Mutual Reliance Review System for ExemptiveRelief Applications - issuer to amend base shelf prospectusto add parent company as credit supporter for issuer's mediumterm notes - parent company's financial statements preparedin accordance with U.S. GAAP and audited in accordance withU.S. GAAS - parent company's financial statements exempt fromrequirement to reconcile to Canadian GAAP - parent company exemptfrom requirement to provide statement by auditor (i) disclosingmaterial differences in form an content of the U.S. auditor'sreport as compared to a Canadian auditor report and (ii) confirmingthat U.S. GAAS is substantially similar to Canadian GAAS - reliefsubject to conditions.
Securities Act, R.S.O. 1990, c. S.5, as am.
National Instrument 44-101 Short Form ProspectusDistributions (2000) 23 OSCB (Supp) 867.
National Instrument 44-102 Shelf Distributions(2000) 23 OSCB (Supp) 985.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ALBERTA, BRITISH COLUMBIA,MANITOBA, NEW BRUNSWICK,
NEWFOUNDLAND AND LABRADOR,NOVA SCOTIA, ONTARIO,
PRINCE EDWARD ISLAND, QUEBECAND SASKATCHEWAN
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
WELLS FARGO & COMPANY,WELLS FARGO FINANCIAL, INC. AND
WELLS FARGO FINANCIAL CANADACORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, British Columbia, Manitoba, New Brunswick, Newfoundlandand Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebecand Saskatchewan (the "Jurisdictions") has receivedan application in respect of Wells Fargo & Company ("WFC"),WFC's wholly-owned indirect subsidiary, Wells Fargo Financial,Inc. ("WFFI") and WFFI's wholly-owned indirect subsidiary,Wells Fargo Financial Canada Corporation ("WFFCC"or the "Issuer") for a decision under the securitieslegislation of the Jurisdictions (the "Legislation")that the requirements contained in the Legislation:
(a) to reconcile financial statements thatare included or incorporated by reference into a base shortform shelf prospectus and prepared in accordance with generallyaccepted accounting principles ("GAAP") of a foreignjurisdiction to Canadian GAAP (the "GAAP ReconciliationRequirement"); and
(b) to provide, where financial statementsthat are included or incorporated by reference into a baseshort form shelf prospectus are audited in accordance withgenerally accepted auditing standards ("GAAS")of a foreign jurisdiction, a statement by the auditor disclosingany material differences in the form and content of theauditor's report as compared to a Canadian auditor's reportand confirming that the auditing standards of the foreignjurisdiction are substantially equivalent to Canadian GAAS(the "GAAS Reconciliation Requirement and togetherwith the GAAP Reconciliation Requirement, the "ReconciliationRequirements");
shall not apply to the WFC Financial Statementsincluded or incorporated by reference in the Prospectus (eachas defined below);
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS the Filer has representedto the Decision Makers that:
1. WFC is a diversified financial servicescompany organized under the laws of the State of Delawareand registered as a bank holding company and financial holdingcompany under the Bank Holding Company Act of 1956,as amended. The principal executive offices of WFC are locatedin San Francisco, California. Based on assets at September30, 2002, WFC was the fifth largest bank holding company inthe United States.
2. WFC is not a reporting issuer or the equivalentthereof in any Jurisdiction and has no present intention ofbecoming a reporting issuer or the equivalent thereof in anyJurisdiction. All of the directors and senior officers ofWFC reside outside Ontario.
3. WFC became a reporting company under theSecurities Exchange Act of 1934 of the United States(the "Exchange Act") many years ago. WFC has filedwith the United States Securities and Exchange Commission(the "SEC") all periodic reports required to befiled with the SEC under sections 13(a) and 15(d) of the ExchangeAct.
4. As at September 30, 2002, WFC had approximately$45.8 billion in long-term debt outstanding. All of WFC'soutstanding long-term debt is rated A+ by Standard & Poor's,AA by Fitch, Inc. and Aa2 by Moody's Investors Service.
5. WFFI was incorporated under the laws ofthe State of Iowa and is a wholly-owned indirect subsidiaryof WFC. The principal executive offices of WFFI are locatedin Des Moines, Iowa. WFFI is a U.S.$18 billion company providinginstalment and home equity lending, automobile financing,consumer and private label credit cards, leasing and receivablesfinancing to consumers and businesses.
6. WFFI is not a reporting issuer or the equivalentthereof in any Jurisdiction and has no present intention ofbecoming a reporting issuer or the equivalent thereof in anyJurisdiction. All of the directors and senior officers ofWFFI reside outside Ontario.
