TransCanada PipeLines Limited

Order

Headnote

OSC Rule 13-502 Fees – s. 8.1 – application for exemptive relief by a wholly-owned subsidiary of a reporting issuer from the requirement to pay participation fees – subsidiary previously granted an exemption from many of the requirements of National Instrument 51-102 – Continuous Disclosure Obligations, including the requirement to file annual and interim financial statements and the related management’s discussion and analysis, as well as an annual information form – capitalization of applicant included in capitalization of parent reporting issuer – relief granted.

Applicable Legislative Provisions

OSC Rule 13-502, s. 8.1.

IN THE MATTER OF
ONTARIO SECURITIES COMMISSION
RULE 13-502 FEES

AND

IN THE MATTER OF
TRANSCANADA PIPELINES LIMITED

ORDER

                WHEREAS the Ontario Securities Commission (the “Commission”) has received an application from TransCanada PipeLines Limited (the “Applicant”) for an order, pursuant to section 8.1 of OSC Rule 13-502 Fees (the “Fees Rule”), that the requirement to pay a participation fee under section 2.2 of the Fees Rule shall not apply to the Applicant with respect to its fiscal year ended December 31, 2018 (the Exemption Sought).

                AND WHEREAS the Applicant has represented to the Commission that:

1.             The Applicant is a corporation incorporated under the Canada Business Corporations Act (the “CBCA”). The registered and head office of the Applicant is located at 450 1 Street S.W., Calgary, Alberta, Canada T2P 5H1.

2.             The Applicant is a North American energy infrastructure company whose business is focused on natural gas pipelines, liquid pipelines and energy.

3.             The Applicant’s authorized share capital consists of an unlimited number of (i) common shares (the “TCPL Common Shares”), (ii) First Preferred Shares, and (iii) Second Preferred Shares (collectively, the “TCPL Preferred Shares”). As of the date of the application, all of the TCPL Common Shares are owned directly by TC Energy Corporation (“TCE”) and are not listed on a public market. No TCPL Preferred Shares are currently outstanding.

4.             TCE is a corporation governed by the CBCA. The registered and head office of TCE is located at 450 1 Street S.W., Calgary, Alberta, Canada T2P 5H1. TCE’s common shares are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange under the symbol “TRP”. TCE also currently has outstanding eleven series of cumulative redeemable first preferred shares, which are also listed on the TSX.

5.             Each of the Applicant and TCE is a reporting issuer, or the equivalent, in each province and territory of Canada. The Applicant is not in default of securities legislation in any jurisdiction and to the best of the Applicant’s knowledge, TCE is not in default of securities legislation in any jurisdiction. Each of TCE and the Applicant has a fiscal year-end of December 31.

6.             TCE is a Class 1 Reporting Issuer as defined by the Fees Rule and pays participation fees under subsection 2.2(1) of the Fees Rule. Pursuant to the Fees Rule, for the year ended December 31, 2018, TCE paid participation fees of $100,500 to the Commission.

7.             The Applicant is a Class 2 Reporting Issuer as defined by the Fees Rule. Except for the year ended December 31, 2018, for each year following the amendments to the Fees Rules effective January 10, 2010, the Applicant has relied on the participation fees paid by TCE, pursuant to the exemption granted under section 2.4, or equivalent, of the Fees Rule.

8.             Pursuant to the Fees Rule, for the fiscal year ended December 31, 2018, the Applicant was not able to rely on the exemption set forth in section 2.4 of the Fees Rule, and as such, on February 14, 2019 the Applicant paid participation fees of $100,500 to the Commission for the year ended December 31, 2018.

9.             Pursuant to a decision dated January 3, 2019 (the “Continuous Disclosure Exemption Decision”) subject to certain conditions, the Applicant was granted, among other things, an exemption from:

a.             many of the filing requirements of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”), including the requirement to file interim financial statements and audited annual financial statements; and

b.             the requirement to file interim and annual certificates pursuant National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings.

10.          The Continuous Disclosure Exemption Decision is subject to certain conditions, including that TCE hold no assets or liabilities of more than a nominal value, other than its holding of the outstanding securities of the Applicant and amounts outstanding under inter-affiliate lending agreements with the Applicant.

11.          The Applicant relied on the Continuous Disclosure Exemption Decision to exempt it from filing its 2018 year-end continuous disclosure filings.

12.          Except as set out in the Continuous Disclosure Exemption Decision, the Applicant does not anticipate filing continuous disclosure documents concerning only the Applicant for the upcoming year.

13.          The Fees Rule includes an exemption for "subsidiary entities" in subsection 2.4(1) of the Fees Rule, provided that certain requirements are met. For the year ended December 31, 2018, the Applicant met all of the substantive requirements to rely on the exemption in subsection 2.4(1) of the Fees Rule, but for the requirement under subsection 2.4(1)(e) that either: (i) in the year ended December 31, 2018, the net assets and total revenues of the Applicant represent more than 90% of the consolidated net assets and total revenues of TCE; or (ii) in the year ended December 31, 2018, the Applicant was entitled to rely on an exemption from the requirements of subsections 4.1(1), 4.3(1), 5.1(1) or section 5.2 and section 6.1 of NI 51-102.

14.          The Applicant is unable to rely on the exemption in subsection 2.4(1)(e)(i) of the Fees Rule because for the year ended December 31, 2018 the net assets and total revenues of the Applicant represented 88% of TCE’s consolidated net assets and total revenues.

15.          The total discrepancy between the Applicant and TCE’s financial statements, with respect to net assets and total revenues, is primarily a result of the way intercompany transactions between the Applicant and TCE are presented in the financial statements.

16.          The Applicant is also unable to rely on the exemption in subsection 2.4(1)(e)(ii) of the Fees Rule, despite having been granted the Continuous Disclosure Exemption Decision, as the Continuous Disclosure Exemption Decision is dated three days after the fiscal year ended December 31, 2018.

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

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

                IT IS ORDERED pursuant to Section 8.1 of Rule 13-502 that the Exemption Sought is granted.

                DATED this 28th day of June, 2019

“Marie-France Bourret”
Manager, Corporate Finance
Ontario Securities Commission