Exemption Orders (Discretionary)
SCOTIA CAPITAL INC.
2001 BCSECCOM 1085
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - previous MRRS decision document varied to extend time period for post-decision confidentiality
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c.418, s. 171
IN THE MATTER OF THE SECURITIES LEGISLATION OFBRITISH COLUMBIA, ONTARIO, QUÉBEC AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEMFOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF SCOTIA CAPITAL INC.
AND
THE BANK OF NOVA SCOTIA
VARIATION OF MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario, British Columbia, Québec and Newfoundland (the “Jurisdictions”) issued a decision (the “Original Decision”) on June 15, 2001 under the securities legislation of the Jurisdictions (the “Legislation”) exempting Scotia Capital Inc. (“Scotia Capital”) from the limitations imposed on underwriters in respect of offerings involving connected issuers, related issuers or non-independent underwriters (the “Independent Underwriter Requirement”) in the Legislation in respect of a proposed distribution (the “Offering”) on a best efforts agency basis of subordinated debentures (the “Securities”) of The Bank of Nova Scotia (the “Bank”), subject to certain conditions;
AND WHEREAS Scotia Capital has applied to the Decision Makers for a decision under the Legislation varying the Original Decision;
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS Scotia Capital has represented to the Decision Makers that:
1. On June 15, 2001, the Decision Makers issued the Original Decision relieving Scotia Capital from the Independent Underwriter Requirement in connection with the Offering of the Securities by the Bank.
2. The Original Decision provided that the Original Decision and the application filed in connection with the Original Decision would be held in confidence for up to 60 calendar days from the date of the Original Decision, or earlier in certain other circumstances.
3. It was anticipated at the time the application was filed in connection with the Original Decision that the Offering would be announced within 60 calendar days of the date of the Original Decision.
4. Additional time is required by Scotia Capital and the Bank to make a decision to proceed with the Offering.
AND WHEREAS under the System this MRRS 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 Makers with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers under the Legislation is that the Original Decision be varied as follows:
1. deleting the first recital paragraph after the facts are set out and replacing it with the following:
AND WHEREAS the Filer has requested that the Decision of the Decision Makers, as varied by the Decision Makers, the application dated June 1, 2001 filed in connection with the Decision and the application to vary the Decision dated August 10, 2001 (collectively, the “Confidential Materials”) be held in confidence until November 14, 2001, subject to certain conditions;”
2. deleting the wording in paragraph 2(c) of the operative portion of the Original Decision and replacing it “November 14, 2001”.
with the result that the Original Decision as varied by this Decision will be in the form attached as Schedule “A”.
DATED this 14th day of August 2001.
John A. Geller R. Stephen Paddon
SCHEDULE “A”
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, QUÉBEC AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SCOTIA CAPITAL INC.
AND
THE BANK OF NOVA SCOTIA
MRRS DECISION DOCUMENT
WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario, British Columbia, Québec and Newfoundland (the “Jurisdictions”) has received an application from Scotia Capital Inc. (the “Filer”) for a decision (the “Decision”), pursuant to the securities legislation of the Jurisdictions (the “Legislation”), that the requirement (the “Independent Underwriter Requirement”) contained in the Legislation which prohibits a registrant from acting as underwriter in connection with a distribution of securities of an issuer made by means of prospectus, where the issuer is a “related issuer” (or the equivalent) of the registrant or a “connected issuer” (or the equivalent) of the registrant, without certain required participation in the distribution by one or more other registrants, in respect of which the issuer is neither a related issuer (or the equivalent) nor a connected issuer (or the equivalent) of the registrant, shall not apply to the Filer in respect of a proposed distribution (the “Offering”) on a best efforts agency basis of subordinated debentures (the “Securities”) of The Bank of Nova Scotia (the “Bank”), subject to certain conditions;
AND WHEREAS the Securities are to be qualified for distribution by a short form prospectus of the Bank which has been filed on a final basis under SEDAR (the “Shelf Prospectus”), as supplemented by a prospectus supplement (the “Prospectus Supplement”) describing the specific terms of the Offering (the Shelf Prospectus and the Prospectus Supplement are collectively referred to as the “Prospectus”), expected to be filed shortly with the securities regulatory authority or regulator (the “Securities Regulators”) in each of the provinces and territories of Canada;
AND WHEREAS the Filer will be an underwriter of the Offering;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (the “OSC”) is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer is registered under the Legislation as a dealer in the categories of “broker” and “investment dealer” or equivalent categories and is not in default in respect of any of the requirements thereunder.
