Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 3.1 and 9.1 -- A reporting issuer wants to early adopt IFRS for purposes of preparing its financial statements -- The issuer has assessed the readiness of its staff, board, audit committee, auditors and investors; the issuer provided detailed disclosure regarding its early adoption of IFRS as set out in CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Polices Relating to Changeover to International Financial Reporting Standard; the issuer will restate any financial statements prepared in accordance with Canadian GAAP for interim periods for the fiscal year in which they intend to adopt IFRS.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 3.1, 9.1.
August 6, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
SASKATCHEWAN AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
POTASH CORPORATION OF
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) exempting the Filer from the requirement in section 3.1 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that financial statements be prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) (the Requested Relief), for so long as the Filer prepares the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) (IFRS-IASB).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
a. the Saskatchewan Financial Services Commission is the principal regulator for this application;
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 Alberta, British Columbia, Manitoba, Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island (the Passport Jurisdictions), 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 National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation organized under the Canada Business Corporations Act. The head office of the Filer is located at Suite 500, 122 -- 1st Avenue South, Saskatoon, Saskatchewan S7K 7G3.
2. The Filer is a reporting issuer in the Jurisdictions and the Passport Jurisdictions. The Filer is also a foreign private issuer in the United States. The Filer is not (to its knowledge) in default of its reporting issuer obligations under the Legislation or the securities legislation of the Jurisdictions and the Passport Jurisdictions.
3. The Filer is also a registrant with the Securities and Exchange Commission (the SEC) in the United States and is subject to the requirements of the United States Securities Exchange Act of 1934 (the 1934 Act).
4. The Filer's securities are listed on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange under the trading symbol "POT".
5. The Filer currently prepares its financial statements in accordance with Canadian GAAP. However, the Filer has a wholly-owned subsidiary located in Trinidad which prepares its financial statements in accordance with IFRS, as well as significant investments located in Jordan and Chile which either prepare financial statements in accordance with IFRS or are in the process of converting to IFRS-IASB. In addition, the Filer is required to reconcile its Canadian GAAP financial statements to generally accepted accounting principles in the United States (US GAAP) to comply with its SEC filing obligations. The Filer can use IFRS-IASB for its SEC filings.
6. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for financial statements relating to fiscal years beginning on or after January 1, 2011.
7. NI 52-107 sets out acceptable accounting principles for financial reporting under the Legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer like the Filer must use Canadian GAAP with the exception that an SEC registrant may use US GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB.
8. CSA Staff Notice 52-321 -- Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, acknowledges that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicates that CSA staff are prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite section 3.1 of NI 52-107. This position was reaffirmed in CSA Staff Notice 52-324 -- Issues Relating to Changeover to International Financial Reporting Standards.
9. Subject to obtaining the Requested Relief and the Filer's continued ability to prepare its financial statements in accordance with IFRS-IASB in its SEC filings, the Filer intends to prepare its financial statements in accordance with IFRS-IASB for periods beginning on or after January 1, 2010.
10. The Filer believes that the adoption of IFRS-IASB would be in the best interests of the Filer and users of its financial information for a number of reasons, including the following: (a) its has the potential to simplify its financial statements for users by possibly eliminating the requirement to provide reconciliations to US GAAP; and (b) use of a single set of accounting principles throughout the Filer's subsidiaries and significant investees would reduce the cost and complexity of the Filer's financial statement preparation process.
11. The Filer has devised and is implementing a comprehensive IFRS-IASB conversion plan and progress on the conversion plan is monitored on a regular basis.
12. The Filer has carefully assessed the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants for the adoption by the Filer of IFRS-IASB for financial periods beginning on and after January 1, 2010 and has concluded that they will be adequately prepared for the Filer's adoption of IFRS-IASB for periods beginning on or after January 1, 2010.
13. The Filer has considered the implications of adopting IFRS-IASB for financial periods beginning on or after January 1, 2010 on its obligations under securities legislation, including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward looking information.
14. The Filer disclosed relevant information about its conversion to IFRS-IASB as contemplated by CSA Staff Notice 52-320 -- Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards in its management's discussion and analysis for the year ended December 31, 2009 and for the quarter ended March 31, 2010, including:
a. the key elements and timing of the Filer's changeover plan;
b. the accounting policy and implementation decisions that Filer has made or will have to make;
c. the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB; and
d. major identified differences between the Filer's current accounting policies and those the Filer is required to or expects to apply in preparing financial statements in accordance with IFRS-IASB.
15. The Filer will update the information set out in paragraph 14 including quantitative information (to the extent such information is available) regarding the impact of adopting IFRS-IASB on the key line items in the Filer's interim financial statements for the periods ending June 30, 2010 and September 30, 2010, as applicable.
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 Decisions Makers under the Legislation is that the Requested Relief is granted provided that:
1. the Filer prepares its annual financial statements for years beginning on or after January 1, 2010 in accordance with IFRS-IASB;
2. the Filer prepares its interim financial statements for interim periods beginning on or after January 1, 2010 in accordance with IFRS-IASB, except that if the Filer files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods for the financial year in which it adopts IFRS-IASB, the Filer will, at or prior to the time of filing its first IFRS-IASB financial statement, restate and re-file those interim financial statements in accordance with IFRS-IASB together with the related restated interim management's discussion and analysis and the certificates required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings;
3. the Filer provides the communication set out in paragraphs 14 and 15; and
4. the Filer's first IFRS-IASB financial statements for an interim period include an opening statement of financial position as at the date of transition to IFRS-IASB that is presented with prominence equal to the other statements that comprise those interim financial statements.