Securities Law & Instruments


Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Confidentiality -- Application by an issuer for a decision that a Management Information Circular previously filed and made public on SEDAR be held in confidence for an indefinite period by the Commission, to the extent permitted by law -- Appended valuation contains intimate financial, personal and other sensitive information, the disclosure of which would be seriously prejudicial to the interests of the issuer and other persons affected -- Issuer to file and make public on SEDAR a revised version of the Management Information Circular with revised Valuation -- Relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 140(1) and 140(2).

October 3, 2019




The principal regulator (the Decision Maker) in the Jurisdiction has received an application (the Application) from Callidus Capital Corporation (the Filer), for a decision (the Decision Sought) by the Decision Maker under the securities legislation of the Jurisdiction (the Legislation), being section 140(2) of the Securities Act (Ontario) (the Act), that the requirement for public inspection of records not apply to the version of the Filer's management information circular dated September 17, 2019 (the Filed Circular) that was filed on the System for Electronic Document Analysis and Retrieval (SEDAR) on September 24, 2019 and that the Filed Circular be held in confidence (and therefore not available to the public for inspection) for an indefinite period, to the extent permitted by law.

Furthermore, the Decision Maker has received a request from the Filer for a decision that the Filer's application be kept confidential for a period that is three years after the date of this decision and that the Revised Blacklined Valuation (as defined below) be kept confidential and not be made public for an indefinite period, in each case to the extent permitted by law (collectively, the Confidentiality Relief).

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

(a) the Ontario Securities Commission is the principal regulator for the Application; and

(b) 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 each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the Other Jurisdictions).


Defined terms contained in National Instrument 14-101 -- Definitions have the same meaning in this decision unless they are defined in this decision.


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

1. The Filer is a corporation formed under the Business Corporations Act (Ontario) (the OBCA). The Filer is a specialty asset-based lender, focused primarily on Canadian companies and select U.S. companies that are unable to obtain adequate financing from traditional lenders.

2. The Filer is a reporting issuer in Ontario and the Other Jurisdictions.

3. The issued and outstanding common shares of the Filer (the Common Shares) are currently listed and trade on the Toronto Stock Exchange.

4. As disclosed by press release dated August 15, 2019, the Filer entered into a definitive agreement with Braslyn Ltd. (Braslyn) pursuant to which Braslyn will acquire all of the Common Shares held by persons (Minority Shareholders) other than Braslyn, certain investment funds managed by The Catalyst Capital Group Inc., and FigCorp Ltd. (a company controlled by Newton Glassman) and James Riley by way of a court-approved Plan of Arrangement (the Transaction) under the OBCA subject to, among other conditions, approval of the Transaction by the holders of Common Shares in accordance with the requirements of the OBCA and MI 61-101 -- Protection of Minority Securityholders in Special Transactions (MI 61-101).

5. In connection with the Transaction, a special committee of the independent directors (the Special Committee) of the Filer was established and Blair Franklin Capital Partners Inc. (Blair Franklin) was retained by the Special Committee to provide, under the supervision of the Special Committee, an independent formal valuation of the Common Shares (Valuation) prepared in accordance with MI 61-101.

6. On September 17, 2019, the Filer obtained an interim order of the Ontario Superior Court of Justice permitting the holding of the Meeting on the Meeting Date (as defined below) and the mailing of the Filed Materials (the Interim Order). The provisions of sections 10 and 12 of the Interim Order permit the Filer to make amendments to the Filed Materials, and section 11 of the Interim Order permits the Filer to adjourn the Meeting Date, in each case without further approval of the Court. Section 12 of the Interim Order establishes requirements for the delivery of materials in respect of the Meeting to Shareholders, including the timing for delivery of those materials pursuant to National Instrument 54-101 -- Communications with Beneficial Owners of Securities of a Reporting Issuer.

7. The Valuation was included as an appendix to the Filed Circular prepared in connection with the meeting of holders of Common Shares (Shareholders) called to consider, and if deemed advisable, approve, a statutory plan of arrangement in connection with the Transaction (the Meeting) on October 23, 2019 (the Meeting Date). The Filed Circular, together with the related form of proxy (the Filed Proxy) and letter of transmittal (the Filed Letter of Transmittal, and together with the Filed Circular and the Filed Proxy, the Filed Materials) were posted on the Filer's profile on SEDAR at on September 24, 2019 pursuant to Part 9 of National Instrument 51-102 -- Continuous Disclosure Obligations. The Filed Materials have not yet been mailed to Shareholders.

8. On September 26, 2019, it came to the attention of certain operating management of the Filer that the Valuation included certain confidential information (the Confidential Information) relating to the Filer and third parties with which it has commercial relations (Third Parties).

9. The Filer believes that the Confidential Information constitutes intimate financial, personal or other information and that continued public access to the Confidential Information on SEDAR would seriously prejudice the interests of the Filer and Third Parties, for the following reasons:

(a) should the Filed Circular remain on SEDAR, commercially sensitive information would continue to be readily available to the general public, including competitors and other third parties, which could detrimentally affect the Filer and/or the Third Parties, their respective commercial relations as well as their ability to negotiate future transactions; and

(b) to the extent that the Decision Sought is granted, the Filer will be able to limit further dissemination of the Confidential Information and thereby limit prejudice to the Filer and Third Parties.

