North Halton Golf & Country Club Limited - s. 74(1)

Headnote

Paragraph 25(1)(a), section 53, and subsection 74(1) of the Act -- certain sales, transfers, and issuances of Class G Common Shares of issuer not subject to dealer registration requirements or prospectus requirements of the Act, subject to conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1)(a), 53, 74(1).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O 1990, CHAPTER S.5, AS AMENDED

(the Act)

AND

IN THE MATTER OF

NORTH HALTON GOLF & COUNTRY CLUB LIMITED

ORDER

(Subsection 74(1))

UPON the application (the Application) of North Halton Golf & Country Club Limited (the Club) to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 74(1) of the Act that the registration requirements contained in paragraph 25(1)(a) of the Act (the Dealer Registration Requirements) and the prospectus requirements of section 53 of the Act (the Prospectus Requirements) shall not apply to certain trades in securities of the Continued Club, as described below;

AND UPON considering the Application and the recommendation of the Staff of the Commission;

AND UPON the Club having represented to the Commission as follows:

1. The Club was incorporated as a corporation with share capital under the Corporations Act (Ontario) (the OCA) in 1954. The Club is not a "private company" within the meaning of the Act and is not a "private issuer" within the meaning of National Instrument 45-106 (NI 45-106). The Club is not, and does not intend to become, a reporting issuer under the Act or under the securities legislation of any other Canadian jurisdiction. The shares of the Club are not traded on any stock exchange. The Club is a "for profit" corporation.

2. The authorized share capital of the Club currently consists of 375 common shares (the Common Shares), 225 non-voting, non-cumulative redeemable first preference shares with a par value of $500 each and 150 non-voting, non-cumulative redeemable second preference shares with a par value of $500 each. The said first preference shares and second preference shares are herein collectively referred to as the Preference Shares. The Common Shares are voting and the Preference Shares are non-voting. The Common Shares and the Preference Shares are held in "units" of one Common Share and one Preference Share. The term Share Unit, when used herein, refers to a unit consisting of one Common Share and one Preference Share.

3. The holders of the Share Units are entitled to receive notice of and to attend all meetings of the shareholders of the Club and are entitled to one vote for each Common Share held.

4. The issued capital of the Club consists of 375 Share Units, of which 157 Share Units are owned by persons holding golf memberships at the Club, 121 Share Units are held by NH Equity Corporation (NH Equity) and the balance of 97 Share Units are held by persons who are not golf members.

5. NH Equity is a corporation incorporated under the Business Corporations Act (Ontario) (OBCA), whose issued and outstanding capital is held by two directors of the Club. NH Equity was formed to acquire 121 Share Units (the Majority Shares) from the former majority shareholder of the Club. The Club borrowed funds from a Canadian Chartered Bank which were loaned to NH Equity to fund the purchase of the Majority Shares, which loan was secured against the Majority Shares. It is intended that this indebtedness will be repaid from the proceeds of sale of Class G Shares by NH Equity.

6. The Club has determined to continue (the Continuance) as a corporation (the Continued Club) under the Canada Business Corporations Act (the CBCA). The Continuance will be submitted to the Shareholders of the Club for approval at a meeting (the Meeting) to be held on or before April 30, 2008. The resolution approving the Continuance must, pursuant to the OCA, be approved by the holders of 66 2/3% of the issued and outstanding Common Shares and the holders of 66 2/3% of each class of Preference Shares of the Club, in each case, present in person or by proxy at the Meeting. Holders of Share Units will be provided with a management proxy circular containing disclosure relating to the Continuance, including the terms and conditions of each class of security to be issued and the restrictions on transfer applicable to each class of such securities.

7. The Club does not intend for the Continued Club to become a reporting issuer under the Act or under the securities legislation of any other Canadian jurisdiction.

8. Upon Continuance under the CBCA, the authorized capital of the Continued Club will consist of:

(a) 375 Class A Common Shares, which will have the same rights, privileges and conditions as are attached to the existing Share Units of the Club, provided that, on a winding up or liquidation of the Continued Club, each Class A Common Share will be immediately converted into one Class G Common Share and 10 Class X Preference Shares. Class A Common Shares are not transferable. In order to transfer a Class A Common Share, the holder of a Class A Common Share will be required to exchange that Class A Common Share for one Class G Common Share and 10 Class X Preference Shares;

(b) 625 Class G Common Shares which will rank pari passu with the Class A Common Shares as to the payment of dividends and the right to vote at meetings of the shareholders of the Continued Club. The Class A Common Shares and the Class G Common Shares will represent equity ownership of the Continued Club and upon conversion of all of the Class A Common Shares, the Class G Common Shares will represent equity ownership of the Continued Club;

(c) 3750 Class X Preference Shares which will be non-voting and non-transferable, bear a 4% annual cumulative dividend and will be redeemable by the Corporation and retractable by the holder at $1,000 per Share. The redemption right shall be exerciseable immediately. The retraction right will be exerciseable at any time following the fifth anniversary of the approval of the Continuance.

The Club does not intend to create additional Class A Common Shares or Class X Preference Shares.

9. Upon Continuance and in accordance with subsection 187(2) of the CBCA, each Share Unit will be exchanged for one Class A Common Share.

10. Following Continuance, each holder of a Class A Common Share will be entitled (but not required) to exchange (the Class A Exchange Right) that Class A Common Share for one Class G Common Share and 10 Class X Preference Shares. Upon such exchange, the Class A Common Share will be cancelled.

