Securities Law & Instruments

Headnote

Application by non-profit corporation pursuant to subsection 74(1) of the Securities Act (Ontario) – Applicant's mandate relates to funding research and development projects based in genomics, proteomics or associated technologies (Eligible Projects) – Applicant does not fall within any of the enumerated classes of "accredited investor" in section 73.3 of the Securities Act (Ontario) and National Instrument 45-106 Prospectus and Registration Exemptions – Applicant will only invest in securities of Eligible Projects (Eligible Project Securities) – Applicant's staff are experts in the field of genomics and related life sciences and are qualified to determine the quality and viability of the projects in which the Applicant invests – All investments and divestitures in Eligible Project Securities will be reviewed by the Applicant's commercialization committee, the members of which, individually and collectively, have significant knowledge and experience in investment matters – Order that the prospectus requirements in section 53 of the Act of the do not apply in respect of a trade in Eligible Project Securities to the Applicant granted, subject to conditions – Order expires in two years.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 73.3, 74(1).

National Instrument 45-106 Prospectus and Registration Exemptions, s. 1.1, 6.1.

Form 45-106F1 Report of Exempt Distribution.

National Instrument 45-102 Resale of Securities, s. 2.5.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O.1990, CHAPTER S.5, AS AMENDED

(the “Act”)

AND

IN THE MATTER OF

ONTARIO GENOMICS INSTITUTE

ORDER

(Subsection 74(1))

                WHEREAS Ontario Genomics Institute (“OGI”) has filed an application (the “Application”) with the Ontario Securities Commission (the “Commission”) for recognition as an accredited investor for the purposes of securities legislation;

                AND WHEREAS the Commission may, pursuant to subsection 74(1) of the Act, rule that any trade, intended trade, security, person or company is not subject to section 53 of the Act (the “Prospectus Requirement”) where it is satisfied that to do so would not be prejudicial to the public interest;

                AND UPON considering the Application and the recommendation of staff of the Commission;


                AND UPON it being represented by OGI to the Commission that:

1.             OGI was established by letters patent on October 18, 2000 under the Canada Corporations Act as a non-profit corporation and was continued under the Canada Not-For-Profit Corporations Act on October 31, 2013.

2.             OGI’s offices are located at 661 University Avenue, Suite 490, Toronto, Ontario, M5G 1M1.

3.             OGI’s mandate is to fund world-class research to create strategic genomics resources and accelerate Ontario’s development of a globally-competitive life sciences sector.

4.             OGI primarily receives its funding from Genome Canada (a not-for-profit corporation which is funded by Industry Canada) and from the Government of Ontario.

5.             OGI receives separate funding for: (i) operation, administration and business development of OGI (“Operations Funding”), and (ii) investment in genomics research and development projects (“Project Funding”).

6.             In its most recently completed fiscal year (the fiscal year ended March 31, 2016), OGI received $2.6 million of Operations Funding and $13.1 million of Project Funding.

7.             The business development mandate at OGI is to catalyze access to, and the impact of, genomics capacity and the applicable resources. One of the ways that OGI does this is through a pre-commercial business development fund (“PBDF”), the principal purpose of which is to enhance progress towards the marketplace for genomics outcomes or genomics-related technologies and to thereby assist the relevant scientific founder in formative efforts to commercialize that early stage research.

8.             In connection with the PBDF program, OGI wishes to structure the funding of, and/or investments in, research and development projects based in genomics, proteomics or associated technologies (“Eligible Projects”) being conducted on a for-profit basis through an investment by OGI from its Operations Funding in the corporate entity undertaking each such Eligible Project and, in return for providing funding and other resources to such corporate entity, OGI would receive equity (or convertible debt) or other securities in the corporation (“Eligible Project Securities”).

9.             OGI only enters into funding arrangements in respect of Eligible Projects after careful research and consideration by experts in the industry and has designed its PBDF program to use the same careful analysis and metrics.


10.          OGI staff are experts in the field of genomics and related life sciences and are qualified to determine the quality and viability of the projects in which OGI invests.

11.          All investments in, and divestitures of, Eligible Project Securities by OGI will be reviewed by OGI’s commercialization committee. The members of OGI’s commercialization committee, individually and collectively, all have significant knowledge and experience in investment matters.

12.          OGI does not fall within any of the enumerated classes of accredited investors set forth in the definition of “accredited investor” in section 73.3 of the Securities Act (Ontario) and in section 1.1 of National Instrument 45-106 Prospectus Exemptions.

                AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

                NOW THEREFORE the Commission orders that the Prospectus Requirement does not apply in respect of a trade in Eligible Project Securities to OGI as if OGI were an accredited investor, provided that:

(a)           OGI purchases as principal;

(b)           if the trade is a distribution, the issuer of the Eligible Project Securities files a Form 45-106F1 – Report of Exempt Distribution in Ontario on or before the tenth day after the distribution;

(c)           the first trade in such Eligible Project Securities will be deemed to be a distribution that is subject to section 2.5 of National Instrument 45-102 Resale of Securities; and

(d)           this order expires two years from the date of this order, unless earlier renewed.

                DATED at Toronto, Ontario on this 2nd day of November, 2016.

“Janet Leiper”

Commissioner

Ontario Securities Commission

“Garnet W. Fenn”

Commissioner

Ontario Securities Commission