Decision No. 493-A-2012

BACKGROUND

[1] Alpine Helicopters Inc. (New Alpine) has applied to the Canadian Transportation Agency (Agency) for a licence to operate a domestic service, small aircraft. The application was received on November 1, 2012. New Alpine filed subsequent information in support of its application, the last of which was received on December 27, 2012.

[2] To obtain a licence to operate the proposed service, New Alpine must, among other things, establish to the satisfaction of the Agency that it is Canadian as required by subparagraph 61(a)(i) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA).

[3] New Alpine was incorporated to carry on the operations of Alpine Helicopters Ltd. (Existing Alpine), which holds a licence issued by the Agency authorizing it to operate a domestic service, small aircraft. New Alpine has provided the Agency with details of its proposed corporate structure, which includes the issuance of shares to Canadian and non-Canadian shareholders and entering into various agreements with its proposed non-Canadian shareholder (Proposed Corporate Structure).

[4] Existing Alpine, a non-Canadian company, is operating under a Minister of Transport order exempting it from the CTA requirement to be Canadian. The exemption order will terminate on February 15, 2013.

[5] The Agency, by confidential letter decision dated December 14, 2012, at the request of New Alpine, issued a preliminary determination as to whether New Alpine under the Proposed Corporate Structure would be Canadian, as defined in subsection 55(1) and as prescribed by section 61 of the CTA.

[6] The Agency, in its confidential letter decision, determined that if the Proposed Corporate Structure were implemented, as filed, New Alpine would not be controlled in fact by Canadians and would therefore not be Canadian.

[7] New Alpine, by submissions dated December 18 and December 21, 2012, amended its application and its Proposed Corporate Structure, in response to the Agency’s confidential letter decision.

CANADIAN OWNERSHIP AND CONTROL REQUIREMENTS

[8] Pursuant to subsection 55(1) of the CTA, a Canadian “means a Canadian citizen or a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act, a government in Canada or an agent of such a government or a corporation or other entity that is incorporated or formed under the laws of Canada or a province, that is controlled in fact by Canadians and of which at least seventy-five percent, or such lesser percentage as the Governor in Council may by regulation specify, of the voting interests are owned and controlled by Canadians.”

[9] In order to be Canadian, as defined under subsection 55(1) of the CTA, New Alpine must, first, be incorporated under the laws of Canada or a province. Second, at least 75 percent of its voting interests must be owned and controlled by Canadians. Third, it must be controlled in fact by Canadians.

INCORPORATION REQUIREMENT

[10] The Agency is satisfied that New Alpine, which is incorporated under the Canada Business Corporations Act, R.S.C., 1985, c. C-44 (1st Supp.), meets the requirement that it be incorporated or formed under the laws of Canada or a province.

VOTING INTEREST REQUIREMENT

[11] The voting interest requirement necessitates that at least 75 percent of New Alpine’s voting interests be owned and controlled by Canadians. The Agency finds that under the amended Proposed Corporate Structure at least 75 percent of the voting interests of New Alpine will be owned and controlled by Canadians.

CONTROL IN FACT REQUIREMENT

[12] The Agency views control in fact as the ongoing power/ability, exercised or not, to determine or decide the strategic decision-making activities of an enterprise and the ability to manage and run its day-to-day operations. Minority owners and their designated representatives normally have the ability to influence a company, as do others, such as financial institutions and employees. The influence, which can be exercised either positively (i.e., the requirement for a positive approval to be given for a decision to be made) or negatively (i.e., the ability to veto a decision), needs to be dominant or determining, however, for it to be considered control in fact.

[13] When determining where control in fact lies, the Agency examines all actual and proposed business and other relationships between the various shareholders, and between the shareholders and the company whose ownership is under review. All actual and proposed operational, managerial and financial relationships are considered. The intent and ability of individual shareholders to influence and control are also considered. Agreements, such as shareholder agreements and commercial contracts between the shareholders and the company are of special importance.

[14] The Agency, after reviewing the amended proposed agreements that New Alpine proposes to enter into along with the amended Proposed Corporate Structure, finds that the Canadian shareholder(s) will have the means to exercise, in a determinative way, control in fact over New Alpine. The Agency is, therefore, satisfied that New Alpine will be controlled in fact by Canadians should the amended Proposed Corporate Structure be completed as filed. Due to the confidentiality of the documents filed by New Alpine, the detailed reasons are set out in the confidential appendix to this Decision.

CONCLUSION

[15] The Agency has considered the material submitted to the Agency by New Alpine, both individually and collectively, and concludes that New Alpine is Canadian as defined in subsection 55(1) of the CTA and would continue to meet that requirement if the amended Proposed Corporate Structure were to be effected as filed.

[16] The Agency directs New Alpine to file final executed copies of all agreements entered into between New Alpine and its shareholders, as part of the amended Proposed Corporate Structure, within 30 days of their execution.

[17] Should there be any material change to the specific terms and conditions contained in the December 18 and 21, 2012 submissions in executing the final transaction, the Agency’s finding that the amended Proposed Corporate Structure would satisfy the Canadian ownership and control requirements would require further review by the Agency.