at www.osc.gov.on.ca. Related amendments Certain other CSA jurisdictions are also intending to publish amendments to similar requirements in local legislation as the requirements addressed by the Proposed Amendments. In addition, the CSA is also publishing today notice of amendments to National Instrument 33-105 Underwriting Conflicts (NI 33-105) to provide for an exemption from certain disclosure requirements in NI 33-105 that would otherwise also be included in a wrapper. The purpose of the NI 33-105 amendments is the same as the Proposed Amendments, namely to facilitate the participation in foreign securities offerings by sophisticated Canadian investors that qualify as permitted clients. For more information about these related amendments, please see the CSA Notice being published today. Questions Please refer your questions to any of: Jo-Anne Matear Manager, Corporate Finance 416-593-2323 1-877-785-1555 [email protected] Elizabeth Topp Senior Legal Counsel, Corporate Finance 416-593-2377 1-877-785-1555 [email protected]

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Amy Tsai Legal Counsel, Compliance and Registrant Regulation 416-593-8074 1-877-785-1555 [email protected] Attachments Annex A – Amendments to Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions Annex B – Amendments to National Instrument 45-106 Prospectus Exemptions Annex C – Summary of changes to the proposed amendments Annex D – List of commenters Annex E – Summary of comments and responses

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Annex A Amendments to Ontario Securities Commission Rule 45-501

Ontario Prospectus and Registration Exemptions Ontario amendment instrument

1. Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions is amended

by this Instrument. 2. Section 1.1 is amended by

(a) adding the following definition:

“eligible foreign security” means a security offered primarily in a foreign jurisdiction as part of a distribution of securities in either of the following circumstances:

(a) the security is issued by an issuer

(i) that is incorporated, formed or created under the laws of a foreign jurisdiction, (ii) that is not a reporting issuer in a jurisdiction of Canada, (iii) that has its head office outside of Canada, and (iv) that has a majority of the executive officers and a majority of the directors ordinarily resident outside of Canada;

(b) the security is issued or guaranteed by the government of a foreign jurisdiction; ,

(b) adding the following paragraph to the definition of “executive officer”:

(a.1) a chief executive officer or chief financial officer, , and

(c) adding the following definition:

“permitted client” has the same meaning as in section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations; .

3. The Instrument is amended by adding the following section:

5.3.1. – (1) Alternative compliance with description of rights in an offering memorandum – If a seller delivers an offering memorandum to a prospective purchaser that is a permitted client in connection with a distribution of an eligible foreign security, the requirement in section 5.3 to disclose the rights referred to in section 130.1 of the Act will be considered to have been satisfied if a specified disclosure statement is made in one of the following:

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(a) the offering memorandum;

(b) a document delivered to the permitted client which accompanies, but is not part of, the offering memorandum; (c) a written notice that: (i) has been delivered to the permitted client by a registered dealer or an international dealer that proposes to make future distributions of securities to the permitted client; and (ii) which contains a statement to the effect that the disclosure will apply to all future distributions. (2) For the purpose of subsection (1), a specified disclosure statement must be in the following form or a substantively similar form: (a) if the statement is made in a document referred to in paragraph 1(a),

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor;

(b) if the statement is made in a document referred to in paragraph (1)(b) or (1)(c),

If, in connection with a distribution of an eligible foreign security as defined in Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions, we deliver to you an offering document that constitutes an offering memorandum under applicable securities laws in Canada, you may have, depending on the province or territory of Canada in which the trade was made to you, remedies for rescission or damages if the offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by you within the time limit prescribed by the securities legislation of your province or territory. You should refer to any applicable provisions of the securities legislation of your province or territory for the particulars of these rights or consult with a legal advisor. .

4. The Instrument is amended by adding the following section: 5.5 – Exemption from Listing Representation Requirements – Subsection 38(3) of the Act does not apply to any representation made in an offering memorandum in connection with a distribution of an eligible foreign security if all of the following apply: (a) each purchaser of the security is a permitted client; (b) the representation does not contain a misrepresentation;

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(c) the representation is made in compliance with the by-laws and rules of the exchange or quotation and trade reporting system referred to in the representation.

5.6 Application – Sections 5.3.1 and 5.6 do not apply if a prospectus has been filed with a Canadian securities regulatory authority in connection with the distribution. .

5. Section 7.1 is replaced by the following:

7.1 Exemption – The Director may grant an exemption to Part 6, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption. .

6. Item 9 of Form 45-501F1 is replaced with the following:

Item 9: If a distribution is made to one or more individuals in Ontario, include the attached “Authorization of Indirect Collection of Personal Information for Distribution in Ontario”. .


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Annex B Amendments to National Instrument 45-106 Prospectus Exemptions

Ontario amendment instrument

1. National Instrument 45-106 Prospectus Exemptions is amended by this Instrument. 2. Item 9 of Form 45-106F1 is replaced by the following:

Item 9: If a distribution is made to one or more individuals in Ontario, include the attached “Authorization of Indirect Collection of Personal Information for Distribution in Ontario”. The “Authorization of Indirect Collection of Personal Information for Distributions in Ontario” is only required to be filed with the Ontario Securities Commission. .


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Annex C Summary of changes to the proposed amendments

The following is a summary of notable changes between the Proposed Amendments and the Rule Amendments.

A. Definition of “designated foreign security”

The definition of “designated foreign security” in the Proposed Amendments was changed in a couple of respects. The term itself was changed to “eligible foreign security”. This change was made to avoid confusion as to whether the OSC had in fact “designated” certain securities as benefiting from the relief.

In addition to minor drafting changes, the definition was amended to remove the reference to the “principal executive office” being outside of Canada. Instead, the definition clarifies that in addition to the issuer’s head office being outside of Canada, a majority of the issuer’s executive officers and directors must be ordinarily resident outside of Canada. We made this change to provide greater clarity to the definition. We determined that use of the term “principal executive office” might be too vague and cause confusion.

B. Definition of “executive officer”

The definition of “executive officer” in OSC Rule 45-501 has been amended to conform to the current definition in National Instrument 51-102 Continuous Disclosure Obligations. The definition now includes paragraph (a.1), which includes the chief executive officer or chief financial officer of the issuer.

C. Exemption from listing representation requirements The Proposed Amendments contemplated that an exemption from the prohibition on making a listing representation in the Act could apply in certain circumstances. In addition to the conditions included in the Proposed Amendments, we have added a further condition (c), namely that the representation is made in compliance with the by-laws and rules of the exchange or quotation and trade reporting system referred to in the representation. This change was made to conform to similar amendments published for comment by certain other CSA jurisdictions in proposed CSA Multilateral Instrument 45-107 Listing Representations and Statutory Rights of Action Disclosure Requirements (MI 45-107). We agreed that it was appropriate to include as a condition to the exemption that the representation be made in compliance with the rules and by-laws of the exchange or quotation system referred to.

D. Manner of disclosure The Proposed Amendments would amend OSC Rule 45-501 to add alternative ways that the disclosure mandated by section 5.3 [Statutory rights of action] could be provided. As an alternative to requiring this disclosure to be included in the offering memorandum, the Proposed Amendments stated that the disclosure could also be provided in a “representation letter, subscription agreement or other form of written notice delivered to the permitted client in connection with a distribution for which no offering memorandum is being used”. A number of commenters pointed out that, if no offering memorandum is being used, then the requirement to provide disclosure of statutory rights of action does not apply. As a result, we have removed the subsection that referred to providing disclosure where no offering memorandum is being used.

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In addition, we have added standard language that can be used to satisfy the requirement to provide disclosure of statutory rights of action. This standard summary language is intended to address comments that noted the current requirements often result in lengthy and detailed disclosure on statutory rights of action that is unnecessary for sophisticated investors that qualify as permitted clients. This language is similar to the standard language on statutory rights of action included in a prospectus.

E. No requirement for permitted clients to acknowledge receipt of a notice

The Proposed Amendments allowed for a notice to be provided to a permitted client by a registered dealer or international dealer that included disclosure of the applicable statutory rights of action and that also included a statement that the notice applied to all similar future distributions. This notice was required to be acknowledged by each permitted client. In response to comments received about the practical difficulties associated with receiving acknowledgment of the notice from each permitted client, we have amended this provision so that the notice can be provided and relate to future distributions, but does not have to be acknowledged by the permitted client.

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Annex D List of commenters

1. Alberta Investment Management Corporation 2. Caisse de Dépôt et Placement du Québec 3. Canada Pension Plan Investment Board 4. Davies Ward Phillips & Vineberg LLP 5. OMERS Administration Corporation 6. Ontario Teachers’ Pension Plan Board 7. Osler, Hoskin & Harcourt LLP 8. Public Sector Pension Investment Board 9. Stikeman Elliott

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Annex E Summary of comments and responses

No. Subject

Summarized Comment OSC Response

General Comments 1. General support for the

proposals Eight commenters expressed general support for the proposed amendments, subject to their comments on specific aspects of the proposals. One commenter stated that the proposed amendments will facilitate participation in the exempt market by sophisticated Ontario investors seeking to invest in foreign securities.

We thank commenters for their support.

2. General concern with the proposals

Six commenters expressed general support for the proposed amendments but stated that the proposed amendments are not sufficient.

We have made some changes to the amendments as a result of certain concerns raised by commenters, as described more fully below.

3. Evaluate in conjunction with other initiatives

One commenter stated that the proposed amendments to OSC Rule 45-501 should be evaluated in conjunction with other initiatives related to the exempt market currently being undertaken by the Ontario Securities Commission (OSC) (for example OSC Staff Consultation Paper 45-710 Considerations for New Capital Raising Prospectus Exemptions). The commenter noted that the OSC has, in recent years, endeavoured to broaden, rather than reduce, its regulatory oversight of exempt market participants. The OSC has also sought to restrict the scope of dealing activities conducted by foreign dealers.

We have considered the proposed amendments in conjunction with other work currently being conducted on the exempt market. The amendments do not change the types of activities that EMDs can conduct in Ontario and they do not affect the regulatory oversight of EMDs. The amendments only provide limited relief from specific items of disclosure where the offering is a foreign offering and the investors in Canada are permitted clients. As a result we do not

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No. Subject


consider the proposed amendments to be contrary to other recent OSC initiatives relating to the exempt market.

4. Related amendments to National Instrument 33-105 Underwriting Conflicts (NI 33-105)

The proposed amendments should also be considered in light of proposed amendments to NI 33-105.

We have coordinated with other CSA jurisdictions to develop and propose related amendments to NI 33-105 which were published for comment on November 28, 2013. After considering the comments received, we are also publishing today final amendments to NI 33-105.

5. Resale restrictions Six commenters stated that there is significant uncertainty about the ability to resell the securities acquired in a foreign private placement. The commenters noted that relief from the OSC may be required to permit the sale of securities of a foreign issuer with a de minimis connection to the Canadian markets.

Changes to the current resale regime in Ontario are beyond the scope of this project.

6. The “wrapper” serves a gatekeeper function

One commenter noted that the typical wrapper preparation process serves a “gatekeeper” or compliance function that addresses a number of Canadian-specific requirements, including requirements not addressed by the proposed amendments. While the commenter is supportive of the efforts to streamline and simplify the wrapper process, the commenter noted that there are many legal and practical reasons for preparing a wrapper beyond the requirements addressed in the proposed amendments. The offering of securities using a wrapper in reliance on certain prospectus exemptions under NI 45-106 has been an efficient and well-established process for many offerings.

We acknowledge the comment and note that the amendments only provide relief from certain discrete items of disclosure, and do not relieve issuers from compliance with other aspects of Ontario securities law that may apply to a particular offering.

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No. Subject


Comments on amendments to OSC Rule 45-501 7. Manner of disclosure One commenter was encouraged that the OSC

had proposed alternative methods of delivery of the right of action disclosure, for example in a separate document, where an offering memorandum is delivered to prospective investors.

We acknowledge the comment.

8. Disclosure where no offering memorandum

Two commenters submitted that disclosure of statutory rights of action is only necessary where an offering memorandum is used in connection with a distribution. The OSC should clarify the purpose and practical application of the proposed subsection 5.6(c), which would allow for alternative methods of disclosure where no offering memorandum is being used.

We agree that, where no offering memorandum is used, the disclosure required by section 5.3 [Description of rights in offering memorandum] of OSC Rule 45-501 is not required to be provided. As a result, we have removed the proposed subsection that would have permitted alternative methods of disclosure where there is no offering memorandum.

9. Option to provide one-time notice that is signed by each permitted client

A number of commenters suggested that section 5.3 [Description of rights in offering memorandum] of OSC Rule 45-501 should not apply in respect of an offering memorandum delivered to a permitted client in connection with the distribution of a designated foreign security6. One commenter submitted that the absence of disclosure of a statutory right of action would not affect the investor’s ability to rely on such a right. The permitted clients to whom sales would be made under the proposed amendments are sophisticated investors who should be reasonably expected to be aware of the rights and remedies available to them under Ontario’s securities laws.

We have not amended the current requirement in section 5.3 [Description of rights in offering memorandum] of OSC Rule 45-501, which requires disclosure of applicable statutory rights of action in an offering memorandum, as we continue to believe disclosure of such rights is appropriate.

6 Note that in the final amendments we have changed the term from “designated foreign security” to “eligible foreign security”.

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(2015), 38 OSCB 5808

No. Subject


Four commenters submitted that the OSC should reconsider imposing a requirement to have the permitted client sign a one-time acknowledgement, and suggested revising subsection proposed subsection 5.6(d) [Manner of disclosure] to allow the disclosure requirement (of statutory rights of action) to be satisfied by the provision of a one-time notice that does not require the recipient’s signature or consent.

