| Item 8. | INDEMNIFICATION
OF DIRECTORS AND OFFICERS. |
Brookfield Capital Finance LLC (the “US
LLC Issuer”) and Brookfield Finance II LLC (the “US Pref Issuer”)
The US LLC Issuer and the
US Pref Issuer are Delaware limited liability companies. Section 18-108 of the Delaware Limited Liability Company Act, as amended
(“DE LLC Act”), provides that a limited liability company may, subject to such standards and restrictions, if any,
as are set forth in its limited liability company agreement, and has the power to, indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
The limited liability company
agreements (each, a “LLC Agreement”) of the US LLC Issuer and the US Pref Issuer contain indemnification provisions
that generally provide that the US LLC Issuer and the US Pref Issuer will indemnify, to the fullest extent permitted under the DE LLC
Act, each member and each manager, officer, employee or agent of the US LLC Issuer and the US Pref Issuer, as applicable, against all
expenses, liabilities and losses (including, without limitation, reasonable attorneys’ fees and expenses, judgments, fines, excise
taxes or penalties) reasonably incurred or suffered by such person made a party or threatened to be made a party to or involved in any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or arbitrative or in the nature
of an alternative dispute resolution by reason of the fact that such person is or was a member or a manager, officer, employee or agent
of the US LLC Issuer and/or the US Pref Issuer or is or was serving as a shareholder, manager, officer, employee or agent of a subsidiary
of the US LLC Issuer and/or the US Pref Issuer, other than in the case of bad faith, intentional misconduct or knowing violation of law.
A policy of directors’
and officers’ liability insurance is maintained by the US LLC Issuer and the US Pref Issuer, which insures, subject to certain
exclusions, directors, officers and/or managers for losses as a result of claims against the directors and officers of the US LLC Issuer
and/or the US Pref Issuer, as applicable, in their capacity as directors, officers and/or managers and also reimburses the US LLC Issuer
and/or the US Pref Issuer for payments made pursuant to the indemnity provided by the US LLC Issuer and/or the US Pref Issuer pursuant
to its LLC Agreement or as required or permitted by law.
Brookfield Finance (Australia) Pty Ltd (the
“AUS Issuer”)
Section 199A(1) of
the Corporations Act 2001 (Commonwealth) (the “Corporations Act”) provides that a company or a related body corporate
must not exempt a person from a liability to the company incurred as an officer of the company.
Section 199A(2) of
the Corporations Act provides that a company or a related body corporate must not indemnify a person against any of the following liabilities
incurred as an officer of the company:
| · | a
liability owed to the company or a related body corporate; |
| · | a
liability for a pecuniary penalty order or compensation order under specified provisions
of the Corporations Act; or |
| · | a
liability that is owed to someone other than the company or a related body corporate that
did not arise out of conduct in good faith. |
Section 199A(2) does
not apply to a liability for legal costs.
Section 199A(3) provides
that a company or a related body corporate must not indemnify a person against legal costs incurred in defending an action for a liability
incurred as an officer of the company if the costs are incurred:
| · | in
defending or resisting proceedings in which the person is found to have a liability for which
they could not be indemnified under Section 199A(2); or |
| · | in
defending or resisting criminal proceedings in which the person is found guilty; or |
| · | in
defending or resisting proceedings brought by the Australian Securities and Investments Commission
(ASIC) or a liquidator for a court order if the grounds for making the order are found by
the court to have been established (this does not apply to costs incurred in responding to
actions taken by ASIC or a liquidator as part of an investigation before commencing proceedings
for the court order); or |
| · | in
connection with proceedings for relief to the person under the Corporations Act in which
the court denies the relief. |
Section 199B of the
Corporations Act provides that a company or a related body corporate must not pay, or agree to pay, a premium for a contract insuring
a person who is or has been an officer of the company against a liability (other than one for legal costs) arising out of:
| · | conduct
involving a willful breach of any duty in relation to the company; or |
| · | a
contravention of the officer’s duties under the Corporations Act not to improperly
use their position or make improper use of information obtained as an officer. |
For the purpose of Sections
199A and 199B, an “officer” of a company includes:
| · | a
director or secretary; |
| · | a
person who makes, or participates in making, decisions that affect the whole, or a substantial
part, of the business of the company; |
| · | a
person who has the capacity to significantly affect the company’s financial standing;
and |
| · | a
person in accordance with whose instructions or wishes the directors of the company are accustomed
to act. |
The AUS Issuer’s Constitution
provides that it may indemnify a person who is, or has been, an officer of the AUS Issuer, to the full extent permissible by law, out
of its property against any liability incurred by such person as an officer of the AUS Issuer and legal costs incurred in defending an
action for a liability incurred by that person as an officer of the AUS Issuer, except in respect of a liability or legal cost for which
the AUS Issuer is prohibited from indemnifying the officer pursuant to the Corporations Act.
