Securities Law & Instruments


Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – relief from prospectus requirement to allow U.S. parent company to spin-off shares of its U.S. subsidiary to investors – distributions not covered by legislative exemptions – U.S. parent company is a public company in the U.S. but is not a reporting issuer in Canada – U.S. parent company has a de minimis presence in Canada – following the spin-off, U.S. subsidiary will become an independent public company in the U.S. and will not be a reporting issuer in Canada – no investment decision required from Canadian shareholders in order to receive distributions.

Applicable Legislative Provisions

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

January 27, 2017

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
 ONTARIO
 (the “Jurisdiction”)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
BIOGEN INC.
 (the “Filer”)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) for an exemption (the “Exemption Sought”) from the prospectus requirement of section 53 of the Securities Act (Ontario) in connection with the proposed distribution (the “Spin-Off”) by the Filer of the shares of common stock (“Bioverativ Shares”) of Bioverativ Inc. (“Bioverativ”), a wholly-owned subsidiary of the Filer, by way of a dividend in specie to holders (“Filer Shareholders”) of shares of common stock of the Filer (“Filer Shares”) resident in Canada (“Filer Canadian Shareholders”).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a)           the Ontario Securities Commission is the principal regulator for this application; and

(b)           the Filer has provided notice that sub-section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in each of the other provinces and territories of Canada.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1.             The Filer is a corporation incorporated in Delaware with principal executive offices in Cambridge, Massachusetts, U.S.A. The Filer is a biotechnology company that discovers, develops and delivers therapies for people living with serious neurological, autoimmune and rare diseases.

2.             The Filer is not a reporting issuer, and currently has no intention of becoming a reporting issuer, under the securities laws of any province or territory of Canada.

3.             The authorized capital stock of the Filer consists of 1 billion Filer Shares, U.S.$0.0005 par value per share, and 8 million shares of preferred stock, U.S.$0.001 par value per share. As of December 1, 2016, there were 215,904,010 Filer Shares and no preferred shares issued and outstanding.

4.             The Filer Shares are listed on the Nasdaq Stock Market (“NASDAQ”) and trade under the symbol “BIIB”. Other than the foregoing listing on NASDAQ, no securities of the Filer are listed or posted for trading on any exchange or market in Canada or outside of Canada. The Filer has no present intention of listing its securities on any Canadian stock exchange.

5.             The Filer is subject to the United States Securities Exchange Act of 1934, as amended from time to time (the “1934 Act”), and the rules, regulations and orders promulgated thereunder.

6.             Based on a geographic breakdown snapshot of registered holders prepared for the Filer by Computershare Trust Company, N.A. (the Filer’s transfer agent), as of January 3, 2017, (i) there were 2 registered Filer Canadian Shareholders, representing approximately 0.3% of the registered shareholders of the Filer worldwide, and (ii) the registered Filer Canadian Shareholders were holding 44 Filer Shares, representing approxi-mately 0.00002% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

7.             Based on a geographic analysis of beneficial shareholders prepared for the Filer by Broadridge Financial Solutions, Inc., as of January 5, 2017, (i) there were 4,874 beneficial Filer Canadian Shareholders, representing approximately 1% of the beneficial holders of Filer Shares worldwide, and (ii) the beneficial Filer Canadian Shareholders were holding approximately 3,478,449 Filer Shares, representing approximately 1.6% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

8.             Based on the information above, the number of registered and beneficial Filer Canadian Share-holders and the proportion of Filer Shares held by such shareholders are de minimis.

9.             The Filer is proposing to separate, through a series of transactions, its business which focuses on the discovery, research, development, and commercialization of therapies for the treatment of hemophilia and other blood disorders (the “Bioverativ Business”) into its wholly owned subsidiary, Bioverativ. These transactions, in addition to certain related transactions, are expected to result in the Spin-Off by the Filer, pro rata to its shareholders, of 100% of the Bioverativ Shares outstanding immediately prior to such distribution.

10.          Bioverativ is a corporation incorporated in Delaware with principal executive offices in Cambridge, Massachusetts, U.S.A. It is currently a wholly-owned subsidiary of the Filer that, at the time of the Spin-Off, will hold, directly and through its subsidiaries, the Filer’s Bioverativ Business.

