In the Matter of Her Majesty the Queen in Right of Ontario and Hydro One Limited, 2017 CanLII 34678

Date: June 6, 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 HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, AS REPRESENTED BY THE MINISTER OF ENERGY

AND

HYDRO ONE LIMITED (the Filers)

DECISION

BACKGROUND

The principal regulator in the Jurisdiction has received an application from Her Majesty the Queen in Right of Ontario (the Province), as represented by the Minister of Energy, and Hydro One Limited (Hydro One) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), and subject to the conditions specified below under the heading “Passport Decision”, granting:

(a) the TOB/EW Relief (as defined below) to each Non-Aggregated Holder in respect of voting or equity securities of Hydro One and securities convertible into voting or equity securities of Hydro One;

(b) the Primary Insider Reporting Requirement Relief and the Supplementary Insider Reporting Requirement Relief (each as defined below) to each Non-Aggregated Holder in respect of securities of Hydro One and debt securities of Hydro One Inc. (HOI);

(c) the Control Person Relief (as defined below) to each Non-Aggregated Holder (other than the Minister of Energy) in respect of securities of Hydro One and debt securities of HOI; and

(d) the CD Relief (as defined below) to Hydro One in respect of securities beneficially owned or controlled by any Non-Aggregated Holder,

(collectively, the Passport Exemptions).

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 for the Passport Exemptions, and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 – Passport System (MI 11-102) is intended to be relied upon in each of Non-Principal Jurisdictions (as defined below).

The Ontario Securities Commission has also received an application from the Province, as represented by the Minister of Energy, and Hydro One for a decision pursuant to section 5.1 of Rule 48-501 (as defined below) granting relief from section 2.2 of Rule 48-501 to each Non-Aggregated Holder other than the Minister of Energy, in respect of the Common Shares (as defined below), subject to the conditions specified below under the heading “Non-Passport Decision” (the Non-Passport 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. The terms “applicable definitions”, “applicable provisions”, “control”, “owns”, “owned”, “ownership” and similar terms in respect of a security, have the meanings given to those terms in NI 62-103.

CD Relief means relief pursuant to section 13.1 of National Instrument 51-102 – Continuous Disclosure from any requirement to report beneficial ownership or control or direction over securities in an information circular or annual information form;

Common Shares means common shares of Hydro One;

Control Person Relief means relief pursuant to section 74(1) of the Legislation from the prospectus requirement;

Electricity Act means the Electricity Act, 1998 (Ontario);

Governance Agreement means the governance agreement dated as of November 5, 2015 by and between the Province and Hydro One;

Minister of Energy means the Minister of Energy in his or her capacity as a holder of securities of Hydro One on behalf of the Province under the Electricity Act or such other member of the Executive Council as may be assigned as a holder of securities of Hydro One on behalf of the Province from time to time;

NI 55-104 means National Instrument 55-104 – Insider Reporting Requirements and Exemptions;

NI 62-103 means National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues;

NI 62-104 means National Instrument 62-104 – Take-over Bids and Issuer Bids;

Non-Aggregated Holder means each of:

(A) the Minister of Energy;

(B) OPG, in respect of itself and the ONFA Funds; and

(C) any (A) agency of the Crown in right of Ontario, (B) corporation that is owned, operated or controlled by the Crown in right of Ontario, within the meaning of section 1.4 of NI 62-104, or (C) board, commission, authority or incorporated body of the Crown in right of Ontario, in each case that may acquire, dispose, hold or vote Hydro One or HOI securities from time to time, provided that any decisions with respect to the acquisition, disposition, holding or voting of Hydro One or HOI securities are made in all circumstances by such entity or by a third party investment manager.

