Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- reporting insider party to automatic securities disposition plan -- relief granted from section 3.3 of NI 55-104 and subsection 107(2) of the Securities Act (Ontario), provided that reporting insider file reports with respect to dispositions under the plan during the year by March 31 of the next calendar year.
Applicable Legislative Provisions
Securities Act (Ontario), s. 107(2).
National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 3.3.
Citation: Re Solium Capital Inc., 2014 ABASC 184
May 7, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF SOLIUM CAPITAL INC. (Solium) AND MICHAEL G. BROADFOOT (Broadfoot) (collectively, the Filers)
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision (the Exemption Sought) under the securities legislation (the Legislation) of the Jurisdictions exempting Broadfoot from the requirement in Section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104) and Subsection 107(2) of the Securities Act (Ontario) (the Ontario Act) to file an insider report within five days following the disposition of securities under his automatic securities disposition plan.
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, New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island; and
(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 55-104 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filers:
1. Solium is a corporation existing under the laws of the Province of Alberta and is a reporting issuer under the securities legislation of Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Newfoundland and Prince Edward Island. Solium is not in default of securities legislation in any jurisdiction.
2. The head office of Solium is located in Calgary, Alberta.
3. The authorized share capital of Solium consists of an unlimited number of common shares (Common Shares) and an unlimited number of preferred shares, issuable in series. As at March 31, 2014, Solium had 47,198,753 Common Shares and no preferred shares issued and outstanding.
4. The Common Shares are listed and posted for trading on the Toronto Stock Exchange under the symbol "SUM".
5. Broadfoot is the Chief Executive Officer and a Managing Director of Solium and is a reporting insider. Broadfoot is not in default of securities legislation in any jurisdiction.
6. As at March 31, 2014, Broadfoot was the beneficial owner of 7,982,200 Common Shares (representing approximately 16.9% of the then outstanding Common Shares).
7. Broadfoot wishes to sell up to a total of 2,100,000 Common Shares pursuant to the ASDP (as defined below) to further diversify his portfolio.
The Automatic Securities Disposition Plan
8. MGI Securities Inc. (the Administrator), Solium and Broadfoot entered into an automatic securities disposition plan (the ASDP) dated effective March 21, 2014 to facilitate the automatic sale of up to 2,100,000 Common Shares beneficially owned by Broadfoot and which have been deposited into an account managed by the Administrator, managed in accordance with the trading parameters and other instructions set out in the ASDP.
9. Broadfoot can only make changes to the trading parameters and other instructions set out in the ASDP if all of the following conditions are met:
(a) Broadfoot has obtained the prior written consent of the Administrator and Solium;
(b) Broadfoot has provided notice to the public of the proposed change by describing it in a filing on the System for Electronic Disclosure by Insiders (SEDI) or in a news release;
(c) Broadfoot has represented to the Administrator that a blackout period is not currently in effect and that he is not aware of any material non-public information about Solium or the securities of Solium and has no knowledge of a material fact or material change with respect to Solium or any securities of Solium (including the Common Shares) that has not been generally disclosed; and
(d) such amendment or modification is made in good faith and not as part of a plan or scheme to evade the prohibitions of Section 147 of the Securities Act (Alberta) (the Alberta Act), Section 76 of the Ontario Act or comparable prohibitions in other securities legislation.
10. The Administrator is a securities broker which is at arm's length to Solium and Broadfoot.
11. The Administrator has been appointed as an independent broker to effect the sales of the Common Shares pursuant to the terms and conditions of the ASDP. The dispositions under the ASDP will be effected by the Administrator in accordance with the pre-determined instructions as to the number and dollar value of the Common Shares to be sold, and other relevant information.
12. Subject to the restrictions set forth in the ASDP, the Administrator shall execute the trades in such ? way as to attempt to minimize the negative price impact on the market and to attempt to maximize the prices obtained for the Common Shares sold.