However, we have provided for alternative ways to comply with this requirement, such as permitting standard language to be provided either in an offering memorandum or other document that accompanies the offering memorandum, in the context of eligible foreign securities offering to permitted clients. In our view, this change will make it easier to comply with the requirement to provide disclosure of applicable statutory rights of action. In response to comments received, we have amended the proposed option for providing notice to permitted clients, so that each permitted client will no longer be required to return a signed acknowledgment to the registered dealer or international dealer.

10. Description of statutory rights of action in document other than offering memorandum

One commenter questioned the purpose of permitting disclosure of applicable statutory rights of action to be provided in a document that accompanies an offering memorandum, given that liability relates to disclosure in the offering memorandum.

Given our understanding of the difficulty of including Canadian-specific disclosure in a foreign offering document, we have provided flexibility on where the disclosure of statutory rights of action can be included.

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June 25, 2015

(2015), 38 OSCB 5809

No. Subject


11. Relief for permitted clients

One commenter submitted that proposed sections 5.5 [Exemption from listing representation requirements] and 5.6 [Manner of disclosure] are conditioned on the investor qualifying as a “permitted client”, notwithstanding that the distribution itself may otherwise qualify under the “accredited investor” prospectus exemption. The commenter noted this introduces additional fragmentation into the private placement process, as private placements offered to “accredited investors” that are not also permitted clients would not qualify. This may result in the unintended consequence that Canadian investors will receive dissimilar disclosure based solely on their status as either “accredited investors” or “permitted clients”, notwithstanding that both classes of investor are qualified for the purposes of reliance on the “accredited investor” exemption.

We have been made aware of significant demand for access to these types of foreign investment opportunities from institutional investors that qualify as permitted clients. “Permitted client” is an existing category of investor that is applied in other securities law contexts. We do not consider using the concept of permitted client in these limited areas of relief to be introducing fragmentation to the market. The definition of accredited investor includes a much broader range of investors. At this time, we did not consider it appropriate or necessary to expand the proposed exemption to accredited investors.

12. Reference to “seller” and role of dealer

One commenter noted that Ontario securities law does not define the term “seller” for the purposes of section 5.3 of OSC Rule 45-501 [Description of rights in offering memorandum] and the proposed amendments. However, section 130.1 [Liability for misrepresentation in offering memorandum] of the Securities Act (the Act) applies to issuers and selling security holders on whose behalf a distribution is made. Therefore, it is reasonable to ascribe similar application of the term “seller” to issuers and selling security holders, rather than to dealers acting as agents.

Where an issuer or selling security holder has engaged a dealer to act as agent in the context of a foreign private placement into Canada, we are of the view that it is appropriate for the dealer to be able to provide notice to its permitted clients of their statutory rights under future private

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June 25, 2015

(2015), 38 OSCB 5810

No. Subject


The commenter suggested it may not be appropriate as a proxy method of delivering notice of statutory rights of action to have a dealer provide the notice, since liability rests with the “seller”.

placements. This was the approach taken in the exemptive relief decisions previously granted to different groups of dealers (the “Wrapper Decisions”), beginning with the decision In the matter of Barclays Capital Inc. et al dated April 23, 2013.

Comments on related proposals 13. Requirement to provide

description of statutory rights in proposed Multilateral Instrument 45-107 Listing representation and statutory right of action disclosure exemptions (MI 45-107)

One commenter stated that the proposed disclosure requirement in MI 45-107 does not mesh with the notice requirement in the proposed amendments to NI 33-105. In particular, the proposed amendments to NI 33-105 would permit a notice describing the terms and conditions of the exemptions to be provided in the exempt offering document, while MI 45-107 would only provide for alternative means by which statutory rights could be described. The commenter suggested that a description of statutory rights of action should not be required.

We continue to believe that a brief description of statutory rights should be provided and have worked with our CSA colleagues to align the various amendments relating to wrapper disclosure.

Other comments related to Wrapper Decisions 14. Process by which

Wrapper Decisions were granted

One commenter suggested there has been confusion about the scope, extent and requirements relating to Wrapper Decisions. The commenter expressed concern with the process by which the Wrapper Decisions were granted and suggested this process was unfair to the broader community of market participants, as the process was not subject to public notice or public commentary.

In our view the Wrapper Decisions were clear with respect to the scope, extent and requirements of the exemptive relief granted in those decisions. We understand from stakeholders that some market participants outside of Canada still find certain Canadian-specific terms (such as

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June 25, 2015

(2015), 38 OSCB 5811

No. Subject


“connected issuer” and “related issuer”) difficult to understand. As a result we have made changes to the amendments to address this concern and provide for broader relief. The process by which the Wrapper Decisions were granted followed the normal exemptive relief process. To recognize that there may have been other market participants that desired similar relief, the Commission delayed the implementation of the Barclays Decision by 60 days. This delay was intended to allow other similarly situated market participants to apply for similar relief. Subsequently, 10 substantially similar exemptive relief decisions have been granted to different applicant groups. The Commission followed the Wrapper Decisions with proposed amendments to implement the relief granted in those decisions.

15. Authority of OSC to grant “wrapper relief”

One commenter noted that the Commission is prohibited from making any order or ruling “of general application” under the Securities Act (Ontario). The commenter expressed concerns as

In considering the Barclays Decision (on which subsequent similar decisions were

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June 25, 2015

(2015), 38 OSCB 5812

No. Subject


to the Commission’s authority to grant the Wrapper Decisions given that prohibition.

based), OSC staff considered the scope of the requested relief and whether it raised concerns regarding the prohibition on orders of general application. The scope of the requested relief in the Barclays Decision was significantly refined through the application review process in order to address such concerns. The Wrapper Decisions apply, in each case, to a specified list of applicants, for a specified period of time in relation to specific heads of relief, subject to defined terms and conditions. Furthermore, the relief provided is transitional in nature, pending the implementation of proposed amendments. The OSC is satisfied that it has the authority to make the Wrapper Decisions.

16. Wrapper Decisions provide relief based on U.S. disclosure requirements

One commenter noted that the Wrapper Decisions were premised on the assumption that U.S. disclosure requirements are substantially similar to disclosure mandated under the “connected issuer” and “related issuer” standards contained in NI 33-105. There are material and substantive differences between U.S. disclosure requirements and those contained in NI 33-105, with the effect that the Canadian disclosure requirements are more robust and provide investors with additional disclosure.

We are aware that there are differences in the Canadian and U.S. disclosure requirements relating to conflicts of interest between issuers and dealers. Given the narrow application of the amendments and the fact that they only apply

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June 25, 2015

(2015), 38 OSCB 5813

No. Subject


with respect to foreign offerings made to permitted clients in Canada, we are satisfied that it is appropriate to provide a limited exemption from the disclosure requirements in NI 33-105 based on alternative U.S. disclosure being provided, despite these differences.

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June 25, 2015

(2015), 38 OSCB 5814

5.1.3 Unofficial Consolidation of NI 55-104 Insider Reporting Requirements and Exemptions and Companion Policy 55-104CP

This document is an unofficial consolidation of National Instrument 55-104 Insider Reporting Requirements and Exemptions and its companion policy, reflecting text that came into force in Ontario on April 30, 2010. The document also reflects local amendments in Alberta, effective October 31, 2014, which were reproduced on March 12, 2015 in CSA Staff Notice 11-328 Notice of Local Amendments in Alberta and the Adoption of Multilateral Amendments in Yukon. This document is for reference purposes only and is not an official statement of the law.

National Instrument 55-104

Insider Reporting Requirements and Exemptions PART 1 DEFINITIONS AND INTERPRETATION 1.1 Definitions and interpretation (1) In this Instrument

“acceptable summary form” means, in relation to the alternative form of insider report described in sections 5.4 and 6.4, an insider report that discloses as a single transaction, with December 31 of the relevant year as the date of the transaction, using an average unit price of the securities,

(a) the total number of securities of the same type acquired under an automatic securities purchase plan or

compensation arrangement, or under all such plans or arrangements, for the calendar year; and (b) the total number of securities of the same type disposed of under all specified dispositions of securities under

an automatic securities purchase plan or compensation arrangement, or under all such plans or arrangements, for the calendar year;

“automatic securities purchase plan” means a dividend or interest reinvestment plan, a stock dividend plan, or any other plan established by an issuer or by a subsidiary of an issuer to facilitate the acquisition of securities of the issuer if the timing of acquisitions of securities, the number of securities which may be acquired under the plan by a director or officer of the issuer or of the subsidiary of the issuer, and the price payable for the securities are established in advance by written formula or criteria set out in a plan document and not subject to a subsequent exercise of discretion; “cash payment option” means a provision in a dividend or interest reinvestment plan under which a participant is permitted to make cash payments to purchase from the issuer, or from an administrator of the plan, securities of the issuer’s own issue; “CEO” means a chief executive officer and any other individual who acts as chief executive officer for an issuer or acts in a similar capacity for the issuer; “CFO” means a chief financial officer and any other individual who acts as chief financial officer for an issuer or acts in a similar capacity for the issuer; “compensation arrangement” includes, but is not limited to, an arrangement, whether or not set out in any formal document and whether or not applicable to only one individual, under which cash, securities or related financial instruments, including, for greater certainty, options, stock appreciation rights, phantom shares, restricted shares or restricted share units, deferred share units, performance units or performance shares, stock, stock dividends, warrants, convertible securities, or similar instruments, may be received or purchased as compensation for services rendered, or otherwise in connection with holding an office or employment with a reporting issuer or a subsidiary of a reporting issuer; “convertible security” means a security of an issuer that is convertible into, or carries the right of the holder to purchase or otherwise acquire, or of the issuer to cause the purchase or acquisition of, a security of the same issuer; “COO” means a chief operating officer and any other individual who acts as chief operating officer for an issuer or acts in a similar capacity for the issuer;

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June 25, 2015

(2015), 38 OSCB 5815

“credit derivative” means a derivative in respect of which the underlying security, interest, benchmark or formula is, or is related to or derived from, in whole or in part, a debt or other financial obligation of an issuer; “derivative” (a) means, other than in Alberta, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince Edward

Island, Québec and the Yukon Territory, an instrument, agreement, security or exchange contract, the market price, value or payment obligations of which is derived from, referenced to, or based on an underlying security, interest, benchmark or formula;

(b) in Alberta, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince Edward Island and the Yukon

Territory, has the same meaning as in securities legislation; and (c) in Québec, has the same meaning as in The Derivatives Act; “dividend or interest reinvestment plan” means an arrangement under which a holder of securities of an issuer is permitted to direct that the dividends, interest or distributions paid on the securities be applied to the purchase, from the issuer or an administrator of the issuer, of securities of the issuer’s own issue; “economic exposure” in relation to an issuer

(a) means, other than in Ontario, the extent to which the economic or financial interests of a person or company are aligned with the trading price of securities of the issuer or the economic or financial interests of the issuer;

(b) in Ontario, has the same meaning as in securities legislation;

“economic interest” in a security or an exchange contract (a) means, other than in British Columbia, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince

Edward Island, Québec, Saskatchewan and the Yukon Territory,

(i) a right to receive or the opportunity to participate in a reward, benefit or return from a security or an exchange contract, or

(ii) exposure to a risk of a financial loss in respect of a security or an exchange contract;

(b) in British Columbia, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince Edward Island,

Québec, Saskatchewan and the Yukon Territory, has the same meaning as in securities legislation;

“exchange contract” (a) means, other than in British Columbia, New Brunswick and Saskatchewan, a futures contract or an option that

meets both of the following requirements:

(i) its performance is guaranteed by a clearing agency; and (ii) it is traded on an exchange pursuant to standardized terms and conditions set out in that exchange's

by-laws, rules or regulatory instruments, at a price agreed on when the futures contract or option is entered into on the exchange;

(b) in British Columbia, New Brunswick and Saskatchewan, has the same meaning as in securities legislation; “exchangeable security” means a security of an issuer that is exchangeable for, or carries the right of the holder to purchase or otherwise acquire, or of the issuer to cause the purchase or acquisition of, a security of another issuer; “income trust” means a trust or an entity, including corporate and non-corporate entities, the securities of which entitle the holder to net cash flows generated by an underlying business or income-producing properties owned through the trust or by the entity; “insider report” means a report to be filed by an insider under securities legislation;

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June 25, 2015

(2015), 38 OSCB 5816

“insider reporting requirement” means (a) a requirement to file insider reports under Parts 3 and 4; (b) a requirement to file insider reports under any provisions of Canadian securities legislation substantially

similar to Parts 3 and 4; and (c) a requirement to file an insider profile under NI 55-102; “investment issuer” means, in relation to an issuer, another issuer in respect of which the issuer is an insider; “issuer event” means a stock dividend, stock split, consolidation, amalgamation, reorganization, merger or other similar event that affects all holdings of a class of securities of an issuer in the same manner, on a per share basis; “lump-sum provision” means a provision of an automatic securities purchase plan that allows a director or officer to acquire securities in consideration of an additional lump-sum payment, and includes a cash payment option; “major subsidiary” means a subsidiary of an issuer if (a) the assets of the subsidiary, as included in the issuer’s most recent annual audited or interim balance sheet,

or, for a period relating to a financial year beginning on or after January 1, 2011, a statement of financial position, are 30 per cent or more of the consolidated assets of the issuer reported on that balance sheet or statement of financial position, as the case may be, or

(b) the revenue of the subsidiary, as included in the issuer’s most recent annual audited or interim income

statement, or, for a period relating to a financial year beginning on or after January 1, 2011, a statement of comprehensive income, is 30 per cent or more of the consolidated revenue of the issuer reported on that statement;

“management company” means a person or company established or contracted to provide significant management or administrative services to an issuer or a subsidiary of the issuer; “NI 55-102” means National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI); “normal course issuer bid” means (a) an issuer bid that is made in reliance on the exemption, contained in securities legislation from requirements

relating to issuer bids, that is available if the number of securities acquired by the issuer within a period of twelve months does not exceed 5 per cent of the securities of that class issued and outstanding at the commencement of the period, or

