National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Maple Group Acquisition Corporation (the Filer) applied for relief in connection with a take-over bid made by the Filer and proposed subsequent plan of arrangement to cause the Filer to acquire all the issued and outstanding common shares of TMX Group Inc. (TMX Group). In particular, the Filer applied for relief from applicable legislative requirements to include:

certain historical interim financial statements of Alpha Trading Systems Limited Partnership and Alpha Trading Systems Inc. (collectively, the Alpha Group),
certain interim pro forma financial statements of the Filer giving effect to certain acquisitions involving TMX Group, Alpha Group and The Canadian Depository for Securities Limited (CDS), and
certain management’s discussion and analysis in relation to historical financial statements of Alpha Group and CDS,

in an offer circular and notice relating to the take-over bid and a circular relating to the subsequent plan of arrangement. The requested relief was granted since, among other things, the offer circular and notice relating to the take-over bid and the circular relating to the subsequent plan of arrangement will contain or incorporate by reference significant financial information and qualitative information about Alpha Group and CDS. Furthermore, the Filer made representations on:

the overall materiality of the transactions involving Alpha Group and CDS in comparison to the transaction involving TMX Group, and
the information required for investors to make informed decisions regarding the take-over and subsequent plan of arrangement.

Applicable Legislative Provisions Form 41-101F1 Information Required in a Prospectus, Items 8, 32 and 35. National Instrument 51-102 Continuous Disclosure Obligations, section 9.1. Form 51-102F5 Information Circular, Item 14.2. Form 62-504F1 Take-over Bid Circular, Item 19.

July 17, 2012

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)

AND

IN THE MATTER OF MAPLE GROUP ACQUISITION CORPORATION (the Filer)

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) in connection with a take-over bid (the Offer) made by the Filer and proposed subsequent plan of arrangement (the Subsequent Arrangement and, together with the Offer, the Filer Acquisition) to cause the Filer to acquire all the issued and outstanding common shares (TMX Shares) of TMX Group Inc. (TMX Group) for approximately $3.8 billion providing that:

(i) the Filer is exempt from the requirement under Item 19 of Form 62-504F1 Take-over Bid Circular (Form 62-504F1) to include:

(a) interim financial statements for Alpha Trading Systems Limited Partnership and Alpha Trading Systems Inc. (collectively, Alpha Group) for the period ended March 31, 2012 (or, if the Subsequent Arrangement Circular (as defined below) is dated on or after August 15, 2012, June 30, 2012) (the Alpha Group Historical Interim Financial Statements);

(b) the Combined Interim Pro Forma Financial Statements (as defined below); and

(c) management's discussion and analysis (MD&A) in relation to the CDS Historical Financial Statements (as defined below) and the Alpha Group Historical Financial Statements (as defined below),

in the Offer Circular (as defined below) and the Notice (as defined below) (collectively, the Bid Document Relief); and

(ii) TMX Group, following the Filer's acquisition of not less than 70% and up to 80% of the TMX Shares, is exempt from the requirement under Item 14.2 of Form 51-102F5 Information Circular (Form 51-102F5) to include:

(a) the Alpha Group Historical Interim Financial Statements;

(b) the Combined Interim Pro Forma Financial Statements; and

in the Subsequent Arrangement Circular (as defined below) (collectively, the Subsequent Arrangement Circular Relief, and, together with the Bid Document Relief, the 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 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, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (collectively, with Ontario, the Jurisdictions).

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.

Representations

The decision is based on the following facts represented by the Filer:

The Filer

The Filer is a corporation existing under the Business Corporations Act (Ontario) (the OBCA). The Filer's registered office is located at 1 First Canadian Place, 100 King Street West, Suite 4400, Toronto, Ontario. The Filer has not carried on any material business other than in connection with the Offer and related transactions and is not in default under the securities legislation of any jurisdiction.
The shareholders of the Filer are comprised of Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Corporation, Dundee Capital Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), GMP Capital Inc., The Manufacturers Life Insurance Company, National Bank Financial & Co. Inc., Ontario Teachers' Pension Plan Board, Scotia Capital Inc. and TD Securities Inc. (collectively, the Investors)¹. The respective holdings of each Investor, together with their respective equity commitment amounts, are set out in the Offer Circular (as defined below).
The authorized share capital of the Filer consists of an unlimited number of common shares (the Filer Shares) and an unlimited number of preferred shares. As at June 22, 2012, there were 835,702 Filer Shares outstanding and no preferred shares outstanding.
The Filer is not currently a reporting issuer in any of the Jurisdictions.

