Exemption Orders (Discretionary)
ELECTROFUEL INC.
2001 BCSECCOM 168
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – relief granted from the prospectus requirements of the legislation, in connection with a public offering, provided that a preliminary prospectus complying with NP 44 is filed as if the Applicant was eligible to use the PREP Procedures.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 61, 76
National Policy No. 44
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, QUÉBEC, NEW BRUNSWICK, PRINCE EDWARD ISLAND, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF ELECTROFUEL INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland (the “Jurisdictions”) have received an application (the “Application”) from Electrofuel Inc. (the “Corporation”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”): (i) giving the Corporation permission to include a representation in the Offering Preliminary Prospectus (as defined below) stating that an application has been made to have the Shares (as defined below) listed and quoted on the Toronto Stock Exchange and to The Nasdaq Stock Market to have the Shares quoted on The Nasdaq Stock Market; and (ii) exempting the Corporation from the prospectus requirements of the Legislation and permitting the use by the Corporation of the PREP Procedures (as such term is defined in National Policy No. 44 (“NP 44”) and similar procedures under the Legislation of Québec (the “Québec Procedures”)) as if the Corporation were eligible under NP 44 and articles 37.5, 37.6 and 37.7 of the Regulation respecting Securities under the Legislation of Québec (the “Québec Regulation”) in connection with the Corporation’s proposed public offering (the “Offering”) of its common shares (the “Shares”), each as more fully described below;
AND WHEREAS pursuant to the Mutual Reliance System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (the “Commission”) is the principal regulator for this application;
AND WHEREAS the Corporation has represented to the Decision Makers that:
1. The Corporation has developed a proprietary technology which it has used to produce limited quantities (for marketing and test purposes) of lithium ion polymer batteries for use with portable computers and cellular telephones.
2. The Corporation was incorporated under the Business Corporations Act (Ontario) (the “Act”) in September 1996. In January 1997, the Corporation completed a special warrant offering in Ontario. In July 1997, the Corporation filed a prospectus to qualify the common shares issuable upon the exercise of the special warrants and is a reporting issuer in the Province of Ontario.
3. The authorized share capital of the Corporation consists of an unlimited number of Shares of which 18,177,077 Shares were issued and outstanding as at March 31, 2000.
4. The Offering will consist of concurrent public offerings of treasury Shares in Canada and in the United States. The Corporation anticipates that the gross proceeds of the Offering will be in excess of $50 million. The underwriters of the Offering in Canada will be BMO Nesbitt Burns Inc., Credit Suisse First Boston Securities Canada, Inc. and Yorkton Securities Inc. The underwriters of the Offering in the United States will be Credit Suisse First Boston Corporation, BMO Nesbitt Burns Inc. and Wit SoundView Corporation.
5. Subject to resolving any comments received by the securities regulatory authorities in Canada and in the United States, the Corporation anticipates filing, in connection with this Offering: (i) a preliminary prospectus (the “Offering Preliminary Prospectus”) with the securities regulatory authorities of each of the provinces of Canada approximately four to six weeks after the filing of the Application; and (ii) a Form F-1 registration statement (the “Registration Statement”) with the Securities and Exchange Commission of the United States (the “SEC”) approximately four to six weeks after the filing of the Application.
6. In connection with the Offering in the United States, the Corporation plans to use the procedures permitted by Rule 430A under the Securities Act of 1933 (the “1933 Act”) which will permit the Corporation to omit certain pricing information in the Registration Statement until after it has been declared effective by the SEC.
7. The Corporation has made an application to the Toronto Stock Exchange to have the Shares listed and posted for trading and to The Nasdaq Stock Market in the United States to have the Shares quoted on the Nasdaq National Market. It is required by the SEC that the Registration Statement include references to these facts.
8. Contemporaneously with the filing of this Application, the Corporation is also filing with the securities regulatory authorities a confidential application pursuant to the procedures established by the Mutual Reliance Review System for Prospectuses and Annual Information Forms (as set out in National Policy 43-201) (the “43-201 Application”) stating, among other things, that the Offering Preliminary Prospectus is being pre-filed with the 43-201 Application on a confidential basis; and requesting that the securities regulatory authorities will commence their review of the pre-filed Offering Preliminary Prospectus in accordance with the review periods set out in NP 43-201, which review periods will commence on the pre-filing of the Offering Preliminary Prospectus, and that if the comments from the securities regulatory authorities are not completely resolved by the date of the filing of the Offering Preliminary Prospectus, the Corporation will continue to work with the Commission to resolve the comments.
9. Contemporaneously with the confidential pre-filing of the Offering Preliminary Prospectus enclosed with the 43-201 Application, the Corporation is furnishing a confidential draft submission of the Registration Statement to the SEC pursuant to the SEC’s confidential review procedures extended to foreign issuers.
10. Use of the PREP Procedures and the Québec Procedures would permit the Corporation and its underwriters to better co-ordinate the pricing, prospectus delivery, confirmation of purchase, closing and settlement processes in Canada with those anticipated to be employed in the United States.
11. Neither the Corporation nor the Shares satisfy the eligibility requirements which would otherwise enable the Corporation to use the PREP Procedures and the Québec Procedures.
AND WHEREAS pursuant to the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met:
THE DECISION of the Decision Makers under the Legislation is that: (i) permission is hereby granted for the Preliminary Prospectus to refer to the fact that an application has been made to the Toronto Stock Exchange to have the Shares listed and posted for trading and to The Nasdaq Stock Market in the United States to have the Shares quoted on the Nasdaq National Market; and (ii) the Corporation is hereby exempted from prospectus requirements of the Legislation and the Québec Procedures with respect to the Canadian tranche of the Offering:
1. insofar as such requirements concern the form and content of a preliminary prospectus or a prospectus, including the form of prospectus certificates, filed under the Legislation;
2. insofar as the requirements of the Legislation concern the filing of an amendment or supplement to a preliminary prospectus or prospectus filed under the Legislation;
provided that:
3. a preliminary prospectus complying with NP 44 and the Québec Regulation is filed under the Legislation pursuant to and in accordance with the requirements and procedures set forth in NP 44 and the Québec Regulation, as if the Corporation was eligible to use the PREP Procedures and the Québec Procedures and such preliminary prospectus is supplemented and amended pursuant to and in accordance with the requirements and procedures set forth in NP 44 and the Québec Regulation, including the filing of amendments complying with the requirements of the Legislation;
4. a prospectus complying with NP 44 and the Québec Regulation is filed under the Legislation pursuant to and in accordance with the requirements and procedures set forth in NP 44 and the Québec Regulation, as if the Corporation was eligible to use the PREP Procedures and the Québec Procedures; and
5. such prospectus is supplemented and amended pursuant to and in accordance with the requirements and procedures set forth in NP44 and the Québec Regulation, including the filing of amendments complying with the requirements of the Legislation.
DATED at Toronto this 5th day of June, 2000.
Iva Vranic