National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Exemption from dealer registration requirement for the filers, the eligible policyholders or the administrators of the purpose of facilitating the sale of shares subscribed for by eligible policyholders subject to certain conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1), 74.
June 23, 2009
IN THE MATTER OF
THE SECURITIES LEGISLATION (THE LEGISLATION) OF
QUÉBEC AND ONTARIO (THE JURISDICTIONS)
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
STANDARD LIFE PLC
(SL plc or the Filer)
1. The local securities regulatory authority or regulator in each of the Jurisdictions (collectively, the Decision Makers) has received an application (the Application) from the Filer for a decision that the Dealer Registration Requirement does not apply to the Filer, The Standard Life Assurance Company of Canada (SCDA), the Administrators (as defined below) or Participating Shareholders (as defined below) in connection with trades pursuant to an assisted sales or similar programme (ASP) of ordinary shares of the Filer (the Shares) acquired under a dividend reinvestment plan (DRIP), scrip dividend scheme or any other reinvestment, share purchase or similar plan (SP) which may be implemented by the Filer from time to time or Shares subscribed for by Participating Shareholders (as defined below) pursuant to rights granted to Participating Shareholders as holders of Shares.
2. Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
a) the Autorité des marchés financiers (the Principal Regulator) is the principal regulator for the Application;
b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (the Other Passport Jurisdictions); and
c) the decision is the decision of the Principal Regulator and evidences the decision of the Ontario Securities Commission.
3. Defined terms contained in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning in this decision, unless they are otherwise defined in this decision.
This decision is based on the following facts represented by the Filer:
4. With 10,000 employees globally, SL plc is a major international financial services group headquartered in Scotland. It provides asset-managing services for retirement, investment and protection to some 6.5 million customers globally. It had C$278.3 billion in assets under administration, as at December 31, 2008. It has offices in the United Kingdom, Canada, Ireland, Germany, Austria, India, China and Hong Kong.
5. SL plc has been trading on the LSE since The Standard Life Assurance Company demutualized in 2006. SL plc is listed on the FTSE 100, Europe's largest index, and on the FTSE4Good Index, which identifies companies adhering to globally recognized corporate responsibility standards.
6. SL plc is not presently, and does not intend to become, a reporting issuer under the Legislation.
7. Standard Life Assurance Limited, a wholly-owned subsidiary of SL plc, is authorised and regulated by the Financial Services Authority (FSA) and has a branch in Canada that is regulated by the Office of the Superintendent of Financial Institutions (Canada) (OSFI). SCDA, a wholly-owned subsidiary of SL plc based in Montréal, Québec, is also regulated by OSFI.
8. SCDA and its affiliates in Canada serve more than 1.3 million Canadians, including group insurance and pension plan participants. Products and services include group savings and retirement, group insurance, individual life insurance, savings and retirement, mutual funds and portfolio management.
9. SL plc has approximately 1.5 million holders of Shares worldwide, including 13,737 institutional and individual holders of Shares in Canada holding 11,592,053 Shares as at April 3, 2009. This represents 0.86% of the holders of Shares holding 0.53% of the issued and outstanding Shares.
10. Prior to the Demutualization, The Standard Life Assurance Company (SLAC) was a private company without share capital and no shareholders. Rather, SLAC was a mutual company with members. Its members comprised certain of the legal holders of various life assurance, pension and annuity products issued by SLAC. There were two classes of members: holders of policies that were invested in "with profits" (Par Members) and holders of policies not invested in "with profits" (Non-Par Members).
11. Par Members had the right to vote at general meetings of SLAC and to share in the profits and surplus assets of SLAC upon winding up. Non-Par Members did not have the right to vote or share in the profits or surplus assets of SLAC.
12. Under the Demutualization, SLAC transferred substantially all of its business undertakings and assets to several wholly owned subsidiaries of SL plc and the membership rights of all of SLAC's members ceased. As a compensation for the loss of membership rights, SL plc issued Shares (Demutualization Shares) to or to the order of eligible Par Members immediately after Demutualization. No amount was payable by Par Members for the Demutualization Shares. Non-Par Members did not receive Demutualization Shares in connection with the Demutualization.
13. In May 2006, the voting members of SLAC voted in favour of Demutualization and flotation. The proposal was approved by the Court of Session in Scotland and the Shares of SL plc were listed on the LSE on July 10, 2006. Immediately following Demutualization, the only issued Shares of SL plc were the Demutualization Shares issued to or to the order of eligible Par Members.
