Exemption Orders (Discretionary)
TECHBC CORPORATION
2001 BCSECCOM 482
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND IN THE MATTER OF TECHBC CORPORATION
Exemption Order Under Sections 48 and 76
[para 1]
WHEREAS TechBC Corporation (“TechBC”) has applied to the British Columbia Securities Commission for an order under sections 48 and 76 of the Securities Act, R.S.B.C. 1996, c. 418, that intended trades of securities of certain issuers to TechBC are exempt from the requirements of sections 34(1)(a) and 61 of the Act;
[para 2]
AND WHEREAS TechBC has represented to the Commission that:
1. TechBC is incorporated under the laws of British Columbia, is not a reporting issuer under the Act and is a wholly-owned subsidiary of the Technical University of British Columbia (the “University”) established to facilitate the University's purposes;
2. the University is a corporation established under the Technical University of British Columbia Act, S.B.C. 1997, c. 54, for the following legislated purposes:
(a) to offer certificate, diploma and degree programs at the undergraduate and graduate levels in the applied, technological and related professional fields that contribute to the economic development of British Columbia;
(b) to conduct applied research and development;
(c) to provide continuing education that corresponds to the needs of the applied, technological and related professional fields;
(d) to collaborate and cooperate with other post-secondary institutions, business and labour respecting education and applied research and development; and
(e) to create strong links with business and labour and develop programs that are relevant to, and at the forefront of, industrial and professional initiatives;
3. TechBC intends to provide consulting and technical support services (the “Services”) from time to time to certain issuers (the “Issuers”) involved in the applied, technological and related professional fields in British Columbia, and to thereby promote and further the economic development of British Columbia;
4. in order to assist TechBC, the University intends to make available to TechBC certain resources including teaching, research and administrative staff (the "Consultants") with expertise to provide Services to an Issuer;
5. the Services will be provided under written contract between TechBC and an Issuer and will include provisions regarding the fees payable, in whole or in part in securities of the Issuer, to TechBC;
6. TechBC will invoice Issuers for time spent by the Consultants in rendering Services to an Issuer;
7. the Consultants will be hired by TechBC under written consulting agreements to provide the Services to an Issuer on behalf of TechBC, in exchange for a nominal amount of cash and/or securities of the Issuer that are to be received by TechBC from that Issuer under its contract with the Issuer;
8. the Issuers may or may not be reporting issuers under the Act;
9. at the time of the trades, the private issuer exemption may not be available to an Issuer or the distribution of securities to TechBC may be considered a distribution to the public which cannot be made under the private issuer exemption;
10. the trades of securities from an Issuer to TechBC are not within the exemption for trades by an issuer to consultants contained in section 2.1 of BCI 45-507, since TechBC is not a 'consultant company' under BCI 45-507 as the Consultants are not employees or shareholders of TechBC;
11. if the trades of the securities and the consulting agreements were between the Issuers and the Consultants, instead of TechBC, the trades would be within BCI 45-507; and
12. there is no exemption from the registration and prospectus requirements for the trades of securities of an Issuer from TechBC to the Consultants in payment for the Services provided under the consulting agreements;
[para 3]
AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;
[para 4]
IT IS ORDERED:
1. under sections 48 and 76 of the Act that trades by an Issuer in a security of its own issue to TechBC under an agreement for the provision of Services by TechBC to the Issuer are exempt from the requirements of sections 34(1)(a) and 61 of the Act;
2. any trade by TechBC of a security acquired under this order is deemed to be a distribution unless:
(a) the trade is to a Consultant who provided Services to the Issuer of the security under a consulting agreement with TechBC; or
(b) (i) at the time of the trade, the Issuer of the security is a reporting issuer and has been a reporting issuer under the Act for at least 12 months;
(ii) if the seller is an insider of the Issuer of the security, other than a director or senior officer of the Issuer, the seller has filed all records required to be filed under sections 87 and 90 of the Act;
(iii) if the seller is a director or senior officer of the Issuer of the security, the seller has filed all records required to be filed under sections 87 and 90 of the Act and the Issuer has filed all records required to be filed under Part 12 of the Act and of the SecuritiesRules, B.C. Reg. 194/97;
(iv) no unusual effort is made to prepare the market or to create a demand for the security;
(v) no extraordinary commission or consideration is paid for the trade; and
(vi) the trade is not a control person distribution; and
3. any trade by a Consultant of a security acquired under this order is deemed to be a distribution unless:
(a) (i) the trade is to TechBC or to a Consultant who has provided Services to the Issuer of the security under a consulting agreement with TechBC;
(ii) the Issuer is a non-reporting issuer; and
(iii) the price of the security being traded is established by a generally applicable formula or similar provisions contained in a written agreement among some or all of the shareholders of the Issuer to which the transferee is, or upon becoming a transferee, will be required to be, a party; or
(b) (i) at the time of the trade, the Issuer of the security is a reporting issuer and has been a reporting issuer under the Act for at least 12 months;
(ii) if the seller is an insider of the Issuer of the security, other than a director or senior officer of the Issuer, the seller has filed all records required to be filed under sections 87 and 90 of the Act;
(iii) if the seller is a director or senior officer of the Issuer of the security, the seller has filed all records required to be filed under sections 87 and 90 of the Act and the Issuer has filed all records required to be filed under Part 12 of the Act and of the Rules;
(iv) no unusual effort is made to prepare the market or to create a demand for the security;
(v) no extraordinary commission or consideration is paid for the trade; and
(vi) the trade is not a control person distribution.
[para 5]
DATED May 9, 2001.
Derek E. Patterson
Manager