Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107), s. 5.1 – the Filer requests relief from the requirements under section 3.2 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises in order to permit the Filer to prepare its financial statements in accordance with U.S. GAAP – revocation or variation of decision – Filer requests to have conditions in existing decision replaced with revised conditions – existing decision revoked – requested relief granted.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standard, s. 5.1 Securities Act, R.S.O. 1990, c.S.5, as am., s.144 – Revocation or variation of decision
DATE: February 19, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTION
AND
IN THE MATTER OF ONTARIO POWER GENERATION INC. (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 (the Legislation) exempting the Filer from the requirements under section 3.2 of National Instrument 52-107 - Acceptable Accounting Principles and Auditing Standards (NI 52-107) that financial statements (a) be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises and (b) disclose an unreserved statement of compliance with IFRS in the case of annual financial statements and an unreserved statement of compliance with IAS 34 in the case of an interim financial report (the Exemption Sought). The Filer previously obtained exemptive relief under the Legislation from the principal regulator in a decision dated January 24, 2012, which permits the Filer to prepare its financial statements in accordance with U.S. GAAP for its financial years that begin on or after January 1, 2012 but before January 1, 2015 (the Existing 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;
(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 British Columbia, Alberta, Saskatchewan, Quebec, Nova Scotia, and Newfoundland and Labrador (the Passport Jurisdictions); and
(c) the decision of the principal regulator automatically results in an equivalent decision in the Passport Jurisdictions.
Interpretation
In this decision:
(a) unless otherwise defined herein, terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 52-107 have the same meaning if used herein; and
(b) “activities subject to rate regulation” has the meaning ascribed in Part V of the Handbook at the date hereof.
Representations
This decision is based on the following facts represented by the Filer.
The Filer is incorporated under the Business Corporations Act (Ontario). The head office of the Filer is located at 700 University Avenue, Toronto, ON M5G 1X6.
The Filer is a reporting issuer or equivalent in the Jurisdiction and each Passport Jurisdiction and is not in default of securities legislation in any such jurisdiction.
The Filer currently prepares its financial statements in accordance with U.S. GAAP as permitted by the Existing Relief.
The Filer is not an SEC issuer.
The Filer has activities subject to rate regulation.
Were the Filer an SEC issuer, it would be permitted by section 3.7 of NI 52-107 to file financial statements prepared in accordance with U.S. GAAP, which accords treatment of activities subject to rate regulation similar to that under Part V of the Handbook.
The Existing Relief will expire not later than January 1, 2015.
The International Accounting Standards Board (IASB) continues to work on a project focusing on accounting specific to rate-regulated activities. It is not yet known when this project will be completed or whether IFRS will include a specific standard that is mandatory for entities with rate-regulated activities.
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:
(a) the Existing Relief is revoked;
(b) the Exemption Sought is granted to the Filer in respect of the Filer’s financial statements required to be filed on or after the date of this order, provided that the Filer prepares those financial statements in accordance with U.S. GAAP; and
(c) the Exemption Sought will terminate in respect of the Filer on the earliest of the following:
(i) January 1, 2019;
(ii) if the Filer ceases to have activities subject to rate regulation, the first day of the Filer’s financial year that commences after the Filer ceases to have activities subject to rate regulation; and
(iii) the effective date prescribed by the IASB for the mandatory application of a standard within IFRS specific to entities with rate-regulated activities.
“Cameron McInnis”
Chief Accountant Ontario Securities Commission