MRRS - Underwriter and advisor registrationrelief for Schedule III Bank - prospectus and registration relieffor trades where Schedule III Bank purchasing as principal andfirst trade relief for Schedule III Bank - prospectus and registrationrelief for trades of bonds, debentures and other evidences ofindebtedness of or guaranteed by Schedule III Bank providedtrades involve only specified purchasers - fee relief for tradesmade in reliance on Decision.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.ss. 25(1)(a)&(c), 34(a), 35(1)(3)(i), 35(2)1(c), 53(1),72(1)(a)(i), 73(1)(a), 74(1), 147.
Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am. ss. 151, 206, 218, Schedule 1, s. 28.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,
MANITOBA, ONTARIO, QUEBEC,NEW BRUNSWICK,
NOVA SCOTIA, PRINCE EDWARDISLAND,
NEWFOUNDLAND AND LABRADOR,YUKON TERRITORY,
NORTHWEST TERRITORIES, ANDNUNAVUT TERRITORY
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
UNION BANK OF CALIFORNIA,N.A.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundlandand Labrador, Yukon Territory, Northwest Territories, and NunavutTerritory (the "Jurisdictions") has received an application(the "Application") from Union Bank of California,N.A. and its Canadian branch ("UBOC") for a decisionpursuant to the securities legislation of the Jurisdictions(the "Legislation") that UBOC is exempt from variousregistration, prospectus and filing requirements of the Legislationin connection with the banking activities to be carried on byUBOC in Canada;
AND WHEREAS, pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the principal regulatorfor the Application;
AND WHEREAS it has been represented byUBOC to the Decision Makers that:
1. UBOC is organized under the laws of theUnited States of America. The head office of UBOC is locatedin San Francisco, California;
2. UBOC provides a wide range of financialservices to consumers, small businesses, middle-market companiesand major corporations, primarily in the states of California,Oregon and Washington, but also nationally and internationallyas well. UBOC's operations are divided into four primary segments:The Community Banking and Investment Services Group; The CommercialFinancial Services Group; The International Banking Group;and The Global Markets Group;
3. UnionBanCal Corporation, a California corporation,is the commercial bank holding company of UBOC, and had consolidatedassets of US$36 billion as at December 31, 2001. UBOC wasthe third largest commercial bank in California, based ontotal assets and total deposits in California, as at December31, 2001;
4. UBOC is not, and has no current intentionof becoming, a reporting issuer in any province of Canada,nor are any of its securities listed on any stock exchangein Canada;
5. in 1999, amendments to the Bank Act (Canada)(the "Bank Act") were made to permit foreign banksto operate directly in Canada through branches, rather thanthrough separate subsidiary Schedule II banks;
6. UBOC submitted an application (the "BankAct Application") to the Office of the Superintendentof Financial Institutions Canada ("OSFI") for anorder establishing a full service foreign bank branch in Canadaand for an order approving the commencement and carrying onof business in Canada pursuant to Sections 524 and 534 ofthe Bank Act;
7. the Bank Act Application was approved,and on June 24, 2002, the Secretary of State (InternationalFinancial Institutions), on behalf of the Minister of Finance,granted an order permitting UBOC to establish a branch inCanada to carry on business in Canada;
8. the operations of UBOC's foreign bank branchin Canada will be primarily comprised of commercial lendingand related treasury functions primarily to the followinginvestors:
8.1 Her Majesty in right of Canada or inright of a province or a territory, an agent of Her Majestyin either of those rights and includes a municipal or publicbody empowered to perform a function of government in Canada,or an entity controlled by Her Majesty in either of thoserights;
8.2 the government of a foreign countryor any political subdivision thereof, an agency of the governmentof a foreign country or any political subdivision thereof,or an entity that is controlled by the government of a foreigncountry or any political subdivision thereof;
8.3 an international agency of which Canadais a member, including an international agency that is amember of the World Bank Group, the Inter-American DevelopmentBank, the Asian Development Bank, the Caribbean DevelopmentBank and the European Bank for Reconstruction and Developmentand any other international regional bank;
8.4 a financial institution (i.e.: (a) abank or an authorized foreign bank under the Bank Act; (b)a body corporate to which the Trust and Loan Companies Act(Canada) applies; (c) an association to which the CooperativeCredit Association Act (Canada) applies; (d) an insurancecompany or fraternal benefit society to which the InsuranceCompanies Act (Canada) applies; (e) a trust, loan or insurancecorporation incorporated by or under an Act of the legislatureof a province or territory in Canada; (f) a cooperativecredit society incorporated and regulated by or under anAct of the legislature of a province or territory in Canada;(g) an entity that is incorporated or formed by or underan Act of Parliament or of the legislature of a provinceor territory in Canada that is primarily engaged in dealingin securities, including portfolio management and investmentcounselling and is registered to act in such capacity underthe applicable Legislation; and (h) a foreign institutionthat is (i) engaged in the banking, trust, loan or insurancebusiness, the business of a cooperative credit society orthe business of dealing in securities or is otherwise engagedprimarily in the business of providing financial services,and (ii) is incorporated or formed otherwise than by orunder an Act of Parliament or of the legislature of a provinceor territory in Canada);
8.5 a pension fund sponsored by an employerfor the benefit of its employees or employees of an affiliatethat is registered and has total plan assets under administrationof greater than $100 million;
8.6 a mutual fund corporation that is regulatedunder an Act of the legislature of a province or territoryin Canada or under the laws of any other jurisdiction andhas total assets under administration of greater than $10million;
8.7 an entity (other than an individual)that has gross revenues on its own books and records ofgreater than $5 million as of the date of its most recentannual financial statements; or
8.8 any other person, if the transactionis in an aggregate amount of greater than $150,000;
collectively referred to for purposes of theDecision (as defined below) as "Authorized Customers".
