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
February 7th, 2024
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 BROOKFIELD REINSURANCE LTD.
DECISION
Background
The principal regulator in the Jurisdiction has received an application from Brookfield Reinsurance Ltd. (the company or the Filer) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that, in respect of the class A-1 exchangeable non-voting shares of the company (Class A-1 Exchangeable Shares), the Filer be exempt from requirements contained in section 9.3(1)(b) of National Instrument 44‑102 – Shelf Distributions (NI 44‑102) that distributions by way of an at-the-market distribution using the shelf procedures be limited to distributions of equity securities (the At-the-Market Distribution Eligibility Requirements or the Exemption Sought). The Class A-1 Exchangeable Shares are the economic equivalent of, and exchangeable for, class A limited voting shares (Brookfield Class A Shares) of Brookfield Corporation, as more particularly described below. The Class A-1 Exchangeable Shares are also convertible into class A exchangeable limited voting shares of the company (Class A Exchangeable Shares).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and
(b) the Filer has provided notice that subsection 4.7(1)(c) 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, the Northwest Territories, Yukon and Nunavut, as applicable.
Interpretation
Terms defined in National Instrument 14‑101 Definitions (NI 14‑101), MI 11‑102 and NI 44-102 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:
Relevant Entities
Brookfield Corporation
Brookfield Corporation was formed by articles of amalgamation dated August 1, 1997 and is organized pursuant to articles of amalgamation under the Business Corporations Act (Ontario) dated January 1, 2005 and articles of amendment by arrangement dated December 9, 2022.
Brookfield Corporation’s registered and head office is located at Suite 100, Brookfield Place, 181 Bay Street, Toronto, Ontario, M5J 2T3.
The Brookfield Class A Shares are co-listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) under the symbol “BN”.
The authorized share capital of Brookfield consists of (a) an unlimited number of preference shares designated as class A preference shares, issuable in series, (b) an unlimited number of Brookfield Class A Shares and (c) 85,120 class B limited voting shares.
Brookfield Corporation is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement under securities legislation in the jurisdictions in which it is a reporting issuer.
The Company
The company was incorporated on December 10, 2020 under the Companies Act 1981 of Bermuda, as amended, as an exempted company limited by shares.
The registered and head office of the company is located at Ideation House, 1st Floor, 94 Pitts Bay Road, Pembroke HM 08 Bermuda.
The authorized share capital of the company consists of (a) Class A Exchangeable Shares, (b) Class A-1 Exchangeable Shares, (c) class B limited voting shares, (d) class C non-voting shares, (e) class A junior preferred shares, issuable in series, (f) class B junior preferred shares, issuable in series, (g) class A senior preferred shares, issuable in series and (h) class B senior preferred shares, issuable in series.
The Class A Exchangeable Shares are listed on the NYSE and the TSX under the symbol “BNRE”.
The Class A-1 Exchangeable Shares are listed on the NYSE and the TSX under the symbol “BNRE.A”.
The company is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement under securities legislation in the jurisdictions in which it is a reporting issuer.
An investment in the Class A-1 Exchangeable Shares is intended to be, as nearly as practicable, functionally and economically, equivalent to an investment in Brookfield Class A Shares or an investment in Class A Exchangeable Shares. As such, the company expects that investors will hold or purchase Class A-1 Exchangeable Shares as an alternative way of owning Class A Exchangeable Shares or Brookfield Class A Shares rather than a separate and distinct investment.
Brookfield Corporation and the company are party to an amended and restated support agreement dated March 21, 2023 (Support Agreement), pursuant to which Brookfield Corporation has agreed to support the economic equivalence of the Exchangeable Shares by agreeing to take all actions reasonably necessary to enable the company to pay quarterly distributions, the liquidation amount or the amount payable on a redemption of Exchangeable Shares, as the case may be.
In addition to the Support Agreement, the Exchangeable Share provisions contain terms that provide holders of Exchangeable Shares directly with protections designed to make the Exchangeable Shares the economic equivalent of the Brookfield Class A Shares.
The Class A-1 Exchangeable Shares are exchangeable into Brookfield Class A Shares and convertible into Class A Exchangeable Shares on a one-for-one basis. Except for the fact that the Class A-1 Exchangeable Shares do not carry voting rights and that they are convertible into Class A Exchangeable Shares on a one-for-one basis, the rights, privileges, restrictions and conditions attached to the Class A Exchangeable Shares as a class and the Class A-1 Exchangeable Shares as a class are identical in all respects. Holders of Class A-1 Exchangeable Shares can exercise their voting rights in either the company or in Brookfield Corporation, by converting their Class A-1 Exchangeable Shares into Class A Exchangeable Shares, or by exchanging their Class A-1 Exchangeable Shares for Brookfield Class A Shares.
At-the-Market Distributions
Following the issuance and listing of Class A-1 Exchangeable Shares on the NYSE and the TSX that occurred in November 2023, the company wishes to be eligible to distribute Class A-1 Exchangeable Shares by way of an at-the-market distribution under NI 44-102.
The At-the-Market Distribution Eligibility Requirements are outlined in section 9.3(1)(b) of NI 44‑102, pursuant to which, only equity securities may be distributed by way of an at-the-market distribution using the shelf procedures.
The term “equity security” is defined under the Legislation as a security that carries a residual right to participate in the earnings of the issuer and, on the liquidation or winding up of the issuer, in its assets.
The Class A-1 Exchangeable Shares do not carry a residual right to participate in the assets of the company upon liquidation or winding-up of the company, and accordingly, are not equity securities under the Legislation.
The Class A-1 Exchangeable Shares provide holders thereof with a security of a reporting issuer having an economic return equivalent to an investment in Brookfield Class A Shares, which are equity securities under the Legislation.
Based upon the rationale provided in paragraph 17 above, it would not be prejudicial to the public interest to exempt the company from the At-the-Market Distribution Eligibility Requirements in respect of a distribution of Class A-1 Exchangeable Shares.
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 Exemption Sought is granted and the company does not have to comply with the At-the-Market Distribution Eligibility Requirements in respect of a distribution of Class A-1 Exchangeable Shares so long as:
(a) the company otherwise satisfies the conditions set out in section 9.3 of NI 44‑102 to distribute securities under an ATM prospectus (as defined in NI 44‑102) as part of an at-the-market distribution;
(b) the securities being distributed are Class A-1 Exchangeable Shares; and
(c) the Brookfield Class A Shares qualify as equity securities under NI 44‑102.
“Marie-France Bourret” Marie- France Bourret Manager, Corporate Finance Ontario Securities Commission
OSC File #:2024/0021