Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer wants to put in place a credit support issuer structure, but is unable to rely on the exemption for credit support issuers in applicable securities legislation -- Relief granted from continuous disclosure requirements, certification requirements, insider reporting requirements, audit committee requirements and corporate governance requirements -- Filer unable to rely on exemption for credit support issuer in applicable securities legislation since the Filer is an SEC foreign issuer relying on the continuous disclosure exemptions in National Instruments 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuer and therefore does not meet the test for a parent credit support issuer in the applicable securities legislation -- Relief subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, ss. 107, 121(2)(a)(ii).

National Instrument 51-102 Continuous Disclosure Obligations, ss. 13.1(2), 13.4.

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, ss. 8.5, 8.6(2).

National Instrument 52-110 Audit Committees, ss. 1.2(g), 8.1(2).

National Instrument 55-102 System for Electronic Disclosure by Insiders (SEDI), s. 6.1(2).

National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 10.1(2).

National Instrument 58-101 Disclosure of Corporate Governance Practices, ss. 1.3(c), 3.1(2).

December 9, 2013

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(THE JURISDICTION)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
GAZIT-GLOBE LTD.
(THE FILER)

DECISION

Background

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) exempting:

(a) Gazit Canada Financial Inc. (the Issuer) from the requirements of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) (the Continuous Disclosure Requirements);

(b) the Issuer from the requirements of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109) (the Certification Requirements);

(c) insiders of the Issuer from the insider reporting requirement (as defined in National Instrument 14-101 Definitions (NI 14-101)) (the Insider Reporting Requirements);

(d) the Issuer from the requirements of National Instrument 52-110 Audit Committees (NI 52-110) (the Audit Committee Requirements);

(e) the Issuer from the requirements of National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) (the Corporate Governance Requirements),

in each case to accommodate the issuance by the Issuer of debt securities guaranteed by the Filer (the Debt Securities) (collectively, the Exemption Sought).

Furthermore, the principal regulator in the Jurisdiction has received a request from the Filer for a decision that the application and this decision be kept confidential and not be made public until the earlier of: (a) the date on which the Issuer and/or the Filer issues a news release announcing that the Issuer has entered into an agreement relating to an offering of Debt Securities; (b) the date on which the Issuer and/or the Filer otherwise publicly announce an offering of Debt Securities; (c) the date on which the Issuer files a preliminary short form prospectus relating to an offering of Debt Securities; (d) the date on which the Filer advises the Ontario Securities Commission (the OSC), as the principal regulator, that there is no longer any need for the application and the decision document to remain confidential; and (e) the date that is 90 days after the date of the decision document (the Confidentiality Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the OSC is the principal regulator for this application; and

(b) the Filer has 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, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and Nunavut.

Interpretation

Terms defined in NI 14-101 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation existing and incorporated under the laws of Israel with its principal executive offices in Tel Aviv, Israel.

2. The ordinary shares (the Shares) of the Filer are listed on the Tel Aviv Stock Exchange, the New York Stock Exchange and the Toronto Stock Exchange (TSX) under the symbol "GZT". The Shares have been listed on the Tel Aviv Stock Exchange since 1983, and on the New York Stock Exchange since December, 2011. The Shares were listed on the TSX on October 16, 2013.

3. The Filer is a reporting issuer in Ontario, and intends to become a reporting issuer in all other Jurisdictions upon the filing of a base shelf prospectus. The Filer is a U.S. Securities and Exchange Commission (the SEC) foreign issuer within the meaning of section 1.1 of National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and relies on the exemptions set out in Part 4 of NI 71-102. With respect to NI 52-109, the Filer intends to file annual certifications in reliance on section 8.1 thereof and interim certifications in reliance on subection 8.2(1) thereof.

4. The Filer is one of the world's largest owners and operators of supermarket-anchored shopping centres. The Filer has direct or indirect interests in, or entities holding interests in, over 620 properties, with a gross leasable area of approximately 73 million square feet. These properties are geographically diversified across over 20 countries, including the United States, Canada, Finland, Sweden, Poland, Czech Republic, Israel, Germany and Brazil. The Filer acquires, develops and redevelops well-located, supermarket-anchored neighbourhood and community shopping centres in densely-populated areas with high barriers to entry and attractive demographic trends. The Filer's properties are typically located in countries characterized by stable gross domestic product (GDP) growth, political and economic stability and strong credit ratings. The Filer owns approximately 45% of the outstanding common shares of First Capital Realty Inc., which is a reporting issuer in the Jurisdictions. In addition, the Filer is active in North America in the healthcare real estate sector.

5. The Filer is subject to the continuous disclosure and filing requirements of Israeli Securities Laws, 5728-1968 (the Israeli Law), pursuant to which the Filer publishes and files annual and interim financial statements in accordance with International Financial Reporting Standards. Under Israeli Law, the Filer is required to file an annual report no later than three months following the end of the Filer's fiscal year end. This annual report must include a management discussion and analysis (MD&A) and audited financial statements, together with a report regarding the effectiveness of the internal auditing of financial reporting and disclosure (the Israeli equivalent to the requirement under the U.S. Sarbanes Oxley Act of 2002 (the Israeli "SOX" equivalent)). The Filer is required to file interim reports no later than two months following the end of each fiscal quarter (March 31st, June 30th, and September 30th). Each interim report must include: (i) interim reviewed (unaudited) financial statements, (ii) MD&A for the interim period, (iii) updates on material changes in the description of the Filer's business, and (iv) a report regarding the effectiveness of the internal auditing of financial reporting and disclosure (the Israeli "SOX" equivalent).

6. The Filer also files "immediate reports" on the occurrence of certain events, generally not later than the first trading day following the occurrence of such event. These "immediate reports" are required to be filed with respect to any event or matter which deviates from the regular course of business of the Filer on account of its nature, scope or potential results, and which has, or may have, a material effect on the Filer, or which may materially affect the price of the Filer's securities. Other specific reporting rules are applicable in circumstances including, among others: the purchase of a substantial asset; changes in the articles of association or memorandum of association of the Filer; or merger.

7. In addition to the above, the Israeli Securities Authority may require the Filer to submit an immediate report regarding any event or matter if, in its opinion, information regarding the same is of importance to a reasonable investor considering the purchase or sale of securities of the Filer.

8. As a U.S. "foreign private issuer", the Filer complies with the requirements of the applicable U.S. rules and does not rely on any exemption from the foreign private issuer regime. With respect to its interim financial statements and interim MD&A, Filer files its translated Israeli financial statements and MD&A with the U.S. Securities and Exchange Commission approximately contemporaneously with their filing in Israel, together with the Israeli "SOX" equivalent certificates. The Filer intends to also file certificates in relation to its interim financial statements and MD&A in compliance with the section 302 of the U.S Sarbanes Oxley Act of 2002.

9. The Filer is not in default of any requirement of Israeli Law, the U.S. rules applicable to it as a "foreign private issuer", the Legislation or equivalent legislation in any of the Jurisdictions.

The Issuer

10. The Debt Securities will be: (a) issued by the Issuer, an entity that is a wholly-owned indirect subsidiary of the Filer; and (b) guaranteed by the Filer.

11. The Issuer is a corporation formed under the laws of Ontario, with a capital structure consisting of an unlimited number of common shares. All of the issued and outstanding shares of the issuer are owned by Gazit Canada Inc., which is an indirect wholly-owned subsidiary of the Filer.

12. Prior to the issuance of a receipt for a final short form prospectus of the Issuer qualifying the distribution of the Debt Securities, the Issuer will not be a reporting issuer in any of the jurisdictions of Canada.

13. The Issuer will operate as a financing company and will have no significant assets or liabilities unrelated to the Debt Securities and will not have any ongoing business operations of its own.

14. The Filer will be a "credit supporter" (as defined in NI 51-102).

15. The Issuer will be a "credit support issuer" (as defined in NI 51-102).

16. By virtue of subsection 13.4(4) of NI 51-102, the Filer is unable to meet the test set forth in subparagraph 13.4(2)(b)(ii) of NI 51-102.

17. It is proposed that the Issuer distribute the Debt Securities to the public pursuant to a short form prospectus in respect of the distribution of the Debt Securities, filed in each of the Jurisdictions, in reliance upon sections 2.4 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) and National Instrument 44-102 Shelf Distributions (NI 44-102). The short form prospectus will be prepared pursuant to the short form procedures contained in NI 44-101 and, if applicable, NI 44-102 and will comply with the requirements set out in Form 44-101F1 Short Form Prospectus and, if applicable, NI 44-102.

18. The Debt Securities will be governed by a trust indenture (the Indenture), to be entered into among the Issuer and a trustee and governed by the laws of Ontario.

19. The Filer will provide a full and unconditional guarantee (the Guarantee) of the payments to be made by the Issuer in respect of the Debt Securities, as stipulated in agreements governing the rights of holders of the Debt Securities, that result in the holders of such securities being entitled to receive payment from the Filer within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in Item 13.4 of NI 51-102.

