Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption granted to a trust from continuous disclosure requirements under National Instrument 51-102 Continuous Disclosure Obligations and certification obligations under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, subject to certain conditions -- Trust established for purpose of effecting offerings of trust securities in order to provide bank with a cost-effective means of raising capital for Canadian bank regulatory purposes -- Trust became reporting issuer upon filing a prospectus offering trust securities -Without relief, trust would have to comply with continuous disclosure and certification requirements -- Given the nature, terms and conditions of the trust securities and various covenants of the bank in connection with the prospectus offering, the meaningful information to public holders of trust securities is information with respect to the bank, rather than the trust.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations.

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

April 22, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

(the "Bank") AND CIBC CAPITAL TRUST

(the "Trust" and, together with the Bank, the "Filers")

 

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision (the "Exemption Sought") under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the requirements contained in the Legislation to:

(a)

(i) file interim financial statements and audited annual financial statements and deliver same to the security holders of the Trust pursuant to sections 4.1, 4.3 and 4.6 of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102"),

(ii) file interim and annual management's discussion and analysis ("MD&A") and deliver same to the security holders of the Trust pursuant to sections 5.1 and 5.6 of NI 51-102,

(iii) file an annual information form pursuant to section 6.1 of NI 51-102, and

(iv) comply with any other requirements of NI 51-102

(collectively defined as the "Continuous Disclosure Obligations"); and

(b) file interim and annual certificates (collectively the "Officers' Certificates") pursuant to Parts 4, 5 and 6 of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109") (the "Certification Obligations")

shall not apply to the Trust, subject to certain conditions.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

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

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the provinces and territories of Canada other than Ontario.

Interpretation

The terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

In this decision,

"Bank Act" means the Bank Act (Canada);

"Prospectus" means the final short form prospectus of the Bank and the Trust dated March 5, 2009 in respect of the Offering (as defined below);

"Tax Act" means the Income Tax Act (Canada);

Representations

This decision is based on the following facts represented by the Filers:

The Bank

1. The Bank is a Schedule 1 chartered bank subject to the provisions of the Bank Act. The head office of the Bank is located at Commerce Court, Toronto, Ontario M5L 1A2.

2. The authorized share capital of the Bank consists of an unlimited number of: (i) common shares (the "Bank Common Shares") without nominal or par value, provided that the maximum aggregate consideration for all outstanding Bank Common Shares at any time does not exceed $15 billion; and (ii) Class A Preferred Shares (the "Bank Preferred Shares") issuable in series without nominal or par value, provided that the maximum aggregate consideration for all Bank Preferred Shares at any time does not exceed $10 billion.

3. The Bank Common Shares are listed and posted for trading on the Toronto Stock Exchange and the New York Stock Exchange. The Bank Preferred Shares are listed on the Toronto Stock Exchange other than the unlisted Series 28 Bank Preferred Shares.

4. The Bank is a reporting issuer, or the equivalent, in each province and territory of Canada (each a "Reporting Jurisdiction" and collectively, the "Reporting Jurisdictions") and is not, to the best of its knowledge, in default of any requirement of the securities legislation in such Reporting Jurisdictions.

The Trust

5. The Trust is a trust established under the laws of Ontario by Computershare Trust Company of Canada, as trustee (the "Trustee") pursuant to a declaration of trust dated as of January 19, 2009, as may be amended, restated and supplemented from time to time (the "Declaration of Trust").

6. The Trust's head and registered office is located at Commerce Court, Toronto, Ontario, M5L 1A2. The Trust has a financial year-end of December 31.

7. The Trust completed an initial public offering (the "Offering") of trust subordinated unsecured notes (the "CIBC Tier 1 Notes") in the Reporting Jurisdictions on March 13, 2009 and may, from time to time, issue further series of CIBC Tier 1 Notes. As a result of the Offering, the capital of the Trust consists of: (i) 9.976% CIBC Tier 1 Notes -- Series A due June 30, 2108 (the "CIBC Tier 1 Notes -- Series A"), (ii) 10.25% CIBC Tier 1 Notes -- Series B due June 30, 2108 (the "CIBC Tier 1 Notes -- Series B") and (iii) voting trust units (the "Voting Trust Units"). The CIBC Tier 1 Notes -- Series A and CIBC Tier 1 Notes -- Series B distributed pursuant to the Prospectus are held by the public and all of the outstanding Voting Trust Units are held, directly or indirectly, by the Bank.

8. As a result of having obtained a receipt for the Prospectus in respect of the Offering, the Trust is a reporting issuer, or the equivalent, in each of the Reporting Jurisdictions. The Trust is not, to the best of its knowledge, in default of any requirement of the securities legislation in the Reporting Jurisdictions.

9. The Trust is a single purpose vehicle established for the purpose of effecting offerings of securities, including CIBC Tier 1 Notes and Voting Trust Units (collectively, the "Trust Securities"), in order to provide the Bank with a cost-effective means of raising capital for Canadian bank regulatory purposes by means of (i) creating and selling the Trust Securities; and (ii) acquiring and holding assets, which will consist primarily of two senior unsecured deposit notes of the Bank (the "CIBC Deposit Notes") and other eligible assets as specified in the Prospectus (collectively, the "Trust Assets"). The Trust Assets will generate income for the payment of principal, interest, the redemption price, if any, and any other amounts, in respect of the Trust's debt securities, including the CIBC Tier 1 Notes. The Trust will not carry on any operating activity other than in connection with offerings of Trust Securities and in connection with the Trust Assets.

CIBC Tier 1 Notes

10. From the date of issue until June 30, 2108 the Trust will pay interest on each series of CIBC Tier 1 Notes in equal (subject to the reset of the interest rate) semi-annual instalments on June 30 and December 31 of each year (each an "Interest Payment Date"). Starting on June 30, 2019, and on every fifth anniversary of such date thereafter until June 30, 2104 (each such date, a "Series A Interest Reset Date"), the interest rate on the CIBC Tier 1 Notes -- Series A will be reset at an interest rate per annum equal to the Government of Canada Yield (as defined in the Prospectus) plus 10.425%. Starting on June 30, 2039, and on every fifth anniversary of such date thereafter until June 30, 2104 (each such date, a "Series B Interest Reset Date"), the interest rate on the CIBC Tier 1 Notes -- Series B will be reset at an interest rate per annum equal to the Government of Canada Yield (as defined in the Prospectus) plus 9.878%.

11. Under two assignment, set-off and trust agreements entered into among the Bank, the Trust and CIBC Mellon Trust Company as Indenture Trustee, each dated March 13, 2009 (the "Assignment and Set-Off Agreements"), the Bank has agreed, for the benefit of the holders of each series of CIBC Tier 1 Notes, that if, in respect of a series of CIBC Tier 1 Notes, (i) the Bank elects, at its sole option, prior to the commencement of the interest period ending on the day immediately preceding the relevant Interest Payment Date, that holders of that series of CIBC Tier 1 Notes invest interest thereon in a new series of Bank Preferred Shares (the "Deferral Preferred Shares"); or (ii) for whatever reason, interest is not paid in full in cash on that series of CIBC Tier 1 Notes on any Interest Payment Date (in either case, an "Other Deferral Event"), the Bank will not declare dividends of any kind on the Bank Preferred Shares and the Bank Common Shares (the "Dividend Restricted Shares") until the sixth month following the relevant Interest Payment Date (the "Dividend Stopper Undertaking"). Accordingly, it is in the interest of the Bank to ensure, to the extent within its control, that the Trust complies with the obligation to pay interest on the Interest Payment Date so as to avoid triggering the Dividend Stopper Undertaking.

