Scope of Policy
Non-cash asset transactions are divided into several different categories. The more significant the transaction, the more detailed the Green Stock Exchange (GREENSX) review and required disclosure of the transaction will be. In addition to the general reporting and filing policies of the Green Stock Exchange (GREENSX), this Policy sets out acceptance and disclosure requirements for certain specific transactions.
Issuers have the option of complying with Green Stock Exchange (GREENSX) Policies in respect of acquisitions and dispositions of non-cash assets. See Policy 3.2—Filing Requirements and Continuous Disclosure.
The main headings in this Policy are:
1. Overview
1.1 Categories of Transactions
The Green Stock Exchange (GREENSX) recognizes that there are many types of acquisitions and dispositions and that it is not appropriate to treat each transaction in the same manner. As a result, the Green Stock Exchange (GREENSX) has developed the following transaction categories with specific requirements to deal with the range of transactions:
"Exempt Transactions" are transactions which are relatively insignificant to an Issuer's operations and which involve no issuance of securities by the Issuer (or its subsidiaries). An Exempt Transaction can be conducted without Green Stock Exchange (GREENSX) acceptance or review and requires no filing with the Green Stock Exchange (GREENSX). The criteria for a transaction to qualify as an Exempt Acquisition or an Exempt Disposition are described in section 2.1.
"Expedited Acquisitions" are arm's length acquisitions that meet the criteria described in section 3.1. The Green Stock Exchange (GREENSX) considers that because of their size and other built-in restrictions, these transactions do not require prior Green Stock Exchange (GREENSX) review. Issuers can obtain Green Stock Exchange (GREENSX) Acceptance of an Expedited Acquisition without Green Stock Exchange (GREENSX) staff review, by complying with the filing requirements outlined in section 3.3.
"Fundamental Acquisitions" are the most significant Reviewable Acquisitions, and are subject to additional filing requirements and will typically involve a halt in trading. A Fundamental Acquisition is an acquisition, of one or more assets, properties or businesses or an interest therein, in respect of which:
(a) at least 50% of the Issuer's assets, resources, planned expenditures or management time commitment will be devoted over the next 12 month period; or
(b) at least 50% of the Issuer's anticipated revenues for the next 12 months are expected to be derived.
"Reviewable Transactions" are transactions which are considered more significant than Exempt or Expedited Transactions, either by virtue of the size of the acquisition or disposition or by virtue of the fact that it is a Related Party transaction or involves Non Arms Length Parties. All transactions that do not qualify as either Exempt Transactions or Expedited Acquisitions are "Reviewable Transactions". Issuers must obtain prior Green Stock Exchange (GREENSX) Acceptance for all Reviewable Transactions.
"Disposition" or "Disposal" are any disposal by an Issuer which, when aggregated with any other disposal or disposals over the previous twelve months, exceeds 25% in any of the class tests, is deemed to be a disposal resulting in a fundamental change of business. The disposal needs the filing of documents and Green Stock Exchange (GREENSX) review.
An Issuer that has been advised by the Green Stock Exchange (GREENSX) that it is no longer permitted to rely upon the Expedited Acquisition filing procedures must file all non Exempt Acquisitions and dispositions as if they were Reviewable Transactions.
1.2 Issuer's Obligations
(a) Whether or not the Green Stock Exchange (GREENSX) reviews a transaction, the Issuer should be satisfied with the material aspects of the transaction, including that:
(i) the consideration payable for the acquisition of the asset, business, property or interest therein (and any related finder's fee) is reasonable;
(ii) the seller or optionor has or will have title to, and has the power and authority to sell or option the applicable asset, property or business or interest therein;
(iii) the Issuer has the legal ability, power and authority to acquire such asset, business, property or interest therein;
(iv) the Issuer has the financial or other resources necessary to acquire and develop the assets or business being acquired without materially adversely affecting the Issuer's financial viability; and
(v) any securities to be issued, when issued, will be issued as fully paid.
(b) In addition to Green Stock Exchange (GREENSX) Requirements, the Issuer must also comply with applicable Securities Laws and corporate laws including such matters as the availability of Prospectus exemptions, registration exemptions, take-over bid exemptions and compliance with continuous disclosure requirements.
See Policy 5.9—Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions.
