Exemption Orders (Discretionary)
DIEBOLD, INCORPORATED
2001 BCSECCOM 1133
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from the prospectus requirements for first trades in shares issued under an arrangement where prospectus relief unavailable for technical reasons – Issuer that becomes reporting in British Columbia following the arrangement deemed to have ceased to be a reporting issuer in British Columbia
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 1(1), 61 and 76
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF DIEBOLD, INCORPORATED
AND
IN THE MATTER OF GLOBAL ELECTION SYSTEMS INC.
MRRS DECISION DOCUMENT
[para 1]
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland (the “Jurisdictions”)has received an application from Diebold, Incorporated (“Diebold”) for a decision:
(a) under the securities legislation of the Jurisdictions (the “Legislation”) that the prospectus requirement, as defined in National Instrument 14-101 Definitions (the “Prospectus Requirement”) shall not apply to certain trades in securities of Diebold acquired in connection with an arrangement (the “Arrangement”) among Diebold, Diebold Acquisition Ltd. (“Subco”) and Global Election Systems Inc. (“Global”), and
(b) under the Legislation of British Columbia that Diebold be deemed to have ceased to be a reporting issuer in British Columbia immediately following the Arrangement;
[para 2]
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the British Columbia Securities Commission is the principal regulator for this application;
[para 3]
AND WHEREAS Diebold has represented to the Decision Makers that:
1. Diebold was incorporated under the laws of the state of Ohio in August 1876; its corporate headquarters are located in Canton, Ohio and its management is also located in the United States;
2. Diebold is a global provider of integrated self-service delivery systems and services; it develops, implements and services advanced self-service and security delivery systems, traditionally for financial institutions and increasingly for retail and other applications; Diebold is a multinational corporation with representation in more than 80 countries and revenues for the financial year ended December 31, 2000 of approximately US$1.7 billion;
3. Diebold’s authorized capital consists of 125,000,000 shares of Common stock, US$1.25 par value per share (the “Diebold Shares”) and 1,000,000 shares of Preferred stock, without par value; as of August 9, 2001 there were 72,095,743 Diebold Shares and no shares of Preferred stock issued and outstanding;
4. as of August 30, 2001 there were approximately 27 registered holders of Diebold Shares in Canada holding an aggregate of 140,811 Diebold Shares, representing approximately 0.2% of the total number of issued and outstanding Diebold Shares;
5. as of August 9, 2001, there were 7,348,547 Diebold Shares reserved for issuance pursuant to outstanding incentive and stock options, none of which, to the knowledge of Diebold, are held by residents of Canada;
6. the Diebold Shares are listed on the New York Stock Exchange (the “NYSE”) under the symbol “DBD”;
7. Diebold is subject to the United States Securities Exchange Actof 1934, as amended (the “1934 Act”); to the best of its knowledge, Diebold is not in default of any requirements of the 1934 Act;
8. Diebold is not a reporting issuer or the equivalent under the securities legislation of any jurisdiction of Canada, but, because of the Arrangement, Diebold will become a reporting issuer under the Legislation of British Columbia as of the date of the Arrangement;
9. Subco was incorporated under the BCCA on August 29, 2001;
10. the authorized capital of Subco consists of 1,000,000 Common shares, of which 100 Common shares are currently issued and outstanding and held by Diebold;
11. Subco is a holding company and will not conduct any business; upon completion of the Arrangement, Subco or Diebold will hold all of the issued and outstanding common shares of Global;
12. Global was formed in November 1991 under the BCCA by way of amalgamation; Global’s United States corporate headquarters are in McKinney, Texas and its Canadian office is in Vancouver, British Columbia;
13. Global, through its wholly-owned United States subsidiary Global Election Systems, Inc., a Delaware corporation, manufactures and distributes computerized electronic election management systems; over 850 jurisdictions in North America use its AccuVote optical scan voting system or its AccuVote-TS touch screen voting system; its revenues for the financial year ended June 30, 2001 were approximately US$12,163,886;
14. the authorized capital of Global consists of 100,000,000 common shares without par value (the “Global Shares”) and 20,000,000 convertible preferred shares without par value; as of September 4, 2001, approximately 20,695,340 Global Shares and no preferred shares were issued and outstanding;
