National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - issuer requests relief from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities - issuer has less than 10% of its securityholders resident in Canada - less than 10% of the issuer's issued and outstanding securities are held by residents of Canada - issuer exempt from requirements of NI 51-101 provided that the issuer complies with oil and gas disclosure requirements of the SEC and AMEX.
Applicable Legislative Provisions
National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.
Citation: GeoPetro Resources Company, Re, 2010 ABASC 136
March 24, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
GEOPETRO RESOURCES COMPANY
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in the provinces of British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation governed by the laws of the state of California, with its head office in California. The Alberta Securities Commission was selected as principal regulator because the province of Alberta is the only province in Canada in which the Filer has any assets.
2. The Filer is an oil and natural gas exploration and production company with substantially all of its assets and operations located outside of Canada.
3. The Filer is a reporting issuer in each of the provinces of Canada and is not in default of the securities legislation of any of the provinces or territories of Canada.
4. The Filer's authorized capital stock consists of up to 100,000,000 shares of common stock (the Common Shares) and up to 50,000,000 shares of preferred stock (Preferred Shares), including 1,000,000 Preferred Shares that have been designated Series A Convertible Preferred Stock, 5,000,000 Preferred Shares that have been designated Series AA 8% Convertible Preferred Stock and 7,523,000 Preferred Shares that have been designated Series B Convertible Preferred Stock (Series B Preferred Shares). As at December 31, 2009, the issued and outstanding shares of the Filer consisted of 34,284,646 Common Shares and 7,523,000 Series B Preferred Shares.
5. The Common Shares are not listed or posted for trading on any "marketplace" in Canada (as defined in National Instrument 21-101 Marketplace Operation). The Filer has no present intention to list its securities on any stock exchange or market in Canada.
6. The Filer has made a good faith investigation to confirm the residency of the holders of its outstanding securities. Based on this investigation as described below, the Filer has concluded that residents of Canada (a) do not directly or indirectly beneficially own more than 10% of each class or series of outstanding securities of the Filer worldwide, and (b) do not directly or indirectly comprise more than 10% of the total number of security holders of the Filer worldwide. The Filer conducted the following investigations to reach the foregoing conclusion:
(a) the Filer reviewed an on-line service made available by its transfer agent, Computershare Trust Company of Canada (Computershare), to confirm the residency of the registered holders of its outstanding Common Shares. As at January 31, 2010, there is one registered holder of Common Shares who is resident in Canada representing approximately 0.33% of the 303 total worldwide registered holders of Common Shares (and such registered holder who is resident in Canada holds 1,365 Common Shares representing approximately 0.00398% of the Common Shares outstanding as at December 31, 2009);
(b) Computershare caused Broadridge Financial Services, Inc. (Broadridge) to conduct an intermediary search, being a search for Common Shares which are beneficially owned other than by the registered holder, using a record date of February 12, 2010. Broadridge's search identified 54 beneficial holders of Common Shares who are resident in Canada representing approximately 4.34% of the 1,243 total worldwide beneficial holders of Common Shares (and such beneficial holders who are resident in Canada hold 399,000 Common Shares representing approximately 1.16% of the Common Shares outstanding as at December 31, 2009); and
(c) the Filer reviewed its register of holders of Series B Preferred Shares and confirmed that none of the holders of Series B Preferred Shares are resident in Canada as at January 31, 2010.
7. The Common Shares are registered in the United States pursuant to Section 12(b) of the 1934 Act. The Common Shares are listed for trading in the United States on the NYSE Amex Equities market (the Amex). The Filer is subject to reporting requirements under the 1934 Act and to disclosure requirements of the Amex. The Filer is not in default of any reporting requirements under the 1934 Act nor any disclosure requirements of the Amex.
8. The Filer is governed by, and in compliance with, all applicable requirements imposed by the SEC, the 1933 Act, the 1934 Act, the United States Sarbanes-Oxley Act of 2002 and the rules of the Amex (collectively, the US Rules).
9. The Filer prepares disclosure with respect to its oil and natural gas activities in accordance with the US Rules (the Oil and Gas Disclosure).
10. The Filer qualifies as a "SEC foreign issuer" under National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) and has relied on and complied with the exemptions from Canadian continuous disclosure requirements afforded to SEC foreign issuers under Part 4 of NI 71-102.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted for so long as:
(a) residents of Canada do not directly or indirectly beneficially hold more than 10% of the aggregate outstanding Common Shares and Series B Preferred Shares;
(b) residents of Canada do not directly or indirectly comprise more than 10% of the aggregate number of beneficial holders of Common Shares and Series B Preferred Shares;
(c) residents of Canada do not directly or indirectly beneficially hold more than 10% of the aggregate outstanding number of any new class or series of securities issued by the Filer;
(d) residents of Canada do not directly or indirectly comprise more than 10% of the aggregate number of beneficial holders of any new class or series of securities issued by the Filer;
(e) the Filer is subject to and compiles with the US Rules in connection with its oil and natural gas activities;
(f) the Filer issues in Canada, and files on SEDAR, a news release stating that it will provide the Oil and Gas Disclosure in accordance with the US Rules rather than in accordance with NI 51-101; and
(g) the Filer files the Oil and Gas Disclosure with the securities regulatory authority or regulator in each of the Canadian jurisdictions in which the Filer is a reporting issuer as soon as practicable after the Oil and Gas Disclosure is filed pursuant to the US Rules.