Brookfield Asset Management Ltd. – s. 6.1 of NI 62-104

Headnote

Section 6.1 of NI 62-104 -- Issuer bid -- relief from requirements applicable to issuer bids in Part 2 of NI 62-104 -- issuer proposes to acquire 2,000,000 of its class A limited voting shares from its parent company in connection with the establishment of its escrowed stock plan -- the consideration that will be paid by the issuer for its class A limited voting shares will be a discounted price to the closing price of the shares on the day prior to the closing date -- the escrowed stock plan received the shareholder approval required by the TSX rules -- the purchase of class A limited voting shares was approved by the issuer's board -- the purchase is de minimis, representing less than 1% of the issuer's issued and outstanding class A limited voting shares -- the issuer announced the proposed purchase of class A limited voting shares in a news release, subject to regulatory approval -- requested relief granted, subject to conditions.

Statutes Cited

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

IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990, c.S.5, AS AMENDED

AND

IN THE MATTER OF
BROOKFIELD ASSET MANAGEMENT LTD.

ORDER

(Section 6.1 of National Instrument 62-104)

UPON the application (the "Application") of Brookfield Asset Management Ltd. (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to Section 6.1 of National Instrument 62-104 Take-Over Bids and Issuer Bids ("NI 62-104") exempting the Issuer from the requirements applicable to issuer bids in Part 2 of NI 62-104 (the "Issuer Bid Requirements") in connection with the proposed purchase (the "Proposed Purchase") by the Issuer of 2,000,000 Class A Limited Voting Shares of the Issuer (the "Subject Shares") from Brookfield Corporation ("BN") for the purpose of administering the Escrowed Stock Plan (as defined below);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Issuer having represented to the Commission that:

1. The Issuer is a corporation existing and in good standing under the Business Corporations Act (British Columbia).

2. The Issuer's head office is located at Brookfield Place, 250 Vesey Street, 15th Floor, New York, New York, 10281-0221, United States and its registered office is located at 1055 West Georgia Street, 1500 Royal Centre, P.O. Box 11117, Vancouver, British Columbia, V6E 4N7.

3. The authorized share capital of the Issuer consists of:

(a) an unlimited number of Class A Limited Voting Shares ("Issuer Shares"), of which there were 1,637,198,026 Issuer Shares issued and outstanding as of February 14, 2025;

(b) 21,280 Class B Limited Voting Shares ("Class B Shares"), of which there were 21,280 issued and outstanding as of February 14, 2025; and

(c) an unlimited number of Class A Preference Shares, issuable in series, none of which are issued and outstanding.

4. The Issuer Shares are listed on the New York Stock Exchange (the "NYSE") and the Toronto Stock Exchange (the "TSX") under the symbol "BAM".

5. The Class B Shares are held by a trust, the beneficial interests of which, and the voting interests in its trustee, are held one-third by Mr. Bruce Flatt, one-third by Mr. Jack L. Cockwell and one-third jointly by Messrs. Brian W. Kingston, Brian D. Lawson, Cyrus Madon, Samuel J. B. Pollock and Sachin Shah in equal parts.

6. The Issuer is a reporting issuer in each of the provinces and territories of Canada and is not in default of any requirement of securities legislation in the jurisdictions in which it is a reporting issuer.

7. BN is a corporation existing and in good standing under the Business Corporations Act (Ontario).

8. BN's registered and head office is located at Suite 100, Brookfield Place, 181 Bay Street, Toronto, Ontario, M5J 2T3.

9. On May 12, 2022, BN announced that it would separately list and distribute a 25% interest in its asset management business (the "Asset Management Business") to its shareholders (the "Spin-out"). In connection with the Spin-out, BN established and transferred the Asset Management Business to the Issuer and distributed Issuer Shares to BN shareholders. The Spin-out was approved at the special meeting of shareholders of BN that was held on November 9, 2022 (the "2022 Special Meeting") and completed on December 9, 2022.

10. On October 31, 2024, the Issuer entered into an agreement with BN to undertake a transaction (the "Arrangement") whereby BN would exchange all of its common shares of Brookfield Asset Management ULC ("BAM ULC") representing an approximate 73% interest in BAM ULC for Issuer Shares representing an approximate 73% interest in the Issuer on a one-for-one basis. On February 4, 2025, the Arrangement was completed, and BN now holds, directly and indirectly, 1,194,021,145 Issuer Shares.

11. The Issuer has a share compensation arrangement (the "Escrowed Stock Plan") for its designated executives to further align their interests with those of the Issuer's shareholders in a manner that is less dilutive than alternative long-term ownership plans.

12. The Escrowed Stock Plan constitutes a "security-based compensation arrangement" under applicable TSX rules. The Escrowed Stock Plan received the shareholder approval required by the TSX rules at the 2022 Special Meeting.

