Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Relief granted from the insider reporting requirements for insider in respect of exercise of options and the acquisition, transfer and disposition of commons shares pursuant to automatic securities disposition plans, subject to insider filing an annual report of such transactions
Applicable Legislative Provisions
Securities Act,R.S.O. 1990, c.S.5, as am., ss. 107(2), 121(2)(a)(ii)
Ontario Securities Commission’s Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Purchase Plans
January 22, 2010
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 JIM BALSILLIE (THE INSIDER) AND RESEARCH IN MOTION LIMITED (RIM, AND COLLECTIVELY WITH THE INSIDER, THE FILERS)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption pursuant to section 121(2)(a)(ii) of the Securities Act (Ontario) (the Act) from the requirements set out in section 107(2) of the Act that the Insider file an insider report within 10 days of each (i) disposition of Shares effected pursuant to the Plans (as defined below) and (ii) acquisition of control or direction over Shares as a result of a donation of Shares to the Balsillie Family Foundation pursuant to the Plans (the Exemption Sought).
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 Filers have 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, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador.
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 in this decision.
Representations
This decision is based on the following facts represented by the Filers:
RIM is a corporation amalgamated under the Business Corporations Act (Ontario).
RIM’s registered and principal business office is 295 Phillip Street, Waterloo, Ontario, N2L 3W8.
RIM is a reporting issuer in each of the provinces of Canada and its Shares are listed for trading on the Toronto Stock Exchange and the NASDAQ Global Select Market.
The Insider is the Co-Chief Executive Officer of RIM and is an “insider” of RIM as that term is defined in the Legislation.
On May 15, 2009, the Insider and The Balsillie Family Foundation each adopted an automatic securities disposition plan (each, a Plan and together, the Plans) pursuant to which the Insider and/or the Balsillie Family Foundation, as applicable, have exercised certain options (Options) to acquire common shares of RIM (Shares) and have sold or donated, and will sell or donate, certain Shares. In accordance with RIM’s Insider Trading Policy, the Plans were pre-cleared by the Compensation, Nomination & Governance Committee of RIM’s Board of Directors, which was and is comprised of independent directors. At the time of entry into the Plans, the Insider was not in possession of any material undisclosed information in relation to RIM.
Under the Plans, a registered investment dealer (the Broker) has been appointed as broker to effect the exercises of Options (Exercises) on behalf of the Insider and the sales and donations of Shares (each sale or donation, a Disposition) pursuant to the Plans. The Exercises and Dispositions have been and will be effected by the Broker subject to the terms and conditions of the Plans and in accordance with the pre-determined instructions which are appended to the Plans as to the date of exercise, the number or dollar value of Options to be exercised, the number or dollar value of Shares to be donated or sold, and other relevant information. Exercises and Dispositions under the Plans commenced on August 19, 2009. As of the date hereof, all Options subject to the Plans have been exercised pursuant to the Plans. All required insider reports have been filed in respect of such Exercises and Dispositions.
Apart from setting trading parameters when the Plans were established, the Insider has no authority, influence or control over any Exercises or Dispositions effected by the Broker pursuant to the Plans, and has agreed not to attempt to exercise any authority, influence or control over such Exercises or Dispositions.
At the time of entry into the Plans, the Insider provided the Broker with a certificate of RIM confirming that RIM had pre-cleared the adoption of the Plans in accordance with RIM’s Insider Trading Policy and certifying that, to the best of RIM’s knowledge, the Insider was not in possession of material non-public information about RIM.
The Insider’s Plan provides for weekly sales of Shares up to a maximum value of Cdn$360 million of sales over the up to 24-month duration of the Plan, subject to a limit order price.
The Insider’s Plan also provides for weekly donations of Shares to the Balsillie Family Foundation up to a maximum value of Cdn$100 million of donations over the up to 24-month duration of the Plan, as well as weekly donations of Shares to the Centre for International Governance Innovation (CIGI) up to a maximum value of Cdn$57 million of donations over the up to 24-month duration of the Plan, subject to limit order prices in certain cases. Under the terms of its Plan, the Balsillie Family Foundation will immediately sell the Shares received from the Insider, subject to certain pre-determined instructions which are contained in the Plan. Under the terms of a separate automatic security disposition plan entered by CIGI, it will immediately sell the Shares received from the Insider.
Exercises and Dispositions under the Plans did not commence until after the expiry of a three-month cooling-off period following the adoption of the Plans in accordance with RIM’s Insider Trading Policy.
The Broker will execute Share sales under each of the Plans in accordance with principles of best execution and subject to volume restrictions intended to minimize any negative price impact of such sales on the market and to attempt to maximize the prices obtained for the Shares sold.
The Plans will automatically terminate on the earliest to occur of:
(a) 4:00 p.m. (Eastern time) on May 15, 2011;
(b) Should the Insider die, the time on the date the Broker receives notice of the Insider’s death; or
(c) 9:30 a.m. (Eastern time) on the date which is the 61st day after the Insider’s employment at RIM has ceased for any reason.
To modify, terminate or amend a Plan (other than in accordance with the termination provisions listed in paragraph 13 above), the Plan participant must contemporaneously (a) instruct the Broker to modify, terminate or amend the Plan, (b) notify RIM of such instruction, (c) notify the public of such instruction which filing shall include a representation that at the time of the modification or termination or amendment the Plan participant was not aware of or in possession of any material non-public information about RIM or any securities of RIM, and (d) provide the Broker with a certificate from RIM confirming that RIM has pre-cleared the modification, termination or amendment of the Plan in accordance with RIM’s Insider Trading Policy and certifying that, to the best of RIM’s knowledge, the Plan participant is not in possession of material non-public information about RIM.
In the event of a modification or amendment to a Plan, or in the event that the Plan participant establishes a new plan after termination of the Plan, no Dispositions shall be effected during the thirty days immediately following such modification, amendment, or establishment of a new plan, other than Dispositions already provided for in the Plan prior to such modification or amendment.
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 provided that the Insider shall file a report, in the form prescribed for insider trading reports under the Legislation, disclosing on a transaction-by-transaction basis or in acceptable summary form (as such term is defined in National Instrument 55-101 Insider Reporting Exemptions):
(a) all Dispositions of Shares under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year; and
(b) all related acquisitions of control or direction over Shares as a result of donations of Shares to the Balsillie Family Foundation under the Plans that have not been previously disclosed by or on behalf of the Insider during a calendar year within 90 days of the end of the calendar year.
“James D. Carnwath” “Paulette Kennnedy”
Ontario Securities Commission Ontario Securities Commission