National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – reporting insider granted relief from the requirement in subsection 107(2) of the Securities Act (Ontario) to file an insider report within five days of each disposition of securities occurring pursuant to an automatic securities disposition plan, provided that the insider files an insider report in respect of all dispositions under the automatic securities disposition plan on an annual basis.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 107(2).
National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 3.3.
Citation: Re Solium Capital Inc., 2018 ABASC 19
February 6, 2018
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
SOLIUM CAPITAL INC.
(collectively, the Filers)
The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filers for a decision (the Exemption Sought) under the securities legislation (the Legislation) of the Jurisdictions exempting Mr. Broadfoot, a director of Solium, from the requirement in section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104) and subsection 107(2) of the Securities Act (Ontario) (the Ontario Act) to file an insider report within five days following the disposition of securities under his ASDP (as defined below), subject to certain conditions.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island; and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 55-104 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filers:
1. Solium is a corporation existing under the laws of the Province of Alberta and is a reporting issuer under the securities legislation of each of the provinces of Canada. Solium is not in default of securities legislation in any jurisdiction.
2. The head office of Solium is located in Calgary, Alberta.
3. The authorized share capital of Solium consists of an unlimited number of common shares (Common Shares) and an unlimited number of preferred shares, issuable in series. As at December 21, 2017, Solium had 55,865,526 Common Shares and no preferred shares of any series issued and outstanding.
4. The Common Shares are listed and posted for trading on the Toronto Stock Exchange under the symbol “SUM”.
5. Broadfoot is a director of Solium, is a reporting insider and is not in default of securities legislation in any jurisdiction.
6. As at December 21, 2017, Broadfoot beneficially owned, controlled or directed 6,880,140 Common Shares (representing approximately 12.3% of the then outstanding Common Shares) as well as stock options to acquire an additional 19,000 Common Shares and 12,845 restricted share units.
7. Broadfoot wishes to sell up to a total of 2,400,000 Common Shares pursuant to the ASDP (as defined below). Broadfoot will comply with the early warning requirements under Section 5.2(2) of National Instrument 62-104 Take-Over Bids and Issuer Bids.
The Automatic Securities Disposition Plan
8. Industrial Alliance Securities Inc. (the Broker), Solium and Broadfoot entered into an automatic securities disposition plan (the ASDP) dated effective December 27, 2017 to facilitate the automatic sale of up to 2,400,000 Common Shares beneficially owned by Broadfoot that have been deposited into an account managed by the Broker in accordance with the trading parameters and other instructions set out in the ASDP.
9. Broadfoot can only make changes to the trading parameters and other instructions set out in the ASDP or voluntarily terminate the ASDP if all of the following conditions are met:
(a) Broadfoot has obtained the prior written consent of Solium in accordance with Solium's disclosure policy;
(b) Broadfoot has provided notice to the public of the proposed change or termination by describing it in a filing on the System for Electronic Disclosure by Insiders (SEDI) and in a news release, which shall include a representation that at the time of the amendment or termination he was not aware of any undisclosed material fact or material change about Solium or any of the securities of Solium; and
(c) Broadfoot has provided the Broker with a certificate from Solium confirming, among other things, compliance with Solium’s disclosure and insider trading policies and that Broadfoot is not in possession of material undisclosed information about Solium.
10. The ASDP does not provide for any waiting period following the voluntary termination of the ASDP by Broadfoot before he can enroll in a new ASDP. However, this decision does not provide the Requested Relief in respect of any new ASDP.
11. The Broker is a securities broker that is at arm’s length to Solium and Broadfoot.
12. The Broker has been appointed as an independent broker to effect sales of the Common Shares pursuant to the terms and conditions of the ASDP. The dispositions under the ASDP will be effected by the Broker in accordance with the pre-determined instructions as to the number and dollar value of the Common Shares to be sold, and other relevant information, all as set out in the ASDP.
13. Subject to the restrictions set forth in the ASDP, the Broker will execute the trades in such a way as to attempt to minimize the negative price impact on the market and to attempt to maximize the prices obtained for the Common Shares.
14. Except to set trading parameters in the manner described, Broadfoot does not have the authority to make investment decisions or influence or control any disposition effected by the Broker pursuant to the ASDP and the Broker and Broadfoot will not consult regarding any disposition.
15. Broadfoot will not disclose to the Broker any information concerning Solium that might influence the execution of any disposition under the ASDP.
16. The ASDP includes a waiting period of 30 days between the date of adoption of the ASDP and the date that the first disposition may be made under the ASDP.
17. The ASDP has been structured to comply with applicable securities legislation and guidance, including section 147(7)(c) of the Securities Act (Alberta) (the Alberta Act), section 175(2)(b) of the General Regulation under the Ontario Act and Ontario Securities Commission Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Securities Purchase Plans.
18. At the time of execution of, and entering into the ASDP, Broadfoot represented that he was not aware of or in possession of material non-public information about Solium or any securities of Solium and that he was entering into the ASDP in good faith and not as part of a plan or scheme to evade the insider trading prohibitions under applicable Canadian securities legislation.
19. The Common Shares are not subject to any liens, security interests or other impediments to transfer (except for limitations imposed by any applicable laws).
20. The ASDP will terminate on the earliest to occur of:
(a) December 31, 2019;
(b) the completion of all sales contemplated by the ASDP;
(c) a determination being made by Broadfoot or the Broker that the ASDP does not comply with applicable securities legislation or that Broadfoot made misstatements in his representations or warranties in the ASDP;
(d) receipt by the Broker of notice of: (i) the filing of a bankruptcy petition by Solium; (ii) the public announcement of a merger, recapitalization, acquisition, take-over bid or other business combination or reorganization resulting in the exchange or conversion of the Common Shares into shares of another company (within the meaning of the ASDP); or (iii) the conversion of the Common Shares into rights to receive fixed amounts of cash or into debt securities and/or preferred shares (in whole or in part);
(e) receipt by the Broker of notice of Broadfoot’s death;
(f) the day that is seven days following the termination of the ASDP by the Broker; and
(g) the voluntary termination of the ASDP by Broadfoot in accordance with paragraph 9 above.
21. Broadfoot will not amend or terminate the ASDP with knowledge of a material fact or material change that has not been generally disclosed and will only do so in good faith and not as part of a plan or scheme to evade the prohibitions of section 147 of the Alberta Act, section 76 of the Ontario Act or comparable prohibitions in other securities legislation.
Each of the Decision Makers 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 Makers under the Legislation is that the Exemption Sought is granted, provided that Broadfoot shall file a report through SEDI, by March 31 of each calendar year, of all dispositions under the ASDP during the prior calendar year not previously disclosed in a SEDI filing, disclosing either of the following:
(a) each disposition on a transaction-by-transaction basis;
(b) all dispositions as a single transaction using the average unit price of the securities.
“Tom Graham, CA”
Director, Corporate Finance
Alberta Securities Commission