March 13, 2017
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 RESTAURANT BRANDS INTERNATIONAL INC. (THE “FILER”)
DECISION
Background
The securities regulatory authority or regulator in the Jurisdiction (the “Decision Maker”) has received an application (the “Application”) from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) for:
(a) relief permitting the Filer to send proxy-related materials to registered holders of securities (including Exchangeable Units, as defined below) entitled to vote at any meeting of securityholders of the Filer using a delivery method permitted under U.S. federal securities law (the “Registered Holder Notice-and-Access Relief”); and
(b) relief permitting the Filer to send proxy-related materials to beneficial holders of securities (including Exchangeable Units) entitled to vote at any meeting of securityholders of the Filer using a delivery method permitted under U.S. federal securities law (the “Beneficial Holder Notice-and-Access Relief” and, together with the Registered Holder Notice-and-Access Relief, the “Requested Relief”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator (the “Principal Regulator”) for this Application; and
(b) the Filer has provided notice that subsection 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, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Yukon and Nunavut.
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
The Filer is a corporation governed by the Canada Business Corporations Act pursuant to articles of continuance dated October 23, 2014.
The Filer’s registered and head office is located at 226 Wyecroft Road, Oakville, Ontario, L6K 3X7.
The Filer is one of the world’s largest quick service restaurant companies with over 20,000 restaurants in approximately 100 countries and U.S. territories operating under the Tim Hortons and Burger King brands.
The Filer is a reporting issuer (or the equivalent thereof) under the securities legislation of each of the provinces and territories of Canada and is currently not in default of any applicable requirements of the securities legislation thereunder.
The Filer has outstanding approximately 234,485,929 common shares (the “Common Shares”), 68,530,939 Class A 9.00% cumulative compounding perpetual voting preferred shares and one special voting share (the “Special Voting Share”) as of the close of business on January 30, 2017. In addition, there are approximately 226,932,923 outstanding Class B exchangeable limited partnership units (the “Exchangeable Units”) of Restaurant Brands International Limited Partnership (the “Partnership”) as of the close of business on January 30, 2017, which may be exchanged for Common Shares on a one-for-one basis.
The Common Shares are listed and posted for trading on both the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange under the trading symbol “QSR” and the Exchangeable Units are listed and posted for trading on the TSX under the trading symbol “QSP”.
Pursuant to a voting trust agreement dated as of December 12, 2014 among the Filer, the Partnership and Computershare Trust Company of Canada (the “Trustee”), at any meeting of securityholders of the Filer at which holders of Common Shares are entitled to vote, the Trustee, as holder of the Special Voting Share, is entitled to such number of votes equal to the number of Exchangeable Units outstanding on the record date for such meeting (the “Voting Rights”). Further, for any such meeting, holders of Exchangeable Units are entitled to instruct the Trustee to cast and exercise, in the manner instructed, that number of votes comprised in the Voting Rights for the Special Voting Share which is equal to the number of Exchangeable Units held.
Pursuant to exemptive relief previously granted by the OSC (see Re: New Red Canada Limited Partnership and Tim Hortons Inc. (2014), 37 O.S.C.B. 9925), the Exchangeable Units are deemed to be “designated exchangeable securities” for purposes of Section 13.3 of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”). Accordingly, in order for the Partnership to continue to qualify for the exemption that is available for exchangeable security issuers set forth in section 13.3 of NI 51-102, the Filer will send all proxy-related materials to all holders of Exchangeable Units using the same method as it uses to send such proxy-related materials to its securityholders.
The Filer is an “SEC issuer” as defined in NI 51-102 and, accordingly, is required to comply with applicable U.S. securities laws in all respects.
In accordance with section 9.1.5 of NI 51-102, a reporting issuer that is an SEC issuer can send proxy-related materials to registered holders under section 9.1 of NI 51-102 using a delivery method permitted under U.S. federal securities law if both of the following apply:
(a) the SEC issuer is subject to, and complies with Rule 14a-16 under the Securities Exchange Act of 1934 of the United States of America, as amended (the “Exchange Act”);
(b) residents of Canada do not own, directly or indirectly, outstanding voting securities carrying more than 50% of the votes for the election of directors, and none of the following apply:
(i) the majority of the executive officers or directors of the issuer are residents of Canada;
(ii) more than 50% of the consolidated assets of the issuer are located in Canada;
(iii) the business of the issuer is administered principally in Canada;
(the “Automatic Registered Holder Exemption”).
