Genworth Financial Inc. and Genworth MI Canada Inc.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- reporting insider granted relief from the requirement, in subsection 107(2) of the Securities Act (Ontario) and section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions, to file an insider report within five days of each disposition of securities occurring pursuant to an automatic securities disposition plan, provided that the insider files an insider report in respect of all dispositions under the automatic securities disposition plan on an annual basis in accordance with section 5.4 of National Instrument 55-104 Insider Reporting Requirements and Exemptions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 107(2), 121(2)(a)(ii).
National Instrument 55-104 Insider Reporting Requirements and Exemptions, ss. 3.3. 10.1.
May 5, 2015
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 GENWORTH FINANCIAL, INC. (THE "INSIDER") AND GENWORTH MI CANADA INC. (THE "COMPANY", AND TOGETHER WITH THE INSIDER, THE "FILERS")
DECISION
Background
The securities regulatory authority or regulator in the Jurisdiction (the "Decision Maker") has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") exempting the Insider from the requirements under subsection 107(2) of the Securities Act (Ontario) (the "Act") and section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions ("NI 55-104") in connection with the disposition of common shares of the Company (the "Shares") beneficially owned by the Insider pursuant to an automatic securities disposition plan (the "Exemption Sought"), subject to certain conditions.
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 Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Manitoba, Saskatchewan, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and the Yukon.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
1. The Company is a corporation existing under the Canada Business Corporations Act and is a reporting issuer, or the equivalent, in each of the provinces and territories of Canada (collectively, the "Reporting Jurisdictions"). The Company is not in default of any requirements under applicable securities legislation or the rules and regulations made pursuant thereto in the Reporting Jurisdictions.
2. The registered and head office of the Company is located at 2060 Winston Park Drive, Suite 300, Oakville, Ontario, L6H 5R7.
3. The authorized share capital of the Company consists of an unlimited number of Shares, an unlimited number of preferred shares (the "Preferred Shares") and one special share (the "Special Share"). As of March 31, 2015, the Company had 93,171,549 Shares, no Preferred Shares and one Special Share issued and outstanding.
4. The Shares are listed on the Toronto Stock Exchange (the "TSX") under the symbol "MIC".
5. As of March 31, 2015, the Insider was the beneficial owner of an aggregate of 53,395,420 Shares (the "Insider Shares"), representing approximately 57.31% of the issued and outstanding Shares, and one Special Share. The Insider Shares are held directly by Brookfield Life Assurance Company Limited, Genworth Mortgage Insurance Corporation and Genworth Mortgage Insurance Corporation of North Carolina, each of which is an indirect wholly-owned subsidiary of the Insider (such subsidiaries together with the Insider, the "Insider Entities"). The Special Share is held directly by Brookfield Life Assurance Company Limited. None of the Insider Shares that will be subject to the ASDP (as defined below) are subject to any encumbrances, liens, security interests or other restrictions to transfer.
6. None of the Insider Entities are in default of applicable securities legislation or the rules and regulations made pursuant thereto in the Reporting Jurisdictions.
7. The Company announced on April 28, 2015 that it is engaging in a normal course issuer bid (the "NCIB") for up to 4,658,577 Shares, representing approximately 5% of the Company's issued and outstanding Shares as of the date specified in the Notice of Intention to Make a Normal Course Issuer Bid that was submitted to, and accepted by, the TSX.
8. Purchases under the NCIB were authorized to commence on May 5, 2015 and will conclude on the earlier of the date on which the maximum number of Shares, being 4,658,577 Shares, have been acquired and May 4, 2016.
9. The Insider wishes to maintain its aggregate proportionate percentage ownership in the Company.
10. The Company has determined that it is in the best interests of the Company for the NCIB to include a proportionate participation feature to enable the Insider to participate in the NCIB and maintain its aggregate proportionate percentage ownership in the Company.
