National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from registration and prospectus requirements in connection with the use of electronic roadshow materials -- cross-border offering of securities -- conducting offering in typical U.S. manner leads to non-compliance with Canadian regime -- relief granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74.
National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means, s. 2.7.
March 23, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
MITEL NETWORKS CORPORATION
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the posting of certain roadshow materials on one or more commercial services such as www.retailroadshow.com and/or www.netroadshow.com during the "waiting period" from the prospectus requirement and, except in British Columbia where registration relief is not required, the registration requirement under the Legislation (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the Commission) is the principal regulator for this application; and
(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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut.
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 was incorporated under the Canada Business Corporations Act on January 12, 2001.
2. The Filer's principal office is located at 350 Legget Drive, Kanata, Ontario, K2K 2W7.
3. On December 22, 2009 the Filer filed a registration statement with the SEC in respect of a proposed initial public offering (the Offering) of its common shares (the Offered Shares), and filed an amendment thereto on February 4, 2010, in order to register the Offered Shares under the 1933 Act.
4. On February 24, 2010 the Filer filed a preliminary base PREP prospectus (the Preliminary Prospectus) in each of the provinces and territories of Canada in respect of the Offering.
5. The Filer also intends to file an amended and restated preliminary base PREP prospectus in connection with the Offering in Canada (the Amended Preliminary Prospectus) and to commence the marketing of the Offering in both Canada and the U.S. after a receipt is obtained evidencing receipt of the Amended Preliminary Prospectus from the Commission under MI 11-102.
6. Between the time that the Commission issues a receipt for the Amended Preliminary Prospectus and the final prospectus (the Final Prospectus), the Filer intends to use electronic roadshow materials (the Website Materials) to promote the Offering, as is now typical for initial public offerings in the United States.
7. Compliance with U.S. securities laws on most initial public offerings requires either making the Website Materials available in a manner that affords unrestricted access to the public, or filing the Website Materials on the SEC's Electronic Data-Gathering Analysis and Retrieval System (known by its acronym, EDGAR), which will have the same effect of affording unrestricted access. We understand that, in the view of the SEC, making documents "available without restriction" means that no restrictions on access or viewing may be imposed, both with respect to persons inside and outside of the United States.
8. Because of the number of current shareholders of the Filer who are resident in the United States, the Filer is currently subject to the reporting obligations under the 1934 Act. As a result, the Filer is not required to file the Website Materials with the SEC or make the Website Materials "available without restriction" as would be required for an issuer who was not already subject to U.S. reporting obligations. However, since most initial public offerings in the United States are required to make such materials available without restriction or file such materials, such "open" roadshows have become typical for all U.S. initial public offerings.
9. The Filer and its underwriters wish to carry out the Filer's initial public offering in a manner that is typical for all initial public offerings in the United States by posting the Website Materials on an Internet-based commercial service such as www.retailroadshow.com or www.netroadshow.com, without password or other restriction.
10. The securities laws of the Jurisdictions do not, absent relief, allow the Filer to post the Website Materials in the manner contemplated, because the Website Materials will be accessible to all prospective investors in Canada without restriction, such that the Filer will be unable to comply with the requirement to forward a copy of the Amended Preliminary Prospectus to persons who the Filer has solicited expressions of interest from. Thus, absent relief, the Filer could not conduct the initial public offering in the United States in the typical manner and comply with Canadian securities laws at the same time.
11. The Website Materials will contain a statement informing readers that the Website Materials do not contain all of the information in the Amended Preliminary Prospectus, or any amendment thereto, or the Final Prospectus, and that prospective purchasers should review all of those documents, in addition to the Website Materials, for complete information regarding the Offered Shares.
12. The Filer will include a hyperlink in the Website Materials to the documents referred to in paragraph 11, if and when such document is filed.
13. The Filer will state, in the Website Materials, any amendment to the Preliminary Prospectus and in the Final Prospectus that, in connection with the information contained in the Website Materials posted on one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com, purchasers of the Offered Shares in each of the provinces and territories of Canada will have a contractual right of action against the Filer and the underwriters.
14. At least one underwriter that signed the Preliminary Prospectus was, and in respect of any amendment to the Preliminary Prospectus and the Final Prospectus will be, registered in each of the Canadian Jurisdictions.
15. Canadian purchasers will only be able to purchase the Offered Shares through an underwriter that is registered in the respective Canadian Jurisdiction of residence of the Canadian purchaser.
16. The Filer acknowledges that the Exemption Sought relates only to the posting of the Website Materials on one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
1. Any further amendment to the Preliminary Prospectus and the Final Prospectus state that purchasers of the Offered Shares in each of the provinces and territories of Canada have a contractual right of action against the Filer and the Canadian underwriters substantially in the following form:
"We may make available certain materials describing the offering (the Website Materials) on the website of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com under the heading "Mitel Networks Corporation" during the period prior to obtaining a final receipt for the final base PREP prospectus in connection with this offering (the Final Prospectus) from the securities regulatory authorities in each of the provinces and territories of Canada. In order to give purchasers in each of the provinces and territories of Canada the same unrestricted access to the Website Materials as provided to U.S. purchasers, we have applied for and obtained exemptive relief from the securities regulatory authority in each of the provinces and territories of Canada. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that, in the event that the Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make any statement therein not misleading in the light of the circumstances in which it was made (a misrepresentation), a purchaser resident in a province or territory of Canada who purchases our common shares pursuant to the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each Canadian underwriter with respect to such misrepresentation as are equivalent to the rights under section 130 of the Securities Act (Ontario) or the comparable provision of the securities legislation of the particular province or territory where that purchaser is resident, as the case may be, subject to the defences, limitations and other terms thereof, as if such misrepresentation was contained in the Final Prospectus."