The AUS Issuer maintains
a directors’ and officers’ liability insurance policy. The AUS Issuer has entered into deeds of indemnity with its directors
and officers against certain liabilities incurred as a director or officer, including costs and expenses associated in successfully defending
legal proceedings.
Brookfield Finance I (UK) plc (the “UK
Issuer”)
The UK Issuer’s memorandum
and articles of association contain indemnification provisions for the benefit of the UK Issuer’s directors to the extent permitted
by English law. However, such provisions are limited by the Companies Act 2006 (the “Companies Act”), which prescribe
that an advance commitment to indemnify only permits a company to pay the costs or discharge the liability of a director or company secretary
where judgment is given in favor of the director or company secretary in any civil or criminal action in respect of such costs or liability,
or where an English court grants relief because the director or company secretary acted honestly and reasonably and ought fairly to be
excused. Any provision whereby an English company seeks to commit in advance to indemnify its directors or company secretary over and
above the limitations imposed by the Companies Act will be void, whether contained in its articles of association or any contract between
the Registrant and the director or company secretary. This restriction does not apply to the UK Issuer’s executive officers who
are not directors, the company secretary or other persons who would be considered “officers” within the meaning of the Companies
Act.
The following provisions
of the Companies Act provide as follows:
“232 Provisions protecting directors
from liability
| 1. | Any
provision that purports to exempt a director of a company (to any extent) from any liability
that would otherwise attach to him in connection with any negligence, default, breach of
duty or breach of trust in relation to the company is void. |
| 2. | Any
provision by which a company directly or indirectly provides an indemnity (to any extent)
for a director of the company, or of an associated company, against any liability attaching
to him in connection with any negligence, default, breach of duty or breach of trust in relation
to the company of which he is a director is void except as permitted by — |
| (a) | section 233
(provision of insurance), |
| (b) | section 234
(qualifying third party indemnity provision), or |
| (c) | section 235
(qualifying pension scheme indemnity provision). |
| 3. | This
section applies to any provision, whether contained in a company’s articles or in any
contract with the company or otherwise. |
| 4. | Nothing
in this section prevents a company’s articles from making such provision as has previously
been lawful for dealing with conflicts of interest.” |
“233 Provision of insurance
Section 232(2) (voidness of
provisions for indemnifying directors) does not prevent a company from purchasing and maintaining for a director of the company, or of
an associated company, insurance against any such liability as is mentioned in that subsection.”
“234 Qualifying third party
indemnity provision
| 1. | Section 232(2) (voidness
of provisions for indemnifying directors) does not apply to qualifying third party indemnity
provision. |
| 2. | Third
party indemnity provision means provision for indemnity against liability incurred by the
director to a person other than the company or an associated company. |
Such provision is qualifying third
party indemnity provision if the following requirements are met.
| 3. | The
provision must not provide any indemnity against — |
| (a) | any
liability of the director to pay — |
| (i) | a
fine imposed in criminal proceedings, or |
| (ii) | a
sum payable to a regulatory authority by way of a penalty in respect of non-compliance with
any requirement of a regulatory nature (however arising); or |
| (b) | any
liability incurred by the director — |
| (i) | in
defending criminal proceedings in which he is convicted, or |
| (ii) | in
defending civil proceedings brought by the company, or an associated company, in which judgment
is given against him, or |
| (iii) | in
connection with an application for relief (see subsection (6)) in which the court refuses
to grant him relief. |
| 4. | The
references in subsection (3)(b) to a conviction, judgment or refusal of relief
are to the final decision in the proceedings. |
| (a) | a
conviction, judgment or refusal of relief becomes final — |
| (i) | if
not appealed against, at the end of the period for bringing an appeal, or |
| (ii) | if
appealed against, at the time when the appeal (or any further appeal) is disposed of, and |
| (b) | an
appeal is disposed of — |
| (i) | if
it is determined and the period for bringing any further appeal has ended, or |
| (ii) | if
it is abandoned or otherwise ceases to have effect. |
| 6. | The
reference in subsection (3)(b)(iii) to an application for relief is to an application
for relief under section 661(3) or (4) (power of court to grant relief in
case of acquisition of shares by innocent nominee), or section 1157 (general power of
court to grant relief in case of honest and reasonable conduct).” |
“235 Qualifying pension scheme
indemnity provision
| 1. | Section 232(2) (voidness
of provisions for indemnifying directors) does not apply to qualifying pension scheme indemnity
provision. |
| 2. | Pension
scheme indemnity provision means provision indemnifying a director of a company that is a
trustee of an occupational pension scheme against liability incurred in connection with the
company’s activities as trustee of the scheme. |
Such provision is qualifying pension
scheme indemnity provision if the following requirements are met.
