Securities Law & Instruments

Headnote

MRRS- NI 44-101 - relief from certain eligibility criteria to permita wholly-owned Canadian subsidiary of a MJDS eligible U.S. issuerto issue approved rating debt, guaranteed by U.S. parent usinga short from prospectus, relief from GAAP reconciliation requirement- certain continuous disclosure relief.

ApplicableOntario Statutory Provisions

SecuritiesAct, R.S.O. 1990, c.S.5, as am., s. 75, 77, 78, 79, 80(b)(iii),81(2), 88(2)(b), 107, 108, 109, 121(2), 147.

RegulationsCited

Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.

NationalInstruments

 


NI 44 -101 Short FormProspectus Distributions, Form 44-101F3

OSCRule 51-501 - AIF and MD&A.


INTHE MATTER OF

THESECURITIES LEGISLATION OF

ALBERTA,BRITISH COLUMBIA, MANITOBA, NEW BRUNSWICK,

NEWFOUNDLAND,NOVA SCOTIA, ONTARIO,

PRINCEEDWARD ISLAND AND SASKATCHEWAN

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM

FOREXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF

WACHOVIACORPORATION

AND

CONGRESSFINANCIAL CAPITAL COMPANY

MRRSDECISION DOCUMENT

WHEREAS the securities regulatory authorityor regulator (the "Decision Makers" or the "Commissions") ineach of Alberta, British Columbia, Manitoba, New Brunswick,Newfoundland, Nova Scotia, Ontario, Prince Edward Island andSaskatchewan (the "Jurisdictions") has received an application(the "Application") from Wachovia Corporation ("Wachovia") onits own behalf and on behalf of its wholly-owned subsidiary,Congress Financial Capital Company ("FinanceCo", and togetherwith Wachovia, the "Applicants") for a decision pursuant tothe securities legislation of the Jurisdictions (the "Legislation")that:


A.the Applicants be exempted from the following requirements containedin the Legislation:


(i) the requirements in section 2.5(1) of National Instrument44-101 ("NI 44-101") that a person or company guaranteeing non-convertibledebt issued by an issuer be a reporting issuer with a 12-monthreporting history in a Canadian province or territory and havea current annual information form (an "AIF") (the "EligibilityRequirement"), in order to permit FinanceCo to issue (the "Offering")non-convertible debt securities, in particular medium term notes(the "Notes"), with an approved rating (as defined in NI 44-101)which will be fully and unconditionally guaranteed by Wachovia;


(ii) the requirement in NI 44-101 that the short form prospectusfiled by FinanceCo in connection with the Offering include areconciliation (the "Reconciliation Requirement") to Canadiangenerally accepted accounting principles ("GAAP") of the consolidatedfinancial statements of Wachovia (or its predecessor First UnionCorporation) and its subsidiaries included in or incorporatedby reference into the prospectus which have been prepared inaccordance with foreign GAAP and that where such financial statementsare audited in accordance with foreign generally accepted auditingstandards ("GAAS"), FinanceCo provide a statement by the auditordisclosing any material differences in the auditor's reportand confirming that the auditing standards of the foreign jurisdictionare substantially similar to Canadian GAAS;


(iii) the requirement in NI 44-101 and under the Legislationof Ontario (Ontario Securities Commission Rule 51-501) and Saskatchewan(Saskatchewan Instrument 51.501) that FinanceCo have a currentAIF and file renewal AIFs (the "AIF Requirement") with the Commissions;


(iv) the requirement that FinanceCo file with the Commissionsand send, where applicable, to its security holders auditedannual financial statements or annual reports, where applicable,including without limitation management's discussion and analysisthereon (the "Annual Financial Statement Requirement");


(v) the requirement that FinanceCo file with the Commissionsand send, where applicable, to its securityholders unauditedinterim financial statements, including, without limitation,management's discussion and analysis thereon (the "Interim FinancialStatement Requirement");


(vi) the requirement that FinanceCo issue and file with theCommissions press releases and file material change reports(the "Material Change Requirement");


(vii) the requirement that the insiders of FinanceCo file withthe Commissions insider reports (the "Insider Reporting Requirement");and


(viii) the requirement that FinanceCo comply with the proxyand proxy solicitation requirements, including filing an informationcircular or report in lieu thereof (the "Proxy Requirement"and together with the Annual Financial Statement Requirement,the Interim Financial Statement Requirement, the Material ChangeRequirement, and the Insider Reporting Requirement, the "ContinuousDisclosure and Reporting Requirements"); and


B.the Application and the Decision, as defined below, be heldin confidence by the Decision Makers subject to certain conditions.


AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Nova Scotia Securities Commission is the principal regulatorfor this application;


AND WHEREAS it has been represented by theApplicants to the Decision Makers that:


1.First Union Corporation was incorporated under the laws of NorthCarolina in 1967. Wachovia Corporation ("Former Wachovia") wasincorporated under the laws of North Carolina in 1985.


2.Wachovia was formed by the merger of First Union Corporationand Former Wachovia on September 1, 2001. The surviving corporationof the merger is First Union Corporation, although the nameof the surviving corporation has been changed to Wachovia Corporation.References herein to "Wachovia" refer to the merged entity.


3.Wachovia is registered as a financial holding company and abank holding company under the U.S. Bank Holding CompanyAct. Wachovia provides a wide range of commercial and retailbanking and trust services through full-service banking officeslocated throughout the United States. It also provides variousother financial services in the United States, including mortgagebanking, credit card, investment banking, investment advisory,home equity lending, asset-based lending, leasing, insurance,and international securities brokerage services through itssubsidiaries.


4.None of Wachovia, First Union Corporation or Former Wachoviais (or has ever been) a reporting issuer in any of the provincesor territories of Canada.


5.Wachovia has been a reporting company under the United StatesSecurities Exchange Act of 1934, as amended (the "1934 Act"),since 1967. More recently, both First Union Corporation andFormer Wachovia have filed with the United States Securitiesand Exchange Commission (the "SEC") annual reports on Form 10-Kfor the fiscal year ended December 31, 2000 and quarterlyreports under Form 10-Q for the quarterly periods endedMarch 31, 2000, June 30, 2000, September 30,2000, March 31, 2001 and June 30, 2001, in accordancewith the filing obligations set out in sections 13 and15(d) of the 1934 Act (collectively, the "Wachovia DisclosureDocuments").


6.The aggregate market value of Wachovia's equity securities (whichare listed and posted for trading over the facilities of theNew York Stock Exchange (the "NYSE")), calculated in accordancewith NI 44-101, on October 12, 2001 was approximately US$27.3billion.



7.Wachovia's senior long-term debt is rated A by Standard &Poor's; A1 by Moody's; and A by Fitch. Wachovia's subordinateddebt is rated A2 by Moody's; and A- by Fitch and its short-termobligations are rated A-1 by Standard & Poor's; P-1 by Moody's;and F-1 by Fitch.


8.FinanceCo is incorporated under the laws of Nova Scotia andis an indirect wholly-owned subsidiary of Wachovia.


9.FinanceCo is not currently a reporting issuer in any of theprovinces or territories of Canada. FinanceCo's primary businesswill be to access Canadian capital markets to raise funds onbehalf of the Canadian subsidiary companies of Wachovia, andwill have no other operations.


10.Wachovia satisfies the criteria set forth in paragraph 3.1(a)of National Instrument 71-101 ("NI 71-101") and is eligibleto use the multi-jurisdictional disclosure system ("MJDS"),as set out in NI 71-101, for the purpose of distributing approvedrating non-convertible debt in Canada based on compliance withUnited States prospectus requirements with certain additionalCanadian disclosure.


11.Except for the fact that FinanceCo is not incorporated underUnited States law, the Offering would comply with the alternativeeligibility criteria for offerings of non-convertible debt havingan approved rating under the MJDS as set forth in Section 3.2of NI 71-101.


12.FinanceCo is ineligible to issue the Notes by way of a prospectusin the form of a short form prospectus under NI 44-101 as neitherFinanceCo nor Wachovia, as credit supporter for the paymentsto be made by FinanceCo under the Notes, is a reporting issuerin any province or territory of Canada, and Wachovia does notitself have a current AIF or meet the criteria set out in clause2.5(1)2 of NI 44-101.


13.As a result of the Offering, FinanceCo will become a reportingissuer or the equivalent under the Legislation and would thereforebe subject to the Continuous Disclosure and Reporting Requirementsunless the relief requested herein is granted.


