Headnote Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief applications in Multiple Jurisdictions – National Instrument 52-107, s. 9.1 Acceptable Accounting Principles, Auditing Standards and Reporting Currency – the Filer requests relief from the requirements under section 3.2 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises (the Exemption Sought) to permit the Filer to prepare its financial statements in accordance with U.S. GAAP for its financial years that begin on or after 1 January 2012 but before 1 January 2015. Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standard, s. 5.1
In the Matter of the Securities Legislation of Ontario (the "Principal Jurisdiction") and the Securities Legislation of British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Yukon Territory, the Northwest Territories and Nunavut (the "Passport Jurisdictions")
and
In the Matter of the Process for Exemptive Relief Applications in Multiple Jurisdictions
and
In the Matter of Fortis Inc. ("Fortis"), on behalf of itself and FortisBC Holdings Inc., FortisBC Energy Inc., FortisBC Inc., FortisAlberta Inc., Newfoundland Power Inc. and Caribbean Utilities Company, Ltd.
DECISION
Background
The securities regulatory authority or regulator in the Principal Jurisdiction (the "Principal Regulator") has received an application from Fortis for a decision under the securities legislation of the Principal Jurisdiction (the "Legislation") of the Principal Regulator exempting each of Fortis and its reporting issuer subsidiaries, FortisBC Holdings Inc., FortisBC Energy Inc., FortisBC Inc., FortisAlberta Inc., Newfoundland Power Inc. and Caribbean Utilities Company, Ltd. (collectively, the "Subsidiaries" and, together with Fortis, the "Filers" and each a "Filer"), from the requirements under section 3.2 of National Instrument 52-107 – Acceptable Accounting Principles and Auditing Standards ("NI 52‑107") that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises (the "Exemption Sought") to permit the Filers to prepare their financial statements in accordance with U.S. GAAP for their financial years that begin on or after January 1, 2012 but before January 1, 2015.
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;
(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 each of the Passport Jurisdictions; and
(c) the decision is the decision of the Principal Regulator and automatically results in an equivalent decision in the Passport Jurisdictions.
Interpretation
Terms defined in National Instrument 14-101 – Definitions, MI 11-102 and NI 52-107 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
Fortis Inc.
Fortis is principally a diversified utility holding company and was continued under the Corporations Act (Newfoundland and Labrador) on August 28, 1987. The head office of Fortis is in St. John's, Newfoundland and Labrador.
Fortis is a reporting issuer or equivalent in the Principal Jurisdiction and each of the Passport Jurisdictions other than the Yukon Territory, the Northwest Territories and Nunavut and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
Fortis is not an SEC issuer.
Fortis has "activities subject to rate regulation", as defined in the Handbook.
FortisBC Holdings Inc.
FortisBC Holdings Inc. ("FHI") is a utility holding company incorporated under the laws of British Columbia. Its articles were amended on March 1, 2011 to change its name to FortisBC Holdings Inc. The head office of FHI is in Vancouver, British Columbia.
FHI is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
FHI is not an SEC issuer.
FHI has "activities subject to rate regulation", as defined in the Handbook.
FortisBC Energy Inc.
FortisBC Energy Inc. ("FEI") is a gas distribution company incorporated under the laws of British Columbia. Its articles were amended on March 1, 2011 to change its name to FortisBC Energy Inc. The head office of FEI is in Vancouver, British Columbia.
FEI is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
FEI is not an SEC issuer.
FEI has "activities subject to rate regulation", as defined in the Handbook.
FortisBC Inc.
FortisBC Inc. ("FBC") is an integrated electric utility incorporated under the laws of British Columbia. The head office of FBC is in Kelowna, British Columbia.
FBC is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions other than the Yukon Territory, the Northwest Territories and Nunavut and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
FBC is not an SEC issuer.
FBC has "activities subject to rate regulation", as defined in the Handbook.
FortisAlberta Inc.
FortisAlberta Inc. ("FAB") is an electricity distribution company incorporated under the laws of Alberta. The head office of FAB is in Calgary, Alberta.
FAB is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions other than the Yukon Territory, the Northwest Territories and Nunavut and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
FAB is not an SEC issuer.
FAB has "activities subject to rate regulation", as defined in the Handbook.
Newfoundland Power Inc.
Newfoundland Power Inc. ("NPI") is an integrated electric utility incorporated under the laws of Newfoundland and Labrador. The head office of NPI is located in St. John's, Newfoundland and Labrador.
NPI is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions other than the Yukon Territory, the Northwest Territories and Nunavut and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
NPI is not an SEC issuer.
NPI has "activities subject to rate regulation", as defined in the Handbook.
Caribbean Utilities Company, Ltd.
Caribbean Utilities Company, Ltd. ("CUC") is an integrated electric utility incorporated under the laws of the Cayman Islands. The head office of CUC is located in Grand Cayman, Cayman Islands.
CUC is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions other than the Yukon Territory, the Northwest Territories and Nunavut and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.
CUC is not an SEC issuer.
CUC has "activities subject to rate regulation", as defined in the Handbook.
General
As "qualifying entities" for the purposes of section 5.4 of NI 52-107, each of the Filers are permitted by that provision to prepare their financial statements for their financial year commencing January 1, 2011 and ending December 31, 2011 in accordance with Canadian GAAP - Part V of the Handbook.
Were any of the Filers SEC issuers, they would be permitted by section 3.7 of NI 52-107 to file their financial statements prepared in accordance with U.S. GAAP, which accords treatment of "activities subject to rate regulation" similar to that under Canadian GAAP - Part V.
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 for each Filer provided that:
(a) for its financial years commencing on or after January 1, 2012 but before January 1, 2015 and interim periods therein, each of the Filers files its financial statements in accordance with U.S. GAAP; and
(b) information for comparative periods presented in each of the financial statements referred to in paragraph (a) is prepared in accordance with U.S. GAAP.
- The Exemption Sought will terminate in respect of each of the Filer's financial statements for annual and interim periods commencing on or after the earlier of:
(a) January 1, 2015; or
(b) the date on which the Filer ceases to have "activities subject to rate regulation" as defined in the Handbook as at the date of this decision.
“Cameron McInnis”
Cameron McInnis
Chief Accountant
Ontario Securities Commission