14. As part of the Reorganization, SL plc raised further capital on flotation by making an offer to institutional and other investors (the General Offer) in certain jurisdictions. The General Offer was made as a public offer in the United Kingdom and as an offer to institutional investors outside the United Kingdom, including a private placement to accredited investors in Canada.
15. SL plc also made a preferential offer (the Preferential Offer) to certain eligible customers of SLAC, including Par Members and Non-Par Members, in certain jurisdictions. In Canada, the Preferential Offer was only made to Par Members who elected to retain their Demutualization Shares received upon Demutualization and to Non-Par Members of the Canadian branch of SLAC as well as the policyholders of SCDA. Policyholders in Canada of SLAC or SCDA to whom the Preferential Offer was made are referred to in this application as (Eligible Policyholders).
16. There was also a bonus issue of Shares (the Bonus Shares), for no additional consideration, to SL plc shareholders who elected to retain their Demutualization Shares and/or subscribed for Shares under the Preferential Offer and held such Shares continuously up to and including July 10, 2007.
17. Upon flotation SL plc also issued a fixed number of Shares for no consideration to eligible employees of SLAC and SCDA (Eligible Employees). The Preferential Offer was also extended to Eligible Employees. Such distributions were made to Eligible Employees in Canada pursuant to Section 2.24 of National Instrument 45-106 -- Prospectus and Registration Exemptions (NI 45-106) and it is expected that resales of Shares by Eligible Employees in Canada will be made pursuant to Section 2.28 of NI 45-106 and Section 2.14 of National Instrument 45-102 -- Resale of Securities ("NI 45-102") or another applicable exemption.
Assisted Sales Programme
18. Shares issued to Eligible Policyholders were registered in the name of the policyholder. SL plc believes that a significant number of Eligible Policyholders resident in Canada who elected to retain Shares do not have a brokerage relationship in the United Kingdom and prefer to receive proceeds of sale of such Shares in Canadian dollars. For these reasons, SL plc established an ASP for Eligible Policyholders following flotation.
19. Eligible Policyholders resident in Canada who own Shares issued or purchased pursuant to the Reorganization or Shares (Rights Shares) subscribed for by Eligible Policyholders pursuant to rights granted to the Eligible Policyholders as holders of Shares are able to sell those Shares by contacting Computershare Trust Company of Canada or any other company appointed from time to time as the administrator in Canada of the ASP. It is expected that CIBC Mellon Trust Company will become the administrator in Canada of the ASP effective July 13, 2009. The administrator in Canada is, and will be, a trust company that is a Canadian financial institution as defined in National Instrument 14-101 -- Definitions (NI 14-101). The administrator in Canada refers the sales order to the administrator of the ASP in the United Kingdom, an entity that is authorised and regulated by the FSA. The administrator in the U.K. has an account with a broker dealer registered under the Financial Services and Markets Act 2000 (FSMA) and, through this broker dealer, arranges to sell Shares and remit the proceeds in Canadian dollars, less applicable fees, to Eligible Policyholders.
20. The ASP has been extended to Eligible Policyholders with respect to Demutualization Shares received by Eligible Policyholders on the Demutualization, Shares subscribed for by Eligible Policyholders pursuant to the Preferential Offer, Bonus Shares and Rights Shares.
21. SL plc has a DRIP in which Canadian residents that directly hold Shares are eligible to participate. However, Canadian resident holders of Shares acquired pursuant to the DRIP (DRIP Participants) are currently not eligible to participate in the ASP with respect to sales of those Shares.
22. The proposed Scrip Scheme will enable eligible holders of Shares who elect to participate in the Scrip Scheme (Scheme Participants) to automatically receive new Shares instead of the cash dividends they would otherwise receive. Many of the Scheme Participants in Canada are former Eligible Policyholders or current holders of SLAC or SCDA insurance policies. Scheme Participants will not incur any dealing costs or stamp duty. Generally, the Scrip Scheme will apply to a Scheme Participant's entire shareholding (including Demutualization Shares, Bonus Shares and Rights Shares) in respect of each dividend for which a Scrip dividend alternative is offered. For administrative reasons, a Scheme Participant will not be able to elect to receive Shares for only part of his or her dividend.
23. SL plc received the necessary shareholder approvals for introduction of the Scrip Scheme at its Annual General Meeting held on May 15, 2009. The Scrip Scheme will replace the currently existing DRIP. DRIP Participants will be deemed to have elected to participate in the Scrip Scheme. Participation will remain valid unless cancelled by the Scheme Participant. The Scrip Scheme is available to every holder of Shares in Canada to which the dividend on the Shares is available.