Non-Principal Jurisdictions means each of the provinces and territories of Canada, except Ontario;

OBCA means the Business Corporations Act (Ontario);

OFA means the Ontario Financing Authority;

OPG means Ontario Power Generation Inc.;

Primary Insider Reporting Requirement Relief means relief from the requirements to file

(i) insider reports under section 107 of the Securities Act (Ontario) and sections 3.2 and 3.3 of NI 55-104, and

(ii) insider reports under any provisions of Canadian securities legislation substantially similar to section 107 of the Securities Act (Ontario) and sections 3.2 and 3.3 of NI 55-104;

PWU means the Power Workers’ Union;

Rule 48-501 means Ontario Securities Commission Rule 48-501 – Trading During Distributions, Formal Bids and Share Exchange Transactions;

SIPP means a Statement of Investment Policies and Procedures;

Supplementary Insider Reporting Requirement Relief means relief from the requirements to file

(i) insider reports under sections 3.1, 3.4 and 3.5 and Part 4 of NI 55-104,

(ii) insider reports under any provisions of Canadian securities legislation substantially similar to sections 3.1, 3.4 and 3.5 and Part 4 of NI 55-104, and

(iii) an insider profile under National Instrument 55-102 - System for Electronic Disclosure by Insiders (SEDI);

The Society means The Society of Energy Professionals;

TOB/EW Relief means relief pursuant to section 6.1(1) of NI 62-104 from the requirements of Part 2, section 5.2, subsection 5.3(1) and section 5.4 of NI 62-104;

TSX means the Toronto Stock Exchange; and

Voting Security means a security of Hydro One carrying a voting right either under all circumstances or under some circumstances that have occurred and are continuing, and includes a Common Share.

REPRESENTATIONS

This decision is based on the following facts represented by the Province, in respect of facts concerning the Province and the Non-Aggregated Holders in paragraphs 1, 4, 5, 6, 8 and 12 to 31, and Hydro One, in respect of facts concerning Hydro One and HOI in paragraphs 2, 3, 4, 7, 9, 10 and 11:

1. In April 2015, the Province announced its intention to broaden the ownership of Hydro One. At that time, the Province publicly communicated its intention to reduce its stake over time, until it holds approximately 40% of Hydro One Common Shares.

2. Hydro One was incorporated on August 31, 2015 under the OBCA as part of a corporate reorganization intended by the Minister of Energy to facilitate the broadening of ownership in the company. The head office of Hydro One is in Toronto, Ontario.

3. Hydro One, through its subsidiaries, owns and operates substantially all the electricity transmission network in Ontario, and is the largest electricity distributor in Ontario by number of customers.

4. On November 5, 2015, Hydro One completed an initial public offering (the “IPO”), by way of secondary offering by the Minister of Energy, of Common Shares. Concurrently with the closing of the IPO, the Minister of Energy also sold Common Shares to two trusts established for the benefit of the PWU and Common Shares to two trusts established for the benefit of The Society. Additional Common Shares were distributed on November 12, 2015 in connection with the over-allotment option granted to the underwriters of the IPO.

5. On April 14, 2016, the Minister of Energy sold additional Common Shares in connection with a subsequent public secondary offering. Additional Common Shares were distributed on April 29, 2016 pursuant to an over-allotment option granted to the underwriters in that secondary offering.

6. On May 17, 2017, the Minister of Energy sold an additional tranche of Common Shares in connection with its third public secondary offering. The underwriters of that offering have been granted an over-allotment option to distribute additional Common Shares, exercisable until June 16, 2017.

7. As a result of the IPO, Hydro One is a reporting issuer in each of the provinces and territories of Canada.

8. As of May 18, 2017, the Minister of Energy directly owned approximately 49.9% of the outstanding Common Shares (excluding Common Shares owned by OPG, as discussed below).

9. HOI was incorporated as Ontario Hydro Services Company Inc. on December 1, 1998, under the Business Corporations Act (Ontario). On May 1, 2000 the company changed its name to Hydro One Inc. Prior to the establishment of Hydro One and the completion of the IPO, HOI was the parent company of the Hydro One business. HOI’s head office is located in Toronto, Ontario.

10. Hydro One owns all of the issued shares of HOI, a reporting issuer in each of the provinces of Canada and a registrant with the U.S. Securities and Exchange Commission.

