IPH Limited and Smart & Biggar LLP/Smart & Biggar S.E.N.C.R.L.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Dual application for relief from the prospectus requirement for certain trades made in connection with an employee offering by an Australian issuer -- The issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions as the securities are not being offered directly to its Canadian employees but rather to its affiliate's Canadian employees -- Canadian participants will have access to disclosure documents -- The issuer is subject to the supervision of the Australian Securities & Investments Commission -- Canadian employees will not be induced to participate in the offering by expectation of employment or continued employment -- There is no market for the securities of the issuer in Canada -- Relief granted, subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 53 and 70.

National Instrument 45-102 Resale of Securities, s. 2.15.

National Instrument 45-106 Prospectus Exemptions, s. 2.24.

OSC Rule 72-503 Distributions Outside Canada, s. 2.8(1).

[TRANSLATION]

May 5, 2023

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IPH LIMITED (IPH) AND SMART & BIGGAR LLP/SMART & BIGGAR S.E.N.C.R.L. (New Legal LLP and, with IPH, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the prospectus requirement so that such requirement does not apply to the distribution by the Filer of Incentive Securities (as defined below) to Eligible Persons (as defined below) (the Exemption Sought).

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

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

b) the Filers have provided notice that section 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 British Columbia; 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 11-202, Regulation 45-102 respecting Resale of Securities, CQLR, c. V-1.1, r. 20 (Regulation 45-102) and Regulation 45-106 respecting Prospectus Exemption, CQLR, c. V-1.1, r. 21 (Regulation 45-106) have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. IPH is a corporation incorporated under the laws of Australia.

2. IPH's fully paid ordinary shares (the Ordinary Shares) are listed and traded on the Australian Securities Exchange (the ASX) and entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of shares held.

3. IPH is not, and has no intention of becoming, a reporting issuer under the securities legislation of any jurisdiction of Canada. The head office of IPH is located in Australia. IPH is not in default of securities legislation in any jurisdiction of Canada.

4. IPH currently has no intention to list its securities on any stock exchange in Canada.

5. IPH is the holding company for a number of intellectual property and associated companies offering a wide range of intellectual property services and products.

6. On October 6, 2022, IPH acquired Smart & Biggar IP Agency Co., an Ontario general partnership carrying on a patent and trademark agency practice, and 49.9 % of the voting rights and 100 % of the economic interest (other than a fixed income allocation as described below) of New Legal LLP, who is continuing the affiliated legal practice formerly carried on through Smart & Biggar LLP, an Ontario limited liability partnership (together, the Practice).

7. The legal assets and practice of the Practice are now owned and carried on through New Legal LLP.

8. New Legal LLP is a limited liability partnership formed under the laws of Quebec having its head office based in Montreal, Quebec.

9. A separate Quebec limited partnership has been formed as of September 19, 2022, Smart & Biggar S.E.C./Smart & Biggar LP (Agency LP), which is now carrying on the patent and trademark agency business formerly conducted by Smart & Biggar IP Agency Co.

10. Voting control as to 50.1 % of New Legal LLP is held by four professional corporations as partners of New Legal LLP, each of which is 100 % owned and controlled by a former equity partner of the Practice, each of whom is also an individual qualified lawyer and receives a fixed income allocation from New Legal LLP through his professional corporation. Each individual qualified lawyer controlling the professional corporations are de facto partners of New Legal LLP, through his professional corporation, and such individuals are not employees of New Legal LLP.

11. IPH has, indirectly through Agency LP, voting rights as to 49.9 % and all of the economic interest (other than the fixed income allocation) in New Legal LLP. Agency LP, 100 % controlled by IPH, is also required to contribute all of the premises, assets, technology, financing and staff required by New Legal LLP to carry on the practice of law, other than the skill and expertise of qualified lawyers.

