Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – National Instrument 62-104 Take-Over Bids and Issuer Bids, s. 6.1 – An employee benefit plan trust wants relief from the issuer bid requirements in Part 2 of NI 62-104 to purchase shares under a normal course issuer bid – The issuer is making a normal course issuer bid accepted by the exchange; the filer is a trust formed by the issuer that will purchase a portion of shares under the normal course issuer bid for distribution to employees of the issuer; all purchases of shares under the normal course issuer bid by the issuer and the filer will be made in accordance with exchange rules; the issuer formed the filer solely for tax reasons.
Applicable Legislative Provisions
National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.
November 9, 2016
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
AN EMPLOYEE BENEFIT PLAN TRUST ESTABLISHED BY
FOR THE BENEFIT OF EMPLOYEES OF
TELUS CORPORATION AND ITS SUBSIDIARIES
1 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) for an exemption from the requirements applicable to issuer bids (the Issuer Bid Requirements) in Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) for purchases by the Filer of common shares (Common Shares) of TELUS Corporation (TELUS) under TELUS’ normal course issuer bid occurring prior to December 31, 2016 (the Exemptive Relief Requested).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the British Columbia Securities Commission is the principal regulator for this application,
(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 Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut, and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
3 This decision is based on the following facts represented by the Filer and TELUS:
1. TELUS is a corporation governed by the Business Corporations Act (British Columbia);
2. the head office and registered office of TELUS is located at 7th Floor, 510 W. Georgia St., Vancouver, British Columbia;
3. TELUS is a reporting issuer in each of the provinces of Canada and the Common Shares are listed for trading on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange (the NYSE) under the symbols “T” and “TU”, respectively; TELUS is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer;
4. the authorized share capital of TELUS consists of 4,000,000,000 shares, divided into: (i) 2,000,000,000 Common Shares without par value; (ii) 1,000,000,000 First Preferred shares without par value; and (iii) 1,000,000,000 Second Preferred shares without par value. As of October 21, 2016, 591,375,741 Common Shares, no First Preferred Shares and no Second Preferred Shares were issued and outstanding;
5. TELUS established the Filer under the laws of the Province of British Columbia under an Employee Benefit Plan and Trust Agreement made as of November 2, 2016 between TELUS and a third party trustee for the benefit of non-executive employees of TELUS and its subsidiaries;
6. under a “Notice of Intention to Make a Normal Course Issuer Bid” (the Notice) that was submitted to, and accepted by, the TSX, effective September 30, 2016, up to 8,000,000 Common Shares, representing 1.35% of TELUS’ public float of Common Shares as of the date specified in the Notice, subject to a maximum aggregate purchase price consideration of $250 million excluding brokerage costs and commission, may be purchased under a normal course issuer bid (the Normal Course Issuer Bid);
7. the Notice provides that up to one-quarter of the maximum number of Common Shares to be purchased under the Normal Course Issuer Bid may be purchased by the Filer for distribution to non-executive employees of TELUS and its subsidiaries; in accordance with the Notice, the Normal Course Issuer Bid is being, and will be, conducted through the facilities of the TSX, the NYSE or alternative Canadian trading platforms (including Alpha ATS, Pure Trading, Chi-X, Omega ATS and MATCH Now), or such other means as may be permitted by the TSX or a securities regulatory authority, in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the TSX NCIB Rules), including by way of off market purchases under exemption orders issued by a securities regulatory authority;
8. on October 1, 2016, TELUS entered into an automatic repurchase plan (the ARP) with a broker providing for automatic purchases of Common Shares, to be conducted by the broker on the TSX or alternative Canadian trading platforms within pre-determined parameters as part of the Normal Course Issuer Bid, during internal trading blackout periods, including regularly scheduled quarterly blackout periods, when TELUS would not otherwise be permitted to trade in its Common Shares (each such time, a Blackout Period);
