February 26, 2019
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
NASPERS LIMITED (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 (the “Legislation”) for an exemption (the “Exemption Sought”) from the prospectus requirements contained in the Legislation in connection with the proposed distribution (the “Spin-Off”) by the Filer of the ordinary no par value shares (“MultiChoice Shares”) of MultiChoice Group Limited (“MultiChoice”), a wholly-owned subsidiary of the Filer, on a pro rata basis and by way of a dividend in specie, to holders (“Filer Shareholders”) of the class “A” ordinary shares (“Filer A Shares”) and the class “N” ordinary shares of the Filer (“Filer N Shares” and together with the Filer A Shares, “Filer Shares”) located or resident in Canada (“Filer Canadian Shareholders”).
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 each of the other provinces and territories of Canada.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meanings if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is a public company incorporated in South Africa with principal executive offices in Cape Town, South Africa. The Filer is a global internet and entertainment group operating in more than 120 countries that runs some of the world’s leading platforms in internet, video entertainment and media.
The Filer is not a reporting issuer, and currently has no intention of becoming a reporting issuer, under the securities laws of any province or territory of Canada.
The authorized capital stock of the Filer consists of 1,250,000 Filer A Shares and 500,000,000 Filer N Shares. As of September 30, 2018, there were 907,128 Filer A Shares and 438,656,059 Filer N Shares issued and outstanding.
The Filer N Shares are listed on the Johannesburg Stock Exchange (“JSE”) and trade under the symbol “NPN”. Other than the foregoing listing on the JSE, no securities of the Filer are listed or posted for trading on any exchange or market in Canada or outside Canada. The Filer has no intention of listing its securities on any Canadian stock exchange after the completion of the Spin-Off.
The Filer is subject to, inter alia, the South African Companies Act No. 71 of 2008, the Financial Markets Act No. 19 of 2012 and the listings requirements of the JSE, as amended from time to time, and the rules, regulations and orders promulgated thereunder (the “Relevant Regulations”).
Based on a geographic breakdown snapshot of registered holders prepared for the Filer by Orient Capital Proprietary Limited (“Orient Capital”), as of November 30, 2018, (i) there were 26 registered Filer Canadian Shareholders, representing approximately 3.55% of the registered shareholders of the Filer worldwide, and (ii) the registered Filer Canadian Shareholders were holding 4,262,195 Filer N Shares, representing approximately 0.97% of the outstanding Filer N Shares. Filer Canadian Shareholders hold no Filer A Shares. The Filer does not expect these numbers to have materially changed since that date.
Based on a geographic analysis of beneficial shareholders prepared for the Filer by Orient Capital, as of November 30, 2018, (i) there were 114 beneficial Filer Canadian Shareholders, representing approximately 3.85% of the beneficial holders of Filer N Shares worldwide, and (ii) the beneficial Filer Canadian Shareholders were holding approximately 7,371,252 Filer N Shares, representing approximately 1.68% of the outstanding Filer N Shares. The Filer does not expect these numbers to have materially changed since that date.
Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders are de minimis.
The Filer is proposing to spin-off, through a series of transactions, its video entertainment business (the “MultiChoice Business”) into its wholly-owned subsidiary, MultiChoice. These transactions, in addition to certain related transactions, are expected to result in the Spin-Off by the Filer, pro rata to its shareholders, of 100% of the MultiChoice Shares outstanding immediately prior to such distribution.
MultiChoice is a public company incorporated in South Africa with principal executive offices at 144 Bram Fisher Drive, Randburg, South Africa. It is currently a wholly-owned subsidiary of the Filer that, at the time of the Spin-Off, will hold, directly and through its subsidiaries, the Filer’s MultiChoice Business.
MultiChoice’s authorized capital stock is 1,000,000,000 MultiChoice Shares. As of the date hereof, all of the issued and outstanding MultiChoice Shares, being 438,837,468 MultiChoice Shares, are held directly by the Filer, and no other shares or classes of stock of MultiChoice are issued and outstanding. It is expected that Filer Shareholders will receive one MultiChoice Share for every one Filer N Share held and one MultiChoice Share for every five Filer A Shares held.
In connection with the Spin-Off, the Filer will distribute to each Filer Shareholder entitled to MultiChoice Shares, the number of whole MultiChoice Shares to which the Filer Shareholder is entitled in the form of a book-entry authorization. No fractional MultiChoice Shares will be issued to holders of Filer N Shares. As the Filer Canadian Shareholders only hold Filer N Shares, no fractional MultiChoice Shares will be issued to Filer Canadian Shareholders.
Filer Shareholders will not be required to pay any consideration for the MultiChoice Shares, or to surrender or exchange Filer Shares or take any other action to receive their MultiChoice Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.
Subject to the satisfaction of certain conditions, it is currently anticipated that the Spin-Off will become effective on March 4, 2019. Following the Spin-Off, MultiChoice will cease to be a subsidiary of the Filer.
MultiChoice received conditional listing approval to list the MultiChoice Shares to be distributed pursuant to the Spin-Off on the JSE under the symbol “MCG” on January 22, 2019.
After the completion of the Spin-Off, the Filer N Shares will continue to be listed and traded on the JSE.
MultiChoice is not a reporting issuer in any province or territory in Canada nor are its securities listed on any stock exchange in Canada. MultiChoice has no intention to become a reporting issuer in any province or territory of Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.
The Spin-Off will be effected under the laws of South Africa.
Because, inter alia, the Spin-Off will be effected by way of a dividend of MultiChoice Shares to Filer Shareholders and MultiChoice will be a wholly-owned subsidiary of the Filer until the implementation of the Spin-Off, no shareholder approval of the Spin-Off is required (or being sought) under South African law.
In connection with the Spin-Off, a pre-listing statement detailing the proposed Spin-Off (the “Pre-Listing Statement”) has been prepared in accordance with the listings requirements of the JSE and submitted to the JSE. The Pre-Listing Statement was approved by the JSE for publication on January 22, 2019.
Filer Shareholders will receive a notice of internet availability or, where required, a hard copy of the Pre-Listing Statement. All materials relating to the Spin-Off sent by or on behalf of the Filer and MultiChoice in South Africa (including relating to the Pre-Listing Statement) will be sent concurrently to Filer Canadian Shareholders.
The Pre-Listing Statement contains prospectus level disclosure about MultiChoice.
Filer Canadian Shareholders who receive MultiChoice Shares pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders resident in South Africa.
Following the completion of the Spin-Off, MultiChoice will be subject to the requirements of the Relevant Regulations. MultiChoice will provide concurrently to holders of MultiChoice Shares located or resident in Canada, the same disclosure materials required to be provided under the Relevant Regulations to holders of MultiChoice Shares resident in South Africa.
There will be no active trading market for the MultiChoice Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of MultiChoice Shares distributed in connection with the Spin-Off will occur through the facilities of the JSE or any other exchange or market outside of Canada on which MultiChoice Shares may be quoted or listed at the time that the trade occurs, or to a person or company outside of Canada.
The Spin-Off to Filer Canadian Shareholders would be exempt from the prospectus requirement pursuant to subsection 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that Multichoice is not a reporting issuer under the securities legislation of any jurisdiction in Canada.
Neither the Filer nor MultiChoice is in default of any securities legislation in any jurisdiction of Canada.
Decision
The principal regulator is satisfied that the decision meets the test contained in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the first trade in MultiChoice Shares distributed in reliance on this decision will be deemed to be a distribution that is subject to section 2.6 of National Instrument 45-102 Resale of Securities.
“Cecilia Williams”
Commissioner Ontario Securities Commission
“Garnet Fenn”
Commissioner Ontario Securities Commission