11. The Common Shares are listed on the TSX and certain of the debt securities of HOI are listed on the New York Stock Exchange.

12. OPG was incorporated on December 1, 1998 pursuant to the Business Corporations Act (Ontario). All of the shares of OPG are held by the Minister of Energy. OPG is an Ontario-based electricity generation company whose principal business is the generation and sale of electricity. OPG’s head office is located in Toronto, Ontario.

13. OPG is a reporting issuer in British Columbia, Alberta, Saskatchewan, Ontario, Quebec, Nova Scotia and Newfoundland.

14. During 2015, OPG entered into renewed three-year collective agreements with each of the PWU and The Society. Changes to the respective collective agreements included increases to employee pension plan contributions. The changes to the collective agreements also provide OPG employees contributing to OPG’s pension plan that are represented by the PWU (as at April 1, 2015) and The Society (as at January 1, 2016) with eligibility to annually receive Common Shares from OPG for up to 15 years starting in the third year of the respective agreements, if they are still employed by OPG and members of the PWU or The Society.

15. On April 14, 2016, OPG acquired 9,000,000 Common Shares, representing approximately 1.5% of the outstanding Common Shares, through the underwriters in the Minister of Energy’s secondary offering. The acquisition of the Common Shares was made for investment purposes, to mitigate the risk of future price increases in meeting its future share delivery obligations under the collective agreements. The decision to acquire the Common Shares was made by OPG management independently and was not influenced by or made at the direction of the Minister of Energy or any other governmental entity. As of May 18, 2017, OPG holds 8,378,349 Common Shares, following the first transfer of Common Shares under the employee plans described above. OPG does not have any agreement, arrangement or understanding with the Minister of Energy or any other governmental entity with respect to the Common Shares or the voting of those shares.

16. OPG, certain of its subsidiaries and the Minister of Finance on behalf of the Province entered into the Ontario Nuclear Funds Agreement as of April 1, 1999. Pursuant to that agreement, segregated funds (the “ONFA Funds”) have been established to ensure that sufficient funds are accumulated and will be available to pay for the costs of nuclear station decommissioning and used fuel and nuclear waste management. For the purposes of this application, the ONFA Funds mean such segregated funds, excluding a trust fund established as required by the Nuclear Fuel Waste Act (Canada) (the “NFWA Trust”).

17. The ONFA Funds are legally and beneficially owned by OPG, but are contractually dedicated under the Ontario Nuclear Funds Agreement to pay for costs of nuclear station decommissioning and nuclear waste management for used fuel and low and intermediate level waste, over a very long time period. The Province has a security interest over the ONFA Funds. The ONFA Funds, including the NFWA Trust, also help satisfy federal nuclear regulatory requirements for financial guarantees of nuclear decommissioning and used fuel and nuclear waste management costs. Agreements entered into between the Province, OPG and others require that the ONFA Funds be maintained in third party custodial accounts that are segregated from the rest of OPG’s assets.

18. The investment activities of the ONFA Funds are jointly managed by OPG and, on behalf of the Province, the OFA. The OFA is a statutory corporation without share capital established by the Capital Investment Plan Act, 1993. It is a Crown agency, accountable to the Minister of Finance. Its objects include assisting the Province and certain other public bodies to borrow and invest money, managing financial risks and providing such other financial services as are considered advantageous to the Province. Ontario Regulation 85/05 exempts the OFA from registration requirements under the securities legislation in connection with its duties and responsibilities under its governing statute. The OFA is authorized by Order in Council to enter into various agreements relating to the ONFA Funds on behalf of the Province.

19. OPG and the OFA jointly appoint external investment managers for the ONFA Funds. Day-to-day investment decisions and voting decisions are made by each investment manager, guided by its investment mandate and an investment framework under a SIPP. The SIPPs applicable to the ONFA Funds are reviewed and approved annually by OPG and the Province, represented by the Deputy Minister of Finance.

