FG Acquisition Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the formal valuation and minority approval requirements in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions -- issuer is a special purpose acquisition corporation that will have no operations and generate no operating revenues until it completes its qualifying acquisition -- issuer's authorized capital consists of class A restricted voting shares which are entitled to be redeemed at the election of the holder prior to the completion of the qualifying acquisition for an amount equivalent to their initial investment, and class B shares that do not have any redemption rights but which have the residual right to share in the assets of the issuer on liquidation or dissolution -- the entirety of the gross proceeds from the initial public offering of the class A restricted voting shares were put into an escrow account to be used to, among other things, satisfy any redemptions in respect of the restricted voting shares and fund the qualifying acquisition -- the class B shares do not have access to, and cannot benefit from, the funds in the escrow account -- only the class A restricted voting shares are listed and posted for trading on an exchange -- relief granted subject to conditions, including that the related party transaction constituting the issuer's qualifying acquisition would qualify for the 25% market capitalization exemption if the class A restricted voting shares represented all of the outstanding equity securities of the issuer.

Applicable Legislative Provisions

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, ss. 5.4, 5.6, and 9.1(2).

July 14, 2023

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

IN THE MATTER OF FG ACQUISITION CORP. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") that the Filer be granted an exemption pursuant to section 9.1 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") from the minority approval and formal valuation requirements under Part 5 of MI 61-101 as they would apply to the Proposed Transaction (as defined below), which transaction constitutes a related party transaction for the purposes of MI 61-101 (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in Alberta, Manitoba, and New Brunswick.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and MI 61-101 have the same meaning if used in this decision, unless otherwise defined. For the purpose of this decision, the following terms have the meaning ascribed to them:

"Extension" means one or more extensions to the allowable time period within which the Filer must consummate its qualifying acquisition, to up to a maximum of 36 months from the closing date of the Filer's IPO, that has been approved by ordinary resolution of the holders of the Class A Restricted Voting Shares and that is also approved by the board of directors of the Filer;

"Extension Redemption Price" shall mean an amount per Class A Restricted Voting Share equal to: (A) the pro-rata portion (per Class A Restricted Voting Share) of: (i) the Escrowed Funds available in the Filer's escrow account at the time of the meeting of the shareholders of the Filer at which an Extension is approved, including any interest and other amounts earned thereon, less (ii) an amount equal to the total of (a) applicable taxes payable by the Filer on such interest and other amounts earned in the Filer's escrow account, and (b) actual and expected expenses directly related to the redemption (and for greater certainty, such amount will not be reduced by the deferred underwriting commissions per Class A Restricted Voting Share held in the Filer's escrow account), each as reasonably determined by the Filer, less (B) any taxes of the Filer (including under Part VI.1 of the Income Tax Act (Canada)), as reasonably determined by the Filer arising in connection with the redemption of the Class A Restricted Voting Shares divided by the number of shares being redeemed;

"qualifying acquisition" shall have the meaning ascribed to such term in the TSX Company Manual;

"Qualifying Acquisition Redemption Price" shall mean an amount per Class A Restricted Voting Share equal to the pro-rata portion (per Class A Restricted Voting Share) of: (A) the Escrowed Funds available in the Filer's escrow account at the time immediately prior to the redemption deposit deadline, including interest and other amounts earned thereon; less (B) an amount equal to the total of (i) applicable taxes payable by the Filer on such interest and other amounts earned in the Filer's escrow account, and (ii) actual and expected expenses directly related to the redemption, each as reasonably determined by the Filer. For greater certainty, such amount will not be reduced by the amount of any tax of the Filer under Part VI.1 of the Income Tax Act (Canada) or the deferred underwriting commission per Class A Restricted Voting Share held in the Escrow Account;

"SPAC" shall mean a special purpose acquisition corporation; and,

"TSX" shall mean the Toronto Stock Exchange.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a SPAC incorporated on October 25, 2021 under, and governed by the laws of, the Province of British Columbia. The Filer was formed for the purpose of effecting its qualifying acquisition pursuant to the acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, share exchange, asset acquisition, share purchase, reorganization, or any other similar business combination involving the Filer. From the time of the Filer'sinitial public offering (the "IPO") and until such time as the Filer completes its qualifying acquisition, the Filer has not had any operations and has generated no operating revenues. The Filer is in good standing under its incorporation statute.

