Ian Robertson et al.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – reporting insider granted relief from the requirement in subsection 107(2) of the Securities Act (Ontario) to file and insider report within five days of each disposition of securities occurring pursuant to an automatic securities disposition plan, provided that the insider files an insider report in respect of all dispositions under the automatic securities disposition plan on an annual basis.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990. c. S.5. ss. 107(2), 121(2)(a)(ii).
National Instrument 55-104 Insider Reporting Requirements and Exemptions, ss. 2.2, 3.3.
October 9, 2018
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
IAN ROBERTSON AND
CHRIS JARRATT
(each, an “Insider” and together, the “Insiders”)
AND ALGONQUIN POWER & UTILITIES CORP.
(“APUC” and together with the “Insiders”, the “Filers”)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption from the requirement of the Legislation that the Insiders file an insider report within 5 days of a disposition of common shares of APUC (Common Shares) pursuant to automatic securities disposition plans (the Exemption Sought), subject to certain conditions.
In accordance with National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission (the OSC) is the principal regulator for this application; and
(b) the Filers have provided notice that subsection 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, and Prince Edward Island.
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 Filers:
APUC
1. APUC is a corporation existing under the Canada Business Corporations Act with its head office in Ontario. APUC is a reporting issuer in each of the provinces of Canada. APUC is not in default of securities legislation in any jurisdiction of Canada.
2. The authorized capital of APUC consists of an unlimited number Common Shares and an unlimited number of preferred shares issuable in series of which, as of September 30, 2018, 473,900,515 Common Shares, 4,800,000 Cumulative Rate Reset Series A Preferred Shares (the Series A Shares), 100 Cumulative Rate Reset Series C Preferred Shares, and 4,000,000 Cumulative Rate Reset Series D Preferred Shares (the Series D Shares) were validly issued and outstanding as fully paid and non-assessable.
3. The Common Shares are listed on the Toronto Stock Exchange and the New York Stock Exchange under the trading symbol “AQN”.
The Insiders
4. Mr. Robertson is the Chief Executive Officer of APUC and is a reporting insider. Mr. Robertson is not in default of securities legislation in any jurisdiction.
5. Mr. Robertson is, as of September 30, 2018, the owner, directly or indirectly, of (i) 1,676,743 Common Shares (representing approximately 0.35% of the outstanding Common Shares), (ii) 1,000 Series A Shares, (iii) 18 Series C Shares, (iv) 1,000 Series D Shares, (v) 2,431,995 stock options to purchase Common Shares (Options), (vi) 243,467 performance share units (PSUs), and (vii) 46,183 restricted share units (RSUs) issued by APUC and granted to Mr. Robertson as a part of APUC’s long-term incentive program for certain members of APUC’s management (the LTIP).
6. Mr. Robertson’s ownership, directly and indirectly, of Common Shares and PSUs, calculated as of January 2, 2018 for the purpose of disclosure in APUC’s Management Information Circular dated May 1, 2018, represented 11.2 times the ownership required of Mr. Robertson under APUC’s Executive Share Ownership Guidelines.
7. Mr. Jarratt is the Vice Chair of APUC and is a reporting insider. Mr. Jarratt is not in default of securities legislation in any jurisdiction.
8. Mr. Jarratt is, as of September 30, 2018, the owner, directly or indirectly, of (i) 1,505,119 Common Shares (representing approximately 0.32% of the outstanding Common Shares), (ii) 18 Series C Shares, (iii) 1,000 Series D Shares, (iv) 1,742,683 Options, (v) 169,614 PSUs, and (vi) 43,674 RSUs issued by APUC and granted to Mr. Jarratt as a part of the LTIP.
9. Mr. Jarratt’s ownership, directly and indirectly, of Common Shares and PSUs, calculated as of January 2, 2018 for the purpose of disclosure in APUC’s Management Information Circular dated May 1, 2018, represented approximately 13.5 times the ownership required of Mr. Jarratt under APUC’s Executive Share Ownership Guidelines.
