Q: We have recently completed a transaction that involves an operating non-public enterprise and a non-operating public enterprise (i.e. a shell company). The transaction resulted in the owners and management of the operating non-public enterprise acquiring control of the combined enterprise. The accounting principles applicable to the issuer refer to this transaction as a reverse takeover or a reverse acquisition, even though the accounting principles specify that this type of transaction is not a business combination because the non-operating public enterprise does not meet the definition of a business. Would this type of transaction be included in the definition of a reverse takeover under NI 51-102? [Added May 4, 2007]
A: Yes. Although these reverse takeover transactions are accounted for as capital transactions (because they are not business combinations), they are still considered to be reverse takeovers under accounting principles and are included in the definition of reverse takeover under NI 51-102.