TMX Group

TMX Group is a corporation existing under the OBCA. TMX Group is headquartered in Toronto with offices in Montréal, Calgary and Vancouver. TMX Group's registered office is located at The Exchange Tower, 130 King Street West, Toronto, Ontario.
TMX Group is a leading, integrated, multi-asset exchange group that owns and operates equities, energy and fixed income cash and derivatives markets, and clearinghouses in Canada and the United States. TMX Group owns and operates:

(a) two national stock exchanges, Toronto Stock Exchange (TSX), serving the senior equity market and TSX Venture Exchange, serving the public venture equity market;

(b) Montréal Exchange Inc., Canada's national derivatives exchange;

(c) Natural Gas Exchange Inc., an exchange providing a platform for the trading and clearing of natural gas, electricity, and crude oil contracts in North America;

(d) Shorcan Brokers Limited, an inter-dealer broker;

(e) The Equicom Group Inc., providing investor relations and related corporate communications services; and

(f) Razor Risk Technologies, providing risk management technology and consulting solutions to financial institutions.

The authorized share capital of TMX Group consists of an unlimited number of TMX Shares and an unlimited number of preferred shares. As at June 22, 2012, there were 74,695,248 TMX Shares outstanding and no preferred shares were outstanding.
TMX Group is a reporting issuer in each of the provinces and territories of Canada. The TMX Shares are listed and posted for trading on the TSX.

The Offer

The Offer is part of the Filer Acquisition, an integrated two-step acquisition transaction designed to result in 100% of the existing TMX Shares being acquired from existing holders of TMX Shares (TMX Shareholders). The first step of the Filer Acquisition is the Offer, pursuant to which the Filer is seeking to acquire not less than 70% and up to 80% of the TMX Shares for $50.00 in cash per TMX Share. Immediately following the successful completion of the Offer, the Investors, through the Filer, will own between 70% and 80% of the outstanding TMX Shares and TMX Shareholders will own between 20% and 30% of the outstanding TMX Shares.
The second step of the Filer Acquisition is an arrangement to be implemented by TMX Group following the completion of the Offer pursuant to applicable Canadian corporate laws (the Subsequent Arrangement). This will be accomplished by way of a court-approved plan of arrangement providing for a share exchange transaction pursuant to which TMX Shareholders (other than the Filer) whose TMX Shares were not acquired by the Filer under the Offer will receive Filer Shares in exchange for their TMX Shares on a one-for-one basis. Following completion of the Subsequent Arrangement, the Investors will own between 58.3% and 72.2% of the outstanding Filer Shares and former TMX Shareholders will own between 27.8% and 41.7% of the outstanding Filer Shares.
The Filer commenced the Offer on June 13, 2011 by mailing a take-over bid circular (as amended and varied, the Original Circular) and related offer documents to TMX Shareholders and concurrently filed such documents on SEDAR. The Offer and the Original Circular have subsequently been amended by notices of change, extension and/or variation dated June 24, 2011, August 8, 2011, September 29, 2011, October 31, 2011, January 31, 2012, February 24, 2012, March 30, 2012, May 3, 2012 and May 31, 2012 (as so amended, the Offer Circular). The Offer is currently due to expire on July 31, 2012.
The Filer has agreed to use its best efforts to complete the Subsequent Arrangement within 35 days following the completion of the Offer. In accordance with applicable corporate and securities laws, TMX Group (in consultation with the Filer) will prepare a management information circular in respect of the Subsequent Arrangement (the Subsequent Arrangement Circular) and deliver the Subsequent Arrangement Circular to TMX Shareholders in accordance with applicable Canadian securities laws. It is anticipated that the Subsequent Arrangement Circular will be filed and mailed to TMX Shareholders following the expiry of the 10-day deposit extension period under the Offer.