(b) a normal course issuer bid as defined in the rules or policies of the Toronto Stock Exchange, the TSX Venture Exchange or an exchange that is a recognized exchange, as defined in National Instrument 21-101 Marketplace Operation, and that is conducted in accordance with the rules or policies of that exchange;

“operating entity” means a person or company with an underlying business or with assets owned in whole or in part by an income trust for the purposes of generating cash flow; “principal operating entity” means an operating entity that is a major subsidiary of an income trust; “related financial instrument” (a) means, other than in British Columbia, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince

Edward Island, Québec, Saskatchewan and the Yukon Territory, (i) an instrument, agreement, security or exchange contract the value, market price or payment

obligations of which are derived from, referenced to or based on the value, market price or payment obligations of a security, or,

(ii) any other instrument, agreement, or understanding that affects, directly or indirectly, a person or

company’s economic interest in a security or an exchange contract;

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June 25, 2015

(2015), 38 OSCB 5817

(b) in British Columbia, New Brunswick, the Northwest Territories, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan and the Yukon Territory, has the same meaning as in securities legislation;

“reporting insider” means an insider of a reporting issuer if the insider is (a) the CEO, CFO or COO of the reporting issuer, of a significant shareholder of the reporting issuer or of a major

subsidiary of the reporting issuer; (b) a director of the reporting issuer, of a significant shareholder of the reporting issuer or of a major subsidiary of

the reporting issuer; (c) a person or company responsible for a principal business unit, division or function of the reporting issuer; (d) a significant shareholder of the reporting issuer; (e) a significant shareholder based on post-conversion beneficial ownership of the reporting issuer’s securities

and the CEO, CFO, COO and every director of the significant shareholder based on post-conversion beneficial ownership;

(f) a management company that provides significant management or administrative services to the reporting

issuer or a major subsidiary of the reporting issuer, every director of the management company, every CEO, CFO and COO of the management company, and every significant shareholder of the management company;

(g) an individual performing functions similar to the functions performed by any of the insiders described in

paragraphs (a) to (f); (h) the reporting issuer itself, if it has purchased, redeemed or otherwise acquired a security of its own issue, for

so long as it continues to hold that security; or (i) any other insider that

(i) in the ordinary course receives or has access to information as to material facts or material changes

concerning the reporting issuer before the material facts or material changes are generally disclosed; and

(ii) directly or indirectly exercises, or has the ability to exercise, significant power or influence over the

business, operations, capital or development of the reporting issuer; “significant shareholder” means a person or company that has beneficial ownership of, or control or direction over, whether direct or indirect, or a combination of beneficial ownership of, and control or direction over, whether direct or indirect, securities of an issuer carrying more than 10 per cent of the voting rights attached to all the issuer’s outstanding voting securities, excluding, for the purpose of the calculation of the percentage held, any securities held by the person or company as underwriter in the course of a distribution; “stock dividend plan” means an arrangement under which securities of an issuer are issued by the issuer to holders of securities of the issuer as a stock dividend or other distribution out of earnings, retained earnings or capital; and “underlying security” means a security issued or transferred, or to be issued or transferred, in accordance with the terms of a convertible security, an exchangeable security or a multiple convertible security.

(2) Affiliate – In this Instrument, an issuer is an affiliate of another issuer if

(a) one of them is the subsidiary of the other, or (b) each of them is controlled by the same person or company.

(3) Control – In this Instrument, a person or company (first person or company) is considered to control another person or company (second person or company) if

(a) the first person or company beneficially owns or has control or direction over, whether direct or indirect,

securities of the second person or company carrying votes which, if exercised, would entitle the first person or company to elect a majority of the directors of the second person or company, unless that first person or company holds the voting securities only to secure an obligation,

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(2015), 38 OSCB 5818

(b) the second person or company is a partnership, other than a limited partnership, and the first person or company holds more than 50 per cent of the interests of the partnership, or

(c) the second person or company is a limited partnership and the general partner of the limited partnership is the

first person or company. (4) Post-conversion beneficial ownership – In this Instrument, a person or company is considered to have, as of a given

date, post-conversion beneficial ownership of a security, including an unissued security, if the person or company is the beneficial owner of a security convertible into the security within 60 days following that date or has a right or obligation permitting or requiring the person or company, whether or not on conditions, to acquire beneficial ownership of the security within 60 days, by a single transaction or a series of linked transactions.

(5) Significant shareholder based on post-conversion beneficial ownership – In this Instrument, a person or company

is a significant shareholder based on post-conversion beneficial ownership if the person or company is not a significant shareholder but the person or company has beneficial ownership of, post-conversion beneficial ownership of, control or direction over, whether direct or indirect, or any combination of beneficial ownership of, post-conversion beneficial ownership of, or control or direction over, whether direct or indirect, securities of an issuer carrying more than 10 per cent of the voting rights attached to all the issuer’s outstanding voting securities, calculated in accordance with subsections (6) and (7).

(6) For the purposes of the calculation in subsection (5), an issuer’s outstanding voting securities include securities in

respect of which a person or company has post-conversion beneficial ownership. (7) For the purposes of the calculation in subsections (4) and (5), a person or company may exclude any securities held by

the person or company as underwriter in the course of a distribution. 1.2 Persons and companies designated or determined to be insiders for the purposes of this Instrument (1) The following persons and companies are designated or determined to be insiders of an issuer:

(a) a significant shareholder of the issuer based on post-conversion beneficial ownership of the issuer’s securities;

(b) a management company that provides significant management or administrative services to the issuer or a

major subsidiary of the issuer, and every director, officer and significant shareholder of the management company; and

(c) if the issuer is an income trust, every director, officer and significant shareholder of a principal operating entity

of the issuer.

(2) Issuer as insider of reporting issuer – If an issuer (the first issuer) becomes an insider of a reporting issuer (the second issuer), the CEO, CFO, COO and every director of the first issuer are designated or determined to be an insider of the second issuer and must file insider reports in accordance with section 3.5 in respect of transactions relating to the second issuer that occurred in the previous six months or for such shorter period that the individual was a CEO, CFO, COO or director of the first issuer.

(3) Reporting issuer as insider of other issuer – If a reporting issuer (the first issuer) becomes an insider of another

issuer (the second issuer), the CEO, CFO, COO and every director of the second issuer is designated or determined to be an insider of the first issuer and must file insider reports in accordance with section 3.5 in respect of transactions relating to the first issuer that occurred in the previous six months or for such shorter period that the individual was a CEO, CFO, COO or director of the second issuer.

1.3 Reliance on Reported Outstanding Shares (1) In determining the securityholding percentage of a person or company in a class of securities for the purposes of the

definition “significant shareholder” and in determining if the person or company is a significant shareholder based on post-conversion beneficial ownership, the person or company may rely upon information most recently filed by the issuer of the securities in a material change report or under section 5.4 of National Instrument 51-102 Continuous Disclosure Obligations, whichever contains the most recent relevant information.

(2) Subsection (1) does not apply if the person or company has knowledge both

(a) that the information filed is inaccurate or has changed; and (b) of the correct information.

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(2015), 38 OSCB 5819

PART 2 APPLICATION 2.1 Insider reporting requirements (insiders of Ontario reporting issuers) – In Ontario, the insider reporting

requirements in sections 3.2 and 3.3 do not apply to an insider of a reporting issuer under the Securities Act (Ontario).

Note: In Ontario, requirements similar to the insider reporting requirements in sections 3.2 and 3.3 of this Instrument are contained in section 107 of the Securities Act (Ontario).

2.2 Reporting deadline – In Ontario, for the purposes of subsection 107(2) of the Securities Act (Ontario), in the case of a

transaction occurring after October 31, 2010, the prescribed period is within five days of any change in the beneficial ownership of, or control or direction over, whether direct or indirect, securities of the reporting issuer or any interest in, or right or obligation associated with, a related financial instrument.

PART 3 PRIMARY INSIDER REPORTING REQUIREMENT 3.1 Reporting requirement – An insider must file insider reports under this Part and Part 4 in respect of a reporting issuer

if the insider is a reporting insider of the reporting issuer. 3.2 Initial report – A reporting insider must file an insider report in respect of a reporting issuer, within 10 days of

becoming a reporting insider, disclosing the reporting insider’s

(a) beneficial ownership of, or control or direction over, whether direct or indirect, securities of the reporting issuer, and

(b) interest in, or right or obligation associated with, a related financial instrument involving a security of the

reporting issuer. 3.3 Subsequent report – A reporting insider must within five days of any of the following changes file an insider report in

respect of a reporting issuer disclosing a change in the reporting insider’s

(a) beneficial ownership of, or control or direction over, whether direct or indirect, securities of the reporting issuer, or

(b) interest in, or right or obligation associated with, a related financial instrument involving a security of the

reporting issuer. 3.4 Reporting requirements in connection with convertible or exchangeable securities – For greater certainty, a

reporting insider who exercises an option, warrant or other convertible or exchangeable security must file, within five days of the exercise, separate insider reports in accordance with section 3.3 disclosing the resulting change in the reporting insider’s beneficial ownership of, or control or direction over, whether direct or indirect, each of (a) the option, warrant or other convertible or exchangeable security, and (b) the common shares or other underlying securities.

3.5 Report by certain designated insiders for certain historical transactions – A CEO, CFO, COO or director of an

issuer (the first issuer) who is designated or determined to be an insider of another issuer (the second issuer) under subsection 1.2(2) or 1.2(3) must file, within 10 days of being designated or determined to be an insider of the second issuer, the insider reports that a reporting insider of the second issuer would have been required to file under Part 3 and Part 4 for all transactions involving securities of the second issuer or related financial instruments involving securities of the second issuer, that occurred in the previous six months or for such shorter period that the individual was a CEO, CFO, COO or director of the first issuer.

PART 4 SUPPLEMENTAL INSIDER REPORTING REQUIREMENT 4.1 Other agreements, arrangements or understandings (1) If a reporting insider of a reporting issuer enters into, materially amends, or terminates an agreement, arrangement or

understanding described in subsection (2), the reporting insider must, within five days of this event, file an insider report in respect of the reporting issuer in accordance with section 4.3.

(2) An agreement, arrangement or understanding must be reported under subsection (1) in an insider report in respect of a

reporting issuer if

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(2015), 38 OSCB 5820

(a) the agreement, arrangement or understanding has the effect of altering, directly or indirectly, the reporting insider’s economic exposure to the reporting issuer;

(b) the agreement, arrangement or understanding involves, directly or indirectly, a security of the reporting issuer

or a related financial instrument involving a security of the reporting issuer; and (c) the reporting insider is not otherwise required to file an insider report in respect of this event under Part 3 or

any corresponding provision of Canadian securities legislation. 4.2 Report of prior agreements, arrangements or understandings – A reporting insider must, within 10 days of

becoming a reporting insider of a reporting issuer, file an insider report in accordance with section 4.3 in respect of the reporting issuer if (a) the reporting insider, prior to the date the reporting insider most recently became a reporting insider, entered

into an agreement, arrangement or understanding in respect of which the reporting insider would have been required to file an insider report under section 4.1 if the agreement, arrangement or understanding had been entered into on or after the date the reporting insider most recently became a reporting insider, and

(b) the agreement, arrangement or understanding remains in effect on or after the date the reporting insider most

recently became a reporting insider. 4.3 Contents of report – An insider report required to be filed under section 4.1 or 4.2 must disclose the existence and

material terms of the agreement, arrangement or understanding. PART 5 EXEMPTION FOR AUTOMATIC SECURITIES PURCHASE PLANS 5.1 Interpretation (1) In this Part, a reference to a director or officer means a director or officer who is

(a) a director or officer of a reporting issuer and a reporting insider of the reporting issuer, or (b) a director or officer of a subsidiary of a reporting issuer and a reporting insider of the reporting issuer.

(2) In this Part, a reference to a security of a reporting issuer includes a related financial instrument involving a security of the reporting issuer.

(3) In this Part, a disposition or transfer of securities acquired under an automatic securities purchase plan is a specified

disposition of securities if

(a) the disposition or transfer is incidental to the operation of the automatic securities purchase plan and does not involve a discrete investment decision by the director or officer; or

(b) the disposition or transfer is made to satisfy a tax withholding obligation arising from the distribution of

securities under the automatic securities purchase plan and either

(i) the director or officer has elected that the tax withholding obligation will be satisfied through a disposition of securities, has communicated this election to the reporting issuer or the plan administrator at least 30 days before the disposition and this election is irrevocable as of the 30th day before the disposition; or

(ii) the director or officer has not communicated an election to the reporting issuer or the plan

administrator and, in accordance with the terms of the plan, the reporting issuer or the plan administrator is required to sell securities automatically to satisfy the tax withholding obligation.

5.2 Reporting exemption (1) The insider reporting requirement does not apply to a director or officer for an acquisition or disposition of securities

described in subsection (2) if the director or officer complies with the alternative reporting requirement in section 5.4.

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(2015), 38 OSCB 5821

(2) The exemption in subsection (1) applies to

(a) an acquisition of securities of the reporting issuer under an automatic securities purchase plan, other than an acquisition of securities under a lump-sum provision of the plan; or

(b) a specified disposition of securities of the reporting issuer under an automatic securities purchase plan.

5.3 Acquisition of options or similar securities – The exemption in section 5.2 does not apply to an acquisition of

options or similar securities granted to a director or officer. 5.4 Alternative reporting requirement (1) A director or officer is exempt under section 5.2 from the insider reporting requirement if the insider files an insider

report within the time period described in subsection (2) disclosing, on a transaction-by-transaction basis or in acceptable summary form, each acquisition and each specified disposition of a security under an automatic securities purchase plan that has not previously been disclosed by or on behalf of the director or officer.

