National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application for an order that the issuer is not a reporting issuer under applicable securities laws -- issuer filed a final prospectus but did not complete its initial public offering of common shares -- issuer is ineligible to use the simplified procedure under CSA Staff Notice 12-307 Application for a Decision that an Issuer is not a Reporting Issuer because it has more than 15 securityholders in Ontario -- requested relief granted.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).
October 27, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND ALBERTA (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF CHOP EXPLORATION INC. (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer is not a reporting issuer (the Exemptive Relief Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a coordinated review application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the decision is the decision of the principal regulator and evidences the decision of the other Decision Maker.
Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
In this application, "securityholder" means, for a security, the beneficial owner of the security.
This decision is based on the following facts represented by the Filer:
1. The Filer was incorporated under the Business Corporations Act (Ontario) on July 21, 2009.
2. The Filer's head office is located at 50 Richmond Street East, Suite 101, Toronto, Ontario.
3. The majority of the Filer's securityholders are residents of Ontario.
4. The Filer filed a prospectus (the Prospectus) in relation to a proposed initial public offering of common shares (the IPO) with the British Columbia Securities Commission (the BCSC), the Alberta Securities Commission (the ASC) and the Ontario Securities Commission (the OSC) on May 6, 2011.
5. The Filer received a receipt for the Prospectus from the OSC, as principal regulator, on July 19, 2011. As a result, the Filer became a reporting issuer in Alberta, British Columbia and Ontario. Until the Filer's final prospectus was receipted, the Filer was a private company.
6. The Filer never completed the IPO. The Filer issued and filed a press release on September 1, 2011 regarding its decision to terminate the IPO due to adverse market conditions.
7. The Filer provided the notice contemplated by BC Instrument 11-502 Voluntary Surrender of Reporting Issuer Status on September 17, 2014 and received notice from the BCSC on September 22, 2014 that it would cease to be a reporting issuer in British Columbia effective September 27, 2014.
8. The Filer is authorized to issue an unlimited number of common shares of which 9,104,236 are issued and outstanding. In addition, there are currently an aggregate of 2,000,000 common share warrants and 400,000 stock options outstanding. The outstanding common shares are held by 45 shareholders in the jurisdictions noted below. The same 45 shareholders are also the holders of all of the outstanding common share warrants and stock options.
No. of Securityholders
No. of Common Shares
9. The Filer currently has the same securityholders as it had prior to filing the Prospectus and the outstanding securities of the Filer have not changed since the filing of the Prospectus except that on August 21, 2012, the Filer issued 667,808 common shares to a new securityholder in settlement of a debt of $66,780.80. The Filer relied on section 2.3 of National Instrument 45-106 Prospectus and Registration Exemptions for this distribution.
10. Except as provided above, no securities, including warrants and stock options, have traded since the filing of the Prospectus.
11. No securities of the Filer, including any debt securities, warrants or stock options, are currently traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.
12. The Filer delivered a notice to its 45 securityholders that it will be applying to the Jurisdictions for a decision that it is not a reporting issuer in each of the Jurisdictions. This notice was filed on System for Electronic Document Analysis and Retrieval (SEDAR) on October 20, 2014.
13. The Filer has no current intention to seek public financing by way of an offering of securities.
14. Each of SEDAR and System for Electronic Disclosure by Insiders (SEDI) profiles of the Filer are up to date and all outstanding fees required to be paid by the Filer under the Legislation have been paid.
15. The Filer is not in default of any of its obligations under the Legislation.
16. The Filer is not eligible to use the simplified procedure under CSA Staff Notice 12-307 Application for a Decision that an Issuer is not a Reporting Issuer because it has more than 15 securityholders in the province of Ontario.
17. The Filer will not be a reporting issuer or the equivalent in any jurisdiction in Canada immediately following the granting of the Exemptive Relief Sought.
18. There is no prejudice to any person in Alberta or Ontario in the grant of the Exemptive Relief Sought.
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 Exemptive Relief Sought is granted.