Reasons for Decision: In the Matter of JDS Uniphase Canada Ltd.
R.S.O. 1990, c. S.5, AS AMENDED
AND
IN THE MATTER OF
JDS UNIPHASE CANADA LTD.
Hearing:
July 22, 1999
Panel:
John A. Geller, QC - Vice-Chair
Morley P. Carscallen, FCA - Commissioner
G. Patrick H. Vernon, QC - Commissioner
Counsel:
For JDS Uniphase Canada Ltd. and JDS Uniphase Corporation
James C. Tory
Linda M. Plumpton
Sharon Pel
For CIBC World Markets
Jamie Scarlett
For the Staff of the Ontario Securities Commission
Tim Moseley
John Carchrae
Margo Paul
JDS Uniphase Canada Ltd. ("Uniphase Canada") filed with the Commission and otherCanadian securities regulatory authorities a preliminary prospectus with respect to aproposed distribution of its exchangeable shares (the "Exchangeable Shares"),exchangeable for shares of Common Stock ("Uniphase Common Stock") of its parent,Uniphase Corporation ("Uniphase"). Attached to the preliminary prospectus was aprospectus of Uniphase, a Delaware corporation, which was stated to form part of thepreliminary prospectus. A number of documents filed by Uniphase with the Securities andExchange Commission (the "SEC") of the United States of America under Americansecurities laws were also incorporated by reference in the preliminary prospectus. Amongthe documents incorporated by reference were financial statements of Uniphase, preparedin accordance with United States generally accepted accounting principles ("U.S. GAAP"),and not reconciled to Canadian generally accepted accounting principles ("CanadianGAAP"). Staff of the Commission ("Staff") took the position that section 57 of theRegulation (the "Regulation") to the Securities Act (the "Act") required such areconciliation.
Section 57 of the Regulation provides that, where a prospectus contains financialstatements of an issuer incorporated or organized other than in Canada or a province orterritory thereof and prepared in accordance with generally accepted accounting principlesas permitted by subsection 1(4) of the Regulation, the notes to the financial statementsshall explain and quantify any significant differences between the principles applied andCanadian GAAP. Subsection 1(4) of the Regulation would permit the use by Uniphase ofU.S. GAAP in its financial statements included in a prospectus.
On July 16, 1999, counsel for Uniphase Canada were advised by Staff that the Directorhad refused to permit a variation of the requirement of section 57 of the Regulation torelieve Uniphase Canada from the reconciliation requirement. The application for variationwas made under subsection 81(2) of the Regulation, which authorizes the Director topermit a variation from the relevant provisions of Part III of the Regulation (which includessection 57) where it will not detract from full, true and plain disclosure.
Under subsection 8(2) of the Act, any person or company directly affected by a decisionof the Director may, by notice in writing sent by registered mail to the Commission within30 days after the mailing of the notice of the decision, request and be entitled to a hearingand review thereof by the Commission.
Uniphase Canada has requested such a hearing and review of the decision of the Directorreferred to above. It requested a similar hearing and review by the Alberta SecuritiesCommission (the "ASC") with respect to a similar decision of the Executive Director of theASC. The Hearing of this matter was a joint hearing with the ASC.
At the commencement of the Hearing, counsel proposed that we should treat the Hearingessentially as a hearing de novo on the merits, and decide the substantive questions putbefore us by Uniphase Canada without considering technical questions such as what, ifany, deference should be given by us to the decision of the Director. We agreed to thisapproach. Similarly, although it was not clear that a formal decision had actually beenmade by the Director of the ASC with respect to the matter, or that Uniphase Canada hadformally requested a hearing and review of such a decision in Alberta, it was agreed thatall procedural irregularities would be waived in this connection, so that the ASC, as well,could deal with Uniphase Canada's application on the merits.
Factual Background
At the time of the Hearing, Uniphase Canada was proposing to make a public offering ofExchangeable Shares in Canada concurrently with a public offering in the United Statesby Uniphase of shares of Uniphase Common Stock.