7. WFFI became a reporting company under theExchange Act many years ago. WFFI has filed with the SEC allperiodic reports (the "WFFI Filings") required tobe filed with the SEC under sections 13(a) and 15(d) of theExchange Act. However, for the reasons described below, WFFIhas no present intention of making any further WFFI Filingswith the SEC in the future.
8. As at September 30, 2002, WFFI had approximatelyUS$10.3 billion in long term debt outstanding. All of WFFI'soutstanding long-term debt, which is guaranteed by WFC israted A+ by Standard Poor's, AA by Fitch, Inc., and Aa2 byMoody's Investors Service.
9. WFFC is an unlimited liability companyamalgamated under the laws of the Province of Nova Scotiaand is a wholly-owned indirect subsidiary of WFFI and WFC.The principal executive offices of WFFC are located in Toronto,Ontario. The main business of WFFC is to raise capital forits Canadian affiliates for use in their consumer financeand related businesses.
10. WFFC is a reporting issuer or the equivalentthereof in each Jurisdiction and is not in default of anyof its requirements under the Legislation.
11. WFFC has issued $550,000,000 principalamount of medium term notes (the "Notes") undera short form base shelf prospectus (the "Prospectus")dated October 3, 2001. WFFC may issue up to $1,500,000,000principal amount of Notes (or the equivalent thereof in U.S.dollars) under the Prospectus from time to time over a twenty-fivemonth period beginning October 3, 2001.
12. WFFI has unconditionally guaranteed thepayment of principal, premium (if any) and interest due underthe Notes, and as such WFFI is a credit supporter (as definedunder National Instrument 44-101 ("NI 44-101"))in respect of the Notes. Accordingly, WFFI has historicallyfiled the WFFI Filings with Canadian provincial securitiesregulatory authorities.
13. In order to consolidate all debt securitiesissuance to the capital markets at the level of the parentof WFFI, on October 22, 2002 WFC issued a full and unconditionalguarantee of all outstanding term debt securities of WFFI.In addition, WFC will guarantee the outstanding Notes (the"WFC Guarantee") on the same basis as the existingguarantee of the Notes by WFFI.
14. WFFI will continue to guarantee the Notesbut will no longer make the WFFI Filings under the ExchangeAct (and with the Canadian provincial securities regulatoryauthorities) and will no longer be a separately rated company.
15. WFFC intends to file an amendment to theProspectus relating to the WFC Guarantee and incorporatingby reference WFC's 2001 Annual Report on Form 10-K and itsQuarterly Reports on Form 10-Q for the quarters ended March31, 2002, June 30, 2002 and September 30, 2002. The Prospectuswill also incorporate by reference all documents requiredby Item 13.2 of Form 44-101F3 and will include a certificateof WFC.
16. The consolidated financial statementsof WFC (the "WFC Financial Statements") and itssubsidiaries that will be included in/or incorporated by referenceinto the Prospectus will be prepared in accordance with U.S.GAAP.
17. Holders of all outstanding Notes have,by extraordinary resolution, approved (i) the WFC Guaranteeand (ii) WFFI ceasing to, among other things, prepare annualaudited financial statements and file such financial statementswith the trustee under the indenture governing the Notes.An extraordinary resolution requires the approval of holdersof Notes representing at least 66-2/3 of the principal amountof all Notes outstanding under the indenture governing theNotes.
18. Following the announcement on October22, 2002 of the intention to (i) implement the WFC Guaranteeand (ii) have WFFI cease to make the WFFI Filings, DominionBond Rating Service confirmed the existing senior unsecureddebt rating of AA(low) for WFFC.
AND WHEREAS under the System this MRRSDecision Document evidences the decision of each Decision Maker(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 underthe Legislation is that the Reconciliation Requirements shallnot apply to the WFC Financial Statements included or incorporatedby reference in the Prospectus provided that:
(a) the WFC Financial Statements that areincluded or incorporated by reference in the Prospectusare prepared in accordance with U.S. GAAP and otherwisecomply with the requirements of United States law, and inthe case of the WFC audited annual financial statements,such financial statements are audited in accordance withU.S. GAAS;
(b) the Notes maintain an approved rating,as that term is defined in NI 44-101;
(c) WFC maintains direct or indirect beneficialownership of all the voting shares of WFFC;
(d) WFC continues to satisfy the eligibilitycriteria set forth in paragraph 3.1 of NI 71-101 - TheMultijurisdictional Disclosure System (or any applicablesuccessor provision) for the purpose of distributing approvedrating non-convertible debt in Canada based on compliancewith United States prospectus requirements with certainadditional Canadian disclosure; and
(e) WFC continues to fully and unconditionallyguarantee payment of the principal and interest on the Notes.
March 18, 2003.