SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
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For the month of | June | | 2022 |
Commission File Number | 001-37400 | | |
Shopify Inc. |
| (Translation of registrant’s name into English) |
151 O'Connor Street, Ground Floor Ottawa, Ontario, Canada K2P 2L8 |
| (Address of principal executive offices) |
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
DOCUMENTS INCLUDED AS PART OF THIS REPORT
Exhibits
99.1 Shopify Announces Receipt of Final Order and Implementation of Updated Governance Structure
99.2 Certificate and Articles of Arrangement
99.3 Founder Agreement
99.4 Material Change Report
99.5 Early Warning Report
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| Shopify Inc. |
| (Registrant) |
| Date: | | June 10, 2022 | | By: | /s/ Jessica Hertz |
| Name: Jessica Hertz
Title: General Counsel and Corporate Secretary |
Exhibit 99.1
Shopify Announces Receipt of Final Order and Implementation of Updated Governance Structure
Internet, Everywhere – June 10, 2022 – Shopify Inc. (NYSE, TSX: SHOP), a provider of essential internet infrastructure for commerce, today announced that the Ontario Superior Court of Justice (Commercial List) has issued a final order approving the previously announced plan of arrangement under the Canada Business Corporations Act (the “Arrangement”), effecting amendments to the Company’s articles of incorporation to update its governance structure.
As explained more fully in the Company’s management information circular dated April 11, 2022 (the “Circular”), the updated governance structure provides for the creation of a new class of share, designated as the Founder share, and the issuance of such Founder share to the Company’s Founder and Chief Executive Officer, Mr. Tobias Lütke. The Arrangement also effects a conversion of all Class B multiple voting shares held by Klister Credit Corp. into an equal number of Class A subordinate voting shares, bringing the voting power of the Class A shares to 59% of the total voting power attached to the Company’s outstanding shares.
As a result of the Arrangement, the Company’s authorized share capital now consists of one Founder share, an unlimited number of Class A subordinate voting shares, an unlimited number of Class B multiple voting shares (which will now be described as Class B restricted voting shares), and an unlimited number of preferred shares, issuable in series. This modernized structure will keep the Company’s governance aligned with Shopify’s long-term market opportunities, ensuring that Shopify remains mission-driven, merchant-obsessed, and focused on long-term value creation.
Pursuant to the final order, the Company filed articles of arrangement and a certificate of arrangement was issued, making the amendments effective as of June 9, 2022. Further details of the Arrangement are contained in the Circular, which is available on Shopify’s profile on SEDAR at www.sedar.com and under the Company’s profile on EDGAR at sec.gov, and on our website at investors.shopify.com.
Early Warning Disclosure
This additional disclosure is being provided pursuant to National Instrument 62-103 –The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which also requires an early warning report to be filed by Mr. Lütke with the regulatory authorities in each jurisdiction in which the Company is a reporting issuer containing information with respect to the foregoing matters.
On June 7, 2022, shareholders of the Company approved the Arrangement, and on June 9, 2022, the Company completed the Arrangement. The Founder share was issued to Mr. Lütke for cash consideration of C$10.
Immediately prior to the Arrangement, Mr. Lütke beneficially owned or controlled 7,891,852 Class B restricted voting shares and 34,867 Class A subordinate voting shares, representing approximately 33.8% of the aggregate voting power attached to all of the Company’s outstanding voting shares. Each Class B restricted voting share represents 10 votes and is convertible into a Class A subordinate voting share in accordance with its terms. Immediately following completion of the Arrangement, Mr. Lütke beneficially owned or controlled 7,891,852 Class B restricted voting shares, 34,867 Class A subordinate voting shares and one Founder share, representing approximately 40% of the aggregate voting power attached to all of the Company’s outstanding voting shares.
Mr. Lütke holds 147,839 options which were granted pursuant to the Company’s stock option plan, which are exercisable into Class A subordinate voting shares.
Mr. Lütke may, depending on market conditions, acquire additional Class A subordinate voting shares or dispose of Class B restricted voting shares or Class A subordinate voting shares in the future, whether in transactions over the open market or through privately negotiated arrangements or otherwise, subject to a number of factors, including general market conditions and estate planning, investment diversification and charitable giving purposes. The Founder share is not transferable by Mr. Lütke.
The early warning report has been filed under Shopify’s profile on SEDAR and further information and/or a copy of the report may be obtained by contacting Jess Hertz, General Counsel and Corporate Secretary of Shopify at (613) 241-2828. The head office of Shopify, as well as Mr. Lütke’s address for purposes of
the early warning report requirements, is located at 151 O’Connor Street, Ground Floor, Ottawa, Ontario, K2P 2L8.
Contact
Stephanie Ross
Communications Lead
press@shopify.com
Exhibit 99.2
SHOPIFY INC. 426160-7 SHOPIFY INC. 426160-7 ✔ Jessica Hertz, General Counsel and Corporate Secretary Canada Business Corporations Act June 9, 2022
Digitally signed by Mr. Justice Cavanagh
Exhibit 99.3
EXECUTION VERSION
FOUNDER AGREEMENT
THIS FOUNDER AGREEMENT (this “Agreement”) dated as of the Effective Date,
AMONG:
SHOPIFY INC., a corporation incorporated under the Canada Business Corporations Act,
(the “Company”)
- and -
TOBIAS LÜTKE, an individual resident in the City of Ottawa in the Province of Ontario,
(the “Founder”)
- and -
7910240 CANADA INC., a corporation incorporated under the Canada Business Corporations Act,
(“7910240”).