Uniphase is a Delaware corporation listed on NASDAQ. It is the product of a cross-bordermerger between Uniphase Corporation (a Delaware corporation whose shares were listedon NASDAQ) and JDS FITEL Inc. (a Canadian Business Corporations Act ("CBCA")corporation whose shares were listed on the Toronto Stock Exchange (the "TSE")). Themerger became effective on July 6, 1999. Uniphase has a market capitalization ofapproximately U.S. $13.5 billion.
Uniphase Canada is an indirect subsidiary of Uniphase that was created in connection withthe merger. It is a CBCA corporation. Its Exchangeable Shares are listed on the TSE.Uniphase Canada has a market capitalization of approximately $9.1 billion, withapproximately 45% of its shares being beneficially held in Canada and approximately 55%being beneficially held by a Japanese corporation.
The Exchangeable Shares were designed to provide their holders with a security of aCanadian issuer having economic and voting rights which are, as nearly as practicable,equivalent to the economic and voting right attributes of the shares of Uniphase CommonStock. In addition, each Exchangeable Share is exchangeable into a share of UniphaseCommon Stock.
The rationale for Uniphase Canada and the Exchangeable Shares was to enableCanadian resident shareholders of JDS FITEL Inc. to obtain, on the merger, theequivalent, by way of a security of a Canadian corporation, of a share of UniphaseCommon Stock, permitting Canadian tax-deferred rollover treatment. This would enableCanadian resident shareholders to participate in the merger without suffering the negativetax consequences that would be triggered by their receiving shares of Uniphase CommonStock on the merger.
It was an important element of the transaction under which Uniphase Canada was createdthat the Exchangeable Shares would have liquidity in Canada. To that end, prior to themerger, Uniphase Canada and Uniphase applied for orders pursuant to the MutualReliance Review System that would , among other things, enable Uniphase Canada toparticipate in the POP System by way of the US securities regulatory filings of Uniphase.
On June 29, 1999, Uniphase Canada obtained the orders sought (the "MRRS Decision").The MRRS Decision provided for a waiver of (i) the requirement of section 4.1(3)(a) ofNational Policy No. 47 ("NP 47") with respect to the filing of a Current AIF and (ii) therequirement of section 4.1 of NP 47 with respect to Equity Securities. The waiver wasconditional on Uniphase Canada:
a) filing upon the merger the then current Form 10-K of Uniphase Corporation insatisfaction of the requirement of a Current AIF; and
b) incorporating by reference in any short form prospectus, documents filed byUniphase with the SEC under the Securities Exchange Act of 1934 (US).
The MRRS Decision also exempted Uniphase Canada from its continuous disclosureobligations under Canadian securities laws provided that, again, all the documents werefiled with Canadian securities regulatory authorities that Uniphase was required to file withthe SEC under United States securities regulatory requirements.
The MRRS Decision did not make it a condition of either Uniphase Canada's participationin the POP System or its continuous disclosure exemptions that Uniphase Canadareconcile to Canadian GAAP the financial statements in the United States continuousdisclosure filings, all of which were presented in accordance with U.S. GAAP.
A similar order was granted by the Quebec Securities Commission.
The preliminary prospectus was filed by Uniphase Canada in connection with a proposedCanadian public offering of Exchangeable Shares to close on or about July 30, 1999. ThisCanadian public offering was intended to be concurrent with a public offering in the UnitedStates by Uniphase of shares of Uniphase Common Stock. That United States publicoffering was also intended to close on or about July 30, 1999. The combined primaryofferings in Canada and the United States were anticipated to raise approximately US$750 million.
Since the attributes of the Exchangeable Shares provide a holder with practicalequivalency to the position of a holder of shares of Uniphase Common Stock, substantiallyall of the disclosure in the Uniphase Canada prospectus would relate to Uniphase. It wasintended that the United States prospectus for the Uniphase public offering would beattached to and form a part of the Uniphase Canada prospectus.
