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Cognos Incorporated - cl. 104(2)(c)
Headnote
Clause 104(2)(c) - Exemptionfrom issuer bid requirements of Part XX granted to issuer proposingto acquire its shares from entities related to a former employeeoffering such shares by prospectus.
Statutes Cited
Securities Act, R.S.O. 1990,c. S.5, as amended, ss. 93(3)(d), 95, 96, 97, 98, 100 and 104(2)(c).
IN THE MATTER OF
THE SECURITIES ACT, R.S.O.1990, CHAPTER S.5,
AS AMENDED (the "Act")
AND
IN THE MATTER OF
COGNOS INCORPORATED
ORDER
(Clause 104(2)(c))
UPON the applicationof Cognos Incorporated ("Cognos") to the Ontario SecuritiesCommission (the "Commission") for an order pursuantto clause 104(2)(c) of the Act exempting Cognos from the requirementsof sections 95, 96, 97, 98 and 100 of the Act (collectively,the "Issuer Bid Requirements") in connection withCognos' proposed acquisition of up to 5% of the common sharesof Cognos (the "Shares") being offered to the publicpursuant to a secondary public offering by prospectus (the "Offering")of 4,500,000 Shares (or up to 5,175,000 Shares if the underwriters'over-allotment option is exercised in full) by entities relatedto a former employee of Cognos;
AND UPON consideringthe application and the recommendation of the staff of the Commission;
AND UPON Cognos havingrepresented to the Commission as follows:
1. Cognos is a corporationexisting under the laws of Canada.
2. Cognos is a reporting issuerunder the Act and is not on the list of defaulting reportingissuers maintained pursuant to subsection 72(9) of the Act.
3. Cognos' authorized capitalconsists of an unlimited number of Shares and an unlimitednumber of preference shares. As of May 31, 2002 Cognos had87,947,963 Shares outstanding and nil preference shares outstanding.
4. The Shares are listed andposted for trading on the Toronto Stock Exchange (the "TSX")and The Nasdaq National Market ("Nasdaq").
5. On June 20, 2002, Cognosfiled a preliminary short form PREP prospectus with securitiesregulatory authorities in all the provinces of Canada anda registration statement on Form F-10 with the United StatesSecurities and Exchange Commission in respect of the Offeringby 3539211 Canada Inc., 3539334 Canada Inc., 3539393 CanadaInc., 3539202 Canada Inc., 3497801 Canada Inc., 3539504 CanadaInc., 3539555 Canada Inc. and 3539571 Canada Inc. (the "SellingShareholders"), all of which are entities affiliatedwith Michael U. Potter. Cognos intends to file a final prospectus(the "Prospectus") in connection therewith.
6. 3539202 Canada Inc., 3539211Canada Inc., 3539334 Canada Inc., and 3539393 Canada Inc.(collectively, the "Ontario Selling Shareholders")have their registered offices in Ontario and are residentin Ontario. The remaining Selling Shareholders have theirregistered offices in Quebec and are resident in Quebec.
7. Mr. Potter was an employeeof Cognos from 1972 until 1995.
8. Mr. Potter, through hiscontrolled entities, acquired the Shares which will be soldpursuant to the Offering from Cognos on September 1, 1978,September 2, 1980 and January 15, 1981 and subsequently transferredthose Shares to the Selling Shareholders on October 8, 1998.
9. Mr. Potter, indirectlythrough his controlled entities, has shared voting power andshared investment power with The Windsor Trust, a Barbadostrust, of the Selling Shareholders. The beneficiaries of TheWindsor Trust are a mix of charities and charitable trusts.Mr. Potter is not the settlor, beneficiary or trustee of TheWindsor Trust.
10. On October 8, 2001 Cognoscommenced a normal course issuer bid (the "Bid")through the facilities of the TSX and Nasdaq to purchase upto 4,400,943 Shares, representing not more than 5% of theoutstanding Shares, during the twelve-month period endingOctober 8, 2002. To date, 1,188,357 Shares have been purchasedpursuant to the Bid representing 1.35% of the outstandingShares.
11. Cognos wishes to havethe ability to purchase up to 5% of the Shares being offeredin the Offering for cancellation from the Ontario SellingShareholders at the public offering price. The public offeringprice will be determined through negotiation between the SellingShareholders and representatives of the underwriters.
12. Cognos' proposed purchaseof Shares from the Ontario Selling Shareholders constitutesan issuer bid within the meaning of the Act. Cognos cannotrely upon the exemption from the Issuer Bid Requirements inclause 93(3)(d) of the Act because the proposed purchase fromthe Ontario Selling Shareholders is not directly from a formeremployee. No other exemption from the Issuer Bid Requirementsis available in the circumstances.
AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;
IT IS ORDERED pursuantto clause 104(2)(c) of the Act that the purchase by Cognos ofup to 5% of the number of Shares being sold pursuant to theOffering from the Ontario Selling Shareholders pursuant to theProspectus is exempt from the Issuer Bid Requirements, providedthat:
(a) the purchase price paidfor the Shares does not exceed the market price of the Sharesdetermined in accordance with section 183 of the regulationmade under the Act, as at the date of such purchase, and
(b) the aggregate number ofShares purchased by Cognos pursuant to the Offering, whenaggregated with all other Shares acquired by Cognos in relianceupon clause 93(3)(d) of the Act, within a period of twelvemonths does not exceed 5 per cent of the issued and outstandingShares outstanding at the commencement of the period.
July 16, 2002.
"Paul Moore" "HaroldP. Hands"