11. NH Equity has agreed to convert its outstanding Share Units into 121 Class G Common Shares and 1210 Class X Preference Shares (the NH Equity Share Unit Conversion). NH Equity will also have the right to exchange the 1210 Class X Preference Shares with the Continued Club for 55 Class G Common Shares on the basis of 22 Class X Preference Shares for each Class G Common Share (the NH Equity Class X Exchange Right). The Class X Preference Shares so exchanged will be cancelled.

12. Following Continuance, new golf members of the Continued Club will be required to purchase one Class G Common Share for consideration, initially, of $22,000. Existing holders of Class G Common Shares who hold Class X Preference Shares who wish to purchase a Class G Common Share for a "Family Golf Member" (i.e., a spouse, a common law spouse, a child or a grandchild, including a spouse of the child or grandchild, that is or will become, upon issue of the Class G Common Share, a golf member that pays annual golf fees) (the Family Member Subscription Credit) will be entitled to surrender up to 10 of their Class X Preference Shares to the Continued Club in partial consideration for such purchase and will receive a credit of up to $10,000 ($1,000 per Class X Preference Share surrendered) against the amount payable in respect of such Class G Common Share. Any Class X Preference Shares so surrendered will be cancelled.

13. Purchases of Class G Common Shares by new members may be made: (a) from the Continued Club (the Treasury Issue); (b) from NH Equity (the NH Equity Purchase); or (c) from another member or non-member shareholder (the Inter-Shareholder Transfer), subject to the approval of the Board of Directors of the Continued Club. The Board of Directors of the Continued Club will establish policies and procedures governing the issue/transfer of Class G Common shares to new members. The initial 150 Class G Common Shares to be sold to new members will be issued by the Continued Club or transferred by NH Equity.

14. The Club believes that the requested relief is necessary as:

(a) (i) the trades outlined in paragraphs (a) through (c) below will not be made to "accredited" investors (as such term is defined in NI 45-106) in every case where such a trade is made; (ii) neither the Club nor NH Equity is entitled to rely on the exemption provided in Paragraph 2.38 of NI 45-106 and it does not appear that any of the other exemptions set forth in NI 45-106 will be available in respect of such trades; and

(b) the ability of the Club to sell Class G Common Shares to new and existing golf members or to have new golf members purchase their memberships from NH Equity is essential to the continued existence of the Club.

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

IT IS HEREBY ORDERED, pursuant to subsection 74(1) of the Act, that the Dealer Registration Requirements and the Prospectus Requirements shall not apply to,

(a) the sale or transfer of Class G Common Shares by NH Equity to new golf playing members of the Continued Club;

(b) the issue of Class G Common Shares by the Continued Club to new golf playing members of the Continued Club (including pursuant to the Family Member Subscription Credit); and

(c) the sale or transfer by members of the Continued Club of Class G Common Shares to new golf playing members of the Continued Club;

provided that,

(d) the Continuance is approved by the holders of 66 2/3% of the issued and outstanding Common Shares, and the holders of 66 2/3% of each class of the Preference Shares, in each case, present in person or by proxy at the Meeting;

(e) the Meeting is held on or before April 30, 2008; and

(f) the Continuance is completed on or before June 30, 2008;

and for so long as,

(g) each purchaser or transferee of Class G Common Shares under paragraph (a), (b) or (c), is provided with a copy of this decision and a written statement to the effect that certain protections, rights and remedies provided by the Act, including statutory rights of rescission and damages, will be unavailable to that purchaser or transferee and that there are restrictions imposed on the disposition or transfer of the Class G Common Shares;

(h) in respect of a sale, transfer or issue under paragraph (a), (b), or (c),

(i) the sale, transfer, or issue is approved by the Board of Directors of the Continued Club,

(ii) in respect of a sale or transfer under paragraph (a) or (c), the Board of Directors of the Continued Club only gives its approval under subparagraph (i) if it has determined that it is appropriate to approve such a sale or transfer in lieu of issuing new Class G Common Shares from Treasury of the Continued Club,

(iii) in respect of a sale or transfer under paragraph (c), the Continued Club charges the transferring member (other than a selling or transferring member who acquired the Class G Common Share being sold or transferred pursuant to the Class A Exchange Right under the Continuance) a "transfer fee" equal to 20% of the then current price at which Class G Common Shares are being issued by the Continued Club from Treasury in respect of any such sale or transfer, and

(iv) the restrictions in subparagraphs (i), (ii), and (iii) are, at the time of the sale, transfer, or issue, contained in the conditions attached to the Class G Common Shares which would form part of the Articles of the Continued Club;

(i) the Continued Club has not issued any securities from Treasury other than the authorized capital described in representation 9, above, and Class G Common Shares;

(j) the By-Laws or Articles of the Continued Club require a new golf playing member of the Continued Club to own a Class A Common Share or a Class G Common Share in order to play golf at facilities owned by the Continued Club;

(k) the By-Laws and Articles of the Continued Club are not amended without notice to, and the consent of, the Director (as defined in the Act); and

(l) the first trade of any Class G Common Shares purchased or acquired pursuant to paragraph (a), (b), or (c) will be a distribution.

DATED at Toronto this 22nd, day of February, 2008

"David L. Knight"

"Paul K. Bates"