Securities Law & Instruments

Headnote

Application by non-profit corporation (the Applicant) for recognition as an accredited investor for the purposes of securities legislation -- Applicant's mandate relates to funding research and development projects based in genomics, proteomics or associated technologies (Eligible Projects) -- Applicant does not fall within any of the enumerated classes of "accredited investor" in National Instrument 45-106 Prospectus and Registration Exemptions -- Applicant will only invest in securities of Eligible Projects (Eligible Project Securities) -- Applicant's executives have expertise and experience to assist the Applicant in making informed investment decisions regarding funding of Eligible Projects -- All investments and divestitures in Eligible Project Securities will be reviewed by an independent board committee of the Applicant -- Order that the registration and prospectus requirements in sections 25 and 53 of the Securities Act(Ontario) do not apply in respect of a trade in Eligible Project Securities to the Applicant granted, subject to conditions -- Order expires in two years.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).

National Instrument 45-106 Prospectus and Registration Exemptions.

IN THE MATTER OF

THE SECURITIES ACT, R.S.O. 1990,

CHAPTER S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

ONTARIO GENOMICS INSTITUTE

 

ORDER

(Subsection 74(1))

WHEREAS Ontario Genomics Institute ("OGI") has filed an application (the "Application") with the Ontario Securities Commission (the "Commission") for recognition as an accredited investor for the purposes of securities legislation;

AND WHEREAS the Commission may, pursuant to subsection 74(1) of the Act, rule that any trade, intended trade, security, person or company is not subject to section 25 or 53 of the Act (the "Registration and Prospectus Requirements") where it is satisfied that to do so would not be prejudicial to the public interest;

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

AND UPON it being represented by OGI to the Commission that:

1. OGI was established by letters patent on October 18, 2000 under the Canada Corporations Act as a non-profit corporation.

2. OGI's offices are located at MaRS Centre, Heritage Building, 101 College Street, Suite HL50, Toronto, Ontario.

3. OGI's mandate is to fund world-class research to create strategic genomics resources and accelerate Ontario's development of a globally-competitive life sciences sector.

4. OGI primarily receives its funding from Genome Canada (a non-profit corporation which is funded by Industry Canada) and from the Government of Ontario.

5. OGI receives separate funding for: (i) operation, administration and business development of OGI, and (ii) investment in genomics research and development projects ("Project Funding").

6. In its most recently completed fiscal year (the fiscal year ended March 31, 2008), OGI received approximately $25 million in Project Funding from Genome Canada pursuant to the Amended and Restated Centre's Funding Agreement effective April 1, 2005 (the "Funding Agreement").

7. A component of OGI's business development mandate involves funding of, and/or investments in, research and development projects based in genomics, proteomics or associated technologies ("Eligible Projects") through its pre-business development fund program ("PBDF").

8. In connection with the PBDF program, OGI wishes to structure the funding of Eligible Projects being conducted on a for profit basis by the relevant scientist(s) as an investment by OGI in equity or convertible debt securities of the relevant corporate entity ("Eligible Project Securities").

9. OGI's investments in Eligible Project Securities will be funded with interest income earned on Project Funding provided by Genome Canada. The use of interest income in this manner is not prohibited by the Funding Agreement and Genome Canada is aware of, and has consented to, this use of the interest income by OGI.

10. OGI executives have extensive expertise in genomics and have substantial experience in evaluating research proposals to assist OGI in making informed investment decisions regarding funding of Eligible Projects.

11. All investments in, and divestitures of, Eligible Project Securities by OGI will be reviewed by OGI's commercialization committee and investment committee, respectively. Each committee is comprised of three independent directors of OGI who have broad knowledge or experience in investment matters.

12. OGI does not fall within any of the enumerated classes of accredited investors set forth in the definition of "accredited investor" in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions.

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

NOW THEREFORE the Commission orders that Registration and Prospectus Requirements do not apply in respect of a trade in Eligible Project Securities to OGI as if OGI were an accredited investor, provided that:

(a) OGI purchases as principal;

(b) if the trade is a distribution, the issuer of the Eligible Project Securities files a Form 46-106F1 - Report of Exempt Distribution in Ontario on or before the tenth day after the distribution;

(c) the first trade in such Eligible Project Securities will be deemed to be a distribution that is subject to section 2.5 of National Instrument 45-102 Resale of Securities; and

(d) this order expires two years from the date of this order, unless earlier renewed.

DATED December 23, 2008.

"Wendell S. Wigle"
Commissioner
Ontario Securities Commission
 
"Margot C. Howard"
Commissioner
Ontario Securities Commission