Atlas Financial Holdings, Inc.

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- issuer deemed to no longer be a reporting issuer under the Legislation of the Jurisdictions -- issuer's securities are traded only on a market or exchange outside of Canada -- Canadian residents own less than 2% of the issuer's securities and represent less than 2% of the issuer's total number of securityholders only on a fully-diluted basis.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.

September 25, 2018

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (THE JURISDICTION) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF ATLAS FINANCIAL HOLDINGS, INC. (THE FILER)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

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

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and British Columbia.

Interpretation

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

"marketplace" has the same meaning as in National Instrument 21-101 Marketplace Operation.

Representations

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

1 the Filer was originally formed on December 21, 2009 under the laws of Ontario. On December 31, 2010, the Filer completed a reverse merger transaction. In connection with the reverse merger transaction, the Filer filed a Certificate of Registration by Way of Continuation in the Cayman Islands to re-domesticate as a Cayman Islands company. The Filer is currently a corporation existing under the laws of the Cayman Islands;

2 the Filer's head office is located at 953 American Lane, Schaumburg, Illinois, USA 60173;

3 the ordinary voting common Shares (Ordinary Shares) of the Filer were previously listed on the TSX Venture Exchange (TSXV). The Filer voluntary delisted the Ordinary Shares from the TSXV on June 5, 2013;

4 the Filer is a reporting issuer in Ontario, Alberta and British Columbia (collectively, Jurisdictions);

5 the principal regulator of the Filer is Ontario;

6 the Filer is not in default of securities legislation in any jurisdiction in Canada;

7 the Filer is authorized to issue 266,666,667 Ordinary Shares and 33,333,334 restricted voting common shares (Restricted Shares);

8 as of the date hereof the issued and outstanding securities of the Filer consist of:

(a) 12,192,475 Ordinary Shares of which 11,936,970 Ordinary Shares are outstanding and 255,505 Ordinary Shares held in treasury;

(b) 7,408 non-transferable restricted stock units issued and outstanding (RSUs);

(c) 1,000,000 6.625% Senior Unsecured Notes due 2022 issued and outstanding (Notes); and

(d) 402,195 non-transferable stock options issued and outstanding (Options);

9 as of the date hereof, the Filer has no Restricted Shares outstanding;

10 the RSUs are held by one Canadian securityholder who is an employee and director of the Filer. The RSUs represent a non-transferrable entitlement to receive Ordinary Shares on a one-for-one basis upon the vesting of the RSUs. The RSUs will automatically convert into Ordinary Shares on the vesting date without any further action of the holder. The RSU's were issued pursuant to a prospectus exemption;

11 the Ordinary Shares of the Filer trade under the stock symbol "AFH" on the NASDAQ Stock Market (NASDAQ), a stock exchange in the United States;

12 the Notes of the Filer also trade on the NASDAQ under the stock symbol "AFHBL";

13 the Filer is not in default of corporate and securities legislation in the Cayman Islands, securities legislation in the United States of America or the rules of NASDAQ;

14 the Filer files continuous disclosure materials in accordance with securities laws in the United States and the requirements of NASDAQ;

15 in the 12 months preceding the date hereof, the Filer has not taken any steps that indicate there is a market for its securities in Canada, including conducting a prospectus offering in Canada, establishing or maintaining a listing on an exchange in Canada or having its securities traded on a marketplace or any other facility in Canada for bringing together buyers and sellers where trading data is publicly reported;

16 the Filer does not currently anticipate offering its securities in Canada at any time in the future;

17 the Filer qualifies as an "SEC foreign issuer" under National instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and has relied on and complied with the exemptions from Canadian disclosure requirements under Part 4 of NI 71-102;

18 the Filer is not eligible for the simplified procedure set out in National Policy 11-206 Process for Cease to be a Reporting Issuer Application because, among other reasons, the Ordinary Shares and Notes securities are listed on the NASDAQ;

19 in support of the representations set forth below concerning the percentage of outstanding securities and the total number of security holders in Canada, the Filer has:

(a) undertaken a thorough and diligent examination of the Filer's record holder list;

(b) undertaken a thorough and diligent examination of the Filer's non-objecting beneficial owner list;

(c) made inquiries to the TSX Trust Company (the Transfer Agent) regarding the beneficial ownership of the Filer;

(d) examined the Transfer Agent's records for any indication of shareholdings in Canada; and

(e) examined US and Canadian geographic analysis reports received from Broadridge Financial Solutions, Inc. on February 15, 2018 (Canadian) and March 9, 2018 (United States);

20 the Filer has calculated Canadian resident shareholdings using the most recent data available to the Filer and the results of these calculations were as follows:

(a) 62,745 Ordinary Shares are held by 29 securityholders in Canada, representing 1.6% of all securityholders worldwide and 0.5% of the total issued and outstanding Ordinary Shares of the Filer (based on 12,192,475 Ordinary Shares outstanding at as April 5, 2018);

(b) 7,408 RSUs are held by one securityholders in Canada, representing 100% of all securityholders worldwide and 100% of the total issued and outstanding RSU's of the Filer; and

(c) none of the outstanding Notes or Options are held by securityholders in Canada.

21 if the RSU's were fully vested, these securities will entitle one resident of Canada to beneficially own an additional 7,408 Ordinary Shares. On this basis if the RSU's were fully vested 29 securityholders in Canada would beneficially own 0.56% of the total issued and outstanding Ordinary Shares of the Filer;

22 accordingly, based on the foregoing, on a fully-diluted basis, residents of Canada do not directly or indirectly beneficially own more than 2% of each class or series of outstanding securities (including debt securities) of the Filer worldwide, nor do they directly or indirectly comprise more than 2% of the total number of securityholders of the Filer worldwide;

23 the Filer provided advance notice to Canadian resident securityholders in a news release dated May 9, 2018, a copy of which was filed on SEDAR, that it has applied for an order that it cease to be a Canadian securities reporting issuer in the Jurisdictions;

24 the Filer is subject to all applicable requirements of corporate and securities law of the Cayman Islands, the securities law of the United States and the rules and reporting requirements of the NASDAQ;

25 the Filer undertakes to concurrently deliver to its Canadian securityholders, all disclosure the Filer would be required to deliver to resident securityholders in the United States under United States securities law or NASDAQ requirements;

26 all public documents of the Filer are available on the Filer's EDGAR profile under the filings section of the SEC website (www.sec.gov); and

27 upon the receipt of the Order Sought, the Filer will no longer be a Canadian securities reporting issuer or the equivalent thereof in any jurisdiction of Canada.

Order

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

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

"AnneMarie Ryan"

Ontario Securities Commission

 

"William J. Furlong"

Ontario Securities Commission