Power Financial Corporation and Power Corporation of Canada

Headnote

Process for Exemptive Relief Applications in Multiple Jurisdictions -- filer relieved from the obligation under National Instrument 51-102 to file annual financial statements, interim financial reports, MD&A, AIFs, material change reports, BARs and executive compensation disclosure, on the condition that its parent Power Corporation of Canada comply with all of its continuous disclosure obligations, and other conditions -- filer also given related relief from short form eligibility requirements and short form prospectus content requirements in National Instrument 44-101 and National Instrument 44-102.

Applicable Legislative Provisions

National Instrument 51-102, Parts 4, 5, 6, 7 and 8, ss. 11.6, 12.1(1) and 12.2(1).

National Instrument 52-109.

National Instrument 44-101, ss. 2.2(d), 2.2(e), and 84.

National Instrument 44-102, ss. 2.2(1) and 2.2(3)(b)(i)(ii)(iii).

Form 44-101F1, ss 6.1, 11.1(1), and 11.2.

[TRANSLATION]

January 19, 2021

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUEBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF POWER FINANCIAL CORPORATION (the Filer) AND POWER CORPORATION OF CANADA (PCC)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from:

(a) the requirements contained in the Legislation (the Continuous Disclosure Requirements) to: (i) file with the securities regulatory authority in each of the jurisdictions (the Securities Regulatory Authorities) and send to its securityholders annual and interim financial statements under Part 4 of Regulation 51-102 respecting Continuous Disclosure Obligations, CQLR, c. V-1.1, r. 23 (Regulation 51-102); (ii) file with the Securities Regulatory Authorities and send to its securityholders annual and interim MD&A with respect to its annual and interim financial statements under Part 5 of Regulation 51-102; (iii) file with the Securities Regulatory Authorities an AIF under Part 6 of Regulation 51-102; (iv) issue and file news releases and file with the Securities Regulatory Authorities reports upon the occurrence of a material change under Part 7 of Regulation 51-102; (v) file with the Securities Regulatory Authorities a business acquisition report in respect of a significant acquisition under Part 8 of Regulation 51-102; (vi) disclose information relating to compensation under Section 11.6 of Regulation 51-102; (vii) file with the Securities Regulatory Authorities documents affecting the rights of securityholders under Subsection 12.1(1) of Regulation 51-102; and (viii) file with the Securities Regulatory Authorities material contracts under Subsection 12.2(1) of Regulation 51-102 (the Continuous Disclosure Relief);

(b) the requirement under Regulation 52-109 respecting Certification of Disclosure in Issuers' Annual and Interim Filings, CQLR, c. V-1.1, r. 27 (Regulation 52-109) to file annual certificates and interim certificates (the Certification Requirements) in respect of annual filings and interim filings and the other requirements of Regulation 52-109 respecting establishing and maintaining DC&P and ICFR (the Certification Relief);

(c) the short form prospectus qualification provisions in paragraphs 2.2(d) and 2.2(e) of Regulation 44-101 respecting Short Form Prospectus Distributions, CQLR, c. V-1.1, r. 16 (Regulation 44-101);

(d) with respect toRegulation 44-102 respecting Shelf Distributions, CQLR, c. V-1.1, r. 17 (Regulation 44-102), the following base shelf prospectus effectiveness provisions:

i. Paragraph 2.2(1);

ii. Subparagraph 2.2(3)(b)(i);

iii. Subparagraph 2.2(3)(b)(ii);

iv. Subparagraph 2.2(3)(b)(iii);

(the relief in paragraphs (c) and (d) are collectively referred to herein as the Eligibility Relief)

(e) the requirement in Section 8.4 of Regulation 44-102 to prepare and file updated earnings coverage ratios;

(f) the requirement in Section 6.1 of Form 44-101F1 -- Short Form Prospectus (Form 44-101F1) to disclose earnings coverage ratios;

(g) the requirement under Subsection 11.1(1) of Form 44-101F1 to incorporate documents by reference in a short form prospectus; and

(h) the statement required by Section 11.2 of Form 44-101F1 regarding future-filed documents

(the relief in paragraphs (e) through (h) above are collectively referred to herein as the Prospectus Relief, and the Continuous Disclosure Relief, the Certification Relief, the Eligibility Relief and the Prospectus Relief are collectively referred to herein as the Exemptions Sought).

