Kingsway Financial Services Inc. – s. 4(b) on Ont. Reg. 289/00 under the OBCA
Consent given to an offering corporation under the Business Corporations Act (Ontario) to continue under the Delaware General Corporation Law.
Statutes Cited
Business Corporations Act, R.S.O. 1990, c.B.16, as am., s. 181.
Delaware General Corporation Law, as am, s. 388.
Securities Act, R.S.O. 1990, c. S.5, as am.
Regulations Cited
Regulation made under the Business Corporations Act, Ont. Reg. 289/00, s. 4(b).
December 18, 2018
IN THE MATTER OF
R.R.O. 1990, REGULATION 289/00, AS AMENDED
(the Regulation) MADE UNDER
THE BUSINESS CORPORATIONS ACT (ONTARIO),
R.S.O. 1990, c. B.16, AS AMENDED
(the OBCA)
AND
IN THE MATTER OF
KINGSWAY FINANCIAL SERVICES INC.
CONSENT
(Subsection 4(b) of the Regulation)
UPON the application (the Application) of Kingsway Financial Services Inc. (the Applicant) to the Ontario Securities Commission (the Commission) requesting the Commission’s consent to the Applicant continuing in another jurisdiction pursuant to section 181 of the OBCA (the Continuance);
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Applicant having represented to the Commission that:
1 The Applicant is an offering corporation under the OBCA.
2 The Applicant’s common shares (the Common Shares) are currently listed for trading on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE) under the symbol “KFS”. The Applicant also currently has series B warrants (the Warrants) trading on the TSX under the symbol “KFS.WT.V” and on the OTC Market under the symbol “KFSYF”. As at December 5, 2018, the Applicant had 21,787,728 Common Shares issued and outstanding exclusive of restricted shares, and 22,880,178 inclusive of restricted shares.
3 The Applicant intends to apply to the Director pursuant to section 181 of the OBCA (the Application for Continuance) for authorization to continue as a company under section 388 of the General Corporation Law of the State of Delaware (the DGCL).
4 The DGCL permits foreign jurisdiction corporations to continue under the laws of Delaware.
5 In connection with the Continuance, the Applicant applied to have the Common Shares and the Warrants de-listed from the TSX, which will be effective at the close of markets on December 19, 2018.
6 The board of directors of the Applicant considers it to be in the best interest of the Applicant to continue under the DGCL because it will allow the Applicant to eliminate a number of potentially material income tax inefficiencies the Applicant believes it would inevitably encounter, particularly in light of the recent sale of its property-casualty insurance companies including the related distribution to Kingsway America Inc., a subsidiary of the Applicant, of the passive investments owned by its property-casualty insurance companies at the time of closing. The Applicant also believes it will be able to reduce operating expenses and transactional inefficiencies that currently result from being subject to Canadian corporate laws despite having no operations in Canada. The Applicant chose the State of Delaware to be its domicile because the more favourable corporate environment afforded by Delaware will help it compete effectively in raising the capital necessary for it to continue to implement its strategic plan, particularly its announced focus on growing its extended warranty segment with accretive acquisitions.
7 The material rights, duties and obligations of a corporation governed by the DGCL are substantially similar to those of a corporation governed by the OBCA. Nonetheless, there are several material differences between Ontario and Delaware corporate law. Exhibit F to the Applicant’s management information circular dated November 16, 2018 (the Circular) for a special meeting of shareholders held on December 14, 2018 (the Shareholder Meeting) outlines the most significant differences.
8 The Applicant is a reporting issuer under the Securities Act, R.S.O. 1990, c. S.5, as amended (the Act) and the securities legislation of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, Saskatchewan and Yukon (collectively, the Reporting Jurisdictions).
9 The Applicant will remain a reporting issuer in the Reporting Jurisdictions following the Continuance.
10 The Applicant is not in default of any of the provisions of the OBCA, the Act, the regulations or rules made under the Act, or the securities legislation of the other Reporting Jurisdictions including the regulations or rules made thereunder.
11 The Applicant is not a party to any proceeding or, to the best of its information, knowledge or belief, any pending proceeding under the Act, the OBCA or the securities legislation of the other Reporting Jurisdictions.
12 The Applicant is not in default of any provision of the rules, regulations or policies of the NYSE or of the TSX.
13 Following the Continuance, the Commission will remain the Applicant’s principal regulator.
14 As the Applicant does not intend to maintain a corporate office in Canada subsequent to the Continuance, the Applicant has provided an undertaking (the Undertaking) to the Commission that it will complete and file an "Issuer Form of Submission to Jurisdiction and Appointment of Agent for Service of Process" in the form of Schedule "A" thereto (the Submission to Jurisdiction Form) with the Commission through the System for Electronic Document Analysis and Retrieval (SEDAR) promptly following the effective date of the Continuance. The Undertaking also provides that the Applicant will maintain and update the information contained in the Submission to Jurisdiction Form, or furnish a new Submission to Jurisdiction Form, in accordance with the provisions contained therein. The form of Undertaking provided to the Commission is attached as Appendix "A".