WHEREAS the Company is proposing to amend its restated articles of incorporation (which, as amended, are referred to as the “Articles”) by way of plan of arrangement under Section 192 of the Canada Business Corporations Act (the “Arrangement”), pursuant to which, among other things, the Company will create and authorize the Founder Share (as defined herein); and
WHEREAS the Founder wishes to subscribe for the Founder Share and the Company wishes to issue the Founder Share to the Founder, on the terms and conditions set out herein;
NOW THEREFORE in consideration of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties) the parties hereto agree as follows:
1.Definitions
In this Agreement, the following terms shall have the meaning given to them as set out below.
“Board” means the Board of Directors of the Company.
“CBCA” means the Canada Business Corporations Act, R.S.C., 1985, c. C-44.
“Certificate” means the certificate to be issued by the Director pursuant to subsection 192(7) of the CBCA giving effect to the Arrangement.
“Change of Control Transaction” shall have the meaning set forth in the Articles.
“Coattail Agreement” means the Coattail Agreement dated May 27, 2015 by and among the Company, Computershare Trust Company of Canada and certain shareholders of the Company, as it may be amended from time to time.
“collateral benefit” has the meaning set forth in Section 1.1 of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions as amended from time to time (provided that for purposes of clause (a) of such definition, the Multiple Voting Shares and Subordinate Voting Shares shall be considered a single class).
“Director” means the director appointed under Section 260 of the CBCA.
“Disability” shall have the meaning set forth in the Articles.
“Effective Date” means the effective date of the Arrangement, being the date shown on the Certificate.
“Founder Holders” means, collectively, the Founder, 7910240 and any Permitted Holder that becomes party to this Agreement pursuant to and in accordance with Section 3(a) of this Agreement.
“Founder Share” means a new class of share, designated as the Founder Share, which shall carry the rights, privileges, restrictions and conditions as set forth in the Articles following the Effective Date.
“Founder Share Attorney” means, at any time, the Person holding a power of attorney with respect to the Founder Share pursuant to Section 6 of this Agreement.
“Incapacity Period” means the period commencing on the death or Disability of the Founder and ending on the Sunset Redemption Date.
“Independent Directors” shall have the meaning set forth in the Articles.
“Multiple Voting Share Transaction” means an acquisition, redemption, reorganization, recapitalization, reclassification, issuer bid, exchange, consolidation, amalgamation, arrangement, merger or other transaction which would have the effect of, directly or indirectly, cancelling or otherwise eliminating any or all of the outstanding Multiple Voting Shares or the Founder Share, or consolidating or collapsing the Multiple Voting Shares and the Subordinate Voting Shares into a single class of outstanding voting equity securities, but does not include (i) a Change of Control Transaction that complies with Section 1.2.3 of the Articles, (ii) a transaction that complies with the Coattail Agreement, (iii) a Pro Rata Transaction, or (iv) the conversion of Multiple Voting Shares in accordance with subsection 1.4 and/or subsection 1.5 of the Articles from and after the Effective Date.
“Multiple Voting Shares” shall have the meaning set forth in the Articles.
“MVS Conversion Shares” shall have the meaning set forth in the Articles.
“Parties” means, collectively, the Company and the Founder Holders.
“Permitted Holder” shall have the meaning set forth in the Articles.
“Person” shall have the meaning set forth in the Articles.
“Pro Rata Transaction” means (i) a consolidation of Multiple Voting Shares into a lesser number of Multiple Voting Shares simultaneously with the consolidation of Subordinate Voting Shares on the same basis into a lesser number of Subordinate Voting Shares; or (ii) a reorganization of the Company pursuant to which the Founder Holders and the holders of Subordinate Voting Shares are entitled to receive securities in the capital of the Company or a successor entity on a pro rata basis in exchange for all Multiple Voting Shares or the Founder Share, as applicable, and all Subordinate Voting Shares held; provided, however, that, in the case of the Founder Holders, such entitlement is not greater than the entitlement of the general body of holders of Subordinate Voting Shares pursuant to such reorganization in relation to the voting and financial participating interests in the Company
represented by the Multiple Voting Shares, the Founder Share and the Subordinate Voting Shares, respectively.
“Redemption Price” shall have the meaning set forth in the Articles.
“Subordinate Voting Shares” shall have the meaning set forth in the Articles.
“Sunset Date” shall have the meaning set forth in the Articles.
“Sunset Event” shall have the meaning set forth in the Articles.
“Sunset Redemption Date” shall have the meaning set forth in the Articles.
“Transfer” of a Multiple Voting Share or the Founder Share, as applicable, for purposes of this Agreement, means any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. A “Transfer” shall also include, without limitation, (1) a transfer of a Multiple Voting Share or the Founder Share to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership) or (2) the transfer of, or entering into a binding agreement with respect to, Voting Control over a Multiple Voting Share or the Founder Share by proxy or otherwise, provided, however, that the following shall not be considered a “Transfer”: (a) the grant of a proxy or power of attorney to the Company’s officers or directors at the request of the Board in connection with actions to be taken at an annual or special meeting of shareholders; (b) the pledge of a Multiple Voting Share that creates a mere security interest in such share pursuant to a bona fide loan or indebtedness transaction so long as the holder of such Multiple Voting Share continues to exercise Voting Control over such pledged shares; provided, however, that a foreclosure on such Multiple Voting Share or other similar action by the pledgee shall constitute a “Transfer”; (c) upon the death or Disability of the Founder, the transfer of a Multiple Voting Share or the Founder Share to the estate of the Founder or to a legal representative of the Founder (including without limitation a tutor, curator, mandatary due to incapacity, custodian, guardian or testamentary executor), acting in such capacity under the authority of the law, an order from a competent tribunal, a will or a mandate in case of incapacity or similar instrument; or (d) the transfer of Voting Control of the Founder Share to the Founder Share Attorney pursuant to Section 6 of this Agreement.
“TSX” means the Toronto Stock Exchange.
