Securities Law & Instruments

[Webmaster's Note: The decision In the Matter of Pentecostal Financial Services Group Inc., Pentecostal Securities Corp. and The Pentecostal Assemblies of Canada was published in the OSC Bulletin on October 5, 2017 at (2017), 40 OSCB 8066 with an incorrect headnote. The correct headnote for the decision was published in the OSC Bulletin on October 19, 2017 in Chapter 1 at (2017), 40 OSCB 8481, and the decision was republished in its entirety in Chapter 2 at (2017), 40 OSCB 8504. The correct headnote is set out below.]

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – interim and ongoing exemptions from the prospectus requirement and an interim exemption from the dealer registration requirement in securities legislation for the first applicant (the Issuer) that operates a church community program for the purpose of making and administering mortgage loans for charitable purposes and funding these mortgage loans by issuing and distributing fixed income securities (Notes).

The Issuer is exempted for an interim period from the prospectus requirement in securities legislation in connection with the renewal distribution of certain legacy Notes – Issuer requires time limited prospectus relief to transition business model and comply with imposition of additional regulatory requirements – This decision expires on November 30, 2017.

The Issuer is exempted from the prospectus requirement in securities legislation in connection with the distribution of Notes – Issuer cannot comply with not for profit issuer prospectus exemption in s. 2.38 of National Instrument 45-106 Prospectus Exemptions (NI 45-106) – the Issuer requires ongoing prospectus relief to permit certain modifications to the offering memorandum (OM) prospectus exemption in s. 2.9 of NI 45-106 – advice provided for purposes of subparagraph 2.9(2.1)(b)(iii) of NI 45-106 will be from the second applicant (the Dealer), who is applying for registration as a “restricted dealer”, with individuals acting on its behalf that are subject to the same proficiency requirements as a dealing representative of an exempt market dealer – relief needed to permit the Dealer to comply with subsection 2.9(5.2) of NI 45-106 for purposes of distributing OM marketing materials which have been approved in writing by the Issuer, and other conditions of the OM prospectus exemption in s. 2.9 of NI 45-106 which require the use of prescribed forms to the extent that such forms currently do not refer to the category of “restricted dealer” in reference to registered firms – relief needed because certain not for profit affiliates of the Issuer may be required to sign an OM certificate under subsection 2.9(9) of NI 45-106 which may put not for profit/charitable assets at risk if used to settle potential claims for misrepresentation in the offering memorandum – This decision expires in five years.

The Issuer is exempted for an interim period from the dealer registration requirement in securities legislation to trade in Notes through the Dealer prior to the Dealer obtaining registration – the Issuer will trade through the Dealer on terms and conditions similar to the registration exemption in section 8.5 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) – This decision expires when the Dealer is registered as a dealer or in one year.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – interim exemptions from the dealer registration requirement and adviser registration requirement in securities legislation for the Dealer that trades, as agent, in the Issuer’s fixed income securities (i.e., Notes), and provides advice in connection with these trades, to sophisticated and unsophisticated persons and companies related to the church community.

The Dealer is exempted for an interim period from the dealer registration requirement to make these trades prior to the Dealer obtaining registration as a dealer – the Dealer will make these trades on terms and conditions that include certain investor protection measures that will also be available to purchasers, and prospective purchasers, when the Dealer is registered – This decision expires when the Dealer is registered as a dealer or in one year.

The Dealer is exempted for an interim period from the adviser registration requirement in securities legislation to give advice to purchasers, and prospective purchasers, in connection with its permitted trading activities under this Decision – the Dealer provides this advice on terms and conditions similar to the registration exemption in section 8.23 of NI 31-103 – This decision expires when the Dealer is registered as a dealer or in one year.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, ss. 1(1), 25(1), 25(3), 53(1), 74(1).
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 3.2, 3.3, 3.9, 8.5, 8.23, 13.2, 13.3.
National Instrument 45-102 Resale of Securities, s. 2.5.
National Instrument 45-106 Prospectus Exemptions, ss. 1.1, 2.3, 2.9, 2.38, 6.1, 6.3, 6.4, 6.5, Form 45-106F1, Form 45-106F2, Form 45-106F4, Form 45-106F16, and Form 45-106F17.

Applicable Decision

In the Matter of Pentecostal Financial Services Group Inc. dated June 21, 2007.