National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Issuer to enter into equity distribution agreement with underwriter to distribute common shares through the facilities of the TSX or other marketplace in Canada – such distribution an “at-the-market” distribution under NI 44-102-Issuer granted exemption from the prospectus delivery requirement and certain other requirements, subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 71, 147.
National Instrument 44-102 Shelf Distributions, ss. 5.5, 6.7, Part 9, 11.1.
Citation: Re Parkland Fuel Corporation, 2016 ABASC 138
May 24, 2016
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
PARKLAND FUEL CORPORATION
CANACCORD GENUITY CORP.
(the Agent and, together with the Issuer, the Filers)
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application (the Application) from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for the following relief (the Exemption Sought):
(a) that the requirement that a dealer, not acting as agent of the purchaser, who receives an order or subscription for a security offered in a distribution to which the prospectus requirement applies, deliver to the purchaser or its agent the latest prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) and any amendment to the prospectus (the Prospectus Delivery Requirement) does not apply to the Agent or other registered investment dealer acting on behalf of the Agent as a selling agent (each a Selling Agent) in connection with any at-the-market distribution of common shares (Common Shares) of the Issuer pursuant to an equity distribution agreement (the Equity Distribution Agreement) to be entered into by the Issuer and the Agent (ATM Distribution); and
(b) that the requirement to include the statements specified by items 2 and 3 of section 5.5 of National Instrument 44-102 Shelf Distributions (NI 44-102) in a base shelf prospectus does not apply to a prospectus of the Issuer to be filed in respect of an ATM Distribution.
The Decision Makers have also received a request from the Filers for a decision that the Application and this decision (together, the Confidential Material) be kept confidential and not be made public until the earliest of (i) the date on which the Filers enter into the Equity Distribution Agreement, (ii) the date on which any of the Filers advise the Decision Makers that there is no longer any need for the Confidential Material to remain confidential, and (iii) 90 days after the date of this decision (together, the Confidentiality Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for the Application;
(b) the Filers have 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, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador; 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 National Instrument 14-101 Definitions, in MI 11-102 or in NI 44-102 have the same meaning if used in this decision, unless otherwise herein defined.
This decision is based on the following facts represented by the Filers.
1. The Issuer is a corporation incorporated under the Business Corporations Act (Alberta). The head office of the Issuer is in Red Deer, Alberta.
2. The Issuer is a reporting issuer in each province of Canada other than Québec, and is not in default of securities legislation in any jurisdiction of Canada except that the statements required by items 2 and 3 of section 5.5 of NI 44-102 to be included in a prospectus were modified in the final short form base shelf prospectus of the Issuer filed on April 11, 2016 (the Base Shelf Prospectus) in the manner described in paragraph 33 below without exemptive relief having first been obtained.
3. The Common Shares are listed on the Toronto Stock Exchange (the TSX).
4. The Base Shelf Prospectus provides for the distribution from time to time of Common Shares and debt securities. The Issuer included in the Base Shelf Prospectus a forward-looking certificate of the Issuer in the form prescribed by Appendix A to NI 44-102.
5. The Agent is a corporation continued under the laws of Ontario with its head office in Vancouver, British Columbia.
6. The Agent is registered as an investment dealer under the securities legislation of each province and territory of Canada, is a member of the Investment Industry Regulatory Organization of Canada, and is a participating organization of the TSX.
7. The Agent is not in default of securities legislation in any jurisdiction of Canada.
Proposed ATM Distribution
8. The Filers propose to enter into the Equity Distribution Agreement for the purpose of ATM Distributions involving the periodic sale of Common Shares by the Issuer through the Agent, as agent, under the shelf prospectus procedures prescribed by Part 9 of NI 44-102.
9. Prior to making an ATM Distribution, the Issuer will have filed, in each province of Canada other than Québec a prospectus supplement in connection with an ATM Distribution under the Equity Distribution Agreement describing the terms of the ATM Distribution, including the terms of the Equity Distribution Agreement and otherwise supplementing the disclosure in the Base Shelf Prospectus (the Prospectus Supplement).
10. Upon entering into the Equity Distribution Agreement, the Issuer will immediately:
(a) issue and file a news release pursuant to section 3.2 of NI 44-102 indicating that the Base Shelf Prospectus and the Prospectus Supplement have been filed on SEDAR and disclosing where and how purchasers may obtain copies; and
(b) file the Equity Distribution Agreement on SEDAR.
11. The Equity Distribution Agreement will limit the number of Common Shares that the Issuer may issue and sell pursuant to any ATM Distribution thereunder to an amount not to exceed 10% of the aggregate market value of the outstanding Common Shares calculated in accordance with section 9.2 of NI 44-102.