The Insiders’ Automatic Share Disposition Plans
10. On April 5, 2018, each of the Insiders made, on the System for Electronic Disclosure by Insiders (SEDI), filings in respect of Options and PSUs received by the applicable Insider as a part of the annual grants under the LTIP made on March 31, 2018 (the 2018 LTIP Grants). These filings contained the following general remarks:
(a) with respect to the Options – “The filer will enter into an automatic securities disposition plan pursuant to which common shs. will be disposed of over the balance of 2018 in an amount up to the number of common shs. to be received by the filer upon the exercise of these options”; and
(b) with respect to the PSUs – “The filer will enter into an automatic securities disposition plan pursuant to which common shs. will be disposed over the balance of 2018 of in an amount up to the nominal number of common shs. to be received by the filer upon the vesting of these PSUs”.
11. Each of the Insiders has entered into an ASDP agreement dated April 20, 2018 with the ASDP Administrator pursuant to which such Insider has instructed the ASDP Administrator to sell, over the balance of 2018, up to the number of Common Shares being approximately equal to the number of Common Shares to be acquired pursuant to the 2018 LTIP Grants, being 534,112 Common Shares for Mr. Robertson and 373,878 Common Shares for Mr. Jarratt.
12. The ASDPs were amended on May 22, 2018 to extend the date on which sales under the ASDPs could commence from 30 days to 60 days after the ASDPs were initially entered into, and further amended on June 18, 2018 to again extend such date an additional 30 days to the date that was 90 days after the ASDPs were initially entered into, being July 19, 2018. These amendments were made substantially in accordance with the procedures described in paragraph 21 below.
13. In accordance with the parameters of the ASDPs, sales commenced on July 19, 2018.
14. As of September 30, 2018, a total of 303,366 Common Shares had been sold pursuant to the ASDP between Mr. Robertson and the ASDP Administrator, and such sales have been reported on Mr. Robertson’s SEDI profile, in each case within five days of the automatic disposition of such Common Shares, in accordance with the requirements set forth in Section 107(2) of the Securities Act (Ontario) (the Act).
15. As of September 30, 2018, a total of 212,334 Common Shares had been sold pursuant to the ASDP between Mr. Jarratt and the ASDP Administrator, and such sales have been reported on Mr. Jarratt’s SEDI profile, in each case within five days of the automatic disposition of such Common Shares, in accordance with the requirements set forth in Section 107(2) of the Act.
16. Each ASDP is structured to comply with applicable securities legislation and guidance, including Clause 175(2) of Regulation 1015 under the Act and OSC Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Securities Purchase Plans (OSC Staff Notice 55-701). Pursuant to the Exemption Sought, it is the intention of APUC and each Insider that all sales under the ASDPs 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 that has not been generally disclosed, and corresponding law and regulations across Canada.
17. The ASDP Administrator is a registered investment dealer and a member of the Investment Industry Regulatory Organization of Canada. The ASDP Administrator is at arm’s length to APUC and the Insiders and is appointed as an independent broker to effect the sales of the Common Shares pursuant to the terms and conditions of each ASDP.
18. Each of the Insiders had a pre-existing broker-client relationship with the ASDP Administrator but the representatives responsible for administering the ASDPs are not the same representatives who act as the investment advisors to the Insiders in the normal course for any non-ASDP transactions. The representatives administering the ASDPs may, from time to time, communicate with the Insiders’ investment advisors for administrative purposes but during the life of the ASDPs there is no trading communication between the representatives administering the ASDPs and the Insiders’ investment advisors.
19. Each ASDP operates automatically such that the ASDP Administrator sells Common Shares on behalf of each Insider with limited discretionary ability for each Insider to vary, suspend or terminate its ASDP. Accordingly, the Insiders are not aided by or in a position to profit or avoid losses from any material undisclosed information of APUC in respect of trades made by the ASDP Administrator under the ASDP.
