National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from the prospectus requirements in connection with the use of electronic roadshow materials -- cross-border offering of securities -- compliance with U.S. offering rules leads to non-compliance with Canadian regime -- relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus requirements -- relief granted from sections 25 and 53 of the Securities Act (Ontario) in connection with a cross-border offering -- decision subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74.
National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means, s. 2.7.
July 12, 2011
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
THE PROVINCE OF ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
UNION AGRICULTURE GROUP CORP (the "Filer")
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") exemption from the prospectus requirement the unrestricted posting of "electronic roadshow" materials on the internet websites of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com, during the period (the "Waiting Period") between the issuance of a receipt for a preliminary prospectus and the issuance of a receipt for a (final) prospectus (the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the "Commission") in the principal regulator for this application; and
(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 on in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the "Passport Jurisdictions").
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless otherwise defined.
1. The Filer was incorporated under the British Virgin Islands Business Companies Act on January 2, 2008.
2. The Filer's principal office is located at Plaza Independencia 737, 11,000, Montevideo, Uruguay.
3. On March 31, 2011 the Filer confidentially submitted a registration statement (the "Registration Statement") with the SEC in respect of a treasury offering of common shares by the Filer (the "Offering"), and submitted amendments thereto on May 23, and July 11, 2011, in order to register the offer and sale of the common shares under the U.S. Securities Act of 1933, as amended (the "1933 Act").
4. On May 24, 2011, the Filer filed a preliminary base prep prospectus (the "Preliminary Prospectus") with the Commission and the Passport Jurisdictions in respect of the Offering on a confidential pre-filing basis.
5. On July 5, 2011, the Filer filed with the Commission and the Passport Jurisdictions the Preliminary Prospectus dated July 5, 2011 in order to qualify the distribution of common shares (the "Offered Shares") under the Legislation and the securities legislation of the Passport Jurisdictions.
6. On July 11, 2011, the Filer filed with the Commission and the Passport Jurisdictions an amended and restated preliminary base prep prospectus under the Legislation and the securities legislation of the Passport Jurisdictions.
7. The Filer and the underwriters of the Offering wish to use electronic roadshow materials (the "Website Materials") to market the Offering in Canada, as is now typical for initial public offerings in the United States.
8. Compliance with U.S. securities laws respecting initial public offerings requires that the Filer either make the Website Materials used in connection with the Offering in the United States available in a manner that affords unrestricted access to the public, or file the Website Materials with the SEC on its Electronic Data Gathering Analysis and Retrieval System (known by its acronym, EDGAR), which has the same effect of affording unrestricted access.
9. The Filer understands that the SEC is of the view that making documents "available without restriction" means that no restrictions on access or viewing, such as password requirements, may be imposed, including with respect to persons outside the United States.
10. Affording unrestricted access to Website Materials during the Waiting Period is, however, contrary to the prospectus requirement and the restrictions on permissible marketing activities during the Waiting Period, such that the Legislation would require that access to Website Materials be controlled by the Filer or the underwriters by such means as password protection and other measures, as suggested by National Policy 47-201 -- Trading Securities Using the Internet and Other Electronic Means ("NP 47-201").
11. The Filer and the underwriters of the Offering wish to carry out the Offering in a manner that is typical for initial public offerings in the United States (and consistent with U.S. federal securities law) by posting Website Materials on the internet websites of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com, without password or other access restrictions.
12. As the Legislation does not permit Website Materials to be made generally available to prospective purchasers in Canada without restriction during the Waiting Period, the Filer and the underwriters of the Offering cannot carry out the Offering in Canada in a manner that is typical for initial public offerings in the United States unless the Exemption Sought is granted.
13. The Website Materials will contain a statement that information conveyed through the Website Materials does not contain all of the information in the Preliminary Prospectus, including any amendments, or the final prospectus for the IPO, as supplemented and including any amendments (the "Final Prospectus"), and that prospective purchasers of the offered shares should review all of those documents, in addition to the Website Materials, for complete information regarding the Offered Shares.
14. Website Materials will be fair and balanced.
15. The Website Materials will also contain a hyperlink to the documents referred to in paragraph 12, at and after such time as a particular document is filed.
16. Any amendment to the preliminary prospectus for the Offering that is filed after the date of the decision granting the Exemption Sought, and the Final Prospectus, will state that purchasers of Offered Shares in each Canadian jurisdiction in which the Final Prospectus is filed and a receipt therefore is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus.
17. At least one underwriter that signs the Preliminary Prospectus, any amendment to the preliminary prospectus and the Final Prospectus will be registered in each of the Jurisdictions.
18. A Canadian purchaser of Offered Shares will only be able to purchase the Offered Shares through an underwriter that is registered in the purchaser's Canadian jurisdiction of residence, unless an exemption from the dealer registration requirement is available.
19. The Filer acknowledges that the Exemption Sought relates only to the unrestricted posting of the Website Materials on the internet websites of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com, and not in respect of the Preliminary Prospectus for the Offering, including any amendments, or the Final Prospectus.
20. The Filer is not in default of the Legislation or the securities legislation of any of the Passport Jurisdictions.
The principal regulator is satisfied that the decision meets the test set out in the Legislation of the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
1. Any amendment to the preliminary prospectus for the Offering after the date of this decision, and the Final Prospectus, will state that purchasers of the Offered Shares in each Canadian jurisdiction in which the Final Prospectus is filed and a receipt is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in the Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus, substantially in the following form:
We may make available certain materials describing the offering (the "Website Materials") on the website of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com under the heading "Union Agriculture Group Corp." during the period prior to obtaining a final receipt for the final prospectus relating to this offering (the "Final Prospectus") from the securities regulatory authorities in the Canadian offering jurisdictions. In order to give purchasers in each of the Canadian offering jurisdictions the same unrestricted access to the Website Materials as provided to United States purchasers, we have applied for and obtained, in a decision dated July •, 2011, exemptive relief from the securities regulatory authority in each of the Canadian offering jurisdictions. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that, in the event that the Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make any statement therein not misleading in the light of the circumstances in which it was made (a "misrepresentation"), a purchaser resident in a Canadian offering jurisdiction who purchases the shares offered hereby pursuant to the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each Canadian underwriter with respect to such misrepresentation as are equivalent to the rights under section 130 of the Securities Act (Ontario) or the comparable provision of the securities legislation of the Canadian offering jurisdiction where the purchaser is resident, as the case may be, as if such misrepresentation were contained in the Final Prospectus.
2. The Website Materials will not include information that compares the Filer to one or more other issuers ("Comparables") unless the Comparables are also included in the preliminary prospectus for the Offering, including any amendments, and the Final Prospectus.