Énergir Inc.

Headnote

Regulation 11-102 respecting Passport System and Policy Statement 11-203 respecting Process for Exemptive Relief Applications in Multiple Jurisdictions -- Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards (Regulation 52-107), s. 5.1 -- the Filer applied for relief from the requirements in section 3.2 of Regulation 52-107 that financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises to permit the Filer to prepare its financial statements in accordance with U.S. GAAP.

Applicable Legislative Provisions

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

[TRANSLATION]

DECISION No: 2023-FS-1015380

March 14, 2023

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF ÉNERGIR INC. (the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption (the Exemption Sought) from the requirements of section 3.2 of Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards, CQLR, c, V-1.1, r. 25 (Regulation 52-107) that the financial statements of the Filer: a) be prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) applicable to publicly accountable enterprises; and b) disclose an unreserved statement of compliance with IFRS in the case of annual financial statements and an unreserved statement of compliance with IAS 34 in the case of an interim financial report. The Exemption Sought is similar to the exemption granted by the Decision Makers under the Legislation to the Filer on March 9, 2018 (the U.S. GAAP Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

1. The Autorité des marchés financiers is the principal regulator for this application;

2. 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, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the Passport Jurisdictions);

3. The decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

The terms defined in Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, Regulation 11-102 and Regulation 52-107 have the same meaning if used in this decision, unless otherwise defined.

"Rate-regulated activities" has the meaning ascribed in the Chartered Professional Accountants of Canada Handbook (the Handbook).

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the Business Corporations Act (Québec), R.S.Q., c. S-31.1. The head office of the Filer is in Montréal, Québec.

2. The Filer is a reporting issuer in the Jurisdictions and each of the Passport Jurisdictions and is not in default of securities legislation in any jurisdiction.

3. The Filer undertakes rate-regulated activities.

4. The Filer is not a SEC issuer and therefore cannot rely on section 3.7 of Regulation 52-107 to file financial statements prepared in accordance with U.S. GAAP.

5. The Filer currently prepares its financial statements for annual and interim periods in accordance with U.S. GAAP, relying on the U.S. GAAP Relief.

6. The U.S. GAAP Relief will cease to apply to the Filer on the earliest of:

a) January 1, 2024;

b) if the Filer ceases to have activities subject to rate regulation, the first day of the Filer's financial year that commences after the Filer ceases to have activities subject to rate regulation;

c) the effective date prescribed by the International Accounting Standards Board (the IASB) for the mandatory application of a standard within IFRS specific to entities with activities subject to rate regulation.

7. Accordingly, in the absence of further relief provided by Canadian securities regulators, the Filer would become subject to Canadian GAAP no later than January 1, 2024. Canadian GAAP includes IFRS as incorporated into the Handbook.

8. In January 2021, the IASB published the Exposure Draft -- Regulatory Assets and Regulatory Liabilities, which introduces a proposed standard of accounting for regulatory assets and liabilities, applicable to entities with rate-regulated activities. The issuance by the IASB of a standard within IFRS for entities with rate-regulated activities (a Mandatory Rate-regulated Standard) would have resulted in the expiry of the U.S. GAAP Relief, giving rise to the obligation of the Filer to commence financial statement preparation and reporting in accordance with IFRS pursuant to Regulation 52-107. It is not yet known when the IASB will finalize and implement such a standard and the Filer will require sufficient time to: (a) interpret and implement such standard and transition from financial statement preparation and reporting in accordance with U.S. GAAP to IFRS; and (b) interpret and reconcile the implications on the customer rate setting process resulting from the implementation.

Decision

Each of the Decision Makers is 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:

1. The U.S. GAAP Relief is revoked;

2. The Exemption Sought is granted to the Filer in respect of the Filer's financial statements required to be filed on or after the date of this decision, provided that the Filer prepares those financial statements in accordance with U.S. GAAP; and

3. The Exemption Sought will terminate in respect of the Filer on the earliest of the following:

a) January 1, 2027;

b) if the Filer ceases to have rate-regulated activities, the first day of the Filer's financial year that commences after the Filer ceases to have rate-regulated activities; and

c) the first day of the Filer's financial year that commences on or following the later of:

i) the effective date prescribed by the IASB for a Mandatory Rate-regulated Standard; and

ii) two years after the IASB publishes the final version of a Mandatory Rate-regulated Standard.