CDS and Alpha Group Acquisitions

On April 30, 2012, the Filer entered into agreements with certain beneficial holders of common shares (the CDS Supporting Shareholders) of The Canadian Depository for Securities Limited (CDS) representing approximately 71% of the voting rights attached to the outstanding common shares of CDS (including TMX Group's approximate 18% indirect interest), pursuant to which such holders have agreed to vote in favour of a proposed amalgamation of CDS with a wholly-owned subsidiary of the Filer (Filer Subco), which upon completion would result in the Filer owning all of the outstanding common shares of CDS for aggregate consideration of $167.5 million. On June 7, 2012, the Filer, Filer Subco and CDS entered into a definitive amalgamation agreement with respect to such amalgamation. The votes attached to the common shares of CDS held by the CDS Supporting Shareholders are sufficient to obtain the required two-third shareholder approval for the proposed amalgamation. Copies of the definitive agreements entered into with respect to the acquisition of CDS by the Filer have been filed on SEDAR at www.sedar.com under TMX Group's profile.
Financial and other information regarding CDS is available on its website at www.cds.ca.
On April 30, 2012, the Filer entered into definitive agreements for the acquisition by the Filer of all of the ownership interests in Alpha Group. The securityholders of Alpha Group that are parties to such agreements represent approximately 83% of the outstanding equity interests in Alpha Group. The Filer intends to acquire the remaining equity interests in Alpha Group pursuant to the terms of the shareholder agreement of Alpha Trading Systems Inc. The aggregate consideration offered by the Filer for the acquisition of Alpha Group is $175 million, subject to the potential exercise of rights by Alpha Group securityholders that are not Investors (or affiliates thereof) to receive an arbitrated fair value for their equity interests in Alpha Group. Such Alpha Group securityholders represent approximately 25.6% of the outstanding equity interests in Alpha Group. Copies of the definitive agreements entered into with respect to the acquisition of Alpha Group by the Filer have been filed on SEDAR at www.sedar.com under TMX Group's profile.
The Filer intends to complete the proposed acquisitions of CDS and Alpha Group concurrently with or as soon as practicable following completion of the Offer, subject to the satisfaction of customary terms and conditions, including the receipt of all necessary regulatory approvals, and, in the case of the acquisition of CDS, the approval of the proposed amalgamation by the shareholders of CDS.

Applicable Requirements

Item 19(1) of Form 62-504F1 provides that if a take-over bid provides that the consideration for the securities of the offeree issuer is to be, in whole or in part, securities of the offeror or other issuer, financial statements and other information required in a prospectus of the issuer whose securities are being offered in exchange for the securities of the offeree issuer are required to be included in the applicable take-over bid circular.
The Offer only provides for cash consideration and the requirements of Item 19 of Form 62-504F1 accordingly do not apply to the Offer. However, as the Offer is the first step of the integrated Filer Acquisition, with Filer Shares to be issued pursuant to the second-step Subsequent Arrangement, the Filer, as noted in paragraph 29 below, has included financial statement disclosure for the Filer in the Offer Circular, and intends to update such financial disclosure in the Notice.
Under section 9.1 of National Instrument 51-102 Continuous Disclosure Obligations, the Subsequent Arrangement Circular will be required to be sent to TMX Shareholders in connection with the solicitation of proxies to vote in respect of the Subsequent Arrangement at a meeting of TMX Shareholders to be held for the purpose of considering a resolution approving the Subsequent Arrangement.
Form 51-102F5 sets out the form requirements applicable to the Subsequent Arrangement Circular.
Item 14.2 of Form 51-102F5 provides that in respect of, inter alia, restructuring transactions² under which securities are to be changed, exchanged, issued or distributed, management information circulars must include disclosure for each entity, other than the company in respect of which the applicable management information circular has been prepared, whose securities are being changed, exchanged, issued or distributed, if:

(a) the matter is a restructuring transaction; and

(b) the securityholders of the company in respect of which the management information circular has been prepared will have an interest in that entity after the restructuring transaction has been completed.

The disclosure in this regard must be the disclosure (including financial statements) prescribed under securities legislation and described in the form of prospectus that the applicable entity would be eligible to use immediately prior to the sending and filing of the information circular in respect of the restructuring transaction, for a distribution of securities in the jurisdiction.