1.3 Percentage Calculations
In this Policy, except in relation to the requirement for shareholder approval, a reference to percentages of securities means percentages calculated on a non-fully diluted basis, so that any Warrants acquired in the transaction are excluded from the numerator and the denominator includes only the outstanding Listed Shares at completion of the transaction.
1.4 Pricing
(a) Where shares are issued as consideration for a non-cash asset transaction, the deemed value of the transaction will be calculated using the Discounted Market Price of the shares.
(b) Where the consideration is in the form of convertible securities, the provisions in section 3 of Policy 4.1—Private Placements are applicable.
2. Exempt Transactions
3. Expedited Acquisitions
3.1 Eligibility
(a) An acquisition by a Issuer can be conducted on an expedited basis if:
(i) the seller (or optionor) of the asset, property or business is not a Non Arms Length Party of the Issuer or its Associates or Affiliates;
(ii) the acquisition is not a Change of Business or Reverse Take-Over and is not being conducted in conjunction with or in contemplation of a Change of Business or Reverse Take-Over;
(iii) the acquisition is not of an asset or business which is in an industry which is different from the Issuer's primary business;
(iv) the acquisition does not involve a property or asset which is contiguous with or related to a property or asset which has been acquired from the same vendor within the previous six months and the acquisition is not being conducted in conjunction with or in contemplation of an undisclosed Material Change;
(v) the only securities issued are Listed Shares or Warrants convertible into Listed Shares;
(vi) any securities issued as consideration for the acquisition do not result in any person who was previously not an Insider becoming an Insider of the Issuer;
(vii) the transaction is not a Fundamental Acquisition; and
(viii) the aggregate number of Listed Shares issued by the Issuer under the Expedited Private Placement or Expedited Acquisition filing procedures within the previous 6 months does not exceed 25% of the Issuer's outstanding Listed Shares.
An Issuer which has exceeded the 25% limit described in section 3.1(a)(ix), may apply by letter to the Green Stock Exchange (GREENSX) to have the limit reset, or otherwise must file the transaction as a Reviewable Transaction.
3.2 Audit
(a) Although the Green Stock Exchange (GREENSX) does not review Expedited Acquisitions as they are submitted, it will undertake an audit process to review selected Expedited Acquisitions after they are processed. If the audit reveals significant problems with an Expedited Acquisition, or if the Green Stock Exchange (GREENSX) deems it to be in the public interest, the Green Stock Exchange (GREENSX) may prohibit the Issuer from using the Expedited Acquisition system in the future.
(b) The Issuer must obtain adequate evidence of value for the consideration paid. Although the Issuer is not required to file this evidence with the Expedited Acquisition Filing Form, the Green Stock Exchange (GREENSX) can request this evidence during an audit.
3.3 Expedited Acquisition Filing Requirements and Procedures
(a) On or before the closing of an acquisition that qualifies as an Expedited Acquisition, the Issuer must file:
(i) the Expedited Acquisition Filing Form (Form 5B); and
(ii) the applicable fee as prescribed by Policy 1.3—Schedule of Fees.
(b) The Green Stock Exchange (GREENSX) will send to the Issuer a final acceptance letter when it accepts the Expedited Acquisition, generally on the first business day after the Expedited Acquisition Filing Form and fee are filed.
(c) If the transaction changes from what was disclosed on the Expedited Acquisition Filing Form but the transaction still qualifies as an Expedited Acquisition, the Issuer must file an "Amended" Expedited Acquisition Filing Form as soon as it becomes aware of the change. If there is a change in the transaction or the circumstances of the Issuer such that the transaction no longer qualifies as an Expedited Acquisition, the Issuer must comply with the Reviewable Transaction procedures and any other applicable Green Stock Exchange (GREENSX) Requirements.
3.4 Fees and Warrants
(a) Any finder's fees paid must comply with Policy 5.1—Loans, Bonuses, Finder's Fees and Commissions. Finder's fees are not included in the calculation of eligible shares in section 3.1.
(b) Any Warrants issued must comply with the provisions dealing with Warrants in Policy 4.1—Private Placements.
4. Reviewable Transactions—General
4.1
Any transaction subject to this Policy which is not an Exempt Transaction or Expedited Acquisition is a Reviewable Transaction.