20. As a result of the Guarantee, the holders of the Debt Securities in substance have a greater interest in the financial condition of the Filer than they have in the Issuer.

Offering of Securities

21. At the time of the filing of any short form prospectus or shelf prospectus supplement in connection with an offering of Debt Securities:

(a) the Issuer will comply with all of the filing requirements and procedures set out in NI 44-101 and, if applicable, NI 44-102, except as permitted by the Legislation;

(b) the prospectus will be prepared in accordance with the short form prospectus requirements of NI 44-101 and, if applicable, NI 44-102 except as permitted by the Legislation;

(c) the Filer will continue to be a reporting issuer under the Legislation;

(d) the prospectus will incorporate by reference the documents of the Filer set forth under Item 11.1 of Form 44-101F1;

(e) the prospectus disclosure required by Item 11 of Form 44-101F1 will be addressed by incorporating by reference the Filer's public disclosure documents referred to in paragraph 21(d) above; and

(f) the Filer will continue to satisfy all of the criteria in section 2.2 of NI 44-101, as applicable, pursuant to Part 4 of NI 71-102.

22. Prior to issuing any Debt Securities:

(a) the Filer will provide its Guarantee in respect of the Debt Securities; and

(b) the Issuer will enter into the Indenture.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for 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. in respect of the Continuous Disclosure Requirements, the Issuer and the Filer continue to satisfy the conditions set out in subsection 13.4(2.1) of NI 51-102, except as modified as follows:

(a) any reference to parent credit supporter in section 13.4 of NI 51-102 shall be deemed to include the Filer notwithstanding its indirect ownership of the Issuer through Gazit Canada Inc.;

(b) subsection 13.4(4) of NI 51-102 does not apply to the Filer (the SEC Foreign Issuer Relief) if:

(i) the Filer continues to be a reporting issuer,

(ii) the Filer continues to be a SEC foreign issuer (as defined in NI 71-102) and only relies on the exemptions in Part 4 of NI 71-102,

(iii) to the extent that the Filer complies with the foreign private issuer disclosure regime under U.S. securities law, it does not rely on any exemption from that regime,

(iv) if the Issuer has issued Debt Securities, the summary financial information referred to in paragraph 13.4(2.1)(c) of NI 51-102 will be reconciled to the consolidated financial statements of the Filer,

(v) if the Issuer has issued Debt Securities that remain outstanding, the Filer files a material change report as set out in Part 7 of NI 51-102 in respect of any material change in the affairs of the Filer that is not reported or filed by the Filer on SEC Form 6-K,

(vi) the Filer includes in the prospectus of the Issuer financial statements or other information about any acquisition that would have been or would be a significant acquisition for the purposes of Part 8 of NI 51-102 that the Filer has completed or has progressed to a state where a reasonable person would believe that the likelihood of the Filer completing the acquisition is high if the inclusion of the financial statements is necessary for the prospectus to contain full, true and plain disclosure of all material facts relating to the securities being distributed. The requirement to include financial statements or other information must be satisfied by including or incorporating by reference (a) the financial statements or other information as set out in Part 8 of NI 51-102, or (b) satisfactory alternative financial statements or other information, unless at least 9 months of the operations of the acquired business or related businesses are incorporated into the Filer's current annual financial statements included or incorporated by reference in the prospectus of the Issuer,

(vii) if the Issuer has not completed a public offering of Debt Securities in Canada by the date that is five years after the date of this decision, the SEC Foreign Issuer relief will expire on the date that is five years after the date of this decision.

2. in respect of the Certification Requirements, the Audit Committee Requirements and the Corporate Governance Requirements, the Filer and the Issuer continue to satisfy the conditions for relief from the Continuous Disclosure Requirements set forth above.

3. in respect of the Insider Reporting Requirements, an insider of the Issuer can only rely on the Exemption Sought so long as:

(a) the insider complies with the conditions in paragraphs 13.4(3)(b) and (c) of NI 51-102, and

(b) the Filer and the Issuer continue to satisfy the conditions for relief from the Continuous Disclosure Requirements set forth above.

Furthermore, the decision of the principal regulator is that the Confidentiality Sought is granted.

As to the Exemption Sought (other than from the Insider Reporting Requirements in the Securities Act (Ontario)) and the Confidentiality Sought in this regard.

"Sonny Randhawa"
Manager, Corporate Finance
Ontario Securities Commission

As to the Exemption Sought from the Insider Reporting Requirements in the Securities Act (Ontario) and the Confidentiality Sought in this regard.

"Christopher Portner"
"Deborah Leckman"
Commissioner
Commissioner
Ontario Securities Commission
Ontario Securities Commission