12. The Issuer will conduct ATM Distributions through the Agent (as agent) directly or via a Selling Agent, through the TSX or another "marketplace" (as defined in National Instrument 21-101 Marketplace Operation) in Canada (each a Marketplace).
13. The Agent will act as the sole underwriter on behalf of the Issuer in connection with each ATM Distribution, and will be the only person or company paid an underwriting fee or commission by the Issuer in connection with such sales. The Prospectus Supplement will include an underwriter certificate signed by the Agent.
14. The Agent will effect each ATM Distribution on a Marketplace, either directly or through a Selling Agent. If sales are effected through a Selling Agent, the Selling Agent will be paid a seller's commission for effecting the trades on behalf of the Agent. A purchaser's rights and remedies under the Legislation as against the Agent, as underwriter of an ATM Distribution, will not be affected by whether a sale is made directly or through a Selling Agent.
15. The aggregate number of Common Shares sold on any trading day pursuant to an ATM Distribution will not exceed 25% of the aggregate trading volume of the Common Shares traded on all Marketplaces on that day.
16. The Equity Distribution Agreement will provide that at the time of each Sell Notice (as defined below), the Issuer will represent to the Agent that the Base Shelf Prospectus, as supplemented by the Prospectus Supplement and any other supplement, or as amended by any amendment (together, the Prospectus), contains full, true and plain disclosure of all material facts relating to the Issuer and Common Shares being distributed. The Issuer will not proceed with sales pursuant to an ATM Distribution when it is in possession of undisclosed information that would constitute a material fact or a material change in respect of the Common Shares.
17. If, after the Issuer delivers a sell notice to the Agent directing the Agent to sell Common Shares on the Issuer's behalf pursuant to the Equity Distribution Agreement (a Sell Notice), the sale of Common Shares specified in the Sell Notice would constitute a material fact or material change, the Issuer will suspend sales under the Equity Distribution Agreement until either: (i) it has filed a material change report or amended the Prospectus; or (ii) circumstances have changed such that a sale would no longer constitute a material fact or material change.
18. In determining whether the sale of the number of Common Shares specified in a Sell Notice would constitute a material fact or material change, the Issuer will take into account factors including: (i) the parameters of the Sell Notice, including the number of Common Shares proposed to be sold and any price or timing restrictions that the Issuer may impose with respect to the particular ATM Distribution; (ii) the percentage of the outstanding Common Shares that the number of Common Shares proposed to be sold pursuant to the Sell Notice represents; (iii) sales under earlier Sell Notices; (iv) trading volume and volatility of Common Shares; (v) recent developments in the business, affairs and capital structure of the Issuer; and (vi) prevailing market conditions generally.
19. It is in the interest of both the Issuer and the Agent to minimize the market impact of sales under an ATM Distribution. Therefore, the Agent will monitor closely the market's reaction to trades made on any Marketplace pursuant to the ATM Distribution in order to evaluate the likely market impact of future trades. If the Agent is concerned that a particular sell order pursuant to a Sell Notice may affect significantly the market price of Common Shares, the Agent will recommend against effecting the trade at that time.
Disclosure of Common Shares Sold in ATM Distribution
20. Within seven calendar days after the end of any calendar month during which the Issuer conducts an ATM Distribution, the Issuer will file on SEDAR and make publicly available, as a notice of proceeds, a report disclosing in respect of such ATM Distribution the number and average price of Common Shares distributed, gross proceeds, commissions and net proceeds.
21. For each financial period in which the Issuer conducts an ATM Distribution, it will disclose in its annual and interim financial statements and management’s discussion and analysis filed on SEDAR the number and average price of Common Shares sold pursuant to ATM Distributions during that period, and the gross proceeds, commissions and net proceeds for such sales.
Prospectus Delivery Requirement
22. Pursuant to the Prospectus Delivery Requirement, a dealer effecting a trade of securities offered under a prospectus is required to deliver a copy of the prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) to the purchaser within prescribed time limits.
23. Delivery of a prospectus is not practicable in the circumstances of an ATM Distribution, because neither the Agent nor a Selling Agent effecting the trade will know the identity of the purchasers.
24. The Prospectus (together with all documents incorporated by reference therein) will be filed and readily available electronically via SEDAR to all purchasers under ATM Distributions. As stated in paragraph 10 above, the Issuer will issue a news release that specifies where and how copies of the Base Shelf Prospectus and the Prospectus Supplement can be obtained.
