HeadnoteMRRS- Underwriter and advisor registration relief for Schedule IIIBank - prospectus and registration relief for trades where ScheduleIII Bank purchasing as principal and first trade relief for ScheduleIII Bank - prospectus and registration relief for trades of bonds,debentures and other evidences of indebtedness of or guaranteedby Schedule III Bank provided trades involve only specified purchasers- prospectus and registration relief for evidences of depositsby Schedule III Bank to specified purchasers - fee relief fortrades made in reliance on Decision.
ApplicableOntario Statutory ProvisionsSecuritiesAct, R.S.O. 1990, c.S.5, as am. ss. 25(1)(a)&(c), 34(a), 35(1)(3)(i),35(2)1(c), 53(i), 72(1)(a)(i), 73(1)(a), 74(1), 147.
RegulationsCitedRegulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.ss. 151, 206, 218, Schedule 1 s. 28.
INTHE MATTER OF
THESECURITIES LEGISLATION OF
BRITISHCOLUMBIA, ALBERTA, MANITOBA, SASKATCHEWAN,
ONTARIO,QUEBEC, NEW BRUNSWICK, NOVA SCOTIA,
PRINCEEDWARD ISLAND, NEWFOUNDLAND AND LABRADOR, YUKON TERRITORY,
NORTHWESTTERRITORIES AND NUNAVUT TERRITORY
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM FOR
INTHE MATTER OF
ABNAMRO BANK N.V.
WHEREAS the local securities regulatory authority orregulator (the "Decision Maker") in each ofthe provinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island,Newfoundland and Labrador and in each of the territories ofNunavut, the Northwest Territories and Yukon Territory (the"Jurisdictions") has received an application(the "Application") from ABN AMRO BANK N.V.("ABN AMRO"), for a decision (the "Decision")pursuant to the securities legislation of the Jurisdictions(the "Legislation") that ABN AMRO is exemptfrom various registration, prospectus and filing requirementsof the Legislation in connection with the banking activitiesto be carried on by ABN AMRO in the Jurisdictions;
AND WHEREAS under the Mutual Reliance ReviewSystem for Exemptive Relief Applications (the "System"),the Ontario Securities Commission (the "OSC")is the principal regulator for this Application;
AND WHEREAS ABN AMRO has represented to theDecision Makers that:
1.ABN AMRO is organized under the laws of the Netherlands. Theprincipal office of ABN AMRO is located in the Netherlands.
2.ABN AMRO is the fifth largest European banking group and, togetherwith its subsidiaries, provides a comprehensive range of financialservices including corporate and investment banking, lease andtrade financing, venture capital and asset management and investmentmanagement services.
3.ABN AMRO has approximately 1,000 branches in the Netherlands.ABN AMRO also operates branches in 60 countries outside theNetherlands. In Canada, ABN AMRO has a wholly-owned subsidiary,ABN AMRO Bank Canada, which is a Schedule II chartered bankunder the Bank Act (Canada) (the "Bank Act").
4.As at December 31, 2000, ABN AMRO had total assets of €543.2billion (approximately Cdn.$751.11 billion).
5.ABN AMRO is not, and has no current intention of becoming, areporting issuer in any province of Canada, nor are any of itssecurities listed on any stock exchange in Canada.
6.In 1999, amendments to the Bank Act were made to permit foreignbanks to operate directly in Canada through branches, ratherthan through separate subsidiary Schedule II banks.
7.On October 5, 2000, ABN AMRO submitted an application (the "BankAct Application") to the Office of the Superintendentof Financial Institutions Canada ("OSFI") foran order establishing a full service foreign bank branch inCanada and for an order approving the commencement and carryingon of business in Canada pursuant to sections 524 and 534 ofthe Bank Act.
8.Upon approval of the Bank Act Application, ABN AMRO will establishand commence business as a foreign bank branch under the BankAct. ABN AMRO expects to receive all OSFI approvals by the endof 2001.
9.The operations of ABN AMRO's foreign bank branch will be primarilycomprised of wholesale deposit-taking, commercial lending andrelated treasury functions.
