Genworth MI Canada Inc.
Headnote
Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 55-104 Insider Reporting Requirements and Exemptions -- Relief granted from the insider reporting requirements for insider in respect of the transfer and disposition of common shares pursuant to an automatic securities disposition plan being used to facilitate dispositions made pursuant to a normal course issuer bid, subject to the insider filing an insider report within 90 days of the termination of the automatic plan.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 107(2), 121(2)(a)(ii).
National Instrument 55-104 Insider Reporting Requirement and Exemptions, s.10.1.
Ontario Securities Commission Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Purchase Plans.
May 10, 2013
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
GENWORTH MI CANADA INC.
(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 of the principal regulator (the Legislation) for an exemption pursuant to Section 121(2)(a)(ii) of the Securities Act (Ontario) (Act) from the requirements set out in Section 107(2) of the Act and Part 2 of National Instrument 55-104 that an insider of the Filer, Genworth Financial, Inc. and its affiliates (Genworth Financial), be exempt from the requirements in the Legislation to file an insider report within 5 days of the disposition of securities (Exemption Sought) pursuant to an automatic securities disposition plan arising in connection with the Filer's normal course issuer bid (NCIB).
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 British Columbia, Alberta, Manitoba, Saskatchewan, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon.
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:
1. The Filer is a corporation existing under the Canada Business Corporations Act and a reporting issuer in each of the Jurisdictions. The Filer is not on the list of defaulting reporting issuers maintained by the securities commission in each of the Jurisdictions that maintains such a list.
2. The authorized share capital of the Filer consists of an unlimited number of common shares (Shares), an unlimited number of preferred shares (Preferred Shares) and one special share (Special Share). As of March 31, 2013, 98,741,567 Shares, no Preferred Shares and one Special Share were issued and outstanding.
3. As of March 31, 2013, Genworth Financial was the beneficial owner of 56,710,094 Shares (representing approximately 57.43% of the outstanding Shares), which were held directly by Brookfield Life Assurance Company Limited, Genworth Mortgage Insurance Corporation, Genworth Mortgage Insurance Corporation of North Carolina and Genworth Residential Mortgage Assurance Corporation, each an indirect wholly-owned subsidiary of Genworth Financial, and one Special Share, held directly by Brookfield Life Assurance Company Limited.
4. The Shares are listed on the Toronto Stock Exchange (TSX) under the symbol "MIC".
5. The Filler has applied to commence a NCIB through the facilities of the TSX. The NCIB will be governed by the TSX Company Manual and other related rules and regulations as prescribed by the TSX.
6. The Filer has determined that it is in the best interest of the Filer that the NCIB include a proportionate participation feature to enable Genworth Financial to participate in the NCIB and maintain its proportionate percentage ownership in the Filer.
7. The Filer has received an exemption from the TSX to permit the NCIB, including the proportionate participation feature, to proceed through the facilities of the TSX in accordance with the bylaws, rules, regulations and policies of the TSX.
8. To effect the NCIB, the Filer has established an automatic share purchase plan (ASPP) through an independent broker. Pursuant to the ASPP, the Filer will purchase outstanding Shares from pre-existing holders of Shares, including Genworth Financial, at regular intervals and on specified terms (Purchased Shares). The Filer has instructed its broker to buy the Purchased Shares in accordance with a pre-arranged set of instructions as set out in the ASPP.
9. The parameters of the ASPP are set out in a written plan document to be entered into with the Filer's independent broker at the time of the establishment of the ASPP.
10. The Filer shall represent that, concurrently with the execution of the ASPP, it is not in possession of any material undisclosed information in relation to the Filer that would otherwise be required to be disclosed by law.
11. The independent broker shall determine, in its sole discretion, the timing, amount, prices and manner of purchase of the Shares during the specified duration of the ASPP, so long as such purchases are within the limits and in accordance with the terms established by the ASPP, and the independent broker shall not consult with, or take any instructions from, the Filer or its affiliates regarding any purchases under the ASPP other than as specifically outlined in the ASPP.
12. The ASPP will operate automatically and be conducted solely through the Filer's appointed broker for the NCIB. No material discretionary authority will remain with the Filer, and the Filer will not be aided by or in a position to profit from material undisclosed information regarding the ASPP or the NCIB. Consequently, pursuant to the ASPP, the Filer's broker will continue to buy Shares regardless of whether any "blackout period" applicable to the Filer is in effect and regardless of whether the Filer is aware of any material undisclosed information about the Filer.