12. On each Interest Payment Date on which a Deferral Event (as defined below) has occurred for a series of CIBC Tier 1 Notes, holders of such CIBC Tier 1 Notes will be required to invest interest paid thereon in a new series of Deferral Preferred Shares. A "Deferral Event" means: (i) an Other Deferral Event; or (ii) the Bank has failed to declare cash dividends on all of the outstanding Bank Preferred Shares or, failing any Bank Preferred Shares being outstanding, on all of the outstanding Bank Common Shares, in accordance with its ordinary dividend practice in effect from time to time, in each case in the last 90 days preceding the commencement of the interest period for the relevant series of CIBC Tier 1 Notes ending on the day preceding the relevant Interest Payment Date.

13. The Deferral Preferred Shares will pay quarterly non-cumulative preferential cash dividends, as and when declared by the Board of Directors, subject to the provisions of the Bank Act, at the Perpetual Preferred Share Rate (as defined in the Prospectus), subject to any applicable withholding tax.

14. Prior to the issuance of any Deferral Preferred Shares in respect of a Deferral Event, the Bank will not, without the approval of the holders of CIBC Tier 1 Notes, delete or vary any terms attaching to the Deferral Preferred Shares other than any amendments relating to the Bank Preferred Shares as a class.

15. The CIBC Tier 1 Notes will be automatically exchanged, without the consent of the holders thereof, for a new series of newly-issued Bank Preferred Shares (the "Exchange Preferred Shares") if (i) an application for a winding-up order in respect of the Bank pursuant to the Winding-up and Restructuring Act (Canada) is filed by the Attorney General of Canada or a winding-up order in respect of the Bank pursuant to that Act is granted by a court; (ii) the Superintendent advises the Bank in writing that the Superintendent has taken control of the Bank or its assets pursuant to the Bank Act; (iii) the Superintendent advises the Bank in writing that the Superintendent is of the opinion that the Bank has a risk-based Tier 1 Capital ratio of less than 5.0% or a risk-based Total Capital ratio of less than 8.0%; (iv) the board of directors of the Bank advises the Superintendent in writing that the Bank has a risk-based Tier 1 Capital ratio of less than 5.0% or a risk-based Total Capital ratio of less than 8.0%; or (v) the Superintendent directs the Bank pursuant to the Bank Act to increase its capital or provide additional liquidity and the Bank elects to cause the Automatic Exchange as a consequence of the issuance of such direction or the Bank does not comply with such direction to the satisfaction of the Superintendent within the time specified therein (the "Automatic Exchange").

16. Under the terms of two share exchange agreements between the Bank, the Trust and CIBC Mellon Trust Company as Exchange Trustee (the "Share Exchange Agreements"), the Bank has granted to the Exchange Trustee for the benefit of the holders of the relevant series of CIBC Tier 1 Notes the right to exchange such CIBC Tier 1 Notes for Exchange Preferred Shares upon an Automatic Exchange and the Exchange Trustee, on behalf of the holders of that series of CIBC Tier 1 Notes has granted to the Bank the right to exchange such CIBC Tier 1 Notes for Exchange Preferred Shares upon an Automatic Exchange. Pursuant to the Share Exchange Agreements, the Bank has covenanted to take or refrain from taking certain actions so as to ensure that holders of that series of CIBC Tier 1 Notes will receive the benefit of the Automatic Exchange, including obtaining the requisite approval of holders of the CIBC Tier 1 Notes of that series to any amendment to the provisions of the Exchange Preferred Shares (other than any amendments relating to the Bank Preferred Shares as a class).

17. The Exchange Preferred Shares will pay quarterly non-cumulative preferential cash dividends, as and when declared by the Board of Directors, subject to the provisions of the Bank Act, at the Perpetual Preferred Share Rate (as defined in the Prospectus), subject to any applicable withholding tax.

18. If the CIBC Tier 1 Notes have not been exchanged for Exchange Preferred Shares pursuant to the Automatic Exchange, the Bank will not, without the approval of the holders of the CIBC Tier 1 Notes, delete or vary any terms attaching to the Exchange Preferred Shares other than any amendments relating to the Bank Preferred Shares as a class.

