Ontario Commission des 22nd Floor 22e étage
Securities valeurs mobilières 20 Queen Street West 20, rue Queen ouest
Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8
November 16, 2018
In the Matter of
the Securities Legislation of
Ontario (the Jurisdiction)
and
In the Matter of
the Process for Cease to be a Reporting Issuer Applications
and
In the Matter of
Gazit-Globe Ltd. (the Filer)
Order
Background
The principal regulator in the Jurisdiction 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 has ceased 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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories, and Nunavut.
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 organized under the laws of the State of Israel.
The Filer’s head and registered office is located at 10 Nissim Aloni St., Tel Aviv, Israel, 6291924.
The Ontario Securities Commission is the principal regulator of the Filer on the basis that the Province of Ontario is the Canadian jurisdiction in which the Filer has the most significant connection, which determination was made on the basis that the Province of Ontario is the location of the Filer’s quotation and trade reporting system in Canada.
The Filer’s authorized share capital consists of 500,000,000 ordinary shares (Ordinary Shares). There are currently 191,838,991 Ordinary Shares issued and outstanding.
As of September 12, 2018, the Filer also has the following five series of debt securities outstanding having an aggregate principal amount of NIS 8,770,165,046 (approximately C$3.2 billion) as of such date (collectively, the Debentures), each of which were offered outside of Canada and are listed for trading only on the Tel Aviv Stock Exchange (the TASE):
(i) NIS 2.069 billion aggregate principal amount of 5.1% Series D Debentures, with principal payment obligations in 3 annual installments starting from March 2019 (each of the first 2 installments will be at the rate of 30% and the last installment will be at the rate of 40%);
(ii) NIS 633 million aggregate principal amount of 6.5% Series J Debentures, with principal payment obligations in 10 equal installments, each of 1% of the principal, paid twice a year on March 31 in each of the years 2015 through 2019 and on September 30 in each of the years 2014 through 2018. The balance of the principal (90%) will be paid in one installment on September 30, 2019. The Series J Debentures are secured against certain real estate assets of the Filer;
(iii) NIS 2.653 billion aggregate principal amount of 5.35% Series K Debentures, with principal payment obligations in 5 installments with the first installment paid in September 2018 at the rate of 10%, the second installment payable in September 2020 at the rate of 15%, the third, fourth and fifth installments payable in September of the years 2022-2024 each at the rate of 25%;
(iv) NIS 2.958 billion aggregate principal amount of 4.0% Series L Debentures, with principal payment obligations in 5 installments with the first installment payable in June 2023 at the rate of 10%, the second and third installments payable in June 2024-2025 at the rate of 15% each, and the fourth and fifth installments payable in June of the years 2026-2027 at the rate of 30% each; and
(v) NIS 860 million aggregate principal amount of 2.78% Series M Debentures, with principal payment obligations in five installments with the first installment payable on June 30, 2021 at the rate of 5%, the second installment payable on June 30, 2022 at the rate of 10%, the third installment payable on June 30, 2023 at the rate of 5%, the fourth installment payable on June 30, 2025 at the rate of 30%, the fifth installment payable on June 30, 2026 at the rate of 10%, and the sixth installment payable on June 30, 2028 at the rate of 40%.
None of the Debentures are convertible or exchangeable into any other voting or equity securities of the Filer.
In October 2013, the Filer sought and obtained a listing for its Ordinary Shares on the Toronto Stock Exchange (the Listing). As a result of the Listing, the Filer became a reporting issuer in Canada.
On September 6, 2018, the Filer filed an application with the Toronto Stock Exchange to voluntarily delist the Ordinary Shares from the Toronto Stock Exchange (the Delisting) and its application to delist was granted on September 12, 2018 with an effective date of September 27, 2018. The principal reason for the Delisting was due to a lack of any significant trading activity in the Ordinary Shares on the Toronto Stock Exchange as well as initiatives undertaken by the Filer in respect of general and administrative expense reduction.
