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 THE ASIAN INFRASTRUCTURE INVESTMENT BANK (the Filer)
DECISION
BACKGROUND
The principal regulator has received an application from the Filer for a decision under the securities legislation of the Jurisdiction exempting the Filer from the requirements contained in section 53 of the Act to file and obtain a receipt for a preliminary prospectus and a final prospectus (the Prospectus Requirement) as it relates to a debt security issued or guaranteed by the Filer in the currency of Canada or the United States of America (the Exemption Sought).
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 all other provinces and territories other than the Jurisdiction.
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.
REPRESENTATIONS
This decision is based on the following facts represented by the Filer:
The Filer is a multilateral development bank that commenced operations on January 16, 2016 to help its members meet a substantial financing gap between the demand for infrastructure in Asia and available financial resources. The Filer aims to work with public and private sector partners to channel its own public resources, together with private and institutional funds, into sustainable infrastructure investment.
The Filer was established in 2015 under, and operates pursuant to, its Articles of Agreement (the Agreement), which came into effect on December 25, 2015.
The Filer is not a private institution and does not have private shareholders.
Under the Agreement, the purpose of the Filer is to:
(i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and
(ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.
The Filer is an international organization with its principal office in Beijing, People’s Republic of China. The Filer does not have any offices in Canada.
The Filer is not and has no intention of becoming a reporting issuer under the securities legislation of any jurisdiction of Canada. The Filer is not in default of securities legislation in any jurisdiction of Canada.
Pursuant to the Agreement, membership in the Filer is open to members of the International Bank for Reconstruction and Development or the Asian Development Bank. In the case of an applicant that is not a sovereign or not responsible for the conduct of its international relations (e.g., a political subdivision such as a semi-autonomous territory), application for membership in the Filer must be presented or agreed by the member of the Filer responsible for its international relations. The Filer currently has 89 regional and non-regional members and 16 prospective members.
Pursuant to the Agreement, the Filer is administered and managed by a Board of Governors, a Board of Directors, a President, one or more Vice-Presidents and other officers and staff. All of the powers of the Filer are vested in the Board of Governors, consisting of one Governor and one Alternate Governor appointed by each member. While the Agreement does not specify criteria for the appointment of a Governor by the member, the current composition of Governors includes officials of ministerial (or equivalent) rank. Notably, they are all public officials. All matters before the Board of Governors are decided by a majority vote, other than matters that are designated as a super majority or special majority vote per the Agreement (such as certain matters pertaining to membership, the Filer’s operations and capital, and amendments to the Agreement). Canada is currently represented at the Board of Governors of the Filer by Chrystia Freeland, Deputy Prime Minister and Minister of Finance. The Alternate Governor for Canada is John Hannaford, Deputy Minister for International Trade.
The Board of Directors consists of twelve members who are not members of the Board of Governors, with nine being elected by the Governors representing regional members and three by the Governors representing non-regional members. The Board of Directors is responsible for the conduct of the Filer’s operations through the exercise of powers delegated to it by the Board of Governors, in addition to those expressly assigned to it by the Agreement. The Directors, who serve the Filer on a non-resident basis, hold office for two-year terms and may be re-elected. They also must be nationals of member jurisdictions and persons of recognized capacity and experience in economic and financial matters. Matters before the Board of Directors are decided by a majority vote, except as otherwise provided in the Agreement.
The President of the Filer shall be elected by a super majority vote of the Board of Governors through an open, transparent and merit-based process. The President must be a national of a regional member and may not be a Governor, a Director or an alternate for either. The term of office of the President is five years with the possibility of one additional term. Mr. Jin Liqun, a Chinese national and the Filer’s current President, has been elected to a second term that began on January 16, 2021.
The President, officers and staff of the Filer, in the discharge of their offices, are responsible solely to the Filer and may not recognize any other authority. The members of the Filer are obligated to respect the international character of this obligation. Moreover, pursuant to the Agreement, the Filer, its President, officers and staff may not interfere in the political affairs of any members of the Filer nor be influenced in their decisions by the political character of the member concerned.
The Agreement endows the Filer with full juridical personality and, in particular, the full legal capacity (a) to contract, (b) to acquire, and dispose of, immovable and movable property, (c) to institute and respond to legal proceedings and (d) to take such other action as may be necessary or useful for its purpose and activities. The Agreement further provides that the Filer enjoys, in the territory of each of its members, the immunities, exemptions and privileges afforded thereto by the Agreement. Canada is a signatory to the Agreement and became a member of the Filer on March 19, 2018. Canada granted the Filer privileges and immunities on March 7, 2018 pursuant to the Privileges and Immunities of the Asian Infrastructure Investment Bank Order (P.C. 2018-197 2018-03-06), made by the Governor General in Council pursuant to the Asian Infrastructure Investment Bank Agreement Act (S.C. 2017, c. 33, s. 176).
The authorized capital of the Filer consists of US$100 billion divided into paid-in shares having an aggregate par value of US$20 billion and callable shares having an aggregate par value of US$80 billion. As of September 30, 2021, the members of the Filer had subscribed an aggregate of US$96.8 billion of the Filer’s share capital, of which US$19.4 billion paid-in and US$77.4 billion was