Settlements
Beleave Inc. [Settlement Agreement]
BCSECCOM #:
2019 BCSECCOM 208
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Document Type:
Settlement Agreement
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Published Date:
2019-06-05
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Effective Date:
2019-06-05
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Details:
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2019 BCSECCOM 208
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Settlement Agreement
Beleave Inc.
Securities Act, RSBC 1996, c. 418
- The Executive Director of the British Columbia Securities Commission (the Executive Director) and Beleave Inc. (Beleave) agree as follows:
Agreed Statement of Facts
Background
1. Beleave is a cannabis company headquartered in North Flamborough, Ontario. It is a reporting issuer in BC listed on the Canadian Securities Exchange and quoted on the OTCQX.
2. Beleave has no history of securities regulatory misconduct.
Misconduct
3. Between April and June 2018, Beleave announced that it had raised a total of approximately $10 million through two private placements. In fact, Beleave retained only $2.5 million of this amount, returning $7.5 million through prepaid consulting fees to the placees, a group of purported consultants (the Purported Consultant Group) who provided no consulting services.
April 2018 Private Placement
4. On April 23, 2018, Beleave entered into 12 consulting agreements with members of the Purported Consulting Group pursuant to which it paid an aggregate of $3.75 million in prepaid consulting fees.
5. The services to be provided under these consulting agreements were often identical, and no services were ever provided.
6. On April 24, 2018, Beleave issued a total of 2,857,145 shares to members of the Purported Consultant Group for gross proceeds of approximately $5 million, relying on the consultant exemption to the prospectus requirement under section 2.24 of National Instrument 45-106.
7. On April 26, 2018, Beleave issued a news release informing the market that it had raised the full amount of the April 2018 private placement and that the proceeds would be used for general and administrative purposes. In fact, it had retained only $1.25 million as a consequence of the prepaid consulting fees.
The June 2018 Private Placement
8. In June 2018, Beleave entered into 13 consulting agreements with members of the Purported Consultant Group in return for prepaid consulting fees totalling $3.75 million.
9. The services to be provided under these consulting agreements were often identical, and no services were ever provided.
10. On June 12, 2018, Beleave issued a total of 2,500,000 shares to members of Purported Consultant Group for gross proceeds of $5 million, relying on the consultant exemption to the prospectus requirement under section 2.24 of National Instrument 45-106.
11. On June 11, 2018, Beleave issued a news release informing the market that it had raised the full amount of the June 2018 private placement and that the proceeds would be used for general and administrative purposes. In fact, it had retained only $1.25 million as a consequence of the prepaid consulting fees.
12. Although the Purported Consultant Group represented to Beleave that the shares it was acquiring through the April and June 2018 private placements were for investment purposes only and not for immediate resale, the Purported Consultant Group resold the majority of the shares it acquired in the market almost immediately at an average price below the private-placement acquisition cost.
13. As a result of the activity described above, Beleave participated in conduct abusive to the capital markets that, but for the mitigating factors outlined below, would warrant public interest orders under s. 161 of the Act.