Exemption Orders (Discretionary)
CROWN LIFE INSURANCE COMPANY
2001 BCSECCOM 497
Headnote:
Mutual Reliance Review System for Exemptive Relief Applications – Relief from requirement to prepare and mail an information circular where there are only two voting shareholders.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, s. 119(2)(b)
IN THE MATTER OF THE SECURITIES LEGISLATION OF SASKATCHEWAN, ONTARIO, BRITISH COLUMBIA, ALBERTA, QUEBEC, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF CROWN LIFE INSURANCE COMPANY
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Saskatchewan, Ontario, British Columbia, Alberta, Quebec, Nova Scotia, and Newfoundland (the “Jurisdictions”) has received an application from Crown Life Insurance Company (the “Filer”), for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the requirements contained in the Legislation to:
1. Except in Nova Scotia, prepare and deliver a management information circular (the “Information Circular”) to its voting security holders in respect of any meeting at which only the holders of common shares of the Filer (the “Common Shares”) will be entitled to vote, and to file such Information Circular otherwise required to be prepared for such meeting, shall not apply to the Filer subject to certain conditions; and
2. Except in Quebec, include a graph (the “Performance Graph”) depicting the cumulative total return for Common Shares against that of the relevant stock exchange in the Annual Filing of a Reporting Issuer (“Annual Filing”) or in the Information Circular, as applicable shall not apply to the Filer.
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Saskatchewan Securities Commission is the principal regulator for this Application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer was incorporated by Special Act of Parliament on June 14, 1900 and was continued under the Insurance Companies Act (Canada) (the “ICA”) on November 12, 1992;
2. The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia and Newfoundland;
3. The Filer’s authorized and issued capital consists of the following:
a. an unlimited number of Common Shares, provided that the aggregate consideration received by the Filer for all Common Shares issued and outstanding at anytime shall not exceed one billion dollars; 3,201,194 Common Shares are currently issued and outstanding;
b. an unlimited number of Class I Preferred Shares, issuable in series, provided that the aggregate consideration received by the Filer for all Class I Preferred Shares issued and outstanding shall not exceed three hundred million dollars (the “Class I Preferred Shares”); the holders of the Class I Preferred Shares are not entitled to notice of, to attend or to vote at any meetings of the holders of the Common Shares unless, in the aggregate, eight dividends on any series of the Class I Preferred Shares remain unpaid; 3,652,599 Class I Preferred Shares, issued as Series A (the “Series A Preferred Shares”) are currently issued and outstanding;
c. an unlimited number of Second Preferred Shares, issuable in series, provided that the aggregate consideration received by the Filer for all Second Preferred Shares issued and outstanding shall not exceed two hundred and fifty million dollars (the “Second Preferred Shares”); the holders of the Second Preferred Shares are not entitled to notice of or to attend or to vote at any meetings of the holders of the Common Shares unless, in the aggregate, eight dividends on any series of the Second Preferred Shares remain unpaid; no Second Preferred Shares are currently issued and outstanding; and
d. one Fifth Preferred Share (the “Fifth Preferred Share”); the holder of the Fifth Preferred Share is entitled to receive notice of and to attend all meetings of the holders of the Common Shares but does not have the right to vote except at a meeting of the holder of the Fifth Preferred Share as a class; the holder of the Fifth Preferred Share is entitled to vote separately as a class until December 31, 2031 with respect to any proposal to change the location of the Filer’s head office to a place not in the Province of Saskatchewan; the one Fifth Preferred Share is issued and outstanding;
4. As a corporation organized under the ICA, the Filer also has approximately 35,000 holders of participating policies. Pursuant to the ICA, the policy holders are entitled to notice of, to attend and to vote at all meetings of the voting policy holders;
5. The Filer has a financial year-end of December 31;
6. The Filer is not in default of any of the requirements of the Legislation or any other securities or corporate legislation to which it is subject;
7. Neither the Filer nor its promoters, directors or officers are the subject of any enforcement or other administrative or legal proceedings in any jurisdiction with respect to the trading or distribution of securities;
8. On October 27, 2000, the Filer initiated an issuer bid (the “Issuer Bid”) to purchase for cancellation the Common Shares held by those shareholders (the “Minority Shareholders”) other than HARO Financial Corporation (“HARO”) and 159524 Canada Inc. (“159524”), a wholly owned subsidiary of Extendicare Inc. (“Extendicare”). Upon the expiry of the Issuer Bid, the Filer commenced a compulsory acquisition pursuant to the ICA (the “Acquisition”) in which it took up and cancelled the remaining Common Shares held by the Minority Shareholders that had not tendered to the Issuer Bid;
9. As a result of the Issuer Bid and subsequent Acquisition, the Common Shares are now owned wholly by HARO and 159524 (the “Shareholders”);
10. The Series A Preferred Shares are publicly traded and widely held. The Fifth Preferred Share is owned by HARO;
11. Subsequent to the Issuer Bid and Acquisition, the Common Shares were de-listed from the Toronto Stock Exchange (“TSE”) at the close of business on January 15, 2001 and are not listed on any other exchange;
12. Other than the Series A Preferred Shares, the Filer has no other securities that are listed on any exchange in Canada or that are publicly traded;
13. The Shareholders are the only security holders eligible to receive notice of the Filer’s annual general meetings;
14. HARO has its head office in Regina, Saskatchewan and both 159524 and Extendicare have their head office in Markham, Ontario;
15. The Shareholders, as insiders and the only voting equity holders of the Filer, may currently access the information mandated to be disclosed in the Information Circular. Consequently, the cost to the Filer of preparing and delivering an Information Circular substantially outweighs the negligible benefit to be gained from the distribution of the Information Circular to the Shareholders;
16. In the event that the Filer intends to hold a meeting of its security holders in which the holders of the Series A Preferred Shares would be entitled to notice, to attend and to vote, the Filer will prepare, deliver and file an Information Circular as required by the Legislation;
17. As there is no longer a public market for the Common Shares, members of the investing public would not be prejudiced by exempting the Filer from the requirement of filing an Information Circular. The Filer will be required to prepare and file the Annual Filing, which will be available to the investing public and will contain substantially the same information to be disclosed in the Information Circular; and
18. As the Common Shares have been delisted from the TSE as of the close of business on January 15, 2001, and are not listed on any other exchange, there is no longer any available information from which to prepare the Performance Graph;
AND WHEREAS pursuant to the System this Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
AND WHEREAS each Decision Maker is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision hasbeen met;
THE DECISION of the Decision Makers pursuant to the Legislation is that the requirements contained in the Legislation to:
1. Except in Nova Scotia, prepare and deliver the Information Circular to its voting security holders in respect of any meeting at which only the holders of Common Shares will be entitled to vote, and to file such Information Circular otherwise required to be prepared for such meeting, shall not apply to the Filer provided that the Filer has obtained a written waiver, which has not been revoked, from all holders of its Common Shares outstanding on the record date determined for such meeting, waiving the requirement that the Filer provide such holders with an Information Circular in respect of such meetings; and
2. Except in Quebec, include the Performance Graph in the Annual Filing or in the Information Circular, as applicable shall not apply to the Filer.
DATED May 2, 2001
Art Wakabayashi
Vice-Chairperson