Exemption Orders (Discretionary)
MERRILL LYNCH FINANCIAL ASSETS INC.
2001 BCSECCOM 929
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – Variation of a previous order granting relief to an issuer of asset-backed securities from the requirement to prepare, file and deliver interim and annual financial statements and annual report, subject to conditions, including the requirement to prepare, file and deliver monthly and annual reports regarding performance of pools of securitized assets - Variation extends the relief to two additional offerings completed since the date of the original order.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, s. 171
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, ALBERTA, NEWFOUNDLAND, NOVA SCOTIA AND SASKATCHEWAN
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF MERRILL LYNCH FINANCIAL ASSETS INC. AND MERRILL LYNCH CANADA INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario, British Columbia, Alberta, Newfoundland, Nova Scotia and Saskatchewan (the “Jurisdictions”) issued on November 30, 2000 a decision (the “Merrill Decision”) pursuant to the securities legislation of the Jurisdictions (the “Legislation”), that provisions of the Legislation concerning the preparation, filing and delivery of interim and annual financial statements and the annual filing of a form by a reporting issuer shall not apply to Merrill Lynch Mortgage Loans Inc., subsequently renamed Merrill Lynch Financial Assets Inc. (the “Issuer”), and Merrill Lynch Canada Inc. (“ML Canada”, and together with the Issuer, the “Applicants”) in respect of certain offerings of commercial mortgage pass-through certificates specified in the Merrill Decision;
AND WHEREAS the Merrill Decision contemplates that the Issuer may from time to time issue additional certificates in connection with similar asset-backed securities transactions, and may periodically apply for a variation of the terms of the Merrill Decision to extend the relief granted thereby to such additional certificates;
AND WHEREAS the Issuer has now completed two additional offerings of commercial mortgage pass-through certificates and is seeking a variation of the Merrill Decision so as to extend such relief to such additional certificates;
AND WHEREAS the Applicants are seeking to clarify certain ambiguous language contained in the Merrill Decision;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “MRRS”) the Ontario Securities Commission is the principal regulator for this Application;
AND WHEREAS the Issuer and ML Canada have represented to the Decision Makers as follows:
1. The Issuer was incorporated under the laws of Canada on March 13, 1995 under the name Bulls Offering Corporation. By articles of amendment dated December 3, 1998, the name of the Issuer was changed to Merrill Lynch Mortgage Loans Inc. By articles of amendment dated March 15, 2001, Merrill Lynch Mortgage Loans Inc. changed its name to Merrill Lynch Financial Assets Inc.
2. The head offices of the Issuer and ML Canada are both located in Toronto, Ontario.
3. The Issuer is a special-purpose corporation whose activities are limited to the issuance of asset-backed securities. The Issuer has no material assets and does not and will not carry on any activities other than the issuance of asset-backed securities.
4. The Issuer is a reporting issuer or equivalent pursuant to the securities legislation of certain of the provinces of Canada and is not in default of any of the requirements thereunder. As described below, the Issuer has received relief from the continuous disclosure requirements under the Legislation from the securities regulatory authorities in the Jurisdictions in respect of all of its public offerings to date, other than the two most recent offerings made by the Issuer, namely the offering of the LBC Certificates (as described below), and the C-5 Certificates (as described below).
5. On November 30, 2000 the Decision Makers issued a decision (the “Merrill Decision”) pursuant to the Legislation that provisions of the Legislation concerning the preparation, filing and delivery of interim and annual financial statements and the annual filing of a form by a reporting issuer shall not apply to the Issuer in respect of certain offerings of commercial mortgage pass-through certificates specified in the Merrill Decision.
6. In the Merrill Decision, the Issuer represented that it may from time to time seek to issue additional certificates in connection with similar asset-backed securities transactions which it may undertake in the future, in which case the Issuer may seek from the Decision Makers a variation of the relief granted in the Merrill Decision so as to include such additional certificates.
7. Since the date of the Merrill Decision, the Issuer has made two additional offerings of asset-backed securities, namely the LBC Certificates (as described below), and the C-5 Certificates (as described below).
8. The Merrill Decision contemplates the periodic application by the Issuer for a variation of the terms of the Merrill Decision to extend the relief granted thereby to such additional offerings. The Merrill Decision contemplates the extension of such relief to such additional offerings by means of periodic amendment to the defined term "Additional Certificates", which is defined to mean such certificates or classes of certificates as are listed in the schedule to the Merrill Decision (the "Schedule").
9. The Issuer is now seeking to vary the terms of the Merrill Decision, as contemplated by the Merrill Decision, by amending the definition of Additional Certificates to include the LBC Certificates (as described below), and the C-5 Certificates (as described below).
10. On January 23, 2001 the Issuer filed a short form prospectus and on January 24, 2001 the Issuer filed a prospectus supplement with each of the Canadian provincial securities regulatory authorities for the issuance of $187,680,000 (initial certificate balance) of commercial mortgage pass-through certificates evidencing co-ownership interests in a pool of 229 conventional, fixed rate mortgage loans, designated as Commercial Mortgage Pass-Through Certificates, Series 2001-LBC (the “LBC Certificates”) and received receipts for such prospectus from each of the Canadian provincial securities regulatory authorities.
11. On May 11, 2001 the Issuer filed a short form prospectus and on May 15, 2001 the Issuer filed a prospectus supplement with each of the Canadian provincial securities regulatory authorities for the issuance of $221,990,000 (initial certificate balance) of commercial mortgage pass-through certificates evidencing co-ownership interests in a pool of 55 conventional, fixed rate mortgage loans, designated as Commercial Mortgage Pass-Through Certificates, Series 2001-Canada 5 (the “C-5 Certificates”).
12. In order for the Issuer to continue to be permitted the continuous disclosure relief which was granted in the Merrill Decision, the Applicants request that the Merrill Decision be amended to include a reference to the LBC Certificates and the C-5 Certificates in the Schedule.
13. Except as noted in paragraph 1 of this Decision Document, all of the factual statements concerning the Applicants that are contained in the Merrill Decision remain true as of the date hereof.
14. The Issuer is further seeking an amendment to the Merrill Decision to clarify certain ambiguous language therein. The inclusion of the words “may be required by the Legislation and/or” in paragraph 24 and the words “required by the Legislation and/or” in subparagraph 29(a) of the Merrill Decision may have the effect of making the Merrill Decision unclear in its meaning.
AND WHEREAS pursuant to the MRRS this Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
IT IS ORDERED pursuant to the Legislation that:
1. The Schedule to the Merrill Decision shall be amended by the deletion of the word “None”, and the insertion of the following paragraphs:
“1. $187,680,000 (initial certificate balance) of commercial mortgage pass-through certificates evidencing co-ownership interests in a pool of 229 conventional, fixed rate mortgage loans, designated as Commercial Mortgage Pass-Through Certificates, Series 2001-LBC”.
“2. $221,990,000 (initial certificate balance) of commercial mortgage pass-through certificates evidencing co-ownership interests in a pool of 55 conventional, fixed rate mortgage loans, designated as Commercial Mortgage Pass-Through Certificates, Series 2001-Canada 5”.
2. Paragraph 24 of the Merrill Decision shall be amended by the deletion of the phrase “may be required by the Legislation and/or”.
3. Subparagraph 29(a) of the Merrill Decision shall be amended by the deletion of the phrase “required by the Legislation and/or”.
4. Paragraph 8 of the Merrill Decision shall be amended by the deletion of the word “firm” and the replacement of such deleted word with the word “first”.
DATED this 17th day of September, 2001.
Paul Moore R. Stephen Paddon