(2) The deadline for filing the insider report under subsection (1) is,

(a) in the case of any securities acquired under the automatic securities purchase plan that have been disposed of or transferred, other than securities that have been disposed of or transferred as part of a specified disposition of securities, within five days of the disposition or transfer; and

(b) in the case of any securities acquired under the automatic securities purchase plan during a calendar year

that have not been disposed of or transferred, and any securities that have been disposed of or transferred as part of a specified disposition of securities, on or before March 31 of the next calendar year.

(3) Subsection (1) does not apply to a director or officer if, at the time the insider report described in subsection (1) is due,

(a) the director or officer is not a reporting insider; or (b) the director or officer is exempt from the insider reporting requirement.

PART 6 EXEMPTION FOR CERTAIN ISSUER GRANTS 6.1 Interpretation (1) In this Part, a reference to a director or officer means a director or officer who is

(a) a director or officer of a reporting issuer and a reporting insider of the reporting issuer, or (b) a director or officer of a subsidiary of a reporting issuer and a reporting insider of the reporting issuer.

(2) In this Part, a reference to a security of a reporting issuer includes a related financial instrument involving a security of the reporting issuer.

(3) In this Part, a disposition or transfer of a security acquired under a compensation arrangement is a specified disposition

of a security if

(a) the disposition or transfer is incidental to the operation of the compensation arrangement and does not involve a discrete investment decision by the director or officer; or

(b) the disposition or transfer is made to satisfy a tax withholding obligation arising from the distribution of a

security under the compensation arrangement and either

(i) the director or officer has elected that the tax withholding obligation will be satisfied through a disposition of securities, has communicated this election to the reporting issuer or the administrator of the compensation arrangement at least 30 days before the disposition and this election is irrevocable as of the 30th day before the disposition; or

(ii) the director or officer has not communicated an election to the reporting issuer or the administrator of

the compensation arrangement and, in accordance with the terms of the arrangement, the reporting issuer or the administrator is required to sell securities automatically to satisfy the tax withholding obligation.

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6.2 Reporting exemption – The insider reporting requirement does not apply to a director or officer for the acquisition of a security of the reporting issuer, or a specified disposition of a security of the reporting issuer, under a compensation arrangement established by the reporting issuer or by a subsidiary of the reporting issuer, if

(a) the reporting issuer has previously disclosed the existence and material terms of the compensation

arrangement in an information circular or other public document filed on SEDAR; (b) in the case of an acquisition of securities, the reporting issuer has previously filed in respect of the acquisition

an issuer grant report on SEDI in accordance with section 6.3; and (c) the director or officer complies with the alternative reporting requirement in section 6.4.

6.3 Issuer grant report – An issuer grant report filed under this Part in respect of a compensation arrangement must

include

(a) the date the option or other security was issued or granted; (b) the number of options or other securities issued or granted to each director or officer; (c) the price at which the option or other security was issued or granted and the exercise price; (d) the number and type of securities issuable on the exercise of the option or other security; and (e) any other material terms that have not been previously disclosed or filed in a public filing on SEDAR.

6.4 Alternative reporting requirement (1) A director or officer is exempt under section 6.2 from the insider reporting requirement if the insider files an insider

report within the time period described in subsection (2) disclosing, on a transaction-by-transaction basis or in acceptable summary form, each acquisition and each specified disposition of a security under a compensation arrangement that has not previously been disclosed by or on behalf of the director or officer.

(2) The deadline for filing the insider report under subsection (1) is

(a) in the case of any security acquired under the compensation arrangement that has been disposed of or transferred, other than a security that has been disposed of or transferred as part of a specified disposition of a security, within five days of the disposition or transfer; and

(b) in the case of any security acquired under the compensation arrangement during a calendar year that has not

been disposed of or transferred, and any security that has been disposed of or transferred as part of a specified disposition of a security, on or before March 31 of the next calendar year.

(3) Subsection (1) does not apply to a director or officer if, at the time the insider report described in subsection (1) is due,

(a) the director or officer is not a reporting insider; or (b) the director or officer is exempt from the insider reporting requirement.

PART 7 EXEMPTIONS FOR NORMAL COURSE ISSUER BIDS AND PUBLICLY DISCLOSED TRANSACTIONS 7.1 Reporting exemption for normal course issuer bids – The insider reporting requirement does not apply to an issuer

for an acquisition of a security of its own issue by the issuer under a normal course issuer bid if the issuer complies with the alternative reporting requirement in section 7.2.

7.2 Reporting requirement – An issuer who relies on the exemption in section 7.1 must file an insider report disclosing

each acquisition of securities by it under a normal course issuer bid within 10 days of the end of the month in which the acquisition occurred.

7.3 General exemption for other transactions that have been otherwise disclosed – The insider reporting requirement

does not apply to an issuer in connection with a transaction, other than a normal course issuer bid, involving a security of its own issue if the existence and material terms of the transaction have been generally disclosed in a public filing on SEDAR.

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PART 8 EXEMPTION FOR CERTAIN ISSUER EVENTS 8.1 Reporting exemption – The insider reporting requirement in respect of a reporting issuer does not apply to a reporting

insider whose beneficial ownership of, or control or direction over, whether direct or indirect, a security of the reporting issuer changes as a result of an issuer event of the reporting issuer.

8.2 Reporting requirement – A reporting insider who relies on the exemption in section 8.1 in respect of a reporting issuer

must file an insider report, disclosing all changes in beneficial ownership of, or control or direction over, whether direct or indirect, a security of the reporting issuer as a result of an issuer event if those changes have not previously been reported by or on behalf of the insider, within the time required by securities legislation for the insider to report any other subsequent change in beneficial ownership of, or control or direction over, whether direct or indirect, a security of the reporting issuer.

PART 9 GENERAL EXEMPTIONS 9.1 Reporting exemption (mutual funds) – The insider reporting requirement does not apply to an insider of an issuer

that is a mutual fund. 9.2 Reporting exemption (non-reporting insiders) – The insider reporting requirement does not apply to an insider of an

issuer if the insider is not a reporting insider of that issuer. 9.3 Reporting exemption (certain insiders of investment issuers) – The insider reporting requirement does not apply to

a director or officer of a significant shareholder, or a director or officer of a subsidiary of a significant shareholder, in respect of securities of an investment issuer or a related financial instrument involving a security of the investment issuer if the director or officer

(a) does not in the ordinary course receive or have access to information as to material facts or material changes

concerning the investment issuer before the material facts or material changes are generally disclosed; and (b) is not a reporting insider of the investment issuer in any capacity other than as a director or officer of the

significant shareholder or a subsidiary of the significant shareholder. 9.4 Reporting exemption (nil report) – The insider reporting requirement does not apply to a reporting insider if the

reporting insider

(a) does not have any beneficial ownership of, or control or direction over, whether direct or indirect, a security of the issuer;

(b) does not have any interest in, or right or obligation associated with, a related financial instrument involving a

security of the issuer; (c) has not entered into any agreement, arrangement or understanding as described in section 4.1; and (d) is not a significant shareholder based on post-conversion beneficial ownership.

9.5 Reporting exemption (corporate group) – The insider reporting requirement does not apply to a reporting insider if

(a) the reporting insider is a subsidiary or other affiliate of another reporting insider (the affiliated reporting insider); and

(b) the affiliated reporting insider has filed an insider report in respect of the reporting issuer that discloses

substantially the same information as would be contained in an insider report filed by the reporting insider,

including details of the reporting insider’s

(i) beneficial ownership of, or control or direction over, whether direct or indirect, securities of the reporting issuer; and

(ii) interest in, or right or obligation associated with, any related financial instrument involving a security

of the reporting issuer. 9.6 Reporting exemption (executor and co-executor) – The insider reporting requirement does not apply to a reporting

insider for a security of an issuer beneficially owned or controlled, directly or indirectly, by an estate if

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(a) the reporting insider is an executor, administrator or other person or company who is a representative of the estate (referred to in this section as an executor of the estate), or a director or officer of an executor of the estate;

(b) the reporting insider is subject to the insider reporting requirement solely because of the reporting insider

being an executor or a director or officer of an executor of the estate; and (c) another executor or director or officer of an executor of the estate has filed an insider report that discloses

substantially the same information as would be contained in an insider report filed by the reporting insider for securities of an issuer beneficially owned or controlled, directly or indirectly, by the estate.

9.7 Exempt persons and transactions – The insider reporting requirement does not apply to

(a) an agreement, arrangement or understanding which does not involve, directly or indirectly,

(i) a security of the reporting issuer; (ii) a related financial instrument involving a security of the reporting issuer; or (iii) any other derivative in respect of which the underlying security, interest, benchmark or formula is or

includes as a material component a security of the reporting issuer or a related financial instrument involving a security of the reporting issuer;

(b) a transfer, pledge or encumbrance of a security by a reporting insider for the purpose of giving collateral for a

debt made in good faith so long as there is no limitation on the recourse available against the insider for any amount payable under such debt;

(c) the receipt by a reporting insider of a transfer, pledge or encumbrance of a security of an issuer if the security

is transferred, pledged or encumbered as collateral for a debt under a written agreement and in the ordinary course of business of the insider;

(d) a reporting insider, other than a reporting insider that is an individual, that enters into, materially amends or

terminates an agreement, arrangement or understanding which is in the nature of a credit derivative; (e) a reporting insider who did not know and, in the exercise of reasonable diligence, could not have known of the

alteration to economic exposure described in section 4.1; (f) the acquisition or disposition of a security, or an interest in a security, of an investment fund, provided that

securities of the reporting issuer do not form a material component of the investment fund's market value; or (g) the acquisition or disposition of a security, or an interest in a security, of an issuer that holds directly or

indirectly securities of the reporting issuer, if (i) the reporting insider is not a control person of the issuer; and (ii) the reporting insider does not have or share investment control over the securities of the reporting

issuer. PART 10 DISCRETIONARY EXEMPTIONS 10.1 Exemptions from this Instrument (1) The regulator or securities regulatory authority may grant an exemption from this Instrument, in whole or in part, subject

to such conditions or restrictions as may be imposed in the exemption. (2) Despite subsection (1), in Ontario only the regulator may grant such an exemption. (3) Except in Ontario, an exemption referred to in subsection (1) is granted under the statute referred to in Appendix B of

National Instrument 14-101 Definitions opposite the name of the local jurisdiction.

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PART 11 EFFECTIVE DATE AND TRANSITION 11.1 Effective Date (1) Except in Ontario, this Instrument comes into force on April 30, 2010. (2) In Ontario, this Instrument comes into force on the later of the following:

(a) April 30, 2010; and

(b) the day on which subsection 1(8) and sections 9 and 10 of Schedule Z.5 to Bill 151, Budget Measures Act, 2006 (No. 2) are proclaimed in force.

11.2 Transition (1) Despite sections 3.3 and 3.4, a reporting insider may file an insider report required by either of those sections within 10

days of a change described in those sections if the change relates to a transaction that occurred on or before October 31, 2010.

(2) Despite section 4.1, a reporting insider may file an insider report required under that section within 10 days of an event

described in that section if the event relates to a transaction that occurred on or before October 31, 2010. (3) Despite paragraph 5.4(2)(a), a reporting insider may file an insider report required under that paragraph within 10 days

of a disposition or transfer described in that paragraph if the disposition or transfer occurred on or before October 31, 2010.

(4) Despite paragraph 6.4(2)(a), a reporting insider may file an insider report required under that paragraph within 10 days

of a disposition or transfer described in that paragraph if the disposition or transfer occurred on or before October 31, 2010.

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Companion Policy 55-104CP Insider Reporting Requirements and Exemptions

PART 1 INTRODUCTION AND DEFINITIONS 1.1 Introduction and Purpose (1) National Instrument 55-104 Insider Reporting Requirements and Exemptions (the Instrument) sets out the principal

insider reporting requirements and exemptions for insiders of reporting issuers.1 (2) The purpose of this Policy is to help you understand how the Canadian Securities Administrators (the CSA or we)

interpret or apply certain provisions of the Instrument. 1.2 Background to the Instrument (1) The Instrument consolidates the principal insider reporting requirements and most exemptions in one location. This will

make it easier for issuers and insiders to locate and understand their obligations and will help promote timely and effective compliance.

(2) The focus of the Instrument is on the substantive legal insider reporting requirements rather than the procedural

requirements relating to the filing of insider reports. Issuers and insiders should review National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI) (NI 55-102) in order to determine their obligations for the filing of insider reports.

(3) Although the Instrument sets out the principal insider reporting requirements and exemptions for issuers and insiders in

Canada, a number of other CSA instruments also contain exemptions from the insider reporting requirements, including

(a) National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102); (b) National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting

Issues (NI 62-103); (c) National Instrument 71-101 The Multijurisdictional Disclosure System (NI 71-101); and (d) National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-

102). We have not included the insider reporting exemptions from these instruments in the Instrument because we think these exemptions are better situated within the context of these other instruments. Issuers and insiders therefore may wish to review these instruments in determining whether any additional exemptions from the insider reporting requirements are available.

1.3 Policy Rationale for Insider Reporting in Canada (1) The insider reporting requirements serve a number of functions. These include deterring improper insider trading based

on material undisclosed information and increasing market efficiency by providing investors with information concerning the trading activities of insiders of an issuer, and, by inference, the insiders’ views of their issuer’s prospects.

(2) Insider reporting also helps prevent illegal or otherwise improper activities involving stock options and similar equity-

based instruments, including stock option backdating, option repricing, and the opportunistic timing of option grants (spring-loading or bullet-dodging). This is because the requirement for timely disclosure of option grants and public scrutiny of such disclosure will generally limit opportunities for issuers and insiders to engage in improper dating practices.