14.In connection with the Offering:


(i) prior to filing a preliminary short form prospectus forthe Offering:


(a) Wachovia will file with the Commissions an AIF in the formof First Union Corporation's annual report on Form 10-K forthe year ended December 31, 2000 (the "First Union Form 10-K"),in electronic format through SEDAR (as defined in National Instrument13-101) under FinanceCo's SEDAR profile, and


(b) Wachovia will file with the Commissions, in electronic formatunder FinanceCo's SEDAR profile, the documents that each ofFirst Union Corporation and Former Wachovia has filed underthe 1934 Act during the last year being, as of the date hereof,an annual report on Form 10-K for the year ended December 31,1999 and quarterly reports on Form 10-Q for the periods endingJune 30, 2001 (which quarterly report contains pro forma financialstatements for the periods ending December 31, 2000 and June30, 2001), March 31, 2001, September 30, 2000, June 30, 2000and March 31, 2000;


(ii) the prospectus will be prepared pursuant to the short formprospectus requirements contained in NI 44-101 and will complywith the requirements set out in Form 44-101F3 of NI 44-101with the disclosure required by item12 of Form 44-101F3 of NI44-101 being addressed by incorporating by reference First UnionCorporation's public disclosure documents, including the FirstUnion Form 10-K and with the disclosure required by item 7 ofForm 44-101F3 of NI 44-101 being addressed by disclosure withrespect to Wachovia in accordance with United States requirements;


(iii) the prospectus will include or incorporate by referenceall material disclosure concerning FinanceCo;


(iv) the prospectus will incorporate by reference the FirstUnion Form 10-K (as filed under the 1934 Act) together withall Form 10-Qs and Form 8-Ks of First Union Corporation (andby Wachovia, following September 1, 2001) filed under the 1934Act in respect of the financial year following the year thatis the subject of the First Union Form 10-K, as would be requiredwere Wachovia to file a registration statement on Form S-4 inthe United States, and will incorporate by reference any documentsof the foregoing type filed after the date of the prospectusand prior to termination of the Offering and will state thatpurchasers of the Notes will not receive separate continuousdisclosure information regarding FinanceCo;


(v) the consolidated annual and interim financial statementsof Wachovia and its subsidiaries that will be included in orincorporated by reference into the short form prospectus areprepared in accordance with U.S. GAAP and otherwise comply withthe requirements of U.S. law, and in the case of audited annualfinancial statements, such financial statements are auditedin accordance with U.S. GAAS;


(vi) Wachovia will fully and unconditionally guarantee the paymentsto be made by FinanceCo as stipulated in the terms of the Notesor in an agreement governing the rights of holders of Notes(the "Noteholders") such that the Noteholders shall be entitledto receive payment from Wachovia within 15 days of any failureby FinanceCo to make a payment as stipulated;


(vii) the Notes will have an approved rating;


(viii) Wachovia will sign the prospectus as credit supporterand promoter; and


(ix) Wachovia will undertake to file with the Commissions, inelectronic format under FinanceCo's SEDAR profile, all documentsthat it files under Sections 13 (other than sections 13(d),(f) and (g) which relate, inter alia, to holdings by Wachoviaof securities of other public companies) and 15(d) of the 1934Act, together with the appropriate filing fees, until such timeas the Notes are no longer outstanding;


15.In the circumstances, were Wachovia to have effected the Offeringof the Notes under the MJDS it would be unnecessary for it toreconcile to Canadian GAAP its financial statements includedin or incorporated by reference into the short form prospectusin connection with the issuance of the Notes.


16.Part 7 of NI 44-101 and Item 20.1 of Form 44-101F3 of NI 44-101would seem to require the reconciliation to Canadian GAAP offinancial statements prepared in accordance with foreign GAAPthat are included in a short form prospectus.


AND WHEREAS pursuant to the System this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");


AND WHEREAS each of the Decision Makers is satisfiedthat the test contained in the Legislation that provides eachDecision Maker with the jurisdiction to make the Decision hasbeen met;


THE DECISION of the Decision Makers pursuant to theLegislation is that the Applicants be exempted from the EligibilityRequirement and the Reconciliation Requirement in connectionwith the Offering provided that:


(i)each of FinanceCo and Wachovia complies with paragraph 14 above;


(ii)FinanceCo complies with all of the filing requirements and proceduresset out in NI 44-101 except as varied by the Decision;


(iii)Wachovia remains the direct or indirect beneficial owner ofall of the issued and outstanding voting securities of FinanceCo;and


(iv)Wachovia continues to satisfy the criteria set forth in paragraph3.1 of NI 71-101 (or any successor provision) and remains eligibleto use MJDS (or any successor instrument) for the purposes ofdistributing approved rating non-convertible debt in Canadabased on compliance with United States prospectus requirementswith certain additional Canadian disclosure.


THE FURTHER DECISION of the Decision Makerspursuant to the Legislation is that, in connection with theOffering, the AIF Requirement shall not apply to FinanceCo,provided that (i) Wachovia complies with the AIF requirementsof NI 44-101 as if it is the issuer; and (ii) the Applicantscomply with all of the conditions in the Decisions above andbelow.


