Headnote
National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions - Relief granted from the requirement to file financial statements that have been audited in accordance with either Canadian or United States generally accepted auditing standards with a business acquisition report – Financial statements audited in accordance with International Standards on Auditing.
Applicable Legislative Provisions
National Instrument 52-107 – Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 6.2 and 9.1
National Instrument 51-102 – Continuous Disclosure Obligations, ss. 8.2. 8.3 and 8.4
February 12, 2010
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, QUEBEC AND NOVA SCOTIA (the “Jurisdictions”)
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
YM BIOSCIENCES INC.
(the “Filer”)
DECISION
Background
The security regulatory authority or regulator in each of Jurisdictions (the “Decision Maker”) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that the Filer be exempted from complying with section 6.2 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (“NI 52-107”) pursuant to which the annual financial statements of the acquired company, which must be included in the Filer’s BAR (as defined below) in respect of the Acquisition (as defined below) pursuant to section 8.4 of National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”), must be audited in accordance with the prescribed form of auditing standards set out in section 6.2 of NI 52-107 (“Requested Relief”).
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 (the Principal Regulator); and
(b) the Filer has provided notice that subsection 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, Québec and Nova Scotia.
Interpretation
Terms defined in National Instrument 14-101 Definitions have the same meaning as is used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is a corporation continued under the laws of Nova Scotia.
The Filer’s head office is located at 5054 Orbitor Drive, Building 11, Suite 400, Mississauga, Ontario, L4W 4Y4.
The Filer is a biopharmaceutical company engaged in the development of drugs and other products primarily for the treatment of cancer. The Filer in-licenses substances designed for use by cancer patients in anti-cancer therapy in order to advance them along the regulatory and clinical pathways toward commercial approval.
The common shares of the Filer are listed and posted for trading on the Toronto Stock Exchange under the symbol “YM” and the NYSE AMEX under the symbol “YMI”.
The Filer is not in default of any of its obligations as a reporting issuer under the Legislation of the Jurisdictions.
As described in a press release dated October 5, 2009 and a material change report dated October 9, 2009, the Filer proposed to merge with Cytopia Limited (“Cytopia”) pursuant to a scheme of arrangement in Australia.for the purpose of acquiring (the “Acquisition”) all of the outstanding shares of Cytopia. The Acquisition was completed on January 29, 2010 as disclosed in a press release dated February 1, 2010 and a material change report dated February 3, 2010.
Prior to the Acquisition, Cytopia was a public company based in Australia whose ordinary shares traded on the Australian Stock Exchange.
The Acquisition was a “significant acquisition” for the Filer, within the meaning of section 8.3 of NI 51-102, such that the Filer is required to file a business acquisition report (the “BAR”) in accordance with section 8.2 of NI 51-102 in respect of the Acquisition.
Pursuant to section 8.4 of NI 51-102, audited annual financial statements of Cytopia for the period ended June 30, 2009 (the “Audited Financial Statements”) are required to be included in the BAR.
The Audited Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and audited in accordance with International Standards on Auditing (“ISA”) issued by the International Auditing and Assurance Standards Board (“IAASB”).
The auditor of Cytopia has expertise and experience in ISA. The auditor of Cytopia uses a standard audit methodology that complies with ISA.
The auditor of Cytopia is a member of the BDO network of accounting firms worldwide. The auditor of Cytopia is able to make the statements set out in paragraph 2 of this decision as a result of consultations with the auditor's Canadian associate firm in the BDO international network.
Section 6.2 of NI 52-107 does not permit the Filer to file the Audited Financial Statements audited in accordance with ISA as the Filer is not a “foreign issuer” within the meaning of NI 52-107.
As announced by the Canadian Institute of Chartered Accountants, the Canadian Auditing and Assurance Standards Board is adopting ISA as Canadian Auditing Standards (“CAS”) for the audits of financial statements. Once effective, the CAS will constitute Canadian generally accepted auditing standards for financial statement audits; the CAS will come into effect for audits of financial statements for periods ending on or after December 14, 2010.
The Audited Financial Statements were prepared in accordance with IFRS issued by the IASB and audited in accordance with ISA issued by the IAASB pursuant to requirements governing publicly-traded companies in Australia, including the requirements of the Australian Stock Exchange.
Having the Audited Financial Statements audited a second time in accordance with Canadian or U.S. GAAS would cause the Filer to incur substantial additional costs and management time and potentially material delay in filing its BAR in respect of the Acquisition.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that:
the Audited Financial Statements are audited in accordance with ISA issued by the IAASB; and
the Audited Financial Statements are accompanied by an auditor's report from the auditor of Cytopia, which contains or is accompanied by a statement by the auditor that:
a. describes any material differences in the form and content of the auditor's report as compared to an auditor's report prepared in accordance with Canadian GAAS; and
b. indicates that an auditor's report prepared in accordance with Canadian GAAS would not contain a reservation.
“Jo-Anne Matear”
Assistant Manager, Corporate Finance
Ontario Securities Commission