Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107), s. 5.1 -- the Filers request relief from the requirements under section 3.2 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises to permit the Filers to prepare their financial statements in accordance with U.S. GAAP.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, s. 5.1.
Citation: Enbridge Gas Distribution Inc., Re, 2013 ABASC 567
December 20, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
ENBRIDGE GAS DISTRIBUTION INC., ENBRIDGE PIPELINES INC.
AND ENBRIDGE INCOME FUND
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers under the securities legislation (the Legislation) of the Jurisdictions seeking exemption (the Exemption Sought) from the requirements of section 3.2 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that financial statements (a) be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises and (b) disclose an unreserved statement of compliance with IFRS in the case of annual financial statements and an unreserved statement of compliance with IAS 34 in the case of an interim financial report.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador; and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
In this decision:
(a) unless otherwise defined herein, terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 52-107 have the same meaning; and
(b) "activities subject to rate regulation" has the meaning ascribed in the Handbook.
This decision is based on the following facts represented by the Filers:
1. Enbridge Inc. (EI) and Enbridge Pipelines Inc. (EPI) are continued under the Canada Business Corporations Act and each of their head offices is located in Calgary, Alberta.
2. Enbridge Gas Distribution Inc. (EGD) is governed by theBusiness Corporations Act (Ontario) and its head office is located in Toronto, Ontario.
3. Enbridge Income Fund (EIF) is an unincorporated open-ended trust established under the laws of Alberta and its head office is located in Calgary, Alberta.
4. EI and each of the Filers is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions.
5. Each of EPI, EGD and EIF became a reporting issuer by distributing by prospectus debt securities that remain outstanding and publicly-held.
6. EI and each of the Filers represents on its own behalf that it is not in default of securities legislation in any jurisdiction in Canada.
7. Each of EI, EPI, EGD and EIF has activities subject to rate regulation.
8. Each of EPI and EGD is a wholly-owned indirect subsidiary of EI.
9. Through various holdings, EI has a significant economic interest in EIF.
10. The financial statements of each of the Filers are consolidated into the financial statements of EI.
11. EI is an SEC issuer and relies on subsection 3.7 of NI 52-107 to file financial statements prepared in accordance with U.S. GAAP. The Filers are not SEC issuers and, therefore, cannot rely on that provision.
12. By orders cited as Re Enbridge Inc., 2011 ABASC 106 and Re Enbridge Income Fund, 2011 ABASC 314, each of EGD, EPI and EIF have been granted relief substantially similar to the Exemption Sought (collectively, the Existing Relief).
13. The Existing Relief will expire not later than 1 January 2015.
14. The International Accounting Standards Board (IASB) continues to work on a project focusing on accounting specific to activities subject to rate regulation. It is not yet known when this project will be completed or whether IFRS will include a specific standard that is mandatory for entities with activities subject to rate regulation.
Each of the Decision Makers is satisfied that the decision satisfies the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that:
(a) the Existing Relief is revoked;
(b) the Exemption Sought is granted to each Filer in respect of the Filer's financial statements required to be filed on or after the date of this order, provided that the Filer prepares those financial statements in accordance with U.S. GAAP; and
(c) the Exemption Sought will terminate in respect of a Filer on the earliest of the following:
(i) 1 January 2019;
(ii) if that Filer ceases to have activities subject to rate regulation, the first day of the Filer's financial year that commences after the Filer ceases to have activities subject to rate regulation; and
(iii) the effective date prescribed by the IASB for the mandatory application of a standard within IFRS specific to entities with activities subject to rate regulation.
For the Commission: