National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer granted exemptions from the prospectus requirement in connection with trades of commercial paper/short term debt instruments of the Filer that may not meet the "approved credit rating" requirement contained in the short-term debt exemption in section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions -- Sufficient for commercial paper/short-term debt instruments to obtain one credit rating at or above a prescribed standard from an approved credit rating agency -- Relief granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74(1).
National Instrument 45-106 Prospectus and Registration Exemptions.
June 30, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTION
IN THE MATTER OF
DAIMLER CANADA FINANCE INC.
The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that trades of negotiable promissory notes or commercial paper maturing not more than one year from the date of issue of the Filer (the "Short-term Debt") be exempt from the prospectus requirement of the Legislation (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 (the "Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in Regulation 14-101 respecting Definitions and Regulation 11-102 have the same meanings if used in this decision, unless otherwise defined.
In this decision:
"Asset-backed Short-term Debt" means short-term debt that is backed, secured or serviced by or from, a discrete pool of mortgages, receivables or other financial assets or interests designed to ensure the servicing or timely distribution of proceeds to holders of that short-term debt;
"Regulation 45-106" means Regulation 45-106 respecting Prospectus and Registration Exemptions;
"Regulation 81-102" means Regulation 81-102 respecting Mutual Funds; and
"Short-term Debt Exemption" means the exemption from the prospectus requirement of the Legislation for short-term debt set out in section 2.35 of Regulation 45-106.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation governed by the Canada Business Corporations Act with its registered and head office located in Montréal, Québec.
2. The Filer is a reporting issuer in each of the jurisdictions of Canada and is not in default of the securities legislation of any jurisdiction.
3. A trade in short-term debt will be exempt from the prospectus requirement of the Legislation pursuant to the Short-term Debt Exemption only where that short-term debt has an approved credit rating from an approved credit rating organization. The terms "approved credit rating" and "approved credit rating organization" used in Regulation 45-106 have the same meanings as in Regulation 81-102.
4. For short-term debt to satisfy the definition of "approved credit rating" in Regulation 81-102, that short-term debt (a) must have a rating at or above one of the rating categories set out in that definition issued by an "approved credit rating organization" for that short-term debt, and (b) must not have a rating below one of the rating categories set out in that definition issued by an "approved credit rating organization" for that short-term debt.
5. The Short-term Debt has a "R-1 (low)" rating from DBRS Limited, which rating meets the prescribed threshold in Regulation 81-102. However, the Short-term Debt does not meet the other prescribed thresholds in Regulation 81-102 because it has a "F2" rating from Fitch Ratings Ltd., a "P-2" rating from Moody's Investors Service, Inc. and a "A-2" rating from Standard & Poor's, all of which are lower than the required ratings for commercial paper and short-term debt.
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 the Exemption Sought is granted, provided that:
1. the Short-term Debt:
(a) matures not more than one year from the date of issue;
(b) is not convertible or exchangeable into or accompanied by a right to purchase another security other than Short-term Debt;
(c) is not an Asset-backed Short-term Debt; and
(d) has a rating issued by one of the following rating organizations, or any of their successors, at or above one of the following rating categories or a rating category that replaces a category listed below:
Rating Organization Rating _________________________ _______________ DBRS Limited R-1 (low) Fitch Ratings Ltd. F2 Moody's Investors Service, Inc. P-2 Standard & Poor's A-2
2. For each jurisdiction of Canada, the Exemption Sought will terminate on the earlier of:
(a) 90 days after the coming into force of any rule, regulation, blanket order or ruling under the securities legislation of that jurisdiction that amends the conditions of the prospectus exemption contained in section 2.35 of Regulation 45-106 or provides an alternate exemption; and
(b) June 30, 2012.