Getchell Gold Corporation
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – relief from prospectus requirements to allow company to complete a share restitution to existing shareholders – distribution not covered by legislative exemptions – shares mistakenly traded on a pre-consolidation basis – no investment decision required from Canadian shareholders in order to receive shares.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74(1).
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATION
IN THE MATTER OF
GETCHELL GOLD CORPORATION
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) for an exemption from the prospectus requirement in the Legislation in connection with the proposed distribution by the Filer of its common shares to certain existing common shareholders (the “Exemption Sought”).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in each of the other provinces and territories of Canada other than Ontario.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the laws of the Province of Ontario.
2. The head office of the Filer is located at 855 Brant Street, Burlington, Ontario, Canada.
3. As of the date hereof, the Filer is a reporting issuer in the Provinces of Ontario and Quebec.
4. On November 17, 2017, trading of the common shares in the capital of Wabi Exploration Inc. (“Wabi”), as the Filer was then known, (the “Common Shares”) was halted by the Investment Industry Regulatory Organization of Canada (“IIROC”) at the request of the Canadian Securities Exchange (“CSE”).
5. On November 27, 2017, the Filer announced the execution of an arrangement agreement (the “Arrangement Agreement”) whereby the Filer would acquire all of the issued and outstanding shares of Buena Vista Gold Inc. (“BVG”) in consideration for Common Shares.
6. On May 7, 2018, the Filer announced that it would change its name from Wabi Exploration Inc. to Getchell Gold Corp. and change its trading symbol from 'WAB' to 'GTCH'.
7. In connection with its name change, the Filer requested a new ISIN, which ISIN was issued by CDS Clearing and Depository Services Inc. (“CDS”) and made the Common Shares eligible for settlement via CDS. The Filer provided the new ISIN to the CSE.
8. On August 24, 2018, the CSE issued bulletin 2018-0818 announcing the new name, new trading symbol and new ISIN of the Filer and noted that the trading halt on the Common Shares in effect since November 17, 2017 would remain pending approval of the fundamental change in the business of the Filer contemplated by the Arrangement Agreement.
9. On October 25, 2018, Capital Transfer Agency (the “Transfer Agent”) provided details to CDS regarding the consolidation of the Common Shares contemplated to be issued pursuant to the Arrangement Agreement and requested the issuance of a post-consolidation ISIN for the Common Shares.
10. On October 25, 2018, CDS issued a post-consolidation ISIN for the Common Shares and delivered the post-consolidation ISIN to the Filer and the Transfer Agent via email. The Filer did not provide the new ISIN to the CSE.
11. On November 9, 2018, the Transfer Agent requested eligibility for the post-consolidation ISIN for settlement via CDS.
12. On November 13, 2018, the Filer announced the closing of the transaction contemplated by the Arrangement Agreement (the “RTO Transaction”), including the consolidation of the Common Shares on a 1-for-6 basis.
13. On November 14, 2018, CDS made the post-consolidated ISIN eligible for settlement via CDS and the Transfer Agent informed CDS that a consolidation on a 1-for-6 basis was required.
14. The consolidation was not processed as required by the Arrangement Agreement.
15. On November 30, 2018, the CSE issued bulletin 2018-1135 announcing that the Filer had received approval for its proposed RTO Transaction and that the trading halt in effect since November 17, 2017 would be lifted effective as of December 3, 2018.
16. On December 3, 2018, trading in the Common Shares resumed on the CSE.
17. On December 14, 2018, the Transfer Agent contacted CDS and inquired as to why the Common Shares were trading on a pre-consolidation basis. CDS explained that the CSE had not issued a bulletin regarding the effective date for the consolidation and as such CDS could not process the consolidation.
18. On December 17, 2018, the Transfer Agent contacted the CSE regarding the consolidation. The CSE advised that there would have to be a new ISIN for the consolidated Common Shares. The Transfer Agent confirmed a new post-consolidated ISIN was issued and forwarded the post-consolidated ISIN to the CSE.
19. On December 18, 2018, the Filer and the CSE asked IIROC to halt the trading of Common Shares. IIROC imposed a trading halt on the Common Shares.
20. CDS identified 154 trades through the CSE between 13 buying dealers and 14 selling dealers which may have been affected. The trading price ranged from $0.16 to $0.65 per Common Share. CDS also identified 7 trades that were not made through the CSE with a price range of $0.19 to $0.40 per Common Share.
21. On January 4, 2019, the CSE issued bulletin 2019-0102 indicating that trades in Common Shares occurring during the Affected Trading Period were settled on a pre-consolidated basis. The bulletin also noted that CDS would correct the deposits, process the consolidation and that trading of the Common Shares would resume on January 7, 2019 on a post-consolidated basis under the post-consolidation ISIN.
22. On January 4, 2019, CDS issued a bulletin advising that CDS would be processing the consolidation on a 1-for-6 basis and that CDS would exchange positions from the pre-consolidation ISIN to the post-consolidation ISIN effective as of January 8, 2019.
23. On January 8, 2019, CDS processed the consolidation on a 1-for-6 basis.
24. On January 21, 2019, the Common Shares resumed trading on the CSE.
25. During the period from December 3, 2018 to December 18, 2018 (the “Affected Trading Period”), 1,679,282 Common Shares were traded, which, after the consolidation on a 1-for-6 basis, resulted in (i) the buyers of those Common Shares (the “Buyers”) receiving 279,880 Common Shares (or 1,399,402 Common Shares less than the Buyers had originally purchased), and (ii) the Buyers having paid $329,464.32 for Common Shares that had a value, after the consolidation, of $54,910.72 (or $274,553.60 less than the Buyers originally paid).
26. The Filer’s board of directors approved the issuance of 1,399,402 Common Shares to the Buyers of Common Shares during the Affected Trading Period.
27. The 1,399,402 Common Shares will be issued by the Transfer Agent on behalf of the Filer and then delivered to CDS for distribution to the respective Buyers, with (i) CDS to deliver to the Filer at the time of the delivery of the 1,399,402 Common Shares to CDS an acknowledgement that CDS has received the full Share Restitution Amount for all Buyers, and (ii) CDS to obtain from each of the dealers for the Buyers and then deliver to the Filer acknowledgements that such dealers have received the full Share Restitution Amount for each of their respective Buyers and releases from such dealers for any future claims in respect of this matter.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the Filer makes the distribution as described in paragraph 27.
Dated this 9th day of May, 2019.
Ontario Securities Commission
Ontario Securities Commission