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Embers Realty Limited - ss. 74(1)
Headnote
Subsection 74(1) - trades of common shares of a real estate company owning real estate from which limited liabilitypartnership of lawyers carries on business not subject to sections 25 or 53 of the Act where acquisition of such sharesis a term of admission to the partnership and the shares are subject to transfer restrictions.
Statutes Cited
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74(1).
Policies Cited
Rule 45-501 - Exempt Distributions (1998), 21 OSCB 6548.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, C.S.5, AS AMENDED (the "ACT")
AND
IN THE MATTER OF
EMBERS REALTY LIMITED
RULING
(Subsection 74(1))
UPON the application of Embers Realty Limited ("Embers") for a ruling pursuant to subsection 74(1) of theAct that certain trades in common shares of Embers (the "Common Shares") to lawyers admitted to the partnership (the"Partners") of Lerner & Associates LLP ("Lerners") shall not be subject to sections 25 and 53 of the Act;
AND UPON considering the application and the recommendation of the staff of the Commission;
AND UPON Embers having represented to the Commission that:
1. Embers is an Ontario Business Corporations Act corporation established by Articles of Amalgamation onJanuary 31st, 1988. Embers holds real estate assets from which Lerners carries on business in London,Ontario. Embers also allows the Partners who hold Common Shares to share in the profits generated byEmbers through distributions Embers makes to its holders of Common Shares (the "Shareholders").
2. The authorized share capital of Embers consists of an unlimited number of Common Shares. There arecurrently 2,127.27516 Common Shares issued and outstanding.
3. Embers is not a reporting issuer or the equivalent under the securities legislation of any province or territoryof Canada and does not have any present intention of becoming a reporting issuer in Ontario. Emberscurrently is a "private issuer" as that term is defined in Commission Rule 45-501 Exempt Distributions ("Rule45-501").
4. Lerners is a limited liability partnership of lawyers established under the laws of Ontario with offices in London,Ontario and Toronto, Ontario. There are currently fifty-two Partners, of whom forty-eight hold all issued andoutstanding Common Shares.
5. Pursuant to the terms of a partnership agreement, (the "Partnership Agreement"), all lawyers entering thepartnership of Lerners, as a term of their admission, must purchase a specified number of Common Sharesfrom existing holders of Common Shares (the "Shareholders") or from Embers treasury at a price determinedin accordance with the terms a shareholders' agreement (the "Shareholders' Agreement").
6. Pursuant to the terms of the Shareholders' Agreement, only Partners are entitled to acquire Common Shares.Shareholders are entitled to receive distributions in respect of their Common Shares at such times and in suchamounts as the Shareholders decide.
7. Pursuant to the terms of the Shareholders' Agreement, the Common Shares will not be transferable, exceptthat upon the death or resignation from Lerners of a Partner who is a Shareholder, the Common Shares heldby such Shareholder either will be redeemed by Embers or purchased by the remaining Shareholders or acorporation incorporated by them. No such corporation presently exists. Under no circumstances may anyperson or entity that is not a Partner beneficially own, directly or indirectly, shares of a corporation that holdsCommon Shares.
8. Each of the Shareholders is provided with audited financial statements of Embers on or before March 31 ofeach year, with the respect to Embers' preceding fiscal year end of December 31.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
IT IS RULED pursuant to subsection 74(1) of the Act that trades in Common Shares to Partners will not besubject to sections 25 and 53 of the Act, provided that:
A. at the time of any such trade, the Common Shares are subject to the restrictions on transfer set outin paragraph 7 (the "Share Transfer Restrictions");
B. the first trade in Common Shares (other than a first trade made in accordance with the ShareTransfer Restrictions) acquired pursuant to this ruling by a Partner shall be a distribution unless suchfirst trade is made in accordance with the provisions of subsection 72(5) of the Act and section2.18(3) of Rule 45-501 as if the securities had been issued pursuant to one of the exemptionsreferenced in subsection 72(5) of the Act; and
C. this ruling shall cease to be effective upon the Common Shares ceasing to be subject to the ShareTransfer Restrictions.
May 4, 2001.
"Howard I. Wetston" "Robert W. Davis"