20. In furtherance of the Exemption Sought, as per guidance contained in OSC Staff Notice 55-701, each Insider has ensured that, regarding its ASDP:
(a) at the time of entry into the ASDP, the Insider represented to the broker that it was not in possession of any undisclosed material fact or material change (as such terms are defined in the Act) in relation to APUC or any securities of APUC and that it was entering into the ASDP in good faith and not as part of a plan or scheme to evade prohibitions against trading while in possession of material undisclosed information contained in applicable Canadian securities legislation;
(b) at the time of entry into the ASDP, the Insider provided the ASDP Administrator with a certificate from the Chief Legal Officer and Chair of the Corporate Disclosure Committee of APUC confirming, on behalf of the Corporate Disclosure Committee of APUC, (i) that APUC has pre-cleared, in accordance with its Insider Trading Policy, the ASDPs, and (ii) that, to the best of APUC’s knowledge, the Insider was not aware of or in possession of material non-public or material undisclosed information about the APUC or any securities of APUC at such time;
(c) the trading parameters and other instructions were set out in writing as Annex A to the ASDP at the time of entry into the ASDP and may not be amended or modified except in accordance with the ASDP (as described below);
(d) the ASDP contains meaningful restrictions on the ability of the Insider to vary, suspend or terminate the ASDP, such restrictions having the effect of ensuring that the Insider cannot profit or avoid losses from material undisclosed information in respect of trades made by the ASDP Administrator under the ASDP through a decision to vary, suspend or terminate the ASDP (as described in detail below); and
(e) the ASDP provides that the ASDP Administrator is not permitted to and shall not consult or communicate with the Insider regarding any disposition of Common Shares under the ASDP, except to send the Insider trade confirmations of sale or transfer, periodic account statements and general account-related material in the ordinary course of business, and the Insider shall not inform or disclose to Broker any information concerning APUC that might influence the execution of the ASDP or otherwise.
21. Each Insider can only modify, terminate or amend its ASDP (other than in accordance with the termination provisions of the ASDP, as described in paragraph 21 below) by an instrument in writing, signed by the Insider and the ASDP Administrator and provided that any such modification, termination or amendment shall only be permitted at a time when the Insider is otherwise permitted to modify, terminate or amend the ASDP under APUC's disclosure or insider trading policies and at a time when the Insider is not aware of or in possession of material non-public information concerning APUC or any securities of APUC. In order to modify, terminate or amend the ASDP (other than in accordance the termination provisions of the ASDP, as described in paragraph 21 below), the Insider must contemporaneously:
(a) instruct the ASDP Administrator to modify, terminate or amend the ASDP;
(b) notify the public of such instruction by way of a SEDI filing or a press release, which shall include a representation that at the time of the modification, termination or amendment the Insider was not aware of or in possession of any material non-public information about APUC or any securities of APUC; and
(c) provide the ASDP Administrator with a certificate from APUC confirming that APUC has pre-cleared the modification, termination or amendment of the ASDP in accordance with APUC’s Insider Trading Policy.
22. Each Insider’s ASDP shall terminate upon the earliest to occur of:
(a) 4:00 p.m. Eastern Time on December 31, 2018;
(b) 4:00 p.m. Eastern Time on the date the ASDP Administrator receives notice of the Insider’s death;
(c) in the case where the Insider’s employment with APUC should cease for any reason, 9:30 a.m. Eastern Time on the 30th day after the date such employment ceases;
(d) the completion of the sale of all of the Common Shares subject to the ASDP; or
(e) the date on which the ASDP Administrator receives notice of (i) a publicly announced take-over bid or exchange offer with respect to the Common Shares or merger, amalgamation, arrangement, acquisition, reorganization, recapitalization or comparable transaction affecting the securities of APUC as a result of which the Common Shares are to be exchanged or converted into cash and/or securities of another entity, or (ii) the commencement or impending commencement of any proceedings in respect of or triggered by the Insider’s bankruptcy.
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 in respect of an Insider provided that at the time of relying on the Exemption Sought the Insider is in compliance with the representations in paragraphs 18, 20, 21 and 22 of this decision and that by March 31 of each calendar year the Insider files a report through SEDI of all acquisitions and dispositions under the ASDP during the prior calendar year not previously disclosed in a SEDI filing, disclosing either of the following:
(a) each acquisition and disposition on a transaction-by-transaction basis;
(b) all acquisitions as a single transaction using the average unit price of the securities, and all dispositions as a single transaction using the average unit price of the securities.
“AnneMarie Ryan” “Poonam Puri”
Commissioner Commissioner
Ontario Securities Commissioner Ontario Securities Commissioner