- In accordance with section 9.1.1(1) of National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), despite section 2.7 of NI 54-101, a reporting issuer that is an SEC issuer can send proxy-related materials to beneficial holders using a delivery method permitted under U.S. federal securities law if all of the following apply:
(a) the SEC issuer is subject to, and complies with Rule 14a-16 under the Exchange Act;
(b) the SEC issuer has arranged with each intermediary through whom the beneficial holder holds its interest in the reporting issuer’s securities to have each intermediary send the proxy-related materials to the beneficial owner by implementing the procedures under Rule 14b-1 or Rule 14b-2 under the Exchange Act that related to the procedures in Rule 14a-16 under the Exchange Act;
(c) residents of Canada do not own, directly or indirectly, outstanding voting securities carrying more than 50% of the votes for the election of directors, and none of the following apply:
(i) the majority of the executive officers or directors of the issuer are residents of Canada;
(ii) more than 50% of the consolidated assets of the issuer are located in Canada;
(iii) the business of the issuer is administered principally in Canada;
(the “Automatic Beneficial Holder Exemption” and, together with the Automatic Registered Holder Exemption, the “Automatic Exemptions”).
- The Filer is unable to rely on the Automatic Exemptions as more than 50% of the consolidated assets of the Filer are located in Canada and the business of the Filer is administered principally in Canada. Notwithstanding the foregoing,
(a) on a fully-exchanged basis, over 70% of the Filer’s outstanding voting securities are held by persons that are not residents of Canada;
(b) while several of the Filer’s executive officers are Canadian, the majority of its executive officers are not residents of Canada;
(c) while three of the Filer’s directors are Canadian, its remaining nine directors are not residents of Canada;
(d) as publicly disclosed, the Filer is focused on global development; as such, approximately 80% of its over 20,000 restaurants are located outside of Canada, the majority of the Filer’s employees are located outside of Canada and more than 75% of the Filer’s system-wide sales in 2016, representing the sales at all franchise restaurants and corporate-owned restaurants, were generated outside of Canada;
(e) although the majority of the Filer’s consolidated assets are located in Canada, the majority of the Filer’s long-lived assets (as defined by the Filer’s GAAP), including property and equipment and intangible assets subject to amortization, are located outside of Canada; and
(f) the majority of the trading volume of the Filer’s common shares occurs on the New York Stock Exchange.
For any meeting of securityholders of the Filer for which the Filer elects to deliver proxy-related materials by using notice-and-access (each, a “Notice-and-Access Meeting”), the Filer will send proxy-related materials to holders of voting securities (including Exchangeable Units) in compliance with Rule 14a-16 (the “U.S. Notice-and-Access Rules”) under the Exchange Act.
The U.S. Notice-and-Access Rules allow the Filer to furnish proxy-related materials by sending securityholders entitled to vote at a Notice-and-Access Meeting a notice of internet availability of proxy materials (the “Notice”) 40 calendar days or more prior to the date of the applicable Notice-and-Access Meeting and sending the record holder, broker or respondent bank the Notice in sufficient time for the record holder, broker or respondent bank to prepare, print and send the Notice to beneficial securityholders entitled to vote at the applicable Notice-and-Access Meeting at least 40 calendar days before the date of such Notice-and-Access Meeting and making all proxy-related materials identified in the Notice, including a management proxy circular, publicly accessible, free of charge, at a website address specified in the Notice. The Notice will comply with the requirements of Rule 14a-16 under the Exchange Act and include instructions regarding how a securityholder entitled to vote at the applicable Notice-and-Access Meeting may request a paper or e-mail copy of the proxy-related materials at no charge. The U.S. Notice-and-Access Rules permit the Filer and, in turn, the record holder, broker or respondent bank, to send only the Notice to beneficial securityholders, provided that all applicable requirements of the U.S. Notice-and-Access Rules have been satisfied.
NI 51-102 requires the Filer to deliver proxy-related materials to registered holders of securities entitled to vote at a meeting of securityholders of the Filer (“Registered Holders”) and NI 54-101 requires the Filer to deliver proxy-related materials to intermediaries for delivery to those beneficial holders of securities (including Exchangeable Units) entitled to vote at a meeting of securityholders of the Filer (“Beneficial Holders”) that have requested materials for meetings of the Filer.