10.ABN AMRO intends to provide deposit-taking, commercial lendingand related treasury functions primarily to the following investors:
(a) Her Majesty in right of Canada or in right of a provinceor a territory, an agent of Her Majesty in either of those rightsand includes a municipal or public body empowered to performa function of government in Canada, or an entity controlledby Her Majesty in either of those rights;
(b) the government of a foreign country or any political subdivisionthereof, an agency of the government of a foreign country orany political subdivision thereof, or an entity that is controlledby the government of a foreign country or any political subdivisionthereof;
(c) an international agency of which Canada is a member, includingan international agency that is a member of the World Bank Group,the Inter-American Development Bank, the Asian Development Bank,the Caribbean Development Bank and the European Bank for Reconstructionand Development and any other international regional bank;
(d) a financial institution (i.e.: (a) a bank or an authorizedforeign bank under the Bank Act; (b) a body corporate to whichthe Trust and Loan Companies Act (Canada) applies;(c) an association to which the Cooperative Credit AssociationAct (Canada) applies; (d) an insurance company or fraternalbenefit society to which the Insurance Companies Act(Canada) applies; (e) a trust, loan or insurance corporationincorporated by or under an Act of the legislature of a provinceor territory in Canada; (f) a cooperative credit society incorporatedand regulated by or under an Act of the legislature of a provinceor territory in Canada; (g) an entity that is incorporated orformed by or under an Act of Parliament or of the legislatureof a province or territory in Canada that is primarily engagedin dealing in securities, including portfolio management andinvestment counselling and is registered to act in such capacityunder the applicable Legislation; and (h) a foreign institutionthat is (i) engaged in the banking, trust, loan or insurancebusiness, the business of a cooperative credit society or thebusiness of dealing in securities or is otherwise engaged primarilyin the business of providing financial services, and (ii) isincorporated or formed otherwise than by or under an Act ofParliament or of the legislature of a province or territoryin Canada);
(e) a pension fund sponsored by an employer for the benefitof its employees or employees of an affiliate that is registeredand has total plan assets under administration of greater than$100 million;
(f) a mutual fund corporation that is regulated under an Actof the legislature of a province or territory in Canada or underthe laws of any other jurisdiction and has total assets underadministration of greater than $10 million;
(g) an entity (other than an individual) that has gross revenueson its own books and records of greater than $5 million as ofthe date of its most recent annual financial statements; or
(h) any other person, if the transaction is in an aggregateamount of greater than $150,000.
collectively referred to for purposes of this Decision as "AuthorizedCustomers".
11.The only advising activities which ABN AMRO intends to undertakewill be incidental to its primary banking business and it willnot advertise itself as an adviser or allow itself to be advertisedas an adviser in the Jurisdictions.
12.Under the current Legislation, banks chartered under SchedulesI and II of the Bank Act have numerous exemptions from variousaspects of the Legislation. Since ABN AMRO's foreign bank branchwill not be chartered under Schedule I or II of the Bank Act,the existing exemptions relating to the registration, prospectusand filing requirements will not be available to it.
13.In order to ensure that ABN AMRO, as an entity listed on ScheduleIII to the Bank Act, will be able to provide banking servicesto businesses in the Jurisdictions, it requires similar exemptionsenjoyed by banking institutions incorporated under the BankAct to the extent that the current exemptions applicable tosuch banking institutions are relevant to the banking businessto be undertaken by ABN AMRO in the Jurisdictions.
AND WHEREAS under the System, this MRRS Decision Documentevidences the Decision of each of the Decision Makers;
AND WHEREAS each of the Decision Makers issatisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decisionhas been met;
THE DECISION of the Decision Makers under theLegislation is that:
1.ABN AMRO is exempt from the requirement under the Legislation,where applicable, to be registered as an underwriter with respectto trading in the same types of securities that an entity listedon Schedule I or II to the Bank Act may act as an underwriterin respect of without being required to be registered underthe Legislation as an underwriter.
2.ABN AMRO is exempt from the requirement under the Legislationto be registered as an adviser where the performance of theservices as an adviser is solely incidental to its primary bankingbusiness.
