Fédération Des Caisses Desjardins du Québec
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Although a reporting issuer, the filer does not have equity securities listed and posted for trading on a short form eligible exchange due to its status as a federation of financial services cooperatives. Application for exemptive relief from the qualification criteria to file a short form prospectus in paragraph 2.2(e) of National Instrument 44-101 Short Form Prospectus Distributions and the qualification criteria to file a base shelf prospectus in subsections 2.2(1) and (2) and subparagraph 2.2(3)(b)(iii) of National Instrument 44-102 Shelf Distributions. Relief granted, subject to conditions.
Applicable Legislative Provisions
National Instrument 44-101 Short Form Prospectus Distributions, ss. 2.2(e) and 8.1.
National Instrument 44-102 Shelf Distributions, ss. 2.2(1) and(2), 2.2(3)(b)(iii) and 11.1.
[Original text in French]
SEDAR+ filing No.: 06059718
January 11, 2024
IN THE MATTER OF
THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO
(the Jurisdictions)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC
(the Filer)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the qualification criteria in paragraph 2.2(e) of Regulation 44-101 respecting Short Form Prospectus Distributions, CQLR, c. V-1.1, r. 16 (Regulation 44-101) and subsections 2.2(1) and 2.2(2) and subparagraph 2.2(3)(b)(iii) of Regulation 44-102 respecting Shelf Distributions, CQLR, c. V-1.1, r. 17 (Regulation 44-102), under which the equity securities of the Filer must be listed and posted for trading on a short form eligible exchange in connection with the filing of a prospectus (as defined below), not apply to the Filer, in accordance with part 8 of Regulation 44-101 and part 11 of Regulation 44-102 respectively (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application (the Principal Regulator);
(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System, CQLR, c. V-1.1, r. 1 (Regulation 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and
(c) the decision is the decision of the Principal Regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, Regulation 11-102 and Regulation 44-101 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:
1. The Filer is a federation of financial services cooperatives amalgamated under the Act respecting financial services cooperatives (Québec), CQLR, c. C-67.3.
2. The Filer's head office is located in Quebec.
3. The cooperative group to which the Filer belongs is called the Groupe coopératif Desjardins, and the financial group to which the Filer belongs is called the Desjardins Group. Desjardins Group is comprised of the Filer and its subsidiaries, the Desjardins caisses in Québec, Caisse Desjardins Ontario Credit Union Inc. and the Fonds de sécurité Desjardins.
4. The Filer is a reporting issuer in all of the provinces of Canada and is not in default of securities legislation in any of those jurisdictions.
5. Desjardins Group is the largest financial services cooperative in Canada, with assets of $414.1 billion as at September 30, 2023. Desjardins Group employs more than 57,700 employees. On June 19, 2013, the Principal Regulator designated the Desjardins Group as a domestic systemically important financial institution (a D-SIFI) under applicable financial institutions legislation in the province of Québec.
6. The Filer acts as a monitoring and control organization for its member caisses (the Desjardins Caisses) and its mission includes risk management and capital management for Desjardins Group, as well as ensuring the financial health and sustainability of the Groupe coopératif Desjardins, which comprises the Desjardins Caisses, the Filer and the Fonds de sécurité Desjardins. The Filer is a seasoned issuer in the Canadian and global markets, and Desjardins Group has approximately $63.4 billion aggregate principal amount of wholesale funding outstanding as of September 30, 2023, on a combined basis, including multiple series of notes and covered bonds as well as commercial paper.
7. In addition, the Filer acts as a control and supervisory body over the Desjardins Caisses in Québec. The Act respecting financial services cooperatives (Québec) confers broad normative powers upon the Filer, in particular with respect to Desjardins Caisses' adequacy of capital base, reserves, liquid assets and credit and investment activities. The Filer is responsible for inspecting the Desjardins Caisses and for adopting a satisfactory standard for the content of financial reports. The Filer also provides the Desjardins Caisses with a variety of services, including certain technical, financial and administrative services. As at September 30, 2023, there were 208 member Desjardins Caisses in Quebec and Ontario.
8. The Filer is also, among other things, the treasurer and official representative of Desjardins Group with the Bank of Canada and within the Canadian banking system.
9. The Filer's share capital is composed of various classes of capital shares, all of which are owned or controlled by members and auxiliary members of the Filer or members and auxiliary members of the Desjardins Caisses.
10. Because of the cooperative nature of the Filer, the Groupe coopératif Desjardins and Desjardins Group, the Filer's constating documents do not allow for the issuance of capital shares of the Filer to the public (i.e., outside of members and auxiliary members of the Fileror of the Desjardins Caisses), except in remote or extraordinary circumstances.
