Securities Law & Instruments

Headnote

Clause 104(2)(c) - Issuer bid - relief from issuer bid requirements in sections 95, 96, 97, 98 and 100 of the Act - Issuer proposes to purchase, at a discounted purchase price, up to 2,000,000 of its Class B shares from one shareholder and/or such shareholder's affiliates - due to discounted purchase price, proposed purchases cannot be made through TSX trading system - Issuer cannot rely on exemption available under section 93(3)(e) of the Act from issuer bid requirements because proposed purchases cannot be made through the facilities of the TSX - but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the sale shares in reliance upon the issuer bid exemption available under section 93(3)(e) of the Act and block purchase exception available under TSX rules -- no adverse economic impact on or prejudice to issuer or public shareholders - proposed purchases exempt from issuer bid requirements in sections 95, 96, 97, 98 and 100 of the Act, subject to conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93(3)(e), 95, 96, 97, 98, 100, 104(2)(c).

July 20, 2007

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED (the Act)

AND

IN THE MATTER OF

SHAW COMMUNICATIONS INC.

 

ORDER

(Clause 104(2)(c))

UPON the application (the Application) of Shaw Communications Inc. (the Issuer) to the Ontario Securities Commission (the Commission) for an order pursuant to clause 104(2)(c) of the Act exempting the Issuer from the requirements of sections 95, 96, 97, 98 and 100 of the Act (the Issuer Bid Requirements) in connection with the proposed purchases (the Proposed Purchases) by the Issuer of up to 2,000,000 (the Sale Shares) of its Class B non-voting participating shares (the Class B Shares) from one shareholder and/or such shareholder's affiliates (the Selling Shareholders);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Issuer having represented to the Commission that:

1. The Issuer is a corporation incorporated under the laws of Alberta, and its head office and registered office are located at Suite 900, 630 -- 3rd Avenue SW, Calgary, Alberta, T2P 4L4.

2. The Issuer is a reporting issuer in each of the provinces of Canada and the Class B Shares of the Issuer are listed for trading on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange. The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.

3. The Selling Shareholders are the direct or indirect beneficial owner of not more than 5% of all issued and outstanding Class B Shares.

4. The authorized share capital of the Issuer consists, among others, of an unlimited number of Class B Shares, of which 206,000,575 were outstanding as of May 30, 2007.

5. On November 17, 2006, the Issuer commenced a normal course issuer bid (NCIB) for a maximum of 15,300,000 Class B Shares through the facilities of the TSX in accordance with rules governing the conduct of normal course issuer bids through the facilities of the TSX that were in effect prior to June 1, 2007 (the Former NCIB Rules), as permitted by Section 629.3 of Part VI of the TSX Company Manual (the TSX Rules). To date, no Class B Shares have been purchased under the NCIB.

6. The Issuer and the Selling Shareholders intend to enter into an agreement of purchase and sale (the Agreement), pursuant to which the Issuer will agree to acquire, by one or more trades, the Sale Shares from the Selling Shareholders for a purchase price (the Purchase Price) that will be negotiated at arm's length between the Issuer and the Selling Shareholders. The Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class B Shares at the time of the trade.

7. The purchase of the Sale Shares by the Issuer pursuant to the Agreement will constitute an "issuer bid" for purposes of the Act, to which the applicable issuer bid requirements in Sections 95, 96, 97, 98 and 100 of the Act would apply (the Issuer Bid Requirements).

8. Because the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class B Shares at the time of each trade, the Proposed Purchases cannot be made through the TSX trading system and, therefore, will not occur "through the facilities" of the TSX. As a result, the Issuer will be unable to acquire the Sale Shares from the Selling Shareholders in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to Section 93(3)(e) of the Act.

9. But for the fact that the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Class B Shares at the time of the trade, the Issuer could otherwise acquire the Sale Shares as a block purchase in accordance with Section 629(1)7 of the TSX Rules and Section 93(3)(e) of the Act.

10. The Issuer will be able to acquire the Sale Shares from the Selling Shareholders in reliance upon the exemption from the dealer registration requirements of the Act that is available as a result of the combined effect of section 2.16 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) and section 4.1(a) of Commission Rule 45-501 Ontario Prospectus and Registration Exemptions.

11. Each of the Selling Shareholders is at arm's length to the Issuer, is not an insider of the Issuer, an associate of an insider of the Issuer, or an associate or an affiliate of the Issuer. Also, each of the Selling Shareholders has its corporate headquarters in Toronto, Ontario and is an "accredited investor" within the meaning of NI 45-106.

12. Management is of the view that the Issuer will be able to purchase the Sale Shares at a lower price than the price at which the Issuer will be able to purchase the Class B Shares under its existing NCIB and management is of the view that this is an appropriate use of the Issuer's funds.

13. The purchase of Class B Shares will not adversely affect the Issuer or the rights of any of the Issuer's securityholders. As the Class B Shares are non-voting shares, the Proposed Purchases will not affect control of the Issuer. The Proposed Purchases will be carried out with a minimum of cost to the Issuer.

14. To the best of the Issuer's knowledge, the public float for the Class B Shares consists of approximately 87.5% for purposes of Sections 628 to 629.2 of the TSX Rules.

15. The market for the Class B Shares is a "liquid market" within the meaning of section 1.3 of Commission Rule 61-501.

16. Other than the Purchase Price, no additional fee or other consideration will be paid in connection with the Proposed Purchases.

17. At the time that the Agreement is entered into by the Issuer and the Selling Shareholders, neither the Issuer nor the Selling Shareholders will be aware of any undisclosed material change or any undisclosed material fact in respect of the Issuer that could reasonably be expected to affect the value of the Class B Shares.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchases, provided that:

(a) at least three clear days prior to its purchase of the Sale Shares from the Selling Shareholders, the Issuer amends its "Notice of Intention to Make a Normal Course Issuer Bid" in a manner acceptable to TSX to make express reference to the fact that the Issuer may acquire the Class B Shares by private agreement;

(b) the purchase of the Sale Shares by the Issuer will be taken into account by the Issuer when calculating the maximum annual aggregate limit that is imposed upon the Issuer's NCIB in accordance with the Former NCIB Rules;

(c) the Purchase Price in respect of each purchase of Sale Shares is not higher than the last "independent trade" (as that term is used in paragraph 629(1)1 of the TSX Rules) of a board lot of Class B Shares immediately prior to the execution of such trade by the Issuer and the Selling Shareholders;

(d) the Issuer will otherwise acquire any additional Class B Shares pursuant to its NCIB and in accordance with the Former NCIB Rules; and

(e) immediately following its purchase of the Sale Shares from the Selling Shareholders, the Issuer will report the purchase of the Sale Shares to the TSX.

"Robert L. Shirriff"
Ontario Securities Commission
 
"Paul K. Bates"
Ontario Securities Commission