Headnote National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – relief from eligibility requirements under NI 44-102 for reporting issuer whose equity securities are not listed on a short form eligible exchange – issuer is a wholly-owned subsidiary – issuer is a substantial global financial services provider – securities of the issuer are listed and posted for trading on NYSE, NYSE Amex and NYSE Arca – the business and consolidated results and financial position of the issuer and the parent are substantially similar – equity securities of parent listed on SIX Swiss Exchange and American Depository Shares representing equity securities of parent listed on NYSE
Applicable Legislative Provisions
National Instrument 44-102 Shelf Distributions, ss. 2.2 and 11.1.
November 21, 2012
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 Credit Suisse AG (the “Filer”)
Decision
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision (the “Exemption Sought”) under the securities legislation of the Jurisdiction of the principal regulator (the “Legislation”) for an exemption from the qualification requirements in subsection 2.2(1) and clause 2.2(3)(b)(iii) of National Instrument 44-102 Shelf Distributions (“NI 44-102”) which would otherwise require that the Filer’s equity securities be listed and posted for trading on a short form eligible exchange as defined in National Instrument 44-101 Short Form Prospectus Distributions (“NI 44-101”) in order for the Filer to distribute under its base shelf short form prospectus dated June 28, 2012 (the “Prospectus”) medium term notes (“Notes”) with the principal amount payable at maturity or interest to be paid on such tranche of Notes, or both, to be determined with reference to the price or prices of specified commodities, stocks or indices, any statistical measure of economic or financial performance, the exchange rate of a specified currency relative to one or more other currencies, currency units, composite currencies or units of account specified in an applicable prospectus supplement (“indexed Notes”) which are not principal protected.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (“OSC”) is the principal regulator for this application,
(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 all provinces and territories of Canada other than Ontario.
Interpretation
Terms defined in MI 11-102 or National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined herein.
Representations
This decision is based upon the following facts represented by the Filer:
The Filer selected the OSC as the principal regulator in respect to the Prospectus in accordance with subsection 3.4(5) of National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions as the Canadian branch of the Filer has its principal office in Ontario and therefore the Filer has the most significant connection with Ontario.
In accordance with subsection 3.6(1) of National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, the OSC is the principal regulator for the Exemption Sought.
The Filer is a corporation established under the laws of the Canton of Zurich, Switzerland. The registered and main offices of the Filer are located at Paradeplatz 8, CH-8001, Zurich, Switzerland.
The Filer is a wholly-owned subsidiary of Credit Suisse Group AG (“CSG”) and is CSG’s principal operating subsidiary. The business and consolidated results and financial position of the Filer and CSG are substantially similar. However, Neue Aargauer Bank AG and BANK – now Bank AG, both based in Switzerland, are owned by CSG directly and their results are not consolidated in the Filer’s results.
The Filer is licensed as a bank in Switzerland and has additional executive offices and principal branches in London, New York, Hong Kong, Singapore and Tokyo.
The Filer’s business is to operate as a bank, with all related banking, finance, consultancy, service and trading activities in Switzerland and abroad.
Together with CSG, the Filer consists of three operating divisions; Private Banking, Investment Banking and Asset Management. The three divisions are complemented by Shared Services and a regional management structure.
As of December 31, 2011, the Filer had total assets of CHF11,023,175 million and total shareholders equity of CHF27,502 million. As at December 31, 2011, the Filer was the second largest Swiss bank and among the fifteen largest European banks measured by total assets.
The main listing and principal trading market for the common shares of CSG is The SIX Swiss Exchange. American Depositary Shares (“ADS”) representing CSG’s common shares are also listed and posted for trading on the New York Stock Exchange (“NYSE”).
Each of the Filer and CSG has securities registered under Section 12(b) of the United States Securities Exchange Act of 1934 and the Filer has classes of securities listed and posted for trading on the NYSE, NYSE Amex and NYSE Arca.
The Filer is a “well-known seasoned issuer” in the United States and a “foreign private issuer” as defined in Rule 405 within the meaning of the United States Securities Act of 1933.
The Filer currently is and has been a reporting issuer, or the equivalent, in all the provinces and territories of Canada since April 16, 2008.
The Filer satisfies the qualification criteria of NI 44-102 under the alternative qualification criteria for issuers of approved rating non-convertible securities set out in section 2.3 of NI 44-102 and NI 44-102.
The Filer filed and obtained a receipt for the Prospectus qualifying the issuance of, among other Notes, non-principal protected indexed Notes (as defined in the Prospectus).
The Filer’s Canadian long-term senior unsecured medium term note program qualified by the Prospectus has been rated A and its Canadian short-term senior unsecured medium term note program qualified by the Prospectus has been rated F1 by Fitch Ratings Ltd. and Fitch, Inc. (“Fitch”). The Filer is not aware of any pending downgrades of such ratings. The ratings are assigned to the program generally and not to any specific issuances of Notes. In May 2010, Fitch announced that it will no longer rate market-linked notes which have variable principal protection. Moody’s Investors Services Ltd. (“Moody’s”) and Standard & Poor’s, a division of The McGraw Hill Companies Inc. (“S&P”) had each previously announced in June and December 2009, respectively, that it would no longer rate market-linked notes which have variable principal protection.
Absent the grant of the exemption sought, the Filer would not be qualified under Part 2 of NI 44-102 to issue non-principal protected indexed Notes under the Prospectus.
The Filer satisfies the basic qualification criteria set forth in section 2.2 of NI 44-101 and section 2.2 of NI 44-102 other than the requirement that its equity securities be listed and posted for trading on a short-form eligible exchange.
The Filer does not plan to seek ratings for the specific issuances of non-principal protected indexed Notes under the Prospectus.
Decision
The principal regulator is satisfied that the decision meets the tests 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 so long as:
i) the Filer satisfies the criteria in paragraphs 2.2(a), (b), (c) and (d) of NI 44-101;
ii) the Filer is not an issuer whose operations have ceased or whose principal asset is cash, cash equivalents or an exchange listing;
iii) the common shares of CSG, the Filer’s parent company, are listed and posted for trading on The SIX Swiss Exchange and ADSs representing the common shares of CSG are listed and posted for trading on the NYSE.
iv) each shelf prospectus supplement qualifying non-principal protected indexed Notes distributed under the Prospectus will includes cover page disclosure that:
a) the non-principal protected indexed Notes qualified under the Prospectus are not rated;
b) any non issue specific credit rating applicable to Notes issued under the Prospectus only applies to credit-related factors such as the Filer’s ability to make any payments it would be obligated to make under the Notes;
c) any non issue specific credit rating applicable to Notes issued under the Prospectus does not apply to non-principal protected indexed Notes and, for so long as Fitch, Moody’s and S&P continue not to rate non-principal protected indexed Notes, an explanation to that effect; and
d) an investor’s principal is at risk as a result of non credit-related factors such as the performance of the underlying reference asset.
v) the Filer complies with its undertaking filed concurrently with the Prospectus that it will not distribute in any local jurisdiction under the Prospectus specified derivatives, that, that the time of distribution, are novel without pre-clearing with the regulator the disclosure contained in a shelf prospectus supplement pertaining to the distribution of the novel specified derivatives, in accordance with subsection 4.1(2) of NI 44-102.
“Jo-Anne Matear”
___________________________
Jo-Anne Matear, Manager
Corporate Finance
Ontario Securities Commission