MRRS - Relief from prospectus requirements in connection with the first trade of common shares outside Canada - Issuer made privately placed common shares to Canadian residents in May 2006 - Exemption from prospectus requirements for trades outside Canada not available as at the time of the distribution the conditions of the exemption were not met - Percentage of shareholders resident in Canada and shares held by Canadian residents subsequently became de minimis.
Applicable Legislative Provisions
Securities Act (Ontario), ss. 74(1), 53(1).
National Instrument 45-102 Resale of Securities, s. 2.14.
Citation: MMC Energy, Inc., 2007 ABASC 745
October 19, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, ONTARIO AND SASKATCHEWAN
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
MMC ENERGY, INC. (THE FILER)
MRRS DECISION DOCUMENT
1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption (the Requested Relief) from prospectus requirements for the first trade of common shares of the Filer distributed to purchasers resident in the Jurisdictions under available "accredited investor" exemptions in connection with a private placement completed in May, 2006 (the Private Placement).
2. Under the Mutual Reliance Review System for Exemptive Relief Applications (the MRRS):
(a) the Alberta Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker (the Decision).
3. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this Decision unless they are otherwise defined in this Decision.
4. This Decision is based on the following facts represented by the Filer:
(a) The Filer is a Delaware corporation whose shares are listed on the NASD Over-the-Counter Bulletin Board (the OTC BB) in the United States and the Deutsche Borse in Germany.
(b) The Filer is not a reporting issuer in any jurisdiction in Canada and currently has no intention of becoming a reporting issuer.
(c) In the Private Placement, 4,525,000 common shares (the Common Shares) were sold to Canadian residents (the Canadian Private Placement Shares) out of a total offering of 12,000,966 Common Shares.
(d) In the absence of an order granting relief, the first trade of the Canadian Private Placement Shares by a resident of the Jurisdictions will be deemed to be a distribution pursuant to section 2.6 of National Instrument 45-102 Resale of Securities (NI 45-102) unless, among other things, the Filer has been a reporting issuer for 4 months immediately preceding the trade in one of the jurisdictions set forth in Appendix B to NI 45-102.
(e) Section 2.14 of NI 45-102 provides an exemption from section 2.6 of NI 45-102 in respect of a distribution of securities if, at the date of a distribution, residents of Canada did not own more than 10% of the outstanding securities of the class distributed and did not represent more than 10% of the number of holders of securities of that class.
(f) Immediately following the Private Placement Canadian residents held in the aggregate approximately 10.65% of the then-outstanding Common Shares. The Filer is unable to determine the number of beneficial holders of Common shares at that time, but 98 of the 165 registered holders of Common Shares (approximately 59%) were Canadian residents. Accordingly, the exemption under section 2.14 is unavailable in respect of the Canadian Private Placement Shares.
(g) Using reasonable efforts the Filer determined that as at July 12, 2007, 243 residents of Canada (representing 12.17% of the total) were beneficial holders of Common Shares and Canadian residents held approximately 8.73% of the total common shares issued and outstanding.
(h) No market currently exists in Canada for the Common shares and none is expected to develop.
(i) The Filer is subject in the United States to the reporting obligations of the 1934 Act. Documents filed with the SEC will be available electronically through EDGAR.
(j) The Filer has filed a registration statement with the United States Securities and Exchange Commission with respect to the Common Shares issued pursuant to the Private Placement and such registration statement was declared effective April 5, 2007.
5. Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
6. The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that:
(a) the trade is made through an exchange, or a market, outside of Canada; and
(b) at the date of the trade the Filer is not a reporting issuer in any jurisdiction of Canada.