LPS 3-35 - Reactivation of Dormant Issuers [Rescinded]
Part 1 Implementation
1.1 Local Policy Statement 3-35 dated February 1, 1987 is hereby rescinded and the following substituted therefore, effective November 1, 1989.
1.2 Terms defined in the Securities Act, S.B.C. 1985, c.83 (the "Act") and the Securities Regulation, B.C. Reg. 270/86 (the "Regulation") and used in this local policy statement have the same meaning as in the Act and the Regulation.
Part 2 Application of Policy
2.1 This local policy statement sets out guidelines that dormant issuers must follow in order to reactivate trading in their securities. In addition, a dormant issuer will need to comply with the applicable reactivation requirements of any stock exchange on which its securities are or will be listed.
2.2 A dormant issuer is a reporting issuer whose securities have been subject to a cease trade order under section 146 of the Act for more than 90 days. An issuer that has been subject to a cease trade order for 90 days or less may reactivate trading in its securities by filing all delinquent information and records.
2.3 Once an issuer has become dormant, section 171.2 of the Regulation provides that the dormant issuer must file, concurrently with filing the record or information referred to in the cease trade order, certain additional records or information about the business and affairs of the dormant issuer that the Commission or the Superintendent considers necessary to determine whether trading in the issuer's securities is prejudicial to the public interest.
This local policy statement specifies the additional records or information that must be filed by a dormant issuer in accordance with section 171.2 of the Regulation. The filing of the additional records or information is referred to in this local policy statement as the "reactivation application".
2.4 If the additional records or information are not filed concurrently with the record referred to in the original cease trade order, a further cease trade order may be issued under section 146 of the Act which will remain in effect until satisfactory records or information have been filed by the dormant issuer.
Part 3 Procedure for Reactivation
3.1 General Requirements
(a) A reactivation application must be made within 2 years after the date of the original cease trade order. The Superintendent will accept a reactivation application relating to an order that has been in effect for more than 2 years only if the issuer has continuously owned its principal asset (which is the subject of its business plan) since it became dormant. An issuer seeking reactivation after more than 2 years of dormancy must file with its application a preliminary prospectus indicating that the issuer meets all applicable requirements for an initial public offering.
(b) The information filed as part of the reactivation application must enable the Commission or the Superintendent to determine whether trading in the dormant issuer's securities is prejudicial to the public interest. If, after a review of the reactivation application, the Superintendent determines that trading in the issuer's securities is not prejudicial to the public interest, the Superintendent will issue
(i) a letter indicating acceptance of the records or information (subject to any shareholder approval which may be required by law or by a stock exchange), and
(ii) a certificate of good standing under section 60 of the Act which will constitute evidence that the cease trade order lapsed as of the date of the certificate.
The cease trade order will remain in effect until the Superintendent issues the letter and certificate of good standing.
(c) An applicant must ensure that its submission is complete when filed and that it responds as quickly as possible to the Superintendent's requests for clarification or further information. The Superintendent may consider the reactivation application to be abandoned if the total number of days an issuer accumulates in responding to the Superintendent's comment letters exceeds 75 days.
3.2 Covering Letter
(a) A reactivation application should be addressed as follows:
Deputy Superintendent, Registration and Statutory Filings
British Columbia Securities Commission
1100-865 Hornby Street
(b) A covering letter listing the documents being filed must accompany the application. The letter should identify the documents using the lettering system indicated in section 3.3 below. Anynon-applicable items should be indicated as such.
(c) The issuer need not refile documents already on file with the Commission provided that they are current. The covering letter should state that the documents have previously been filed and provide relevant details of the filing.
3.3 Documents Required to be Filed
The following documents must be filed in connection with a reactivation application and should be marked to correspond with the disclosure in the covering letter:
A. Fee checklist - a completed checklist in the required form, together with any applicable filing fees prescribed by section 183(1) of the Regulation, including:
(i) the reactivation application filing fee,
(ii) all outstanding fees payable in respect of previous filings made by the issuer and in respect of filings made as part of the reactivation application, and
(iii) the appropriate filing fee for any prospectus or technical or engineering report filed with the application.
Cheques should be made payable to the "Minister of Finance".
B. Audited annual financial statements - the issuer's audited annual financial statements for each fiscal year ending after the last year in respect of which the issuer has filed statements in accordance with the Regulation.
C. Interim financial statements - the issuer's unaudited interim financial statements or, if the issuer is an exchange issuer, quarterly reports for each quarter subsequent to the end of the issuer's last fiscal year.
D. Confirmation of mailing - confirmation that the financial statements referred to in paragraphs (B) and (C) have been mailed to the issuer's shareholders.
E. Material change reports - unless a prospectus or statement of material facts is filed with the application, a material change report in respect of each material change in the affairs of the issuer that has not previously been reported on.
F. Business Plan - unless a prospectus or statement of material facts is filed with the application, a business plan in accordance with Part 4 of this local policy statement.
G. Engineering or technical report - a report will be required only if the issuer has effectively abandoned what was the principal property or business of the issuer on the date of the cease trade order, and is embarking on exploration of another property or commencing another business coincident with the reactivation application. In addition, the normal requirements for a technical or engineering report will apply if a prospectus or statement of material facts is filed with the reactivation application.
