Register today for OSC Dialogue 2024: Inviting, thriving and secure capital markets
Industries Lassonde Inc.
Headnote
Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief applications in Multiple Jurisdictions -- Exemption from requirement in subsection 4.11(4) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) to reconcile acquisition statements to the issuer's GAAP -- The issuer wants relief from the requirement to include in a reconciliation to Canadian GAAP in annual financial statements of the acquired business -- The issuer will prepare pro forma financial statements as set out in section 8.7(9) of Companion Policy 51-102CP as it applies to financial years beginning on or after January 1, 2011 for all periods presented.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standard, s. 5.1.
TRANSLATION
October 24, 2011
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND OF ONTARIO
(the "Jurisdictions")
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
INDUSTRIES LASSONDE INC.
(the "Applicant")
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Makers") has received an application from the Applicant for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting the Applicant from the requirement in section 4.11(4) of Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards ("Regulation 52-107") that it reconcile to Canadian GAAP the financial statements of Clement Pappas and Company, Inc. ("Clement Pappas") to be filed with the business acquisition report (the "BAR") (the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marches financiers is the principal regulator for this application;
(b) the decision is that of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 respecting Passport System and Regulation 52-107 have the same meanings if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Applicant:
1. The Applicant is a corporation incorporated under the Canada Business Corporations Act.
2. The head office of the Applicant is located in Rougemont, Québec.
3. The Applicant is a reporting issuer in the Jurisdictions. The Applicant is not in default of its obligations as a reporting issuer under the Legislation.
4. The Class A subordinate voting shares of the Applicant are listed on the Toronto Stock Exchange under the trading symbol "LAS.A".
5. The audited consolidated financial statements of the Applicant for the years ended December 31, 2010 and 2009 have been prepared in accordance with Canadian GAAP.
6. The unaudited interim consolidated financial statements of the Applicant for the six-month periods ended July 2, 2011 and July 3, 2011 (the "Applicant Interim Statements") have been prepared in accordance with IFRS.
Acquisition Transaction
7. On August 12, 2011, pursuant to an agreement and plan of merger dated June 17, 2011, the Applicant, along with members of the Pappas and Lassonde families, completed the acquisition of Clement Pappas for a total cash consideration of US$400.9 million (the "Acquisition of Clement Pappas").
8. Under Part 8 of Regulation 51-102 respecting Continuous Disclosure Obligations ("Regulation 51-102"), the Applicant is required to file a business acquisition report for any significant acquisitions that it completes. The Applicant is of the opinion that the Acquisition of Clement Pappas is a significant acquisition and therefore it intends to file the BAR within 75 days of the closing of the Acquisition of Clement Pappas.
9. As required by Part 8 of Regulation 51-102, the BAR will contain (or incorporate by reference):
(a) the audited consolidated financial statements of Clement Pappas for the years ended September 26, 2010 and September 27, 2009 (the "Clement Pappas Annual Statements") which have been prepared in accordance with United States generally accepted accounting principles ("US GAAP");
(b) the unaudited interim consolidated financial statements of Clement Pappas for the nine-month periods ended June 26, 2011 and June 27, 2010 (the "Clement Pappas Interim Statements") which have been prepared in accordance with US GAAP;
(c) the pro forma financial statements of the Applicant which reflect the completion of the Acquisition of Clement Pappas as if it had occurred as of the beginning of the periods presented for the purposes of the pro forma consolidated statement of operations (being the year ended December 31, 2010 and the six-month period ended July 2, 2011), and as of July 2, 2011 for the purposes of the pro forma balance sheet (collectively, the "Pro Forma Statements"), all of which have been prepared in accordance with IFRS.
10. For financial years beginning before January 1, 2011, section 4.11(4) of Regulation 52-107 requires that acquisition statements prepared using accounting principles that are different from the issuer's GAAP (in this case, the Clement Pappas Annual Statements) be reconciled to the issuer's GAAP, with further disclosure required in the notes to such financial statements (the "Reconciliation Requirement").
11. Although the Clement Pappas Interim Statements are prepared using US GAAP, the Reconciliation Requirement does not apply to such financial statements as they relate to a financial year of the Applicant beginning on or after January 1, 2011.
12. The Applicant Interim Statements were, and the Pro Forma Statements will be, prepared in accordance with IFRS.
13. Due to these facts, in the Applicant's view, the reconciliation of the Clement Pappas Annual Statements to Canadian GAAP will not provide investors with any incremental or useful information as they would neither be directly comparable to the Pro Forma Statements nor to the Applicant Interim Statements.
14. The cost of preparing a reconciliation of the Clement Pappas Annual Statements to Canadian GAAP, and the time required to prepare such a reconciliation, would outweigh any benefit that investors may get from such reconciliation. In fact, the filing of such reconciled financial statements may be confusing to investors since such financial statements would not be directly comparable to the other financial statements filed with the BAR.
Decision
The Decision Makers are satisfied that the decision meets the test set out in the Legislation for them to make the decision.
The decision of the Decision Makers under the Legislation is to grant the Exemption Sought subject to the following conditions:
(a) the Pro Forma Statements be prepared in accordance with the requirements of section 8.7(9) of Policy Statement to Regulation 51-102 respecting Continuous Disclosure Obligations as it applies to financial years beginning on or after January 1, 2011 for all periods presented;
(b) the BAR otherwise complies with the requirements of Form 51-102F4.
"Josee Deslauriers"
Director,
Investment Funds and Continuous Disclosure
Autorité des marchés financiers