In lieu of delivering to each Registered Holder the proxy-related materials required under NI 51-102, for each Notice-and-Access Meeting the Filer will deliver by mail or electronically (if permitted by applicable law) the Notice to each Registered Holder.
In lieu of delivering to each Beneficial Holder the proxy-related materials required under NI 54-101, for each Notice-and-Access Meeting the Filer will deliver to Broadridge Financial Solutions, Inc., its affiliates, successor or an equivalent provider of proxy services (collectively, “Broadridge”), the Notice for delivery to each Beneficial Holder. Broadridge will deliver the English only Notice to all Beneficial Holders by postage-paid mail or electronically (if permitted by applicable law). Broadridge will act as the Filer’s agent for such purposes and the Filer will pay all of the expenses involved in printing and delivering the Notice to all requesting Beneficial Holders.
The Notice sent by the Filer to securityholders entitled to vote at a Notice-and-Access Meeting will include the following information:
(a) the date, time and location of such Notice-and-Access Meeting as well as information on how to obtain directions to be able to attend such Notice-and-Access Meeting and vote in person or to designate another person to attend, vote and act on the securityholder’s behalf;
(b) a description of each matter to be voted on at such Notice-and-Access Meeting including the recommendations of the board of directors of the Filer regarding those matters;
(c) a plain language explanation of the U.S. Notice-and-Access Rules, including that the circular, form of proxy and voting instruction form for such Notice-and-Access Meeting have been made available online and that securityholders may request a physical copy at no charge;
(d) an explanation of how to obtain a physical copy of the circular, form of proxy and voting instruction form for such Notice-and-Access Meeting;
(e) the website addresses for SEDAR, the Filer’s website and other third party hosting website where the proxy-related materials are posted;
(f) a reminder to review the circular for such Notice-and-Access Meeting before voting;
(g) an explanation of the methods available for securityholders to vote at such Notice-and-Access Meeting; and
(h) the date by which a validly completed form of proxy or voting instruction form must be deposited in order for the securities represented by such form of proxy or voting instruction form to be voted at such Notice-and-Access Meeting, or any adjournment thereof.
Registered Holders and Beneficial Holders requesting the proxy-related materials will receive the same materials required to be sent to securityholders under the U.S. Notice-and-Access Rules.
A Beneficial Holder who wants to attend a Notice-and-Access Meeting in person will be required to obtain a proxy from his, her or its applicable intermediary.
For each Notice-and-Access Meeting, Broadridge will notify all Canadian intermediaries on whose behalf it or a related company acts as agent under NI 54-101 to advise them of the Filer’s reliance on the U.S. Notice-and-Access Rules and this decision in its communication with the Beneficial Holders.
For each Notice-and-Access Meeting, the Filer will retain Broadridge to respond to requests for the proxy related-materials from all Beneficial Holders and will retain Computershare Trust Company of Canada, its affiliates, successor or an equivalent provider of transfer agent or proxy services (collectively, “Computershare” and together with Broadridge, the “Agents”) to respond to requests for the proxy related-materials from all Registered Holders. The Notice from the Filer will direct all Registered Holders and all Beneficial Holders to contact the Agent, as applicable, at a specified toll-free telephone number, by e-mail or via the internet to request a printed copy of the proxy-related materials for the applicable Notice-and-Access Meeting. The Agents will give notice to the Filer of the receipt of requests for printed copies and the Filer will provide English only materials to the Agents in compliance with the requirements of the U.S. Notice-and-Access Rules.
To comply with the U.S. Notice-and-Access Rules, the Filer will not receive any information about the Registered Holders and Beneficial Holders that contact the Agents other than the aggregate number of proxy-related material packages requested by the Registered Holders or Beneficial Holders and will reimburse the Agents for delivery of requests.
The Filer has consulted with the Agents in developing the mailing and voting procedures for the Registered Holders and Beneficial Holders described in this decision.
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 Requested Relief is granted, provided that, in respect of a Notice-and-Access Meeting, at the time the Filer sends the notification of meeting and record dates for such meeting in accordance with section 2.2 of NI 54-101, the Filer meets all of the requirements of the Automatic Exemptions other than the those set out in: (A) sections 9.1.5(b)(ii) and (iii), in the case of the Automatic Registered Holder Exemption; and (B) sections 9.1.1(1)(c)(ii) and (iii), in the case of the Automatic Beneficial Holder Exemption.
“Winnie Sanjoto”
Manager, Corporate Finance Branch
Ontario Securities Commission