Subparagraph 1(10)(a)(ii) of the Securities Act (Ontario) -- Application by foreign reporting issuer for a decision that it is not a reporting issuer under applicable securities laws -- issuer has represented that Canadian resident shareholders beneficially own less than 2% of the issuer's outstanding securities and represent less than 2% of total number of beneficial securityholders -- issuer has made diligent enquiries to support beneficial ownership representations -- no securities of the issuer trade on any market or exchange in Canada -- issuer has not conducted a public or private financing in any jurisdiction in Canada since June 29, 2007 and has no present intention of seeking public or private financing in any jurisdiction of Canada in the future -- issuer's securities listed on Hong Kong stock exchange -- issuer is subject to continuous disclosure reporting requirements under Hong Kong securities laws -- issuer has undertaken to continue to concurrently send or provide to its Canadian resident shareholders all disclosure material it is required to send or provide to Hong Kong resident shareholders under applicable Hong Kong securities laws -- issuer has issued a press release announcing that it has applied to cease to be a reporting issuer in the Jurisdictions -- requested relief granted.
Applicable Legislative Provisions
Securities Act, R.S.O 1990, c. S.5, as am., s. 1(10)(a)(ii).
April 14, 2015
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (THE "JURISDICTION") AND IN THE MATTER OF HARMONY ASSET LIMITED (THE "FILER")
The securities regulatory authority or regulator in the Jurisdiction (the "Decision Maker") has received an application (the "Application") from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") that the Filer is not a reporting issuer (the "Exemptive Relief Sought").
Terms defined in National Instrument 14-101 Definitions 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 is an investment company that invests in equity and debt securities of public and private companies, with an emphasis on the resource, manufacturing technology, real estate development and financial project sectors.
2. The Filer was incorporated on September 28, 1993 under the laws of the Cayman Islands under the name "SHK Convertibles Limited." Effective February 12, 1998, the Filer changed its name to "Harmony Asset Limited".
3. The Filer's head office is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, Cayman Islands KY1-1111. In addition to its head office, the Filer maintains an office at Suite 2806, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.
4. The Filer has no operations, employees or offices in Canada.
5. The authorized share capital of the Filer consists of HK$100,000,000 divided into 100,000,000 ordinary shares ("Shares"). As of January 14, 2015, there were 39,058,614 Shares issued and outstanding. The Filer does not have any issued and outstanding securities other than the Shares.
6. The Shares are listed on The Stock Exchange of Hong Kong Limited ("HKEx"). The Filer is not in default of any requirements of the HKEx, or applicable requirements of the Hong Kong securities regulatory authorities.
7. The Filer became a reporting issuer in the Jurisdiction upon acceptance by the Toronto Stock Exchange ("TSX") of an original listing application of the Filer in respect of the Shares. The Filer is not a reporting issuer in any other jurisdiction in Canada.
8. The Shares were listed on the TSX on June 29, 2007. The Filer has not conducted a public or private financing in any jurisdiction in Canada subsequent to the initial listing of the Shares on the TSX and the Filer has no present intention of seeking public or private financing in any jurisdiction in Canada in the future.
9. The Filer applied to voluntarily delist the Shares from the TSX on January 21, 2013 due to the administrative and legal costs of maintaining the listing and the low trading volume of the Shares on the TSX. The TSX approved the Filer's voluntary delisting application on January 22, 2013.
10. The Shares ceased trading and the Filer was delisted from the TSX as of the close of trading on July 22, 2013. The Canadian share register maintained by the Filer's then-transfer agent in Canada, Computershare Investor Services Inc. ("Computershare Canada"), was terminated at that time. Therefore, since that time, the Filer has not taken any steps to indicate there is a market for its securities in Canada.
11. To the knowledge of the Filer, after diligent inquiry, residents of Canada do not directly or indirectly beneficially own more than 2% of each class or series of outstanding securities of the Filer worldwide. The due diligence conducted by the Filer in support of the foregoing representation is as follows:
a. Prior to and following the delisting of the Shares from the TSX on July 22, 2013, registered and beneficial owners of the Shares were contacted and informed of the process to transfer their Shares to the HKEx. According to the Agent's transfer agent in Hong Kong, Computershare Hong Kong Investor Services Ltd. ("Computershare HK"), there is no requirement to mail printed meeting materials to beneficial shareholders in Hong Kong. Meeting materials are sent only to security/broker firms holding Shares on behalf of beneficial owners. As such, Computershare HK has no access to the contact information regarding the Filer's beneficial shareholders, including information about such beneficial owners' addresses to determine residency, once the Shares are transferred to the Hong Kong branch share register.
b. The Filer requested information on the Canadian Share ownership levels from its former Canadian transfer agent, Computershare Canada, and from Computershare HK. As of January 14, 2015, there were 11 registered security/broker firms with Canadian addresses holding Shares on behalf of beneficial shareholders and 2 other Canadian resident registered shareholders, listed on the Hong Kong share register. These 13 Canadian resident registered shareholders held 780,671 Shares at that time, representing approximately 1.99872% of the total number of outstanding Shares.
c. Therefore, based on the information provided by Computershare HK, and assuming that the Canadian resident registered security/broker firms hold Shares only on behalf of Canadian resident beneficial shareholders, the number of Shares beneficially owned by Canadian residents is less than 2% of the total number of outstanding Shares of the Filer worldwide.
