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BNS Split Corp. - MRRS Decision
Headnote
Mutual Reliance Review System for ExemptiveRelief Applications - Relief granted to an issuer from requirementto deliver annual financial statements and an annual reportwhere applicable. The annual financial statements covered ashort operating period.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.s. 80(b)(iii).
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ONTARIO, BRITISH COLUMBIA,ALBERTA, SASKATCHEWAN,
MANITOBA, QUEBEC, NOVA SCOTIAAND
NEWFOUNDLAND AND LABRADOR
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
BNS SPLIT CORP.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario, British Columbia, Alberta, Saskatchewan, Manitoba,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from BNS Split Corp. (the "Issuer")for decisions under the securities legislation (the "Legislation")of the Jurisdictions that the Issuer be exempted from the requirementto send its annual financial statements and annual report, whereapplicable, for its fiscal year ended August 2, 2002 to itssecurity holders, as would otherwise be required pursuant toapplicable Legislation;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),Ontario is the principal regulator for this application;
AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101.
AND WHEREAS the Issuer has representedto the Decision Maker that:
1. The Issuer filed a final prospectus datedJuly 25, 2002 (the "Prospectus") with the securitiesregulatory authority in each of the Provinces of Canada pursuantto which a distribution of 2,040,000 class A capital shares(the "Capital Shares") and 1,020,000 class A preferredshares (the "Preferred Shares") of the Issuer wascompleted on August 2, 2002.
2. The Issuer was incorporated under the lawsof the Province of Ontario on June 14, 2002. The fiscal yearend of the Issuer is August 2, with the first fiscal yearend occurring on August 2, 2002.
3. The authorized capital of the Issuer consistsof an unlimited number of Capital Shares, of which 2,040,000are issued and outstanding, an unlimited number of PreferredShares, of which 1,020,000 are issued and outstanding, anunlimited number of class B, class C, class D and class Ecapital shares, issuable in series, none of which are issuedand outstanding, an unlimited number of class B, class C,class D and class E preferred shares, issuable in series,none of which are issued and outstanding, and an unlimitednumber of class J shares (the "Class J Shares"),of which 100 are issued and outstanding. The attributes ofthe Capital Shares and the Preferred Shares are describedin the Prospectus under "Description of Share Capital".
4. The Class J Shares are the only class ofvoting securities of the Issuer. Scotia Capital Inc. ("ScotiaCapital") owns all of the issued and outstanding ClassJ Shares. Scotia Capital acted as an agent for, and was thepromoter of, the Issuer in respect of the offerings of theCapital Shares and the Preferred Shares.
5. The principal undertaking of Issuer isthe holding of a portfolio of common shares (the "PortfolioShares") of The Bank of Nova Scotia in order to generatedistributions for the holders of Preferred Shares and to providethe holders of Capital Shares with a leveraged investment,the value of which is linked to changes in the market priceof the Portfolio Shares. The Portfolio Shares held by theIssuer will only be disposed of as described in the Prospectus.
6. The Prospectus included an audited balancesheet of the Issuer as at July 25, 2002 and an unaudited proforma balance sheet prepared on the basis of the completionof the sale and issue of Capital Shares and Preferred Sharesof the Issuer. There are no material differences in the financialposition of the Issuer as at August 2, 2002 and, as such,the financial position of the Issuer as at August 2, 2002will have been substantially reflected in the pro forma financialstatements contained in the Prospectus.
7. The Issuer is an inactive company, thesole purpose of which is to provide a vehicle through whichdifferent investment objectives with respect to participationin the Portfolio Shares may be satisfied. Holders of CapitalShares will be entitled on redemption to the benefits of anycapital appreciation in the market price of the PortfolioShares after payment of operating expenses of the Issuer andthe fixed distributions on the Preferred Shares, and holdersof Preferred Shares will be entitled to receive fixed cumulativepreferential distributions on a quarterly basis equal to $0.3162per Preferred Share.
8. The benefit to be derived by the securityholders of the Issuer from receiving a hard copy of the financialstatements and annual report for the fiscal year ended August2, 2002 would be minimal in view of (i) the very short periodfrom the date of the Prospectus to its fiscal year end; (ii)the pro forma financial statements contained in the Prospectus;(iii) the contemporary occurrence of the closing of the offeringsand the Issuer's first year end on August 2, 2002; and (iv)the nature of the minimal business carried on by the Issuer.
9. The expense to the Issuer of sending toits security holders the financial statements and annual reportfor the fiscal year ended August 2, 2002 would not be justifiedin view of the availability of such statements through theSEDAR website and the Issuer's website.
AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
IT IS HEREBY DECIDED by the DecisionMakers pursuant to the Legislation that the Issuer is exemptedfrom sending to its security holders its annual financial statementsfor its fiscal year ended August 2, 2002 and is exempted frompreparing, filing and sending to its security holders an annualreport, where applicable, for the period ended August 2, 2002,provided that, the Issuer sends a copy of such annual financialstatements to any security holder of the Issuer who so requests.
September 27, 2002.
"Howard I. Wetston" "RobertL. Shirriff"