2. The Filer is an indirect wholly-owned subsidiary of the Bank.
3. The Bank is a Schedule I chartered bank under the Bank Act (Canada), which constitutes its charter. The Bank’s head office is located at 1709 Hollis Street, Halifax, Nova Scotia.
4. The Bank is a “reporting issuer” (or equivalent) under the Legislation of the Jurisdictions and is not in default of any requirements of the Legislation. The Bank is eligible to participate in the shelf distribution system set out in National Instrument 44 – 102 Shelf Distributions.
5. The Securities will be offered pursuant to the Prospectus.
6. The Decision to accept subscriptions to purchase the Securities will be made by the Bank. One or more officers of the Filer will provide financial advice to the Bank.
7. The Bank is, in relation to the Filer, a “related issuer” (or equivalent) and a “connected issuer” (or equivalent) as such terms are defined in the Legislation.
8. Since the Bank is a related issuer (or equivalent) and a connected issuer (or equivalent) of the Filer, and the Filer proposes to underwrite the largest portion of the Offering, the Offering will not comply with the Independent Underwriter Requirement contained in the Legislation.
9. The Filer and at least one underwriter in respect of which the Bank is not a “related issuer” or a “connected issuer” (an “Independent Underwriter” and together with the Filer and the other underwriters, the “Underwriters”) will offer the Securities for sale to the public on a best efforts agency basis as stipulated in an agency agreement to be executed in relation to the Offering.
10. The Underwriters will be named in the Prospectus Supplement in respect of the Offering and the Prospectus Supplement will contain a certificate signed by the Filer and each of the other Underwriters.
11. The Prospectus Supplement will contain the information specified in Appendix “C” of proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Instrument”) on the basis that the Bank is a related issuer (or equivalent) and “connected issuer” (or equivalent) of the Filer as such term is defined in the Proposed Instrument.
12. At least one Independent Underwriter will receive not less than 20 percent of the total management fees of the Offering (the “20% Independent Underwriter”).
13. The Prospectus Supplement will identify the 20% Independent Underwriter and disclose the role of the 20% Independent Underwriter in the structuring and pricing of the distribution and in the due diligence activities performed by the underwriters for the distribution.
AND WHEREAS the Filer has requested that the Decision of the Decision Makers, as varied by the Decision Makers, the application dated June 1, 2001 filed in connection with the Decision and the application to vary the Decision dated August 10, 2001 (collectively, the “Confidential Materials”) be held in confidence until November 14, 2001, subject to certain conditions;
AND WHEREAS pursuant to the System this MRRS 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;
THE DECISION of the Decision Makers, pursuant to the Legislation, is that
1. the Independent Underwriter Requirement shall not apply to the Filer in connection with the offering of the Securities provided that:
(a) the portion of the total management fees received in respect of the Offering of the Securities by at least one Independent Underwriter is at least the lesser of:
(i) 20 percent of the total management fees for the Offering; and
(ii) the largest portion of the management fees paid or payable to the Filer or any other registrant that is not an Independent Underwriter; and
(b) the Prospectus Supplement contains the information described by paragraphs 11 and 13 hereof; and
2. the Confidential Materials will be held in confidence by the Decision Makers until the occurrence of the earliest of the following:
(a) the date on which the Prospectus Supplement is filed with the Decision Makers or a press release or other public announcement in respect of the Offering is made by the Filer;
(b) the date the Filer advises the Decision Makers that there is no longer any need to hold the Confidential Materials in confidence; and
(c) November 14, 2001.