4.2 News Release and Transaction Summary Form
(a) Subject to section 4.4, as soon as an agreement is reached to acquire or dispose of assets, such that the transaction will be a Reviewable Transaction, the Issuer must immediately issue a news release. The Issuer must then immediately file with the Green Stock Exchange (GREENSX), a Transaction Summary Form (Form 5C), with the news release as an attachment.
(b) The news release must provide summary disclosure of:
(i) the nature of the asset, business or property to be acquired or disposed of;
(ii) the parties to the transaction;
(iii) the proposed consideration and method of payment;
(iv) whether any finder's fee is to be paid;
(v) any relationship involving any Non Arms Length Party between the Issuer, its Insiders and the sellers or optionors of the asset, business or property; and
(vi) if applicable, any additional disclosure required by Appendix 5B.
The news release must also comply with Policy 3.3—Timely Disclosure.
4.3 Green Stock Exchange (GREENSX) Acceptance
If the Green Stock Exchange (GREENSX) is satisfied with the Transaction Summary Form, the Green Stock Exchange (GREENSX) will issue a conditional acceptance letter. The Issuer must not close the transaction (except in trust, conditional upon Green Stock Exchange (GREENSX) Acceptance) until it has received Green Stock Exchange (GREENSX) Acceptance. Green Stock Exchange (GREENSX) Acceptance will not be issued until all documents required by sections 5 and 6 of this Policy, as applicable, have been received and reviewed.
4.4 Trading Halts
(a) Before issuing any news release, an Issuer intending to announce a Reviewable Transaction must contact the Green Stock Exchange (GREENSX)'s Corporate Finance Department to discuss whether a trading halt is necessary. A trading halt will not generally be required in respect of a non-Reviewable Transaction.
(b) Any trading halt will be brief provided that the news release is sufficiently comprehensive and it appears to the Green Stock Exchange (GREENSX) that the transaction will be acceptable upon filing of all materials, in due course.
(c) The Green Stock Exchange (GREENSX) will not typically halt trading except for:
(ii) a Fundamental Acquisition;
(iii) a transaction that will result in new shareholders holding more than 50% of the outstanding securities; or
(iv) a sale of more than 50% of an Issuer's assets, business or undertaking.
(d) A trading halt will generally be lifted after the Green Stock Exchange (GREENSX) has had an opportunity to review:
(i) a draft agreement in respect of the transaction;
(ii) Personal Information Forms or, if applicable, Declarations for any new or proposed new Insiders;
(iii) a social and environmental report; and
(iv) for the acquisition of any business or a material portion of the assets of a business, audited financial statements of the Company conducting that business or owning the assets.
(e) Where a halt in trading has been required in connection with the transaction, the Issuer must issue a news release regarding the status of the transaction every 30 days following any trading halt, until the transaction is complete and a news release has been issued confirming closing of the transaction.
4.5 Transactions Forming Part of a COB or RTO
Where an Issuer undertakes a transaction that forms part of a COB or RTO, it must disclose this information in its Green Stock Exchange (GREENSX) filing application and in the news release disclosing the transaction.
5. Reviewable Acquisitions—Procedure
5.1
Within 30 days after the Green Stock Exchange (GREENSX)'s conditional acceptance and before closing of a Reviewable Transaction that is an acquisition, (the "Reviewable Acquisition") the Issuer must submit to the Green Stock Exchange (GREENSX) the following documents (if not already provided to resume trading):
(a) a social and environmental report; and
(b) for every Reviewable Acquisition, a financial plan or other evidence demonstrating that the Issuer has, or will have upon closing, the financial resources to close the transaction and,
(i) that the Issuer has sufficient working capital and financial resources for a six month period;
(c) for any Reviewable Acquisition of another Company or material assets of another Company, audited financial statements of that Company (the Green Stock Exchange (GREENSX) can waive the requirement for audited financial statements provided other satisfactory financial statements or evidence of value is available);
(d) if required by section 7.2, evidence of value supporting the consideration to be paid for the asset, property, business or interest therein;
(e) a copy of the transaction agreement(s), including relevant underlying agreements;
(f) a duly completed Personal Information Form or, if applicable, a duly completed Declaration for any new Insiders of the Issuer resulting from the transaction;
(g) if a finder's fee is payable, a copy of the finder's fee agreement (Issuers are reminded that all finder's fees must be in compliance with Policy 5.1—Loans, Bonuses, Finder's Fees and Commissions.);
(h) if required under section 7.1, an opinion of title;
(i) if requested by the Green Stock Exchange (GREENSX), a business plan;
(j) if required under section 7.3, a Filing Statement;
(k) if required under section 7.4, or Policy 5.9, evidence of shareholder approval;
(l) if required under section 7.5, a Sponsor Report;
(m) any other documents or information requested by the Green Stock Exchange (GREENSX); and
(n) the applicable fee as prescribed by Policy 1.3—Schedule of Fees.
