Owner of two apartment buildings deemed to cease to be a reporting issuer. Occupants of apartments must purchase shares and enter into occupancy agreement. Primary reason to own shares is to have a place to live, not for investment purpose. Trades in shares not subject to sections 25 or 53, as long as certain conditions met.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5 as am, ss. 25, 53, 74(1), s. 83.
Business Corporations Act, R.S.O. 1990, c. B.16, as am, s. 1(6).
Applicable Ontario Rules
OSC Rule 13-502 Fees, s. 6.1.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act)
IN THE MATTER OF
THE BUSINESS CORPORATIONS ACT
R.S.O. 1990, CHAPTER B.16, AS AMENDED (the OBCA)
IN THE MATTER OF
ONTARIO SECURITIES COMMISSION RULE 13-502 FEES
(the Fees Rule)
IN THE MATTER OF
AVOCA APARTMENTS LIMITED
ORDER AND RULING
UPON the application of Avoca Apartments Limited (Avoca) for the following:
1. an order of the Ontario Securities Commission (the Commission) pursuant to section 83 of the Act that Avoca be deemed to have ceased to be a reporting issuer under the Act;
2. an order of the Commission pursuant to subsection 1(6) of the OBCA that Avoca be deemed to have ceased to be offering its securities to the public for the purposes of the OBCA;
3. a ruling of the Commission pursuant to subsection 74(1) of the Act that trades in Avoca Shares (as hereinafter defined) are not subject to sections 25 or 53 of the Act (the Section 74 Application) subject to certain conditions; and
4. an order of the Director pursuant to section 6.1 of the Fees Rule that Avoca be exempt from paying the required fee for the Section 74 Application;
AND UPON considering the application and the recommendation of the staff of the Commission;
AND UPON Avoca representing to the Commission and the Director that:
1. Avoca is a corporation existing under the OBCA;
2. Avoca was incorporated on January 15, 1968 for the purpose of taking title to and holding as bare trustee for the beneficial owners, the lands, premises and apartment buildings erected at 10 and 20 Avoca Avenue, Toronto, Ontario (the Apartment Suites);
3. Avoca became a reporting issuer in Ontario on September 5, 1968 as a result of filing a prospectus qualifying the initial distribution of its shares to apartment occupants;
4. Avoca is not a reporting issuer in any other jurisdiction in Canada;
5. The authorized capital of Avoca consists of 5,760 shares (Avoca Shares), of which 5,760 Avoca Shares are outstanding. Other than the Avoca Shares, Avoca has no securities, including debt securities, outstanding;
6. The Avoca Shares are not quoted or listed on a marketplace as defined in National Instrument 21-101 Marketplace Operation;
7. There is no market for the Avoca Shares and Avoca does not anticipate that any such market will develop;
8. Avoca maintains the common elements and provides services for the benefit of the owner occupants of the Apartment Suites (Owner Occupants). The beneficial ownership of each Apartment Suite is vested in the holders of the Avoca Shares, being the Owner Occupants;
9. Purchasers of Avoca Shares are restricted to those persons who will be Owner Occupants of an Apartment Suite;
10. There are currently 185 Owner Occupants which together hold all of the outstanding Avoca Shares.
11. In order to purchase an Apartment Suite, a purchaser must acquire the specified number of Avoca Shares which are associated with that Apartment Suite. The amount of Avoca Shares purchased depends on, among other things, the size of the Apartment Suite being acquired. The Avoca Shares are transferred to a new Owner Occupant (a Purchasing Owner Occupant) from the existing Owner Occupant (a Selling Owner Occupant). On the closing of the purchase, the Selling Owner Occupant returns his or her certificates representing the Avoca Shares to Avoca for cancellation and Avoca issues a new certificate representing such Avoca Shares to the Purchasing Owner Occupant. In purchasing an Apartment Suite, the Purchasing Owner Occupant assumes all of the Selling Owner Occupant's rights and obligations under the Occupancy Agreement (as hereinafter defined);
12. Under the standard form of occupancy agreement (the Occupancy Agreement) entered into between each Owner Occupant and Avoca, an Owner Occupant cannot assign, sell or pledge his or her Avoca Shares unless such Owner Occupant also assigns to the purchaser of such Avoca Shares the rights under the Occupancy Agreement;
13. The Occupancy Agreement sets out the rights and obligations of Owner Occupants in respect of the Apartment Suites and the facilities of Avoca. It provides that an Owner Occupant has the right to use the Apartment Suite they have purchased as well as the right to use certain common areas and facilities of Avoca so long as the Owner Occupant owns his or her Avoca Shares and abides by the rules and regulations of Avoca;
14. A transfer of Avoca Shares occurs only in the following circumstances:
(a) in event that a Selling Owner Occupant transfers his or her interest in an Apartment Suite to a Purchasing Owner Occupant; or
(b) Avoca takes possession of an Apartment Suite in accordance with the provisions of the Occupancy Agreement and subsequently transfers the Apartment Suite and the Avoca Shares which are associated with such Apartment Suite to a Purchasing Owner Occupant;
15. In order for an Owner Occupant to assign his or her rights under an Occupancy Agreement, the Owner Occupant must, among other things, obtain the consent of the majority of the directors of Avoca;
16. Avoca does not intend to seek public financing by way of an offering of its securities; and
17. Avoca is not in default of any requirement of the Act or the rules and regulations made thereunder.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest,
IT IS ORDERED pursuant to section 83 of the Act that Avoca is deemed to have ceased to be a reporting issuer under the Act,
AND IT IS ORDERED pursuant to subsection 1(6) of the OBCA that Avoca is deemed to have ceased to be offering its securities to the public for the purposes of the OBCA,
AND IT IS RULED pursuant to subsection 74(1) of the Act that a trade in Avoca Shares is not subject to sections 25 or 53 of the Act, provided that there is no material change to the business of Avoca and that trading of Avoca Shares is limited to:
(a) trades from a Selling Owner Occupant to a Purchasing Owner Occupant; and
(b) trades by Avoca to a Purchasing Owner Occupant in connection with an Apartment Suite that Avoca has taken possession of pursuant to the provisions of the Occupancy Agreement.
August 20, 2004.
"Paul M. Moore"
"Harold P. Hands"
AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;
IT IS THE DECISION of the Director, pursuant to section 6.1 of the Fees Rule, that Avoca is exempt from the requirement in section 4.1 of the Fees Rule to pay an activity fee for the filing of the Section 74 Application.
August 20, 2004.