11. The TSX has granted the Company an exemption (the "TSX Exemption") to allow the Company to purchase during the TSX's Special Trading Session through a broker retained for such purpose, on any trading day that the Company makes a purchase from other holders of Shares pursuant to the NCIB, such number of Insider Shares from the Insider Entities participating in the NCIB that would result in the Insider maintaining its aggregate proportionate percentage ownership in the Company.
12. The NCIB, including the proportionate participation feature, will be conducted through the facilities of the TSX or through other permitted means (including through other published markets) in accordance with the bylaws, rules, regulations and policies of the TSX.
13. The NCIB will be implemented by a broker that is independent to the Company (the "Broker") who will be responsible for making purchases of Shares on behalf of the Company pursuant to an automatic share purchase plan (the "ASPP"). Pursuant to the ASPP, the Company will instruct the Broker to buy Shares in accordance with a prearranged set of trading parameters and other instructions (the "ASPP Parameters"), all as set out in a written plan document (the "ASPP Agreement") that has been reviewed by the TSX and that will be entered into between the Company and the Broker at the time that the ASPP is established.
14. At the time that the ASPP Agreement is entered into by the Company and the Broker, the Company will not be in possession of any material undisclosed information in relation to the Company that would otherwise be required to be disclosed by law.
15. Pursuant to the ASPP Agreement, the Broker will determine, in its sole discretion, the timing of the purchases of Shares, the number of Shares to be purchased, the price payable for the Shares and the manner in which purchases of Shares are to occur for the duration of the ASPP, so long as such purchases are within, and in accordance with, the ASPP Parameters. The ASPP Agreement will specify that, other than the ASPP Parameters, the Broker will not take any instructions from, nor consult with, the Company or its affiliates regarding any purchases under the ASPP.
16. The ASPP will operate automatically and be conducted solely through the Broker. No material discretionary authority will remain with the Company and the Company will have no influence or control over any of the purchases of Shares. The ASPP will enable the Company to buy Shares regardless of whether a "blackout period" established and applicable to the Company may then be in effect and regardless of whether the Company is in possession of material undisclosed information at the time of a particular purchase.
17. The TSX Exemption will immediately terminate if, on a trading day where the Company makes a purchase from other holders of Shares pursuant to the NCIB, the Insider does not sell the specified number of Insider Shares to the Company in order to maintain its aggregate proportionate percentage ownership. Absent an automatic disposition process, as an insider of the Company, the Insider would have a limited number of opportunities to dispose of the Insider Shares due to insider trading restrictions under applicable securities laws and the Company's insider trading policies, and the Insider might be unable to sell Insider Shares to the Company at all times when the ASPP is operative and purchasing.
18. Accordingly, in order for the Insider to ensure that it is able to maintain its existing aggregate proportionate percentage ownership in the Company, the Insider intends to enter, and to cause the Insider Entities participating in the NCIB to enter, into an automatic share disposition plan (the "ASDP") so that they will be reciprocally permitted to dispose of Insider Shares at such times when the Company is purchasing Shares under the ASPP, including when a "blackout period" established and applicable to the Company may be in effect and when such participating Insider Entities may be in possession of material undisclosed information about the Company.
19. The ASDP will be administered by the Broker, who is also independent to the Insider Entities, in accordance with a pre-arranged set of trading parameters and other instructions (the "ASDP Parameters") set out in a written plan document (the "ASDP Agreement") that will be entered into between the Insider Entities participating in the NCIB, the Broker, and the Company at the time that the ASDP is established. The form of ASDP ultimately implemented will be in compliance with applicable securities legislation and guidance, including, inter alia, clause 175(2) of Regulation 1015 under the Act, OSC Staff Notice 55-701 Automatic Securities Disposition Plans and Automatic Securities Purchase Plans and similar rules and regulations regarding automatic dispositions of securities under Canadian securities laws.
