The Securities Commission has granted a partial revocation of a cease trade order (CTO) that was initially imposed on an issuer due to its failure to file audited annual financial statements. The issuer, a company under British Columbia law with its head office in the province, is a reporting issuer in all Canadian provinces. Its securities were cease traded after it did not meet the filing deadline for its 2019 financial statements and subsequent interim statements, largely due to COVID-19 related disruptions affecting the audit process.
The issuer sought the partial revocation to amend an existing deferral agreement related to payments owed under a convertible debenture agreement with Land Breeze II S.A.r.l, a subsidiary of China Investment Corporation. The partial revocation was necessary to allow the issuer to undertake certain corporate actions, including entering into a new deferral agreement, potentially issuing common shares, and seeking shareholder approval and acceptance by the Toronto Stock Exchange (TSX).
The commission’s decision to grant the partial revocation was based on representations by the issuer that the deferral agreement would enhance its ability to continue as a going concern, address auditors’ concerns, provide time to secure additional capital or support, and work towards an unmodified audit opinion on its 2019 financial statements. This would enable the issuer to remedy its filing defaults and apply for a full revocation of the CTO.
The partial revocation was granted under the conditions that the issuer would provide copies of the CTO and the partial revocation order to Land Breeze and Fullbloom, obtain signed acknowledgments from them, and rely on the exemption in Section 2.37 of National Instrument 45-106 for the deferral agreement.
The decision was made in accordance with sections 127 and 144 of the Securities Act (R.S.O. 1990, c. S.5) and National Policy 11-207, which govern failure-to-file cease trade orders and revocations in multiple jurisdictions. The outcome permits the issuer to complete the corporate actions necessary to amend the deferral agreement.