In the Matter of Staff’s Recommendation
for Terms and Conditions on the Registration
of Access Capital Corp.
Opportunity to be Heard by the Director
Section 31 of the Securities Act (Ontario)
1. For the reasons outlined below, my decision is not to impose the recommended terms and conditions on the registration of Access Capital Corp. (Access Capital).
2. By letter dated June 13, 2011, Staff of the Ontario Securities Commission advised Access Capital that it was recommending to the Director that terms and conditions be imposed on Access Capital in relation to the overdue delivery of its annual audited financial statements. The terms and conditions had two parts. Part one required the delivery of monthly year-to-date unaudited financial statements and excess working capital calculations for a minimum period of six months. Part two required Access Capital to review its procedures for compliance with Ontario securities law and to deliver a report to the Commission.
Process for requesting an opportunity to be heard
3. Under section 31 of the Securities Act (Ontario) (Act), if a registrant wants to oppose Staff’s recommendation for terms and conditions, the registrant may request an opportunity to be heard (OTBH). By email dated June 23, 2011, Robert McLeese, Access Capital’s Chief Compliance Officer and sole shareholder, requested an OTBH.
4. My decision is based on the verbal submissions of Staff (Mark Skuce, Legal Counsel, Compliance and Registrant Regulation Branch) and Robert McLeese on behalf of Access Capital.
5. Access Capital is registered as an exempt market dealer. Its fiscal year end is February 28. Under paragraph 12.12(1)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, the annual audited financial statements of Access Capital were due no later than May 29, 2011. Access Capital delivered its annual audited financial statements on July 7, 2011.
6. Subsection 28(a) of the Act provides that the Director may impose terms and conditions on the registration of a company if it appears to the Director that the company is not suitable for registration or has failed to comply with Ontario securities law. Subsection 27(2) of the Act enumerates the factors that the Director shall consider in determining whether a company is suitable for registration, which includes prescribed requirements relating to proficiency, solvency and integrity.
7. Staff submits that the imposition of terms and conditions is appropriate because Access Capital’s late delivery of its annual audited financial statements has raised a serious potential concern regarding the firm’s solvency. Staff also submits that the timely delivery of annual audited financial statements by registrants is one of the most serious regulatory obligations in the Act and that financial statements are the principal tool enabling Staff to monitor a registrant’s financial viability and capital position.
8. For these reasons, Staff uniformly recommends the imposition of terms and conditions on the registration of registrants that do not deliver their annual audited financial statements on a timely basis. In Staff’s opinion, the delivery of annual audited financial statements is a serious regulatory obligation and only in extremely rare circumstances would Staff not recommend imposing terms and conditions on a registrant that delivered its annual audited financial statements late.
9. Access Capital submits that it has had a clean regulatory record with the OSC during its 21 year registration history. Access Capital also submits that its registration is not used frequently and that the last transaction requiring registration was in 2008. Mr. McLeese also advised me that part of the reason for the late delivery of Access Capital’s annual audited financial statements was the recent death of his father and the complexity of finalizing his father’s relatively complex estate as an only child. Lastly, Access Capital has now hired a full time accountant to maintain the books and records of Access Capital, which were formerly maintained by Mrs. McLeese.
Decision and reasons
10. My decision is not to impose terms and conditions on the registration of Access Capital. As set out above, only in extremely rare circumstances will a registrant be permitted to file its annual audited financial statements late and not be placed on the recommended terms and conditions. I was convinced that these extremely rare circumstances are present in this case. I was also convinced that Access Capital takes its registration obligations seriously and that it was unlikely that it would find itself in a similar position in the future.“Marrianne Bridge”, FCA
Compliance and Registrant Regulation Branch
Ontario Securities Commission
July 28, 2011