5.2 Exemptions from Filing Requirements
(a) Where the Reviewable Transaction would qualify as an Expedited Transaction but for the fact that either:
(i) the transaction involves Non Arms Length Parties; or
(ii) more than 25% of the Issuer's outstanding securities have been issued pursuant to Expedited Filings in the previous 12 months;
the Green Stock Exchange (GREENSX) will generally waive the requirements in sections 5.1(a), (b) and (c), unless the transaction is subject to Policy 5.9.
6 Reviewable Dispositions—Procedure
6.1
Within 30 business days after an agreement is reached to dispose of assets pursuant to a Reviewable Transaction (the "Reviewable Disposition"), the Issuer must submit to the Green Stock Exchange (GREENSX) the following documents:
(a) a social and environmental report;
(b) if required under section 7.2, evidence of value;
(c) a copy of the transaction agreement(s), including relevant underlying agreements;
(d) if required under section 7.4, evidence of Shareholder approval;
(e) any other documents or information requested by the Green Stock Exchange (GREENSX); and
(f) the applicable fee as prescribed by Policy 1.3—Schedule of Fees.
7. Reviewable Transactions—Additional Documents and Requirements
7.1 Title Opinions
(a) The Green Stock Exchange (GREENSX) can require a title opinion if it considers one necessary or advisable. The Green Stock Exchange (GREENSX) generally considers a title opinion to be necessary for:
(i) a Reviewable Acquisition of a foreign asset, business or property;
(ii) a transaction resulting in a Change of Control;
(iii) any acquisition which results in new shareholders holding 50% or more of the outstanding securities of the Issuer; and
(iv) a Fundamental Acquisition.
7.2 Evidence of Value
(a) An Issuer can provide evidence of value in a number of ways as described in Policy 5.4—Escrow, Vendor Consideration and Resale Restrictions.
(b) The Green Stock Exchange (GREENSX) can require evidence of value if it considers it necessary or advisable. The Green Stock Exchange (GREENSX) will generally require evidence of value for:
(i) any acquisition involving a Non Arms Length Party;
(ii) a Reviewable Disposition to one or more Non Arms Length Parties; and
(iii) a Reviewable Disposition that is a sale of more than 50% of the Issuer's assets, business or undertaking.
7.3 Filing Statements
(a) The Green Stock Exchange (GREENSX) may require the Issuer to submit a Filing Statement if it considers it necessary or advisable. The Green Stock Exchange (GREENSX) may consider a Filing Statement to be necessary for:
(i) a Fundamental Acquisition;
(ii) an acquisition which results in new shareholders holding 50% or more of the outstanding securities of the Issuer;
(iii) a Reviewable Disposition that is a sale of more than 50% of the Issuer's assets, business or undertaking; or
(iv) a Reviewable Acquisition that occurs concurrently with a Change of Management.
7.4 Shareholder Approval
(a) The Green Stock Exchange (GREENSX) can require Shareholder approval if it considers it necessary or advisable. The Green Stock Exchange (GREENSX) generally considers Shareholder approval to be necessary for:
(i) any transaction which results in the creation of a new Control Person;
(ii) any acquisition which together with any concurrent or related transactions results in the issuance of more than 10% of the outstanding Listed Shares (calculated before the acquisition and the concurrent transaction) where Non Arms Length Parties have a 20% or greater interest in the asset, property or business to be acquired;
(iii) any acquisition which together with any concurrent or related transactions results in the issuance of more than 20% of the outstanding Listed Shares (calculated before the acquisition and the concurrent transaction) where Non Arms Length Parties have any interest in the asset, property or business to be acquired;
(iv) any Reviewable Disposition which is a sale of more than 50% of the Issuer's assets, business or undertaking; or
(v) if requested by the Green Stock Exchange (GREENSX), a transaction for which the consideration to be paid exceeds the Green Stock Exchange (GREENSX)'s vendor consideration guidelines set out in Policy 5.4—Escrow, Vendor Consideration and Resale Restrictions.