19. The CIBC Tier 1 Notes have been structured with the intention of achieving Tier 1 regulatory capital for purposes of the guidelines of the Superintendent and as such, have, in certain circumstances, features similar to those of equity securities.

20. The Trust may, subject to approval of the Office of the Superintendent of Financial Institutions Canada ("Superintendent Approval"), at its option, on or after June 30, 2014, on giving not more than 60 nor less than 30 days' notice to the holders of the applicable series of CIBC Tier 1 Notes, redeem the CIBC Tier 1 Notes of such series, in whole or in part. The redemption price per $1,000 principal amount of CIBC Tier 1 Notes of a series redeemed on any day that is not a Series A Interest Reset Date or Series B Interest Reset Date, as applicable, will be equal to the greater of par and the Canada Yield Price, and the redemption price per $1,000 principal amount of CIBC Tier 1 Notes of a series redeemed on any Series A Interest Reset Date or Series B Interest Reset Date, as applicable, in respect of such series will be par, together in either case with accrued and unpaid interest to but excluding the date fixed for redemption, subject to any applicable withholding tax (the "Redemption Price").

21. Upon the occurrence of certain regulatory or tax events affecting the Bank or the Trust the Trust may, at its option, without the consent of holders of the CIBC Tier 1 Notes but subject to Superintendent Approval, on giving not more than 60 nor less than 30 days' notice to the holders of the applicable series of CIBC Tier 1 Notes, redeem all but not less than all of such a series of CIBC Tier 1 Notes at a price equal to par plus accrued and unpaid interest.

22. The Trust may, after the date that is five years after the date of closing of the Offering, purchase in whole or in part, subject to Superintendent Approval, the CIBC Tier 1 Notes of either series. CIBC Tier 1 Notes purchased by the Trust shall be cancelled and not re-issued.

23. The CIBC Tier 1 Notes will be direct unsecured obligations of the Trust, ranking at least equally with other subordinated indebtedness of the Trust from time to time issued and outstanding. In the event of the insolvency or winding-up of the Trust, the indebtedness evidenced by the CIBC Tier 1 Notes issued by the Trust will be subordinate in right of payment to the prior payment in full of all other liabilities of the Trust except liabilities which by their terms rank in right of equal payment with or subordinate to indebtedness evidenced by such CIBC Tier 1 Notes.

24. The Bank will not assign or otherwise transfer its obligations under the Share Exchange Agreements or the Assignment and Set-Off Agreements, except in the case of a merger, consolidation, amalgamation or reorganization or a sale of substantially all of the assets of the Bank.

25. The Bank has covenanted that it will maintain direct or indirect ownership of 100% of the outstanding Voting Trust Units.

26. As long as any CIBC Tier 1 Notes are outstanding, and are held by any person other than the Bank, the Trust may only be terminated in certain limited circumstances with the approval of the Bank as the holder of the Voting Trust Units and with Superintendent Approval. However, the Bank will not approve the termination of the Trust unless the Trust has sufficient funds to pay the Redemption Price. The Bank will not create or issue any Bank Preferred Shares which, in the event of insolvency or winding-up of the Bank, would rank in right of payment in priority to the Exchange Preferred Shares or the Deferral Preferred Shares.

27. The CIBC Tier 1 Notes are non-voting except in limited circumstances set out in the Declaration of Trust. The Voting Trust Units entitle the holder thereof (i.e. the Bank or an affiliate of the Bank) to vote in respect of certain matters regarding the Trust.

28. Pursuant to the administration agreement dated January 19, 2009, as amended and restated, entered into between the trustee of the Trustee and the Bank, the Trustee has delegated to the Bank certain of its obligations in relation to the administration of the Trust. The Bank, as administrative agent, will provide advice and counsel with respect to the administration of the day-to-day operations of the Trust and other matters as may be requested by the Trustee from time to time.