13. To ensure Genworth Financial maintains its proportionate percentage ownership in the Filer, Genworth Financial will enter into an automatic share disposition plan (ASDP) providing for the disposition of Shares held by Genworth Financial directly, or indirectly through any of its affiliates, pursuant to the NCIB. Genworth Financial will file an insider report pursuant to subsection 107(2) of the Securities Act (Ontario) at the time the ASDP is entered into.
14. As a result of the Filer's ability, through the ASPP, to buy Shares regardless of any "blackout period" applicable to the Filer and regardless of whether the Filer is aware of any material undisclosed information about the Filer, the establishment of the ASDP is necessary for Genworth Financial to comply with the terms of the NCIB and the proportionate participation feature through the facilities of the TSX in accordance with the bylaws, rules, regulations and policies of the TSX. In particular, pursuant to the ASDP, Genworth Financial is reciprocally permitted to dispose of Shares where a "blackout period" applicable to Genworth Financial is in effect and regardless of whether Genworth Financial is aware of any material undisclosed information about the Filer, thus maintaining its proportionate percentage ownership in the Filer.
15. The parameters of the ASDP have been written out in an agreement with Genworth Financial's independent broker implementing the ASDP. The ASDP has been structured to comply with applicable securities legislation and guidance, including, inter alia, Clause 175(2) of Regulation 1015 under the Act, OSC Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Securities Purchase Plans (OSC 55-701) and similar rules and regulations regarding automatic dispositions of shares under Canadian securities laws. Pursuant to the Exemption Sought, it is the intent of the Filer and Genworth Financial that all sales under the ASDP shall be exempt from Subsection 76(1) of the Act and from liability under Section 134 of the Act regarding trades in securities of a reporting issuer with knowledge of a material fact or change not generally disclosed, and corresponding law and regulations across Canada.
16. The ASDP shall terminate upon the first to occur of the following:
a. the termination of the NCIB;
b. the termination of the ASPP in accordance with its terms;
c. the termination of the TSX approval of the proportionate participation feature of the NCIB;
d. the commencement of any voluntary or involuntary proceedings seeking:
i. liquidation, reorganization or other relief under any bankruptcy, insolvency or similar law of the Genworth Financial entities selling under the ASDP, or
ii. the appointment of a trustee, receiver or other similar official in respect of the Genworth Financial entities selling under the ASDP,
or the taking of any corporate action by the Genworth Financial entities selling under the ASDP to authorize any of the foregoing.
17. The ASDP will operate automatically such that Genworth Financial's independent broker will sell Shares on behalf of Genworth Financial with limited discretionary ability for Genworth Financial to vary, suspend or terminate the ASDP.
18. The ASDP contains meaningful restrictions on the ability of Genworth Financial to vary, suspend or terminate the ASDP, such restrictions having the effect of ensuring that Genworth Financial cannot profit from material undisclosed information through a decision to vary, suspend or terminate the ASDP.
19. The ASDP provides that the broker shall determine, in its sole discretion, the timing, amount, prices and manner of sales of the Shares during the specified duration of the ASDP, so long as such sales are within the limits and in accordance with the terms established by the ASDP, and the independent broker shall not consult with, or take any instructions from, the Genworth Financial entities selling under the ASDP regarding any sales under the ASDP other than as specifically outlined in the ASDP.
20. At the time of entry into the ASDP, the Genworth Financial entities selling under the ASDP will represent to the broker that they are not in possession of material undisclosed information about the Filer and that they are entering into the ASDP in good faith and not as part of a plan to evade prohibitions against trading with material undisclosed information contained in applicable Canadian securities laws. Accordingly, Genworth Financial will not be aided by or in a position to profit from material undisclosed information of the Filer.
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 provided that Genworth Financial shall file a report, in the form prescribed for insider trading reports under the Legislation, disclosing on a transaction-by-transaction basis or in acceptable summary form (as such term is defined in National instrument 55-101 Insider Reporting Exemptions) all dispositions of Shares under the ASDP that have not been previously disclosed by or on behalf of Genworth Financial within 90 days of the termination of the ASDP.