(3) Insiders should interpret the insider reporting requirements in the Instrument with these policy rationales in mind and

comply with the requirements in a manner that gives priority to substance over form.

1 In Ontario, the principal insider reporting requirements are set out in Part XXI of the Securities Act (Ontario) (the Ontario Act). See Part 2 of

this Policy.

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1.4 Definitions used in the Instrument (1) General – The Instrument provides definitions of many terms that are defined in the securities legislation of some local

jurisdictions but not others. A term used in the Instrument and defined in the securities statute of a local jurisdiction has the meaning given to it in the local securities statute unless: (a) the definition in that statute is restricted to a specific portion of the statute that does not govern insider reporting; or (b) the context otherwise requires.

This means that, in the jurisdictions specifically excluded from the definition, the definition in the local securities statute applies. However, in the jurisdictions not specifically excluded from the definition, the definition in the Instrument applies.

The provincial and territorial regulatory authorities consider the meanings given to these terms in securities legislation to be substantially similar to the definitions set out in the Instrument.

(2) Directors and Officers – Where the Instrument uses the term “directors” or “officers”, insiders of an issuer that is not a

corporation must refer to the definitions in securities legislation of “director” and “officer”. The definitions of “director” and “officer” typically include persons acting in capacities similar to those of a director or an officer of a company or individuals who perform similar functions. Corporate and non-corporate issuers and their insiders must determine, in light of the particular circumstances, which individuals or persons are acting in such capacities for the purposes of complying with the Instrument. Similarly, the terms “CEO”, “CFO” and “COO” include the individuals that have the responsibilities normally associated with these positions or act in a similar capacity. This determination is to be made irrespective of an individual’s corporate title or whether that individual is employed directly or acts pursuant to an agreement or understanding.

(3) Economic Interest – The term “economic interest” in a security is a core component of the definition of “related

financial instrument” which is part of the primary insider reporting requirement in Part 3 of the Instrument. We intend the term to have broad application and to refer to the economic attributes ordinarily associated in common law with beneficial ownership of a security, including • the potential for gain in the nature of interest, dividends or other forms of distributions or reinvestments of

income on the security;

• the potential for gain in the nature of a capital gain realized on a disposition of the security, to the extent that the proceeds of disposition exceed the tax cost (that is, gains associated with an appreciation in the security’s value); and

• the potential for loss in the nature of a capital loss on a disposition of the security, to the extent that the proceeds of disposition are less than the tax cost (that is, losses associated with a fall in the security’s value).

For example, a reporting insider who owns securities of his or her reporting issuer could reduce or eliminate the risk associated with a fall in the value of the securities while retaining ownership of the securities by entering into a derivative transaction such as an equity swap. The equity swap would represent a “related financial instrument” since, among other things, the agreement would affect the reporting insider’s economic interest in a security of the reporting issuer.

(4) Economic Exposure – The term “economic exposure” is used in Part 4 of the Instrument and is part of the supplemental insider reporting requirement. The term generally refers to the link between a person’s economic or financial interests and the economic or financial interests of the reporting issuer of which the person is an insider. For example, an insider with a substantial proportion of his or her personal wealth invested in securities of his or her reporting issuer will be highly exposed to changes in the fortunes of the reporting issuer. By contrast, an insider who does not hold securities of a reporting issuer (and does not participate in a compensation arrangement involving securities of the reporting issuer) will generally be exposed only to the extent of their salary and any other compensation arrangements provided by the issuer that do not involve securities of the reporting issuer. All other things being equal, if an insider changes his or her ownership interest in a reporting issuer (either directly, through a purchase or sale of securities of the reporting issuer, or indirectly, through a derivative transaction involving securities of the reporting issuer), the insider will generally be changing his or her economic exposure to the reporting issuer. Similarly, if an insider enters into a hedging transaction that has the effect of reducing the sensitivity of the insider to changes in the reporting issuer’s share price or performance, the insider will generally be changing his or her economic exposure to the reporting issuer.

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(5) Major Subsidiary – The definition of “major subsidiary” is a key element of the definition of “reporting insider”. The determination of whether a subsidiary is a major subsidiary will generally require a backward-looking determination based on the issuer’s most recent financial statements. If an issuer acquires a subsidiary or undertakes a reorganization, with the result that a subsidiary will come within the definition of major subsidiary once the issuer next files its financial statements, the subsidiary will not be a major subsidiary until such filing, and directors and the CEO, CFO and COO of the subsidiary will not be reporting insiders until such filing. Although not required to do so, insiders may choose to file insider reports upon completion of the acquisition or reorganization rather than wait for the issuer to file its next set of financial statements. Similarly, if a subsidiary ceases to be a major subsidiary because of an acquisition or other reorganization by the parent issuer, but the subsidiary continues to be a major subsidiary based on information contained within the issuer’s most recently filed financial statements, the issuer or reporting insiders may wish to consider applying for an exemption from the insider reporting requirement as the reporting obligation will continue until the issuer next files its financials statements.

(6) Related Financial Instrument – Historically, there has been some uncertainty as to whether, as a matter of law, certain derivative instruments involving securities are themselves securities. This uncertainty has resulted in questions as to whether a reporting obligation existed or how insiders should report a derivative instrument. The Instrument resolves this uncertainty by including derivative instruments in the definition of “related financial instrument”. Under the Instrument, it is not necessary to determine whether a particular derivative instrument is a security or a related financial instrument since the insider reporting requirement in Part 3 of the Instrument applies to both securities and related financial instruments. To the extent the following derivative instruments do not, as a matter of law, constitute securities, they will generally be related financial instruments: • a forward contract, futures contract, stock purchase contract or similar contract involving securities of the

insider’s reporting issuer;

• options issued by an issuer other than the insider’s reporting issuer;

• stock-based compensation instruments, including phantom stock units, deferred share units (DSUs), restricted share awards (RSAs), performance share units (PSUs), stock appreciation rights (SARs) and similar instruments;

• a debt instrument or evidence of deposit issued by a bank or other financial institution for which part or all of the amount payable is determined by reference to the price, value or level of a security of the insider’s reporting issuer (a linked note); and

• most other agreements, arrangements or understandings that were previously subject to an insider reporting requirement under former Multilateral Instrument 55-103 Insider Reporting for Certain Derivative Transactions (Equity Monetization) (MI 55-103).

(7) Reporting insider – We developed the term “reporting insider” specifically for the purposes of the insider reporting

requirements and exemptions in the Instrument. It allows us to focus the insider reporting requirement on a core group of persons and companies who in some cases are not “insiders” as defined in securities legislation. There are additional obligations and prohibitions on ‘insiders’ as defined in our Acts, such as the important prohibition on illegal insider trading. The concept of reporting insider is discussed in section 3.1 of this Policy.

1.5 References to the term “day” in the Instrument – References in the Instrument to the term “day” mean calendar day

(as opposed to business day). This is consistent with how we use this term elsewhere in securities legislation and the statutory interpretation of the term “day” in each of the CSA jurisdictions.

1.6 Persons and companies designated or determined to be insiders – Section 1.2 of the Instrument designates or

determines certain persons and companies to be insiders of a reporting issuer. The Instrument uses the terms “designate” and “determine” since these are the terms used in securities legislation in different jurisdictions. The designation or determination is for the purposes of the insider reporting requirements in the Instrument only. However, in many cases, persons and companies designated or determined to be insiders will also be insiders in another capacity. For example, section 1.2 designates or determines officers and directors of a management company that provides significant management or administrative services to a reporting issuer to be insiders of that reporting issuer. These individuals may also be officers and directors of the reporting issuer under the extended definitions of “officer” and “director” which typically include persons acting in capacities similar to those of a director or an officer or

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individuals who perform similar functions. The purpose of designating or determining these individuals to be insiders is to clarify these individuals’ insider reporting obligations and to avoid uncertainty.

PART 2 APPLICATION 2.1 Application in Ontario – In Ontario, the insider reporting requirements are set out in Part XXI of the Ontario Act. For

this reason, sections 3.2 and 3.3 of the Instrument do not apply in Ontario. However, the insider reporting requirements set out in the Instrument and in Part XXI of the Ontario Act are substantially harmonized. Accordingly, in this Policy, we omit separate references to the requirements of the Ontario Act except where it is necessary to highlight a difference between the requirements of the Instrument and the Ontario Act.

PART 3 PRIMARY INSIDER REPORTING REQUIREMENT 3.1 Concept of reporting insider (1) General – Subsection 1.1(1) of the Instrument contains the definition of “reporting insider”. The definition represents a

principles-based approach to determining which insiders should file insider reports and enumerates a list of insiders whom we think generally satisfy both of the following criteria: (i) the insider in the ordinary course receives or has access to information as to material facts or material

changes concerning the reporting issuer before the material facts or material changes are generally disclosed; and

(ii) the insider directly or indirectly, exercises, or has the ability to exercise, significant power or influence over the

business, operations, capital or development of the reporting issuer. In addition to enumerating a list of insiders, the definition also includes, in paragraph (i), a “basket” provision that explicitly states these two criteria. The basket provision articulates the fundamental principle that an insider who satisfies the criteria of routine access to material undisclosed information concerning a reporting issuer and significant influence over the reporting issuer should file insider reports.

(2) Interpreting the basket criteria – The CSA consider that insiders who come within the enumerated list of positions in the definition of reporting insider will generally satisfy the criteria of routine access to material undisclosed information and significant influence over the reporting issuer. We recognize that this may not always be the case for certain positions in the definition and have therefore included an exemption in section 9.3 of the Instrument for directors and officers of significant shareholders based on lack of routine access to material undisclosed information. If an insider does not fall within any of the enumerated positions, the insider should consider whether the insider has access to material undisclosed information and has influence over the reporting issuer that is reasonably commensurate with that of one or more of the enumerated positions. If the insider satisfies both of these criteria, the insider will fall within the basket provision of the reporting insider definition.

(3) Meaning of significant power or influence – In determining whether an insider satisfies the significant influence criterion, the insider should consider whether the insider exercises, or has the ability to exercise, significant influence over the business, operations, capital or development of the issuer that is reasonably comparable to that exercised by one or more of the enumerated positions in the definition. Certain positions or relationships with the issuer may give rise to reporting insider status in the case of certain issuers but not others, depending on the importance of the position or relationship to the business, operations, capital or development of the particular issuer. Similarly, the importance of a position or relationship to an issuer may change over time. For example, the directors and the CEO, CFO and COO of a 20 per cent subsidiary (i.e. not a “major subsidiary”, as defined in the Instrument) who are not reporting insiders for any other reason may be reporting insiders prior to and during a significant business acquisition or reorganization, or a market moving announcement.

(4) Exercise of reasonable judgment – The determination of whether an insider is a reporting insider based on the criteria in the basket provision will generally be a question of reasonable judgment. The CSA expect insiders to make reasonable determinations after careful consideration of all relevant facts but recognize that a reasonable determination may not always be a correct determination. The CSA recommend that insiders consult with their issuers when making this determination since confirming that the insider’s conclusion is consistent with the issuer’s view may help establish that a determination was reasonable. Insiders may also wish to seek professional advice or consider the reporting status of individuals in similar positions with the issuer or other similarly situated issuers.

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3.2 Meaning of beneficial ownership (1) General – The term “beneficial ownership” is not defined in securities legislation. Accordingly, beneficial ownership

must be determined in accordance with the ordinary principles of property and trust law of a local jurisdiction. In Québec, due to the fact that the concept of beneficial ownership does not exist in civil law, the meaning of beneficial ownership has the meaning ascribed to it in section 1.4 of Regulation 14-501Q. The concept of beneficial ownership in Québec legislation is often used in conjunction with the concept of control and direction, which allows for a similar interpretation of the concept of common law beneficial ownership in most jurisdictions.

(2) Deemed beneficial ownership – Although securities legislation does not define beneficial ownership, securities

legislation in certain jurisdictions may deem a person to beneficially own securities in certain circumstances. For example, in some jurisdictions, a person is deemed to beneficially own securities that are beneficially owned by a company controlled by that person or by an affiliate of such company.

(3) Post-conversion beneficial ownership – Under the Instrument, a person has “post-conversion beneficial ownership”

of a security, including an unissued security, if the person is the beneficial owner of a security convertible into the security within 60 days. For example, a person who owns special warrants convertible at any time and without payment of additional consideration into common shares will be considered to have post-conversion beneficial ownership of the underlying common shares. Under the Instrument, a person who has post-conversion beneficial ownership of securities may in certain circumstances be designated or determined to be an insider and may be a reporting insider. For example, if a person owns 9.9% of an issuer’s common shares and then acquires special warrants convertible into an additional 5% of the issuer’s common shares, the person will be designated or determined to be an insider under section 1.2 of the Instrument and will be a reporting insider under subsection 1.1(1) of the Instrument. The concept of post-conversion beneficial ownership of the underlying securities into which securities are convertible within 60 days is consistent with similar provisions for determining beneficial ownership of securities for the purposes of the early warning requirements in section 1.8 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and in Ontario, subsection 90(1) of the Ontario Act.

(4) Beneficial ownership of securities held in a trust – Under common law trust law, legal ownership is commonly distinguished from beneficial ownership. A trustee is generally considered to be the legal owner of the trust property; a beneficiary, the beneficial owner. Under the Québec civil law, a trust is governed by the Québec Civil Code. A reporting insider who has a beneficial interest in securities held in a trust may have or share beneficial ownership of the securities for insider reporting purposes, depending on the particular facts of the arrangement and upon the governing law of the trust, whether common law or civil law. We will generally consider a person to have or share beneficial ownership of securities held in a trust if the person has or shares (a) a beneficial interest in the securities held in the trust and has or shares voting or investment power over the

securities held in the trust; or (b) legal ownership of the securities held in the trust and has or shares voting or investment power over the

securities held in the trust.