“Voting Control” means with respect to a Multiple Voting Share or the Founder Share the exclusive power (whether directly or indirectly) to vote or direct the voting of such Multiple Voting Share or Founder Share, as applicable, by proxy, voting agreement or otherwise.
2.Restrictions on Transfer
(a)The Founder agrees not to Transfer, directly or indirectly, the Founder Share.
(b)The Founder Holders agree not to Transfer, directly or indirectly, the Multiple Voting Shares held by such Founder Holders to a Permitted Holder if such Transfer would result in the Founder not retaining Voting Control over such Multiple Voting Shares.
(c)Other than in connection with the Founder’s death or Disability, the Founder Holders agree that, in the event a Transfer, directly or indirectly, of any Multiple Voting Shares held by such Founder Holders results in the Founder no longer retaining Voting Control over such Multiple Voting Shares, the applicable Founder Holder will as promptly as reasonably practicable convert or cause to be converted all such Multiple Voting Shares into Subordinate Voting Shares pursuant to and in accordance with subsection 1.4 of the Articles, and the applicable Founder Holder will not vote any such Multiple Voting Shares prior to the conversion into
Subordinate Voting Shares unless approved to do so by a majority of Independent Directors then in office.
(d)The Company will not, and will direct its transfer agent not to, permit any indirect or direct Transfer of the Founder Share or the Multiple Voting Shares in contravention of this Agreement.
3.Permitted Holders
(a)The Founder Holders agree to cause their respective Permitted Holders to execute and deliver to the Secretary of the Company a counterpart signature to this Agreement prior to effectuating an indirect or direct Transfer of any Multiple Voting Shares to such Permitted Holder confirming that such Permitted Holder shall be bound by all the terms and conditions of this Agreement as a Founder Holder. Notwithstanding the foregoing, if the applicable Founder Holder is required to convert or cause to be converted the Multiple Voting Shares proposed to be Transferred to such Permitted Holder into Subordinate Voting Shares pursuant to and in accordance with Section 2(c) of this Agreement, such Founder Holder and Permitted Holder will not be required to comply with this Section 3(a).
(b)The Founder hereby represents and warrants to the Company that as of the Effective Date, 7910240 is the only Permitted Holder of the Founder that beneficially owns or exercises control or direction over Multiple Voting Shares.
(c)The Founder hereby represents and warrants to the Company that as of the Effective Date, the Founder retains the Voting Control over the Multiple Voting Shares held by the Founder Holders.
4.Certain Transactions
(a)In the event of a Multiple Voting Share Transaction, (i) each of the Founder Holders shall receive one Subordinate Voting Share in consideration for each Multiple Voting Share (as adjusted to appropriately reflect any share split, consolidation, stock dividend, reorganization, recapitalization or similar event approved by the Board affecting the number of outstanding Multiple Voting Shares and/or Subordinate Voting Shares) held by such Founder Holder and (ii) the holder of the Founder Share shall receive the Redemption Price in consideration for the Founder Share. For greater certainty, the Founder Holders shall not be entitled to receive, directly or indirectly, any economic premium, additional payment or collateral benefit in connection with a Multiple Voting Share Transaction.
(b)Each Founder Holder agrees not to make any short sale or engage in any hedging, monetization or derivative transaction with respect to such Founder Holder’s Multiple Voting Shares or MVS Conversion Shares, or enter into any swap or other arrangement that results in such Founder Holder not retaining, in whole or in part, any of the economic consequences of ownership of such Founder Holder’s Multiple Voting Shares or MVS Conversion Shares, as applicable, in each case whether or not such arrangement is cash settled.
5.Voluntary Conversion following Sunset Event
The Founder Holders agree that following the occurrence of a Sunset Event, the Founder Holders will convert or cause to be converted all Multiple Voting Shares held by the Founder Holders into Subordinate Voting Shares on or before the Sunset Date pursuant to and in accordance with subsection 1.4 of the Articles.
6.Power of Attorney
(a)Subject to Section 6(b) of this Agreement, the Founder hereby constitutes the Secretary of the Company in office from time to time as true and lawful attorney for the Founder with respect to the Founder Share during any Incapacity Period, with full power of substitution, to vote for and on behalf of the Founder with respect to the Founder Share on all matters (including the right to act by written consent), provided that the Founder Share Attorney shall exercise pursuant to this Section 6(a) all voting rights attached to the Founder Share in accordance with the recommendations of management of the Company set forth in any notice of meeting and management proxy circular in respect of any matter to be voted on, including with respect to any amendments or variations to matters identified in any such notice of meeting and on any other items that may properly come before such a meeting or any adjournment thereof.
(b)At any time prior to the Founder’s death or Disability, the Founder may revoke the power of attorney granted under Section 6(a) of this Agreement and replace the Founder Share Attorney appointed under Section 6(a) of this Agreement by designating a Person approved by a majority of Independent Directors then in office as the true and lawful attorney for the Founder with respect to the Founder Share during any Incapacity Period to vote for and on behalf of the Founder with respect to the Founder Share on all matters (including the right to act by written consent) in such manner as the Founder Share Attorney determines in such Person’s sole discretion.
(c)The Parties acknowledge and agree that any power of attorney granted pursuant to this Section 6 shall have been coupled with an interest and given for valuable consideration (the receipt and adequacy of which are acknowledged) and shall survive, and not terminate upon, the legal or mental incapacity or death of the Founder.
7.Payment for the Founder Share
The Founder agrees to subscribe for, and the Company agrees to issue and sell to the Founder, the Founder Share, for a purchase price of $10 on the Effective Date. The Founder agrees that on the Effective Date, and concurrent with the issuance of the Founder Share to the Founder pursuant to the Arrangement, the Founder will pay the purchase price of $10 to the Company as consideration for the Founder Share.