"J.William Slattery"


THE FURTHER DECISION of the Decision Makerspursuant to the Legislation is that, in connection with theOffering:


A. the Annual Financial Statement Requirement shall not applyto FinanceCo, provided that (i) FinanceCo files with the Commissionsthe annual reports on Form 10-K filed by Wachovia with the SECwithin one business day after they are filed with the SEC; and(ii) such documents are provided to Noteholders whose last addressas shown on the books of FinanceCo is in Canada in the mannerand at the time required by applicable United States law;


B. the Interim Financial Statement Requirement shall not applyto FinanceCo, provided that (i) FinanceCo files with the Commissionsthe quarterly reports on Form 10-Q filed by Wachovia with theSEC within one business day after they are filed with the SEC;and (ii) such documents are provided to Noteholders whose lastaddress as shown on the books of FinanceCo is in Canada in themanner and at the time required by applicable United Stateslaw;


C. the Material Change Requirement shall not apply to FinanceCo,provided that (i) FinanceCo files with the Commissions the mandatoryreports on Form 8-K (including press releases) filed by Wachoviawith the SEC forthwith after the earlier of the date the reportis filed with the SEC and the date it is required to be filedwith the SEC; (ii) Wachovia complies with the requirements ofthe NYSE in respect of making public disclosure of materialinformation on a timely basis and forthwith issues in each Jurisdictionany press release issued in this regard; (iii) Wachovia forthwithissues in each Jurisdiction and FinanceCo files with the Commissionsany press release that discloses material information and whichis required to be issued in connection with the mandatory Form8-K requirements applicable to Wachovia; and (iv) if there isa material change in respect of the business, operations orcapital of FinanceCo that is not a material change in respectof Wachovia, FinanceCo will comply with the requirements ofthe Legislation to issue a press release and file a materialchange report notwithstanding that the change may not be materialin respect of Wachovia;

D. the Insider Reporting Requirement shall not apply to insidersof FinanceCo, provided that such insiders file with the SECon a timely basis the reports, if any, required to be filedwith the SEC pursuant to section 16(a) of the 1934 Act and therules and regulations thereunder; and


E. the Proxy Requirements shall not apply to FinanceCo, providedthat (i) Wachovia complies with the requirements of the 1934Act and the rules and regulations thereunder relating to proxystatements, proxies and proxy solicitations in connection withany meetings of its noteholders (if any); (ii) FinanceCo fileswith the Commissions the materials relating to the meeting filedby Wachovia with the SEC promptly after they are filed by itwith the SEC; and (iii) such documents are provided to Noteholderswhose last address as shown on the books of FinanceCo is inCanada in the manner, at the time and if required by applicableUnited States law;


forso long as (i) Wachovia maintains an approved rating in respectof the Notes; (ii) Wachovia maintains direct or indirect 100%beneficial ownership of the outstanding voting securities ofFinanceCo; (iii) Wachovia maintains a class of securities registeredpursuant to section 12 of the 1934 Act; (iv) Wachovia continuesto satisfy the criteria set forth in paragraph 3.1 of NI 71-101(or any successor provision) and remains eligible to use MJDS(or any successor instrument) for the purpose of distributingapproved rating non-convertible debt in Canada based on compliancewith United States prospectus requirements with certain additionalCanadian disclosure; (v) FinanceCo carries on no other businessthan that set out in paragraph 9 of the Decision; (vi) Wachoviacontinues to fully and unconditionally guarantee the Notes asto the payments required to be made by FinanceCo to the Noteholders;(vii) FinanceCo does not issue additional securities other thanthe Notes (or any other series of Notes which may hereinafterbe issued), debt securities ranking pari passu to theNotes, any debentures issued in connection with the securitygranted by FinanceCo to the Noteholders or debt ranking paripassu with the Notes, other than to Wachovia or to wholly-ownedsubsidiaries of Wachovia; and (viii) if notes of another seriesor debt securities ranking pari passu with the Notesare hereinafter issued by FinanceCo, Wachovia shall fully andunconditionally guarantee such notes or debt securities as tothe payments required to be made by FinanceCo to holders ofsuch notes or debt securities.


THE FURTHER DECISION of the Decision Makers pursuantto the Legislation is that the Application and the Decisionshall be held in confidence by the Decision Makers until theearlier of the date that the preliminary prospectus is filedin connection with the Offering and December 15, 2001.


November 15, 2001.

"H. Leslie O'Brien"