2. The Filer's head office is located at 510 West Georgia Street, Suite 1800, Vancouver, BC V6B 0M3.

3. The Filer is a reporting issuer (or the equivalent thereof) in each of the provinces and territories of Canada (other than Quebec) and is not in default of securities legislation in any jurisdiction.

4. Pursuant to the approval of an Extension by holders of the Class A Restricted Voting Shares (as defined below) at a special meeting of shareholders of the Filer held on June 29, 2023 (the "Meeting") and by the Filer's board of directors the Filer has until July 5, 2024 to close a qualifying acquisition. If a qualifying acquisition is not completed by July 5, 2024 and the Filer does not receive shareholder approval to further extend its "permitted timeline" prior to that date, the Filer will be required to liquidate.

5. The authorized capital of the Filer consists of an unlimited number of Class A restricted voting shares (the "Class A Restricted Voting Shares"), an unlimited number of Class B shares (the "Class B Shares"), an unlimited number of common shares (the "Common Shares") and an unlimited number of proportionate voting shares (the "Proportionate Voting Shares"), each without nominal or par value. As at July 3, 2023, the Filer had 11,500,000 Class A Restricted Voting Shares issued and outstanding, and 2,875,000 Class B Shares issued and outstanding. The Class A Restricted Voting Shares comprised part of the Class A restricted voting units offered to the public pursuant to the final long-form prospectus of the Filer dated April 28, 2022. The Class B Shares were issued to FGAC Investors LLC and CG Investments VII Inc., the Filer's sponsors (the "Sponsors"), in connection with the Filer's IPO. FGAC Investors LLC currently holds 2,555,925 Class B Shares and CG Investments VII Inc. currently holds 319,075 Class B Shares, representing in the aggregate 100% of the outstanding Class B Shares and 20% of the outstanding Class A Restricted Voting Shares and Class B Shares.

6. The entirety of the gross proceeds from the Class A Restricted Voting Shares offered under the IPO were put into the Filer's escrow account (the "Escrowed Funds") to be used to, inter alia, satisfy the payment of the Extension Redemption Price or the Qualifying Acquisition Redemption Price (the Extension Redemption Price and the Qualifying Acquisition Redemption Price, as applicable, the "Redemption Price") due to holders of Class A Restricted Voting Shares upon the exercise of the redemption rights attached to the Class A Restricted Voting Shares, and fund the qualifying acquisition. Any Escrowed Funds which are not used to consummate the qualifying acquisition will be disbursed to the Filer and will, along with any other amounts not expended prior to the consummation of the qualifying acquisition, be used to fund general ongoing expenses of the resulting issuer.

7. Provided that holders of Class A Restricted Voting Shares adhere to the specified timing requirements, such holders are entitled to redeem all or a portion of their Class A Restricted Voting Shares, whether they vote for or against, or do not vote on, the qualifying acquisition for the applicable Redemption Price per Class A Restricted Voting Share. The applicable Redemption Price is payable in cash from the Escrowed Funds, and upon such payment, the holders of Class A Restricted Voting Shares will have no further rights in respect of the Class A Restricted Voting Shares. Any Class A Restricted Voting Shares that are not redeemed will be automatically converted immediately following the closing of the qualifying acquisition into Common Shares on the basis of one Common Share for each Class A Restricted Voting Share converted.

8. The net proceeds from the issuance of the Class B Shares offered to the Sponsors were not put into the Filer's escrow account and may be used towards the Filer's general ongoing expenses and funding the identification and completion of a qualifying acquisition. The holders of Class B Shares do not have access to, and cannot benefit from, the Escrowed Funds, and accordingly, do not have any redemption rights.

9. The Filer intends to file articles of amendment to amend the terms of the Class B Shares such that the Class B Shares (other than the Exchange Preferred Shares discussed below) are convertible into Common Shares (rather than Proportionate Voting Shares) of the Filer upon the closing of a qualifying acquisition, which has been approved by the requisite number of shareholders at the Meeting.

