Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – National Instrument 62-104 Take-Over Bids and Issuer Bids, s. 6.1 – A wholly-owned subsidiary of the issuer wants relief from the issuer bid requirements in Part 2 of NI 62-104 to purchase shares under the issuer's normal course issuer bid - The issuer is making a normal course issuer bid accepted by the exchange; the filer is a wholly-owned subsidiary of the issuer that will purchase a portion of shares under the normal course issuer bid which it will then donate to a charity operated by the issuer; all purchases of shares under the normal course issuer bid by the issuer and the filer will be made in accordance with exchange rules; the issuer is proposing that the filer make the purchases solely for tax reasons.
Applicable Legislative Provisions
National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2, Part 4 and s. 6.1.
August 2, 2018
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
TELUS COMMUNICATIONS INC.
1 The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the requirements applicable to issuer bids (the Issuer Bid Requirements) in Part 2 of National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) for purchases by the Filer of common shares (Common Shares) of TELUS Corporation (TELUS) under TELUS’ normal course issuer bid occurring prior to November 13, 2018 (the Exemptive Relief Requested).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
- the British Columbia Securities Commission is the principal regulator for this application,
- 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 upon in Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut, and
- the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
3 This decision is based on the following facts represented by the Filer and TELUS:
1. TELUS is a corporation governed by the Business Corporations Act (British Columbia);
2. the head office and registered office of TELUS is located at 7th Floor, 510 W. Georgia St., Vancouver, British Columbia;
3. TELUS is a reporting issuer in each of the provinces of Canada and the Common Shares are listed for trading on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange (the NYSE) under the symbols “T” and “TU”, respectively; TELUS is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer;
4. the authorized share capital of TELUS consists of 4,000,000,000 shares, divided into: (i) 2,000,000,000 Common Shares without par value; (ii) 1,000,000,000 First Preferred shares without par value; and (iii) 1,000,000,000 Second Preferred shares without par value; as of July 24, 2018, 597,774,841 Common Shares, no First Preferred Shares and no Second Preferred Shares were issued and outstanding;
5. the Filer is a corporation governed by the Business Corporations Act (British Columbia) and is a direct wholly-owned subsidiary of TELUS;
6. the head office and registered office of the Filer is located at 7th Floor, 510 W. Georgia St., Vancouver, British Columbia and its executive office at 23rd Floor, 510 W. Georgia St., Vancouver, British Columbia;
7. the Filer is a reporting issuer in each of the provinces of Canada as it has outstanding unsecured debentures, for which TELUS has guaranteed the payment of principal and interest, and the Filer relies on the continuous disclosure documents filed by TELUS pursuant to an exemption from continuous disclosure requirements under section 13.4 of National Instrument 51-102 Continuous Disclosure Obligations; the Filer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer;
8. TELUS Foundation (the Foundation) is a corporation governed by the Canada Not-for-profit Corporations Act and a registered charity as defined under the Income Tax Act (Canada) (ITA);
9. the Foundation was established to receive gifts, bequests, trusts, funds and property and beneficially, or as a trustee agent, to hold, invest, develop, manage, administer and distribute funds and property to charities that are designated as “qualified donees” under the ITA and over the years it has supported various TELUS charitable giving initiatives, as well as periodic charitable giving by current and former TELUS employees and directors;
10. under a “Notice of Intention to Make a Normal Course Issuer Bid” (the Notice) that was originally submitted to, and accepted by, the TSX, effective November 13, 2017, up to 8,000,000 Common Shares, representing 1.35% of TELUS’ public float of Common Shares as of the date specified in the Notice, subject to a maximum aggregate purchase price consideration of $250 million excluding brokerage costs and commission, may be purchased under a normal course issuer bid; a proposed amendment of the Notice (the Amended Notice) was submitted to the TSX, on June 25, 2018, to permit the Filer to purchase up to a number of the Common Shares referenced in the Notice with an aggregate fair market value of up to $105 million for donation to the Foundation under the amended normal course issuer bid (the Normal Course Issuer Bid), while the remaining Common Shares may only be purchased by TELUS for cancellation, and the TSX has indicated that it has no concerns with the proposed Amended Notice;