(5) Disclaimers of beneficial ownership – The CSA generally will not regard a purported disclaimer of a beneficial interest in, or beneficial ownership of, securities as being effective for the purposes of determining beneficial ownership under securities legislation unless such disclaimer is irrevocable and has been generally disclosed to the public.

(6) When ownership passes – Securities legislation of certain local jurisdictions provides that ownership is deemed to

pass at the time an offer to sell is accepted by the purchaser or the purchaser’s agent or an offer to buy is accepted by the vendor or the vendor’s agent. The CSA is of the view that, for the purposes of the insider reporting requirement beneficial ownership passes at the same time.

3.3 Meaning of control or direction (1) The term “control or direction” is not defined in Canadian securities legislation except in Québec, where the Securities

Act (Québec), in sections 90, 91 and 92, defines the concept of control and deems situations where a person has control over securities. For purposes of the Instrument, a person will generally have control or direction over securities if the person, directly or indirectly, through any contract, arrangement, understanding or relationship or otherwise has or shares (a) voting power, which includes the power to vote, or to direct the voting of, such securities and/or

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(b) investment power, which includes the power to acquire or dispose, or to direct the acquisition or disposition of such securities.

(2) A reporting insider may have or share control or direction over securities through a power of attorney, a grant of limited

trading authority, or a management agreement. This would also include a situation where a reporting insider acts as a trustee for an estate (or in Québec as a liquidator) or other trust in which securities of the reporting insider’s issuer are included within the assets of the trust. This may also be the case if a spouse (or any other person related to the reporting insider) owns the securities or acts as trustee, but the reporting insider has or shares control or direction over the securities held in trust. In addition, this may be the case where the reporting insider is an officer or director of another issuer that owns securities of the reporting insider’s issuer and the reporting insider is able to influence the investment or voting decisions of the issuer.

PART 4 SUPPLEMENTAL INSIDER REPORTING REQUIREMENT 4.1 Supplemental insider reporting requirement (1) Part 4 of the Instrument contains the supplemental insider reporting requirement. The supplemental insider reporting

requirement is consistent with the predecessor insider reporting requirement for derivatives that previously existed in some jurisdictions under former MI 55-103. However, because Part 3 of the Instrument requires insiders, as part of the primary insider reporting requirement, to file insider reports about transactions involving “related financial instruments”, most transactions that were previously subject to a reporting requirement under former MI 55-103 will be subject to the primary insider reporting requirement under Part 3 of the Instrument.

(2) If a reporting insider enters into an equity monetization transaction or other derivative-based transaction that falls

outside of the primary insider reporting requirement in Part 3 of the Instrument, the reporting insider must report the transaction under Part 4. For example, certain types of monetization transactions may be found to alter an insider’s “economic exposure” to the insider’s issuer but not alter the insider’s “economic interest in a security”. If a reporting insider enters into, materially amends or terminates this type of transaction, the insider must report the transaction under Part 4.

4.2 Insider reporting of equity monetization transactions (1) What are equity monetization transactions? There are a variety of sophisticated derivative-based strategies that

permit investors to dispose of, in economic terms, an equity position in a public company without attracting certain tax and non-tax consequences associated with a conventional disposition of such position. These strategies, which are sometimes referred to as “equity monetization” strategies, allow an investor to receive a cash amount similar to proceeds of disposition, and transfer part or all of the economic risk and/or return associated with securities of an issuer, without actually transferring ownership of or control over such securities. (The term “monetization” generally refers to the conversion of an asset (such as securities) into cash.)

(2) What are the concerns with equity monetization transactions? Where a reporting insider enters into a monetization

transaction, and does not disclose the existence or material terms of that transaction, there is potential for harm to investors and the integrity of the insider reporting regime because • an insider in possession of material undisclosed information, although prohibited from trading in securities of

the issuer, may be able to profit improperly from such information by entering into derivative-based transactions that mimic trades in securities of the reporting issuer;

• market efficiency will be impaired since the market is deprived of important information relating to the market activities of the insider; and

• since the insider’s publicly reported holdings no longer reflect the insider’s true economic position in the issuer, the public reporting of such holdings (e.g., in an insider report or a proxy circular) may in fact materially mislead investors.

If a reporting insider enters into a transaction which satisfies one or more of the policy rationales for insider reporting, but for technical reasons it may be argued that the transaction falls outside of the primary insider reporting requirement in Part 3 of the Instrument, the insider will be required to file an insider report under Part 4 unless an exemption is available. In this way, the market can make its own determination as to the significance, if any, of the transaction in question.

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PART 5 AUTOMATIC SECURITIES PURCHASE PLANS 5.1 Automatic Securities Purchase Plans (1) Section 5.1 of the Instrument contains an interpretation provision that applies to Part 5. Because of this provision,

directors and officers of a reporting issuer and of a major subsidiary of a reporting issuer can use the exemption in this Part for both acquisitions and specified dispositions of securities and related financial instruments under an automatic securities purchase plan (ASPP).

(2) The exemption does not apply to securities acquired under a cash payment option of a dividend or interest

reinvestment plan or a lump-sum provision of a share purchase plan. (3) The exemption does not apply to an “automatic securities disposition plan” (sometimes referred to as a “pre-arranged

structured sales plan”) (an ASDP) established between a reporting insider and a broker, since an ASDP is designed to facilitate dispositions not acquisitions. However, if a reporting insider can demonstrate that an ASDP is genuinely an automatic plan and that the insider cannot make discrete investment decisions through the plan, we may consider granting exemptive relief on an application basis to permit the insider to file reports on an annual basis.

(4) The exemption is not available for a grant of options or similar securities to reporting insiders, since, in many cases, the

reporting insider will be able to make an investment decision in respect of the grant. If an insider is an executive officer or a director of the reporting issuer or a major subsidiary, the insider may be participating in the decision to grant the options or other securities. Even if the insider does not participate in the decision, we think information about options or similar securities granted to this group of insiders is important to the market and the insider should disclose this information in a timely manner.

5.2 Specified Dispositions of Securities

(1) Paragraph 5.1(3)(a) of the Instrument provides that a disposition or transfer of securities is a specified disposition if,

among other things, it does not involve a “discrete investment decision” by the director or officer. The term “discrete investment decision” generally refers to the exercise of discretion involved in a specific decision to purchase, hold or sell a security. The purchase of a security as a result of the application of a pre-determined, mechanical formula does not generally represent a discrete investment decision (other than the initial decision to enter into the plan). For example, for an individual who holds stock options in a reporting issuer, the decision to exercise the stock options will generally represent a discrete investment decision. If the individual is a reporting insider, we think the individual should report this information in a timely fashion, since this decision may convey information that other market participants may consider relevant to their own investing decisions.

(2) The definition of “specified disposition of securities” contemplates, among other things, a disposition made to satisfy a tax withholding obligation arising from the acquisition of securities under an ASPP in certain circumstances. Under some types of ASPPs, an issuer or plan administrator may sell, on behalf of a plan participant, a portion of the securities that would otherwise be distributed to the plan participant in order to satisfy a tax withholding obligation. In such plans, the participant typically may elect either to provide the issuer or the plan administrator with a cheque to cover this liability or to direct the issuer or plan administrator to sell a sufficient number of the securities that would otherwise be distributed to cover this liability. In many cases, for reasons of convenience, a plan participant will simply direct the issuer or the plan administrator to sell a portion of the securities. Although we think that the election as to how a tax withholding obligation will be funded contains an element of a discrete investment decision, we are satisfied that, where the election occurs sufficiently in advance of the actual disposition of securities, it is acceptable for a report of a disposition made to satisfy a tax withholding obligation to be made on an annual basis. Accordingly, a disposition made to satisfy a tax withholding obligation will be a specified disposition of securities if it meets the criteria contained in paragraph 5.1(3)(b) of the Instrument.

5.3 Alternative Reporting Requirements – If securities acquired under an ASPP are disposed of or transferred, other than through a specified disposition of securities, and the insider has not previously disclosed the acquisition of these securities, the insider report should disclose, for each acquisition of securities which the insider is now disposing of or transferring, information about the date of acquisition of the securities, the number of securities acquired and the acquisition price of such securities. The report should also disclose, for each disposition or transfer, information about each disposition or transfer of securities.

5.4 Exemption from the Alternative Reporting Requirement – The rationale underlying the alternative reporting

requirement is the need for reporting insiders to periodically update their publicly disclosed holdings to ensure that their publicly disclosed holdings convey an accurate picture of their holdings. If an individual has ceased to be subject to the insider reporting requirements at the time the alternative report becomes due, the market generally would not benefit

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from the information in the alternative report. Accordingly, we provided an exemption in subsection 5.4(3) of the Instrument in these circumstances.

5.5 Design and Administration of Plans (1) Part 5 of the Instrument provides a limited exemption from the insider reporting requirement only in circumstances in

which an insider, by virtue of participation in an ASPP, is not making discrete investment decisions for acquisitions under such plan. Accordingly, if it is intended that insiders of an issuer rely on this exemption for a particular plan of an issuer, the issuer should design and administer the plan in a manner that is consistent with this limitation.

(2) To fit within the definition of an ASPP, the plan must set out a written formula or criteria for establishing the timing of

the acquisitions, the number of securities that the insider can acquire and the price payable. If a plan participant is able to exercise discretion in relation to these matters either in the capacity of a recipient of the securities or through participating in the decision-making process of the issuer making the grant, he or she may be able to make a discrete investment decision in respect of the grant or acquisition. We think a reporting insider in these circumstances should disclose information about the grant within the normal timeframe and not on a deferred basis.

PART 6 ISSUER GRANT REPORTS 6.1 Overview (1) Section 6.1 of the Instrument contains an interpretation provision that applies to Part 6. Because of this provision,

directors and officers of a reporting issuer or a major subsidiary of a reporting issuer who are reporting insiders of the reporting issuer can use the exemption in this Part for grants of securities and related financial instruments.

(2) A reporting insider who intends to rely on the exemption in Part 6 for a grant of stock options or similar securities must

first confirm that the issuer has made the public disclosure required by section 6.3 of the Instrument. If the issuer has not made the required disclosure within the required time, the reporting insider must report the grant within the required time and in accordance with the normal reporting requirements under Part 3 of the Instrument.

6.2 Policy rationale for the issuer grant report exemption (1) The issuer grant report exemption reduces the regulatory burden on insiders that is associated with insider reporting of

stock options and similar instruments since it allows an issuer to make a single filing on SEDI. This filing provides the market with timely information about the existence and material terms of the grant, making it unnecessary for each of the affected reporting insiders to file an insider report about the grant within the ordinary time periods.

(2) The concept of an issuer grant report is generally similar to the concept of an issuer event report in that the decision to

make the grant originates with the issuer. Accordingly, at the time of the grant, the issuer will generally be in a better position than the reporting insiders who are the recipients of the grant to communicate information about the grant to the market in a timely manner.

(3) There is no obligation for an issuer to file an issuer grant report for a grant of stock options or similar instruments. An

issuer may choose to do so to assist its reporting insiders with their reporting obligations and to communicate material information about its compensation practices to the market in a timely manner.

(4) If an issuer chooses not to file an issuer grant report, the issuer should take all reasonable steps to notify reporting

insiders of their grants in a timely manner to allow reporting insiders to comply with their reporting obligations. (5) The concept of an issuer grant report is different from the issuer event report that an issuer is required to make under

Part 2 of NI 55-102 in that an issuer is not required to file an issuer grant report. 6.3 Format of an issuer grant report – There is no required format for an issuer grant report. However, an issuer grant

report must include the information required by section 6.3 of the Instrument. PART 7 EXEMPTIONS FOR NORMAL COURSE ISSUER BIDS AND PUBLICLY DISCLOSED TRANSACTIONS 7.1 Introduction – Under securities legislation, a reporting issuer may become an insider of itself in certain circumstances

and therefore subject to an insider reporting requirement in relation to transactions involving its own securities. Under the definition of “insider” in securities legislation, a reporting issuer becomes an insider of itself if it “has purchased, redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security”. In certain jurisdictions, a reporting issuer may also become an insider of itself if it acquires and holds securities of its own issue through an affiliate, because in certain jurisdictions a person is deemed to beneficially own securities beneficially

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owned by affiliates. Where a reporting issuer is an insider of itself, the reporting issuer will also be a reporting insider under the Instrument.

7.2 General exemption for transactions that have been generally disclosed –Section 7.3 of the Instrument provides

that the insider reporting requirement does not apply to an issuer in connection with a transaction, other than a normal course issuer bid, involving securities of its own issue if the existence and material terms of the transaction have been generally disclosed in a public filing made on SEDAR. Because of this exemption and the exemption for normal course issuer bids in section 7.1, a reporting issuer that is an insider of itself will not generally need to file insider reports under Part 3 or Part 4 provided the issuer complies with the alternative reporting requirement in section 7.2 of the Instrument.

PART 8 EXEMPTION FOR CERTAIN ISSUER EVENTS 8.1 [Intentionally left blank] PART 9 EXEMPTIONS 9.1 Scope of exemptions – The exemptions under the Instrument are only exemptions from the insider reporting

requirements contained in the Instrument and are not exemptions or defences from the provisions in Canadian securities legislation imposing liability for improper insider trading.

9.2 Reporting Exemption – The definition of “reporting insider” includes certain enumerated persons or companies that

generally satisfy the criteria contained in subsection (i) of the definition of reporting insider, namely, routine access to material undisclosed information and significant power or influence over the reporting issuer. Although there is no general exemption for the enumerated persons or companies based on lack of routine access to material undisclosed information or lack of power or influence, we will consider applications for exemptive relief where the issuer or reporting insider can demonstrate that the reporting insider does not satisfy these criteria. This might include, for example, a situation where a foreign subsidiary may appoint a locally resident individual as a director to meet residency requirements under applicable corporate legislation, but remove the individual's powers and liabilities through a unanimous shareholder declaration.