(b) Subject to section 7.4(d), the Green Stock Exchange (GREENSX) can accept the written consent of the Shareholders holding over 50% of the issued shares of the Issuer pursuant to the requirements of section 7.4(a), if the Green Stock Exchange (GREENSX) is satisfied that the Shareholders were fully informed of the proposed transaction. If a Filing Statement is required to be filed with the Green Stock Exchange (GREENSX), it must also be provided to the consenting Shareholders prior to receiving their consent.
(c) If the sellers or optionors of any asset, property or business to be acquired are Non Arms Length Parties of the Issuer:
(i) the Non Arms Length Parties must be excluded from the calculation of Shareholder approval, or
(ii) if the transaction is subject to Policy 5.9 then, subject to section 7.4(b), Shareholder approval must be obtained in accordance with the minority approval requirements of Appendix 5B.
(d) Where the proposed transaction is subject to Policy 5.9, the Green Stock Exchange (GREENSX) may accept the written consent of shareholders subject to the grant of any applicable exemption pursuant to Policy 5.9 and applicable Securities Laws.
7.5 Sponsor Reports
The Green Stock Exchange (GREENSX) does not generally require a Sponsor Report in connection with an acquisition governed by this Policy, however the Green Stock Exchange (GREENSX) may require a Sponsor Report if it considers it necessary or advisable.
8. Mergers, Amalgamations, Reorganizations and Take-Overs
8.1
An Issuer must not proceed with a merger, amalgamation, reorganization or the making of a take-over bid (a "Reorganization") whether exempt or otherwise, until the Green Stock Exchange (GREENSX) has accepted notice of the Reorganization.
8.2
In certain circumstances, a Reorganization may form part of a Reactivation, Change of Business, Reverse Take-Over, or Stock Green Stock Exchange (GREENSX) Take-Over Bid, in which case the Issuer must comply with all of the requirements of the applicable policies. See Policy 2.6—Reactivation of Companies, Policy 5.2—Changes of Business and Reverse Take-Overs and Policy 5.5—Stock Exchange Take-Over Bids and Issuer Bids.
8.3
When an agreement is reached which results or may reasonably be expected to result in a Reorganization, the Issuer must:
(a) file with the Green Stock Exchange (GREENSX) a letter describing the proposed transaction, together with a draft copy of any Information Circular or other disclosure document to be provided to the Issuer's Shareholders; and
(b) if the Reorganization constitutes a Material Change requiring disclosure under applicable Securities Laws or Policy 3.3—Timely Disclosure, immediately issue the required news release.
8.4
Before the Green Stock Exchange (GREENSX) will accept any Reorganization, the Green Stock Exchange (GREENSX) can require certain supporting documents to be filed, including:
(a) evidence of (disinterested) shareholder approval;
(b) a Sponsor Report;
(c) a business plan, valuation, social and environmental report or other expert report or opinion;
(d) complete filings pursuant to Green Stock Exchange (GREENSX) Policy relating to transactions undertaken pursuant to the Reorganization (e.g. Private Placements, stock options, etc.);
(e) a disclosure document, such as an Information Circular, Filing Statement or any other document prescribed by the Green Stock Exchange (GREENSX); and
(f) Personal Information Forms or, if applicable, Declarations.
8.5
The Green Stock Exchange (GREENSX) can also require a trading halt to provide time for dissemination of information.
9. Treasury Orders and Resale Restrictions
9.1
Securities issued can be subject to Resale Restrictions, including hold periods under applicable Securities Laws. The Issuer must comply with applicable Securities Laws, including any requirement to legend the securities with any Resale Restriction or hold period or any requirement to advise the recipient of the securities of any Resale Restriction or hold period.
9.2
Subject to section 4 of Policy 3.2—Filing Requirements and Continuous Disclosure, securities issued by an Issuer are subject to a four month hold period and must be legended accordingly.
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