Thomson Reuters Corporation (Re), 2008 CanLII 41578

Headnote

NP 11-203 – decision exempting the Filer from the requirement in s. 3.1 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP for so long as the Filer prepares its financial statements in accordance with IFRS-IASB – for financial periods beginning on or after January 1, 2009 –Filer must provide specified disclosure regarding change to IFRS-IASB – if the Filer files interim financial statements prepared in accordance with Canadian GAAP in the year that the Filer adopts IFRS-IASB, those interim financial statements must be restated using IFRS-IASB - Filer wishes to change to IFRS-IASB to reduce the complexity of its financial statement preparation process

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 3.1.

Addendum

[If at the time of making the decision for a dual application or a coordinated review application, the decision maker in the principal regulator jurisdiction makes any comments about the application that would be relevant to staff or a decision maker in a non-principal regulator jurisdiction, staff should prepare an addendum to the memorandum summarizing the comments prior to circulating materials for opt-in.]

August 22, 2008

In the Matter of the Securities Legislation of Ontario (the Jurisdiction)

and

In the Matter of the Process for Exemptive Relief Applications in Multiple Jurisdictions

and

In the Matter of Thomson Reuters Corporation (the Filer)

Decision

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Filer from the requirement in section 3.1 of National Instrument 52-107 — Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP, for financial periods beginning on or after January 1, 2009 (the Exemption Sought), for so long as the Filer prepares its financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB).

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

(a) the Ontario Securities Commission is the principal regulator for this 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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the Passport Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is a corporation incorporated under the Business Corporations Act (Ontario) pursuant to articles of incorporation dated December 28, 1977. The registered office of the Filer is located at Suite 2706, Toronto Dominion Bank Tower, Toronto-Dominion Centre, Toronto, Ontario M5K 1A1.

2. The Filer is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions. The Filer is not, to its knowledge, in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdictions.

3. The Filer and Thomson Reuters PLC, a public limited company governed by the laws of England and Wales, are the parent companies of a unified group known as Thomson Reuters that operates under a dual listed company structure (the DLC Structure). Thomson Reuters principal executive office is located at 3 Times Square, New York, New York 10036.

4. Thomson Reuters had unaudited pro forma consolidated revenues of approximately US$12.4 billion in 2007.

5. The Filer’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol “TRI”. Thomson Reuters PLC’s ordinary shares are listed on the London Stock Exchange under the symbol “TRIL” and its American Depositary Shares, each representing six Thomson Reuters PLC ordinary shares, are listed on the Nasdaq Global Select Market under the symbol “TRIN”.

6. Thomson Reuters is subject to a diverse set of financial reporting requirements and prepares financial statements in accordance with Canadian generally accepted accounting principles (Canadian GAAP), International Financial Reporting Standards as adopted by the European Union and generally accepted accounting principles in the United States (US GAAP) as a result of its stock exchange listings in Toronto, London and New York.

7. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.

8. NI 52-107 sets out acceptable accounting principles for financial reporting under the Legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP with the exception that a registrant with the United States Securities and Exchange Commission may use US GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB.

9. In CSA Staff Notice 52-321 Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite section 3.1 of NI 52-107.

10. Subject to obtaining the Exemption Sought, the Filer intends to adopt IFRS-IASB effective January 1, 2009.

11. The Filer believes that the adoption of IFRS-IASB will avoid potential confusion for the users of its financial statements because the reporting requirements of all its primary regulators would be satisfied using one accounting standard. Additionally, the use of a single accounting standard would eliminate substantial complexity and cost from the Filer's financial statement preparation process.

12. The Filer has evaluated, and is satisfied as to, its overall readiness to transition from Canadian GAAP to IFRS-IASB effective January 1, 2009, including the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants to deal with the change.

13. The Filer has considered the implications of adopting IFRS-IASB effective January 1, 2009 on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward-looking information.

14. The Filer will disclose relevant information about its changeover to IFRS-IASB in its management’s discussion and analysis for the interim periods leading up to its changeover date as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards. In particular, based on its intention to adopt IFRS-IASB effective January 1, 2009, the Filer will discuss the following in its management’s discussion and analysis for the interim periods ended June 30, 2008 and ending September 30, 2008:

(a) the key elements and timing of its changeover plan;

(b) accounting policy and implementation decisions the Filer has made or will have to make;

(c) major differences the Filer has identified between its current accounting policies and those it expects to apply under IFRS-IASB; and

(d) the impact of the changeover on the key line items presented in the Filer’s interim financial statements for those periods.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, subject to all of the following conditions:

(a) for so long as the Filer prepares its financial statements for financial periods beginning on or after January 1, 2009 in accordance with IFRS-IASB;

(b) provided that the Filer provides all of the communication as described and in the manner set out in paragraph 14; and

(c) provided that if the Filer files interim financial statements prepared in accordance with Canadian GAAP in the year that the Filer adopts IFRS-IASB, upon the adoption of IFRS-IASB the Filer will restate any previous interim statements for the financial year in which it adopted IFRS-IASB that were originally prepared using Canadian GAAP.

“Jo-Anne Matear”

Jo-Anne Matear

Assistant Manager, Corporate Finance