Canadian Imperial Bank of Commerce and CIBC Capital Trust (Re), 2009 CanLII 12805

Headnote

MI 11-102 and NP 11-203 as applicable – capital trust established by bank to issue capital trust securities as cost-effective means of raising capital for Canadian bank regulatory purposes exempted from eligibility requirements to file a short form prospectus; certain form requirements and the 10-day notice requirement– trust is not currently a reporting issuer – relief granted as disclosure regarding the bank is more relevant and bank has been reporting issuer for many years – relief subject to conditions – National Instrument 44-101 Short Form Prospectus Distributions – relief also granted for temporary confidentiality of decision

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.1, 2.8

Form 44-101F1 Short Form Prospectus, items 6 and 11.

January 12, 2009

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 Canadian Imperial Bank of Commerce (the Filer or the Bank) and CIBC Capital Trust (the Trust)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for a decision (the Requested Relief) that:

A. the Trust be exempted from the following short form prospectus distribution requirements in connection with offerings by the Trust from time to time of CIBC Tier 1 Notes (as defined herein):

(i) the requirements of Part 2 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), which set forth the eligibility requirements to enable an issuer to file a prospectus in the form of a short form prospectus;

(ii) the disclosure requirements (the Disclosure Requirements) in Item 6 (Earnings Coverage Ratios) and Item 11 (Documents Incorporated by Reference), with the exception of Item 11.1(1)(5), of Form 44-101F1 Short Form Prospectus of NI 44-101 (Form 44-101F1) in respect of the Trust, as applicable; and

(iii) the requirement in Section 2.8 of NI 44-101 to file a notice of intention to file a short form prospectus no fewer than 10 business days prior to the filing of the Trust’s first preliminary short form prospectus.

B. the Trust is qualified to file a prospectus in the form of a short form prospectus in accordance with NI 44-101; and

C. the Application and this decision document be held in confidence by the principal regulator, subject to certain conditions.

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 the provinces and territories of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Saskatchewan, Québec, and the Yukon, Northwest Territories and Nunavut.

Interpretation

Defined terms contained 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:

The Bank

1. The Bank is a Schedule 1 chartered bank subject to the provisions of the Bank Act (Canada). The head office of the Bank is located at Commerce Court, Toronto, Ontario, Canada, M5L 1A2.

2. The authorized share capital of the Bank consists of an unlimited number of: (i) common shares (Bank Common Shares); (ii) Class A Preferred Shares (Bank Preferred Shares); and (iii) Class B Preferred Shares. There are currently no Class B Preferred Shares outstanding.

3. The Bank Common Shares are listed on the Toronto Stock Exchange and the New York Stock Exchange. The Bank Preferred Shares are listed on the Toronto Stock Exchange other than the unlisted Series 28 Preferred Shares.

4. The Bank is a reporting issuer, or the equivalent, in each province and territory of Canada that provides for a reporting issuer regime and is not, to the best of its knowledge, in default of securities legislation in any jurisdiction.

5. The Bank is qualified to use the short form prospectus system provided under NI 44-101.

The Trust

6. The Trust will be a trust established under the laws of the Province of Ontario pursuant to a declaration of trust prior to the filing of a preliminary prospectus by the Trust and the Bank.

7. The Trust proposes to conduct an initial public offering (the Offering) of subordinated notes (the CIBC Tier 1 Notes) to be designated CIBC Tier 1 Notes - Series A in each of the provinces and territories of Canada and may, from time to time, issue further series of similar CIBC Notes. As a result of the Offering, the capital of the Trust will consist of CIBC Tier 1 Notes - Series A and voting trust units (the Voting Trust Units and, collectively with the CIBC Tier 1 Notes - Series A, the Trust Securities). All of the Voting Trust Units will be held, directly or indirectly, by the Bank.

8. The Trust will be established for the purpose of effecting offerings of Trust Securities in order to provide the Bank with a cost-effective means of raising capital for Canadian bank regulatory purposes by means of: (i) creating and selling the Trust Securities; and (ii) acquiring and holding assets, which will consist primarily of one or more senior deposit notes of the Bank (Bank Deposit Notes, and together with the other assets of the Trust, the Trust Assets). The Trust Assets will generate income for distribution to holders of Trust Securities. The Trust will not carry on any operating activity other than in connection with the offering of Trust Securities and in connection with the Trust Assets.

9. As a result of the Offering, the Trust will become a reporting issuer, or the equivalent, in each of the provinces and territories of Canada that provide for a reporting issuer regime.

