Emerald Technology Ventures AG - s. 10.1 of OSC Rule 35-502 Non Resident Advisers
Headnote
Application for a ruling pursuant to section 10.1 of Rule 35-502 -- Non Resident Advisers for relief from the requirement under section 6.1 of Rule 35-502, that the Applicant, once registered as an international adviser in Ontario, only act as an adviser in Ontario for "permitted clients", as such term is defined in section 1.1 of Rule 35-502.
Rules Cited
Ontario Securities Commission Rule 35-502 -- Non Resident Advisers, ss. 1.1, 6.1, 10.1.
IN THE MATTER OF
THE SECURITIES ACT, R.S.O. 1990,
CHAPTER S.5, AS AMENDED (THE ACT)
AND
IN THE MATTER OF
EMERALD TECHNOLOGY VENTURES AG
ORDER
(Section 10.1 of Ontario Securities Commission
Rule 35-502 Non Resident Advisers)
UPON the application of Emerald Technology Ventures AG (Emerald) to the Ontario Securities Commission (the Commission) for a ruling pursuant to section 10.1 of Commission Rule 35-502 -- Non Resident Advisers (Rule 35-502) for relief from the requirement under section 6.1 of Rule 35-502, that Emerald, once registered as an international adviser in Ontario, only act as an adviser in Ontario for "permitted clients", as such term is defined in section 1.1 of Rule 35-502. The relief being sought would allow Emerald to act as an adviser in respect of a portfolio of private equity investments (the Portfolio) held by OPG Ventures Inc. (OPGV), a wholly-owned subsidiary of Ontario Power Generation Inc. (OPG), notwithstanding that OPGV does not meet the criteria for a "permitted client" in Rule 35-502.
AND UPON considering the application and the recommendation of the staff of the Commission;
AND UPON Emerald having represented to the Commission as follows:
1. Emerald is a corporation governed by the laws of Switzerland. Its head office is located in Zurich, Switzerland.
2. Emerald is a private, independent venture capital fund focused on the rapidly emerging clean technology investment sector, and in particular innovative technologies in energy, materials and water. Its clients include leading financial institutions and multinational corporations.
3. Emerald was founded in 2007 by the nine-member management team of the private equity business of SAM Sustainable Asset Management AG (SAM).
4. Under a Share and Asset Purchase Agreement dated February 22, 2007 between Emerald and SAM, Emerald will acquire all the assets and liabilities of SAM's private equity business, including its mandate in respect of the Portfolio, as well as all 16 employees engaged in SAM's private equity business.
5. On April 1, 2005, SAM was granted relief from the requirement under section 6.1 of the Rule that it act as an adviser only for "permitted clients", to allow it to provide advice with respect to the Portfolio.
6. Emerald proposes to succeed SAM as adviser in respect of the Portfolio and is consequently seeking registration in Ontario as an adviser in the category of international adviser.
7. The Portfolio had a total book value of approximately $23.2 million as of December 31, 2006 and is held by OPGV, a corporation incorporated under the laws of Ontario with its head office located in Toronto.
8. OPGV is a wholly-owned subsidiary of OPG, a corporation incorporated under the laws of Ontario with its head office located in Toronto.
9. All of OPG's issued and outstanding common shares are owned by the Province of Ontario. OPG had total assets of approximately $22.75 billion and shareholders' equity of approximately $5.75 billion as of December 31, 2006.
10. OPG's principal business is the generation and sale of electricity in Ontario. OPG's electricity generating portfolio, which includes nuclear, fossil-fuel, hydroelectric and wind stations, has a total capacity of over 22,000 megawatts, making OPG one of the largest power generators in North America.
11. OPG is the sole shareholder of OPGV and the sole source of capital for OPGV. OPG assumes the full risk of the capital provided to OPGV.
12. OPGV's principal business is to provide financial returns and growth opportunities for OPG by investing in private companies, primarily in the United States and Europe, that develop or commercialize emerging energy technologies.
13. OPG provides financial reporting, accounting and cash management services for OPGV and for financial reporting purposes OPGV's results are consolidated with those of OPG.
14. All members of OPGV's board of directors are senior OPG executives and all OPGV staff are seconded OPG employees.
15. OPG separated its venture capital activities from its main business of power generation and sale to allow for streamlined decision making and ease of tracking financial returns from the venture capital investments.
16. Pursuant to section 6.1 of the Rule, if registered in Ontario as an international adviser, Emerald could act as an adviser in Ontario only for "permitted clients" as defined in section 1.1 of the Rule.
17. "Permitted clients" include corporations that have shareholders' equity of at least $100 million on a consolidated basis (the Shareholders' Equity Requirement).
18. Although OPG meets the Shareholders' Equity Requirement, OPGV, its wholly-owned subsidiary, does not meet this requirement.
IT IS ORDERED pursuant to section 10.1 of Rule 35-502 that Emerald, once registered in Ontario in the category of international adviser, shall be permitted to act as an adviser to OPGV in the circumstances described herein, notwithstanding the requirement under section 6.1 of Rule 35-502 that an international adviser may only act as an adviser in Ontario for "permitted clients" as defined in section 1.1 of Rule 35-502.
May 17, 2007
"David M. Gilkes"