12. To the knowledge of the Filer, after diligent enquiry, residents of Canada do not directly or indirectly comprise more than 2% of the total number of shareholders of the Filer worldwide. The due diligence conducted by the Filer in support of the foregoing representation is as follows:
a. As of January 14, 2015, according to Computershare HK there were:
i. 2 registered shareholders holding Shares in his/her/its own name with a Canadian address listed on the Hong Kong share register;
ii. 11 registered security/broker firms with a Canadian address listed on the Hong Kong share register;
iii. 963 registered shareholders holding Shares in his/her/its own name with Hong Kong addresses listed on the Hong Kong share register; and
iv. 241 registered security/broker firms with Hong Kong addresses holding Shares on behalf of beneficial shareholders listed on the Hong Kong share register.
b. The Filer previously endeavoured to determine the number of Hong Kong resident shareholders beneficially holding Shares of the Filer by conducted the following due diligence:
i. On August 12, 2014, the Filer obtained a list from the Central Clearing and Settlement System ("CCASS") disclosing the name and contact address of each of the registered security/broker firms in Hong Kong ("CCASS Participants") holding Shares on behalf of the Filer's beneficial shareholders.
ii. The Filer sent letters to CCASS Participants holding approximately 66.96% of its Shares as of August 12, 2014 to request information regarding the Filer's beneficial shareholders, including the beneficial shareholders' addresses to determine residency. The Filer did not contact the remaining CCASS Participants as they only held approximately 1.69% of its Shares at that time, and the Filer concluded that information from such CCASS Participants would not contribute significantly to the determination of the number of Hong Kong resident shareholders beneficially holding Shares of the Filer. As of August 12, 2014, the remaining 31.35% of Shares were held directly by registered holders of the Shares on the Hong Kong share register.
iii. The Filer received only a minority of responses to the request letters it sent to the CCASS Participants and after such diligent enquiry was unable to determine the number of shareholders in Hong Kong beneficially holding its Shares. As a result, the Filer could not determine the total number of shareholders beneficially holding its Shares worldwide.
iv. With no other alternative options to determine the number of shareholders indirectly holding its Shares in Hong Kong, the Filer did not repeat this course of action.
c. As described in paragraph 11(a) above, information concerning the number of shareholders beneficially holding Shares of the Filer in Hong Kong is difficult to ascertain and, without such information, determining the total number of shareholders beneficially holding Shares of the Filer worldwide is not possible. Based on the information provided in paragraph 12(a) above and on its due diligence efforts described in paragraph 12(c) above, management of the Company believes it is reasonable to conclude that the total number of shareholders in Canada beneficially holding Shares of the Filer is not significant compared to the total number of shareholders worldwide beneficially holding shares of the Filer.
13. The Filer is governed by, and is in compliance with, corporate governance and disclosure standards imposed by the Hong Kong Securities and Futures Commission and the HKEx (collectively, the "HK Rules"). These standards, which include the publication of annual and interim financial statements, proxy materials and material change and timely disclosure reporting, are similar in nature and scope to the reporting requirements under National Instrument 51-102 Continuous Disclosure Obligations and are, pursuant to National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers ("NI 71-102"), acceptable for the purposes of complying with the continuous disclosure requirements of the Jurisdiction.
14. The Filer has delivered all disclosure material required by applicable HK Rules to its Canadian shareholders in accordance with NI 71-102. Continuous disclosure materials mandated by the HK Rules are available to the Filer's shareholders through the HKEx's website at www.hkexnews.hk or the Filer's website at www.harmonyasset.com.hk.
15. Upon granting of the Exemptive Relief Sought, the Filer undertakes to continue to send or provide to its Canadian shareholders all disclosure material that it is required to send or provide to Hong Kong resident holders of the Shares, in the same manner and at the same time that such disclosure material is required to be sent or provided to Hong Kong resident shareholders under applicable HK Rules.
16. On March 19, 2015, the Filer issued a press release announcing that it has applied to the Ontario Securities Commission for a decision that it is not a reporting issuer in the Jurisdiction, and that, as a consequence of such decision, if rendered, the Filer will no longer be a reporting issuer in any jurisdiction in Canada.
17. The Filer is not in default of any requirement of the securities legislation in any jurisdiction in Canada.
18. The Filer, upon the grant of the Exemptive Relief Sought, will no longer be a reporting issuer in any jurisdiction in Canada.
1. The Decision Maker is satisfied that the decision meets the test set out in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
2. The decision of the Decision Maker under the Legislation is that the Exemption Relief Sought is granted.