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 Filers request relief from the requirements under paragraph 2.1(2)(e) and subsection 4.2(1) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that “any other financial statements” be prepared in accordance with Canadian GAAP – Part V (the Exemption Sought) to permit the Filers to prepare “any other financial statements” in accordance with U.S. GAAP for the year ended December 31, 2011. 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 "Jurisdiction")
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 principal regulator in the Jurisdiction (the "Principal Regulator") has received an application from Fortis for a decision under the securities legislation of the Jurisdiction (the "Legislation") of the Principal Regulator exempting 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"), from the requirements under sections 2.1(2)(e) and 4.2(1) of National Instrument 52-107 – Acceptable Accounting Principles and Auditing Standards ("NI 52‑107") that "any other financial statements" be prepared in accordance with the financial reporting standards applicable to such publicly accountable enterprise (the "Exemption Sought") to permit each of the Filers to prepare and file on the System for Electronic Document Analysis and Retrieval ("SEDAR"), subsequent to filing its audited annual financial statements for the fiscal year ended December 31, 2011 ("Fiscal 2011") as required by sections 4.1 and 4.2 of National Instrument 51‑102 – Continuous Disclosure Obligations, prepared in accordance with Canadian GAAP – Part V (as such term is defined in Part 4 of NI 52-107), as permitted for a "qualifying entity" pursuant to section 5.4 of NI 52‑107, comparative audited annual financial statements for Fiscal 2011, prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").
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 each 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.
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 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.
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.
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.
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.
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.
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.
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.
General
As 'qualifying entities' for the purposes of section 5.4 of NI 52-107, each of the Filers is permitted by that provision to prepare their financial statements for Fiscal 2011 in accordance with Canadian GAAP - Part V of the Handbook.
Each of the Filers has been granted exemptive relief pursuant to the legislation in Re Fortis Inc., on Behalf of Itself and FortisBC Holdings Inc., FortisBC Energy Inc., FortisBC Inc., FortisAlberta Inc., Newfoundland Power Inc. and Caribbean Utilities Company, Ltd., (2011) 34 OSCB 6705 (the "U.S. GAAP Relief"), which exempts the Filers from the requirement of section 3.2 of NI 52-107 that they prepare their financial statements in accordance with Canadian GAAP applicable to publicly accountable enterprises and allows the Filers to prepare their financial statements in accordance with U.S. GAAP for the financial years that begin on or after January 1, 2012 but before January 1, 2015. None of the Filers is, will become or will be deemed to be an "SEC issuer", as defined in NI 52-107, as a result of the U.S. GAAP Relief.
Part 3 of NI 52-107 (which will apply to the Filers commencing on January 1, 2012, as modified by the U.S. GAAP Relief) does not require any U.S. GAAP financial statements to contain a reconciliation that would describe the differences between Canadian GAAP and U.S. GAAP (such as the disclosure required under section 4.7 of NI 52-107 for financial years beginning before January 1, 2011, or in the case of a "qualifying entity" pursuant to section 5.4 of NI 52-107, January 1, 2012).
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:
(a) the U.S. GAAP comparative annual audited financial statements of each Filer for Fiscal 2011 are filed subsequent to the filing of the Canadian GAAP annual audited financial statements for Fiscal 2011 of such Filer and prior to the filing by such Filer of its unaudited interim financial statements as at and for the three months ended March 31, 2012, which will be prepared in accordance with U.S. GAAP;
(b) the U.S. GAAP comparative annual audited financial statements of each Filer for Fiscal 2011 contain all of the information which would have been required by subsections (a) and (b) of section 4.7(1) of NI 52-107, if such sections are read as requiring only one set of reconciled annual financial statements; and
(c) the U.S. GAAP audited financial statements of each Filer are filed on SEDAR under the "Other" documents category with an explanatory cover note.
DATED at Toronto, this 20th day of September 2011
“Cameron McInnis”
Cameron McInnis
Chief Accountant
Ontario Securities Commission