10. The Filer and the Sponsors have entered into a business combination agreement dated as of May 12, 2023 with ThinkMarkets to acquire all of the issued and outstanding shares of ThinkMarkets (the "Qualifying Acquisition"). In connection with the closing of the Qualifying Acquisition, up to 2,000,000 Class B Shares (which the Sponsors beneficially own and exercise control and direction over) will be exchanged for a new class of exchange preferred shares (the "Exchange Preferred Shares") of the Filer. The terms of the Exchange Preferred Shares are described in the Filer's preliminary non-offering prospectus dated May 12, 2023. Notably, the Exchange Preferred Shares will be convertible into Common Shares having a value equal to U.S.$11.50 per share (based on the 20-day volume weighted average price of the common shares on the TSX, or such other exchange on which the common shares may subsequently be listed, at such time), or a maximum aggregate value of U.S.$23,000,000.

11. The proposed exchange of up to 2,000,000 Class B Shares for Exchange Preferred Shares (the "Proposed Transaction") will be an acquisition of shares of the Filer from the Sponsors and constitutes a related party transaction under MI 61-101 that would require the Filer obtain a formal valuation and minority approval (the "Minority Protections"), unless an exemption is available.

12. A related party transaction that is subject to MI 61-101 may be exempt from the Minority Protections if, at the time the transaction is agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, exceeds 25% of the issuer's market capitalization (the "Transaction Size Exemption").

13. The Filer may not be entitled to rely on the Transaction Size Exemption because the definition of market capitalization is calculated with reference to the aggregate market price of all outstanding equity securities of the Filer.

14. For the purposes of MI 61-101, an equity security is a security that carries a residual right to participate in the earnings of the issuer and, on liquidation or winding-up of the issuer, in its assets. The Class A Restricted Voting Shares do not meet the definition of an "equity security" under MI 61-101 because they are redeemable for a fixed amount equal to a pro rata portion of the funds held in escrow by the SPAC and do not have a residual right to share in the assets of the Filer on a liquidation or dissolution. This redemption feature is unique to the SPAC structure and is required by the rules of the TSX. Prior to the completion of the Qualifying Acquisition, the residual right to share in the assets of the Filer on liquidation or dissolution rests with the Class B Shares. If the Class B Shares were used to calculate the market capitalization, the Transaction Size Exemption may not be available.

15. The Class A Restricted Voting Shares are listed and posted for trading on the TSX under the trading symbol "FGAA.U". The Class B Shares are not listed on any public stock exchange and prior to the completion of a qualifying acquisition, are not transferable absent TSX consent. For the purposes of the TSX and public shareholders, the aggregate market value of the Class A Restricted Voting Shares represents the market capitalization of the Filer.

16. If the market capitalization of the Filer was calculated on the basis of the outstanding Class A Restricted Voting Shares representing all of the outstanding equity securities of the Filer as of the close of business on the last business day of the calendar month preceding the calendar month in which the Proposed Transaction was agreed to, it would be U.S.$116,725,000 and thus, the Proposed Transaction would represent approximately 19.7% of the Filer's market capitalization.

17. The Filer has included in the amended and restated material change report filed June 26, 2023, in connection with the Proposed Transaction, and in its preliminary non-offering prospectus dated May 12, 2023, and will include in its final non-offering prospectus filed in connection with the Qualifying Acquisition, a statement that it has applied for the Exemption Sought and a description of the substance and effects of the Exemption Sought, if granted.

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 provided that:

a) the Proposed Transaction would qualify for the Transaction Size Exemption contained in MI 61-101 if the Class A Restricted Voting Shares represented all of the outstanding equity securities of the Filer;

b) any disclosure document provided to holders of Class A Restricted Voting Shares in connection with the Proposed Transaction and the Qualifying Acquisition (as described above), includes a statement that the Filer has applied for, and been granted, the Exemption Sought, and a description of the substance and effects of the Exemption Sought; and

c) there be no material change to the terms of the Class A Restricted Voting Shares, including the conversion rights associated therewith, as described above and in the Filer's amended and restated notice of articles and articles dated March 30, 2022.