12. Current and future senior lawyers employed by New Legal LLP are entitled to receive as part of their incentive compensation, options or performance rights to subscribe for or be transferred Ordinary Shares (with the Ordinary Shares issued upon the exercise or the vesting of such options and performance rights, the Incentive Securities) pursuant to IPH's Employee Incentive Plan (the Plan). The purpose of the Plan is to give eligible persons the opportunity to participate in the growth and profits of IPH and to attract, motivate and retain the services of eligible persons to promote the long-term success of IPH. The Plan has been established by IPH in compliance with all ASX-listed issuer rules and regulations.

13. The Plan is available for i) current and future senior lawyers employed by New Legal LLP (the Eligible Persons); ii) any employee of IPH and of any of its subsidiaries; iii) any non-executive director of IPH group; iv) any contractual or occasional employee engaged by IPH group to work the number of hours equivalent to 40 % or more of a comparable full-time position; and v) any person who is declared by the board of IPH to be eligible under the Plan.

14. As of January 16 2023, there are 14 Eligible Persons, of whom two Eligible Persons reside in Quebec, one Eligible Person resides in British Columbia and 11 Eligible Persons reside in Ontario. New Legal LLP currently has no intention to hire Eligible Persons outside of British Columbia, Ontario and Quebec.

15. IPH is not able to rely on the prospectus exemption set out in section 2.24 of Regulation 45-106 because the Eligible Persons are employees, executive officers or consultants of New Legal LLP, which does not meet the technical requirements to be a "related entity" of IPH within the meaning of section 2.22 of Regulation 45-106.

16. The prospectus exemption set out in section 2.3 of Regulation 45-106 may also not be available to IPH as it is anticipated that some of the Eligible Persons would not qualify as accredited investors.

17. As an ASX listed issuer, IPH is subject to a continuous disclosure regime.

18. Eligible Persons will have access to IPH's public disclosure record on the ASX, and IPH will also send to each Eligible Person holding Ordinary Shares its annual report.

19. Eligible Persons will not be induced to participate in any distribution or exercise of Incentive Securities by expectation of employment or continued employment with New Legal LLP or another related entity of IPH.

20. As of the date hereof and after giving effect to any Incentive Securities offering pursuant to the Plan, IPH is and will be a "foreign issuer" as such term is defined in 2.15(1) of Regulation 45-102 and section 2.8(1) of Ontario Securities Commission Rule 72-503 Distributions Outside Canada (OSC Rule 72-503).

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

a) before the issuance of Incentive Securities to an Eligible Person, New Legal LLP will obtain a statement from each Eligible Person acknowledging receipt of:

(i) a copy of this Decision; and

(ii) details as to how to access IPH's public disclosure record.

b) at the time of any issuance of Incentive Securities to an Eligible Person, IPH will be a "public company" within the meaning of Australia's Corporations Act (Cth), its securities will be quoted for trading on the ASX; and IPH will be in compliance with its continuous disclosure obligations under the Corporations Act (Cth) and the listing rules of the ASX;

c) the prospectus requirement will apply to the first trade of any Incentive Security acquired by an Eligible Person pursuant to this decision, unless the following conditions are met:

(i) the issuer of the security was a foreign issuer on the distribution date, as such term is defined in section 2.15(1) of Regulation 45-102 and section 2.8(1) of OSC Rule 72-503;

(ii) the issuer of the security:

(A) was not a reporting issuer in any jurisdiction of Canada at the distribution date, or

(B) is not a reporting issuer in any jurisdiction of Canada at the date of the trade; and

(iii) the first trade is made:

(A) through an exchange, or a market, outside of Canada, or

(B) to a person or company outside of Canada;

d) in the Province of Ontario, the prospectus exemption above, for the first trade in any Incentive Securities acquired by Eligible Persons pursuant to this decision, is not available with respect to any transaction or series of transactions that is part of a plan or scheme to avoid the prospectus requirements in connection with a trade to a person or company in Canada.

"Benoît Gascon"
Directeur principal du financement des sociétés
Autorité des marchés financiers

OSC File #: 2022/0417