Gaz Métro inc.
Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Filer applied for a variation of a decision so that it can continue to file financial statements in accordance with Canadian GAAP in Part V of the CICA Handbook for periods beginning on October 1, 2014 and ending on September 30, 2015 -- Relief previously granted to the Filer for financial years commencing October 1, 2012 and ending September 30, 2014 -- The Canadian Accounting Standards Board decided that entities with activities subject to rate regulation will only be required to adopt International Reporting Standards (IFRS) for annual periods beginning on or after January 1, 2015 -- The Filer is seeking relief from the requirements in Part 3 of NI 52-107 Acceptable Accounting Principles and Auditing Standards to defer the mandatory IFRS changeover date to January 1, 2015 -- Relief granted, subject to conditions.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.
May 5, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF GAZ MÉTRO INC. (the Filer)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer to review the decision issued on February 6, 2013 under the securities legislation of the Jurisdictions (the Legislation) that exempted the Filer from the requirements, in section 3.2 of Regulation 52-107 respecting Acceptable Accounting Principles and Auditing Standards (Regulation 52-107), to establish its financial statements in accordance with Canadian generally accepted accounting principles (Canadian GAAP) as set out in Part V of the Chartered Professional Accountants Canada Handbook -- Accounting (the Handbook) entitled Pre-changeover accounting standards, for the years commencing on October 1, 2012 and October 1, 2013 and ending respectively on September 30, 2013 and September 30, 2014 (the Deferral Decision).
The Filer requests that the Decision Maker review the Deferral Decision in order to allow the Filer to defer the mandatory International Financial Reporting Standards (IFRS) changeover date stipulated in Regulation 52-107 to January 1, 2015 and to use this additional one-year deferral for the financial year commencing on October 1, 2014 and ending on September 30, 2015 (the Modification Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers is the principal regulator for this application;
(b) the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the Passport Jurisdictions); and
(c) this decision is the decision 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, Regulation 51-102 respecting Continuous Disclosure Obligations or Regulation 52-107 have the same meaning if used in this decision, unless otherwise defined herein.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation existing under the Business Corporations Act (Québec), R.S.Q., c. S-31.1. The head office of the Filer is in Montréal, Québec.
2. The Filer is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions and is not in default of securities legislation in any jurisdiction.
3. The Filer has "activities subject to rate regulation" as defined in the Accounting Guideline AcG-19 Disclosures by entities subject to rate regulation (AcG-19) -- Part V of the Handbook.
4. On October 1, 2010, the Canadian Accounting Standards Board (AcSB) issued modifications to Part 1 of the Handbook, International Financial Reporting Standards, allowing a deferral of one year of the mandatory IFRS changeover date for entities with qualifying rate-regulated activities. These modifications allowed those entities, as defined in AcG-19 -- Part V of the Handbook, to defer the adoption of IFRS to the years commencing on or after January 1, 2012.
5. As a "qualifying entity" for the purposes of section 5.4 of Regulation 52-107 , the Filer was permitted by that provision to prepare its financial statements for its financial year commencing October 1, 2011 and ending September 30, 2012 in accordance with Canadian GAAP as set out in Part V of the Handbook.
6. On July 11, 2011, the Filer obtained a decision from the Decision Maker under the Legislation of each Jurisdiction that exempted the Filer from the requirements under section 3.2 of Regulation-52-107 to provide its financial statements in accordance with Canadian GAAP that apply to publicly accountable enterprises and authorized the Filer to provide its financial statements in accordance with generally accepted accounting principles in the United States of America for its financials years commencing on or after January 1, 2012 but before January 1, 2015.
7. In March 2012, the AcSB decided to defer the mandatory IFRS changeover date for an additional year for entities with qualifying rate-regulated activities, such that those entities would only be required to adopt IFRS for the years commencing on or after January 1, 2013.
8. In October 2012, the AcSB decided to defer the mandatory IFRS changeover date for another year for entities with qualifying rate-regulated activities. Thus, the entities subject to rate regulation as defined in AcG-19 -- Part V of the Handbook are only required to adopt IFRS for the years commencing on or after January 1, 2014.
9. In March 2013, the AcSB decided to defer the mandatory IFRS changeover date for an additional year for entities with qualifying rate-regulated activities, allowing such entities to adopt IFRS for years commencing on or after January 1, 2015.
10. The AcSB decisions issued in March 2012, October 2012 and March 2013 to extend the deferral of the mandatory IFRS changeover date for additional three years for entities with qualifying rate-regulated activities are not currently reflected in Regulation 52-107 and other regulations regarding continuous disclosure requirements. The Filer wants to take advantage of this third deferral and therefore requests that it be permitted to establish its financial statements in accordance with Canadian GAAP as set out in Part V of the Handbook, for the year commencing on October 1, 2014 and ending on September 30, 2015.
Decision
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Modification Sought is granted under the following conditions:
1. The Filer remains an "entity subject to rate regulation" as defined in AcG-19 -- Part V of the Handbook.
2. As a "qualifying entity" within the meaning of section 5.4 of Regulation 52-107 , the Filer can apply Part 3 of Regulation 52-107 to all financial statements, financial information, operating statements and pro forma financial statements as if the expression "January 1, 2011" in subsection 3.1(2) of Regulation 52-107 were read as "January 1, 2015".
3. If the Filer relies on the above paragraph in respect of a period, Part 4 of the Regulation applies as if the expression "January 1, 2011" in subsection 4.1(2) were read as "January 1, 2015".