As noted above, in connection with the Subsequent Arrangement, Filer Shares will be distributed to TMX Shareholders (other than the Filer) and such TMX Shareholders will have an interest in the Filer after the Subsequent Arrangement has been completed.
Immediately prior to the sending and filing of the Offer Circular, Notice and Subsequent Arrangement Circular, the Filer will only be eligible to use a long-form prospectus prepared in accordance with Form 41-101F1 Information Required in a Prospectus (Form 41-101F1).
In accordance with Item 32 of Form 41-101F1, the Filer is required to include the financial statements of a business or businesses acquired by the Filer within three years before the date of the Offer Circular or Subsequent Arrangement Circular or proposed to be acquired, if a reasonable investor reading the Offer Circular or Subsequent Arrangement Circular would regard the primary business of the Filer to be the business or businesses acquired, or proposed to be acquired, by the Filer. Such financial statements, if applicable, are required to include interim financial statements of the relevant business or businesses, together with pro forma financial statements of the Filer, giving effect to the acquisition of such business or businesses. It is possible that an investor reading the Offer Circular or Subsequent Arrangement Circular could potentially regard the primary business of the Filer to include Alpha Group and CDS once the acquisition thereof is completed.
In addition, pursuant to Item 35 of Form 41-101F1, the Filer is required to include certain financial statements in respect of each of CDS and Alpha Group, if (depending on the timing of completion of such transactions in relation to the date of filing and mailing of the Subsequent Arrangement Circular) such transactions constituted recently completed "significant acquisitions" (as per Item 35.5 of Form 41-101F1) or proposed acquisitions of a business that has progressed to a state where a reasonable person would believe that the likelihood of the Filer completing the acquisition is high, and that, if completed by the Filer, would be a "significant" acquisition (as per Item 35.6 of Form 41-101F1).
Lastly, pursuant to Item 8 of Form 41-101F1, MD&A would be required to be included in respect of the annual and interim financial statements of the Filer, CDS and Alpha Group included in the Notice and Subsequent Arrangement Circular.

Reasons Supporting Grant of Requested Relief

The Offer Circular, the Notice and the Subsequent Arrangement Circular (including the CDS Historical Financial Statements, the Alpha Group Historical Annual Financial Statements and the Combined Annual Pro Forma Financial Statements included therein and as defined below) will provide information in respect of the Filer and the Filer Shares that is sufficient to enable an investor to make an informed investment decision regarding the Filer Acquisition.
Disclosure of the following in the Offer Circular, Notice or Subsequent Arrangement Circular is not necessary to allow TMX Shareholders to form a reasoned judgment concerning the Filer Acquisition:

(a) Alpha Group Historical Interim Financial Statements;

(b) (i) a pro forma statement of financial position of the Filer as at March 31, 2012 (or, if the Subsequent Arrangement Circular is dated on or after August 15, 2012, June 30, 2012) giving effect to the Filer Acquisition and the acquisitions of each of CDS and Alpha Group by the Filer as if they had occurred on such date, and

(ii) pro forma income statements of the Filer for the period ended March 31, 2012 (or, if the Subsequent Arrangement Circular is dated on or after August 15, 2012, June 30, 2012), giving effect to the Filer Acquisition and the acquisitions of each of CDS and Alpha Group by the Filer as if they had occurred on April 28, 2011 (collectively, the Combined Interim Pro Forma Financial Statements); and

The Offer Circular includes:

(a) stand-alone audited financial statements of the Filer as at April 28, 2011; and

(b) pro forma financial statements of the Filer giving effect to the Filer Acquisition as if it had occurred on April 28, 2011.

Additionally, at least 10 days prior to the expiry of the Offer, the Filer will mail to TMX Shareholders and file on SEDAR a notice of change of information (the Notice) that will include:

(a) stand-alone audited financial statements of the Filer as at, and for the period ended, December 31, 2011 (the Filer Historical Annual Financial Statements);

(b) stand-alone unaudited financial statements of the Filer as at, and for the three months ended, March 31, 2012 (the Filer Historical Interim Financial Statements and together with the Filer Historical Annual Financial Statements, the Filer Historical Financial Statements);

(c) stand-alone audited financial statements of CDS as at, and for the twelve months ended, on each of October 31, 2011, October 31, 2010 and October 31, 2009 (collectively, the CDS Historical Annual Financial Statements);

(d) stand-alone unaudited financial statements of CDS as at, and for the six months ended, April 30, 2012 (the CDS Historical Interim Financial Statements and, together with the CDS Historical Annual Financial Statements, the CDS Historical Financial Statements);

(e) stand-alone audited financial statements of Alpha Group as at, and for the twelve months ended, on each of December 31, 2011, December 31, 2010 and December 31, 2009 (collectively, the Alpha Group Historical Annual Financial Statements and, together with Alpha Group Historical Interim Financial Statements, the Alpha Group Historical Financial Statements); and

(f) pro forma financial statements of the Filer giving effect to the Filer Acquisition and the acquisitions of each of CDS and Alpha Group by the Filer as if they had occurred, for purposes of the pro forma statement of financial position as at December 31, 2011, on such date, and for purposes of the pro forma income statements for the period ended December 31, 2011, as if the Filer Acquisition and the acquisitions of each of CDS and Alpha Group had occurred on April 28, 2011 (the Combined Annual Pro Forma Financial Statements).