8.Term
This Agreement shall become effective on the Effective Date without any further act or formality and shall continue in full force and effect until no Multiple Voting Shares are held by the Founder Holders and the Founder Share is no longer outstanding or until the Agreement is otherwise terminated pursuant to Section 10(a) of this Agreement.
9.Notices
All notices and other communications among the Parties hereunder shall be in writing and shall be deemed given if delivered personally or sent by registered mail, or by facsimile transmission or other form of recorded communication to the Parties at the following addresses (or at such other address for such Party as shall be specified in like notice):
| | | | | | | | |
(1) | If to the Company: | Shopify Inc. 151 O’Connor Street Ground Floor Ottawa, ON K2P 2L8 Attention: Corporate Secretary |
(1) | If to the Founder, 7910240 or any other Founder Holder: | Tobias Lütke [Redacted] with a copy (which shall not constitute notice) to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 Attention: Katharine Martin Email: kmartin@wsgr.com |
10.Miscellaneous
(a)This Agreement may be amended, varied, modified or terminated and the observance of any term hereof may be waived only by a written instrument executed by the Company with the approval of (i) all of the Independent Directors then in office, (ii) the Founder acting on behalf of all Founder Holders, (iii) the TSX, provided that the Subordinate Voting Shares are listed on the TSX at the time of such amendment, variation, modification, termination or waiver, (iv) at least two-thirds of the votes cast by holders of Subordinate Voting Shares present or represented at a meeting duly called for the purpose of considering such amendment, variation, modification, termination or waiver, and (v) a majority of the votes cast by holders of Subordinate Voting Shares and Multiple Voting Shares (excluding votes attached to any Subordinate Voting Shares and Multiple Voting Shares held directly or indirectly by the Founder Holders and any associate or affiliate (each as defined in the Securities Act (Ontario)) of the Founder Holders) present or represented at a meeting duly called for the purpose of considering such amendment, variation, modification, termination or waiver.
(b)Notwithstanding the provisions of Section 10(a), this Agreement may be amended without the approvals set forth in (iv) and (v) of Section 10(a) to correct or rectify any ambiguities, defective provisions, inconsistencies or omissions herein or to facilitate the operation of the provisions hereof provided the rights and interests of the holders of Subordinate Voting Shares and the holders of Multiple Voting Shares (other than the Founder Holders and any associate or affiliate (each as defined in the Securities Act (Ontario)) of the Founder Holders) are not prejudiced by such amendment and that such amendment has been approved by all of the Independent Directors then in office.
(c)Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (whether by operation of law or otherwise) and any purported assignment shall be void and unenforceable; provided, however, that the Company may assign or transfer this agreement to a successor entity in connection with any amalgamation, arrangement, merger or other similar transaction.
(d)This Agreement shall enure to the benefit of and be binding upon the Parties and their respective heirs, attorneys, guardians, estate trustees, executors, trustees, successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any person other than the Parties hereto or their respective heirs, attorneys, guardians, estate trustees, executors, trustees, successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(e)The Founder Holders agree that, without prejudice to any and all remedies which may be available to the Company under this Agreement or at law or in equity, injunctive relief provides the only effective protection from a breach of this Agreement, and the Founder Holders agree that the Company shall be entitled to seek injunctive relief, including an interim or interlocutory injunction, in any court of competent jurisdiction, to enforce any or all of the terms of this Agreement upon breach or threatened breach thereof, together with reimbursement for all reasonable legal fees and other expenses incurred in connection therewith.
(f)This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
(g)This Agreement constitutes the entire agreement and supersedes all other prior agreements, understandings, negotiations and discussions, whether oral or written, pre-contractual or otherwise, between the Parties with respect to the subject matter of this Agreement.
(h)If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.
(i)The Parties acknowledge that they have entered into this Agreement willingly with full knowledge of the obligations imposed by the terms of this Agreement. The Parties further acknowledge that they have been afforded the opportunity to obtain independent legal advice and confirm by the execution of this Agreement that they have either done so or waived their right to do so, and agree that this Agreement constitutes a binding legal obligation and that they are estopped from raising any claim on the basis that they have not obtained such advice.
(j)This Agreement may be executed in two or more counterparts (including by facsimile or PDF), each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date.
| | | | | | | | | | | |
| | |
| “Tobias Lütke” |
| TOBIAS LÜTKE |
| |
| | | | | | | | | | | |
| |
7910240 CANADA INC. |
| By: | “Tobias Lütke” |
| Name: Tobias Lütke |
| Title: CEO |
| | | | | | | | | | | |
| |
SHOPIFY INC. |
| By: | “Jessica Hertz” |
| Name: Jessica Hertz |
| Title: General Counsel and Corporate Secretary |
Form 51-102F3
Material Change Report
Item 1 Name and Address of Company
Shopify Inc. (“Shopify” or the “Company”)
151 O’Connor Street, Ground Floor
Ottawa, Ontario
K2P 2L8
Item 2 Date of Material Change
June 7, 2022.
Item 3 News Release
Press releases were disseminated by the Company on June 8, 2022 and June 10, 2022 through the facilities of Newsfile Corp. and were filed on SEDAR under the Company’s profile at www.sedar.com.
Item 4 Summary of Material Change
On June 8, 2022, the Company announced that its shareholders approved (a) a plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act (the “Plan of Arrangement”) to effect, among other things, certain updates to the Company’s governance structure, including an amendment to its restated articles of incorporation to provide for the creation of a new class of share, designated as the Founder Share (the “Founder Share”), and the issuance of such Founder Share to the Company’s Founder and Chief Executive Officer, Mr. Tobias Lütke (the “Arrangement”), and (b) a ten-for-one share split of the Company’s outstanding shares (the “Share Split”). On June 10, 2022, the Company announced the completion of the Arrangement.
