Headnote MI 11-102 and NP 11-203 Relief granted from the maximum length of transition year - Relief needed to align issuer with recently acquired subsidiary company without incurring undue expenses - Condition of relief that the Filer must file year-end financial statements as if the Filer had a 15- month transition year - National Instrument 51-102 - Continuous Disclosure Obligations, Part 4 Applicable Legislative Provisions
National Instrument 51-102 - Continuous Disclosure Obligations, Part 4
August 15, 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
ONENERGY INC.
(THE “FILER” or “ONENERGY”)
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”) for relief from the requirement in paragraph 4.8(4)(a) of National Instrument 51-102 - Continuous Disclosure Obligations (“NI 51-102”) that a transition year arising from a notice of change in year-end must not exceed 15 months (the “Exemption Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
The Ontario Securities Commission is the principal regulator for this application; and
The Filer has provided notice in accordance with section 4.7 of Multilateral Instrument 11-102 - Passport System (“MI 11-102”) that the requested approval and relief is intended to be relied upon by the Filer in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador.
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 in this decision.
Representations
This decision is based on the following facts represented by the Filer:
ONEnergy
1The Filer, formerly Look Communications Inc. (“Look”) is a corporation governed by the Canada Business Corporations Act, with its head office in Toronto, Ontario.
2The authorized capital of the Filer consists of an unlimited number of multiple voting shares, an unlimited number of subordinate voting shares and an unlimited number of Class A non-voting shares. As of the date of the Filer’s application for the Exemption Sought, there were 99,994,671 multiple voting shares, 111,135,424 subordinate voting shares and no Class A non-voting shares outstanding.
3The Filer is a reporting issuer under the securities legislation of each of the provinces of Canada and is not in default of its reporting issuer obligations under the securities legislation of any of the provinces of Canada. The Filer is a “venture issuer” as defined in NI 51-102.
4On July 9, 2013, the Filer acquired all of the issued and outstanding shares of Sunwave Gas & Power Inc. (“Sunwave”), an energy retailer, and concurrently completed a private placement of $9 million of multiple voting shares and subordinate voting shares (the “Transactions”). The Transactions constituted a “change of business” of the Filer under the rules of the TSX Venture Exchange (the “TSX-V”).
5Upon completion of the Transactions, the Filer’s subordinate voting shares and multiple voting shares were transferred from the NEX board of the TSX-V to Tier 1 of the TSX-V, under the symbols OEG and OEG.A, respectively.
6Following completion of the Transactions, the business of the Filer consists entirely of the business of Sunwave, and, since its most recent financial year end (i.e., August 31, 2012) the Filer has not conducted any material operations other than the operation of the business of Sunwave.
7The Filer’s current financial year-end is August 31.
8Sunwave’s current financial year-end is December 31.
Change in Year-End
9The Filer proposes to change its year-end to December 31.
10The proposed transition year is the 16 month period beginning September 1, 2012 and ending December 31, 2013.
11The change in year-end will align the reporting periods of the Filer and its operating subsidiary, Sunwave, which will permit the Filer to conduct its internal financial accounting and engage external auditors at the same time as such practices are being undertaken on behalf of Sunwave.
12The Filer’s management believes that it is efficient for the Filer to report on the same basis as its operating subsidiary to facilitate the preparation of consolidated financial statements.
13The change in year-end will align the Filer’s financial year-end with its current year-end for tax purposes of December 31.
14The Filer’s prospective lender and wholesale energy supplier has indicated a strong preference that the Filer change its year-end to December 31.
15Sunwave was acquired by the Filer on July 9, 2013, and shareholders were provided with audited financial statements of Sunwave for the year ended December 31, 2012 and a pro forma balance sheet for ONEnergy as at February 28, 2013.
Decision
The principal regulator is satisfied that the test set out in the Legislation that provides the principal regulator with the jurisdiction to make the decision has been met.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted and the Filer shall be permitted to change its financial year-end from August 31 to December 31, provided that:
The Filer shall prepare and file, no later than October 30, 2013, an interim financial report that consolidates the operations of Sunwave as at and for the 12 month period ended August 31, 2013 with comparative financial statements for the 12 month period ended August 31, 2012; and
The Filer shall prepare and file, no later than March 31, 2014, audited annual financial statements for the 16 month period ended December 31, 2013 with comparative financial statements for the 12 month period ended August 31, 2012.
“Shannon O’Hearn”
Shannon O’Hearn, Manager
Ontario Securities Commission