MD&A in respect of the Filer Historical Financial Statements will also be included in the Notice.

The Subsequent Arrangement Circular will contain or incorporate by reference all of the financial statements referred to in paragraph 29.
In addition to the CDS Historical Financial Statements and Alpha Group Historical Annual Financial Statements, the Offer Circular, the Notice and the Subsequent Arrangement Circular has and/or shall include or incorporate by reference information in respect of CDS and Alpha Group, including:

(a) a general description of the business of each of Alpha Group and CDS;

(b) the Filer's plans to combine TMX Group with Alpha Group and CDS following completion of the Filer Acquisition;

(d) detailed descriptions of the definitive agreements entered into in connection with the acquisition by the Filer of each of Alpha Group and CDS;

(e) regulatory provisions generally applicable to each of the Filer, Alpha Group and CDS following completion of the acquisition thereof by the Filer (including, for greater certainty, the fee model that will apply to the products and services of CDS); and

(f) governance structures.

The Offer Circular and Notice will, except as permitted by the Requested Relief, otherwise comply with Item 19 of Form 62-504F1. The Subsequent Arrangement Circular will, except as permitted by the Requested Relief, otherwise comply with Item 14.2 of Form 51-102F5.
As at the date hereof, each of CDS and Alpha Group are not reporting issuers in any jurisdiction in Canada. Accordingly, neither of such entities is presently obligated under applicable Canadian securities laws regarding continuous disclosure to have prepared: (a) financial statements in respect of any interim periods; or (b) MD&A in respect of any financial statements.
The Filer understands that CDS prepares interim financial statements on an ongoing basis, and the Filer will accordingly include the CDS Historical Interim Financial Statements in the Notice. However, the Filer understands that Alpha Group does not currently prepare any interim financial statements other than certain internal documents prepared for the board of directors by management. The Filer understands that Alpha Group will commence preparing quarterly interim statements beginning for the six month period ended June 30, 2012, but that such statements will not be finalized until August 2012.
The Filer understands that neither of CDS or Alpha Group has prepared MD&A in respect of the CDS Historical Financial Statements or the Alpha Group Historical Financial Statements, as applicable.
The business of CDS represents only a very small proportion of the existing TMX Group operations on a quantitative basis. Specifically:

(a) the consolidated assets of CDS represent less than 4% of the consolidated assets of TMX Group;

(b) the aggregate purchase price payable in respect of the acquisition of CDS ($167.5 million) represents 5.6% - 6.4% of the total potential cash consideration payable by the Filer under the Offer of between approximately $2.6 billion and $3.0 billion³; and

in each case, based on the most recently completed audited financial statements of each of TMX Group and CDS, respectively.

The business of Alpha Group represents only a very small proportion of the existing TMX Group operations on a quantitative basis. Specifically:

(a) the consolidated assets of Alpha Group represent less than 1.0% of the consolidated assets of TMX Group;

(b) the aggregate purchase price payable in respect of the acquisition of Alpha Group ($175.0 million) represents approximately 5.8% - 6.7% of the total potential cash consideration payable by the Filer under the Offer of between approximately $2.6 billion and $3.0 billion⁴; and

(c) the consolidated specified loss of Alpha Group represents less than 1.7% of the consolidated specified profit of TMX Group,

in each case, based on the most recently completed audited financial statements of each of TMX Group and Alpha Group, respectively.

Effect of Decision

The Filer acknowledges that the granting of this decision does not constitute approval of the Filer Acquisition for any regulatory purpose.

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:

(i) the Bid Document Relief is granted, and

(ii) the Subsequent Arrangement Circular Relief is granted provided the Filer completes the Offer.

“Jo-Anne Matear”

Manager, Corporate Finance Ontario Securities Commission

Footnotes

As at the date of this decision, GMP Capital Inc. (GMP) was a shareholder of the Filer. However, as has been announced prior to the date of this decision, GMP is in the process of disposing of its shares of the Filer such that it will no longer be a shareholder of the Filer.
Defined in section 1.1 of NI 51-102 to include, inter alia, arrangements such as the Subsequent Arrangement.
Based on the number of issued outstanding TMX Group shares on June 22, 2012.
Ibid.

Maple Group Acquisition Corporation (Re), 2012 CanLII 41236

Case Summary