Headnote Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - – Application by an issuer for a decision that draft versions of a news release inadvertently filed and made public on SEDAR be held in confidence for an indefinite period by the Commission, to the extent permitted by law – Issuer subsequently filed and made public on SEDAR correct, final versions of news release – Relief granted.
Applicable Ontario Legislative Provisions Securities Act, R.S.O. 1990, c. S.5, as am., ss. 140(1) and 140(2).
July 19, 2013
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 ELEMENTAL MINERALS LIMITED (the “Filer”)
DECISION
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”) that, pursuant to the confidentiality provisions of the Legislation (being subsection 140(2) of the Securities Act (Ontario)), the version of the Filer’s news release filed on April 8, 2013 was incomplete (the “Incomplete News Release”) and erroneously filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) by CNW Group (the “Filing Agent”) without receiving the proper authorization to release, be held in confidence (and therefore not available to the public) for an indefinite period, to the extent permitted by law (the “Exemption Sought”).
Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the “Principal Regulator”) is the principal jurisdiction for the application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, North West Territories, Yukon and Nunavut (the “Non-Principal Passport Jurisdictions”).
Interpretation
Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is incorporated under the laws of Australia. The Filer is an advanced stage mineral exploration and development company.
The registered office of the Filer is located in Perth, Australia and the head office of the Filer is located in Dainfern, South Africa.
The Filer’s shares are listed on the Australian Securities Exchange (the “ASX”), Toronto Stock Exchange (the “TSX”) and Frankfurt Stock Exchange. The Filer is a reporting issuer in Ontario and the Non-Principal Passport Jurisdictions.
Following the close of trading on the TSX on April 8, 2013, the Filing Agent filed the Incomplete News Release containing certain drilling results on SEDAR in accordance with National Instrument 51-102 Continuous Disclosure Obligations (“NI 51-102”).
Shortly after such filing, it came to the attention of the Filing Agent that Barnes Communications, the Filer’s agent with whom the Filing Agent had been in contact, had not given the final authorization to the Filing Agent to file the Incomplete News Release and that the Incomplete News Release had therefore been erroneously filed on SEDAR.
On the morning of April 9, 2013, Barnes Communications re-confirmed that the Incomplete News Release should not have been filed on SEDAR as they were still awaiting final approval from the Filer’s board of directors and management who is predominately based in South Africa and Australia. The Incomplete News Release did not yet have final approval of the Filer’s board of directors for release, nor was it capable of release as the content of the Incomplete News Release did not include final sign off from the Filer’s “Competent Person” (terminology in Australia) nor from a “qualified person” (as such term is defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and insertion of the “Competent Person” statement into the Incomplete News Release. For these reasons, the Filer had entered “halt” status with the ASX to allow the Filer to get the Incomplete News Release into a form capable of release to the ASX.
Following the Filing Agent’s correspondence with Barnes Communications, the Filing Agent contacted the Principal Regulator in an attempt to make the Incomplete News Release private prior to the commencing of trading on the TSX. This request was unable to be accommodated prior to the commencing of trading.
Throughout the morning on April 9, 2013, Stikeman Elliott LLP (“Stikeman”), the Filer’s Canadian legal counsel, contacted Market Surveillance at the Investment Industry Regulatory Organization of Canada (“IIROC”) to discuss the potential selective disclosure issue resulting from the Incomplete News Release having been filed on SEDAR without having been generally disseminated over a news wire service. Stikeman and IIROC agreed that, given an approximately 14% increase in the Filer’s trading price on the TSX, the most prudent course of action was to disseminate the news release across a national news wire service as quickly as possible so as to comply with the Filer’s continuous disclosure obligations. An updated version of the Incomplete News Release (the “Updated News Release”) was filed on SEDAR by the Filing Agent on April 9, 2013 at 12:31 p.m. EST.
On April 9, 2013, the Principal Regulator temporarily marked the Incomplete News Release as private on SEDAR, pending the receipt and review of a formal application for exemptive relief from the Filer. As a result, as of April 9, 2013, the Incomplete News Release no longer appears under the Filer’s profile on SEDAR.
The Filer believes that continued public access to the Incomplete News Release would seriously prejudice the interests of the Filer for the following reasons:
(a) as a result of filing the Incomplete News Release, the Filer could face penalties from the ASX given that it was during a trading halt at the time of the filing;
(b) the Incomplete News Release has been superseded in its entirety by the Updated News Release and leaving both the Incomplete News Release and Updated News Release on SEDAR would cause confusion amongst investors;
(c) the negative implications to the Filer and the investing public if the Incomplete News Release were to remain public outweigh the desirability of adhering to the principle that material filed with the Principal Regulator be available to the public for inspection and the disclosure of the Incomplete News Release is not necessary in the public interest;
(d) as of April 9, 2013, the Filer has fully complied with its disclosure obligations under NI 51-102 by filing the Updated News Release. The Updated News Release contains additional information which was omitted from the Incomplete News Release, including a detailed outline of the Filer’s Kola Project Summary and the “Competent Person” statement (required by the ASX) and the “qualified person” statement (as per NI 43-101); and
(e) the Incomplete News Release is not material to an investor, and the making and keeping private of the Incomplete News Release will not adversely affect investors or impact the decision by an investor for the purposes of making an investment decision with respect to the filer and therefore there will be no prejudice or harm to the public as a result of the Incomplete News Release remaining private.
The Filer is not in default of its obligations under the securities legislation of any jurisdiction of Canada.
The Filer acknowledges that making the Incomplete News Release private on SEDAR does not guarantee that such versions of the Incomplete News Release are not available elsewhere in the public domain.
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.
“Sarah B. Kavanagh” “Deborah Leckman”
Commissioner Commissioner