GFL Environmental Inc.

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the issuer bid requirements in connection with purchases by a cross-listed issuer of its shares on published markets in the U.S. as part of normal course issuer bids implemented from time to time and conducted through the facilities of the TSX in reliance on the designated exchange exemption -- the trading volume of the cross-listed issuer on U.S. markets is significant and greater than the trading volume of such issuer on the TSX -- requested relief granted, subject to conditions, including that the bid is made in compliance with applicable U.S. securities laws and any applicable rules of the published market on which purchases are carried out; purchases over U.S. markets only occur in compliance with Part 6 (Order Protection) of NI 23-101 Trading Rules and the pricing requirement in NI 62-104; the issuer does not make purchases in reliance on section 4.8(3) of NI 62-104 if the aggregate number of shares purchased in reliance on the decision and section 4.8(3) of NI 62-104 within a 12-month period exceeds 5% of the outstanding shares on the first day of such 12-month period; the total number of shares purchased in reliance on the decision and sections 4.8(2) and (3) of NI 62-104 over the 12-month period specified in the TSX notice relating to the bid does not exceed 10% of the public float specified in such notice; and the requested relief apply only to the acquisition of shares pursuant to the issuer's current bid or one commenced within 36 months of the date of the decision.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

February 26, 2025

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
GFL ENVIRONMENTAL 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) that the requirements contained in the Legislation relating to issuer bids (the Issuer Bid Requirements) shall not apply to purchases of the Filer's subordinate voting shares (the SVS) made by the Filer through the facilities of the New York Stock Exchange (the NYSE) and over alternative trading systems based in the United States (together with the NYSE, the U.S. Markets) in connection with an issuer bid made in the normal course through the facilities of the Toronto Stock Exchange (the TSX) that the Filer may implement from time to time (such bids, the Normal Course Issuer Bids, and such exemption, 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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and Yukon.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and National Instrument 62-104 Take-Over Bids and Issuer Bids (NI 62-104) 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 Business Corporations Act (Ontario) and is in good standing. The Filer has its registered office and principal office in Ontario.

2. The Filer is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement of the securities legislation in any jurisdiction of Canada.

3. The Filer is also a registrant with the SEC and is subject to the requirements of the 1934 Act. The Filer is not in default of any requirement of U.S. federal securities law.

4. The authorized capital of the Filer consists of an unlimited number of SVS, an unlimited number of multiple voting shares, an unlimited number of preferred shares, issuable in series, 28,571,428 Series A Convertible Preferred Shares, and 8,196,721 Series B Convertible Preferred Shares. As of January 31, 2025, 381,570,455 SVS were issued and outstanding and the Filer's public float (as defined in Section 628(1)(xi) of the TSX Company Manual) (the Public Float) was comprised of 280,462,561 SVS.

5. The SVS are listed and posted for trading on the TSX and the NYSE under the trading symbol "GFL".

6. On January 7, 2025, the Filer publicly announced its intention to use up to $2.25 billion of the net proceeds from the sale of its Environmental Services business (the Transaction Proceeds) to opportunistically purchase shares of the Filer. The Filer does not currently intend to use the Transaction Proceeds to repurchase any class of securities of the Filer other than SVS.

7. The Filer will announce on February 27, 2025 that the TSX has authorized it to make a normal course issuer bid (the Current Bid) for the 12-month period commencing on March 3, 2025, to purchase up to 28,046,256 SVS, representing approximately 10% of the of the Public Float and approximately 7.4% of the issued and outstanding SVS, in each case, as of the date specified in the Notice of Intention to Make a Normal Course Issuer Bid (the Current Notice).

8. The Current Notice specifies that purchases under the Current Bid will be made through the facilities of the TSX, the NYSE or alternative trading systems in Canada or the United States, if eligible, or by such other means as may be permitted by a securities regulatory authority.

9. Purchases under issuer bids made in the normal course through the facilities of the TSX are, and will be, conducted in reliance upon the exemption from the Issuer Bid Requirements set out in subsection 4.8(2) of NI 62-104 (the Designated Exchange Exemption). The Designated Exchange Exemption provides that an issuer bid made in the normal course through the facilities of a designated exchange is exempt from the Issuer Bid Requirements if the bid is made in accordance with the bylaws, rules, regulations and policies of that exchange. The TSX is a designated exchange for the purposes of the Designated Exchange Exemption.

10. The TSX's rules governing the conduct of normal course issuer bids (the TSX NCIB Rules) are set out, inter alia, in Sections 628 to 629.3 of Part VI of the TSX Company Manual. The TSX NCIB Rules permit a listed issuer to acquire, over a 12-month period commencing on the date specified in the Notice of Intention to Make a Normal Course Issuer Bid (a Notice), up to the greater of (a) 10% of the Public Float as at the date specified in the Notice, or (b) 5% of such class of securities issued and outstanding as at the date specified in the Notice.

11. Purchases under issuer bids made in the normal course through U.S. Markets and alternative trading systems in Canada need to be conducted in reliance upon the exemption from the Issuer Bid Requirements set out in Section 4.8(3) of NI 62-104 (the Other Published Markets Exemption). The Other Published Markets Exemption provides that an issuer bid made in the normal course on a published market, other than a designated exchange, is exempt from the Issuer Bid Requirements if, among other things, the bid is for not more than 5% of the outstanding securities of a class of securities of the issuer, and the aggregate number of securities acquired in reliance on the Other Published Markets Exemption by the issuer and any person acting jointly or in concert with the issuer within any 12-month period does not exceed 5% of the securities of that class outstanding at the beginning of the 12-month period.