Item 5 Full Description of Material Change
5.1 Full Description of Material Change
Arrangement
Further details regarding the Arrangement are set out in the Company’s management information circular dated April 11, 2022 (the “Circular”) in respect of the annual general and special meeting of shareholders held on June 7, 2022 (the “Meeting”), which is available under the Company’s profile on www.sedar.com. The following description of the terms of the Arrangement, the terms of the Founder Share and the Founder Agreement (as defined below) are qualified in their entirety by reference to the full text of the Plan of Arrangement, the rights, privileges, restrictions and conditions of the Founder Share and the Founder Agreement, which are available under the Company’s profile on www.sedar.com. Capitalized terms used, but not defined in this section have the meanings given to them in the Plan of Arrangement.
On June 7, 2022, the shareholders of the Company approved the Arrangement at the Meeting. The Company obtained a final order from the Ontario Superior Court of Justice (Commercial List) on June 9, 2022, and the Arrangement was completed on June 9, 2022 (the “Effective Date”). Pursuant to the Arrangement, the Company created a new class of share, designated as the Founder Share, the authorized number of which is one share, such that as of the Effective Date, the Company’s authorized share capital consists of an unlimited number of Class A subordinate voting shares (the “Class A Subordinate Voting Shares”), an unlimited number of Class B multiple voting shares (the “Class B Restricted Voting Shares”), one Founder Share, and an unlimited number of preferred shares, issuable in series.
The Founder Share provides Mr. Lütke with a variable number of votes that represents, when combined with the votes attached to certain other voting shares of the Company beneficially owned or controlled by Mr. Lütke, his immediate family and affiliates, 40% of the aggregate voting power attached to all of the Company’s outstanding voting shares, provided that such variable number of votes does not cause the aggregate voting power of Mr. Lütke and his immediate family and affiliates to exceed 49.9% of the aggregate voting power attached to all of the Company’s outstanding voting shares. Specifically, subject to the limitations set forth below, and until the occurrence of the Sunset Date, the Founder Share, as of the applicable record date, represents the lesser of:
–a number of votes, when combined with the votes attached to the Class B Restricted Voting Shares and any Class A Subordinate Voting Shares resulting from a conversion of Class B Restricted Voting Shares after the Effective Date (and, in some circumstances, additional Class A Subordinate Voting Shares acquired following a disposition of Class A Subordinate Voting Shares resulting from a conversion of Class B Restricted Voting Shares after the Effective Date), beneficially owned or controlled by Mr. Lütke, his immediate family and affiliates, equal to 40% of the aggregate voting power attached to all of the Company’s outstanding voting shares at such time; or
–a number of votes, when combined with the votes attached to the Class B Restricted Voting Shares and all Class A Subordinate Voting Shares beneficially owned or controlled by Mr. Lütke, his immediate family and affiliates, equal to 49.9% of the aggregate voting power attached to all of the Company’s outstanding voting shares at such time;
provided, however, that the Founder Share always carries at least one vote. As a result, the Founder Share carries one vote at any time when Mr. Lütke and his immediate family and affiliates beneficially own or control (i) an aggregate number of Class B Restricted Voting Shares, as well as any Class A Subordinate Voting Shares received on conversion of Class B Restricted Voting Shares after the Effective Date (and, in some circumstances, additional Class A Subordinate Voting Shares acquired following a disposition of Class A Subordinate Voting Shares resulting from a conversion of Class B Restricted Voting Shares after the Effective Date), representing 40% or more of the aggregate voting power attached to all of the Company’s outstanding voting shares at such time or (ii) an aggregate number of Class B Restricted Voting Shares and Class A Subordinate Voting Shares, representing 49.9% or more of the aggregate voting power attached to all of the Company’s outstanding voting shares at such time.
The variable voting power of the Founder Share will terminate following the occurrence of a Sunset Event on the Sunset Date. Specifically, the number of votes attached to the Founder Share will automatically and permanently be reduced to one vote following a transition period, to be determined by the Board of Directors of the Company that is not less than nine months and not more than 18 months following the occurrence of a Sunset Event, after the earliest of: (a) the date that Mr. Lütke is both no longer (i) providing services to the Company as an executive officer or a consultant whose primary engagement is with the Company and (ii) serving as a member of the Board of Directors of the Company, (b) the date of Mr. Lütke’s death or Disability, or (c) the date that Mr. Lütke and his immediate family and affiliates beneficially own an aggregate number of Class A Subordinate Voting Shares and Class B Restricted Voting Shares that is less than 2,367,556, representing 30% of the aggregate number of Class B Restricted Voting Shares beneficially owned by Mr. Lütke and his affiliates as of April 11, 2022, as such number is adjusted to appropriately reflect any share split, consolidation, stock dividend, reorganization, recapitalization, or similar event.
The Founder Share is subject to redemption by the Company for nominal consideration (a) at the Company’s option, at any time on or after the Sunset Date, or (b) at Mr. Lütke’s option, at any time, and is not entitled to receive any dividends or property or assets of the Company on liquidation, dissolution or winding-up of the Company.
As part of the Arrangement, 3,750,000 Class B Restricted Voting Shares held by Klister Credit Corp. were converted into Class A Subordinate Voting Shares in accordance with their terms.
The terms of the Class A Subordinate Voting Shares, the Class B Restricted Voting Shares and the preferred shares did not change as a result of the Arrangement.