All financial statements and financial data included in the documents incorporated byreference in the Uniphase Canada prospectus relating to Uniphase would be prepared andpresented in accordance with U.S. GAAP. As above stated, Staff have taken the positionthat the financial statements would have to be reconciled to Canadian GAAP if theCanadian offering of Exchangeable Shares was to proceed.
Additional Material Filed
Counsel for Uniphase Canada filed as an exhibit a letter dated July 20, 1999 to him fromBoris Pavlin, a partner at Ernst & Young, estimating that the reconciliation processrequired by the Regulation would take approximately four to six weeks, the actual timerequired depending on the availability of supporting information, cooperation of clientpersonnel and other factors. It was common ground that there was not sufficient timebetween the date of the Hearing and the proposed completion date of the offering for thereconciliation to be completed.
We were advised by Mr. Tory that Uniphase had not been taking any steps with a view todoing a Canadian GAAP reconciliation because its limited accounting staff were "madlyengaged in dealing with their year end accounting process" for its June 30 year end andhad not had the resources to devote to getting themselves in a position to do thereconciliation, and because June 30 was also the effective date of the merger, causingadditional demands on the personnel involved.
Counsel for Uniphase Canada also filed as an exhibit an affidavit of Michael C. Phillips,a Vice-President and Assistant Secretary of Uniphase Canada and the Senior Vice-President, Business Development, and General Counsel of Uniphase. In this, Mr. Phillipsstated, amongst other things, that if the Commission ordered that Uniphase Canadaprovide a Canadian GAAP reconciliation in the proposed prospectus of Uniphase Canada,Uniphase Canada would not proceed with the public offering of exchangeable shares forreasons explained by him in the affidavit and related to the timing of the American offering.
Oral Evidence
Counsel for Uniphase Canada called as a witness Daniel J. Daviau, a Managing Directorof CIBC World Markets, and the head of that organizations Canadian TechnologyInvestment Banking Group. Mr. Daviau's testimony included the following:
1. The public float of Exchangeable Shares is 17 million shares, with a current tradingvalue of about $4 billion. The current trading value of the public float of UniphaseCommon Stock is approximately U.S. $8 billion. The United States market is amuch more active market with a larger float, so that over 80% of the combinedtrading volumes of the Uniphase Common Stock and the Exchangeable Shares istraded on NASDAQ.
2. The Canadian market price is very much a function of the trading price of theUniphase Common Stock on NASDAQ. The Exchangeable Shares trade at theCanadian dollar equivalent of the price of the Uniphase Common Stock onNASDAQ.
3. Coverage by analysts has something to do with this. Uniphase stock is morebroadly covered by analysts in the United States. The American analysts are forthe most part very focussed technology analysts who make the market in the stockand whose recommendations move the market.
4. The United States analysts use the disclosure documents of Uniphase, based onU.S. GAAP. Those Canadian analysts who cover the Uniphase stock also rely onthe United States reporting documents.
5. There are no Canadian companies comparable to Uniphase. All the comparablepublic companies are in the United States.
6. It is important to keep an active liquid market in the Exchangeable Shares. Therewill be fewer and fewer Exchangeable Shares as holders exchange them intoCommon Stock of Uniphase. The float will dwindle down over time.
7. Uniphase's plan was that, in future financings, it would finance using both UniphaseCommon Stock in the United States and Exchangeable Shares in Canada. Thiswas important to boost up or maintain the float of Exchangeable Shares.
8. If a Canadian investor holding Exchangeable Shares desires to sell those sharesand doesn't find a sufficient bid in Canada, the investor will just exchange theExchangeable Shares for Uniphase Common Stock. Once investors have made thedecision to sell, whether they sell in Canada or in the United States is irrelevant tothem.
9. Once one person exchanges, the next persons, institutional investors mainly, whogo to sell the stock will have even a harder time finding a bid for the stock. Overtime this will have a spiral effect and you will end up with zero ExchangeableShares outstanding.