11. As a result thereof, the currently issued and outstanding capital shares of the Filer cannot be listed and posted for trading on a short form eligible exchange.
12. All Canadian domestic systemically important banks have filed short form base shelf prospectuses that are currently effective, and which qualify the issuance of, inter alia, debt securities with terms substantially similar to those of the Securities (as defined below).
13. The Filer expects to file a base shelf prospectus for the issuance of the Securities up to $2,000,000,000 (together with the applicable shelf prospectus supplements, the Prospectus).
14. Except for the requirement that its equity securities be listed on a short form eligible exchange, the Filer meets all requirements in order to qualify under the "Basic Qualification Criteria" to file a prospectus in the form of a short form prospectus (and in the form of a base shelf prospectus, as set forth under Subsections 2.2(1) and 2.2(2) of Regulation 44-102).
15. Except for the requirement that the securities distributed be non-convertible, the Filer meets (or, in the case of (f) below, will meet at the time of distribution) all requirements in order to qualify to file a prospectus in the form of a short form prospectus (and in the form of a base shelf prospectus, as set forth under Subsections 2.3(1) and 2.3(2) of Regulation 44-102) under the "Alternative Qualification Criteria for Issuers of Designated Rating Non-Convertible Securities", as the Filer meets the following requirements:
(a) the Filer is required to transmit documents through SEDAR+ in accordance with Regulation 13-103 respecting System for Electronic Data Analysis and Retrieval + (SEDAR+), CQLR, c. V-1.1, r. 2.3;
(b) the Filer is a reporting issuer in each of the provinces of Canada;
(c) the Filer has filed with the securities regulatory authority in each jurisdiction in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in that jurisdiction (i) under applicable securities legislation, (ii) pursuant to any order issued by the securities regulatory authorities in such jurisdiction, and (iii) pursuant to any undertaking to the securities regulatory authorities in such jurisdiction, all in compliance with decision no. 2021-FS-0091, file no. 7299, of the Principal Regulator (the FS Decision);
(d) the Filer has, in all provinces of Canada, current annual financial statements and a current AIF, as required by the FS Decision;
(e) the Filer is not an issuer whose operations have ceased or whose principal asset is cash, cash equivalents or its exchange listing; and
(f) the Filer has reasonable grounds to believe that, at the time of distribution, the Securities to be offered by the Filer under the Prospectus (i) will have received a designated rating on a provisional basis; (ii) will not be the subject of an announcement by an approved rating organization or its DRO affiliate, of which the Filer is or ought reasonably to be aware at the time, that the approved rating given by the organization may be downgraded to a rating category that would not be a designated rating; and (iii) will not have received a provisional or final rating lower than a designated rating from any approved rating organization or its DRO affiliate.
16. The Securities to be offered by the Filer under a Prospectus will be (i) subordinated debt securities, including securities without a stated maturity constituting subordinated indebtedness, that are convertible into capital shares of the Filer (including Class Z-Contingent Capital shares of the Filer) pursuant to an automatic conversion mechanism which is linked to specified trigger events contained in the terms and conditions of the subordinated debt securities, as required under the capital adequacy guideline of the Principal Regulator (the NVCC Provisions); and/or (ii) unsubordinated debt securities that are convertible into contributed capital securities of the Filer, of a deposit-taking institution that is part of the Groupe coopératif Desjardins or of a legal person constituted or resulting from an amalgamation/continuance or other conversion carried out for purposes of the resolution of the Filer, pursuant to the bail-in powers of the Principal Regulator under applicable financial institutions legislation in the province of Québec (the Bail-in Powers); and/or (iii) unsubordinated debt securities that are not convertible pursuant to the Bail-in Powers or otherwise (collectively, the Securities).
Decision
Each of the Decision Makers are satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
(a) the Filer complies with the applicable requirements, procedures and qualification criteria of Regulation 44-101, other than the requirement of paragraph 2.2(e) of Regulation 44-101 that the Filer's equity securities be listed and posted for trading on a short form eligible exchange;
(b) Desjardins Group continues to be recognized by the Principal Regulator as a D-SIFI (or the equivalent) under applicable financial institutions legislation in the province of Québec;
(c) the Securities to be offered under a Prospectus shall, at the time of distribution, have a designated rating as per the conditions set out in paragraph 2.3(1)(e) of Regulation 44-101 and subparagraph 2.3(3)(b)(iv) of Regulation 44-102; and
(d) the Prospectus shall disclose risk factors attaching to the NVCC Provisions, in the case of Securities that are subordinated debt securities, and to the Bail-in Powers, in the case of Securities that are unsubordinated debt securities subject to the Bail-in Powers.