13. Pursuant to the Escrowed Stock Plan:

(a) the Issuer forms a new subsidiary (the "ESPco") and capitalizes it with cash in exchange for common shares and preferred shares of the ESPco;

(b) the ESPco uses the cash to acquire Issuer Shares;

(c) the Issuer grants to each of its designated executives a specified amount of non-voting common shares of the ESPco (the "Escrowed Shares");

(d) Escrowed Shares are generally expected to vest as to 20% each year over five years from the grant date, subject to the designated executive's continued employment with the Issuer;

(e) following the vesting date of the Escrowed Shares, generally up to a maximum of 10 years from the initial grant date, each designated executive will be entitled to receive from the Issuer in exchange for their respective Escrowed Shares, new Issuer Shares with a value equal to the then net asset value of the Escrowed Shares. The net asset value will be the amount by which the Issuer Shares held by the ESPco have appreciated from the date the Escrowed Stock Plan is established based on the volume-weighted average price of Issuer Shares on the NYSE on the date of the exchange; and

(f) after the exchange of the Escrowed Shares for new Issuer Shares, the ESPco will be wholly owned by the Issuer and will be wound up, as a result of which, the Issuer Shares held by the ESPco will be cancelled, resulting in no net dilution to existing shareholders of the Issuer. Dividends on the Issuer Shares held by the ESPco will be used to pay dividends on the preferred shares of the ESPco that are issued to the Issuer to capitalize the ESPco.

14. The Issuer Shares owned by the ESPco will not be voted.

15. The Issuer has proposed to BN that the ESPco purchase the Subject Shares from BN on February 24, 2025 (the "Closing Date") at a price equal to the lesser of (a) 96% of the average volume weighted trading price of the Issuer Shares on the NYSE for the 5 trading days preceding the Closing Date and (b) the closing price of the Issuer Shares on the NYSE on the day preceding the Closing Date (the "Purchase Price"). BN has irrevocably offered to sell the Subject Shares to the ESPco at the Purchase Price on the Closing Date.

16. The Proposed Purchase amounts to an issuer bid by the Issuer because the purchase of the Issuer Shares is being initiated by the Issuer in order to establish the Escrowed Stock Plan and will be made by the ESPco at the direction of the Issuer, and the Issuer Shares that are acquired by the ESPco will ultimately be cancelled by the Issuer.

17. The Proposed Purchase is subject to approval by the board of directors of the Issuer ("Board") based on a recommendation by the Governance, Nominating and Compensation Committee (the "Committee"), which consists entirely of independent directors.

18. The Board has determined that:

(a) the Proposed Purchase is not prejudicial to the shareholders of the Issuer and will not adversely affect the Issuer or its shareholders; and

(b) the Escrowed Stock Plan is in the best interests of the Issuer and its shareholders, and that the Proposed Purchase is the best way to obtain Issuer Shares for the Escrowed Stock Plan, as the Proposed Purchase does not remove the Subject Shares from the Issuer's public float and allows the Issuer to purchase the Subject Shares at a discounted price.

19. The Subject Shares represent less than 0.15% of the issued and outstanding Issuer Shares, an amount that is not material to the Issuer from a financial perspective.

20. The Subject Shares represent 0.1% of BN's post-Arrangement ownership and the Proposed Purchase will not have any material effect on the control of the Issuer.

21. As of the Closing Date, the Issuer would be able to rely on the "liquid market" exemption from the formal valuation requirement set out in section 3.4 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (the "Liquid Market Exemption").

22. The purchase of the Subject Shares will be funded by available liquidity and will not impose an imprudent financial burden on the Issuer.

23. The Issuer, the ESPco, and BN will not complete the Proposed Purchase at any time that either of them is aware of any "material change" or "material fact" (each as defined in the Securities Act (Ontario)) in respect of the Issuer, BN, or the Issuer Shares that has not been generally disclosed.

24. Other than the Purchase Price, no additional fee or other consideration will be paid by the Issuer or the ESPco in connection with the purchase of the Subject Shares.

25. The Issuer announced its intention to purchase the Subject Shares from BN in connection with the administration of the Escrowed Stock Plan in a press release that was published on February 12, 2025.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 6.1 of NI 62-104 that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchase, provided that:

(a) at the time of the Proposed Purchase, neither the Issuer, the ESPco, nor BN is aware of any "material change" or "material fact" (each as defined in the Securities Act (Ontario)) in respect of the Issuer, BN, or the Issuer Shares that has not been generally disclosed;

(b) the value of the consideration paid for the Subject Shares is not in excess of a price equal to the lesser of (a) 96% of the average volume weighted trading price of the Issuer Shares on the NYSE for the 5 trading days preceding the Closing Date and (b) the closing price of the Issuer Shares on the NYSE on the day preceding the Closing Date;

(c) as at the Closing Date, the Board remains of the view that the Liquid Market Exemption is available to the Issuer in respect of the Proposed Purchase; and

(d) other than the Purchase Price, no additional fee or other consideration will be paid by the Issuer or the ESPco in connection with the purchase of the Subject Shares.

DATED at Toronto, Ontario this 24th day of February, 2025.

"David Mendicino"
Manager, Mergers & Acquisitions
Ontario Securities Commission