25. The liability of an issuer or an underwriter (or others) for a misrepresentation in a prospectus pursuant to the civil liability provisions of the Legislation will not be affected by the grant of an exemption from the Prospectus Delivery Requirement, because purchasers of securities offered by a prospectus during the period of distribution have a right of action for damages or rescission without regard to whether the purchaser relied on the misrepresentation or in fact received a copy of the prospectus.
Withdrawal Right and Right of Action for Non-Delivery
26. Pursuant to the Legislation an agreement to purchase a security in respect of a distribution to which the prospectus requirement applies is not binding on the purchaser if a dealer receives, not later than midnight on the second day (exclusive of Saturdays, Sundays and holidays) after receipt by the purchaser of the latest prospectus or any amendment to the prospectus, a notice in writing that the purchaser does not intend to be bound by the agreement of purchase (the Withdrawal Right).
27. Pursuant to the Legislation a purchaser of a security to whom a prospectus was required, but not in fact, sent or delivered in compliance with the Prospectus Delivery Requirement has a right of action for rescission or damages against the dealer who did not comply with the Prospectus Delivery Requirement (the Right of Action for Non-Delivery).
28. Neither the Withdrawal Right nor the Right of Action for Non-Delivery is workable in the context of an ATM Distribution because of the impracticability of delivering the Prospectus to a purchaser of Common Shares thereunder.
Prospectus Form Requirements
29. To reflect the fact that an ATM Distribution is a continuous distribution, the Prospectus Supplement will include the following issuer certificate:
The short form prospectus, as supplemented by the foregoing, together with the documents incorporated in the prospectus by reference as of the date of a particular distribution of securities under the prospectus, will, as of that date, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus, as required by the securities legislation of each province of Canada other than Québec.
30. Also to reflect the fact that an ATM Distribution is a continuous distribution, the Prospectus Supplement will include the following underwriter certificate:
To the best of our knowledge, information and belief, the short form prospectus, as supplemented by the foregoing, together with the documents incorporated in the prospectus by reference as of the date of a particular distribution of securities offered by the prospectus, will, as of that date, constitute full, true and plain disclosure of all material facts relating to the securities offered by the prospectus, as required by the securities legislation of each province of Canada other than Québec.
31. A different statement of purchasers’ rights than that required by the Legislation is necessary in order to allow the Prospectus to accurately reflect the relief granted from the Prospectus Delivery Requirement. Accordingly, the Prospectus Supplement will state the following, with the date reference completed:
Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities and with remedies for rescission or, in some jurisdictions, revision of the price or damages, if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment are not delivered to the purchaser, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. However, purchasers of Common Shares under an at-the-market distribution by the Issuer will not have the right to withdraw from an agreement to purchase the Common Shares, and will not have remedies of rescission or, in some jurisdictions, revision of the price or damages, for non-delivery of the prospectus, because the prospectus, prospectus supplements relating to the Common Shares purchased by the purchaser and any amendment relating to Common Shares purchased by such purchaser will not be delivered as permitted under a decision dated l, 2016 and granted pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
Securities legislation in certain of the provinces of Canada also provides purchasers with remedies for rescission or, in some jurisdictions, revision of the price or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment contain a misrepresentation, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of Common Shares under an at-the-market distribution by the Issuer may have against the Issuer or the Agent for rescission or, in some jurisdictions, revision of the price or damages, if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment contain a misrepresentation remain unaffected by the non-delivery and the decision referred to above.
Purchasers should refer to applicable provisions of securities legislation and the decision referred to above for the particulars of these rights or consult with a legal adviser.
32. The Prospectus Supplement will disclose that, in respect of ATM Distributions under the Prospectus Supplement, the statement prescribed in paragraph 31 above supersedes the statement of purchaser's rights in the Base Shelf Prospectus.
33. The statements required by items 2 and 3 of section 5.5 of NI 44-102 to be included in the Base Shelf Prospectus have been qualified by including the additional words ", except in cases where an exemption from such delivery requirement has been obtained".
Each of the Decision Makers is satisfied that this decision satisfies 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:
(a) the Issuer complies with the disclosure requirements set out in paragraphs 20, 21, 29, 30, 31 and 32 above; and
(b) the Issuer and Agent respectively comply with the representations made in paragraphs 10, 12, 13, 14, 15, 16, 17 and 19 above.
This decision will terminate 25 months from the date of the receipt for the Base Shelf Prospectus.
The further decision of the Decision Makers is that the Confidentiality Relief is granted.
For the Commission:
“Stephen Murison”Vice Chair