Order pursuant to subsection 158(1.1) of the Business Corporations Act(Ontario) that an offering corporation is authorized to dispense with its audit committee - Issuer is an indirect wholly-owned subsidiary of a U.S. public parent that is subject to audit committee requirements of the New York Stock Exchange - Issuer exempt from audit committee requirements of Multilateral Instrument 52-110 Audit Committees- Relief conditional upon issuer continuing to satisfy the subsidiary entity eligibility criteria for relief from audit committee requirements of MI 52-110 or a successor instrument.
Ontario Legislative Provisions Cited
Business Corporations Act, R.S.O. 1990, c. B.16, s. 158(1.1).
Multilateral Instrument 52-110 Audit Committees,ss. 1.2.
IN THE MATTER OF
THE BUSINESS CORPORATIONS ACT,
R.S.O. 1990, CHAPTER B. 16, AS AMENDED
IN THE MATTER OF
UNION GAS LIMITED
(Subsection 158(1.1) of the OBCA)
UPON the application of Union Gas Limited (the "Applicant") to the Ontario Securities Commission (the "Commission") for an order pursuant to subsection 158(1.1) of the OBCA for a determination that the Applicant be authorized to dispense with an audit committee;
AND UPON considering the application and the recommendation of staff of the Commission;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant is a corporation existing under the OBCA by amalgamation on January 1, 1998.
2. The Applicant's capital structure consists of: (a) an unlimited number of common shares (the "Common Shares") of which 57,822,650 were issued and outstanding as of June 30, 2007, (b) multiple classes and series of non-voting preferred shares (the "Preferred Shares") of which 4,189,272 in the aggregate were issued and outstanding as of June 30, 2007 and (c) unsecured non-convertible debt securities (the "Debt Securities") of which an aggregate amount of $2,183,000,000 was issued and outstanding as of June 30, 2007.
3. All of the Applicant's Common Shares are held by its immediate parent Westcoast Energy Inc. ("Westcoast"). Westcoast's parent company, and the Applicant's ultimate parent, is Spectra Energy Corp. ("Spectra"), a Delaware corporation that is a public company in the United States and whose shares are listed on the New York Stock Exchange ("NYSE"). The Preferred Shares and the Debt Securities are publicly-held.
4. The Applicant is a reporting issuer and is subject to securities legislation in each of the provinces in Canada (the "Legislation"). The Applicant is not in default of any of its obligations as a reporting issuer under the Legislation.
5. Multilateral Instrument 52-110 Audit Committees ("MI 52-110") prescribes requirements for audit committees of reporting issuers in certain provinces of Canada, including Ontario. The requirements of MI 52-110 do not apply to reporting issuers that are subsidiary entities if they satisfy the criteria set out in clause 1.2(e) of MI 52-110 (the "Subsidiary Entity Exemption Criteria").
6. The Applicant satisfies the Subsidiary Entity Exemption Criteria of MI 52-110 because (a) the Applicant is a subsidiary entity within the meaning of MI 52-110, (b) the Applicant does not have equity securities (other than non-convertible, non-participating preferred securities) trading on a marketplace, and (c) the Applicant's parent, Spectra, is an issuer that (1) has securities listed on the NYSE, and (2) is in compliance with the requirements of the NYSE applicable to issuers, other than foreign private issuers, regarding the role and composition of audit committees.
7. As an indirect wholly-owned subsidiary of Spectra, the function of an audit committee for the Applicant is carried out at the level of Spectra during the review of its consolidated financial statements. The board of directors of the Applicant will approve the Applicant's financial statements, as is required by the OBCA.
8. The Preferred Shares are governed by the rights attaching to them as set out in the Applicant's amended articles of incorporation and the Debt Securities are governed by trust indentures. Neither the Preferred Shares' rights nor the Debt Securities' trust indentures contain restrictions or affirmative or negative covenants requiring the Applicant's board of directors to have an audit committee.
AND UPON the Commission being satisfied that do so would not be prejudicial to the Applicant's shareholders,
IT IS ORDERED, pursuant to subsection 158(1.1) of the OBCA, that the Applicant is authorized to dispense with an audit committee for so long as the Applicant continues to satisfy the Subsidiary Entity Exemption Criteria of MI 52-110 or a successor instrument.
DATED August 3, 2007