Securities Law & Instruments

Headnote

Applicant deemed to have ceased to be offering its securities to the public under the OBCA.

Statutes Cited

Business Corporations Act, R.S.O. 1990, c. B.16, as am., s. 1(6).

IN THE MATTER OF THE BUSINESS CORPORATIONS ACT (ONTARIO), R.S.O. 1990, c. B.16, AS AMENDED (THE "OBCA") AND IN THE MATTER OF DIVERSINET CORP. (THE "FILER")

ORDER (Subsection 1(6) of the OBCA)

UPON the application of the Filer to the Ontario Securities Commission (the "Commission") for an order pursuant to subsection 1(6) of the OBCA to be deemed to have ceased to be offering its securities to the public;

AND UPON the Filer representing to the Commission that:

1. The Filer is a corporation incorporated under the OBCA, and is an "offering corporation" as defined in the OBCA, and its head office is located at 2235 Sheppard Avenue East, Suite 1700, Toronto, Ontario M2J 5B5.

2. The Filer is a reporting issuer in the provinces of British Columbia, Alberta and Ontario (the "Jurisdictions").

3. On November 29, 2013, the Filer made an application to the Ontario Securities Commission, as principal regulator on behalf of the securities regulatory authorities in the Jurisdictions, that the Filer cease to be a reporting issuer in the Jurisdictions. The cease to be a reporting issuer application contains further background details about the Filer.

4. At the annual and special meeting of shareholders of the Filer held on September 11, 2013 (the "Special Meeting"), the shareholders approved a special resolution authorizing the sale of substantially all of the assets of the Filer (the "Sale Resolution"). A total of 99.80% of the votes cast at the Special Meeting were in favour of the Sale Resolution.

5. At the Special Meeting, the shareholders approved a special resolution authorizing the formal winding-up of the Filer and the distribution of its remaining assets to shareholders (the "Winding Up Resolution") pursuant to a Plan of Liquidation and Distribution (the "Liquidation Plan"). A total of 99.79% of the votes cast at the Special Meeting were in favour of the Winding Up Resolution.

6. By resolution of the Filer's board of directors (the "Board") on September 16, 2013, the effective date for the commencement of the formal winding-up in accordance with the Liquidation Plan was determined to be September 23, 2013.

7. The Filer applied to the Superior Court of Justice (Commercial List) (Ontario) (the "Court") for the winding-up to be supervised by the Court.

8. On October 18, 2013, the winding-up order and claims procedure order were approved by the Court for a voluntary winding-up of the Filer pursuant to the Liquidation Plan in accordance with the OBCA.

9. Pursuant to the Liquidation Plan:

a. Duff & Phelps Canada Restructuring Inc. (the "Liquidator") was appointed the liquidator of the estate and effects of the Filer for the purpose of winding-up its business and affairs and distributing its assets;

b. a process established by the Liquidator and approved by the Court was initiated for the identification, resolution and barring of certain claims against the Filer (the "Claims Process");

c. consistent with Section 221 of the OBCA and Section 3.3 of the Liquidation Plan, all of the powers of the board of directors of the Filer have ceased and the directors have been deemed to have resigned; and

d. certain former members of the Board and/or former officers of the Filer, namely David Hackett, Albert Wahbe and Jay Wigdale, were appointed inspectors of the Filer pursuant to Section 194 of the OBCA and Section 6.1 of the Liquidation Plan.

10. In accordance with the Claims Process, the date by which all claims were required to be filed was on or about December 16, 2013.

11. In accordance with the Liquidation Plan, the Filer maintained the listing of the common shares (the "Shares") on the OTCQB marketplace, operated by the OTC Markets Group, (the "OTCQB") until the completion of the Claims Process.

12. On December 11, 2013, the Filer applied to the Financial Industry Regulatory Authority ("FINRA") for a voluntary de-listing of the Shares as of the end of business on December 16, 2013.

13. By press release issued on December 17, 2013, the Filer announced that the Shares had been delisted from the OTCQB. FINRA also issued a bulletin to this effect on December 16, 2013. Pursuant to Section 198 of the OBCA and paragraph 4.2(e) of the Liquidation Plan, all Share transfers made after December 16, 2013 are void unless made with the explicit sanction of the Liquidator.

14. On December 6, 2013 the Filer requested that to the Clearing and Depository Services Inc. ("CDS") place a restriction on the Shares so that no transfers among participants may occur after December 16, 2013. On December 16, 2013, CDS published a bulletin announcing that the Shares would be fully restricted in CDS as of opening of business on December 17, 2013, subject to any Liquidator sanctioned transfers.

15. On December 13, 2013, the Filer requested that the Depository Trust & Clearing Corporation ("DTCC") place a restriction on the Shares so that no transfers among participants may occur after December 16, 2013. As requested by DTCC, the Liquidator consented to permit broker-to-broker transfers where the beneficial owners of the securities remained the same. The DTCC also required that a three day period be permitted following the delisting of the Shares from the OTCQB to permit trades made on or before December 16, 2013 to be completed. On December 19, 2013, DTCC published a bulletin announcing that the Shares would be fully restricted in DTCC as of opening of business on December 20, 2013, subject to any Liquidator sanctioned transfers.

16. The Filer's shareholders no longer have the ability to trade in the Shares. As a result, the Filer's shareholders do not receive any further benefit from the Filer continuing to be a public company given that all pertinent information will be disclosed by the Liquidator.

17. No securities of the Filer are listed, traded or quoted for trading on any "marketplace" in Canada or elsewhere (as defined in National Instrument 21-101 Marketplace Operation), and the Filer does not intend to have any of its securities listed, traded or quoted on such a marketplace in Canada or any other jurisdiction.

18. The Filer has no current intention to seek public financing by way of offering of securities.

19. The Liquidator is required by the Liquidation Plan to report to the Filer's shareholders with respect to all matters relating to the assets, the Filer and such other matters as may be relevant to the Liquidation Plan. The Liquidator intends to issue a press release and/or report to the Court when the timing and quantum of shareholder distributions are determined. All such materials will be posted on the Liquidator's website.

20. The Liquidator has established a website in respect of the liquidation where it intends to continue to post information and issue press releases where considered advisable (with the advice of outside counsel) with respect to material claims raised during the Claims Process, the resolution of any material claims and the timing and expected amounts of any distributions to the Filer's shareholders. As a result of the Liquidator being an officer of the Court and the Liquidation being under the supervision of the Court, the Liquidator will report to the Court from time to time with respect to disclosure made to the Filer's shareholders.

21. On December 2, 2013, the Filer issued a press release disclosing that the Filer has made an application for a decision that the Filer is not a reporting issuer under applicable securities laws. The press release was filed on SEDAR on December 2, 2013.

22. The Filer's assets consist primarily of cash (approximately US$3.5 million) with some accounts receivables (approximately $150,000) owing from Mihealth Global Systems Inc. The Filer has no other assets.

23. The Filer has ceased exercising commercial activity of any kind and will be dissolved after the Claims Process is complete, all claims are resolved, tax clearance certificates are issued in accordance with the Income Tax Act and all assets are distributed.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS HEREBY ORDERED by the Commission pursuant to subsection 1(6) of the OBCA that the Filer be deemed to have ceased to be offering its securities to the public for the purposes of the OBCA.

DATED at Toronto, this 4th day of July, 2014.

"Vern Krishna"
Ontario Securities Commission
 
"Edward P. Kerwin"
Ontario Securities Commission