24. SL plc intends to extend the availability of the ASP to DRIP Participants and Scheme Participants and may extend it to other participants in a SP (collectively, DRIP Participants, Scheme Participants and such other participants in a SP are referred to as Participating Shareholders) with respect to resale of Shares pursuant to an ASP.
25. Participating Shareholders resident in Canada who own Shares issued or purchased pursuant to a SP would be able to sell those Shares by contacting Computershare Trust Company of Canada or any other company appointed from time to time as the administrator of the ASP in Canada (the Canadian Administrator). It is expected that CIBC Mellon Trust Company will become the Canadian Administrator of the ASP effective July 13, 2009. The Canadian Administrator is, and will be, a trust company that is a Canadian financial institution as defined in NI 14-101. The Canadian Administrator will refer the sales order to a UK affiliate of Computershare Trust Company of Canada or any other company appointed by SL plc from time to time as the administrator of the ASP in the United Kingdom (the UK Administrator), an entity that is, and will be, authorised and regulated by the FSA. It is expected that Capita IRG Trustees Limited will become the UK Administrator of the ASP effective July 13, 2009. The Canadian Administrator and UK Administrator are collectively referred to as the Administrators. The UK Administrator has an account with a broker dealer registered under the FSMA (the Assisting Dealer) and, through the Assisting Dealer, will arrange to sell Shares and remit the proceeds in Canadian dollars, less applicable fees, to Participating Shareholders. The ASP will be extended to Participating Shareholders with respect to Shares acquired pursuant to an SP and Shares subscribed for by Participating Shareholders pursuant to rights granted to Participating Shareholders as holders of Shares. The ASP would not otherwise be available in Canada to facilitate purchases or sales of Shares other than sales of Shares as described in paragraphs 17 and 20 of this decision..
26. Under the ASP, only sell orders are accepted by the Administrators and no advice regarding the decision to sell, hold or purchase Shares will be offered to any Participating Shareholder. SL plc does not subsidize the costs of selling Shares under the ASP, although Participating Shareholders may benefit from any reduced commission that can be negotiated with the Assisting Dealer. Any Participating Shareholder who wishes to sell its Shares in another manner (for example, by transferring their holdings to another dealer with whom they have a brokerage relationship) is at liberty to do so. Any information distributed to Participating Shareholders regarding the ASP will not contain any investment advice as to the desirability of Participating Shareholders holding or selling their Shares or purchasing additional Shares. The Assisting Dealer does not open individual accounts or engage in "know-your-client" procedures with respect to individual Participating Shareholders utilizing the ASP. Documents describing the ASP will be provided to all Participating Shareholders.
27. The Canadian Administrator may maintain a call centre through which questions of Participating Shareholders regarding the mechanics of selling Shares under the ASP can be answered. The call centre staff will be instructed not to provide investment advice as to the desirability of a Participating Shareholder holding, selling or purchasing Shares.
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Dealer Registration Requirement does not apply under the Legislation of each Jurisdiction to the Filer, SCDA, the Administrators or Participating Shareholders in connection with trades pursuant to an ASP of Shares acquired under a SP or Shares subscribed for by Participating Shareholders pursuant to rights granted to Participating Shareholders as holders of Shares if :
(a) the trade is the execution of an unsolicited order to sell Shares made on behalf of a Participating Shareholder by the Administrators through the Assisting Dealer;
(b) SL plc was not a reporting issuer in any jurisdiction of Canada at the date of distribution of the Shares;
(c) at the date of the distribution of the Shares, after giving effect to the issue of the Shares and any other Shares that were issued at the same time as the Shares, residents of Canada
(i) did not own directly or indirectly more than 10% of the outstanding Shares, and
(ii) did not represent in number more than 10% of the total number of owners directly or indirectly of Shares; and
(d) the trade is made
(i) through an exchange, or market, outside of Canada, or
(ii) to a person or company outside of Canada,
and for the purposes of this Decision, a trade shall not be considered "solicited" by reason of the Filer or SCDA (or the Administrators on their behalf) distributing to Participating Shareholders disclosure documents, notices, brochures or similar documents advising of the availability of the Administrators to facilitate sales of the Shares or by reason of the Filer, SCDA and/or the Administrators advising Participating Shareholders of the availability, and informing Participating Shareholders of the details of the operation of, the ASP in response to enquiries from Participating Shareholders by telephone or otherwise.