13. Except to set trading parameters in the manner described in the representations in this decision, Broadfoot does not have the authority to make investment decisions or influence or control any disposition effected by the Administrator pursuant to the ASDP and the Administrator and Broadfoot will not consult regarding any disposition.
14. Broadfoot will not disclose to the Administrator any information concerning Solium that might influence the execution of any disposition under the ASDP.
15. The ASDP included a waiting period of 30 days between the date of adoption of the ASDP and the date that the first disposition could be made under the ASDP.
16. The ASDP has been structured to comply with applicable securities legislation and guidance, including Paragraph 147(5)(c) of the Alberta Act, Paragraph 175(2)(b) of the General Regulation under the Ontario Act and Ontario Securities Commission Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Securities Purchase Plans.
17. At the time of execution of, and entering into the ASDP, Broadfoot represented that he was not in possession of material undisclosed information about Solium and that he was entering into the ASDP in good faith and not as part of a plan or scheme to evade the prohibitions of Section 147 of the Alberta Act, Section 76 of the Ontario Act or any other applicable securities laws.
18. The Common Shares are not subject to any liens, security interests or other impediments to transfer (except for limitations imposed by any applicable laws).
19. The ASDP will automatically terminate on the earliest to occur of:
(a) March 21, 2016;
(b) the date on which 2,100,000 Common Shares have been disposed of pursuant to the ASDP;
(c) the date Solium terminates the ASDP, which shall be the date three business days after Solium has done both of the following:
(i) given written notice to the Administrator of the termination of the ASDP; and
(ii) publicly disclosed the termination by news release;
(d) the date Broadfoot terminates the ASDP, which shall be the date three business days after Broadfoot has done all of the following:
(i) given written notice to the Administrator of the termination of the ASDP;
(ii) represented in writing to the Administrator that he is not aware of any material fact or material change with respect to Solium or any securities of Solium that has not been generally disclosed; and
(iii) publicly disclosed the termination by doing either of the following:
A. filing a report on SEDI disclosing the effective date of the termination of the ASDP; or
B. issuing a news release disclosing the termination of the ASDP;
(e) the date on which the Administrator receives notice of or otherwise becomes aware of any one of the following:
(i) Solium having entered into a definitive agreement pursuant to which either of the following applies:
A. Solium will be subject to a take-over bid, tender or exchange offer with respect to the Common Shares; or
B. Solium will be subject to an arrangement, merger, acquisition, reorganization, recapitalization or comparable transaction affecting the securities of Solium as a result of which the Common Shares are to be exchanged or converted into shares of another company;
(ii) the death or mental incapacity of Broadfoot; or
(iii) the commencement or impending commencement of any proceedings in respect of or triggered by Broadfoot's bankruptcy or insolvency; and
(f) the date the Administrator terminates the ASDP after having received notice (an ASDP Restriction Notice) of any legal, contractual or regulatory restriction applicable to Broadfoot, including without limitation, any restriction related to a take-over bid, tender or exchange offer, an arrangement, merger or acquisition, reorganization or a stock offering requiring lock-up, that would prohibit dispositions pursuant to the ASDP.
20. Any ASDP Restriction Notice given by Broadfoot or Solium will be given in good faith and not as part of a plan or scheme to evade the prohibitions of Section 147 of the Alberta Act, Section 76 of the Ontario Act or comparable prohibitions in other securities legislation.
21. Broadfoot will not terminate the ASDP with knowledge of a material fact or material change that has not been generally disclosed.
Each of the Decision Makers is satisfied that the decision meets 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 the Exemption Sought is granted, provided that Broadfoot shall file a report through SEDI, by March 31 of each calendar year, of all dispositions under the ASDP during the prior calendar year not previously disclosed in a SEDI filing, disclosing either:
(a) each disposition on a transaction-by-transaction basis; or
(b) all dispositions as a single transaction using the average unit price of the securities.