Subsection 1(10) of the Securities Act – Application by a reporting issuer for an order that it is not a reporting issuer. Applicant not eligible to use the simplified procedure under the Staff Notice 12-307 Applications for a Decision that an Issuer is not a Reporting Issueras its securities are listed on the Australian Stock Exchange. Non-U.S. Applicant eligible to use the modified approach provided the Applicant demonstrates that Canadian securityholders will receive adequate disclosure under foreign securities law or exchange requirements. Outstanding securities are not beneficially owned, directly or indirectly by fewer than 15 security holders in Ontario and more than 51 security holders worldwide. Issuer has issued a press release announcing that it has submitted an application to cease to be a reporting issuer – requested relief granted.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74(1).
National Instrument 45-106 Prospectus and Registration Exemptions.
October 5, 2016
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
The securities regulatory authority or regulator in the Jurisdiction (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) that the Filer be deemed to cease to be reporting issuer in the Jurisdiction (the Exemptive Relief Sought).
Terms defined in National Instrument 14-101 – Definitions and Interpretation 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 a corporation incorporated under the laws of Western Australia. The head office of the Filer is located at Ground Floor, 20 Kings Park Road, West Perth, Western Australia 6005, Australia.
2. The Filer does not have any operations, employees or offices in Canada.
3. The Filer is an Australian based mining company in the business of exploration, development and production. The Filer owns 100% of the Wonarah Project in Australia and 80% of the Baobab phosphate project in Senegal, West Africa. The Filer's management is located in West Perth, Australia.
4. The Filer is a reporting issuer in the Jurisdiction and is not a reporting issuer, or the equivalent, in any other jurisdiction in Canada.
5. The ordinary shares of the Filer (the Ordinary Shares) have traded on the Australian Securities Exchange (the ASX), an Australian exchange, since October 10, 2006.
6. The Ordinary Shares were listed and posted for trading on the Toronto Stock Exchange (the TSX) on September 13, 2010.
7. The Filer only attracted a de minimis number of Canadian investors. During the period in which the Ordinary Shares were concurrently listed on the TSX and the ASX, the majority of the trading took place on the ASX. During the 12 complete months preceding the date of the Filer's application for the Exemptive Relief Sought, being March 2015 through February 2016, based on information obtained from Bloomberg, the total trading volume of the Ordinary Shares on the ASX was 52,054,681 and the total trading volume of the Ordinary Shares on the TSX was 109,992, indicating that 99.79% and 0.21% of the total trading volume of the Ordinary Shares occurred on the ASX and the TSX, respectively.
8. As a result of the very limited trading volume of Ordinary Shares on the TSX over a sustained period and the low and declining ownership of Ordinary Shares on the Canadian share register, the Filer determined that the regulatory and other costs associated with maintaining a TSX listing could no longer be justified and, on February 22, 2016, made an application to the TSX to voluntarily de-list the Ordinary Shares from the TSX. The Filer issued a press release dated February 24, 2016 indicating its reasons for the de-listing and the date on which the Ordinary Shares would be de-listed, being March 11, 2016.
9. On March 11, 2016, the Ordinary Shares were de-listed from the TSX. Following delisting from the TSX, the Filer closed its Canadian share register.
10. As of the date of this application, no securities of the Filer, including debt securities, are listed, traded or quoted in Canada on a "marketplace" as defined in National Instrument 21-101 – Market-place Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported and the Filer does not intend to have any of its securities listed, traded or quoted on such a marketplace in Canada.
11. The Filer files continuous disclosure reports under Australian securities laws and the Ordinary Shares continue to be listed on the ASX.
12. The Filer is a "designated foreign issuer" (as defined under National Instrument 71-102 – Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102)).
13. The Filer is not eligible to use the simplified procedure under the CSA Staff Notice 12-307 – Applications for a Decision that an Issuer is not a Reporting Issuer (Staff Notice 12-307) as its securities are listed on the ASX and it does not meet the requisite test under the simplified procedure relating to the number of security-holders of the Filer and the Filer has therefore applied under the modified approach for foreign issuers set forth under Staff Notice 12-307.
14. The Filer is not in default of any requirement of the Legislation.
15. In support of the representations set forth in paragraph 21 below concerning the percentage of outstanding securities and the total number of security holders in Canada, the Filer sought and obtained information from several sources about the number, holdings, identity and geographic location of the beneficial holders of the outstand-ing Ordinary Shares. The Filer has undertaken a thorough and diligent examination of its share register. The transfer agent in turn made relevant inquiries of participants holding positions in the Filer's securities. The Filer also engaged the advisory services group of Nasdaq Corporate Solutions (NASDAQ) to provide an analysis of Canadian resident beneficial owners by issuing tracing notices to the custodian and nominee companies listed on the Filer's share register. NASDAQ confirmed that this is done in accordance with s. 672 of the Corporations Act of Australia (the Corporations Act). The Filer believes that these inquiries were reasonable, given that its share register and the transfer agents are the only official sources of information on the Filer's security holders.
