IMAX Corporation

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the issuer bid requirements set out in Part 2 of NI 62-104 in connection with purchases by the issuer of up to 15% of its outstanding shares through the facilities of the NYSE under repurchase programs that the issuer may implement from time to time -- the shares are not listed on any Canadian exchange and are only listed and posted for trading on the NYSE -- the issuer believes that less than 2% of the shares are beneficially owned by resident Canadians -- requested relief granted, subject to certain conditions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

April 1, 2022

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 IMAX 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 principal regulator (the Legislation) exempting the Filer from the requirements applicable to issuer bids (the Issuer Bid Requirements) in Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) in connection with purchases by the Filer of up to 15% of the Filer's outstanding common shares (the Shares) made through the facilities of the New York Stock Exchange (the NYSE) under repurchase programs that the Filer may implement from time to time (such programs, the Repurchase Programs, and such exemption, 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 British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

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

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the Canada Business Corporations Act and is in good standing. The Filer has its head office and one of its two principal executive offices located in Mississauga, Ontario. The Filer's other principal executive office is located in New York, New York.

2. The Filer is a reporting issuer in all of the provinces of Canada, and is not in default of any requirements of the securities legislation of the jurisdictions in which it is a reporting issuer.

3. The Filer is also a registrant with the Securities and Exchange Commission in the United States (the SEC) and is subject to the requirements of the Securities Act of 1933 (United States) (the 1933 Act) and the Securities Exchange Act of 1934 (United States) (the 1934 Act).

4. The authorized capital of the Filer consists of an unlimited number of Shares and an unlimited number of non-voting special shares. As at March 18, 2022, the Filer had 58,748,344 Shares and no special shares issued and outstanding.

5. Upon the completion of its initial public offering in 1994, the Shares were concurrently listed and posted for trading on the Toronto Stock Exchange (the TSX) and the NASDAQ Stock Exchange (the NASDAQ). In 2011, the Filer delisted the Shares from the NASDAQ and instead listed and posted the Shares for trading on the NYSE. From that point onward, until January 19, 2015, the Shares were listed and posted for trading on the TSX and the NYSE.

6. The Filer was of the view that the low trading volume of the Shares on the TSX over a sustained period no longer justified the financial and administrative costs associated with maintaining its listing of the Shares on the TSX, and on January 12, 2015, the Filer applied for a voluntary delisting of the Shares from the TSX. The delisting was effective as of the close of markets on January 19, 2015.

7. The Shares are no longer listed and posted for trading on any exchange in Canada. The Shares are only listed and posted for trading on the NYSE under the symbol "IMAX".

8. As at March 18, 2022, the Filer's "public float" (as such term is defined by the TSX and the NYSE) consisted of 48,911,957 Shares, representing approximately 83.26% of the outstanding Shares.

9. On June 12, 2017, the Filer announced that its board of directors approved a U.S.$200 million Repurchase Program (the Current Repurchase Program). The Current Repurchase Program commenced on July 1, 2017 and authorizes the Filer to purchase for cancellation up to U.S.$200 million worth of Shares. On June 25, 2021, the Filer announced a 12-month extension to the Current Repurchase Program from June 30, 2021 to permit repurchases until June 30, 2022. Repurchases pursuant to the Current Repurchase Program may be made either in the open market or through private transactions, subject to market conditions, applicable legal requirements and other relevant factors.

10. The exemption from the Issuer Bid Requirements set out in subsection 4.8(3) of NI 62-104 (the Other Published Markets Exemption) provides that an issuer bid that is made in the normal course on a published market, other than a designated exchange, is exempt from the Issuer Bid Requirements if, among other things, the bid is for not more than 5% of the outstanding securities of a class of securities of the issuer and the aggregate number of securities acquired in reliance on the Other Published Markets Exemption by the issuer and any person acting jointly or in concert with the issuer within any period of 12 months does not exceed 5% of the outstanding securities of that class at the beginning of the 12-month period.

11. The Ontario Securities Commission (the OSC) issued a decision on April 1, 2016 (the 2016 Order) exempting the Filer from the Issuer Bid Requirements in connection with purchases by the Filer of up to 10% of its outstanding Shares made through the facilities of the NYSE under Repurchase Programs implemented by the Filer from time to time, subject to certain conditions set out in the decision, for a period of 36 months expiring on April 1, 2019.

12. The OSC issued a decision on March 25, 2019 (the 2019 Order) exempting the Filer from the Issuer Bid Requirements in connection with purchases by the Filer of up to 10% of its outstanding Shares made through the facilities of the NYSE under Repurchase Programs implemented by the Filer from time to time, subject to certain conditions set out in the decision, for a period of 36 months expiring on March 25, 2022.

13. The OSC issued a decision on May 21, 2020 (the 2020 Order) varying the terms of the 2019 Order to increase the maximum number of Shares that could be purchased by the Filer from 10% to 15% of its outstanding Shares. The 2019 Order ceased to be effective and was superseded by the 2020 Order upon the issuance of the 2020 Order.

