Headnote National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions – relief from the prospectus requirements in connection with the use of electronic roadshow materials – cross-border offering of securities – compliance with U.S. offering rules leads to non-compliance with Canadian regime – relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus requirements – relief granted from sections 25 and 53 of the Securities Act (Ontario) in connection with a cross-border offering – decision subject to conditions. Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53 and 74. National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means, s. 2.7.
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
SUNSHINE SILVER MINES CORPORATION
(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) exempting the posting of certain roadshow materials on one or more commercial services such as www.retailroadshow.com and/or www.netroadshow.com during the period (the Waiting Period) between the issuance of a receipt for a preliminary prospectus and a receipt for a final prospectus from the prospectus requirement under the Legislation (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the Commission) is the principal regulator for this application; 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 on in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador (the Passport Jurisdictions).
Representations
This decision is based on the following facts and representations made by the Filer:
The Filer was incorporated under the Delaware General Corporation Law on February 2, 2011.
The Filer's principal office is located at 370 17th Street, Suite 3800, Denver, Colorado. United States 80202.
On July 7, 2011, the Filer filed a registration statement with the United States Securities and Exchange Commission (the SEC) in respect of a proposed initial public offering (the Offering) of its shares of common stock (the Offered Shares) in order to register the Offered Shares under the U.S. Securities Act of 1933, as amended.
On July 8, 2011, the Filer filed a preliminary long form base PREP prospectus with the Commission and the Passport Jurisdictions in respect of the Offering. On December 28, 2011 the Filer filed an amended and restated preliminary long form base PREP prospectus, which was subsequently withdrawn when the Filer determined to delay its initial public offering due to market conditions. On December 21, 2012, the Filer filed a new preliminary long form base PREP prospectus (the Preliminary Prospectus) with the Commission and the Passport Jurisdictions in respect of the Offering.
The Filer also intends to file an amended and restated preliminary long form base PREP prospectus in connection with the Offering in Canada (the Amended Preliminary Prospectus) and to commence the marketing of the Offering in both Canada and the United States after a receipt is obtained evidencing receipt of the Amended Preliminary Prospectus from the Commission under MI 11-102.
Between the time that the Commission issues a receipt for the Amended Preliminary Prospectus and the final long form base PREP prospectus (the Final Prospectus), the Filer intends to use electronic roadshow materials (the Website Materials) to promote the Offering, as is now typical for initial public offerings in the United States.
Compliance with U.S. securities laws in an initial public offering requires either making a bona fide version of the roadshow, such as the Website Materials, available in a manner that affords unrestricted access to the public, or filing a copy of the roadshow on the SEC's Electronic Data-Gathering Analysis and Retrieval System (known by its acronym, EDGAR), which will have the same effect of affording unrestricted access. We understand that, in the view of the SEC, making documents available in a manner that affords unrestricted access to the public means that no restrictions on access or viewing may be imposed, such as password protection, both with respect to persons inside and outside of the United States.
The Filer and the underwriters of the Offering wish to carry out the Offering in a manner that is typical for initial public offerings in the United States, and consistent with United States federal securities law, by posting the Website Materials on an Internet-based commercial service such as www.retailroadshow.com or www.netroadshow.com, without password or other access restrictions.
Affording unrestricted access to Website Materials during the Waiting Period is, however, contrary to the prospectus requirement and the restrictions on permissible marketing activities during the Waiting Period, such that the Legislation would require that access to Website Materials be controlled by the Filer or the underwriters by such means as password protection and other measures, as suggested by National Policy 47-201 -- Trading Securities Using the Internet and Other Electronic Means.
As the Legislation does not permit Website Materials to be made generally available to prospective purchasers in Canada without restriction during the Waiting Period, the Filer and the underwriters of the Offering cannot carry out the Offering in Canada in a manner that is typical for initial public offerings in the United States unless the Exemption Sought is granted.
The Website Materials will contain a statement informing readers that the Website Materials do not contain all of the information in the Preliminary Prospectus, including any amendments, or the Final Prospectus, as supplemented and including any amendments, and that prospective purchasers should review all of those documents, in addition to the Website Materials, for complete information regarding the Offered Shares.
The Website Materials will be fair and balanced and will not contradict or distort information contained in the Preliminary Prospectus, the Amended Preliminary Prospectus, any further amendment to the Preliminary Prospectus or the Final Prospectus.
The Filer will include a hyperlink in the Website Materials to the documents referred to in paragraph 11, at such time as a particular document is filed.
The Filer will state in the Website Materials and in any amendment to the Preliminary Prospectus and the Final Prospectus that, in connection with the information contained in the Website Materials posted on one or more commercials services, such as www.retailroadshow.com and/or www.netroadshow.com, purchasers of the Offered Shares in each of the provinces of Canada in which the Final Prospectus is filed and a receipt therefore is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in the Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus.
At least one underwriter that signed the Preliminary Prospectus was, and in respect of any amendment to the Preliminary Prospectus and the Final Prospectus will be, registered in each of the provinces of Canada other than Québec.
Canadian purchasers will only be able to purchase the Offered Shares through an underwriter that is registered in the purchaser's Canadian province of residence, unless an exemption from the dealer registration requirement is available.
The Filer acknowledges that the Exemption Sought relates only to the posting of the Website Materials on one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com, and not in respect of the Preliminary Prospectus, any amendment to the Preliminary Prospectus or the Final Prospectus.
A Canadian investor will be deemed to have relied upon any misrepresentation in the Website Materials.
The Filer is not in default of any of its obligations under the Legislation or the securities legislation of any of the Passport Jurisdictions.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation of 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:
- Any amendment to the Preliminary Prospectus after the date of this decision and the Final Prospectus will state that purchasers of the Offered Shares in each of the provinces of Canada in which the Final Prospectus is filed and a receipt is issued (or is deemed to have been issued) will have a contractual right of action for any misrepresentation in the Website Materials against the Filer and the Canadian underwriters who sign the Final Prospectus, substantially in the following form:
"We may make available certain materials describing the offering (the Website Materials) on the website of one or more commercial services such as www.retailroadshow.com or www.netroadshow.com under the heading "Sunshine Silver Mines Corporation" during the period prior to obtaining a final receipt for the final base PREP prospectus in connection with this offering (the Final Prospectus) from the securities regulatory authorities in the Canadian offering jurisdictions. In order to give purchasers in each of the Canadian offering jurisdictions the same unrestricted access to the Website Materials as provided to U.S. purchasers, we have applied for and obtained exemptive relief from the securities regulatory authority in each of the Canadian offering jurisdictions. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that, in the event that the Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make any statement therein not misleading in the light of the circumstances in which it was made (a misrepresentation within the meaning of Canadian securities laws), a purchaser resident in a Canadian offering jurisdiction who purchases our shares of common stock pursuant to the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each Canadian underwriter signing the certificate contained in the Final Prospectus with respect to such misrepresentation as are equivalent to the rights under section 130 of the Securities Act (Ontario) or the comparable provision of the securities legislation of the particular province where that purchaser is resident, as the case may be, subject to the defences, limitations and other terms thereof, as if such misrepresentation were contained in the Final Prospectus."
- The Website Materials will not include information that compares the Filer to one or more other issuers (Comparables) unless the Comparables are also included in the preliminary prospectus for the Offering, including any amendments, and the Final Prospectus.
“Edward P. Kerwin” “Christopher Porter”
Commissioner Commissioner
Ontario Securities Commission Ontario Securities Commission