June 2, 2015
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 FIRSTSERVICE 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") that:
(a) the requirements under section 12.3 of National Instrument 41-101 General Prospectus Requirements ("NI 41-101") for a prospectus distribution of restricted securities shall not apply to the Filer in connection with any future distributions of Subordinate Voting Shares of the Filer or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares of the Filer, other than Multiple Voting Shares of the Filer (the "41-101 Exemption"); and
(b) the requirements under section 3.2 of Ontario Securities Commission Rule 56-501 Restricted Shares ("OSC Rule 56-501") for a prospectus exemption to be available for a stock distribution of securities shall not apply to the Filer in connection with any future distributions of securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, Subordinate Voting Shares of the Filer (the "56-501 Exemption", and together with the 41-101 Exemption, the "Exemptions Sought").
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; 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 upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador in respect of the 41-101 Exemption.
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.
Representations
The decision is based on the following facts represented by the Filer:
The Filer (formerly named New FSV Corporation) is a corporation existing under the Business Corporations Act (Ontario) (the "OBCA") pursuant to a certificate and articles of arrangement effective June 1, 2015 (the "Effective Date") providing for a plan of arrangement involving, among others, Colliers International Group Inc. (formerly named FirstService Corporation) (prior to the Effective Date, "Old FirstService" and on and following the Effective Date, "Colliers"), the holders of Subordinate Voting Shares and Multiple Voting Shares in the capital of Old FirstService, the Filer, FSV Holdco ULC and FirstService Commercial Real Estate Services Inc. (the "Arrangement"). The Filer's head office is located in Toronto, Ontario.
The Filer has been a reporting issuer (or its equivalent) in each province of Canada since the Effective Date. The Filer is not in default of securities legislation in any jurisdiction of Canada.
Old FirstService called and held an annual and special meeting (the "Meeting") of the holders of its Subordinate Voting Shares and Multiple Voting Shares (collectively, the "Voting Shareholders") in order to, among other things, consider and, if deemed advisable, to pass, with or without variation, a special resolution (the "Arrangement Resolution") approving the Arrangement.
In connection with the Meeting, Old FirstService prepared and delivered a management information circular to the Voting Shareholders that contained the disclosure regarding the Arrangement required by applicable securities laws (the "Circular").
In accordance with the requirements of the OBCA and the interim Court order issued by the Ontario Superior Court of Justice with respect to the Arrangement, the Arrangement Resolution was approved at the Meeting by:
(a) more than two-thirds (66⅔%) of the votes cast at the Meeting by the holders of Old FirstService Subordinate Voting Shares, voting separately as a class;
(b) more than two-thirds (66⅔%) of the votes cast at the Meeting by the holders of Old FirstService Multiple Voting Shares, voting separately as a class; and
(c) a majority of the votes cast at the Meeting by the holders of Old FirstService Subordinate Voting Shares, voting separately as a class (excluding the votes cast in respect of Old FirstService Subordinate Voting Shares held by persons whose votes were excluded pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions and OSC Rule 56-501).
Following the approval of the Arrangement by Voting Shareholders, the Arrangement was approved by the Ontario Superior Court of Justice.
The Arrangement effected a split of Old FirstService into two public companies as follows: (a) the first public company, Colliers, which owns and operates the businesses which made up the Commercial Real Estate Services division of Old FirstService (carrying on business under the brand name "Colliers International"); and (b) the second public company, the Filer, which owns and operates the businesses which made up the Residential Real Estate Services and Property Services divisions of Old FirstService (carrying on business under the brand names "FirstService Residential" and "FirstService Brands", respectively).
Upon the Arrangement becoming effective on the Effective Date, holders of Old FirstService Subordinate Voting Shares continued to own one Subordinate Voting Share in the capital of Colliers and received one Subordinate Voting Share in the capital of the Filer (a "New FSV Subordinate Voting Share"), for each Old FirstService Subordinate Voting Share held, and holders of Old FirstService Multiple Voting Shares continued to own one Multiple Voting Share in the capital of Colliers and received one Multiple Voting Share in the capital of the Filer (a "New FSV Multiple Voting Share"), for each Old FirstService Multiple Voting Share held. On the Effective Date, shareholders of Old FirstService owned both Colliers and the Filer.
On the Effective Date, the attributes of the New FSV Subordinate Voting Shares and New FSV Multiple Voting Shares were the same as the Old FirstService Subordinate Voting Shares and Old FirstService Multiple Voting Shares, respectively. In particular, holders of New FSV Subordinate Voting Shares and New FSV Multiple Voting Shares are entitled to one vote and 20 votes, respectively, for each such share held on all votes taken at meetings of the shareholders of the Filer. Subject to the rights of holders of other shares of the Filer ranking prior to the New FSV Subordinate Voting Shares and New FSV Multiple Voting Shares, the New FSV Subordinate Voting Shares and New FSV Multiple Voting Shares participate equally, share for share, as to dividends. The New FSV Multiple Voting Shares are convertible into New FSV Subordinate Voting Shares on a one-for-one basis at any time, subject to adjustment.
The Filer is seeking the 41-101 Exemption in connection with any future distributions of New FSV Subordinate Voting Shares, or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, New FSV Subordinate Voting Shares, by means of a prospectus, and the Filer is seeking the 56-501 Exemption in connection with any future distributions of securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, New FSV Subordinate Voting Shares, pursuant to a prospectus exemption. Old FirstService was a reporting issuer at the time of the Arrangement and it prepared and delivered the Circular to the Voting Shareholders in connection with the Arrangement. The Arrangement, being the restricted security reorganization pursuant to which New FSV Subordinate Voting Shares were created and a stock distribution pursuant to which New FSV Subordinate Voting Shares were distributed, received prior majority approval of the Voting Shareholders and of the holders of Old FirstService Subordinate Voting Shares, excluding the votes cast in respect of Old FirstService Subordinate Voting Shares held by persons whose votes were excluded pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions and OSC Rule 56-501.
The Filer was not a reporting issuer at the time that it issued the New FSV Subordinate Voting Shares as part of the Arrangement. Upon completion of the Arrangement on the Effective Date, the Filer became a reporting issuer and the Voting Shareholders (who had approved the Arrangement) became holders of New FSV Subordinate Voting Shares and New FSV Multiple Voting Shares.
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 Exemptions Sought are granted provided that:
(a) in respect of the 41-101 Exemption, any subsequent restricted security reorganization, if any, carried out by the Filer related to the New FSV Subordinate Voting Shares, other than a restricted security reorganization that results only in the creation of a security that is not itself a subject security or a restricted security but that is, directly or indirectly, convertible into or exercisable or exchangeable for New FSV Subordinate Voting Shares, complies with the provisions of section 12.3 of NI 41-101; and
(b) in respect of the 56-501 Exemption, any subsequent restricted security reorganization, if any, carried out by the Filer related to the New FSV Subordinate Voting Shares, other than a restricted security reorganization that results only in the creation of a security that is not itself a subject security or a restricted security but that is, directly or indirectly, convertible into or exercisable or exchangeable for New FSV Subordinate Voting Shares, complies with the provisions of section 3.2 of OSC Rule 56-501.
“Sonny Randhawa”
Sonny Randhawa
Manager, Corporate Finance
Ontario Securities Commission