Founder Agreement
In addition to the rights, privileges, restrictions and conditions attaching to the Founder Share, the Company entered into a founder agreement with Mr. Lütke and 7910240 Canada Inc., his affiliate, on the Effective Date (the “Founder Agreement”). Pursuant to the Founder Agreement, Mr. Lütke agreed not to Transfer (as such term is defined in the Founder Agreement), directly or indirectly, the Founder Share. Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) also agreed not to Transfer any Class B Restricted Voting Shares if such Transfer would result in Mr. Lütke not retaining Voting Control (as such term is defined in the Founder Agreement) over such shares, in which case such transferred Class B Restricted Voting Shares shall be caused to be converted into Class A Subordinate Voting Shares. The Founder Agreement also provides that Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) are not entitled to receive, directly or indirectly, any economic premium, additional payment or collateral benefit in connection with certain transactions involving the elimination, consolidation or collapse of the Class B Restricted Voting Shares or the Founder Share.
Pursuant to the Founder Agreement, Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) also agreed following the occurrence of a Sunset Event to convert or cause to be converted all outstanding Class B Restricted Voting Shares held by them into Class A Subordinate Voting Shares on or before the Sunset Date. As a result, in addition to the automatic and permanent reduction of the Founder Share to one vote on the Sunset Date, following a transition period after the occurrence of a Sunset Event, Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) will, pursuant to the Founder Agreement, be required to convert any Class B Restricted Voting Shares held by them following a Sunset Event into Class A Subordinate Voting Shares on or before the Sunset Date.
The Founder Agreement may be amended, varied, modified or terminated and the observance of any term thereof may be waived only by a written instrument executed by the Company with the approval of (i) all of the Independent Directors (as such term is defined in the Founder Agreement) then in office, (ii) Mr. Lütke acting on behalf of all Founder Holders (as such term is defined in the Founder Agreement), (iii) the Toronto Stock Exchange, provided that the Class A Subordinate Voting Shares are listed on the Toronto Stock Exchange at the time of such amendment, variation, modification, termination or waiver, (iv) at least two-thirds of the votes cast by holders of Class A Subordinate Voting Shares present or represented at a meeting duly called for the purpose of considering such amendment, variation, modification, termination or waiver, and (v) a majority of the votes cast by holders of Class A Subordinate Voting Shares and Class B Restricted Voting Shares (excluding votes attached to any Class A Subordinate Voting Shares and Class B Restricted Voting Shares held directly or indirectly by the Founder Holders and any associate or affiliate (each as defined in the Securities Act (Ontario)) of the Founder Holders) present or represented at a meeting duly called for the purpose of considering such amendment, variation, modification, termination or waiver.
Notwithstanding the foregoing, the Founder Agreement may be amended without the approvals set forth above in (iv) and (v) to correct or rectify any ambiguities, defective provisions, inconsistencies or omissions therein or to facilitate the operation of the provisions thereof provided the rights and interests of the holders of Class A Subordinate Voting Shares and the holders of Class B Restricted Voting Shares (other than the Founder Holders and any associate or affiliate (each as defined in the Securities Act (Ontario)) of the Founder Holders) are not prejudiced by such amendment and that such amendment has been approved by all of the Independent Directors then in office.
Share Split
On June 7, 2022, the Company’s shareholders approved the Share Split at the Meeting. Consequently, shareholders of record as of the close of business on June 22, 2022 (the “Record Date”) will receive on June 28, 2022 (the “Payment Date”) nine additional Class A Subordinate Voting Shares or Class B Restricted Voting Shares, as applicable, for each share held.
The New York Stock Exchange and the Toronto Stock Exchange have determined that the Class A Subordinate Voting Shares will trade on a due bill basis from June 21, 2022 (being one trading day prior to the Record Date) to the Payment Date (i.e., June 28, 2022), inclusive. A due bill is an entitlement attached to listed securities undergoing a material corporate action, such as the Share Split. In this instance, the entitlement is to the additional Class A Subordinate Voting Shares issuable because of the Share Split. Any trades that are executed during the due bill period will be flagged to ensure purchasers receive the entitlement to the additional Class A Subordinate Voting Shares issuable because of the Share Split. Ex-distribution trading in the Class A Subordinate Voting Shares on a split-adjusted basis will commence on June 29, 2022, as of which date purchases of Class A Subordinate Voting Shares will no longer have the attaching entitlement to the additional Class A Subordinate Voting Shares. The due bill redemption date will be June 30, 2022.
Shareholders will not need to take any action. Currently outstanding share certificates representing Class A Subordinate Voting Shares or Class B Restricted Voting Shares will continue to be effective. They should be retained by shareholders and should not be forwarded to the Company or Computershare. The Company will use the direct registration system (“DRS”) to electronically register the shares issued pursuant to the Share Split, rather than issuing physical share certificates. On or around June 28, 2022, Computershare Investor Services Inc., the Company’s transfer agent, will send out DRS advice statements to registered shareholders indicating the number of additional shares that they are receiving as a result of the Share Split. This will allow shareholders to hold their additional shares in book-entry form without having a physical share certificate issued. In addition, Computershare will electronically issue the appropriate number of Class A Subordinate Voting Shares to CDS Clearing and Depositary Services Inc. and the Depository Trust Company for distribution to non-registered (beneficial) shareholders. Non-registered (beneficial) shareholders who hold their Class A Subordinate Voting Shares in an account with their investment dealer or other intermediary will have their accounts automatically updated to reflect the Share Split in accordance with the applicable brokerage account providers’ usual procedures.
The Share Split will not change a shareholder’s proportionate ownership in the Company and there will be no change to the interest, rights or privileges of holders of Class A Subordinate Voting Shares and Class B Restricted Voting Shares. Given the Share Split will affect the Class A Subordinate Voting Shares and Class B Restricted Voting Shares in the same manner, the relative voting power attached to the Class A Subordinate Voting Shares and Class B Restricted Voting Shares will not change due to the Share Split. There will also be certain proportionate adjustments to the number of shares reserved for issuance pursuant to, and outstanding awards under, the Company’s share-based incentive plans, and to the conversion rate of the Company’s 0.125% convertible senior notes due 2025 pursuant to the supplemental indenture governing such notes, in each case, in order to reflect the Share Split.