10. As regards the proposed offering, in order to keep a significant portion of the totaloffer in Canada, Uniphase Canada would have to comply in all material respectswith the timetable of the United States offering. This is why participation in the POPSystem was important. It was never contemplated that an Exchangeable Sharespublic offering would be done in Canada independent of a contemporaneousoffering in the United States.
11. If there is no Canadian offering in conjunction with the United States offering,Canadian investors will eventually be shut out of participating in Uniphase througha tax efficient vehicle that is not a foreign property.
12. Uniphase requires the money now because there are consolidation opportunitiesin the market. After that, there is no ongoing financing requirement for Uniphase,so Uniphase won't necessarily be coming back into the market for the foreseeablefuture.
13. For this particular issue and in the particular fact situation, Canadian GAAPreconciliation is not particularly meaningful or helpful for Canadian investors.However, on cross-examination Mr. Daviau stated that he did not know whetherinstitutional in-house analysts might be doing cross-sector or multi-sector analysisor whether retail investors would be looking for cross-sector or multi-sectorinvestment opportunities.
14. For larger institutions, there is either explicitly or implicitly an intention to weighttheir holdings to the weighting on the TSE. If the weighting in the index comesdown because of a dwindling number of Exchangeable Shares, the shareholder ifhe wishes to match his weighting with the index, will effectively be forced to sell.This is true for many of the large institutions in Canada.
We found Mr. Daviau to be a helpful witness, whose evidence we accepted.
MRRS Decision
Counsel for Uniphase Canada argued that, based on the absence of any Canadian GAAPreconciliation condition in the MRRS Decision, it was reasonable for Uniphase andUniphase Canada to conclude, and he said that they did conclude, that, by virtue of theMRRS Decision, Uniphase Canada would be able to do an expeditious financing inCanada by way of the POP System without Canadian GAAP reconciliation and they madetheir financing plans accordingly.
Section 57 of the Regulation specifically requires a reconciliation where a prospectuscontains financial statements of an issuer incorporated or organized other than in Canadaor a province or territory thereof and the financial statements are prepared in accordancewith foreign generally accepted accounting principles as permitted by subsection 1(4) ofthe Regulation. Subsection 1(1) of the Act defines "issuer" to mean a person or companywho has outstanding, issues or proposes to issue, a security. Uniphase is an issuer as sodefined.
There is no similar reconciliation requirement with respect to financial statements filed inaccordance with the continuous disclosure requirements of the Act, the Regulations or theCommission's rules or policies.
The requirement for Canadian GAAP reconciliation in a prospectus is designed, at leastin part, to enable investors to have a common basis for evaluating various investmentopportunities which are available to them in prospectus offerings. The disclosurerequirements generally with respect to continuous disclosure are less stringent than thecomparable requirements for prospectuses, and we do not believe that the less stringentstandard is necessarily the appropriate one. The continuous disclosure requirements arebeing reconsidered in connection with the current project of the Canadian SecuritiesAdministrators to create an integrated disclosure regime.
In their application under the Mutual Reliance Review System for the MRRS Decision,Messrs. Tory Tory DesLauriers and Binnington, counsel for Uniphase and UniphaseCanada, requested, among other things, a waiver of (i) the requirements of section4.1(3)(a) of NP 47 with respect to the filing of a current AIF and (ii) the requirement ofsection 4.1 of NP 47 with respect to Equity Securities, each on certain conditions, and awaiver of other continuous disclosure requirements.
Uniphase Canada's counsel did not apply, under subsection 81(2) of the Regulation, asthey could have done, for an order of the Director permitting Uniphase Canada not tocomply, in connection with its POP prospectuses, with the requirements of section 57 ofthe Regulation, or alternatively apply for an order under NP 47 waiving the reconciliationrequirements contained in NP 47.