CIBC Tier 1 Notes

10. The CIBC Tier 1 Notes - Series A will pay a fixed rate of interest on such date(s) (Interest Payment Dates) as may be described in the prospectus for the Offering (the Prospectus) until such date as described in the Prospectus, following which the interest will be reset every five years (Interest Reset Dates) until maturity at a Government of Canada Yield (as defined in the Prospectus) plus a spread to be described in the Prospectus. The CIBC Tier 1 Notes - Series A will mature in 2108.

11. Under an assignment, set-off and trust agreement to be entered into among the Bank, the Trust and a party acting as indenture trustee, the Bank will agree, for the benefit of the holders of the CIBC Tier 1 Notes - Series A, that if (i) the Bank elects, at its option, prior to the commencement of the interest period ending on the day immediately preceding an Interest Payment Date, that holders of CIBC Tier 1 Notes - Series A invest interest thereon in a new series of Bank Preferred Shares (the Deferral Event Preferred Shares); or (ii) for whatever reason, interest is not paid in full in cash on the CIBC Tier 1 Notes - Series A on any Interest Payment Date (in either case, an Other Deferral Event), the Bank will not declare dividends of any kind on the Bank Preferred Shares, or if no Bank Preferred Shares are then outstanding, on the Bank Common Shares (the Dividend Restricted Shares) for a specified period of time following the relevant Interest Payment Date (the Dividend Stopper Undertaking). Accordingly, it is in the interest of the Bank to ensure, to the extent within its control, that the Trust complies with the obligation to pay interest on the Interest Payment Date so as to avoid triggering the Dividend Stopper Undertaking.

12. On each Interest Payment Date on which a Deferral Event (as defined below) has occurred, holders of CIBC Tier 1 Notes - Series A will be required to invest interest paid on the CIBC Tier 1 Notes - Series A in a new series of Deferral Event Preferred Shares. A Deferral Event means: (i) an Other Deferral Event; or (ii) the Bank has failed to declare dividends on all of the outstanding Bank Preferred Shares or, if no Bank Preferred Shares are then outstanding, on the Bank Common Shares, in accordance with its ordinary dividend practice in the 90 days preceding the commencement of the interest period for the CIBC Tier 1 Notes - Series A ending on the day preceding the relevant Interest Payment Date.

13. The CIBC Tier 1 Notes - Series A will be automatically exchanged, without the consent of the holder, for a new series of newly-issued Bank Preferred Shares (the Automatic Exchange Preferred Shares) upon the occurrence of certain stated events relating to the solvency of the Bank or actions taken by the Superintendent of Financial Institutions Canada in respect of the Bank (an Automatic Exchange).

14. If, for any reason following the Automatic Exchange, any CIBC Tier 1 Notes - Series A remain outstanding, the Trust will redeem each $1000 principal amount of CIBC Tier 1 Notes - Series A not so exchanged for Automatic Exchange Preferred Shares to be issued by the Bank to the Trust.

15. The Trust may, subject to approval of the Superintendent of Financial Institutions Canada (Superintendent Approval), at its option, on a date to be described in the Prospectus not prior to five years following the date of issuance of the CIBC Tier 1 Notes - Series A, redeem the CIBC Tier 1 Notes - Series A. The price payable in respect of any such redemption will include an early redemption compensation component in the event of a redemption on any date other than an Interest Reset Date. The price payable in all other cases will be the principal amount of the CIBC Tier 1 Notes - Series A together with any accrued and unpaid interest thereon to but excluding the date fixed for redemption (the Redemption Price).

16. Upon the occurrence of certain regulatory or tax events affecting the Bank or the Trust, the Trust may, at its option, without the consent of holders of the CIBC Tier 1 Notes - Series A but subject to Superintendent Approval, redeem at any time all but not less than all of the CIBC Tier 1 Notes - Series A at a price equal to par plus accrued and unpaid interest to but excluding the date fixed for redemption.

17. The Trust may, after the date that is five years after the date of issuance of the CIBC Tier 1 Notes - Series A, purchase in whole or in part, subject to Superintendent Approval, the CIBC Tier 1 Notes - Series A. CIBC Tier 1 Notes - Series A purchased by the Trust shall be cancelled and not re-issued.

18. Subject to Superintendent Approval, the CIBC Tier 1 Notes - Series A will qualify as Tier 1 Capital of the Bank under the Innovative Capital Guidelines issued by the Superintendent.

19. The Bank will covenant that it will maintain direct or indirect ownership of 100% of the outstanding Voting Trust Units.