A natural resource issuer must file two signed copies of each engineering report, prepared in accordance with National Policy No. 2-A or 2-B, as the case may be, Local Policy Statement 3-01 and Form 54 or 55 in respect of each property on which the issuer intends to carry out work.
An industrial issuer must file a technical report in accordance with Local Policy Statement 3-04.
H. Confirmation of status or good standing - a certificate respecting the status of the issuer from the British Columbia Registrar of Companies or the appropriate regulatory authority in the jurisdiction in which the issuer was incorporated, organized or continued, or a legal opinion from the filing solicitor to the same effect.
I. Title opinion - if an engineering report is required to be filed, a legal opinion relating to the status of the issuer's interest in the new mineral resource properties that are the subject of the engineering report.
J. Form 4 - a list of the directors and officers holding office on the date of the reactivation application and a Form 4 for each director and officer of the issuer and its existing or proposed subsidiaries.
Alternatively, a statutory declaration may be sworn by a director or officer attesting that he has filed a Form 4 within the three year period preceding the date of the application and that there has been no change in the facts disclosed or required to be disclosed in the Form 4.
K. Insider reports - a signed insider report for each person who is an insider of the issuer as of the date of the reactivation application.
L. Letter from transfer agent - a letter from the transfer agent acknowledging that it is prepared to facilitate registration of share transfers and issuances upon reactivation of the issuer.
M. Confirmation of listed status - in respect of an issuer whose securities have at any time been listed for trading on a stock exchange, written confirmation from a stock exchange in Canada that, upon reactivation, the issuer will meet all of the applicable requirements of the stock exchange and that the issuer's securities will be listed or reinstated for trading.
N. Directors' resolution - a certified copy of the directors' resolution approving the making of the reactivation application.
O. Financing document - a preliminary prospectus if a public offering of the issuer's securities is contemplated as part of the reactivation or if the reactivation application is made more than two years after the cease trade order. Reference should be made to Local Policy Statement 3-02 for guidance concerning the additional documents that must be filed with a preliminary prospectus.
A statement of material facts may be filed in place of a prospectus if the dormant issuer's securities are listed on the Vancouver Stock Exchange on the date of the reactivation application and the reactivation application is made less than two years after the cease trade order.
Where a private placement is proposed, a copy of the subscription agreement must be filed and the covering letter must indicate the statutory exemptions which are being relied upon. If a discretionary exemption order is being sought under sections 33 and 59 of the Act, the application for an order should be filed with the reactivation application.
3.4 Review of Reactivation Application
(a) Upon filing, an initial review of the application will be carried out in order to ensure that all of the documents required under section 3.3 have been filed. If the application is incomplete or does not comply with applicable requirements of this local policy statement, it may be returned to the issuer. Where an application has been returned to the issuer, the issuer may request a partial refund of the filing fees paid in respect of the application or may apply the refundable portion of the filing fees to a refiling of the application.
(b) A reactivation application will be assigned to an analyst for review and comment as soon as practicable after it has been filed. All further correspondence in connection with the application should be directed to that analyst. If a preliminary prospectus, statement of material facts or application for a discretionary exemption order has also been filed, it will be vetted concurrently with the application for reactivation.
(c) After the issuer has responded satisfactorily to all requests for clarification or further information, the Superintendent will advise the issuer that the application has been accepted, subject to the issuer obtaining any shareholder approval required by law or a stock exchange, and will issue a certificate of good standing. The Superintendent will also issue, as appropriate, a receipt for a prospectus, an acceptance of a statement of material facts, or an order under sections 33 and 59 of the Act.
(d) Throughout the application process, the issuer must file any required reports, financial statements or other information as they become due.
Part 4 Business Plan
4.1 A reactivation application by a non-resource issuer must include a business plan prepared in accordance with the guidelines set out in Local Policy Statement 3-04. A natural resource issuer will not be required to file a business plan that complies with Local Policy Statement 3-04, but its business plan must contain the information required in section 4.2.
4.2 A business plan must include a discussion of the current financial condition of the issuer and, if applicable, the measures proposed to restore its solvency. Reactivation of a dormant issuer will not be permitted unless its business plan indicates that it will be solvent when trading of its securities resumes and will remain so in carrying out its business for at least six months thereafter.
Part 5 Financing as Part of a Reactivation
5.1 The business plan of the issuer may provide for certain trades in securities - for example, a public offering, the issuance of shares for debt, a private placement or a trade to effect a change in control - that must be carried out as part of the reactivation process. In most cases, these trades should not occur until the cease trade order has lapsed. To the extent that any trade must be completed before the reactivation application has been accepted, an application must be made to the Superintendent for an order under section 153 of the Act that partially revokes the cease trade order.
5.2 Where a reactivation application is accompanied by a preliminary prospectus, an application for an order under section 153 of the Act must be made if the preliminary prospectus will be distributed to any persons for the purpose of soliciting expressions of interest in the issuer's securities. No partial revocation order will be required if the preliminary prospectus is provided only to the staff of the Commission for vetting as part of the reactivation application.
DATED at Vancouver, British Columbia, this 13th day of October 1989.
Douglas M. Hyndman