In the MRRS Decision, this Commission, and the other Canadian Securities RegulatoryAuthorities involved, granted Uniphase Canada essentially the relief which it asked for.They did not impose a reconciliation requirement in connection with continuous disclosurefilings. Uniphase Canada now argues, in effect, that because no reconciliation conditionwas imposed in connection with the relief specifically requested by Uniphase Canada, itwas entitled to assume that no reconciliation requirement would apply in connection witha POP prospectus of Uniphase Canada. In essence, Uniphase Canada is arguing thatStaff should have known that Uniphase Canada wanted relief from the requirements ofsection 57 and/or the corresponding requirements of NP 47, even though it had not appliedfor such relief, and, if Staff was not going to provide such relief, should have said so in theMRRS Decision.
We do not agree. In our view it was not reasonable for Uniphase Canada or its counsel,not having requested the relief, to assume that the relief had been granted.
Counsel for Uniphase Canada argued that it is Staff's normal practice, as evidenced byStaff's Corporate Finance Accountants Practice Manual, to make Canadian GAAPreconciliation a condition of an exemption with respect to continuous disclosurerequirements if Staff is expecting reconciliation, and that Staff's failure to do so in this caseentitled Uniphase Canada and its counsel to assume that reconciliation would not berequired in a Uniphase Canada POP prospectus. We do not agree. In our view, thefailure to insist on a requirement not provided for in the Regulation could in no way beconsidered by Uniphase Canada or its counsel to be a waiver of the requirement which didexist with respect to prospectuses. If relief is required or desired, then it should berequested. It is not up to Staff to guess at what an applicant for relief is really looking for.
Accordingly, in our view, Uniphase Canada cannot rely on the MRRS Decision either ashaving provided it with relief from the reconciliation requirements, or as having given it anyreason to believe that it had obtained such relief.
Applicability of Section 57 to a POP Prospectus
Mr. Tory, assisted by Mr. Scarlett, presented very interesting arguments to the effect thatsection 57 of the Regulation did not apply to a POP prospectus filed under NP 47. As weunderstood it, the arguments were as follows.
1. The blanket ruling of the Commission dealing with the POP System now forms, withNP 47, a rule of the Commission. The blanket ruling provides that section 53 of theAct (requiring a preliminary prospectus and a prospectus to be filed, and receiptstherefore obtained from the Director, before a trade may be made in the course ofa distribution) does not apply with respect to distributions of securities that aremade in compliance with the POP System (ie: NP 47), insofar as section 53concerns the form and content of a preliminary prospectus and a prospectus.
2. Section 57 of the Regulation is, in effect, a form and content requirement dependenton section 53 of the Act. In fact, most of the form and content requirements for apreliminary prospectus and a prospectus are found in the Regulation, and not in theAct itself.
3. Accordingly, once an issuer is in the POP System, it is NP 47 which exclusivelygoverns the form and content requirements for a preliminary prospectus and aprospectus, and NP 47 does not include a reconciliation requirement.
4. Even if we do not conclude that this argument is correct, at a bare minimum theargument shows that Uniphase Canada and its counsel had every reason toconclude that the MRRS Ruling was sufficient for their purposes, and that they didnot require a Director's order exempting them from the requirements of section 57of the Regulation.
As we have said, these arguments are very interesting, and, if NP 47 did not itself requirethe reconciliation provided for in section 57 of the Regulation, we would have to seriouslyconsider them. Subsection 81(1) of the Regulation provides that every preliminaryprospectus and every prospectus referred to in subsection 53(2) of the Act shall complywith the relevant provisions of Part III of the Regulation except as otherwise provided incertain Commission rules, including NP 47.
