Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from prospectus requirement to proposed distributions of warrants under dividend reinvestment plan -- proposed distributions do not fall within criteria of exemption in section 2.2 of NI 45 -- relief granted subject to conditions similar to conditions of exemption in section 2.2 of NI 45-106.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 53, 74(1).

November 22, 2013

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
CONSTELLATION SOFTWARE INC.
(the Filer)

DECISION

Background

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) for an exemption from the prospectus requirements of the Legislation (the Exemption Sought) so that such requirements do not apply to distributions of warrants (the Warrants) to purchase common shares (Common Shares) in the capital of the Filer issued to Participants (as defined below) in the each of the provinces and territories of Canada in connection with the Filer's dividend reinvestment plan.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities 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 in each of Alberta, British Columbia, Manitoba, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was amalgamated pursuant to the laws of the Province of Ontario on March 1, 2002.

2. The Filer's head office is located at 20 Adelaide Street East, Suite 1200, Toronto, Ontario M5C 2T6.

3. The Filer is a reporting issuer in each of the provinces and territories of Canada, and is not in default of securities legislation in any of these jurisdictions.

4. The authorized capital of the Filer consists of an unlimited number of Common Shares and an unlimited number of class A non-voting shares. As at the date hereof, there are 21,191,530 Common Shares and no class A non-voting shares issued and outstanding.

5. The Common Shares are listed on the Toronto Stock Exchange (the TSX) under the trading symbol "CSU".

6. The Filer's current dividend policy is to pay dividends on its Common Shares on a quarterly basis in such amount as the Filer's Board of Directors may from time to time determine. Since April 2012, the Filer has declared and paid a quarterly dividend in the amount of US$1.00 per Common Share.

7. Effective May 16, 2013, the Filer adopted a dividend reinvestment plan (the DRIP), under which all registered holders of Common Shares in Canada are eligible to participate (the Eligible Participants). Non-registered holders of Common Shares may be eligible to participate through their financial institution, broker or other intermediary through which their Common Shares are held. Alternatively, non-registered holders of Common Shares may become registered holders of such shares in order to participate in the DRIP.

8. Computershare Trust Company of Canada is the agent and administrator of the DRIP.

9. Pursuant to the DRIP, Eligible Participants are permitted to increase their investment in the Filer by choosing to automatically reinvest cash dividends received on the Common Shares held by them in additional Common Shares, which will be purchased by the Filer (or a trustee, custodian or administrator on the Filer's behalf) on the open market, or at the Filer's discretion, issued from treasury. If the Common Shares issued pursuant to the DRIP are to be issued from treasury, such Common Shares will be issued at a price equal to the weighted average market price of the Common Shares on the TSX for the five trading days immediately preceding the applicable dividend payment date.

10. As an incentive to increase participation in the DRIP, the Filer proposes to amend the DRIP such that participants in the DRIP (the Participants) will receive one Warrant in addition to each Common Share purchased and/or issued following the reinvestment of dividends. Each whole Warrant would entitle the holder thereof to purchase one Common Share at an exercise price equal to the weighted average market price of the Common Shares on the TSX for the five trading days immediately preceding the applicable dividend payment date for a period of one year from the date of issue of the Warrant (or such other exercise period as may be determined by the Filer from time to time).

11. The Filer does not intend to list the Warrants on the TSX or any other exchange.

12. Participants will not make any cash payment to the Filer upon the issuance of the Warrants.

13. The Filer will provide Participants with a description of the material attributes and characteristics of the Warrants or notice of a source from which the Participant can obtain the information without charge.

14. The DRIP will specify that the aggregate number of Common Shares issuable upon exercise of Warrants in each financial year of the Filer will not exceed 2% of the issued and outstanding Common Shares as at the beginning of each such financial year.

Decision

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. the Common Shares trade on a marketplace (as defined in NI 45-106);

2. the aggregate number of Common Shares issued upon exercise of Warrants in each financial year of the Filer will not exceed 2% of the issued and outstanding Common Shares as at the beginning of the financial year;

3. participation in the DRIP is available to every registered holder of Common Shares in Canada; and

4. the Filer, or a trustee, custodian or administrator, provides to each Participant either a description of the material attributes and characteristics of the Warrants or notice of a source from which the Participant can obtain the information without charge.

"Mary Condon"
Commissioner
Ontario Securities Commission
 
"Sarah B. Kavanagh"
Commissioner
Ontario Securities Commission