9. under the ARP, at times it is not subject to blackout restrictions, TELUS may, but is not required to, instruct the designated broker to make purchases under its Normal Course Issuer Bid in accordance with the terms of the ARP; such purchases under the ARP will be determined by the designated broker in its sole discretion based on parameters established by TELUS prior to the applicable Blackout Period in accordance with TSX rules, applicable securities laws and the terms of the agreement between the broker and TELUS; the ARP was approved by the TSX and is in compliance with the TSX rules and applicable securities laws;
10. TELUS wishes to distribute up to 25 per cent of the Common Shares purchased under the Normal Course Issuer Bid to non-executive employees of TELUS and its subsidiaries and has determined to contribute sufficient funds to the Filer to enable the Filer to purchase such number of Common Shares under the Normal Course Issuer Bid;
11. TELUS and the Filer will enter into one or more agreements with the broker appointed under TELUS’ Normal Course Issuer Bid, to contemplate the ability of TELUS to specify that a portion of the Common Shares to be purchased under the Normal Course Issuer Bid will be purchased by the Filer with the remainder to be purchased by TELUS; the Filer will not purchase Common Shares under the Normal Course Issuer Bid through the ARP and no Common Shares will be purchased by the Filer during a Blackout Period;
12. all Common Shares purchased by TELUS under the Normal Course Issuer Bid will be cancelled; Common Shares purchased by the Filer will be distributed to employees of TELUS and its subsidiaries prior to December 31, 2016; any Common Shares held by the Filer in excess of the number of Common Shares needed for distribution to employees of TELUS and its subsidiaries will be delivered by the Filer to TELUS as an in kind return of contribution and such Common Shares will then be cancelled;
13. the purchases of Common Shares under the Normal Course Issuer Bid will be made in accordance with the requirements of exemptions from the Issuer Bid Requirements set out in section 4.8 of NI 62-104 (such exemptions, the NCIB Exemptions);
14. the purchase of Common Shares by the Filer will constitute an indirect “issuer bid” by TELUS for the purposes of NI 62-104 to which the Issuer Bid Requirements would apply;
15. the Filer will be a “joint actor” with TELUS and the Issuer Bid Requirements would apply to purchases of Common Shares by the Filer, unless an exemption is available; however the NCIB Exemptions are available only to the “issuer”, and for purposes of such exemptions, “issuer” does not include the Filer;
16. but for the fact that the Common Shares will be purchased by the Filer, TELUS could otherwise acquire Common Shares to distribute to non-executive employees of TELUS and its subsidiaries in reliance on the NCIB Exemptions;
17. the purchase of Common Shares by TELUS and the Filer under the Normal Course Issuer Bid will not adversely affect TELUS or the rights of any of TELUS’ security holders and it will not materially affect control of TELUS;
18. to the best of TELUS’ knowledge, as of October 21, 2016, the “public float” of the Common Shares represented more than 99.87% of all issued and outstanding Common Shares for the purposes of the TSX NCIB Rules;
19. the Common Shares are “highly liquid securities” within the meaning of section 1.1 of Ontario Securities Commission Rule 48-501 Trading during Distributions, Formal Bids and Share Exchange Transactions and section 1.1 of the Universal Market Integrity Rules; and
20. the Filer will not purchase, in the aggregate, more than one-quarter of the maximum number of Common Shares that TELUS can purchase under its Normal Course Issuer Bid, such one-quarter being equal to 2,000,000 Common Shares as of the date of this decision.
4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemptive Relief Requested is granted provided that:
(a) Common Shares purchased by the Filer will be taken into account by TELUS when calculating the maximum annual aggregate limit that is imposed upon the Normal Course Issuer Bid in accordance with the TSX NCIB Rules and the maximum aggregate limit that is imposed upon TELUS in accordance with the exemption from the Issuer Bid Requirements set out in subsection 4.8(3) of NI 62-104;
(b) all purchases of Common Shares under the Normal Course Issuer Bid, whether by TELUS or by the Filer, are made in accordance with the TSX NCIB Rules and any by-laws, rules, regulations or policies of any published markets upon which purchases are carried out, as applicable;
(c) TELUS will report purchases of such Common Shares by TELUS and the Filer to the TSX under the TSX NCIB Rules; and
(d) the Filer does not purchase, in the aggregate, more than one-quarter of the maximum number of Common Shares TELUS can purchase under the Normal Course Issuer Bid, such one-quarter being equal to, as of the date of this decision, 2,000,000 Common Shares.
“Nigel P. Cave”
British Columbia Securities Commission