20. At the time that the ASDP Agreement is entered into, none of the Insider Entities participating in the NCIB will be in possession of any material undisclosed information about the Company and each of them will represent that it is entering into the ASDP in good faith and not as part of a plan or scheme to evade prohibitions against trading with material undisclosed information contained in applicable Canadian securities laws.
21. At the time that the ASDP Agreement is entered into, the Insider will provide the Broker with a certificate from the Company confirming that the Company is aware of the ASDP and certifying that, to the best of the Company's knowledge, the Insider Entities participating in the NCIB are not in possession of material undisclosed information about the Company.
22. Pursuant to the ASDP Agreement, the Broker will determine, in its sole discretion, the timing of the sales of Insider Shares, the number of Insider Shares to be sold, the price at which the Insider Shares will be sold, and the manner in which sales of Insider Shares are to occur for the duration of the ASDP, so long as such sales are within, and in accordance with, the ASDP Parameters. The ASDP Agreement will specify that, other than the ASDP Parameters, the Broker will not take any instructions from, nor consult with, the Insider Entities participating in the NCIB regarding any sales under the ASDP.
23. The ASDP will operate automatically and be conducted solely through the Broker. No material discretionary authority will remain with the Insider Entities participating in the NCIB and such participating Insider Entities will have no influence or control over any of the sales of Insider Shares under the ASDP.
24. The ASDP Agreement will specify that the Broker will not consult with the Insider Entities participating in the NCIB regarding any sales under the ASDP. The ASDP Agreement will also specify that such participating Insider Entities will not disclose any information concerning the Company or the Shares to the Broker that might influence the execution of the ASDP.
25. The ASDP Agreement will specify that any amendment to, or modification of, the ASDP Agreement (including the termination thereof, other than in accordance with the termination provisions listed in paragraph 26) will require the written agreement of each of the parties thereto, which includes the Company, and will be conducted in compliance with, inter alia, statutes and regulations applicable to the trading of securities in the Reporting Jurisdictions, including applicable rules, policy statements and blanket rulings and orders promulgated by Canadian securities regulatory authorities. The ASDP Agreement will specify that at the time of any amendment to, or modification of, the ASDP Agreement, each party will represent that it is not in possession of material undisclosed information with respect to the Company. In the event of any amendment to, or modification of, the ASDP Agreement, a SEDI filing in respect of such amendment or modification will be completed by, or on behalf of, the Insider, and such filing will include a statement that the Insider is not in possession of any undisclosed material information in respect of the Company.
26. The ASDP shall terminate upon the first to occur of the following:
a. May 4, 2016;
b. the termination of the ASPP in accordance with its terms;
c. the termination of the TSX Exemption; and
d. the commencement of any voluntary or involuntary proceedings seeking:
i. the liquidation, reorganization or other relief under any bankruptcy, insolvency or similar law of any of the Insider Entities participating in the NCIB; or
ii. the appointment of a trustee, receiver or other similar official in respect of any of the Insider Entities participating in the NCIB,
or the taking of any corporate action by any of the Insider Entities participating in the NCIB to authorize any of the foregoing.
27. Upon entering into the ASDP Agreement, the Insider will file an insider report in accordance with subsection 107(2) of the Act.
Decision
The Decision Maker is satisfied that decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted provided that the Insider shall file an insider report (as such term is defined in NI 55-104) disclosing, on a transaction-by-transaction basis or in acceptable summary form (as such term is defined in NI 55-104), all dispositions of Insider Shares under the ASDP that have not been previously disclosed by or on behalf of the Insider during a calendar year, on or before March 31 of the next calendar year.
As to the Exemption Sought from subsection 107(2) of the Securities Act (Ontario):
"Judith Robertson"CommissionerOntario Securities Commission"Sarah B. Kavanagh"CommissionerOntario Securities Commission
As to the Exemption Sought from section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions:
"Sonny Randhawa"Manager, Corporate FinanceOntario Securities Commission