Subsection 74(1) – Application for exemption from prospectus requirement in connection with first trade of shares of issuer through exchange or market outside of Canada or to person or company outside of Canada – issuer not a reporting issuer in any jurisdiction in Canada – conditions of the exemption in section 2.14 of National Instrument 45-102 Resale of Securities not satisfied as residents of Canada own more than 10% of the total number of shares – relief granted subject to conditions.
Securities Act, R.S.O. 1990, c. S.5, as am.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED (THE “ACT”)
IN THE MATTER OF
ONTARIO TEACHERS’ PENSION PLAN BOARD AND ISS A/S
The Ontario Securities Commission has received an application from the Ontario Teachers’ Pension Plan Board (the “Applicant”) for an order pursuant to section 74(1) of the Act for an exemption from the prospectus requirement contained in section 53 of the Act in connection with the first trades of ordinary shares (the “Shares”) of ISS A/S (the “Company”) acquired by the Applicant as a result of the Offering and the Reorganization (as such terms are defined below) (the “Requested Relief”).
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
This order is based on the following facts represented by the Applicant:
1. The Applicant is an independent corporation established on December 31, 1989 by the Teachers’ Pension Act (Ontario) to administer and manage a pension plan established for the benefit of the Province of Ontario’s primary and secondary school teachers and to pay members of the pension plan their respective benefits under the plan. The head office of the Applicant is located at 5650 Yonge Street, Toronto, Ontario, Canada.
2. The Company is a leading provider of facility services (such as cleaning, property, catering, support, security and other facility management services), with operations in approximately 70 countries worldwide. The Company’s registered office is located at Buddingevej 197, DK-2860 Søborg, Denmark.
3. The Company is incorporated as a public limited liability company under the laws of Denmark, with its Shares listed on NASDAQ OMX Copenhagen. The Company has advised the Applicant that to the best of the Company’s knowledge it is not in default of any requirements of the NASDAQ OMX Copenhagen, or the applicable securities laws of Denmark or any jurisdiction of Canada.
4. The Company completed its initial public offering of Shares on March 18, 2014 (the “Offering”). A total of 58,908,644 Shares were distributed in the Offering, of which 50,224,907 Shares were sold by the Company and 8,683,737 (inclusive of Shares sold under an over-allotment option) Shares were sold by shareholders of the Company.
5. Immediately prior to the Offering, the sole shareholder of the Company was FS Invest II S.à.r.l., which was in turn controlled by FS Invest S.à.r.l. FS Invest S.à.r.l. was owned by EQT Funds (40%), funds advised by affiliates of Goldman Sachs (33%), the Applicant (through 2337323 Ontario Limited) (18%) and KIRKBI Invest A/S (8%), with the remaining ownership interest held by or on behalf of current and former directors and officers of the Company.
6. The Applicant originally acquired its indirect interest in the Company in August 2012, in reliance on the “private issuer” and/or “accredited investor” prospectus exemptions contained in National Instrument 45-106.
7. A reorganization was undertaken immediately prior to the Offering, such that certain of the Company’s indirect shareholders would hold a direct interest in Shares (the “Reorganization”). In connection with the Reorganization, the Applicant replaced 2337323 Ontario Limited as a direct shareholder of the Company.
8. As of March 31, 2014, after giving effect to the Reorganization and the Offering, the Company had 185,668,226 Shares issued and outstanding.
9. As of March 31, 2014 24,650,748 Shares (or 13.28%) were held by the Applicant. The Applicant represented less than 0.01% of the total number of owners, directly or indirectly, of the Shares.
10. To the best of the Applicant’s knowledge, based on a certificate from the Company (the “ISS Certificate”), as of March 18, 2014, after giving effect to the Reorganization and the Offering, residents of Canada, other than the Applicant:
(a) owned, directly or indirectly, 49,569 Shares, representing 0.03% of the outstanding Shares; and
(b) represented one (1) holder of Shares, representing less than 0.01% of the total number of owners, directly or indirectly, of the Shares.
11. For greater certainty, as of March 18, 2014, after giving effect to the Reorganization and the Offering, Canadian residents other than the Applicant did not own, directly or indirectly, more than 10% of the outstanding Shares, and did not represent in number more than 10% of the total number of owners of the Shares, directly or indirectly.
12. As of August 20, 2014:
(a) the Company had 185,668,226 Shares issued and outstanding;
(b) the Applicant held 24,650,748 Shares, representing 13.28% of the total number of outstanding Shares, representing less than 0.01% of the total number of owners, directly or indirectly, of the Shares; and
(c) apart from the Shares, the Company did not have any other securities, including debt securities, issued and outstanding.
13. The Applicant has not acquired any additional Shares since the Reorganization. The Applicant does not hold any derivatives in respect of the Shares.
14. The Applicant understands that the information in the ISS Certificate is based on (i) the Company’s knowledge of its shareholder base prior to giving effect to the Offering, and (ii) inquiries made of the Company’s underwriters who undertook the distribution of Shares in the Offering, including Canadian selling efforts on a private placement basis.
15. The Company is not a reporting issuer or its equivalent in the Province of Ontario or any other province or territory of Canada, nor are any of its securities listed or posted for trading on any exchange, or market, located in Canada.
16. The Company has advised the Applicant that it has no present intention of becoming listed in Canada or of becoming a reporting issuer under the Act or under any other Canadian securities laws, and no market for the Shares exists in Canada and none is expected to develop.
17. In the absence of the exemption requested hereby, the Applicant takes the view that the first trade of Shares held by the Applicant will be deemed to be a distribution and subject to section 53 of the Act.
18. The prospectus exemptions in sections 2.5 and 2.6 of National Instrument 45-102 will not be applicable in this situation because the Company is not a reporting issuer or its equivalent in the Province of Ontario or any other province or territory of Canada.
19. The prospectus exemption in section 2.14 of National Instrument 45-102 would be applicable in this situation, but will not be available to the Applicant (or any other holder of Shares in Canada) with respect to its first trade of Shares because residents of Canada, including the Applicant, owned more than 10% of the outstanding Shares at the date of the distribution of the Shares.
The Commission is satisfied that this order meets the test set out in Section 74(1) of the Act.
The order of the Commission under Section 74(1) of the Act is that the Requested Relief is granted provided that:
(i) the Company:
(A) was not a reporting issuer in any jurisdiction of Canada at the distribution date; or
(B) is not a reporting issuer in any jurisdiction of Canada at the date of the trade;
(ii) the trade is executed through the facilities of NASDAQ OMX Copenhagen or through any other exchange or market outside Canada or to a person or company outside of Canada; and
(iii) at the distribution date of the Shares, after giving effect to the issue of the Shares and any other shares of the same class or series that were issued at the same time as or as part of the same distribution as the Shares, residents of Canada (excluding the Applicant):
(A) did not own directly or indirectly more than 10 percent of the outstanding Shares, and
(B) did not represent in number more than 10 percent of the total number of owners directly or indirectly of Shares.
DATED at Toronto on this 2nd day of December , 2014.