9. the only advising activities which UBOCintends to undertake will be incidental to its primary bankingbusiness and it will not advertise itself as an adviser orallow itself to be advertised as an adviser in the Jurisdictions;
10. under the current Legislation, banks charteredunder Schedules I and II of the Bank Act have numerous exemptionsfrom various aspects of the Legislation. Since UBOC's foreignbank branch will not be chartered under Schedule I or II ofthe Bank Act, these existing exemptions relating to the registration,prospectus and filing requirements will not be available toit;
11. In order to ensure that UBOC, as an entitylisted on Schedule III to the Bank Act, will be able to providebanking services to businesses in the Jurisdictions, it requiressimilar exemptions enjoyed by banking institutions incorporatedunder the Bank Act to the extent that the current exemptionsapplicable to such banking institutions are relevant to thebanking business to be undertaken by UBOC in the Jurisdictions.
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;
THE DECISION of the Decision Makers pursuantto the Legislation is that in connection with the banking businessto be carried on by UBOC in the Jurisdictions by its Canadianbranch:
1. UBOC is exempt from the requirement underthe Legislation of the Jurisdictions, where applicable, tobe registered as underwriter with respect to trading in thesame types of securities that an entity listed on ScheduleI or II to the Bank Act may act as an underwriter in respectof without being required to be registered under the Legislationas an underwriter;
2. UBOC is exempt from the requirement underthe Legislation to be registered as an adviser where the performanceof the services as an adviser is solely incidental to itsprimary banking business;
3. with respect to a trade of a security toUBOC where UBOC purchases the security as principal, the tradeshall be exempt from the registration and prospectus requirementsof the Legislation of the Jurisdiction in which the tradetakes place (the "Applicable Legislation") providedthat:
3.1 the forms that would have been filedand the fees that would have been paid under the ApplicableLegislation if the trade had been made, on an exempt basis,to an entity listed on Schedule I or II to the Bank Actpurchasing as principal are filed and paid in respect ofthe trade to UBOC;
3.2 in all Jurisdictions except Québec,the first trade in a security acquired by UBOC will be adistribution, unless the conditions in section 2.5 of MultilateralInstrument 45-102 are satisfied;
3.3 in the Province of Québec, thefirst trade in a security acquired by UBOC will be a distributionunless:
3.3.1 at the time UBOC acquired the security:(i) the issuer of the security is a reporting issuer inQuébec; (ii) the issuer is not a Capital Pool Companyas defined in Policy 2.4 of the Toronto Venture ExchangeInc.; (iii) the issuer has a class of equity securitieslisted on the Toronto Stock Exchange Inc., Tier 1 or 2of the Toronto Venture Exchange Inc., the American StockExchange, Nasdaq National Market, Nasdaq SmallCap Market,the New York Stock Exchange or the London Stock ExchangeLimited, has not been advised that it does not meet therequirements to maintain that listing and is not designatedinactive, or the issuer has a class of securities outstandingthat has an approved rating from an approved rating organization;and (iv) the issuer has filed an annual information formrequired under section 159 of the Regulation made underthe Securities Act (Québec), as amended from timeto time, (the "Québec Act") within thetime period contemplated by that section, or, if not requiredto file an annual information form, has filed a prospectusthat contains the most recent annual financial statements;
3.3.2 the issuer has been a reportingissuer in Québec for 4 months immediately precedingthe trade;
3.3.3 UBOC has held the securities forat least 4 months;
3.3.4 no extraordinary commission or otherconsideration is paid;
3.3.5 no effort is made to prepare themarket or to create a demand for the securities;
3.3.6 if UBOC is an insider of the issuer,UBOC has no reasonable grounds to believe that the issueris in default under the Québec Act; and
3.3.7 UBOC files a report within 10 daysof the trade prepared and executed in accordance withthe requirements of the Québec Act that would applyto a trade made in reliance on section 43 or 51 of theQuébec Act;
3.3.8 UBOC files a report within 10 daysof the trade prepared and executed in accordance withthe requirements of the Applicable Legislation that wouldapply to a trade, on an exempt basis, to an entity listedon Schedule I or II of the Bank Act; and
4. provided UBOC only trades the types ofsecurities referred to in this paragraph 4 with AuthorizedCustomers, trades of bonds, debentures or other evidencesof indebtedness of or guaranteed by UBOC shall be exempt fromthe registration and prospectus requirements of the Legislation;
THE FURTHER DECISION of the DecisionMaker in Ontario is that with respect to the Province of Ontarioonly, pursuant to subsection 74(1) of the Securities Act (Ontario)(the "Ontario Act"), except as provided for in paragraph3 of this Decision, section 28 of Schedule I to the Regulationsmade under the Ontario Act shall not apply to trades made byUBOC.
January 23, 2003.
"Glenda A. Campbell" "DavidW. Betts"