Valener Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- the Filers applied for relief from the requirements in section 3.2 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises to permit the Filers to prepare their financial statements in accordance with U.S. GAAP for its financial years that begin before January 1, 2019.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.

May 12, 2015

[Translation]

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (THE "JURISDICTIONS") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF VALENER INC. (THE "FILER")

DECISION

Background

The securities regulatory authority or the regulator in each of the Jurisdictions (the "Decision Makers") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting the Filer from the requirements of section 3.2 of Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards ("Regulation 52-107"), to the effect that the annual financial statements and interim financial reports of the Filer: (a) be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises; and (b) disclose an unreserved statement of compliance with IFRS in the case of annual financial statements and an unreserved statement of compliance with IAS 34 in the case of an interim financial report (the "Exemption 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 ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the "Passport Jurisdictions");

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

In this decision:

(a) Unless otherwise defined herein, terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and Regulation 52-107 have the same meaning if used in this decision;

(b) "Rate-regulated operations" has the meaning ascribed in Part V, Pre-change-over accounting standards, ("Part V") of the CPA Canada Handbook -- Accounting (the "Handbook"), at the date hereof.

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, (Québec) R.S.C., 1985, c. C-44. The head office of the Filer is in Montréal, Québec.

2. The Filer is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions, and is not in default of securities legislation in any jurisdiction.

3. The Filer carries on rate-regulated operations.

4. The Filer is not an SEC issuer; therefore cannot rely on section 3.7 of Regulation 52-107 to file financial statements prepared in accordance with U.S. GAAP.

5. On October 1, 2010, the Canadian Accounting Standards Board (AcSB) issued modifications to Part 1 of the Handbook, International Financial Reporting Standards, allowing a deferral of one year of the mandatory IFRS changeover date for entities with qualifying rate-regulated operations. These modifications allowed these entities, as defined in Section 1100, Generally Accepted Accounting Principles, in Part V of the Handbook, to defer the adoption of IFRS to the years commencing on or after January 1, 2012.

6. As a "qualifying entity" for the purposes of section 5.4 of Regulation 52-107, the Filer was permitted to prepare its financial statements for its financial year commencing October 1, 2011 and ending September 30, 2012 in accordance with Canadian GAAP as set out in Part V of the Handbook.

7. On July 11, 2011, the Filer obtained a decision from the Decision Makers under the Legislation, exempting the Filer from the requirements under section 3.2 of Regulation 52-107, to provide its financial statements in accordance with IFRS that apply to publicly accountable enterprises, and authorizing the Filer to provide its financial statements in accordance with U.S. GAAP, for its financials years commencing on or after January 1, 2012 but before January 1, 2015 (the "Original Decision").

8. In March 2012, the AcSB decided to defer the mandatory IFRS changeover date for an additional year for entities with qualifying rate-regulated operations, allowing such entities to adopt IFRS for the years commencing on or after January 1, 2013.

9. In October 2012, the AcSB decided to defer the mandatory IFRS changeover date for an additional year for entities with qualifying rate-regulated operations, allowing such entities to adopt IFRS for the years commencing on or after January 1, 2014.

10. In March 2013, the AcSB decided to defer the mandatory IFRS changeover date for an additional year for entities with qualifying rate-regulated operations, allowing such entities to adopt IFRS for years commencing on or after January 1, 2015.

11. Since the deferrals permitted by AcSB were not introduced in Regulation 52-107, on February 6, 2013 and May 5, 2014, the Filer obtained decisions from the Decision Makers under the Legislation of each of the Jurisdictions allowing the Filer to defer successively the mandatory IFRS changeover date of Regulation 52-107 to its financial years beginning on October 1, 2012, October 1, 2013 and October 1, 2014 (the "Changeover Deferral Decisions").

12. With these Changeover Deferral Decisions, the Filer was permitted to prepare its financial statements for the financial years ending on September 30, 2013, September 30, 2014 and September 30, 2015 in accordance with Canadian GAAP as set out in Part V of the Handbook.

13. The Original Decision and the Changeover Deferral Decisions are not applicable to financial years that begin on or after January 1, 2015.

14. The International Accounting Standards Board (IASB) continues to work on a project focusing on accounting specific to rate-regulated operations. It is not yet known when this project will be completed or whether IFRS will include a specific standard that is mandatory for entities with rate-regulated operations.

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:

(a) the Exemption Sought is granted to the Filer in respect of the annual financial statements and interim financial reports required to be filed on or after the date of this decision, provided that the Filer prepares those financial statements in accordance with U.S. GAAP; and

(b) the Exemption Sought will cease to have effect on the earliest of the following:

i. January 1, 2019;

ii. if the Filer ceases to carry on rate-regulated operations, the first day of the Filer's financial year that commences after the Filer ceases to carry on rate-regulated operations; and

iii. the effective date prescribed by the IASB for the mandatory application of a standard within IFRS specific to entities with rate-regulated activities.

"Gilles Leclerc"
Superintendent, Securities Markets
Autorité des marchés financiers