Further details of the Share Split are set out in the Circular, which is available under the Company’s profile on www.sedar.com.
5.2 Disclosure for Restructuring Transactions
Not applicable.
Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102
Not applicable.
Item 7 Omitted Information
None.
Item 8 Executive Officer
Further information regarding the matters described in this report may be obtained from Jessica Hertz, General Counsel and Corporate Secretary, who is knowledgeable about the details of the material change and may be contacted at corporate@shopify.com or 613 241-2828.
Item 9 Date of Report
June 10, 2022.
Exhibit 99.5
Form 62-103F1
REQUIRED DISCLOSURE UNDER THE EARLY WARNING REQUIREMENTS
State if this report is filed to amend information disclosed in an earlier report. Indicate the date of the report that is being amended.
This report amends information disclosed in a report filed on February 24, 2017.
Item 1 – Security and Reporting Issuer
1.1 State the designation of securities to which this report relates and the name and address of the head office of the issuer of the securities.
This report relates to the Class A subordinate voting shares, Class B multiple voting shares and Founder share of Shopify Inc. (the “Company”).
The Company’s head office is located at:
151 O’Connor Street
Ground Floor
Ottawa, Ontario
K2P 2L8
1.2 State the name of the market in which the transaction or other occurrence that triggered the requirement to file this report took place.
Not applicable. The transaction that triggered the requirement to file this report was an issuance of a Founder share to Tobias Lütke by way of a plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act, as further described in Item 2.2 below.
Item 2 – Identity of the Acquiror
2.1 State the name and address of the acquiror.
Tobias Lütke
c/o Shopify Inc.
151 O’Connor Street, Ground Floor
Ottawa, Ontario
K2P 2L8
2.2 State the date of the transaction or other occurrence that triggered the requirement to file this report and briefly describe the transaction or other occurrence.
On June 7, 2022, shareholders of the Company approved a plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act to effect, among other things, certain updates to the Company’s governance structure, including an amendment to its restated articles of incorporation to provide for the creation of a new class of share, designated as the Founder share, and the issuance of such Founder share to the Company’s Founder and Chief Executive Officer, Mr. Lütke (the “Arrangement”).
On June 9, 2022, the Company completed the Arrangement and the Founder share was issued to Mr. Lütke.
2.3 State the names of any joint actors.
Not applicable.
Item 3 – Interest in Securities of the Reporting Issuer
3.1 State the designation and number or principal amount of securities acquired or disposed of that triggered the requirement to file the report and the change in the acquiror’s securityholding percentage in the class of securities.
7910240 Canada Inc. holds 6,729,875 Class B multiple voting shares and 5,250 Class A subordinate voting shares. Mr. Lütke directly holds 1,161,977 Class B multiple voting shares and 29,617 Class A subordinate voting shares. Mr. Lütke is deemed to beneficially own the shares held by 7910240 Canada Inc.
Mr. Lütke was issued one Founder share pursuant to the Arrangement. Immediately prior to the Arrangement, Mr. Lütke beneficially owned or controlled 7,891,852 Class B multiple voting shares (representing approximately 66.0% of the issued and outstanding Class B multiple voting shares and approximately 33.8% of the aggregate voting power attached to all of the Company’s outstanding voting shares) and 34,867 Class A subordinate voting shares (representing approximately 0.03% of the issued and outstanding Class A subordinate voting shares and approximately 0.01% of the aggregate voting power attached to all of the Company’s outstanding voting shares). Each Class B multiple voting share represents 10 votes and is convertible into a Class A subordinate voting share in accordance with its terms.
The Founder share provides Mr. Lütke with a variable number of votes that, when combined with Class B multiple voting shares beneficially owned by him, his immediate family and affiliates (including any Class A subordinate voting shares issued in the future upon conversion of his Class B multiple voting shares and certain other Class A subordinate voting shares acquired after the effective date of the Arrangement), represents 40% of the total voting power attached to all of the Company’s outstanding voting shares. Immediately following completion of the Arrangement, Mr. Lütke beneficially owned or controlled 7,891,852 Class B multiple voting shares (representing approximately 96.2% of the issued and outstanding Class B multiple voting shares), 34,867 Class A subordinate voting shares (representing approximately 0.03% of the issued and outstanding Class A subordinate voting shares) and one Founder share (with only one Founder share being issued and outstanding), representing, approximately, 40% of the aggregate voting power attached to all of the Company’s outstanding voting shares.
Mr. Lütke holds 147,839 options which were granted pursuant to the Company’s stock option plan, which are exercisable for Class A subordinate voting shares.
3.2 State whether the acquiror acquired or disposed ownership of, or acquired or ceased to have control over, the securities that triggered the requirement to file the report.
See Item 2.2.
3.3 If the transaction involved a securities lending arrangement, state that fact.
Not applicable.
3.4 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities, immediately before and after the transaction or other occurrence that triggered the requirement to file this report.
See Item 3.1 above.
3.5 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities referred to in Item 3.4 over which
(a)the acquiror, either alone or together with any joint actors, has ownership and control,
See Item 3.1 above.
(b)the acquiror, either alone or together with any joint actors, has ownership but control is held by persons or companies other than the acquiror or any joint actor, and
Not applicable.
(c)the acquiror, either alone or together with any joint actors, has exclusive or shared control but does not have ownership.
Not applicable.
3.6 If the acquiror or any of its joint actors has an interest in, or right or obligation associated with, a related financial instrument involving a security of the class of securities in respect of which disclosure is required under this item, describe the material terms of the related financial instrument and its impact on the acquiror’s securityholdings.
Not applicable.