15. as of September 4, 2001, 1,355,000 Global Shares were reserved for issuance under outstanding stock options (“Global Options”) and 950,000 Global Shares were reserved for issuance under outstanding warrants (“Global Warrants”); of these, residents of Canada held Global Options and Global Warrants entitling them to purchase, in the aggregate, 985,000 Global Shares;
16. the Global Shares are listed on The Toronto Stock Exchange (the “TSE”) and the American Stock Exchange (“AMEX”) under the symbols GSM and GLE, respectively;
17. Global is a reporting issuer under the Legislation of British Columbia and Ontario; it is also subject to the reporting requirements of the 1934 Act;
18. an extraordinary general meeting (the “Meeting”) of the Global Shareholders was held on October 26, 2001, at which the Global Shareholders approved the Arrangement;
19. in connection with the Meeting, Global sent the Global Shareholders a management information circular containing prospectus level disclosure (except with respect to the requirement to reconcile certain financial information to Canadian generally accepted accounting principles, for which regulatory relief was granted) of the Arrangement and the business and affairs of each of Diebold and Global;
20. the Arrangement has been approved by the Supreme Court of British Columbia;
21. under the Arrangement, the following will be deemed to occur at the effective time of the Arrangement (the “Effective Time”):
(a) the issued and outstanding Global Shares, other than those held directly or indirectly by Diebold or Global and those held by dissenting shareholders, will be transferred to Subco or Diebold in exchange for cash and Diebold Shares, calculated based on the applicable exchange ratio, and holders of such Global Shares will cease to have any rights as Global Shareholders other than the right to be paid the exchange consideration; and
(b) the Global Shares held by dissenting shareholders who have validly exercised their dissent rights will be transferred to Global and cancelled and such dissenting shareholders will cease to have any rights as Global Shareholders other than the right to be paid the fair value of their Global Shares;
22. holders of Global Options are expected to be dealt with in accordance with agreements entered into prior to the completion of the Arrangement that either terminate the Global Options or entitle the holders to receive the same consideration paid to the Global Shareholders on exercise of the Global Options following the Arrangement;
23. any holders of Global Warrants following the Arrangement are expected to be entitled to receive the same consideration paid to the Global Shareholders on the exercise of the Global Warrants;
24. Diebold is making an application to the NYSE to have the Diebold Shares issued under the Arrangement listed for trading on the NYSE;
25. following the Effective Time, Diebold intends to have Global delisted from the TSE and AMEX, and intends to file an application with the applicable Canadian securities regulatory authorities to have Global cease to be a reporting issuer;
26. following the Arrangement, it is expected that holders of Diebold Shares resident in Canada will hold less than 1% of the issued and outstanding Diebold Shares; in addition, the number of holders of Diebold Shares resident in Canada will represent less than 10% of the total number of holders of Diebold Shares;
27. following the Arrangement, holders of Diebold Shares resident in Canada will be provided with the same continuous disclosure materials as are provided to holders of Diebold Shares resident in the United States; and
28. there is no market for the Diebold Shares in Canada and none is expected to develop; Diebold does not presently intend to access the public markets in Canada for financing;
[para 4]
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
[para 5]
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;
[para 6]
THE DECISION of the Decision Makers under the Legislation is that the first trades of Diebold Shares acquired by Global Shareholders, the holders of Global Options and the holders of Global Warrants in connection with the Arrangement shall not be subject to the Prospectus Requirement of the Legislation, provided such first trades are made through an exchange or market outside of Canada or to a person or company outside of Canada;
[para 7]
THE FURTHER DECISION of the Decision Maker in British Columbia is that Diebold be deemed to have ceased to be a reporting issuer under the Legislation of British Columbia, immediately following the Effective Time.
[para 8]
DATED November 30, 2001.
Brenda Leong
Director