National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer granted exemptions from the prospectus requirement in connection with trades of commercial paper/short term debt instruments of the Filer that may not meet the "approved credit rating" requirement contained in the short-term debt exemption in section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions -- Sufficient for commercial paper/short-term debt instruments to obtain only one credit rating at or above a prescribed standard from an approved credit rating agency -- Relief granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).
National Instrument 45-106 Prospectus and Registration Exemptions.
November 26, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that trades of negotiable promissory notes or commercial paper maturing not more than one year from the date of issue of the Filer be exempt from the prospectus requirement of the Legislation (the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application;
(b) the Filer has provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut (collectively the "Passport Jurisdictions"); and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in Regulation 14-101 respecting Definitions and Regulation 11-102 have the same meanings if used in this decision, unless otherwise defined.
In this decision:
"Asset-backed Short-term Debt": short-term debt that is backed, secured or serviced by or from, a discrete pool of mortgages, receivables or other financial assets or interests designed to ensure the servicing or timely distribution of proceeds to holders of that short-term debt;
"Regulation 45-106": Regulation 45-106 respecting Prospectus and Registration Exemptions; and
"Regulation 81-102": Regulation 81-102 respecting Mutual Funds.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation governed by the Canada Business Corporations Act with its principal business place located in Verdun, Québec.
2. The Filer is a reporting issuer in all of the provinces of Canada and is not in default of the securities legislation of the Jurisdictions or Passport Jurisdictions.
3. A trade in short-term debt is exempt from the prospectus requirement pursuant to section 2.35 of Regulation 45-106 only where short-term debt has a designated rating from a designated rating organization or its DRO affiliate. The terms "designated rating", "designated rating organization" and "DRO affiliate" used in Regulation 45-106 have the same meaning as in Regulation 81-102.
4. For short-term debt to satisfy the definition of designated rating in Regulation 81-102, that short-term debt (a) must have a rating at or above one of the rating categories set out in that definition issued by a "designated rating organization" or its "DRO affiliate" for that short-term debt, and (b) must not have a rating below one of the rating categories set out in that definition issued by a "designated rating organization" or any of its "DRO affiliates" for that short-term debt.
5. The negotiable promissory notes or commercial paper of the Filer have a "R-1 (low)" rating from DBRS Limited, which rating meets the prescribed threshold in the definition of "designated rating" in Regulation 81-102. However, the negotiable promissory notes or commercial paper of the Filer do not meet the other prescribed thresholds in the definition of "designated rating" in Regulation 81-102 because they have a "P-2" rating from Moody's Canada Inc. and a "A-2" rating from Standard & Poor's Ratings Services (Canada), which ratings are lower than the ratings prescribed by the definition of designated rating in Regulation 81-102.
6. The Filer has been granted relief similar in nature to the Exemption Sought under a decision document of the Decision Makers dated June 16, 2009 which terminated on June 30, 2012.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
1. the negotiable promissory notes or commercial paper of the Filer:
(a) mature not more than one year from the date of issue;
(b) are not convertible or exchangeable into or accompanied by a right to purchase another security other than negotiable promissory notes or commercial paper of the Filer;
(c) are not Asset-backed Short-term Debt; and
(d) have a rating issued by one of the following rating organizations, or any of their successors, at or above one of the following rating categories or a rating that replaces a category listed below:
Designated Rating Organization
Moody's Canada Inc.
Standard & Poor's Ratings Services (Canada)
2. each trade by the Filer of negotiable promissory notes or commercial paper of the Filer to a resident in a Jurisdiction or Passport Jurisdiction in reliance on this decision is made:
(a) through an agent who is a registered dealer, registered in a category that permits the trade;
(b) through a bank listed in Schedules I, II or III to the Bank Act (Canada) trading in reliance on an exemption from the registration requirement available in the circumstances in the Jurisdictions and Passport Jurisdictions in which the trade occurs; or
(c) through a dealer permitted to rely on the exemption from the dealer registration requirement for international dealers in section 8.18 of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations; and
3. for each Jurisdiction and Passport Jurisdiction, the Exemption Sought will terminate on the earlier of:
(a) 90 days after the coming into force of any rule, other regulation or blanket order or ruling under the securities legislation of that jurisdiction that amends the conditions of the prospectus exemption contained in section 2.35 of Regulation 45-106 or provides an alternate exemption; and
(b) October 30, 2018.