9.3 Reporting Exemption (certain directors and officers of insider issuers) – The reference to “material facts or

material changes concerning the investment issuer” in section 9.3 of the Instrument is intended to include information that originates at the insider issuer level but which concerns or is otherwise relevant to the investment issuer. For example, in the case of an issuer that has a subsidiary investment issuer, a decision at the parent issuer level that the subsidiary investment issuer will commence or discontinue a line of business would generally represent a “material fact or material change concerning the investment issuer”. Similarly, a decision at the parent issuer level that the parent issuer will seek to sell its holding in the subsidiary investment issuer would also generally represent a “material fact or material change concerning the investment issuer.” Accordingly, a director or officer of the parent issuer who routinely had access to such information concerning the investment issuer would not be entitled to rely on the exemption for trades in securities of the investment issuer.

9.4 Exemption for a pledge where there is no limitation on recourse – The exemption in paragraph 9.7(b) of the

Instrument is limited to pledges of securities in which there is no limitation on recourse since a limitation on recourse may effectively allow the borrower to “put” the securities to the lender to satisfy the debt. The limitation on recourse may effectively represent a transfer of the risk that the securities may fall in value from the insider to the lender. In these circumstances, the transaction should be transparent to the market. A loan secured by a pledge of securities may contain a term limiting recourse against the borrower to the pledged securities (a legal limitation on recourse). Similarly, a loan secured by a pledge of securities may be structured as a limited recourse loan if the loan is made to a limited liability entity (such as a holding corporation) owned or controlled by the insider (a structural limitation on recourse). If there is a limitation on recourse as against the insider either legally or structurally, the exemption would not be available.

9.5. Exemption for certain investment funds – The exemption in paragraph 9.7(f) of the Instrument is limited to situations where securities of the reporting issuer do not form a material component of the investment fund's market value. In determining materiality, similar considerations to those involved in the concepts of material fact and material change would apply.

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PART 10 CONTRAVENTION OF INSIDER REPORTING REQUIREMENTS 10.1 Contravention of insider reporting requirements (1) It is an offence to fail to file an insider report in accordance with the filing deadlines prescribed by the Instrument or to

submit information in an insider report that, in a material respect and at the time and in the light of the circumstances in which it is submitted, is misleading or untrue.

(2) A failure to file an insider report in a timely manner or the filing of an insider report that contains information that is

materially misleading may result in one or more of the following

• the imposition of a late filing fee;

• the reporting insider being identified as a late filer on a public database of late filers maintained by certain securities regulators;

• the issuance of a cease trade order that prohibits the reporting insider from directly or indirectly trading in or acquiring securities or related financial instruments of the applicable reporting issuer or any reporting issuer until the failure to file is corrected or a specified period of time has elapsed; or

• in appropriate circumstances, enforcement proceedings. (3) Members of the CSA may also consider information relating to wilful or repeated non-compliance by directors and

executive officers of a reporting issuer with their insider reporting obligations in the context of a prospectus review or continuous disclosure review, since this may raise questions relating to the integrity of the insiders and the adequacy of the issuer’s policies and procedures relating to insider reporting and insider trading.

PART 11 INSIDER TRADING 11.1 Non-reporting insiders – Insiders who are not reporting insiders are still subject to the provisions in Canadian

securities legislation prohibiting improper insider trading. 11.2 Written disclosure policies – National Policy 51-201 Disclosure Standards outlines detailed best practices for issuers

for disclosure and information containment and provides interpretative guidance of insider trading laws. We recommend that issuers adopt written disclosure policies to assist directors, officers, employees and other representatives in discharging timely disclosure obligations. Written disclosure policies also should provide guidance on how to maintain the confidentiality of corporate information and to prevent improper trading based on inside information. Adopting the CSA best practices may assist issuers to ensure that they take all reasonable steps to contain inside information.

11.3 Insider Lists – Reporting issuers may also wish to consider preparing and periodically updating a list of the persons working for them or their affiliates who have access to material facts or material changes concerning the reporting issuer before those facts or changes are generally disclosed. This type of list may allow reporting issuers to control the flow of undisclosed information. The CSA may request additional information from time to time, including asking the reporting issuer to prepare and provide a list of insiders and reporting insiders, in the context of an insider reporting review.

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Chapter 7

Insider Reporting This chapter is available in the print version of the OSC Bulletin, as well as as in Carswell's internet service SecuritiesSource (see www.carswell.com). This chapter contains a weekly summary of insider transactions of Ontario reporting issuers in the System for Electronic Disclosure by Insiders (SEDI). The weekly summary contains insider transactions reported during the seven days ending Sunday at 11:59 pm. To obtain Insider Reporting information, please visit the SEDI website (www.sedi.ca).

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Chapter 8

Notice of Exempt Financings REPORT OF TRADES ON FORM 45-106F1 AND 45-501F1 There are no Reports of Exempt Distribution on Forms 45-106F1 or 45-501F1 (Reports) in this Bulletin. Reports filed on or after February 19, 2014 must be filed electronically. As a result of the transition to mandated electronic filings, the OSC is considering the most effective manner to make data about filed Reports available to the public, including whether and how this information should be reflected in the Bulletin. In the meantime, Reports filed with the Commission continue to be available for public inspection during normal business hours.

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Chapter 11

IPOs, New Issues and Secondary Financings Issuer Name: Aequus Pharmaceuticals Inc. Principal Regulator - British Columbia Type and Date: Preliminary Base Shelf Prospectus dated June 17, 2015 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: $15,000,000.00 Common Shares Warrants Units Subscription Receipts Debt Securities Preferred Shares Underwriter(s) or Distributor(s):= - Promoter(s): - Project #2364763 _______________________________________________ Issuer Name: Brookfield Property Partners L.P. Principal Regulator - Ontario Type and Date: Preliminary Base Shelf Prospectus dated June 19, 2015 NP 11-202 Receipt dated June 19, 2015 Offering Price and Description: US$1,500,000,000 Limited Partnership Units Preferred Limited Partnership Units Underwriter(s) or Distributor(s): - Promoter(s): - Project #2365624 _______________________________________________ Issuer Name: iShares Conservative Short Term Strategic Fixed Income ETF iShares Conservative Strategic Fixed Income ETF Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: Units Underwriter(s) or Distributor(s): - Promoter(s): - Project #2364388 _______________________________________________

Issuer Name: iShares S&P U.S. Mid-Cap Index ETF iShares S&P U.S. Mid-Cap Index ETF (CAD-Hedged) Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated June 19, 2015 NP 11-202 Receipt dated June 22, 2015 Offering Price and Description: Units Underwriter(s) or Distributor(s): BlackRock Asset Management Canada Limited Promoter(s): - Project #2365698 _______________________________________________ Issuer Name: Kelt Exploration Ltd. Principal Regulator – Alberta Type and Date: Preliminary Short Form Prospectus dated June 19, 2015 NP 11-202 Receipt dated June 19, 2015 Offering Price and Description: $75,225,000.00 - 8,500,000 Common Shares Price: $8.85 per Offered Share Underwriter(s) or Distributor(s): Peters & Co. Limited FirstEnergy Capital Corp. CIBC World Markets Inc. National Bank Financial Inc. RBC Dominion Securities Inc. Cormark Securities Inc. Scotia Capital Inc. AltaCorp Capital Inc. GMP Securities L.P. Macquarie Capital Markets Canada Ltd. TD Securities Inc. Credit Suisse Securities (Canada), Inc. Desjardins Securities Inc. Raymond James Ltd. Promoter(s): - Project #2364051 _______________________________________________

IPOs, New Issues and Secondary Financings

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(2015), 38 OSCB 5922

Issuer Name: Northern Graphite Corporation Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: $2,500,000.00 - 3,906,250 Units Price: $0.64 per Unit Underwriter(s) or Distributor(s): Secutor Capital Management Corporation Promoter(s): - Project #2364178 _______________________________________________ Issuer Name: PrairieSky Royalty Ltd. Principal Regulator - Alberta Type and Date: Preliminary Short Form Prospectus dated June 19, 2015 NP 11-202 Receipt dated June 19, 2015 Offering Price and Description: $180,000,000 - 5,760,000 Common Shares Price: $31.25 per Common Share Underwriter(s) or Distributor(s): CIBC World Markets Inc. BMO Nesbitt Burns Inc. RBC Dominion Securities Inc. Scotia Capital Inc. TD Securities Inc. National Bank Financial Inc. Peters & Co. Limited Altacorp Capital Inc. Firstenergy Capital Corp. GMP Securities L.P. Dundee Securities Ltd Promoter(s): - Project #2363950 _______________________________________________ Issuer Name: Roll-Up Capital Corp. Principal Regulator - Alberta Type and Date: Preliminary CPC Prospectus dated June 15, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: $250,000.00 - 2,500,000 Common Shares Price: $0.10 per Common Share Underwriter(s) or Distributor(s): PI Financial Corp. Promoter(s): Michael Thomson Project #2364015 _______________________________________________

Issuer Name: Shred-it International Inc. Principal Regulator - Ontario Type and Date: Preliminary Long Form PREP Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: C$ * - * Common Shares Price: C$ * per Common Share Underwriter(s) or Distributor(s): TD Securities Inc. BMO Nesbitt Burns Inc. CIBC World Markets Inc. Scotia Capital Inc Promoter(s): - Project #2364215 _______________________________________________ Issuer Name: Sun Life Beutel Goodman Canadian Bond Fund Sun Life BlackRock Canadian Balanced Class Sun Life BlackRock Canadian Composite Equity Class Sun Life BlackRock Canadian Equity Class Sun Life Dynamic Energy Fund Sun Life Dynamic Equity Income Class Sun Life Dynamic Strategic Yield Class Sun Life Managed Balanced Class Sun Life Managed Balanced Growth Class Sun Life Managed Conservative Class Sun Life Managed Growth Class Sun Life Managed Moderate Class Sun Life MFS Canadian Equity Class Sun Life MFS Dividend Income Class Sun Life MFS Global Growth Class Sun Life MFS Global Growth Fund Sun Life MFS Global Total Return Fund Sun Life MFS Global Value Fund Sun Life MFS International Growth Class Sun Life MFS International Growth Fund Sun Life MFS International Value Fund Sun Life MFS Monthly Income Fund Sun Life MFS U.S. Growth Class Sun Life MFS U.S. Growth Fund Sun Life MFS U.S. Value Fund Sun Life Money Market Class Sun Life Money Market Fund Sun Life Schroder Emerging Markets Fund Sun Life Sentry Value Class Principal Regulator - Ontario Type and Date: Preliminary Simplified Prospectuses dated June 11, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: Series A, T5, T8, E, EF, F, I and O Securities Underwriter(s) or Distributor(s): - Promoter(s): Sun Life Global Investments (Canada) Inc. Project #2363206 _______________________________________________


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Issuer Name: Tahoe Resources Inc. Principal Regulator - British Columbia Type and Date: Amended and Restated Preliminary Short Form Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: $998,489,102.00 - 58,051,692 Common Shares Price $17.20 per Common Share Underwriter(s) or Distributor(s): GMP Securities L.P. BMO Nesbitt Burns Inc. CIBC World Markets Inc. HSBC Securities (Canada) Inc. RBC Dominion Securities Inc. Scotia Capital Inc. TD Securities Inc. Citigroup Global Markets Canada Inc. Credit Suisse Securities (Canada), Inc. Goldman Sachs Canada Inc. Laurentian Bank Securities Inc. Merrill Lynch Canada Inc. Morgan Stanley Canada Ltd. Beacon Securities Limited Canaccord Genuity Corp. Cormark Securities Inc. Dundee Securities Ltd. Macquarie Capital Markets Canada Ltd. Paradigm Capital Capital Inc Raymond James Ltd. Promoter(s): - Project #2363853 _______________________________________________ Issuer Name: AGF Dividend Income Fund (Mutual Fund Series, Series D, Series F, Series O, Series Q and Series V Securities) AGF Fixed Income Plus Fund (Mutual Fund Series, Series F, Series O, Series Q and Series W Securities) Principal Regulator - Ontario Type and Date: Amendment #3 dated June 12, 2015 to the Simplified Prospectuses and Annual Information Form dated April 17, 2015 NP 11-202 Receipt dated June 18, 2015 Offering Price and Description: Mutual Fund Series, Series D, Series F, Series O, Series Q, Series V and Series W Securities @ Net Asset Value Underwriter(s) or Distributor(s): - Promoter(s): AGF Investments Inc. Project #2319602 _______________________________________________

Issuer Name: Alignvest Acquisition Corporation Principal Regulator - Ontario Type and Date: Final Long Form Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: $225,000,000.00 - 22,500,000 Class A Restricted Voting Units Price: $10.00 per Class A Restricted Voting Unit Underwriter(s) or Distributor(s): TD Securities Inc. Cantor Fitzgerald Canada Corporation BMO Nesbitt Burns Inc. CIBC World Markets Inc. Promoter(s): Alignvest Management Corporation Project #2353716 _______________________________________________ Issuer Name: AlphaNorth Growth Fund (Series A and F Shares) AlphaNorth Resource Fund (Series A, B, D and F Shares) Principal Regulator - Ontario Type and Date: Final Simplified Prospectuses dated June 15, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: Series A, B, D and F Shares Underwriter(s) or Distributor(s): - Promoter(s): - Project #2353309 _______________________________________________ Issuer Name: Eagle Credit Card Trust Principal Regulator - Ontario Type and Date: Final Base Shelf Prospectus dated June 19, 2015 NP 11-202 Receipt dated June 19, 2015 Offering Price and Description: Up to $1,000,000,000.00 of Credit Card Receivables-Backed Notes Underwriter(s) or Distributor(s): CIBC World Markets Inc. RBC Dominion Securities Inc. BMO Nesbitt Burns Inc. Desjardins Securities Inc. National Bank Financial Inc. Scotia Capital Inc. TD Securities Inc. Promoter(s): President's Choice Bank Project #2363007 _______________________________________________


