BOR 97/03 - Resale Relief For Eligible Real Estate Securities [Rescinded]

IN THE MATTER OF THE SECURITIES ACT S.B.C. 1985, c. 83

AND

IN THE MATTER OF RESALE RELIEF FOR ELIGIBLE REAL ESTATE SECURITIES

Order Under Sections 33 and 59

WHEREAS securities are defined in section 1(1) of the Securities Act, S.B.C. 1985, c. 83, to include investment contracts;

AND WHEREAS for the purposes of this order,

"developer" means "developer" as defined in Part 2 of the Real Estate Act, R.S.B.C. 1979, c. 356;

"eligible holder" means a person, other than a developer, having title to an Eligible Real Estate Security where the title was acquired by that person pursuant to an agreement of purchase and sale entered into prior to November 1, 1996;

"Eligible Real Estate Security" means an investment contract that is comprised of a direct interest in real property together with a rental pool agreement or rental management agreement that does not include, or purport to include, any rental or cash flow guarantee or other financial commitment;

"eligible seller" means a seller, other than a developer or an agent acting on a developer's behalf;

"rental management agreement" means an agreement, other than a rental pool agreement, pursuant to which a person manages the generation of revenue from real property for another person;

"rental pool" for a particular property means an arrangement pursuant to which revenues derived from, and/or expenses relating to, that property and other properties are pooled and shared among the owners of the properties in accordance with their proportionate interests in the pool; and

"rental pool agreement" means the agreement or agreements creating or giving rise to a rental pool;

AND WHEREAS the Commission issued NIN#96/36, dated October 10, 1996, confirming that an offering of a real estate security is an investment contract subject to regulation under the Securities Act;

AND WHEREAS an offering of a real estate security is subject to regulation under the Real Estate Act;

AND WHEREAS Eligible Real Estate Securities have been distributed prior to NIN#96/36 without having been in compliance with the Securities Act and eligible holders have acquired Eligible Real Estate Securities without the knowledge of any applicable resale restrictions;

AND WHEREAS the Commission considers that to do so would not be prejudicial to the public interest;

IT IS ORDERED

1. under sections 33 and 59 of the Securities Act that an intended trade by an eligible holder, or an agent acting on the eligible holder's behalf, of an Eligible Real Estate Security acquired by the eligible holder pursuant to an agreement of purchase and sale entered into prior to November 1, 1996 is exempt from the requirements of sections 20(1)(a) and 42 of the Securities Act provided that the eligible holder, or any agent acting on the eligible holder's behalf, does not advertise the expected economic benefits of any rental pool agreement or rental management agreement to a prospective purchaser;
   
2. under section 59 of the Securities Act that a subsequent trade in an Eligible Real Estate Security acquired under this order is deemed to be a distribution unless
   
   (a) the seller is an eligible seller, and
   
   (b) the seller, or any agent acting on the seller's behalf, does not advertise the expected economic benefits of any rental pool agreement or rental management agreement to a prospective purchaser; and
   
3. under section 33 of the Securities Act that a subsequent trade in an Eligible Real Estate Security acquired under this order is exempt from the requirements of section 20(1)(a) of the Securities Act provided that
   
   (a) the seller is an eligible seller, and
   
   (b) the seller, or any agent acting on the seller's behalf, does not advertise the expected economic benefits of any rental pool agreement or rental management agreement to a prospective purchaser.

DATED at Vancouver, British Columbia on February 3, 1997.

Ref: NIN#96/36