The Ontario Securities Commission (OSC) granted a partial revocation of a cease trade order (CTO) against Net Zero Renewable Energy Inc. This decision was based on an application by Generation PMCA Corp. and Generation IACP Inc., who sought to sell Net Zero shares to establish a tax loss. The shares in question were acquired before the CTO was issued due to Net Zero’s failure to file required continuous disclosure materials.
The decision, under section 144 of the Securities Act, R.S.O. 1990, c. S.5, as amended, allows the sale of the shares at a nominal value to a sophisticated purchaser who is an accredited investor, understands the shares’ lack of market value, and is aware of the CTO’s nature. The OSC was satisfied that the partial revocation would not be prejudicial to the public interest, as there was no undisclosed material information and the transaction would occur solely for tax loss purposes.
The partial revocation is subject to conditions, including the provision of the CTO and the order to the purchaser before the sale, and obtaining a signed acknowledgement from the purchaser regarding the CTO’s continuation and the lack of guarantee for a full revocation in the future. The applicants must also make the acknowledgement available to the OSC upon request. The decision was made on December 22, 2022.