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Issuer Name: Harvest Banks & Buildings Income Fund Harvest Canadian Income & Growth Fund Principal Regulator - Ontario Type and Date: Final Simplified Prospectuses dated June 19, 2015 NP 11-202 Receipt dated June 19, 2015 Offering Price and Description: Series A, Series D, Series F and Series R Units Underwriter(s) or Distributor(s): - Promoter(s): - Project #2353301 _______________________________________________ Issuer Name: iShares Advantaged Short Duration High Income ETF (CAD-Hedged) (FKA, iShares Advantaged Short Duration High Income ETF) iShares Canadian Financial Monthly Income ETF iShares Equal Weight Banc & Lifeco ETF iShares Premium Money Market ETF Principal Regulator - Ontario Type and Date: Amendment #1 dated June 15, 2015 to the Long Form Prospectus dated October 21, 2014 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: - Underwriter(s) or Distributor(s): BlackRock Asset Management Canada Limited Promoter(s): - Project #2259846 _______________________________________________ Issuer Name: Mogo Finance Technology Inc. Principal Regulator - British Columbia Type and Date: Final Long Form Prospectus dated June 18, 2015 NP 11-202 Receipt dated June 18, 2015 Offering Price and Description: $50,000,000.00 - 5,000,000 Common Shares Price: $10.00 per Common Share Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc. Cormark Securities Inc. Canaccord Genuity Corp. CIBC World Markets Inc. National Bank Financial Inc. Promoter(s): - Project #2352536 _______________________________________________

Issuer Name: National Bank Strategic U.S. Income and Growth Fund Principal Regulator - Quebec Type and Date: Final Simplified Prospectus dated June 15, 2015 NP 11-202 Receipt dated June 16, 2015 Offering Price and Description: Units of the Advisor, F, F5, O and T5 Series @ Net Asset Value Underwriter(s) or Distributor(s): National Bank Investments Inc. Promoter(s): National Bank Investments Inc. Project #2333546 _______________________________________________ Issuer Name: PHX Energy Services Corp. Principal Regulator - Alberta Type and Date: Final Short Form Prospectus dated June 22, 2015 NP 11-202 Receipt dated June 22, 2015 Offering Price and Description: $30,475,000.00 - 5,300,000 Common Shares Price: $5.75 per Common Share Underwriter(s) or Distributor(s): Peters & Co. Limited Scotia Capital Inc. AltaCorp Capital Inc. Promoter(s): - Project #2362520 _______________________________________________ Issuer Name: TransAlta Renewables Inc. Principal Regulator - Alberta Type and Date: Final Base Shelf Prospectus dated June 16, 2015 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: $1,000,000,000.00 Common Shares Preferred Shares Warrants Subscription Receipts Debt Securities Underwriter(s) or Distributor(s): - Promoter(s): Transalta Corporation Project #2362785 _______________________________________________


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Issuer Name: Vanguard FTSE All-World ex Canada Index ETF Vanguard FTSE Developed ex North America Index ETF Vanguard FTSE Developed ex North America Index ETF (CAD-hedged) Vanguard FTSE Developed Europe Index ETF Vanguard FTSE Developed Asia Pacific Index ETF Vanguard FTSE Emerging Markets Index ETF Principal Regulator - Ontario Type and Date: Amendment #2 dated June 11, 2015 to the Long Form Prospectus dated June 16, 2014 NP 11-202 Receipt dated June 17, 2015 Offering Price and Description: - Underwriter(s) or Distributor(s): - Promoter(s): VANGUARD INVESTMENTS CANADA INC. Project #2207071 _______________________________________________


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(2015), 38 OSCB 5927

Chapter 12

Registrations 12.1.1 Registrants

Type Company Category of Registration Effective Date

Change in Registration Category

Franklin Templeton Investments Corp.

From: Exempt Market Dealer, Investment Fund Manager, Mutual Fund Dealer and Portfolio Manager To: Commodity Trading Manager, Exempt Market Dealer, Investment Fund Manager, Mutual Fund Dealer and Portfolio Manager

June 16, 2015


Allianz Global Investors U.S. LLC

From: Portfolio Manager, Exempt Market Dealer To: Exempt Market Dealer

June 16, 2015


Goldenwise Capital Management Inc.

From: Commodity Trading Manager To: Commodity Trading Manager and Portfolio Manager

June 18, 2015

New Firm Metaform Investments Inc. Portfolio Manager and Exempt Market Dealer

June 19, 2015

Registrations

June 25, 2015

(2015), 38 OSCB 5928


June 25, 2015

(2015), 38 OSCB 5929

Chapter 13

SROs, Marketplaces, Clearing Agencies and Trade Repositories

13.1 SROs 13.1.1 MFDA – Client Relationship Model – Phase 2 – Housekeeping Amendments to MFDA Rule 5.3 (Client

Reporting) and MFDA Policy No. 7 (Performance Reporting)

OSC STAFF NOTICE OF COMMISSION APPROVAL

THE MUTUAL FUND DEALERS ASSOCIATION OF CANADA

CLIENT RELATIONSHIP MODEL – PHASE 2 HOUSEKEEPING AMENDMENTS TO MFDA RULE 5.3 (CLIENT REPORTING) AND

MFDA POLICY NO. 7 (PERFORMANCE REPORTING) The Ontario Securities Commission approved proposed amendments to MFDA Rule 5.3 (Client Reporting) and MFDA Policy No. 7 (Performance Reporting) that will come into effect on a date to be determined by the MFDA. The amendments are housekeeping in nature and ensure that MFDA Members are provided the same relief granted to non-SRO registrants under the relief orders issued by the Canadian Securities Administrator on May 21, 2015. In addition, the British Columbia Securities Commission, the Alberta Securities Commission, the Financial and Consumer Affairs Authority of Saskatchewan, the Financial and Consumer Services Commission of New Brunswick, the Manitoba Securities Commission, the Nova Scotia Securities Commission, and the Prince Edward Island Office of the Superintendent of Securities Office did not object to or approved the amendments. A copy of the MFDA’s notice for publication, which includes a blackline of the amendments, and a certified copy of the resolution adopted by the MFDA Board of Directors, can be found at http://www.osc.gov.on.ca.

SROs, Marketplaces, Clearing Agencies and Trade Repositories

June 25, 2015

(2015), 38 OSCB 5930


June 25, 2015 (2015), 38 OSCB 5931

Index

1415409 Ontario Inc. Notice from the Office of the Secretary ..................... 5687 Order – ss. 127, 127.1 .............................................. 5751 Allianz Global Investors U.S. LLC Change in Registration Category .............................. 5927 BlackRock Asset Management Canada Limited Order – s. 80 of the CFA ........................................... 5743 BlackRock Institutional Trust Company, N.A. Order – s. 80 of the CFA ........................................... 5743 BNY Mellon Asset Management Canada Limited Order – s. 80 of the CFA ........................................... 5747 Canadian Pacific Railway Limited Order – s. 104(2)(c) .................................................. 5718 Order – s. 104(2)(c) .................................................. 5722 Order – s. 104(2)(c) .................................................. 5726 Cardinal Energy Ltd. Decision .................................................................... 5705 Companion Policy 21-101CP Marketplace Operation .................................................................... Supplement 2 Companion Policy 23-101CP Trading Rules .................................................................... Supplement 2 Companion Policy 55-104CP Insider Reporting Requirements and Exemptions Rules and Policies .................................................... 5814 CSA Staff Notice 45-308 (Revised) – Guidance for Preparing and Filing Reports of Exempt Distribution under National Instrument 45-106 Prospectus Exemptions Notice ........................................................................ 5673 Dave, Ametra Notice from the Office of the Secretary ..................... 5687 Order – ss. 127, 127.1 .............................................. 5751 Dave, Chandramattie Notice from the Office of the Secretary ..................... 5687 Order – ss. 127, 127.1 .............................................. 5751 Dave, Ravindra Notice from the Office of the Secretary ..................... 5687 Order – ss. 127, 127.1 .............................................. 5751 Desjardins Securities Inc. Decision .................................................................... 5716 Dollarama Inc. Order – s. 104(2)(c) .................................................. 5730

Enbridge Inc. Decision .................................................................... 5696 Energy IndexPlus Dividend Fund Decision .................................................................... 5692 Fidelity Investments Canada ULC Order – s. 80 of the CFA .......................................... 5734 Fidelity Investments Money Management, Inc. Order – s. 80 of the CFA .......................................... 5734 FIL Limited Order – s. 80 of the CFA .......................................... 5734 FMR Co., Inc. Order – s. 80 of the CFA .......................................... 5734 FMR Investment Management (UK) Limited Order – s. 80 of the CFA .......................................... 5734 Form 21-101F1 Information Statement Exchange or Quotation and Trade Reporting System ................................................................... Supplement 2 Form 21-101F2 Initial Operation Report Alternative Trading System ................................................................... Supplement 2 Form 21-101F3 Quarterly Report of Marketplace Activities ................................................................... Supplement 2 Form 21-101F4 Cessation of Operations Report for Alternative Trading System ................................................................... Supplement 2 Form 21-101F5 Initial Operation Report for Information Processor ................................................................... Supplement 2 Form 21-101F6 Cessation of Operations Report for Information Processor ................................................................... Supplement 2 Form 45-106F1 Report of Exempt Distribution Rules and Policies .................................................... 5795 Franklin Templeton Investments Corp. Change in Registration Category .............................. 5927 GAR Limited Cease Trading Orders .............................................. 5771 Goldenwise Capital Management Inc. Change in Registration Category .............................. 5927

Index

June 25, 2015 (2015), 38 OSCB 5932

Good Mining Exploration Inc. Notice of Hearing and Statement of Allegations – s. 127 ................................................... 5685 Notice from the Office of the Secretary ..................... 5688 Notice from the Office of the Secretary ..................... 5689 Order – s. 127(1) ....................................................... 5752 IMRIS Inc. Cease Trading Orders .............................................. 5771 JDS Uniphase Corporation Decision .................................................................... 5708 Jourdan Resources Inc. Cease Trading Orders .............................................. 5771 MagIndustries Corp. Cease Trading Orders .............................................. 5771 Metaform Investments Inc. New Firm................................................................... 5927 MFDA SROs – Client Relationship Model – Phase 2 – Housekeeping Amendments to MFDA Rule 5.3 (Client Reporting) and MFDA Policy No. 7 (Performance Reporting)........................................... 5929 Middlefield Global Infrastructure Fund Decision .................................................................... 5692 Middlefield Limited Decision .................................................................... 5692 NI 21-101 Marketplace Operation .................................................................... Supplement 2 NI 23-101 Trading Rules .................................................................... Supplement 2 NI 33-105 Underwriting Conflicts Rules and Policies .................................................... 5773 NI 45-106 Prospectus Exemptions Rules and Policies .................................................... 5795 NI 55-104 Insider Reporting Requirements and Exemptions Rules and Policies .................................................... 5814 Northland Resources SE Cease Trading Orders .............................................. 5771 NorthWest International Healthcare Properties Real Estate Investment Trust Decision – s. 1(10)(a)(ii) ............................................ 5691 O’Brien, David M. Notice of Hearing – ss. 127 and 127.1 of the Act and Rule 12 of the OSC Rules of Procedure ............ 5684 Notice from the Office of the Secretary ..................... 5688

OSC Rule 45-501 Ontario Prospectus and Registrations Exemptions Rules and Policies .................................................... 5795 OSC Staff Notice 81-727 – Report on Staff’s Continuous Disclosure Review of Mutual Fund Practices Relating to Portfolio Liquidity Notice ....................................................................... 5678 Pacific Coal Resources Ltd. Cease Trading Orders .............................................. 5771 Pariak-Lukic, Lucy Marie Order – ss. 8(3), 21.7 .............................................. 5753 Reasons and Decision – ss. 8(3), 27.1 ..................... 5755 Practice Guideline – Electronic Copies of Written Submissions Notice ....................................................................... 5683 Notice from the Office of the Secretary ..................... 5687 Pyramis Global Advisors (Canada) ULC Order – s. 80 of the CFA .......................................... 5734 Pyramis Global Advisors Trust Company Order – s. 80 of the CFA .......................................... 5734 Pyramis Global Advisors, LLC Order – s. 80 of the CFA .......................................... 5734 Russell Implementation Services Inc. Order – s. 80 of the CFA .......................................... 5739 Russell Investment Management Company Order – s. 80 of the CFA .......................................... 5739 Russell Investments Canada Limited, Order – s. 80 of the CFA .......................................... 5739 San Gold Corporation Cease Trading Orders .............................................. 5771 Santacruz Silver Mining Ltd. Decision .................................................................... 5702 Sentry Investments Inc. Decision .................................................................... 5711 Shoreline Energy Corp. Cease Trading Orders .............................................. 5771 Standish Mellon Asset Management Company LLC Order – s. 80 of the CFA .......................................... 5747 TD Investment Services Inc. Decision .................................................................... 5714 Title One Closing Inc. Notice from the Office of the Secretary ..................... 5687 Order – ss. 127, 127.1 .............................................. 5751 Viking Gold Exploration Inc. Cease Trading Orders .............................................. 5771

osc bulletin volume 38, issue 25 (june 25, 2015)...2015/06/25 · june 25, 2015 volume 38, issue 25...

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