20. As of December 31, 2016, the fair value of the ONFA Funds (excluding the NFWA Trust) was approximately $15.7 billion. Given the size of the ONFA Funds’ portfolio and that Hydro One has a market capitalization in excess of $14 billion (as of April 30, 2017) and has been included in various stock indices, it is expected that the investment managers for the ONFA Funds will seek to invest in securities of Hydro One and HOI from time to time.

21. From time to time, other government entities of the Province may similarly acquire securities of Hydro One or debt securities of HOI for investment purposes in the course of carrying out their particular mandates. Depending on the structure of such entities and their activities, the Minister of Energy may be considered, or be deemed, to beneficially own and/or exercise control or direction over securities held by certain of the entities pursuant to the Legislation.

22. Following the May 2017 secondary offering referred to above, the Province stated that it has completed its initiative to broaden the ownership of Hydro One and it does not anticipate any further offerings of Common Shares by the Province, other than certain sales for the collective benefit of Indigenous communities. Further, subsection 48.2(5) of the Electricity Act prohibits the Minister of Energy from selling or divesting Common Shares or any other Voting Securities, if the Minister of Energy would own less than 40% of the outstanding number of Voting Securities of that class or series after the sale. If, as a result of the issuance of additional Voting Securities by Hydro One, the Minister of Energy owns less than 40% of the outstanding number of Voting Securities of any class or series, pursuant to subsection 48.2(6) of the Electricity Act the Minister of Energy must, subject to the approval of the Lieutenant Governor in Council and the necessary appropriations from the Ontario legislature, take steps to acquire as many Voting Securities of that class or series as are necessary to increase the Minister of Energy’s ownership to not less than 40% of the outstanding number of Voting Securities of that class or series (the 40% Requirement). The manner in which, and the time by which, the Minister of Energy must acquire these additional Voting Securities will be determined by the Lieutenant Governor in Council and the Minister of Energy’s actions and the acquisition must comply with the securities legislation and any other applicable law.

23. Subsection 48.2(1) of the Electricity Act also stipulates that no person or entity, and no combination of persons or entities acting jointly or in concert, may beneficially own or exercise control or direction over more than 10% of any class or series of Voting Securities (the 10% Ownership Restriction). However, the 10% Ownership Restriction does not apply with respect to Voting Securities held by the Minister of Energy. Accordingly, under the current statutory regime, Hydro One could not be subject to a take-over bid or other contest for control involving a third party, which obviates the need for certain of the protections otherwise afforded by the early warning reporting system and the take-over bid rules.

24. Upon the closing of the IPO, the Province and Hydro One entered into the Governance Agreement. The provisions of the Governance Agreement reflect the Province’s intention, with respect to the Minister of Energy’s ownership interest in Hydro One, to engage in the business and affairs of Hydro One and its subsidiaries as an investor and not a manager and to make the independent board of directors responsible for the management of or supervision of the management of the business and affairs of Hydro One.

25. The Province has agreed in the Governance Agreement, among other things, not to acquire previously issued Voting Securities if after that acquisition, the Province would own more than 45% of any class or series of Voting Securities (including Common Shares) (the 45% Restriction). The 45% Restriction does not require the Province to sell any of the Voting Securities that it currently owns through the Minister of Energy, nor does it limit the Province from acquiring Voting Securities on a treasury issuance by Hydro One, including pursuant to the exercise by the Province of its pre-emptive rights under the Governance Agreement. The 45% Restriction was established to permit the Minister of Energy, as considered appropriate, to acquire and hold a small percentage of shares above the 40% threshold to mitigate the risk that a dilutive transaction would trigger the 40% Requirement.

26. For purposes of the 45% Restriction, beneficial ownership of or control or direction over the Voting Securities held by certain government entities, including OPG and the ONFA Funds, are not taken into account.