3.7 If the acquiror or any of its joint actors is a party to a securities lending arrangement involving a security of the class of securities in respect of which disclosure is required under this item, describe the material terms of the arrangement including the duration of the arrangement, the number or principal amount of securities involved and any right to recall the securities or identical securities that have been transferred or lent under the arrangement.
Not applicable.
State if the securities lending arrangement is subject to the exception provided in section 5.7 of NI 62-104.
Not applicable.
3.8 If the acquiror or any of its joint actors is a party to an agreement, arrangement or understanding that has the effect of altering, directly or indirectly, the acquiror’s economic exposure to the security of the class of securities to which this report relates, describe the material terms of the agreement, arrangement or understanding.
Not applicable.
Item 4 – Consideration Paid
4.1 State the value, in Canadian dollars, of any consideration paid or received per security and in total.
The Founder share was issued to Mr. Lütke for cash consideration of C$10.
4.2 In the case of a transaction or other occurrence that did not take place on a stock exchange or other market that represents a published market for the securities, including an issuance from treasury, disclose the nature and value, in Canadian dollars, of the consideration paid or received by the acquiror.
Refer to Items 2.2 and 4.1.
4.3 If the securities were acquired or disposed of other than by purchase or sale, describe the method of acquisition or disposition.
Not applicable.
Item 5 – Purpose of the Transaction
State the purpose or purposes of the acquiror and any joint actors for the acquisition or disposition of securities of the reporting issuer. Describe any plans or future intentions which the acquiror and any joint actors may have which relate to or would result in any of the following:
(a) the acquisition of additional securities of the reporting issuer, or the disposition of securities of the reporting issuer;
(b) a corporate transaction, such as a merger, reorganization or liquidation, involving the reporting issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of the assets of the reporting issuer or any of its subsidiaries;
(d) a change in the board of directors or management of the reporting issuer, including any plans or intentions to change the number or term of directors or to fill any existing vacancy on the board;
(e) a material change in the present capitalization or dividend policy of the reporting issuer;
(f) a material change in the reporting issuer’s business or corporate structure;
(g) a change in the reporting issuer’s charter, bylaws or similar instruments or another action which might impede the acquisition of control of the reporting issuer by any person or company;
(h) a class of securities of the reporting issuer being delisted from, or ceasing to be authorized to be quoted on, a marketplace;
(i) the issuer ceasing to be a reporting issuer in any jurisdiction of Canada;
(j) a solicitation of proxies from securityholders;
(k) an action similar to any of those enumerated above.
The Founder share was acquired by Mr. Lütke pursuant to the Arrangement.
Mr. Lütke may, depending on market conditions, acquire additional Class A subordinate voting shares or dispose of Class B multiple voting shares or Class A subordinate voting shares in the future, whether in transactions over the open market or through privately negotiated arrangements or otherwise, subject to a number of factors, including general market conditions and estate planning, investment diversification and charitable giving purposes. The Founder share is not transferable by Mr. Lütke.
Item 6 – Agreements, Arrangements, Commitments or Understandings With Respect to Securities of the Reporting Issuer
Describe the material terms of any agreements, arrangements, commitments or understandings between the acquiror and a joint actor and among those persons and any person with respect to securities of the class of securities to which this report relates, including but not limited to the transfer or the voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Include such information for any of the securities that are pledged or otherwise subject to a contingency, the occurrence of which would give another person voting power or investment power over such securities, except that disclosure of standard default and similar provisions contained in loan agreements need not be included.
In connection with the Arrangement, the Company entered into a founder agreement with Mr. Lütke and 7910240 Canada Inc. (the “Founder Agreement”). Pursuant to the Founder Agreement, Mr. Lütke agreed not to, directly or indirectly, transfer the Founder share. Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) also agreed not to transfer any Class B multiple voting shares if such transfer would result in Mr. Lütke not retaining voting control over such shares, in which case such transferred Class B multiple voting shares shall be caused to be converted into Class A subordinate voting shares. The Founder Agreement also provides that Mr. Lütke and 7910240 Canada Inc. (and any additional affiliate who becomes a party to the Founder Agreement pursuant to its terms) are not entitled to receive, directly or indirectly, any economic premium, additional payment or collateral benefit in connection with certain transactions involving the elimination, consolidation or collapse of the Class B multiple voting shares or the Founder share.
As further described in the Company’s Annual Information Form dated February 16, 2022, in connection with the Company’s initial public offering, Mr. Lütke through entities owned and/or controlled, directly or indirectly, by him is party to (i) a coattail agreement dated May 27, 2015, which contains provisions customary for dual class, TSX-listed corporations designed to prevent transactions that otherwise would deprive the holders of Class A subordinate voting shares of rights under the take-over bid provisions of applicable securities laws in Canada to which they would have been entitled if the Class B multiple voting shares had been Class A subordinate voting shares; and (ii) a third amended and restated investors’ rights agreement dated May 27, 2015, which provides certain registration rights in respect of any Class A subordinate voting shares held by certain shareholders from time to time, including those Class A subordinate voting shares issuable upon the conversion of any Class B multiple voting shares beneficially owned by the holder thereof.
Item 7 – Change in material fact
If applicable, describe any change in a material fact set out in a previous report filed by the acquiror under the early warning requirements or Part 4 in respect of the reporting issuer’s securities.
Not applicable.
Item 8 – Exemption
If the acquiror relies on an exemption from requirements in securities legislation applicable to formal bids for the transaction, state the exemption being relied on and describe the facts supporting that reliance.
Not applicable.
[Signature page follows.]
Item 9 – Certification
Certificate
I, as the acquiror, certify to the best of my knowledge, information and belief, that the statements made in this report are true and complete in every respect.
Dated: June 10, 2022.
| | | | | |
By: |
(signed) Tobias Lütke |
| Name: Tobias Lütke |