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

(a) the Autorité des marchés financiers is the principal regulator for this application,

(b) the Filer has provided notice that Subsection 4.7(1) of Regulation 11-102 respecting Passport System, CQLR, c. V-1.1, r. 1 (Regulation 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Saskatchewan, Northwest Territories, Nunavut and Yukon, 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

Terms defined in Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, Regulation 11-102, Regulation 13-101 respecting the System for Electronic Document Analysis and Retrieval (SEDAR), CQLR, c. V-1.1, r. 2 (Regulation 13-101), Regulation 44-101, Regulation 44-102, Regulation 51-102 and Regulation 52-109 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. PCC was incorporated under The Companies Act (Canada) in 1925 and continued under the Canada Business Corporations Act (the CBCA) in 1980. The head office of PCC is located in Québec.

2. PCC is a reporting issuer in each of the jurisdictions of Canada and is not in default of any securities legislation in any jurisdiction.

3. PCC's authorized share capital consists of an unlimited number of subordinate voting shares in the capital of PCC (the Subordinate Voting Shares), an unlimited number of participating preferred shares (the Participating Preferred Shares) and an unlimited number of first preferred shares, issuable in one or more series. As of November 16, 2020, 621,408,091 Subordinate Voting Shares, 54,860,866 Participating Preferred Shares, 129,400 floating rate Cumulative Redeemable First Preferred Shares, 1986 Series, 6,000,000 5.60% Non-Cumulative First Preferred Shares, Series A, 8,000,000 5.35% Non-Cumulative First Preferred Shares, Series B, 6,000,000 5.80% Non-Cumulative First Preferred Shares, Series C, 10,000,000 5.00% Non-Cumulative First Preferred Shares, Series D, and 8,000,000 5.60% Non-Cumulative First Preferred Shares, Series G were issued and outstanding.

4. The Subordinate Voting Shares, Participating Preferred Shares and each series of outstanding first preferred shares of PCC are listed for trading on the Toronto Stock Exchange (the TSX).

5. PCC currently prepares and files consolidated annual and interim financial statements and MD&A, which include the financial information of the Filer and the Filer's subsidiaries, including Great-West Lifeco Inc. and IGM Financial Inc. (as well as the financial information concerning the Filer's investment in Groupe Bruxelles Lambert).

6. PCC is an electronic filer under Regulation 13-101.

7. The Filer is a corporation governed by the CBCA. The head office of the Filer is located in Québec.

8. The Filer is a reporting issuer in each of the jurisdictions of Canada and is not in default of securities legislation in any jurisdiction.

9. The Filer's authorized share capital consists of an unlimited number of common shares in the capital of the Filer (the Common Shares), an unlimited number of first preferred shares, issuable in series (the PFC First Preferred Shares), and an unlimited number of second preferred shares (the PFC Second Preferred Shares). As of November 16, 2020, 664,096,506 Common Shares, 4,000,000 Series A Floating Rate Cumulative Redeemable First Preferred Shares, 6,000,000 5.50% Non-Cumulative First Preferred Shares, Series D, 8,000,000 5.25% Non-Cumulative First Preferred Shares, Series E, 6,000,000 5.90% Non-Cumulative First Preferred Shares, Series F, 6,000,000 5.75% Non-Cumulative First Preferred Shares, Series H, 8,000,000 6.00% Non-Cumulative First Preferred Shares, Series I, 10,000,000 4.95% Non-Cumulative First Preferred Shares, Series K, 8,000,000 5.10% Non-Cumulative First Preferred Shares, Series L, 6,000,000 5.80% Non-Cumulative First Preferred Shares, Series O, 8,965,485 2.318% Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series P, 2,234,515 Non-Cumulative Floating Rate First Preferred Shares, Series Q, 10,000,000 5.50% Non-Cumulative First Preferred Shares, Series R, 12,000,000 4.80% Non-Cumulative First Preferred Shares, Series S, 8,000,000 4.20% Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series T, 10,000,000 5.15% Non-Cumulative First Preferred Shares, Series V, and no PFC Second Preferred Shares were issued and outstanding.

10. Each series of outstanding PFC First Preferred Shares is listed for trading on the TSX and the Filer's 6.9% debentures due March 11, 2033 (the PFC Debentures) are outstanding.