27. Pursuant to the Governance Agreement, the Province agreed not to act jointly or in concert with any person in connection with the exercise by that other person of that person’s rights as a shareholder in Hydro One or take any steps, directly or indirectly, to solicit any other person to exercise that person’s rights as a shareholder in a manner if the Province would be prohibited under the Governance Agreement from directly exercising its own rights as a shareholder in that manner. These restrictions prohibit the Minister of Energy from acting in concert with OPG or other Non-Aggregated Holders for such purposes. A person’s rights as a shareholder include for such purpose the right to requisition a meeting of shareholders, to nominate someone for election as a director and to vote any Voting Securities. However, the Minister of Energy is not prohibited from soliciting proxies to vote another person’s shares in a particular manner, if the Minister of Energy would have been entitled to vote Voting Securities in that manner under the Governance Agreement.

28. The Province has entered into a confidentiality agreement with Hydro One and has instituted a comprehensive set of internal controls to protect confidential information of Hydro One and restrict trading in its securities. The internal controls are designed to prevent individuals who work on matters relating to the Voting Securities held by the Minister of Energy from disclosing material confidential information except in the necessary course of business to persons at Hydro One or the Province and its advisors who are involved in those matters.

29. Requiring aggregation of the holdings of Non-Aggregated Holders such as OPG with the holdings of the Minister of Energy may make it more difficult for the Minister of Energy to fulfill his or her public mandate under the Electricity Act by aggregating purchases by other Non-Aggregated Holders for purposes of the normal course purchase exemption in section 4.1 of NI 62-104. As well, aggregation of the Minister of Energy’s holdings with those of other government entities would create difficulties for the normal investment activities of Non-Aggregated Holders, which have their own investment mandates and policy objectives independent from that of the Minister of Energy and all for passive investment purposes and not with a view to exercising control over Hydro One, because:

(a) secondary market purchases of Common Shares made by a Non-Aggregated Holder other than the Minister of Energy, could be considered a take-over bid under the Legislation and require compliance with, or an exemption from, the formal take-over bid requirements of the Legislation;

(b) purchases and sales in Common Shares by a Non-Aggregated Holder other than the Minister of Energy, could require compliance by the Minister of Energy with the early warning reporting and insider reporting requirements of the Legislation;

(c) all sales of securities of Hydro One or HOI made by a Non-Aggregated Holder other than the Minister of Energy, could be considered control person distributions requiring a prospectus or an applicable prospectus exemption; and

(d) secondary market purchases by Non-Aggregated Holders other than the Minister of Energy, which do not in the ordinary course receive or have access to information as to material facts or material changes concerning Hydro One or HOI before the material facts or material changes are generally disclosed, could be prohibited during the “issuer-restricted period”, as defined in Rule 48-501, in connection with an offering of Common Shares by Hydro One or the Minister of Energy.

30. The Ministry of Energy will send a copy of this decision with an explanatory memo to all Deputy Ministers advising them of this decision and the requirements under this decision. All Deputy Ministers will be instructed to distribute a copy of the decision to all agencies, provincial Crown corporations and other provincial government entities for which they are responsible, that in the ordinary course own or control equity or debt securities. Any entity that determines that it intends to rely on this decision as a Non-Aggregated Holder will be instructed to notify the Ministry of Energy and provide a name and contact information of a person within the Non-Aggregated Holder designated to monitor compliance with the terms and conditions of this decision. Any entity that in the ordinary course owns or controls equity or debt securities but determines that it will not rely on this decision (an “Other Holder”) will be instructed to identify a contact person for the Ministry of Energy and to ensure that information is provided to the Ministry of Energy to ensure compliance with applicable securities laws. The Ministry of Energy will maintain a list of all such Non-Aggregated Holders and Other Holders and the associated contact persons. The contact persons at each Non-Aggregated Holder will be instructed to refer to the conditions of this decision each time the Non-Aggregated Holder relies on this decision to verify that the conditions have been complied with. The contact persons will be instructed to immediately report any known or suspected violation of the terms of the decision by the Non-Aggregated Holder to the Ministry of Energy.

