Quad/Graphics, Inc.
Headnote
National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- Application for an order that an issuer is not a reporting issuer under applicable securities laws -- the issuer has more than 15 securityholders in each of the jurisdictions of Canada and more than 51 securityholders in total worldwide -- issuer's securities are traded only on a market or exchange outside of Canada -- Canadian residents own less than 2% of the issuer's securities and represent less than 2% of the issuer's total number of securityholders.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
[TRANSLATION]
Decision no: 2019-IC-0020
File no: 31507
December 2, 2019
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the "Jurisdictions") AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF QUAD/GRAPHICS, INC. (the "Filer")
ORDER
Background
The securities regulatory authority or regulator of the Jurisdictions ("Decision Makers") has received an application from the Filer for an order under the securities legislation of the Jurisdiction (the "Legislation") that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the "Order Sought").
Under the Process for Cease to be a Reporting Issuer Applications:
(a) the Autorité des marchés financiers (Québec) is the principal regulator for this application,
(b) the Filer has provided notice that section 4C.5(1) of Regulation 11-102 Passport System ("Regulation 11-102") is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, and
(c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and, in Québec, in Regulation 14-501Q on definitions have the same meaning if used in this order, unless otherwise defined.
Representations
This order is based on the following facts represented by the Filer:
1. The Filer is a corporation governed by the laws of the State of Wisconsin, with its head office in Sussex, Wisconsin;
2. The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (collectively, the "Reporting Jurisdictions");
3. On July 2, 2010, the Filer became a reporting issuer in the Reporting Jurisdictions pursuant to a court-approved plan of arrangement between the Filer and World Color Press Inc., a Canadian corporation who was then a reporting issuer in the Reporting Jurisdictions;
4. On March 1, 2012, the Filer divested its Canadian operations and assets;
5. The Filer is not in default of securities legislation in any jurisdiction in Canada;
6. The securities of the Filer have never been traded in Canada on any marketplace or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;
7. The Filer's authorized capital consists of 105,000,000 shares of Class A Stock ("Class A Stock"), 80,000,000 shares of Class B Stock ("Class B Stock"), 20,000,000 shares of class C stock ("Class C Stock") and 500,000 shares of preferred stock ("Preferred Stock");
8. As of the date hereof, the Filer's outstanding capital stock consists of 40,311,826 shares of Class A Stock, 13,556,858 shares of Class B Stock, and no shares of Class C Stock or Preferred Stock are outstanding;
9. The Filer's Class A Stock are registered under the United States Securities Exchange Act of 1934 (the "1934 Act"). The Class A Stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "QUAD";
10. There is no public trading market for the Class B Stock;
11. Under the Filer's Omnibus Plan (the "Omnibus Plan") an aggregate of 12,671,652 shares of Class A Stock are reserved for issuance. Awards under the Omnibus Plan may consist of restricted stock awards (RSAs), restricted stock units (RSUs), stock options, deferred stock units (DSUs), incentive awards, stock appreciation rights, performance share and performance share unit awards (collectively, "Equity Awards");
12. As of the date hereof, there are no Equity Awards that were granted to or held by Canadian residents;
13. The Filer is subject to and is in compliance with all requirements applicable to it imposed by the Securities and Exchange Commission ("SEC"), the United States Securities Act of 1933, the 1934 Act, and the rules of the NYSE (collectively, the "US Rules"), and it complies with all of them;
14. The Filer qualifies as an "SEC foreign issuer" under Regulation 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers ("71-102") and as such relies on and complies with the exemptions from Canadian continuous disclosure requirements afforded to SEC foreign issuers under Part 4 of 71-102;
15. The Filer is not eligible to use the simplified procedure under Policy Statement 11-206 Process for Cease to be a Reporting Issuer Applications since its outstanding securities are beneficially owned by more than 15 securityholders in each of the jurisdictions of Canada and by more than 51 securityholders in total worldwide and its securities are traded in another country on a marketplace;
16. In the 12 months before applying for this order, the Filer has not taken any steps that indicate there is a market for its securities in Canada, including conducting a prospectus offering in Canada, establishing or maintaining a listing on an exchange in Canada or having its securities traded on a marketplace or any other facility in Canada for bringing together buyers and sellers where trading data is publicly reported;
17. The Filer does not currently anticipate offering its securities in Canada at any time in the future;
18. The Class A Stock will remain listed on the NYSE, and the Filer will be subject to the periodic and timely disclosure requirements under the US Rules;
19. On April 28, 2014, the Filer completed an offering of USD$300,000,000 aggregate principal amount of its unsecured 7.00% senior notes due May 1, 2022 (the "Notes");
20. The Notes do not constitute voting or equity securities in the capital of the Filer and are not convertible into or exchangeable for voting or equity securities;
21. The Notes were issued to qualified institutional buyers in the United States and the Notes were not initially offered, issued or sold by the Filer in any jurisdiction in Canada;
22. As of the date hereof, the Filer continues to have USD$243,477,000.00 aggregate principal amount of Notes outstanding;
23. The Notes have not been listed for trading on any stock exchange or marketplace.
24. The Filer has made a diligent enquiry to confirm the residency of the holders of its outstanding securities as of the date hereof. More specifically, the Filer has:
a. conducted a thorough review of its internal corporate records for the Class A Stock, the Class B Stock, the Equity Awards and the Notes;
b. requested information from American Stock Transfer & Trust Company, the transfer agent for the Filer's Class A Stock (the "Transfer Agent"), regarding the record holders and registered ownership of the Filer's Class A Stock;
c. obtained geographical analysis of the beneficial holders of the Class A Stock and the Notes from Broadridge Financial Solutions Inc. ("Broadridge"); and
d. examined the Transfer Agent's and Broadridge reports for any indication of shareholdings, of record or beneficially, in Canada.
25. The diligent enquiry reveals that:
a. 484,777 shares of Class A Stock (representing approximately 1.20% of the total issued and outstanding shares of Class A Stock) are held by 482 residents of Canada (representing approximately 1.68% of holders of Class A Stock worldwide);
b. no Class B Stock are held by residents of Canada
c. no Equity Awards are held by any residents of Canada;
d. five Notes representing an aggregate principal amount of approximately USD$2,870,000 (representing approximately 1.18% of the aggregate principal amount of USD$243,477,000 under the Notes) are held by five residents of Canada (representing approximately 0.16% of holders of Notes worldwide); and
e. 487 securityholders of the Filer reside in Canada which represents approximately 1.53% of securityholders worldwide.
26. Based on the foregoing, residents of Canada do not directly or indirectly beneficially own more than 2% of each class or series of outstanding securities (including debt securities) of the Filer worldwide, and do not directly or indirectly comprise more than 2% of the total number of securityholders of the Filer worldwide;
27. In a news release disseminated on October 1, 2019, the Filer has provided advance notice to Canadian resident securityholders that it will apply for an order to cease to be a reporting issuer in the Reporting Jurisdictions and, if the Order Sought is granted, the Filer will no longer be a reporting issuer in any jurisdiction in Canada;
28. The Filer has undertaken to each of the Decision Makers to concurrently deliver to its Canadian securityholders all disclosure the Filer would be required to deliver to U.S. resident securityholders under the US Rules;
29. All public documents of the Filer are available on the Filer's EDGAR profile under the filings section of the SEC website (www.edgar.gov);
30. Upon the grant of the Order Sought, the Filer will no longer be a reporting issuer in any jurisdiction of Canada;
Order
Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.
The decision of the Decision Makers under the Legislation is that the Order Sought is granted.