Electrameccanica Vehicles Corp.

Decision

Multilateral Instrument 11-102 Passport System and National Policy 11-206 Process for Cease to be a Reporting Issuer Applications – Securities Act s. 76 Prospectus Requirement Exemption from resale restrictions – The Filer was an OTC reporting issuer in British Columbia by operation of MI 51-105; the Filer ceased to be an OTC reporting issuer under MI 51-105 when its securities became listed on NASDAQ; the Filer has filed and continues to file all required continuous disclosure; the Filer has applied to be designated a reporting issuer in British Columbia.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am. s. 74.

October 23, 2018

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
ELECTRAMECCANICA VEHICLES CORP.
(the Filer)

DECISION

Background

1              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 grants the Filer an exemption from the prospectus requirement for the first trade of Restricted Securities (defined below) held by certain security holders of the Filer (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a)           the British Columbia 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 by the Filer in Alberta; and

(c)           this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

2              Terms defined in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

3              This decision is based on the following facts represented by the Filer:

1.             it is incorporated under the laws of British Columbia and its head office is located in Vancouver, British Columbia;
2.             its authorized capital consists of an unlimited number of common shares and an unlimited number of preferred shares;

3.             as of October 4, 2018, the Filer had 27,786,111 common shares (Shares), 18,171,450 common share purchase warrants (Warrants) and 4,343,750 stock options (Options) outstanding;

4.             the Filer is subject to the reporting obligations of section 13 of the 1934 Act; the Filer is not in default of its reporting obligations under section 13 of the 1934 Act;

5.             on June 27, 2017, the Filer became an “OTC reporting issuer” in British Columbia as defined in Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI 51-105) when the Financial Industry Regulatory Authority in the United States assigned a ticker symbol in respect of the Shares;

6.             from July 19, 2017 to August 8, 2018, the Shares were posted for trading on the OTCQB in the United States;

7.             the Filer ceased to be an OTC reporting issuer in British Columbia effective August 9, 2018 when its Shares commenced trading on the NASDAQ Capital Market (NASDAQ) under the symbol “SOLO”;

8.             under National Instrument 45-102 Resale of Securities (NI 45-102), the first trade of any outstanding Shares, Warrants or Options issued by the Filer under certain prospectus exemptions when it was an OTC reporting issuer or before it was an OTC reporting issuer that were not traded by the original security holder in accordance with the provisions of MI 51-105 will be deemed to be a distribution unless, among other things, the Filer is and has been a reporting issuer in a jurisdiction of Canada for four months immediately preceding the trade (the Seasoning Period Requirement);

9.             in addition, under NI 45-102, the first trade of any Shares to be distributed by the Filer on exercise of the Warrants or Options (Underlying Shares) will be deemed to be a distribution unless, among other things, the Filer has satisfied the Seasoning Period Requirement; 

10.          the Restricted Securities are held by security holders located in British Columbia, Ontario and Alberta and by security holders outside of Canada;

11.          as of October 4, 2018, the Filer had 22,784,720 Shares, Warrants to acquire 12,657,856 Underlying Shares and Options to acquire 4,343,750 Underlying Shares outstanding that are subject to the Seasoning Period Requirement (the Restricted Securities);

12.          since June 30, 2017, the Filer has filed on SEDAR all disclosure documents it was required to file under MI 51-105 and National Instrument 51-102 Continuous Disclosure Obligations; the Filer also files continuous disclosure reports under United States securities laws and all public documents of the Filer are available on the Filer’s EDGAR profile under the filings section of the SEC website (www.sec.gov);

13.          the Filer is not in default of any of the requirements of securities legislation in any jurisdiction of Canada, except for the failure to comply with the legending requirements in section 2.5 of NI 45-102 in connection with the distribution of securities to purchasers in Ontario when the Filer was an OTC reporting issuer; the certificates for the securities distributed to Ontario purchasers were imprinted with the following legend:

The Holder of this security must not trade the security in or from a jurisdiction of Canada unless the conditions in section 13 of Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets are met.;

14.          the conditions for resale set out in subsection 13(1) of MI 51-105 include the following, which are equally or more restrictive than the conditions set out in section 2.5 of NI 45-102:

(a)           a four month period has passed from the date of distribution (at least six months has passed for a control person);

(b)           the number of securities the person proposes to trade, plus the number of securities of the OTC reporting issuer of the same class that the person has traded in the preceding 12 months period, does not exceed 5% of the OTC reporting issuer’s outstanding securities of the same class;

(c)           the person trades the security through an investment dealer registered in a jurisdiction of Canada;

(d)           the investment dealer executed the trade through any of the over-the-counter markets in the United States of America;

(e)           there has been no unusual effort made to prepare the market or create demand for the security;

(f)            no extraordinary commission or other consideration is paid to a person for the trade; and

(g)           if the person trading the security is an insider of the OTC reporting issuer, the person reasonably believes that the OTC reporting issuer is not in default of securities legislation;

15.          during the time it was an OTC reporting issuer, the Filer complied with the applicable legending requirements in MI 51-105;

16.          after ceasing to be an OTC reporting issuer, the Filer has complied with the applicable legending requirements in subsection 2.5(2)3(ii) of NI 45-102 by having the following legend imprinted on the certificates for any securities distributed:

Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is 4 months and a day after the later of (i) [insert the distribution date], and (ii) the date the issuer became a reporting issuer in any province or territory; and

17.          the British Columbia Securities Commission designated the Filer to be a reporting issuer in British Columbia on October 15, 2018.

Decision

4              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 provided that:

(a)           the Filer is a reporting issuer in a jurisdiction of Canada at the time of the trade;

(b)           for Restricted Securities that were distributed under a prospectus exemption listed in Appendix D of NI 45-102 or to which section 2.5 of NI 45-102 applies:

(i)            at least four months have elapsed from the distribution date of the Restricted Securities or, in the case of Underlying Shares, at least four months have elapsed from the distribution date of the Warrants or Options that entitled the security holder to acquire the Underlying Shares;

(ii)           the Filer has provided to security holders holding Restricted Securities where at least four months have not elapsed from the distribution date of the Restricted Securities written notice of the applicable legend restriction notation set out in subparagraph (i) or subparagraph (ii) of item 3 of section 2.5 of NI 45-102, as applicable;

(iii)           the trade is not a control distribution as defined in NI 45-102;

(iv)          no unusual effort is made to prepare the market or to create a demand for the Restricted Securities that are the subject of the trade;

(v)           no extraordinary commission or consideration is paid to a person in respect of the trade; and

(vi)          if the selling security holder is an insider or officer of the Filer, the selling security holder has no reasonable grounds to believe that the Filer is in default of securities legislation in any jurisdiction; and

(c)           for Restricted Securities that were distributed under a prospectus exemption listed in Appendix E of NI 45-102 or to which section 2.6 of NI 45-102 applies:

(i)            the trade is not a control distribution as defined in NI 45-102;

(ii)           no unusual effort is made to prepare the market or to create a demand for the shares that are the subject of the trade;
(iii)           no extraordinary commission or consideration is paid to a person in respect of the trade; and

(iv)          if the selling security holder is an insider or officer of the Filer, the selling security holder has no reasonable grounds to believe that the Filer is in default of securities legislation in any jurisdiction.

“Nigel P. Cave”
Vice Chair
British Columbia Securities Commission