31. On an annual basis, the Ministry of Energy will send a reminder to all Deputy Ministers of the availability of the decision and instruct each Deputy Minister to advise all agencies, provincial Crown corporations and other provincial government entities for which they are responsible of the availability of this decision. The Ministry of Energy will also, on an annual basis, send a reminder to the contact people at all Non-Aggregated Holders and Other Holders of the terms and conditions of this decision and instruct that the Ministry of Energy be notified immediately of any known or suspected violation of the terms of this decision by the Non-Aggregated Holder.

PASSPORT 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.

1. The decision of the principal regulator under the Legislation is that the Primary Insider Reporting Requirement Relief is granted to each Non-Aggregated Holder and the Control Person Relief is granted to each Non-Aggregated Holder other than the Minister of Energy, provided that since the date of this decision:

(a) decisions on each of the acquisition, disposition, holding or voting of Hydro One securities or HOI debt securities owned or controlled by the Non-Aggregated Holder relying on the exemption are made, and have been made, in all circumstances by that Non-Aggregated Holder or by an independent third party;

(b) the Non-Aggregated Holder relying on the exemption is not, and has not been, a joint actor with any other Non-Aggregated Holder with respect to Hydro One securities or HOI debt securities owned or controlled by a Non-Aggregate Holder or securities into which those securities are convertible, exercisable or exchangeable, determined without regard to the provisions of securities legislation that deem an affiliate, and presume an associate, to be acting jointly or in concert with the offeror;

(c) no person or entity, including the Minister of Energy, that makes, advises on, participates in the formulation of, or exercises influence over, decisions on the acquisition, disposition, holding or voting of Hydro One securities or HOI debt securities owned or controlled by or on behalf of the Non-Aggregated Holder relying on the exemption (other than the Minister of Energy in regards to itself as a Non-Aggregated Holder), also makes, advises on, participates in the formulation of or exercises influence over, decisions on the acquisition, disposition, holding or voting of Hydro One securities or HOI debt securities owned or controlled by or on behalf of any other Non-Aggregated Holder, except for the purposes of (A) monitoring or ensuring compliance with regulatory requirements or the Governance Agreement or (B) setting, monitoring or ensuring compliance with general investment policies, guidelines, objectives or restrictions;

(d) the Non-Aggregated Holder relying on the exemption complies with the applicable provisions and Part 2 of NI 62-104 (or relies on another exemption therefrom pursuant to NI 62-104) in connection with the Hydro One securities and HOI debt securities owned or controlled by such Non-Aggregated Holder, provided that for such purposes, including the definition of “take-over bid” and “offeror’s securities” in NI 62-104 and the definition of “significant shareholder” in National Instrument 55-104 – Insider Reporting Requirements and Exemptions and clause (c) of the definition of “insider” in section 1(1) of the Legislation, such Non-Aggregated Holder shall be entitled to treat securities of Hydro One and debt securities of HOI that it owns and controls, and securities into which those securities are convertible, exercisable or exchangeable, separately from securities of Hydro One and debt securities of HOI owned or controlled by the other Non-Aggregated Holders;

(e) the Minister of Energy has reasonable grounds for believing that each Non-Aggregated Holder complies with the applicable provisions and securities legislation related to the applicable definitions in connection with the Hydro One securities and HOI debt securities owned or controlled by the Non-Aggregated Holder, as modified by this decision;

(f) the Minister of Energy has taken reasonable steps to ensure that each Non-Aggregated Holder complies with the requirements of this decision;

(g) the Non-Aggregated Holder relying on the exemption complies with the prospectus requirement (or relies on another exemption therefrom pursuant to the Legislation) in respect of any trade by it of Hydro One securities and HOI debt securities owned or controlled by such Non-Aggregated Holder if such trade would constitute a distribution pursuant to National Instrument 45-102 – Resale of Securities or pursuant to the control block distribution definition (as defined in NI 62-104), provided that for such purposes such Non-Aggregated Holder shall be entitled to treat securities of Hydro One and debt securities of HOI that it owns and controls, and securities into which those securities are convertible, exercisable or exchangeable, separately from securities of Hydro One and debt securities of HOI owned or controlled by the other Non-Aggregated Holders;