10. Prior to the filing of the Filed Circular, neither the Confidential Information nor information similar in nature has been included in the Filer's disclosure filed under applicable securities legislation as it was not considered to be material by the Filer nor otherwise required to be filed.

11. The Filer has had discussions with Blair Franklin relating to revisions to the Valuation that would maintain the confidentiality of the Confidential Information. Following discussions with the Filer, its counsel and counsel to the Special Committee, Blair Franklin has prepared a revised version of the Valuation (a Revised Valuation) that includes all information contained in the Valuation except for the Confidential Information that, in its professional judgment, satisfies the applicable requirements of MI 61-101 and the Investment Industry Regulatory Organization of Canada (IIROC) rules. In particular, the Filer confirms that Blair Franklin: (i) sought and obtained a decision of the Special Committee, in accordance with IIROC rules, that the perceived detriment to the Filer and Third Parties of the disclosure of the Confidential Information in the Valuation outweighs the benefit of disclosure of such information to the readers of the Valuation; and (ii) considers the Revised Valuation will continue to enable a reader to understand the methodology used to value the Common Shares and the reasons for the methodology selected, and that the omission of the Confidential Information will not detract from the reader's understanding of Blair Franklin's analysis and valuation conclusion, which are unchanged in the Revised Valuation.

12. The Special Committee has considered the Revised Valuation with its counsel, and concurs with Blair Franklin's assessment, and does not believe that the removal of the Confidential Information would reasonably be expected to affect the decision of Shareholders, including the Minority Shareholders, to vote for or against the Transaction. The Special Committee does not think that the specific detail of the Confidential Information contained in the Valuation is relevant to the reader as the valuation analysis indicates that, without taking into account the consideration to be received by Braslyn from The Catalyst Capital Group Inc. pursuant to the shareholders agreement to be entered into between such parties, the value attributable to holders of Common Shares would be negative and, accordingly, the valuation range would be materially below the purchase price payable pursuant to the Transaction of $0.75 per share. The exclusion of the detail of the Confidential Information would not affect this fundamental aspect of the Valuation.

13. The Confidential Information (i) is not, and does not contain, a "material fact" (as defined in the Act), and (ii) is not material information to the Shareholders of the Filer in that its disclosure is not reasonably expected to influence the decision of Shareholders, including Minority Shareholders, to vote for or against the Transaction, nor considered material to the Shareholders or investors generally or necessary to satisfy the Filer's disclosure obligations.

14. Disclosure of the Filer's application, which contains specific reference to the type and nature of the Confidential Information and the nature by which such information could be used to the prejudice of the Filer and Third Parties, and all documents included in the application that compare the Revised Valuation with the Valuation provided in the application (the Revised Blacklined Valuation and together with the Filer's application, the Application Material), would be prejudicial to the Filer and Third Parties.

15. The desirability of avoiding further disclosure of the Confidential Information and the Application Material (together, the Confidential Material) outweighs the desirability of adhering to the principle that such material be made available to the public for inspection, and the disclosure of the Confidential Material is not necessary in the public interest.

16. The Decision Sought contemplates that the Meeting Date will be deferred to a date beyond October 23, 2019. This deferral is required in order to permit the Filer to comply with the Delivery Requirements contained in the Interim Order. Accordingly, the New Circular and related Meeting materials will reflect a date for the Meeting that is deferred beyond the Meeting Date, as well as other consequential changes resulting from the deferral of the date of the Meeting.

17. The Filer acknowledges that making the Filed Circular (which includes the Valuation) private on the SEDAR website provides no assurance that the Valuation is not available elsewhere in the public domain.


18. The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

19. The decision of the Decision Maker under the Legislation is that the Decision Sought is granted, provided that:

(a) a new management information circular (the New Circular) identical in all respects to the Filed Circular except that:

i. the Valuation will be deleted and replaced with the Revised Valuation;

ii. the Meeting Date and the date by which proxies are required to be submitted and other dates dependent upon the Meeting Date contained in the Filed Circular will be amended so as to be based on a deferred meeting date that is not less than 5 days and not more than 15 days after the meeting date of October 23, 2019 set forth in the Filed Circular, which date will in part be dependent on the date of the disposition of the Filer's application;

iii. the Notice of Application of the Ontario Superior Court of Justice will be deleted and replaced with an Amended Notice of Application that is identical in all material respects to the Notice of Application other than that the date of the hearing of the application to obtain approval of the Transaction will be amended;

iv. the New Circular will bear a legend indicating that it is an amended and restated management information circular that replaces the Filed Circular; and

v. other ancillary changes resulting from the changes referred to above.

(b) a new form of proxy identical in all respects to the Filed Proxy except that reference to the New Circular rather than the Filed Circular will be made, and the Meeting Date and the date by which proxies are required to be submitted will be amended to conform to those dates to be contained in the New Circular; and

(c) a new letter of transmittal identical in all respects to the Filed Letter of Transmittal except that reference to the New Circular rather than the Filed Circular will be made, and the Meeting Date and expected effective date of the Transaction will be updated.

20. The further decision of the Decision Maker is that the Confidentiality Relief is granted.

"Grant Vingoe"
Ontario Securities Commission