However, as was pointed out by Vice-Chair Spink of the ASC at the Hearing, note (24) toNP 47 provides as follows:
Foreign issuers should refer to the Securities Legislation of each Jurisdiction for theprovisions relating to the reconciliation of financial statements to Canadian GAAPin a prospectus. These provisions apply to a preliminary short form prospectus anda short form prospectus whether or not the foreign issuer is satisfying therequirement for filing an AIF by filing a current annual report on Form 10-K filed withthe SEC pursuant to the 1934 Act. The issuer may include the reconciliation of itsfinancial statements to Canadian GAAP in the notes to its financial statements orin its short form prospectus. Where an issuer does not include this information inthe notes to its financial statements, the issuer shall provide the information ordiscussion required in footnotes (36) and (37) in its short form prospectus.
Notes (36) and (37) to NP 47 provide as follows:
Where an issuer is required to reconcile its financial statements to Canadian GAAP,the issuer may present the selected consolidated financial information on the basisof the accounting principles used in its primary financial statements. In that case,the issuer shall provide in accordance with Canadian GAAP any of the informationrequired under this item that is reconciled to Canadian GAAP in its financialstatements.
Where an issuer is required to reconcile its financial statements to Canadian GAAP,the discussion in the issuer's MD&A shall focus on its primary financial statements.The issuer shall include in its MD&A a reference to the reconciliation and adiscussion of any aspects of the difference between the foreign accountingprinciples applied and Canadian GAAP not discussed in the financial statementreconciliation that the issuer believes is necessary for an understanding of thefinancial statements as a whole.
The blanket ruling of the Commission to which we have referred only makes section 53 ofthe Act inapplicable with respect to distributions of securities that are made "in compliancewith" the POP System (ie: NP 47), and NP 47, in our view, clearly requires thereconciliation provided for in section 57 of the Regulation. So, whether or not section 57of the Regulation is directly applicable to a POP prospectus, the reconciliation isnevertheless required, and, in our view, it was not reasonable for Uniphase Canada andits counsel to conclude otherwise, or to conclude that a Director's exemption from thereconciliation requirements was not necessary.
Uniphase Canada's Arguments for Waiving the Reconciliation Requirement
Counsel for Uniphase Canada argued that it would not be prejudicial to the public interestfor the Commission to grant a waiver of the reconciliation requirements. In particular, heargued that requiring the reconciliation would result in a decline in liquidity for holders ofExchangeable Shares (since the proposed Canadian public offering would not proceed inthat event), that waiving the reconciliation requirement would not deprive holders ofExchangeable Shares of meaningful information in the circumstances of this particularcase, and that waiving the reconciliation requirement in the circumstances of this particularcase would not prejudice the integrity of the securities regulatory system. He advancedthese arguments, to a very great extent, based upon the testimony of Mr. Daviau.
Counsel for Uniphase Canada made it clear at the outset of his argument that he was notchallenging the appropriateness of the general Canadian GAAP reconciliation requirementunder Canadian securities law. He accepted what Staff had to say in its writtensubmissions about the statutory framework, the general importance of Canadian GAAP,and the general need for GAAP reconciliation. What Staff had to say included thefollowing:
Financial statements are the cornerstone of a disclosure system designed topromote informed decision-making by the investing public through full, true andplain disclosure. The quality and usefulness of financial statements in this regardare directly dependent on the accounting principles used in their preparation. TheAct and the Regulation have embraced Canadian GAAP as the appropriatestandard for Canadian issuers and for foreign issuers offering their securities inCanada by way of prospectus.
In our view, there is a clear and valid regulatory rationale for the reconciliationrequirement, and it clearly would apply in the normal situation.
Counsel for Uniphase Canada argued that the requirement was not an absolute, and that,as permitted by the Regulation and NP 47, it could be waived if full, true and plaindisclosure of all material information to Canadian investors was being made withoutreconciliation, and that in the special circumstances of this case it was appropriate that itbe dispensed with.
He argued that, if we did not waive the requirement, the losers would be the holders of theExchangeable Shares, who would lose the liquidity benefits associated with a vibrantCanadian market for Exchangeable Shares. He argued that, in the particularcircumstances of this case and having regard to the particular nature of the ExchangeableShares, waiving the requirement would not result in the loss to holders of ExchangeableShares of any meaningful information.