The Ordinary Shares of the Filer continue to be listed on the New York Stock Exchange (the NYSE) and the TASE. The TASE is the principal market for the Ordinary Shares.
The Filer is currently subject to (i) reporting requirements under the securities laws of the State of Israel; and (ii) reporting requirements of the United States Securities Exchange Act of 1934, as amended, as a “Foreign Private Issuer”, and is not in default of any such reporting requirements.
Under National Instrument 71-102 – Continuous Disclosure and Other Exemptions relating to Foreign Issuers, the Filer is classified as an “SEC foreign issuer”.
After extensive investigation, the Filer has concluded that securityholders resident in Canada do not:
(a) beneficially own, directly or indirectly, more than 2% of a class or series of outstanding securities (including debt securities) of the Filer worldwide; and
(b) comprise more than 2% of the total number of securityholders of the Filer, directly or indirectly, worldwide.
- In support of the representations set forth above concerning the percentage of outstanding securities and the total number of security holders in Canada, the Filer has conducted the following investigations and analysis:
(a) undertaken a thorough and diligent examination of the Filer’s shareholders’ register (the Shareholders’ Register);
(b) undertaken a thorough and diligent examination of the Filer’s non-objecting beneficial owner list (the NOBO List) with respect to the 31,203,469 Ordinary Shares held through The Depository Trust Company (DTC);
(c) undertaken a thorough and diligent examination, through inquiries made to the TASE and certain TASE members, regarding the beneficial owners of Ordinary Shares held through Bank Hapoalim Nominee Company (the Israeli Depository) with respect to the 160,468,887 Ordinary Shares held through the Israeli Depository (the Israeli Depository List); and
(d) undertaken a thorough and diligent examination, through inquiries made to the TASE and certain TASE members, regarding the beneficial owners of Debentures held through the Israeli Depository with respect to 100% of the issued and outstanding Debentures.
The Filer calculated Canadian resident shareholders using the most recent data available to the Filer, and by assuming that the figures with respect to Canadian holders of Ordinary Shares on the NOBO List is equal to the figures with respect to Canadian holders of Ordinary Shares held by Canadian-resident objecting beneficial owners (OBOs). OBOs account for approximately 5% of all outstanding Ordinary Shares.
With respect to the total percentage of issued and outstanding Ordinary Shares owned by Canadian resident shareholders, the results of the investigations and assumptions referred to in paragraphs 13 and 14 above were as follows:
(a) The Filer has a total of 191,838,991 Ordinary Shares issued and outstanding.
(b) A total of 166,635 Ordinary Shares are held by shareholders on the Shareholders’ Register, representing 0.1% of all issued and outstanding Ordinary Shares. Of this amount, 150,000 of such Ordinary Shares are held by Canadian resident shareholders.
(c) A total of 21,454,209 Ordinary Shares are held by shareholders on the NOBO List, representing 11.1% of all issued and outstanding Ordinary Shares. Of this amount, 98,486 of such Ordinary Shares are held by Canadian resident shareholders.
(d) A total of 160,468,887 Ordinary Shares are held by shareholders on the Israeli Depository List, representing 83.6% of all issued and outstanding Ordinary Shares. Of this amount, 3,133,266 of such Ordinary Shares are held by Canadian resident shareholders.
(e) As a result of the above calculations (including the assumptions with respect to OBOs as set forth in paragraph 14 above), the total percentage of Canadian ownership of the Filer is estimated to be 1.8% of the issued and outstanding Ordinary Shares.
- With respect to the total percentage of Canadian resident shareholders, the results of the investigations and assumptions referred to in paragraphs 13 and 14 above were as follows:
(a) The Filer has a total of 8,218 holders of Ordinary Shares worldwide.
(b) There are a total of 48 shareholders on the Shareholders’ Register, representing 0.6% of the Filer’s shareholders worldwide. Of this amount, only one such shareholder is a Canadian resident.
(c) There are a total of 564 shareholders on the NOBO List, representing 6.9% of the Filer’s shareholders worldwide. Of this amount, 65 shareholders are Canadian residents.