11. in accordance with the Notice, the Normal Course Issuer Bid is being, and will be, conducted through the facilities of the TSX, the NYSE or alternative Canadian trading platforms (including Alpha ATS, Pure Trading, Chi-X, Omega ATS and MATCH Now), or such other means as may be permitted by the TSX or a securities regulatory authority, in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the TSX NCIB Rules), including by way of off-market purchases under exemption orders issued by a securities regulatory authority;
12. the Filer wishes to donate to the Foundation Common Shares with an aggregate fair market value of up to $105 million purchased by the Filer under the Normal Course Issuer Bid or other exemptions from the Issuer Bid Requirements under NI 62-104;
13. the donation will provide the Foundation with a long-term endowment of the Common Shares to be held by the Foundation as an investment, with dividends received on the Donated Shares providing funding for ongoing charitable giving by the Foundation;
14. TELUS and the Filer will enter into one or more agreements with the broker appointed under the Normal Course Issuer Bid, to contemplate the ability of TELUS to specify that a portion of the Common Shares to be purchased under the Normal Course Issuer Bid will be purchased by the Filer with the remainder to be purchased by TELUS; no Common Shares will be purchased by the Filer during any internal trading blackout periods, including regularly scheduled quarterly blackout periods, when TELUS would not otherwise be permitted to trade in its Common Shares;
15. all Common Shares purchased by TELUS under the Normal Course Issuer Bid will be cancelled; Common Shares purchased by the Filer will be donated as they are purchased to the Foundation and, in any event, all such Common Shares will be purchased prior to November 13, 2018;
16. the purchases of Common Shares by the Filer will be made in accordance with the requirements of exemptions from the Issuer Bid Requirements set out in section 4.8 of NI 62-104 and may also be made in accordance with the requirements of the exemption from the Issuer Bid Requirements set out in section 4.7 of NI 62-104 (such exemptions, the Issuer Bid Exemptions);
17. the purchase of Common Shares by the Filer will constitute an indirect “issuer bid” by TELUS for the purposes of NI 62-104 to which the Issuer Bid Requirements would apply;
18. the Filer will be a “joint actor” with TELUS and the Issuer Bid Requirements would apply to purchases of Common Shares by the Filer, unless an exemption is available; however the Issuer Bid Exemptions are available only to the “issuer”, and for purposes of such exemptions, “issuer” does not include the Filer;
19. but for the fact that the Common Shares will be purchased by the Filer, TELUS could otherwise acquire Common Shares to donate to the Foundation in reliance on the Issuer Bid Exemptions;
20. the purchase of Common Shares by TELUS and the Filer under the Normal Course Issuer Bid will not adversely affect TELUS or the rights of any of TELUS’ security holders and it will not materially affect control of TELUS;
21. to the best of TELUS’ knowledge, as of July 24, 2018, the “public float” of the Common Shares represented more than 99.86% of all issued and outstanding Common Shares for the purposes of the TSX NCIB Rules;
22. the Common Shares are “highly liquid securities” within the meaning of section 1.1 of Ontario Securities Commission Rule 48-501 Trading during Distributions, Formal Bids and Share Exchange Transactions and section 1.1 of the Universal Market Integrity Rules; and
23. the Filer will not purchase, in the aggregate, Common Shares with a fair market value of more than $105 million.
4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemptive Relief Requested is granted provided that:
- Common Shares purchased by the Filer will be taken into account by TELUS when calculating the maximum annual aggregate limit that is imposed upon the Normal Course Issuer Bid in accordance with the TSX NCIB Rules and the maximum aggregate limit that is imposed upon TELUS in accordance with the exemptions from the Issuer Bid Requirements set out in subsections 4.7(b) and 4.8(3) of NI 62-104;
- all purchases of Common Shares under the Normal Course Issuer Bid, whether by TELUS or by the Filer, are made in accordance with the TSX NCIB Rules and any bylaws, rules, regulations or policies of any published markets upon which purchases are carried out, as applicable;
- TELUS will report purchases of such Common Shares by TELUS and the Filer to the TSX under the TSX NCIB Rules; and
- the Filer does not purchase, in the aggregate, Common Shares with a fair market value of more than $105 million under the Issuer Bid Exemptions.
“Michael L. Moretto”
Acting Director, Corporate Finance
British Columbia Securities Commission