20. As long as any CIBC Tier 1 Notes - Series A are outstanding, and are held by any person other than the Bank or an affiliate of the Bank, the Trust may only be terminated in certain limited circumstances with the approval of the Bank as the holder of the Voting Trust Units and with Superintendent Approval. As long as any CIBC Tier 1 Notes - Series A are outstanding and held by any person other than the Bank, or an affiliate thereof, the Bank will not approve the termination of the Trust unless the Trust has sufficient funds to pay the Redemption Price.

21. Pursuant to an administration agreement to be entered into between the trustee of the Trust (the Trustee) and the Bank, the Trustee will delegate to the Bank certain of its obligations in relation to the administration of the Trust. The Bank, as administrative agent, will provide advice and counsel with respect to the administration of the day-to-day operations of the Trust and other matters as may be requested by the Trustee from time to time.

22. Because of the terms of the CIBC Tier 1 Notes, and given that the assets of the Trust will consist primarily of Bank Deposit Notes and the Bank will, under the administration agreement, act as administrative agent of the Trust, information concerning the affairs and financial performance of the Bank, as opposed to that of the Trust, is meaningful to holders of CIBC Tier 1 Notes.

23. It is expected that the CIBC Tier 1 Notes - Series A will receive an approved rating from an approved rating organization, as defined in NI 44-101.

24. At the time of the filing of any prospectus in connection with offerings of CIBC Tier 1 Notes (including the Offering):

(i) the prospectus will be prepared in accordance with the short form prospectus requirements of NI 44-101 other than the Disclosure Requirements, except as permitted by the securities legislation in Canada;

(ii) the Trust will comply with all of the filing requirements and procedures set out in NI 44-101 except as varied by this decision or as permitted by the Legislation;

(iii) the prospectus will incorporate by reference the documents that would be required to be incorporated by reference under Item 11 of Form 44-101F1 if the Bank were the issuer of such securities;

(iv) the prospectus disclosure required by Item 11 (other than Item 11.1(1)(5)) of Form 44-101F1 in respect of the Trust) will be addressed by incorporating by reference the Bank's public disclosure documents; and

(v) the Bank will satisfy the criteria in section 2.2 of NI 44-101 if the word "issuer" were replaced with "Bank".

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 Requested Relief is granted, provided that:

(i) the Trust and the Bank, as applicable, will comply with paragraph 24 above;

(ii) the Bank remains the direct or indirect beneficial owner of all of the outstanding Voting Trust Units;

(iii) the Bank, as holder of the Voting Trust Units, will not propose changes to the terms and conditions of any outstanding CIBC Tier 1 Notes offered and sold pursuant to a short form prospectus of the Trust filed under this decision that would result in such CIBC Tier 1 Notes being exchangeable for securities other than Bank Preferred Shares;

(iv) the Trust has minimal assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Trust Securities;

(v) the Trust issues a news release and files a material change report in accordance with Part 7 of NI 51-102, as amended, supplemented or replaced from time to time, in respect of any material change in the affairs of the Trust that is not also a material change in the affairs of the Bank;

(vi) the Trust becomes, on or before the filing of a preliminary short form prospectus in connection with the Offering and thereafter remains an electronic filer under NI 13-101;

(vii) following the Offering, the Trust is a reporting issuer in at least one jurisdiction in Canada;

(viii) following the Offering, the Trust files with the securities regulatory authority in each jurisdiction in which it becomes a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction: (a) under all applicable securities legislation; (b) pursuant to an order issued by the securities regulatory authority; or (c) pursuant to an undertaking to the securities regulatory authority;

(ix) the securities to be distributed: (a) have received an approved rating on a provisional basis, (b) are not the subject of an announcement by an approved rating organization, which the Trust is or ought reasonably to be aware, that the approved rating given by the organization may be downgraded to a rating category that would not be an approved rating, and (c) have not received a provisional or final rating lower than an approved rating from any approved rating organization; and

(x) the Trust files a notice declaring its intention pursuant to section 2.8 of NI 44-101 prior to or concurrently with the filing of the preliminary short form prospectus for the Offering.

The further decision of the principal regulator under the Legislation is that the Application and this decision shall be held in confidence by the principal regulator until the earlier of: (i) the date the Filer or the Trust publicly announces the Offering; (ii) the date that a preliminary short form prospectus is filed in respect of the Offering; (iii) the date the Filer or the Trust advises the Decision Makers that there is no longer any need for the Application and the decision document to remain confidential; and (iv) March 31, 2009.

“Jo-Anne Matear”

Jo-Anne Matear, Assistant Manager

Corporate Finance