| 3. | The
provision must not provide any indemnity against — |
| (a) | any
liability of the director to pay — |
| (i) | a
fine imposed in criminal proceedings, or |
| (ii) | a
sum payable to a regulatory authority by way of a penalty in respect of non-compliance with
any requirement of a regulatory nature (however arising); or |
| (b) | any
liability incurred by the director in defending criminal proceedings in which he is convicted. |
| 4. | The
reference in subsection (3)(b) to a conviction is to the final decision in the
proceedings. |
| (a) | a
conviction becomes final — |
| (i) | if
not appealed against, at the end of the period for bringing an appeal, or |
| (ii) | if
appealed against, at the time when the appeal (or any further appeal) is disposed of, and |
| (b) | an
appeal is disposed of — |
| (i) | if
it is determined and the period for bringing any further appeal has ended, or |
| (ii) | if
it is abandoned or otherwise ceases to have effect. |
| 6. | In
this section “occupational pension scheme” means an occupational pension scheme
as defined in section 150(5) of the Finance Act 2004 (c. 12) that is established
under a trust.” |
“256 Associated bodies corporate
For the purposes of this Part —
| (a) | bodies
corporate are associated if one is a subsidiary of the other or both are subsidiaries of
the same body corporate, and |
| (b) | companies
are associated if one is a subsidiary of the other or both are subsidiaries of the same body
corporate.” |
“239 Ratification of acts of
directors
| 1. | This
section applies to the ratification by a company of conduct by a director amounting to negligence,
default, breach of duty or breach of trust in relation to the company. |
| 2. | The
decision of the company to ratify such conduct must be made by resolution of the members
of the company. |
| 3. | Where
the resolution is proposed as a written resolution neither the director (if a member of the
company) nor any member connected with him is an eligible member. |
| 4. | Where
the resolution is proposed at a meeting, it is passed only if the necessary majority is obtained
disregarding votes in favour of the resolution by the director (if a member of the company)
and any member connected with him. |
This does not prevent the director
or any such member from attending, being counted towards the quorum and taking part in the proceedings at any meeting at which the decision
is considered.
| 5. | For
the purposes of this section — |
| (a) | “conduct”
includes acts and omissions; |
| (b) | “director”
includes a former director; |
| (c) | a
shadow director is treated as a director; and |
| (d) | in
section 252 (meaning of “connected person”), subsection (3) does
not apply (exclusion of person who is himself a director). |
| 6. | Nothing
in this section affects — |
| (a) | the
validity of a decision taken by unanimous consent of the members of the company, or |
| (b) | any
power of the directors to agree not to sue, or to settle or release a claim made by them
on behalf of the company. |
| 7. | This
section does not affect any other enactment or rule of law imposing additional requirements
for valid ratification or any rule of law as to acts that are incapable of being ratified
by the company.” |
“1157 Power of court to grant
relief in certain cases
| 1. | If
in proceedings for negligence, default, breach of duty or breach of trust against — |
| (a) | an
officer of a company, or |
| (b) | a
person employed by a company as auditor (whether he is or is not an officer of the company), |
it appears to the court hearing the
case that the officer or person is or may be liable but that he acted honestly and reasonably, and that having regard to all the circumstances
of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly
or in part, from his liability on such terms as it thinks fit.
| 2. | If
any such officer or person has reason to apprehend that a claim will or might be made against
him in respect of negligence, default, breach of duty or breach of trust — |
| (a) | he
may apply to the court for relief, and |
| (b) | the
court has the same power to relieve him as it would have had if it had been a court before
which proceedings against him for negligence, default, breach of duty or breach of trust
had been brought. |
| 3. | Where
a case to which subsection (1) applies is being tried by a judge with a jury, the
judge, after hearing the evidence, may, if he is satisfied that the defendant (in Scotland,
the defender) ought in pursuance of that subsection to be relieved either in whole or in
part from the liability sought to be enforced against him, withdraw the case from the jury
and forthwith direct judgment to be entered for the defendant (in Scotland, grant decree
of absolvitor) on such terms as to costs (in Scotland, expenses) or otherwise as the judge
may think proper.” |
The UK Issuer is permitted
under its articles of association and the Companies Act to purchase directors’ and officers’ liability insurance, as well
as other types of insurance, for directors and former directors of the UK Issuer or an associated company.
The UK Issuer expects to
enter into indemnification agreements with each of its directors and officers. These indemnification agreements may subject to the provisions
of the Companies Act require the UK Issuer, among other things, to indemnify its directors and officers for some expenses, including
attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising
out of his or her service as one of its directors or officers, or any of its subsidiaries or any other company or enterprise to which
the person provides services at its request.
**********
Insofar as indemnification
for liabilities under the Securities Act may be permitted to directors, officers or persons controlling the US LLC Issuer, the US Pref
Issuer, the AUS Issuer and/or the UK Issuer (each, a “F-3 Registrant”) pursuant to the foregoing provisions or in
any underwriting agreement each F-3 Registrant enters into, each F-3 Registrant has been informed that in the opinion of the U.S. Securities
and Exchange Commission (the “Commission”) such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
