December 2nd, 2016
IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(THE JURISDICTION)
AND
IN THE MATTER OF
OPKO HEALTH, INC.
(THE FILER)
DECISION
Background
The principal regulator in the Jurisdiction (the Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer be deemed to cease to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).
Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec (the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.
Representations
This order is based on the following facts represented by the Filer:
the Filer is a corporation existing under the laws of the State of Delaware. The Filer's head office is located at 4400 Biscayne Blvd., Miami, Florida 33137;
the Filer is a diversified healthcare company that seeks to establish industry-leading positions in large, rapidly growing markets;
the Filer is a reporting issuer in each of the Jurisdictions and is not in default of securities legislation in any jurisdiction in Canada;
the common shares of the Filer (the Common Shares) have traded on the NASDAQ Stock Market (the NASDAQ) since June 24, 2016;
as of the date of this application, no securities of the Filer, including debt securities, are listed, traded or quoted in Canada on a "marketplace" as defined in National Instrument 21-101 – Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported and the Filer does not intend to have any of its securities listed, traded or quoted on such a marketplace in Canada;
the Filer files continuous disclosure materials under U.S. securities laws and is listed on the NASDAQ;
the Filer is not eligible to use the simplified procedure under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications (NP 11-206) as its securities are listed on the NASDAQ and the Filer has therefore applied under the modified approach for foreign issuers set forth under NP 11-206;
in support of the representations set forth below concerning the percentage of outstanding securities and the total number of security holders in Canada, the Filer has done the following:
(a) undertaken a thorough and diligent examination of the Filer’s record holder list;
(b) undertaken a thorough and diligent examination of the Filer’s non-objecting beneficial owner list (the NOBO list);
(c) made inquiries of the American Stock Transfer & Trust Company, LLC (the Transfer Agent) regarding the beneficial ownership of the Filer;
(d) reviewed materials prepared by the Transfer Agent in connection with the plan of arrangement (the Plan of Arrangement) with Transition Therapeutics Inc. (Transition), which named the beneficial owners of Transition; and,
(e) examined the Transfer Agent's records for any indication of shareholdings in Canada;
- the Filer calculated Canadian resident shareholdings using the most recent data available to the Filer, by assuming that all of Transition’s shareholders were Canadian (which was not the case, but is appropriately conservative for the purposes of this calculation) and by assuming that the percentage shares on the NOBO list held by Canadian residents is equal to the percentage of shares of objecting beneficial owners (OBOs) held by Canadian residents, which the Filer submits is a reasonable assumption. The results of these calculations were as follows:
(a) the percentage of Common Shares that are held by Canadian resident registered shareholders is 0.097% and registered shareholders accounted for 56.1% of all outstanding Common Shares;
(b) the percentage of Common Shares that are held by Canadian residents on the NOBO list was 0.047% and the NOBO list accounted for 23.7% of all outstanding Common Shares;
(c) the percentage of Common Shares that are held by Canadian resident OBOs was estimated to be 0.04% and OBOs accounted for 20.2% of all outstanding Common Shares;
(d) as a result of the calculations above in 9(a), (b) and (c), the total percentage of Canadian ownership of the Filer prior to the Plan of Arrangement is estimated to be 0.184%;
(e) if all of the shares issued pursuant to the Plan of Arrangement are held by Canadians, which is not true but is used herein as a conservative estimate, the estimated total percentage of Canadian ownership of the Filer would be 1.337%; and,
(f) even with the conservative estimate in (e), in order for Canadian ownership of the Filer to be greater than 2%, there would have to be approximately 17 times more Common Shares held by Canadian resident OBOs than estimated; these inquiries and calculations in all cases support the disclosure made herein and, importantly, indicate that shareholdings in Canada are substantially lower than the applicable 2% threshold. The Applicant believes that these inquiries were reasonable and sufficient to determine the beneficial ownership of its securities;
residents of Canada do not, directly or indirectly, beneficially own more than 2% of each class or series of outstanding securities of the Filer worldwide, and they do not, directly or indirectly, comprise more than 2% of the total number of securityholders of the Filer worldwide;
in the 12 months before applying for the decision, the Filer has not taken any steps that indicate there is a market for its securities in Canada, including conducting a prospectus offering in Canada, establishing or maintaining a listing on an exchange in Canada or having its securities traded on a marketplace or any other facility in Canada for bringing together buyers and sellers where trading data is publicly reported;
the Filer provided advance notice to Canadian resident securityholders in a news release dated October 12, 2016 stating that it has applied to the Ontario Securities Commission for a decision that it is not a reporting issuer in any jurisdiction in Canada;
the Filer has provided an undertaking that it will concurrently deliver to its Canadian securityholders all disclosure material the Filer would be required under U.S. securities laws or exchange requirements to deliver to U.S. resident securityholders; and,
upon the receipt of the Order Sought, the Filer will no longer be a reporting issuer or the equivalent thereof in any jurisdiction in Canada.
Order
The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
“Judith Robertson”
“Edward P. Kerwin”
Commissioner Ontario Securities Commission
Commissioner Ontario Securities Commission