3.A trade of a security to ABN AMRO, where ABN AMRO purchasesthe security as principal, shall be exempt from the registrationand prospectus requirements of the Legislation of the Jurisdictionin which the trade takes place (the "Applicable Legislation")provided that:
(i) the forms that would have been filed and the fees that wouldhave been paid under the Applicable Legislation if the tradehad been made, on an exempt basis, by an entity listed on ScheduleI or II to the Bank Act (referred to in this Decision as a "ScheduleI or II Bank Exempt Trade") are filed and paid in respectof the trade to ABN AMRO;
(ii) except in Quebec, the first trade in a security acquiredby ABN AMRO pursuant to this Decision is deemed a distributionor primary distribution to the public under the Applicable Legislationunless the conditions in subsections 2 or 3, as applicable,of section 2.5 of Multilateral Instrument 45-102 - Resaleof Securities are satisfied;
(iii) in Quebec, the first trade in a security acquired by ABNAMRO pursuant to this Decision will be a distribution unless,
(a) at the time ABM AMRO acquired the security: (i) the issuerof the security is a reporting issuer in Quebec; (ii) the issueris not a Capital Pool Company as defined in Policy 2.4 of TheCanadian Venture Exchange Inc.; (iii) the issuer has a classof securities listed on an acceptable exchange, has not beenadvised that it does not meet the requirements to maintain thatlisting and is not designated inactive, or the issuer has aclass of securities that has an approved rating from an approvedrating organization; for purposes of this Decision, the acceptableexchanges include the Toronto Stock Exchange, tier 1 and 2 ofThe Canadian Venture Exchange Inc., the American Stock Exchange,Nasdaq National Market, Nasdaq SmallCap Market, the New YorkStock Exchange and the London Stock Exchange Limited; and (iv)the issuer has filed an annual information required under section159 of the Regulation made under the Securities Act(Quebec), as amended from time to time, (the "Quebec Act") withinthe time period contemplated by that section, or, if not requiredto file an annual information, has filed a prospectus that containsthe most recent financial statements;
(b) the issuer has been a reporting issuer in Quebec for 4 monthsimmediately preceding the trade;
(c) ABN AMRO has held the securities for at least 4 months;
(d) no extraordinary commission or other consideration is paid;
(e) no effort is made to prepare the market or to create a demandfor the securities;
(f) if ABN AMRO is an insider of the issuer, ABN AMRO has noreasonable grounds to believe that the issuer is in defaultunder the Quebec Act; and
(g) ABN AMRO files a report within 10 days of the trade preparedand executed in accordance with the requirements of the QuebecAct that would apply to a trade made in reliance on section43 or 51 of the Quebec Act.
4.ABN AMRO is exempt from the registration and prospectus requirementsof the Legislation for trades by ABN AMRO of bonds, debenturesor other evidences of indebtedness of or guaranteed by ABN AMROwith Authorized Customers.
5.Evidences of deposit issued by ABN AMRO to Authorized Customersshall be exempt from the registration and prospectus requirementsof the Legislation.
THE FURTHER DECISION of the Decision Makerin Ontario is that:
A.Subsection 25(1)(a) of the Securities Act (Ontario)R.S.O. 1990 c. S.5, as amended, (the "Ontario Act")does not apply to a trade by ABN AMRO:
(i) of a type described in subsection 35(1) of the Ontario Actor section 151 of the Regulation made under the Ontario Act;or
(ii) subject to paragraph 4 above, the securities describedin subsection 35(2) of the Ontario Act.
B.Subsection 25(1)(a) and section 53 of the Ontario Act do notapply to a trade by ABN AMRO in:
(i) a security of a mutual fund, if the security is sold toa pension plan, deferred profit sharing plan, retirement savingsplan or other similar capital accumulation plan maintained bythe sponsor of the plan for its employees, and
(a) the employees deal only with the sponsor in respect of theirparticipation in the plan and the purchase of the security bythe plan, or
(b) the decision to purchase the security is not made by orat the direction of the employee; or
(ii) in a security of a mutual fund that:
(a) is administered by a body corporate to which the Trustand Loan Companies Act (Canada) applies or a trust, loanor insurance corporation incorporated by or under an Act ofthe legislature of a province or territory in Canada;
(b) consists of a pool of funds that:
(A) results from, and is limited to, the combination or comminglingof funds of pension or other superannuation plans registeredunder the Income Tax Act (Canada), and
(B) is established by or related to persons or companies thatare associates or affiliates of or that otherwise do not dealat arms length with the promoters of the mutual fund, exceptthe trust, loan or insurance corporation that administers thefund; and
(c) is managed, in whole or in part, by a person who is registeredor who is exempt from registration under the Ontario Act.
C.Except as provided for in paragraph 3 of this Decision, section28 of Schedule I to the Regulation made under the Ontario Actshall not apply to trades made by ABN AMRO in reliance on thisDecision.
December 28, 2001.
"Paul M. Moore" "H. Lorne Morphy"