Generation PMCA Corp. et al. – s. 144
Section 144 -- Application for partial revocation of a cease trade order against issuer to permit certain trades of common shares for the purpose of selling securities for a nominal amount solely to establish a tax loss -- The securities were acquired prior to the date of the cease trade order -- Purchaser of the securities is a sophisticated purchaser who understands that such shares have no market value, the purpose of the proposed trades and the nature of the cease trade order -- Each of the applicants and the purchaser are not aware of any material information that has not been generally disclosed -- Partial revocation of the cease trade order granted subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.
December 22, 2022
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5., AS AMENDED (the Act) AND IN THE MATTER OF GENERATION PMCA CORP. AND GENERATION IACP INC. AND NET ZERO RENEWABLE ENERGY INC.
ORDER (Section 144 of the Act)
WHEREAS the securities of Net Zero Renewable Energy Inc. (Net Zero) are subject to a cease trade order made by the Ontario Securities Commission (the Commission) dated April 5, 2022 ordering that trading whether direct or indirect, cease in respect of each security of Net Zero (the Cease Trade Order).
AND WHEREAS Generation PMCA Corp. (GPMCA) and Generation IACP Inc. (GIACP) (together, the Applicants) have made an application to the Commission pursuant to section 144 of the Act for a partial revocation of the Cease Trade Order to permit the sale by the Applicants of the Net Zero Shares (as defined below) solely for the purpose of establishing a tax loss;
AND WHEREAS National Policy 12-202 Revocation of Certain Cease Trade Orders provides that the Commission will generally grant a partial revocation order to permit a securityholder to sell securities for a nominal amount solely to establish a tax loss;
AND UPON the Applicants having represented to the Commission that:
1. GPMCA is an Ontario corporation and is registered as a portfolio manager, exempt market dealer and investment fund manager under the Act.
2. GIACP is an Ontario corporation and is registered as an investment dealer under the Act.
3. Net Zero is a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan and Ontario.
4. GPMCA holds 2,192,399 common shares of Net Zero on behalf of non-registered managed accounts and GIACP holds 2,763,144 common shares of Net Zero on behalf of non-registered managed accounts (the aggregate number of common shares held by GPMCA and GIACP on behalf of nonregistered managed accounts being collectively referred to herein as the Net Zero Shares).
5. The Cease Trade Order was made by the Commission as a result of Net Zero's failure to file the following continuous disclosure materials as required by Ontario securities law:
(a) audited annual financial statements for the year ended November 30, 2021;
(b) management's discussion and analysis relating to the audited annual financial statements for the year ended November 30, 2021;
(c) certification of the foregoing filings as required by National Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings.
6. No jurisdiction of Canada, other than Ontario, has issued a cease trade order against Net Zero's securities.
7. The Net Zero Shares were acquired prior to the date of the Cease Trade Order.
8. On February 24, 2022, a receivership order was granted by the Ontario Superior Court of Justice to appoint A. Farber and Partners Inc. as the receiver and to sell all the assets of Net Zero.
9. GPMCA and GIACP will effect the proposed trades of the Net Zero Shares (the Net Zero Disposition) solely for the purpose of enabling them to establish a tax loss on behalf of the managed accounts in respect of such Net Zero Shares.
10. It is intended that the Applicants will sell the Net Zero Shares at a price of $0.00001 per share for aggregate proceeds of $49.56, solely for the purpose of establishing tax losses.
11. The purchaser of the Net Zero Shares is a sophisticated purchaser who understands that such shares have no market value, the purpose of the proposed trades and the nature of the Cease Trade Order. The purchaser of the Net Zero Shares qualifies as an "accredited investor" as defined under paragraph (d) of section 1.1 of National Instrument 45-106 Prospectus Exemptions and paragraph (d) of Section 73.3 of the Act.
12. The Applicants and the purchaser of Net Zero Shares are residents of Ontario. The Net Zero Disposition will take place in Ontario.
13. The Applicants believe that the partial revocation of the Cease Trade Order is not prejudicial to the public interest.
14. The Applicants will obtain an acknowledgement from the purchaser that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.
15. Each of the Applicants and the purchaser of the Net Zero Shares is not aware of any material information concerning the affairs of Net Zero that has not been generally disclosed.
16. The Applicants will provide to the purchaser of the Net Zero Shares a copy of the Cease Trade Order and a copy of this Order prior to the Net Zero Disposition.
17. No managed account is held by an insider of Net Zero.
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;
IT IS ORDERED pursuant to section 144 of the Act, that the Cease Trade Order is partially revoked solely to permit the Net Zero Disposition and acts in furtherance of the Net Zero Disposition that are necessary for and are in connection with the Net Zero Disposition and all other acts in furtherance of the Net Zero Disposition that may be considered to fall within the definition of "trade" within the meaning of the Act, provided that:
(a) prior to the completion of the Net Zero Disposition, the Applicants will:
(i) provide to the purchaser of the Net Zero Shares a copy of the Cease Trade Order;
(ii) provide to the purchaser of the Net Zero Shares a copy of the of this Order; and
(iii) obtain from the purchaser of the Net Zero Shares a signed and dated acknowledgement, which clearly states that all of Net Zero's securities, including the Net Zero Shares, will remain subject to the Cease Trade Order, and that the issuance of a partial revocation of a cease trade order does not guarantee the issuance of a full revocation in the future.
(b) The Applicants undertake to make available a copy of the written acknowledgement referred to in paragraph (a)(iii) to staff of the Commission upon request.
DATED in Toronto this 22nd of December, 2022.