11. On February 13, 2019, the Filer and PCC completed an arrangement under section 192 of the CBCA, whereby each Common Share held by holders of Common Shares other than PCC and its wholly-owned subsidiaries, were exchanged for 1.05 Subordinate Voting Shares and $0.01 in cash (the Reorganization).

12. The articles of arrangement of the Filer have been issued and are available under the Filer's SEDAR profile.

13. Since the Reorganization, PCC owns, directly or indirectly, 100% of the issued and outstanding voting and equity securities of the Filer, being 100% of the Common Shares. Accordingly, PCC holds a controlling interest in the Filer and, on that basis, the operations of the Filer are consolidated by PCC for financial statement purposes.

14. The Common Shares were delisted from the TSX following the completion of the Reorganization, and the Common Shares are no longer listed on a public market. The outstanding PFC First Preferred Shares remain shares of the Filer and listed on the TSX and the PFC Debentures remain outstanding. Accordingly, the Filer remains a reporting issuer and a non-venture issuer in each of the jurisdictions of Canada.

15. PCC is a holding company and its interest in the Common Shares, which are held directly and indirectly, constitute PCC's principal assets.

16. The business of PCC is substantially the same as the business of the Filer. PCC has no operations, assets or liabilities other than its interest in the Filer that are material.

17. The assets of PCC that are not held through the Filer consist of the following:

(a) PCC's interests in certain other investees and subsidiaries, including its investments in China Asset Management Co., Ltd., and alternative asset sector investment platforms under Power Sustainable Capital Inc. and Sagard Holdings Inc.; and

(b) cash and cash equivalents and other assets.

18. PCC and the Filer have the same financial year-end.

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 Exemptions Sought are granted provided that:

1. in regard to the Continuous Disclosure Relief:

(a) PCC remains an electronic filer and a reporting issuer or the equivalent thereof in each of the jurisdictions of Canada in which the Filer is a reporting issuer;

(b) PCC is not a venture issuer;

(c) PCC remains the owner, directly or indirectly, of all the issued and outstanding voting and equity securities of the Filer;

(d) the business of PCC continues to be substantially the same as the business of the Filer, in that PCC has no material operations, assets or liabilities other than its holdings of securities of the Filer and amounts outstanding under the indebtedness, if any, owing, directly or indirectly, to PCC by the Filer, and each of the following consolidated items of the Filer vary from the corresponding consolidated items of PCC by no more than 10% of such corresponding consolidated items of PCC, calculated using PCC's financial statements, for the periods covered by the consolidated interim financial report or consolidated annual financial statements of PCC, as the case may be:

(i) cash flow from operations;

(ii) total assets; and

(iii) total liabilities;

(e) PCC includes disclosure in its MD&A that identifies the principal differences between the consolidated assets and liabilities of PCC and the Filer;

(f) PCC includes disclosure in its AIF that would be required of the Filer under Items 6, 7 and 8 of Form 51-102F2 Annual Information Form;

(g) PCC complies with the Continuous Disclosure Requirements and files with the Securities Regulatory Authorities all such documents required to be filed under the Legislation at or before the time those documents would have been required to be filed under the Legislation by the Filer;

(h) the Filer has no issued and outstanding securities other than (i) voting and equity securities beneficially owned and controlled, directly or indirectly, by PCC; (ii) non-voting and non-convertible preferred shares, or preferred shares convertible into other preferred shares of the same class as the distributed preferred shares or into equity securities of PCC; and (iii) non-convertible debt securities;

(i) the Filer sends to all Canadian-resident registered holders of securities of the Filer distributed to the public (including, to the extent outstanding, the PFC First Preferred Shares and the PFC Debentures), other than PCC and wholly-owned subsidiaries of PCC, all continuous disclosure materials that are sent to holders of similar securities of PCC, contemporaneously with the furnishing by PCC of such materials to holders of PCC's securities, in accordance with Regulation 51-102 and Regulation 54-101 respecting Communication with Beneficial Owners of Securities of a Reporting Issuer, CQLR, c. V-1.1, r. 29;

(j) if there is a material change in the affairs of the Filer that is not a material change in the affairs of PCC, the Filer complies with the requirements of the Legislation respecting issuance and filing of a press release and filing of a material change report;

(k) the documents required to be filed by PCC under the Continuous Disclosure Requirements are filed under the SEDAR profiles of each of PCC and the Filer within the time limits and together with applicable fees required for the filing of such documents;