16. NASDAQ conducted an analysis of the holdings of the registered shareholders of the Filer holding the largest 200 registered positions (the Top 200) based on the Ordinary Share register dated as of June 24, 2016. As of such date, there were 523,901,468 Ordinary Shares outstanding. The register extract of the Top 200 registered shareholders accounted for approximately 82.66% of the total issued and outstanding Ordinary Shares.
17. In cases where a Canadian-domiciled custodian, nominee or broker was not in a position to disclose the name and address details of the beneficial owner/relevant interest holders under their custody in response to a tracing notice due to Canadian privacy laws, NASDAQ obtained a generic breakdown of the number of beneficial holders under such custodian's position, together with the aggregate number of Ordinary Shares held by each shareholder.
18. Based on the analysis of the Top 200 registered shareholders, NASDAQ identified six Canadian shareholders holding, in aggregate, 589,626 Ordinary Shares (representing approximately 0.11% of the outstanding Ordinary Shares). All six positions were identified as being Canadian-based private client brokers. In order to estimate the number of Canadian beneficial shareholders behind these positions, NASDAQ calculated a proportional share ownership ratio by dividing the total number of Ordinary Shares outstanding (being 523,901,468) by the number of beneficial shareholders worldwide (being 4,500) and calcu-lated that, on average, each beneficial share-holder owns approximately 116,422 Ordinary Shares. On this basis, it was estimated that five beneficial shareholders would be expected to be behind the six Canadian-domiciled private client broker holders.
19. Shareholdings outside of the Top 200 registered holders accounted for approximately 17.34% of the outstanding Ordinary Shares. Based on NASDAQ's review of the register, this balance of Ordinary Shares was believed to consist almost entirely of holdings of a retail nature. These shareholdings were made up either of Ordinary Shares beneficially owned by the person(s) named on the register of members or small Australian-domiciled private client brokers that are typically seen to hold securities on behalf of Australian domestic retail clients. Among the registered positions outside the Top 200, two Canadian registered shareholders were identified, holding a total of 2,100 Ordinary Shares (representing approximately 0.0003% of the outstanding Ordinary Shares). For the purpose of ascertaining where these holdings are domiciled, the address on the register was taken as the domiciled address of the beneficial shareholder. On this basis, the 2,100 Ordinary Shares were reflected as being domiciled in Canada.
20. After giving effect to the assumptions in paragraphs 17 and 19, NASDAQ calculated that 591,726 Ordinary Shares (representing 0.11% of the outstanding Ordinary Shares) were held by seven Canadian beneficial shareholders (representing approximately 0.001% of the 4,500 beneficial shareholders worldwide).
21. Accordingly, based on the foregoing, as at June 24, 2016, residents of Canada do not:
(a) directly or indirectly beneficially own more than 2% of each class or series of outstanding securities (including debt securities) of the Filer worldwide; and
(b) directly or indirectly comprise more than 2% of the total number of securityholders of the Filer worldwide.
22. In the 12 months before applying for the decision, the Filer has not taken any steps that indicate there is a market for its securities in Canada. The Filer has not taken steps to create a market for the Ordinary Shares in Canada and, in particular, has never offered securities to the public in any jurisdiction in Canada by way of a prospectus offering, and has not privately placed any Ordinary Shares in Canada in the last 12 months.
23. The Filer provided advance notice to Canadian resident securityholders in a news release dated March 16, 2016 stating that it has applied to the Ontario Securities Commission for a decision that it is not a reporting issuer in the Jurisdiction and that, if that decision is made, the Filer will no longer be a reporting issuer in any jurisdiction in Canada.
24. The Filer has provided an undertaking that it will concurrently deliver to its Canadian securityholders all disclosure material the Filer would be required under Australian securities laws or exchange requirements to deliver to Australian resident securityholders.
25. Upon the receipt of the decision and the granting of the Exemptive Relief Sought, the Filer will no longer be a reporting issuer or the equivalent thereof in any jurisdiction in Canada.
The Decision Maker 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 Maker under the Legislation is that the Exemptive Relief Sought is granted.
Ontario Securities Commission
“Garnet W. Fenn”
Ontario Securities Commission