15 The Circular disclosed the reasons for, and the implications of, the proposed Continuance. It also disclosed the full particulars of the dissent rights of the Applicant’s shareholders under section 185 of the OBCA.
16 The Applicant’s shareholders authorized the proposed Continuance at the Shareholder Meeting by 99.91% of the votes cast. No shareholders exercised dissent rights pursuant to section 185 of the OBCA.
17 Subsection 4(b) of the Regulation requires the Application for Continuance to be accompanied by a consent from the Commission.
18 Upon receipt of the consent to continue from the Commission, the Applicant will continue under the DGCL, with a planned effective date of December 31, 2018.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
THE COMMISSION CONSENTS to the continuance of the Applicant as a corporation under the DGCL.
DATED at Toronto, Ontario this 18th day of December, 2018
| "Deborah Leckman" Commissioner Ontario Securities Commission |
"Robert P Hutchison" Commissioner Ontario Securities Commission |
APPENDIX “A”
UNDERTAKING
To: Ontario Securities Commission (the Commission)
Re: Kingsway Financial Services Inc. (the Applicant)
Application dated December 6, 2018 for a Consent to continue to Delaware pursuant to clause 4(b) of Ontario Regulation 289/00 made under the Business Corporations Act, R.S.O. 1990, c. B. 16
The Applicant hereby undertakes that it will complete and file an "Issuer Form of Submission to Jurisdiction and Appointment of Agent for Service of Process" in the form of Schedule "A" hereto (the Submission to Jurisdiction Form) with the Commission through the System for Electronic Document Analysis and Retrieval (SEDAR) promptly following the effective date of the Continuance.
The Applicant hereby further undertakes that it will maintain and update the information contained in the Submission to Jurisdiction Form, or furnish a new Submission to Jurisdiction Form, in accordance with the provisions contained therein.
Dated: December 17, 2018
KINGSWAY FINANCIAL SERVICES INC.
“William A. Hickey, Jr.”
Executive Vice President and CFO
Schedule A
Issuer Form of Submission to Jurisdiction and Appointment of Agent for Service of Process
1. Name of issuer (the “Issuer”):
________________________________________________________________________
2. Jurisdiction of incorporation, or equivalent, of Issuer:
________________________________________________________________________
3. Address of principal place of business of Issuer:
________________________________________________________________________
4. Description of securities (the “Securities”):
________________________________________________________________________
5. Name of agent for service of process (the “Agent”):
________________________________________________________________________
6. Address for service of process of Agent in Canada (the address may be anywhere in Canada):
________________________________________________________________________
7. The Issuer designates and appoints the Agent at the address of the Agent stated above as its agent upon whom may be served with a notice, pleading, subpoena, summons or other process in an action, investigation or administrative, criminal, quasi-criminal, penal or other proceeding (the "Proceeding") arising out of, relating to or concerning the obligations of the Issuer as a reporting issuer and irrevocably waives any right to raise as a defence in any such Proceeding an alleged lack of jurisdiction to bring such Proceeding.
8. The Issuer irrevocably and unconditionally submits to the non-exclusive jurisdiction of
(a) the judicial, quasi-judicial and administrative tribunals of each of the provinces and territories of Canada in which the securities have been distributed; and
(b) any administrative proceeding in any such province or territory,
in any Proceeding arising out of or related to or concerning the obligations of the Issuer as a reporting issuer.
9. Until six years after it has ceased to be a reporting issuer in any Canadian province or territory, the Issuer shall file a new submission to jurisdiction and appointment of agent for service of process in this form at least 30 days before termination of this submission to jurisdiction and appointment of agent for service of process.
10. Until six years after it has ceased to be a reporting issuer in any Canadian province or territory, the Issuer shall file an amended submission to jurisdiction and appointment of agent for service of process at least 30 days before any change in the name or above address of the Agent.
11. This submission to jurisdiction and appointment of agent for service of process shall be governed by and construed in accordance with the laws of Ontario.
Dated: _______________________________
_____________________________________________
Signature of Issuer
_____________________________________________
Print name and title of signing officer of Issuer
AGENT
The undersigned accepts the appointment as agent for service of process of Kingsway Financial Services Inc. under the terms and conditions of the appointment of agent for service of process stated above.
Dated: _______________________________
_____________________________________________
Signature of Agent
_____________________________________________
Print name of person signing and, if Agent
is not an individual, the title of the person signing