14. From the commencement of the Current Repurchase Program on July 1, 2017 until March 18, 2022, the Filer repurchased a total of 7,277,273 Shares for an aggregate amount of approximately U.S.$130,795,626. Any and all Shares purchased under the Current Repurchase Program prior to the expiry of the 2020 Order have been, or will be, acquired in reliance on the 2016 Order, the 2019 Order, and the 2020 Order, as applicable.

15. As at March 18, 2022, the Filer had approximately U.S.$69,204,374 remaining available to repurchase Shares under the Current Repurchase Program and the Filer wishes to be able to continue to make repurchases under the Current Repurchase Program and any further Repurchase Programs that may be implemented by the Filer on the facilities of the NYSE in excess of the maximum allowable in reliance on the Other Published Markets Exemption (such repurchases, the Proposed Bids). The Filer intends to either approve and implement a Repurchase Program, or further extend the Current Repurchase Program to allow it to continue to make repurchases following the expiry of the Current Repurchase Program.

16. The Filer believes that the Proposed Bids are in the best interests of the Filer and its shareholders.

17. Based on information provided by the Filer's transfer agent, as at March 18, 2022:

(a) the Filer had 58,748,344 Shares and no special shares issued and outstanding;

(b) 51,688,439 Shares (or approximately 87.983% of the issued and outstanding Shares) were registered to shareholders in the United States;

(c) 7,058,469 Shares (or approximately 12.015% of the issued and outstanding Shares) were registered to shareholders in Canada (the Registered Canadian Shares);

(d) of the Registered Canadian Shares, 7,042,804 Shares were registered to The Canadian Depositary for Securities (the CDS Position), and 15,665 Shares (or approximately 0.027% of the issued and outstanding Shares) were held among fewer than 50 registered shareholders in Canada; and

(e) of the CDS Position, 6,227,097 Shares were held by American intermediaries (the U.S. Intermediary Shares), and 815,707 Shares (or approximately 1.388% of the issued and outstanding Shares) were held by Canadian intermediaries.

18. Based on the information provided by the Filer's transfer agent noted in paragraph 17, the Filer reasonably believes that:

(a) less than 2% of the Shares are beneficially owned by more than 50 shareholders resident in Canada; and

(b) the size of the CDS Position, and the fact that the U.S. Intermediary Shares form part of the CDS Position, is likely a result of the Shares having been listed on the TSX for over 20 years.

19. The Proposed Bids will be effected in accordance with the 1933 Act, the 1934 Act, the rules of the SEC made pursuant thereto, including the safe harbour provided by Rule 10b-18 under the 1934 Act (collectively, the Applicable U.S. Securities Laws) and any by-laws, rules, regulations or policies of the NYSE (the Exchange Rules).

20. Applicable U.S. Securities Laws require that, in respect of purchases by an issuer of its own securities through the facilities of the NYSE: (a) all purchases made during a single trading day must be conducted through a single broker or dealer; (b) purchases cannot be effected during the last 10 minutes before the scheduled close of market or be the opening purchase; (c) purchases must be made at a price that does not exceed the highest independent bid or the last transaction price quoted; and (d) in any given day, the issuer cannot purchase more than 25% of its average daily trading volume on the NYSE over the past four weeks.

21. Applicable U.S. Securities Laws also require that the Filer report any repurchases conducted pursuant to the Current Repurchase Program (and any Repurchase Programs that may be implemented by the Filer) in its quarterly and annual reports.

22. The Proposed Bids would be permitted under the Exchange Rules and Applicable U.S. Securities Laws.

23. The purchase of Shares under the Proposed Bids will not adversely affect the Filer or the rights of any of the Filer's security holders and they will not materially affect control of the Filer.

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) the Proposed Bids are permitted under the Exchange Rules and Applicable U.S. Securities Laws, and are established and conducted in accordance and compliance with the Exchange Rules and Applicable U.S. Securities Laws;

(b) the aggregate number of Shares acquired in reliance on this decision and the Other Published Markets Exemption by the Filer and any person acting jointly or in concert with the Filer within any period of 12 months does not exceed 15% of the outstanding Shares at the beginning of the 12-month period;

(c) the Shares are not listed and posted for trading on an exchange in Canada;

(d) the Exemption Sought applies only to the acquisition of Shares by the Filer occurring within 36 months of the date of this decision pursuant to a Proposed Bid;

(e) at least 5 days prior to purchasing Shares in reliance on this decision, the Filer discloses the terms of the Exemption Sought and the conditions applicable thereto in a press release that is issued and filed on the System for Electronic Document Analysis and Retrieval, and includes such information as part of the news release required to be issued in accordance with the Other Published Markets Exemption in respect any Repurchase Program that may be implemented by the Filer; and

(f) the Filer does not acquire Shares in reliance on the Other Published Markets Exemption if the aggregate number of Shares purchased by the Filer and any person or company acting jointly or in concert with the Filer in reliance on this decision and the Other Published Markets Exemption within any period of 12 months, exceeds 5% of the outstanding Shares at the beginning of the 12-month period.