OSC Staff Notice: 61-701 - Applications for Exemptive Relief under Rule 61-501
OSC Staff Notice: 61-701 - Applications for Exemptive Relief under Rule 61-501
ONTARIO SECURITIES COMMISSION
STAFF NOTICE 61-701
APPLICATIONS FOR EXEMPTIVE RELIEF UNDER RULE 61-501
On May 1, 2000, Ontario Securities Commission Rule 61-501 - Insider Bids, Issuer Bids,Going Private Transactions and Related Party Transactions ("Rule 61-501") andCompanion Policy 61-501CP (the "Companion Policy") came into effect. Section 9.1 ofRule 61-501 provides that the Director may grant an exemption from Rule 61-501, in wholeor in part, subject to such conditions or restrictions as may be imposed in the exemption.
The purpose of this notice is to describe: (i) the process applicable to such applicationsfor discretionary relief; (ii) the types of supporting documentation to be provided to theDirector by or on behalf of persons or companies seeking discretionary relief; and (iii) thetype of decision document that will be provided when the Director grants an exemptionfrom one or more of the requirements of Rule 61-501.
Rule 61-501 replaced Ontario Securities Commission Policy 9.1 ("Policy 9.1"). Theprincipal differences between the process that previously applied to requests for "no-action"relief under Policy 9.1 and the process that will apply to requests for exemptionsfrom Rule 61-501 are as follows:
(1) Since Rule 61-501 is part of "Ontario securities law", section 9.1 contemplates that,in the appropriate circumstances, the Director will grant a formal exemption fromone or more requirements of Rule 61-501. This replaces the practice of issuing"staff no-action letters" under Policy 9.1.
(2) Persons seeking EXEMPTIVE relief under Rule 61-501 are being asked to submitwith their application a draft decision document (see Appendix A to this Notice fora sample form of decision document). This is consistent with the practiceapplicable to applications to the Commission for EXEMPTIVE relief.
(3) If the Director decides to grant an exemption from all or any part of Rule 61-501, thedecision will be placed on the public file and published in the Ontario SecuritiesCommission Bulletin. Staff believes that publishing these decisions will enhancethe transparency of the decision-making process.
Submission of Applications
1. will be discussed in more detail below, an application package (collectively, the"Application") for relief from one or more requirements of Rule 61-501 shouldconsist of:
(a) a letter or memorandum prepared by or on behalf of the applicant outliningthe basis upon which EXEMPTIVE relief is being sought (the "Submission");
(b) a draft decision document, in the form set out in Appendix A to this Notice,providing for the requested relief (please provide a diskette containing thedecision document, as well as a paper copy);
(c) supporting documents, as appropriate (e.g., disclosure documents (orexcerpts thereof) provided, or to be provided, to securityholders, agreementsrelating to the transaction in question, financial information, etc.);
(d) a statement: (i) from the person submitting the Application certifying the truthof the facts set out in the Application; and (ii) if the Application is being madeby an agent of the applicant on its behalf, a statement from the applicantconfirming the agent's authority to prepare and file the Application andconfirming the truth of the representations contained in the Application; and
(e) a cheque in the amount of the appropriate fees for the Application andpayable to the Ontario Securities Commission.
2. Please send the original, executed Application and two copies of each of items1(a)-(d) above, together with the cheque referred to in item 1(e), to:The Director, Take-over/Issuer Bids, Mergers & Acquisitions
c/o Admin./Doc. Management
Ontario Securities Commission
Suite 1900, Box 55
20 Queen Street West
Toronto ON M5H 3S8
3. If the supporting documents appended to the Submission are bulky, one copy of thesupporting documents will be sufficient, unless staff of the Commission requestsadditional copies. Staff may request that the applicant provide additional copies ofthe Application in certain circumstances.
4. It is highly recommended that the Submission and draft decision documentbe faxed directly to the attention of the Director, Take-over/Issuer Bids,Mergers & Acquisitions, as soon as these documents are finalized, so thatstaff of the Commission can start reviewing these materials immediately,pending receipt of a "hard copy" of the Application and the filing fee. Presently, the take-over bid team's fax number is (416) 593-8177. (Please refer toa current OSC telephone directory, however, to ensure that an up-to-date faxnumber for the take-over bid team is used.) Please do not fax the supportingdocumentation unless requested to do so by staff of the Commission.
5. Upon receipt by staff of an Application for exemptive relief from one or morerequirements of Rule 61-501, one copy of the Application will be placedimmediately on the public file, unless confidentiality is specifically requested. Ifconfidentiality is requested, the applicant should be prepared to demonstrate thatsuch confidentiality is reasonable in the circumstances and would not be contraryto the public interest.
6. Applicants should be aware that requests for confidentiality will not necessarily begranted and the onus is on the applicant to overturn the presumption favouringpublic availability of applications. Staff will scrutinize carefully requests forconfidentiality, particularly in the context of contentious transactions. An applicantwhose request for confidentiality is opposed by staff has the option of withdrawingthe Application or requesting a meeting with the Director, Take-over/Issuer Bids,Mergers & Acquisitions, to discuss the confidentiality request.
7. If the Director makes a decision exempting a person or company from one or moreprovisions of Rule 61-501, the decision will be placed on the public file andpublished in the Ontario Securities Commission Bulletin. In certain circumstancesupon further request by the applicant, the Director will refrain from placing thedecision on the public file for a temporary period (e.g., pending an imminent publicannouncement of the transaction in respect of which exemptive relief has beenobtained).
8. Applicants should be aware that freedom of information legislation may require theCommission to provide the press and members of the public with access toapplications for exemptive relief and/or exemption decisions, notwithstanding theapplicant's request for confidential treatment of such materials.
Content and Format of Applications
9. While the content and form of Applications is not prescribed, staff generally will findit helpful to its analysis of the Application if the Submission:
(a) states whether similar relief has been, or is likely to be requested, withrespect to Policy Q-27 (or any successor instrument) issued by theCommission des valeurs mobilières du Québec;
(b) contains a detailed description of the transaction in respect of which reliefis being sought;
(c) describes, in general terms, the nature of any other discretionary exemptiverelief the applicant is seeking, or expects to seek, from any requirements ofapplicable Ontario securities law or the securities legislation in otherprovinces or territories of Canada, in connection with the transaction(s)giving rise to the Application for exemptive relief under Rule 61-501;
(d) describes any pre-filing discussions relating to the relief referred to inparagraphs (a)-(c) above and identifies the staff member(s) with whom suchdiscussions were held;
(e) identifies any automatic exemptions from any of the requirements of Rule 61-501that the applicant intends to rely upon in connection with the proposed transaction(s);
(f) describes exactly how Rule 61-501 and the Companion Policy would applyto the transaction in the absence of any discretionary exemptive relief;
(g) describes the review and approval process adopted, or to be employed, bythe board(s) of directors and the independent committee(s), if any, of theparties to the transaction in respect of which the Application is being made;
(h) explains why exemptive relief is being sought from all or part of Rule 61-501,provides submissions in support of the requested relief and discussesapplicable case law, prior Commission decisions and policies;
(i) includes as exhibits the relevant case law and Commission decisionsreferred to in (h) above;
(j) explains why it would not be contrary to the public interest for the Directorto grant the requested relief;
(k) if confidential treatment of all or part of the Application has been requested,explains why confidential treatment is reasonable in the circumstances andnot contrary to the public interest; and
(l) if expedited treatment of the Application has been requested, explains whysuch treatment is required in the circumstances, indicates exactly when reliefis needed and explains why it was not possible to apply for relief sooner.
10. Applicants may obtain additional guidance as to the preferred content and formatof applications for exemptive relief by referring to Section D of OSC Policy 2.1 -Applications to the Ontario Securities Commission ("Policy 2.1") and any successorthereto.
11. Rule 61-501 provides in many circumstances that the availability of exemptive reliefis conditional upon disclosure of the facts supporting reliance upon the exemptionin a material change report and/or a disclosure document provided tosecurityholders in connection with the proposed transaction. (See, e.g., sections2.4, 3.4, 4.5 and 5.6 of Rule 61-501.) If draft or final versions of such documentsare available at the time the Application is filed, please provide such documents (orthe relevant excerpts if the documents are lengthy) as part of the supportingdocumentation for the Application.
Procedure for Processing Applications
12. Upon receipt of an Application, a Commission staff member will be assigned toreview the Application and recommend disposition. The staff member may contactthe applicant if further information or clarification is required. If the additionalinformation or clarification sought is not provided within a reasonable amount oftime, the Director may decide that the Application should be treated as abandoned.
13. If the staff member recommends that the requested exemption be granted and theDirector accepts such recommendation, the Director will issue a written decisiongranting the requested exemption upon such terms and conditions as the Directorbelieves it is appropriate to impose.
14. Decisions by the Director, either to grant the requested exemption or deny therequested exemption (including a denial of the requested exemption unless theapplicant consents to having the Application placed on the public file or disclosedto persons or companies who may be affected by the Application), are subject toreview by the Commission in accordance with subsections 8(2) and (3) of the Act.Subsection 8(2) of the Act provides that any person or company directly affectedby a decision of the Director may, by notice in writing sent by registered mail to theCommission within thirty days after the mailing of the notice of the decision, requestand be entitled to a hearing and review thereof by the Commission. Subsection8(3) provides that, upon such a hearing and review, the Commission may confirmthe decision under review or make such other decision as the Commissionconsiders proper.
15. An Application may be withdrawn at any time before the Director has reached adecision on the matter without prejudice to the applicant's right to re-apply.
For further information, please contact:Janet Holmes
Senior Legal Counsel
UPON the application (the "Application") of ______________ [name(s) ofapplicant(s) - use defined terms, as appropriate] to the Director for a decision pursuantto section 9.1 of Rule 61-501 that, in connection with ______________ [brief descriptionof the transaction in respect of which exemptive relief is requested - use definedterms, as appropriate], __________ [name(s) of applicant(s)] be exempt from section(s)_____ [list the provisions of Rule 61-501 in respect of which exemptive relief is beingsought] of Rule 61-501;
AND UPON considering the Application and the recommendation of staff of theCommission;
AND UPON __________ (name(s) of the applicant(s)] having represented to theDirector as follows:
[Insert numbered representations disclosing all information relevant to thegranting of the relief. Without limiting the generality of the foregoing, includerepresentations: (i) as to how Rule 61-501 would apply in the absence of therequested relief; and (ii) explaining why it is not contrary to the public interestto grant the requested relief. ]
AND UPON the Director being satisfied that to do so would not be prejudicial to thepublic interest;
IT IS DECIDED pursuant to section 9.1 of Rule 61-501 that, in connection with__________ [brief description of the transaction in respect of which exemptive reliefis requested], _________ [name(s) of applicants] shall not be subject to therequirements in section(s) _____ [list the provisions of Rule 61-501 in respect of whichexemptive relief is being sought] of Rule 61-501, provided that ____________ [name(s)of applicant(s)] comply with the other applicable provisions of Rule 61-501 and [insertthe numbered terms and conditions].