(h) the Non-Aggregated Holder discloses in any early warning report, insider report or other disclosure document filed by it pursuant to the Legislation regarding its beneficial ownership or control or direction over Hydro One securities or HOI debt securities (i) its reliance on this decision, (ii) the Non-Aggregated Holders for which ownership and control of securities of Hydro One or debt securities of HOI has been disclosed, and (iii) the fact that securities owned or controlled by other Non-Aggregated Holders have not been, or may not have been, disclosed;

(i) the Minister of Energy maintains (i) a list of the Non-Aggregated Holders that are, by reason of this decision, treated separately for the purposes of compliance with the applicable provisions and securities legislation related to the applicable definitions, and (ii) contact details for a person at each Non-Aggregated Holder responsible for monitoring compliance with the terms and conditions of this decision; and

(j) the Non-Aggregated Holder relying on the exemption other than the Minister of Energy, does not in the ordinary course receive or have access to information as to material facts or material changes concerning Hydro One or HOI before the material facts or material changes are generally disclosed.

2. The Primary Insider Reporting Requirement Relief and the Control Person Relief shall terminate on the earlier of: (i) the date that is five years after the date of this decision, and (ii) the date that the Non-Aggregated Holder becomes subject to disclosure requirements that are substantially similar to the disclosure requirements regarding beneficial ownership or control over securities of Hydro One or debt securities of HOI for which an exemption has been granted pursuant to this decision and such disclosure requirements require the aggregation of holdings by the Minister of Energy with other Non-Aggregated Holders.

“Grant Vingoe” “Monica Kowal”

Grant Vingoe Monica Kowal

Vice-Chair Vice-Chair

Ontario Securities Commission Ontario Securities Commission

3. The decision of the principal regulator under the Legislation is that

(a) the TOB/EW Relief and the Supplementary Insider Reporting Requirement Relief are granted to each Non-Aggregated Holder provided that since the date of this decision the conditions set out in 1(a) – (j) above are satisfied with respect to such Non-Aggregated Holder;

(b) the CD Relief is granted provided that, in any information circular or annual information form filed by Hydro One, it discloses the existence of this decision and complies with the requirements of NI 51-102 in respect of the reporting of beneficial ownership of, or control or direction over, securities of Hydro One and debt securities of HOI by Non-Aggregated Holders, provided that any such disclosure may rely solely on insider reports and early warning reports filed by Non-Aggregated Holders; and

(c) the TOB/EW Relief, the Supplementary Insider Reporting Requirement Relief and the CD Relief shall terminate on the earlier of: (i) the date that is five years after the date of this decision, and (ii) the date that the Non-Aggregated Holder becomes subject to disclosure requirements that are substantially similar to the disclosure requirements regarding beneficial ownership or control over securities of Hydro One or debt securities of HOI for which an exemption has been granted pursuant to this decision and such disclosure requirements require the aggregation of holdings by the Minister of Energy with other Non-Aggregated Holders.

“Naizam Kanji”

Naizam Kanji

Director, Office of Mergers & Acquisitions

Ontario Securities Commission

NON-PASSPORT DECISION

The Director is satisfied that it would not be prejudicial to the public interest to grant the Non-Passport Exemption.

The decision of the Director under Rule 48-501 is that the Non-Passport Exemption is granted to each Non-Aggregated Holder, provided that:

(i) since the date of this decision the conditions set out in 1(a) –(j) above are satisfied with respect to the Non-Aggregated Holder, and

(ii) the Common Shares meet the requirements in Rule 48-501 to be considered a “highly liquid security” at the time any purchases are made by the Non-Aggregated Holder.

“Naizam Kanji”

Naizam Kanji

Director, Office of Mergers & Acquisitions

Ontario Securities Commission