12. Purchases made over the U.S. Markets are not exempt under the Designated Exchange Exemption, as the U.S. Markets are not "designated exchanges" for the purpose of the Designated Exchange Exemption. As a result, purchases made pursuant to the Current Bid on the U.S. Markets, taken together with purchases made over published markets in Canada other than the TSX, cannot exceed within any 12-month period 5% of the issued and outstanding SVS at the beginning of the 12-month period, representing a number of SVS that is, and is expected to remain going forward, significantly lower than the number of SVS equal to 10% of the Public Float.

13. For the 12-month period ended December 31, 2023, an aggregate of 450,564,191 SVS were traded over published markets in Canada and the United States, with trading volumes having occurred as follows:

(a) 74,612,161 SVS (or approximately 16.6% of total aggregate trading) over the facilities of the TSX;

(b) 52,774,628 SVS (or approximately 11.7% of total aggregate trading) over published markets in Canada other than the TSX; and

(c) 323,177,402 SVS (or approximately 71.7% of total aggregate trading) over U.S. Markets.

14. For the 12-month period ended December 31, 2024, an aggregate of 420,751,799 SVS were traded over published markets in Canada and the United States, with trading volumes having occurred as follows:

(a) 65,170,918 SVS (or approximately 15.5% of total aggregate trading) over the facilities of the TSX;

(b) 53,291,785 SVS (or approximately 12.7% of total aggregate trading) over published markets in Canada other than the TSX; and

(c) 302,289,096 SVS (or approximately 71.8% of total aggregate trading) over U.S. Markets.

15. As a much higher volume of SVS have historically traded over the U.S. Markets relative to the TSX, the Filer wishes to have the ability to make repurchases in connection with the Current Bid and any Normal Course Issuer Bids that may be implemented by the Filer following the expiry of the Current Bid (collectively, with the Current Bid, the Proposed Bids) over the U.S. Markets in excess of the maximum allowable in reliance on the Other Published Markets Exemption up to the maximum authorized and approved by its board of directors and permissible by the TSX.

16. The Proposed Bids will be effected in accordance with all applicable securities laws, including the 1934 Act, the 1933 Act, and the rules of the SEC made pursuant thereto, and any applicable by-laws, rules, regulations or policies of the U.S. Markets on which the purchases are carried out (collectively, the Applicable U.S. Rules).

17. In connection with the Proposed Bids, the Filer also intends to rely on the "safe harbour" provided by Rule 10b-18 under the 1934 Act (Rule 10b-18), which provides an issuer and its affiliated purchasers with a safe harbor from liability under certain market manipulation rules when purchases are structured to satisfy the conditions of Rule 10b-18. In order for the Filer to comply with Rule 10b-18, all purchases made by or on behalf of the Filer through U.S. Markets are generally required:

(a) to be made through only one broker or dealer in any single day;

(b) not to be made at the opening of a trading session or during the 10 minutes before the scheduled close of a trading session;

(c) not to be made at prices higher than the highest published independent bid or last reported independent transaction price on the relevant U.S. Market (whichever is higher) at the time the Rule 10b-18 purchase is effected; and

(d) not to exceed, on any single day, an aggregate amount equal to 25% of the average daily trading volume over the U.S. Markets, calculated in accordance with Rule 10b-18 (provided one block purchase per week may be effected in compliance with the provisions of Rule 10b-18(b)(4)).

18. Purchases of SVS by the Filer of up to 10% of the Public Float on U.S. Markets are permitted under the Applicable U.S. Rules. Under the Applicable U.S. Rules, there is no aggregate limit on the number of SVS that may be purchased by the Filer over U.S. Markets.

19. The purchase of SVS under the Proposed Bids will not adversely affect the Filer or the rights of any of the Filer's security holders and they will not materially affect control of the Filer.

20. The Filer believes that the Proposed Bids are or will be in the best interests of the Filer.

21. No other exemptions exist under the Legislation that would permit the Filer to continue to make purchases pursuant to the Proposed Bids through the U.S. Markets on an exempt basis once the Filer has purchased, within a 12-month period, 5% of the outstanding SVS in reliance on the Other Published Markets Exemption.

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:

(a) the Proposed Bids are permitted under the Applicable U.S. Rules, and are established and conducted in accordance and compliance with the Applicable U.S. Rules and in reliance on Rule 10b-18;

(b) the Notice accepted by the TSX in respect of any Proposed Bid that may be implemented by the Filer specifically contemplates that purchases under such bid will also be effected through the U.S. Markets;

(c) purchases of SVS under a Proposed Bid over U.S. Markets in reliance on this decision shall only be made:

(i) in compliance with Part 6 (Order Protection) of National Instrument 23-101 Trading Rules; and

(ii) at a price which complies with the requirements of paragraph 4.8(3)(c) of NI 62-104;

(d) the Exemption Sought applies only to the acquisition of SVS by the Filer pursuant to a Proposed Bid made within 36 months of the date of this decision;

(e) prior to purchasing SVS under a Proposed Bid in reliance on this decision, the Filer issues and files a press release setting out the terms of the Exemption Sought and the conditions applicable thereto;

(f) the Filer does not acquire SVS in reliance on the Other Published Markets Exemption if the aggregate number of SVS purchased by the Filer and any person or company acting jointly or in concert with the Filer in reliance on this decision and the Other Published Markets Exemption within any period of 12 months, exceeds 5% of the outstanding SVS on the first day of such 12-month period; and

(g) the aggregate number of SVS purchased pursuant to a Proposed Bid in reliance on this decision, the Designated Exchange Exemption and the Other Published Market Exemption does not exceed, over the 12-month period specified in the Notice in respect of the relevant Proposed Bid, 10% of the Public Float as specified in such Notice.

"David Mendicino"
Manager, Corporate Finance Division
Ontario Securities Commission