Further, he argued that in the particular circumstances of this case, not only would awaiver of the reconciliation requirement not deprive investors in Exchangeable Shares ofany meaningful information, it would protect them from potentially being misled by one-timefinancial reporting that was inconsistent with the basis on which past results have beenand future results will be prepared and communicated by way of continuous disclosure.
Of course it is not the existing holders of Exchangeable Shares with whom we must beconcerned in respect of this matter. It is potential purchasers of Exchangeable Sharesunder the proposed prospectus, whom the prospectus requirements of the Act and theRegulation are designed to protect. The fact that holders of Exchangeable Shares havemore to gain than to lose if the reconciliation requirement is waived, if this in fact be thecase, cannot form a basis for us agreeing that the requirement should be waived.
Mr. Daviau, in his testimony, did not go quite so far as to say, taking his evidence as awhole, that potential investors in the Exchangeable Shares, and especially retail investors,would not obtain useful information from a reconciliation. To grant the relief requested, wemust be satisfied that the absence of a reconciliation would not detract from full, true andplain disclosure. On the basis of the evidence submitted, and the arguments made, onbehalf of Uniphase and Uniphase Canada, we cannot arrive at this conclusion. In ourview, there may well be information in the reconciliation which would in fact be useful toat least some, and perhaps to many, investors, and particularly retail investors, in comingto their decision as to whether or not to invest in the Exchangeable Shares or, instead, insome other investment. As a result, we must conclude that, failing the reconciliation, theprospectus will not contain the required full, true and plain disclosure, so that the Directorwas correct to refuse to relieve Uniphase Canada of the reconciliation requirement.
Precedents
Counsel for Uniphase Canada referred us to two prospectuses which had been receiptedby the Director even though they did not contain full GAAP reconciliations.
In December of 1995, the Director receipted a short form prospectus of HammersonCanada Inc. which contained only a summary form of reconciliation. In October of 1998,the Director receipted a prospectus of Battle Mountain Gold Company which did notcontain a reconciliation at all.
The decision of the Director or the Commission as to the granting of a receipt for aprospectus or an exemption or variation from the requirements of the Act, the Regulationor the Commission's rules is always a highly fact sensitive one. Such fact-sensitivedecisions are of strictly limited value as "precedents". To rely upon such "precedents" asassurance that the same result will occur in every instance, without a careful analysis ofthe particular circumstances of each case, is unwarranted and dangerous. In addition, inexercising our public interest jurisdictions under the Act, although, in our view, we shouldhave regard to what previous Commission decisions on the subject matter may exist, itwould be improper for us to consider that we are obliged to follow them. There are twocases in which a receipt for a prospectus was issued by the Director in which thereconciliation requirements were varied by the Director. But we do not know on whatbasis, and for what reasons, this was done in either case. We must, as the Directorapparently did, decide this matter on the basis of the fact situation before us, and, as wehave said, we are not satisfied, on the evidence which we heard and the submissionsmade to us, that a variation of the reconciliation requirement would be appropriate in thecircumstances of this case.
Decision
Accordingly, we issued the Decision which appears as the Appendix to these Reasons.
August 19th, 1999
"J. A. Geller"
"Morley P. Carscallen"
"G.P.H. Vernon"
R.S.O. 1990, c. S.5, AS AMENDED
AND
IN THE MATTER OF
JDS UNIPHASE CANADA LTD.
DECISION
We have, under subsection 8(2) of the Securities Act, reviewed the decision of the Directorrefusing to grant relief under section 81(2) of the Regulation from the requirement ofsection 57 of the Regulation for a Canadian GAAP reconciliation in the Applicant'sprospectus, and have heard evidence adduced by the Applicant and the submissions ofcounsel for the Applicant and counsel for Commission staff. We order that the Director'sdecision is confirmed.
Reasons for this Decision will follow.
July 22, 1999
"J. A. Geller"
"Morley P. Carscallen"
"G.P.H. Vernon"