(l) if there is a "significant acquisition" as defined in Part 8 of Regulation 51-102 of the Filer that is not a "significant acquisition" of PCC, the Filer complies with Part 8 of Regulation 51-102 in respect of such significant acquisition;

(m) the constating documents of the Filer, as amended from time to time, are filed under the SEDAR profile of the Filer in accordance with the Legislation;

(n) if there is a document affecting the rights of securityholders of the Filer that has not been filed by PCC, the Filer complies with Part 12 of Regulation 51-102 in respect of the filing of such document;

(o) if there is a material contract of the Filer that has not been filed by PCC, the Filer complies with Part 12 of Regulation 51-102 in respect of the filing of such material contract;

(p) if there is a named executive officer of the Filer, as defined in Form 51-102F6 Statement of Executive Compensation (Form 51-102F6), or director of the Filer who is not a named executive officer or director of PCC, the information in respect of such named executive officer or director required under Form 51-102F6 is included in the information circular of PCC containing compensation disclosure for named executive officers and directors of PCC in accordance with Form 51-102F6;

(q) the Filer files a notice in its SEDAR profile stating that it has been granted the Continuous Disclosure Relief and that investors should refer to the continuous disclosure documents filed by PCC that are also available in the Filer's SEDAR profile; and

(r) the Filer and PCC, as applicable, comply with the conditions of the Certification Relief, the Eligibility Relief and the Prospectus Relief;

2. in regard to the Certification Relief:

(a) PCC remains an electronic filer and a reporting issuer or the equivalent thereof in each of the jurisdictions of Canada in which the Filer is a reporting issuer;

(b) PCC complies with the Certification Requirements, and such certificates are filed under the SEDAR profiles of each of PCC and the Filer; and

(c) the Filer and PCC, as applicable, comply with the conditions of the Continuous Disclosure Relief, the Prospectus Relief and the Eligibility Relief;

3. in regard to the Eligibility Relief:

(a) the Filer and PCC, as applicable, comply with the conditions of the Continuous Disclosure Relief, the Certification Relief and the Prospectus Relief;

(b) PCC is qualified under Section 2.2 of Regulation 44-101 to file a short form prospectus;

(c) the Filer does not file a short form prospectus or shelf prospectus supplement to distribute Common Shares or securities in respect of which Common Shares may be issued or transferred;

(d) any preferred shares distributed pursuant to a short form prospectus or a shelf prospectus supplement are non-convertible or are convertible into other preferred shares of the same class as the distributed preferred shares or into equity securities of PCC;

(e) any debentures or other debt securities distributed pursuant to a short form prospectus or shelf prospectus supplement are non-convertible; and

(f) any securities distributed pursuant to a short form prospectus or shelf prospectus supplement are preferred shares or debentures or other debt securities and have received a final designated rating;

4. in regard to the Prospectus Relief:

(a) the Filer and PCC, as applicable, comply with the conditions of the Continuous Disclosure Relief, the Certification Relief and the Eligibility Relief;

(b) in relation to Section 8.4 of Regulation 44-102, if the Filer is distributing securities by way of an MTN program or other continuous distribution using the shelf procedures, the Filer does both of the following:

(i) calculates updated earnings coverage ratios for the ratios contained in its base shelf prospectus each time PCC prepares an interim financial report or audited financial statements, using the 12-month period that ended on the last day of PCC's most recently completed financial period; and

(ii) files the updated earnings coverage ratios, concurrently with the filing of PCC's financial statements, in either (A) an exhibit to PCC's financial statements or (B) a shelf prospectus supplement;

(c) the Filer incorporates by reference in any short form prospectus any material change report filed by the Filer since the end of the financial year in respect of which PCC's current AIF is filed;

(d) the Filer makes the statement required by Section 11.2 of Form 44-101F1 in any short form prospectus, with "or PCC" or a reference that is substantively the same added after the words "by the issuer";

(e) for any short form prospectus, the Filer complies with Section 6.1 of Form 44-101F1, except that "the issuer" is to be read as "PCC" and any references to the issuer's annual financial statements or interim financial reports are to be read as those of PCC; and

(f) for any short form prospectus, the Filer complies with Subsection 11.1(1) of Form 44-101F1, except that references to the disclosure documents are to be read as those of PCC.