(d) There are a total of 7,043 shareholders on the Israeli Depository List, representing 85.7% of the Filer’s shareholders worldwide. Of this amount, 11 shareholders are Canadian residents.
(e) As a result of the above calculations (including the assumptions with respect to OBOs as set forth in paragraph 14 above), the total percentage of Canadian resident shareholders is estimated to be 1.7% of the total number of shareholders of the Filer worldwide.
All of the Debentures were distributed primarily in a foreign jurisdiction, principally Israel, are listed only on the TASE and are the subject of book-entry positions with only the Israeli Depository. The Filer undertook a comprehensive inquiry in order to confirm the residency of the beneficial owners of each series of Debentures, which consisted of a thorough and diligent examination through (i) inquiries made to the TASE (who collects the information directly from its TASE members) and (ii) direct inquiries made to those TASE members that did not provide the information directly to the TASE regarding the beneficial owners of Debentures held through the Israeli Depository. As a result of this inquiry, the Filer determined that there are only 18 beneficial owners of the Debentures in Canada, which represented less than 0.1% of all beneficial owners of the Debentures, and the Canadian beneficial owners of the Debentures owned approximately NIS 114,744,666 (approximately C$41.7 million) principal amount of the Debentures, which represented approximately 1.3% of the principal amount of all of the outstanding Debentures.
Accordingly, the Filer’s security ownership in Canada as a proportion to the Filer’s global security ownership is de minimis.
During the preceding 12 months, the Filer has not taken any steps to indicate that there is a market for its securities in Canada, except by virtue of the fact that the Filer maintained its listing, and had its Ordinary Shares traded, on the Toronto Stock Exchange prior to the Filer’s recent Delisting from the Toronto Stock Exchange.
Prior to the Delisting, the Filer only attracted a de minimis number of Canadian investors. In particular, the daily average volume of trading in the Ordinary Shares in Canada during the 12 months prior to the Delisting was 0.10% of the worldwide daily average volume of trading of the Ordinary Shares during that 12 month period. Furthermore, since the Listing in 2013, the Toronto Stock Exchange accounted for only 0.08% of the worldwide trading volume of the Ordinary Shares.
The Filer has no intention to distribute any securities to the public in Canada or seek financing by way of a public offering of its securities in Canada.
None of the Filer’s securities are traded on a marketplace in Canada and the Filer does not intend to have its securities listed for trading on a marketplace in Canada.
The Filer’s securityholders, including those resident in Canada, have access to the Filer’s continuous disclosure documents which are made available electronically via the EDGAR database, as required by the U.S. Securities and Exchange Commission, via the TASE database, as required by Israeli securities laws, and through the Filer’s corporate website at http://www.gazitglobe.com/investor-relations/.
The Filer has undertaken to deliver to Canadian resident owners of Ordinary Shares or Debentures, as the case may be, all disclosure documents that the Filer is required to send or provide to United States resident owners of Ordinary Shares or Debentures, as the case may be, in the same manner and at the same time that such documents are required to be sent or provided to United States resident owners of Ordinary Shares or Debentures, as the case may be, under applicable United States federal securities laws or exchange requirements.
The Filer is not in default under the securities legislation in any jurisdiction of Canada.
The Filer is unable to rely on the simplified procedure set out in Section 19 of NP 11-206 because the Filer does not meet the requirement of having fewer than 51 securityholders in total worldwide.
On September 13, 2018, the Filer issued and filed a news release announcing that the Filer had submitted an application to the securities regulatory authorities to cease to be a reporting issuer in each of the provinces and territories of Canada.
The Filer, upon grant of the Order Sought, will no longer be a reporting issuer in any jurisdiction of Canada.
Order
The principal regulator is satisfied that the order meets the test set out in the Legislation for the
principal regulator to make the order.
The decision of the principal regulator under the Legislation is that the Order Sought is granted.
“Mark Sandler” “Deborah Leckman”
Commissioner Commissioner
Ontario Securities Commission Ontario Securities Commission