The Securities Commission has granted a partial revocation of a cease trade order (CTO) that was imposed on an issuer due to its failure to file required financial documents. The issuer sought this partial revocation to proceed with a plan of arrangement under the Business Corporations Act (British Columbia), which involves merging with its wholly-owned subsidiary to form a new entity (Amalco), consolidating issued common shares, and cashing out shareholders with small lots.
The CTO was originally issued because the issuer did not file its audited annual financial statements and interim financial reports. The issuer’s inability to file these documents was attributed to financial distress. Despite the CTO, the issuer has since made a proposal to its creditors under the Companies Creditors Arrangement Act to settle outstanding debts.
The partial revocation is conditional upon the issuer obtaining acknowledgments from all remaining shareholders that the securities acquired under the arrangement will remain subject to the CTO. Additionally, the issuer must provide a copy of the CTO and the partial revocation order to all shareholders.
The decision to grant the partial revocation was made under the authority of Section 144 of the Securities Act (Ontario) and was informed by National Policy 11-207, which addresses failure-to-file CTOs and revocations in multiple jurisdictions. The outcome allows the issuer to move forward with its restructuring plan while ensuring that shareholders are informed of the ongoing restrictions on their securities.