29. The Trust may, from time to time, issue further series of CIBC Tier 1 Notes, the proceeds of which would be used to acquire additional Trust Assets.

30. Because of the terms of the Trust Securities, the Bank Share Exchange Agreement, the Assignment and Set-Off Agreement and the various covenants of the Bank, information about the affairs and financial performance of the Bank, as opposed to that of the Trust, is meaningful to holders of CIBC Tier 1 Notes. The Bank's filings will provide holders of CIBC Tier 1 Notes and the general investing public with all information required in order to make an informed decision relating to an investment in CIBC Tier 1 Notes and any other Trust Securities that the Trust may issue from time to time. Information regarding the Bank is relevant both to an investor's expectation of being paid the principal, interest and Redemption Price, if any, and any other amount on the CIBC Tier 1 Notes when due and payable.

Decision

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

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. in respect of the Continuous Disclosure Obligations:

(a) the Bank remains a reporting issuer under the Legislation and has filed all continuous disclosure documents that it is required to file by the Legislation;

(b) the Bank files with the securities regulatory authority or regulator in each Reporting Jurisdiction, in electronic format under the Trust's SEDAR profile, the continuous disclosure documents listed in paragraph 1(a), above, of this Decision, at the same time as they are required under the Legislation to be filed by the Bank;

(c) the Trust pays all filing fees that would otherwise be payable by the Trust in connection with the filing of the continuous disclosure documents under NI 51-102;

(d) the Trust sends, or causes the Bank to send, the Bank's interim and annual financial statements and interim and annual MD&A, as applicable, to holders of Trust Securities, at the same time and in the same manner as if the holders of Trust Securities were holders of similar debt securities of the Bank;

(e) all outstanding securities of the Trust are either CIBC Tier 1 Notes, additional series of debt securities having terms substantially similar to either series of the CIBC Tier 1 Notes, or Voting Trust Units;

(f) the rights and obligations of the holders of additional series of CIBC Tier 1 Notes are the same in all material respects as the rights and obligations of the holders of the CIBC Tier 1 Notes -- Series A and CIBC Tier 1 Notes -- Series B, with the exception of economic terms such as the interest payable by the Trust and redemption dates and prices;

(g) the Bank is, directly or indirectly, the beneficial owner of all issued and outstanding voting securities of the Trust, including the Voting Trust Units;

(h) the Trust does not carry on any operating activity other than in connection with offerings of its securities and the Trust has minimal assets, operations, revenues or cash flows other than those related to the CIBC Deposit Notes or the issuance, administration and repayment of the Trust Securities;

(i) the Trust issues a news release and files a material change report in accordance with Part 7 of NI 51-102 as amended, supplemented or replaced from time to time, in respect of any material change in the affairs of the Trust that is not also a material change in the affairs of the Bank;

(j) in any circumstances where the CIBC Tier 1 Notes (or any additional series of the Trust's debt securities having terms substantially similar to either series of the CIBC Tier 1 Notes) are voting, the Trust will comply with Part 9 of NI 51-102; and

(k) the Trust complies with Parts 4A, 4B, 11 and 12 of NI 51-102.

2. in respect of the Certification Obligations:

(a) the Trust is not required to, and does not, file its own interim filings and annual filings (as those terms are defined in NI 52-109);

(b) the Trust is and continues to be exempted from the Continuous Disclosure Obligations and the Bank and the Trust are in compliance with the conditions set out in paragraph 1 above; and

(c) the Bank files with the with the securities regulatory authority or regulator in each of the Reporting Jurisdictions, in electronic format under the Trust's SEDAR profile, the Officers' Certificates of the Bank at the same time as such documents are required under the Legislation to be filed by the Bank.

3. this decision shall expire 30 days after the date a material adverse change occurs in the representations of the Trust in this decision.

DATED this 22nd day of April, 2009.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission