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Brookfield Corporation
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.
February 14, 2023
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BROOKFIELD CORPORATION (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 from the requirement in item 11.1(1)(7) of Form 44-101F1 Short Form Prospectus (Form 44-101F1) to incorporate by reference in any short form prospectus of the Filer, including any prospectus that is a base shelf prospectus pursuant to National Instrument 44-102 Shelf Distributions (NI 44-102) and any supplement thereto (each, a Prospectus), the Excluded Sections (as defined below) of the Circular (as defined below) as they are no longer material, relevant, or applicable to the Filer, its securityholders or potential purchasers of the Filer's securities (the Exemption Sought).
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 each province and territory of Canada, other than Ontario.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 and 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 and in good standing under the Business Corporations Act (Ontario). The Filer's registered and head office is located at Suite 100, Brookfield Place, 181 Bay Street, Toronto, Ontario M5J 2T3.
2. The Filer is a reporting issuer in all of the provinces and territories of Canada and is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.
3. The class A limited voting shares of the Filer are listed on the New York Stock Exchange and on the Toronto Stock Exchange, each under the symbol "BN".
4. The Filer satisfies the basic qualification criteria as set out in section 2.2 of National Instrument 44-101 Short Form Prospectus Distribution (NI 44-101) and, as a result, is qualified to file short form prospectus that is a base shelf prospectus under section 2.2 of NI 44-102.
5. The Filer has a current annual information form and current annual financial statements (each as defined in section 1.1 of NI 44-101).
6. The Filer has filed (or has been deemed to have filed) the notice required by section 2.8 of NI 44-101 and such notice has not been withdrawn.
7. As of the date hereof, the Filer has two effective short form prospectuses that are base shelf prospectuses:
a. the short form base shelf prospectus of the Filer dated September 16, 2022 qualifying the issuance and sale of US$3.5 billion aggregate principal amount of debt securities, class A preference shares, and class A limited voting shares of the Filer and debt securities of Brookfield Finance Inc., Brookfield Finance II Inc., Brookfield Capital Finance LLC, Brookfield Finance (Australia) Pty Ltd, Brookfield Finance I (UK) PLC and preferred shares of Brookfield Finance II LLC; and
b. the short form base shelf prospectus of the Filer dated July 30, 2021 qualifying the issuance and sale of US$1 billion of class A exchangeable limited voting shares of Brookfield Asset Management Reinsurance Partners Ltd. and class A limited voting shares of the Filer (issuable or deliverable upon exchange, redemption or acquisition of class A exchangeable limited voting shares).
8. On October 6, 2022, the Filer filed on the System for Electronic Document Analysis and Retrieval a management information circular dated September 30, 2022 (the Circular) in respect of a plan of arrangement (the Arrangement) pursuant to which: (i) shareholders (the Existing Shareholders) of the Filer (at such time, known as Brookfield Asset Management Inc.) would receive shares of Brookfield Asset Management Ltd. (the Manager), while retaining their shares of the Filer; and (ii) the Manager would acquire a 25% interest in Brookfield Asset Management ULC (the Asset Management Company). The Filer would retain the remaining 75% interest in the Asset Management Company.
9. On November 9, 2022, the Filer held a special meeting of shareholders at which the shareholders of the Filer approved the Arrangement.
10. On December 9, 2022, the Filer completed the Arrangement. Prior to closing of the Arrangement, the Manager did not carry on an active business and had not issued any shares. Immediately following the Arrangement, the Existing Shareholders owned 100% of both the Filer and the Manager, which became a publicly-traded reporting issuer in all jurisdictions in Canada.
11. Subject to Item 11.1(3) of Form 44-101F1, Item 11.1(1)(7) of Form 44-101F1 requires the Filer to incorporate by reference in any Prospectus of the Filer any information circular filed by the Filer under Part 9 of National Instrument 51-102 Continuous Disclosure Obligations since the beginning of the financial year in respect of which the Filer's current AIF is filed. Item 11.1(3) of Form 44-101F1 permits, among other things, the Filer to exclude from any Prospectus an opinion contained in an information circular prepared in connection with a special meeting of securityholders if the opinion was prepared in respect of a specific transaction contemplated in the information circular, unrelated to the distribution of securities under the Prospectus, and the transaction has been completed. Accordingly, other than as permitted under 11.1(3) to exclude certain portions of the Circular, the Filer is required to incorporate by reference in any such Prospectus of the Filer the entire Circular from the date hereof until the Filer files an annual information form in respect of its financial year ended December 31, 2023.
12. Other than pursuant to the Exemption Sought, any Prospectus prepared by the Filer will comply with the applicable requirements of NI 44-101, NI 44-102 and Form 44-101F1, as applicable.
13. The Excluded Sections of the Circular are:
a. "Information Concerning the Manager Post-Arrangement" starting on page 59 of the Circular;
b. "Other Matters to be Acted Upon" starting on page 66 of the Circular;
c. "Legal Matters" at page 92 of the Circular;
d. "Consents" at page 93 of the Circular;
e. "Appendix E -- Information Concerning the Manager Post-Arrangement";
f. "Appendix F -- Consolidated Financial Statements of Brookfield Asset Management Ltd.";
g. "Appendix G -- Combined Consolidated Carve-Out Financial Statements of Brookfield Asset Management ULC"; and
h. "Appendix H -- Unaudited Condensed Combined Carve-Out Financial Statements of Brookfield Asset Management ULC".
14. Since the Arrangement has now been completed and the Manager's shares have been distributed, the information in the Excluded Sections that relates to the Manager is no longer relevant to potential purchasers of the Filer's securities.
15. Both before and after the completion of the Arrangement, the results and financial position of the Asset Management Company are, and will be, consolidated by the Filer. As a result, the outdated, standalone financial information of the Asset Management Company contained in Appendix G and Appendix H of the Circular is neither material to investors in the Filer's securities, nor necessary for the Filer to fulfill its obligation to provide full, true, and plain disclosure.
16. The Arrangement's impact on the Filer's financial position is the movement of the net book value of the Manager's 25% interest in the Asset Management Company from the Filer's common equity to non-controlling interests. This change is immaterial in the context of the Filer's financial statements.
17. In addition, to the extent that the information in the Excluded Sections relates to the Asset Management Company, the information contained in the Excluded Sections is now outdated and superseded since the financial information relating to the Asset Management Company was as of June 30, 2022 and the Filer has now released its third quarter financial statements.
18. If portions of the Circular that name Canadian counsel and U.S. counsel will be incorporated by reference into a Prospectus, the Filer will file their written consents if required by and in accordance with paragraph 4.2(a)(vii) of NI 44-101 or subsection 7.2(2) of NI 44-102.
19. As such, incorporating by reference the Excluded Sections in a Prospectus is of no benefit to the Filer's securityholders or potential purchasers of the Filer's securities.
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:
(a) at the time of filing any Prospectus, the Filer satisfies the basic qualification criteria as set out in section 2.2 of NI 44-101;
(b) the Filer complies with all of the other applicable requirements of NI 44-101, NI 44-102 and Form 44-101F1, in respect of any Prospectus of the Filer (except as varied by this decision); and
(c) the Filer discloses in each Prospectus that it has obtained exemptive relief from the requirement to incorporate by reference in such Prospectus the Excluded Sections of the Circular, and includes a statement identifying the decision and explaining how a copy of this decision can be obtained.
"Erin O'Donovan"
Manager, Corporate Finance
Ontario Securities Commission
OSC File #: 2022/0584