11.          Bioverativ’s authorized capital stock is 800 million Bioverativ Shares, par value U.S.$0.001 per share and 50 million shares of preferred stock, par value $0.001 per share. As of the date hereof, all of the issued and outstanding Bioverativ Shares, being 1,000 Bioverativ Shares, are held directly by the Filer, and no other shares or classes of stock of Bioverativ are issued and outstanding.

12.          In connection with the Spin-Off, the distribution agent will distribute to each Filer Shareholder entitled to Bioverativ Shares, the number of whole Bioverativ Shares to which the Filer Shareholder is entitled in the form of a book-entry authorization. No fractional Bioverativ Shares will be issued. Instead, the distribution agent will aggregate fractional shares into whole shares, sell such whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds (i.e. net of discounts and commissions) of the sales pro rata to each Filer Shareholder who would otherwise have been entitled to receive fractional shares. Interest will not be paid on the amounts of payment made in lieu of fractional Bioverativ Shares.

13.          Filer Shareholders will not be required to pay any consideration for the Bioverativ Shares, or to surrender or exchange Filer Shares or take any other action to receive their Bioverativ Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.

14.          Subject to the satisfaction of certain conditions, it is currently anticipated that the Spin-Off will become effective on February 1, 2017. Following the Spin-Off, Bioverativ will cease to be a subsidiary of the Filer.

15.          Bioverativ has applied for, and NASDAQ has approved, the listing of Bioverativ Shares to be issued pursuant to the Spin-Off on NASDAQ Global Select Market under the symbol “BIVV”.

16.          After the completion of the Spin-Off, the Filer Shares will continue to be listed and traded on NASDAQ.

17.          Bioverativ is not a reporting issuer in any province or territory in Canada nor are its securities listed on any stock exchange in Canada. Bioverativ has no present intention to become a reporting issuer in any province or territory of Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.

18.          The Spin-Off will be effected under the laws of the State of Delaware.

19.          Because the Spin-Off will be effected by way of a dividend of Bioverativ Shares to Filer Shareholders, no shareholder approval of the Spin-Off is required (or being sought) under Delaware law.

20.          In connection with the Spin-Off, Bioverativ filed with the United States Securities and Exchange Commission (the “SEC”) a registration statement on Form 10 dated December 20, 2016 (as amended) under the 1934 Act, detailing the proposed Spin-Off (the “Registration State-ment”). On December 22, 2016, the SEC completed its review of, and declared effective, the Registration Statement.

21.          Filer Shareholders will receive a notice of internet availability or, where required, a hard copy of an information statement with respect to Bioverativ (the “Information Statement”), detailing the terms and conditions of the Spin-Off and forming part of the Registration Statement. All materials relating to the Spin-Off sent by or on behalf of the Filer and Bioverativ in the United States (including relating to the Information Statement) will be sent concurrently to Filer Canadian Shareholders.

22.          The Information Statement contains prospectus level disclosure about Bioverativ.

23.          Filer Canadian Shareholders who receive Bioverativ Shares pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders resident in the United States.

24.          Following the completion of the Spin-Off, Bioverativ will be subject to the requirements of the 1934 Act and the rules and regulations of NASDAQ. Bioverativ will send concurrently to holders of Bioverativ Shares resident in Canada, the same disclosure materials required to be sent under applicable United States securities laws to holders of Bioverativ Shares resident in the United States.

25.          There will be no active trading market for the Bioverativ Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of Bioverativ Shares distributed in connection with the Spin-Off will occur through the facilities of NASDAQ or any other exchange or market outside of Canada on which Bioverativ Shares may be quoted or listed at the time that the trade occurs, or to a person or company outside of Canada.

26.          The Spin-Off to Filer Canadian Shareholders would be exempt from the prospectus requirement pursuant to subsection 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that Bioverativ is not a reporting issuer under the securities legislation of any jurisdiction in Canada.

27.          Neither the Filer nor Bioverativ is in default of any securities legislation in any jurisdiction of Canada.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the first trade in the Bioverativ Shares acquired pursuant to the Spin-Off will be deemed to be a distribution unless the conditions in section 2.6 or subsection 2.14(1) of National Instrument 45-102 Resale of Securities are satisfied.

“William Furlong”
Commissioner
Ontario Securities Commission

“Janet Leiper”
Commissioner
Ontario Securities Commission