Securities Law & Instruments


Headnote

Relief from the requirements otherwise applicable to the Filer as a reporting issuer who is not a venture issuer – Filer is cross listed on the TSX Venture Exchange and the Alternative Exchange of the Johannesburg Stock Exchange – secondary listing on AltX only requires Filer to comply with TSXV requirements – relief granted subject to conditions, including that the Filer complies with the requirements of Canadian securities legislation applicable to a venture issuer

Applicable Legislative Provisions

National Instrument 41-101 General Prospectus Requirements, s. 19.1.
National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, s. 5.1.
National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, s. 8.6.
National Instrument 52-110 Audit Committees, s. 8.1.
National Instrument 58-101 Disclosure of Corporate Governance Practices, s. 3.1.
Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, s. 9.1.

June 29, 2017

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the “Jurisdiction”)

AND

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

AND

IN THE MATTER OF
BUFFALO COAL CORP.
(the “Filer”)

DECISION

Background

The securities regulatory authority or regulator in the Jurisdiction (the “principal regulator”) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the “Legislation”) for relief from:

(a)           the requirements otherwise applicable to the Filer as a reporting issuer who is not a venture issuer in each of the following instruments, including the forms thereof (collectively, the “Instruments”):

(i)            National Instrument 41-101 General Prospectus Requirements;

(ii)           National Instrument 51-102 Continuous Disclosure Obligations;

(iii)          National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards;

(iv)          National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings;

(v)           National Instrument 52-110 Audit Committees; and

(vi)          National Instrument 58-101 Disclosure of Corporate Governance Practices;

(b)           the formal valuation requirements under sections 4.3 and 5.4 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”); and

(c)           the minority approval requirements under section 5.6 of MI 61-101 (the “Minority Approval Relief”);

(collectively, the “Exemption Sought”).

Securities legislation imposes obligations for all reporting issuers. There are different obligations applicable to reporting issuers who are venture issuers and to those that are non-venture issuers. The Exemption Sought, if granted, would permit the Filer to comply with the obligations applicable to venture issuers notwithstanding that the Filer does not meet the criteria in the definition of “venture issuer”.

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

(d)           the Ontario Securities Commission is the principal regulator for this application; and

(e)           the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

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

Representations

This decision is based on the following facts represented by the Filer.

1.             The Filer is a corporation governed by the Business Corporations Act with a head office located in Woodmead, Gauteng, South Africa. The Filer is a coal producer in southern Africa which holds a majority interest in two operating mines in South Africa.

2.             The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the “Reporting Jurisdictions”).

3.             The common shares of the Filer (the “Common Shares”) are listed on the TSX Venture Exchange (the “TSXV”) under the symbol “BUF” and the Alternative Exchange of the Johannesburg Stock Exchange (the “AltX”) under the symbol “BUC”.

4.             The Common Shares were previously listed on the Toronto Stock Exchange (“TSX”) and the main board of the Johannesburg Stock Exchange (“JSE”). As a result of the Filer not meeting certain continued listing requirements, the Filer delisted from the TSX and listed the Common Shares on the TSXV effective December 17, 2015. Concurrent with the TSXV listing, the Filer delisted the Common Shares from the JSE and commenced trading on the AltX effective December 24, 2015. The Filer initially obtained a secondary listing on the JSE (and sought to maintain a listing on the AltX following the JSE delisting) to facilitate the trading in the Common Shares by its South African resident shareholders who may not otherwise be in a position to trade the Common Shares through the facilities of a Canadian stock exchange (given certain restrictions under applicable South African law).

5.             In the Instruments, the definition of a “venture issuer” excludes a reporting issuer who, at the relevant time, has any of its securities listed or quoted on any of the Toronto Stock Exchange, Aequitas NEO Exchange Inc., a U.S. marketplace or a marketplace outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc (the “Venture Issuer Definition”).

6.             As the AltX is a marketplace and hence a “marketplace outside of Canada”, the filer does not, subsequent to December 24, 2015, meet the criteria in the Venture Issuer Definition.

7.             The Filer acknowledges that any right of action, remedy, penalty or sanction available to any person or company or to a securities regulatory authority against the Filer from December 24, 2015 until the date of this decision are not terminated or altered as a result of this decision.

8.             The AltX is a venture capital market for small and medium-sized companies. A listing on the AltX is available as a secondary listing to the Filer since it is listed on the TSXV, and the Filer is only required to comply with the listing requirements of its primary exchange, being the TSXV, other than as specifically stated in the JSE’s listing requirements, which are limited and relate mainly to compliance with the JSE’s timetable requirements with regards to certain corporation actions.

9.             The information provided by the Filer about the AltX and its status as a junior market for the purposes of review by staff of the principal regulator is accurate at the date of the decision.

10.          The Filer is not in default of any securities legislation in any jurisdiction of Canada, except that from December 24, 2015 to the date of this decision, the Filer has been in default of securities legislation requirements in the Reporting Jurisdictions that apply to reporting issuers that are not venture issuers.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a)           the Filer complies with the conditions and requirements of Canadian securities legislation applicable to a venture issuer;

(b)           the AltX is not restructured in a manner that makes it unreasonable to conclude that it is still a junior market and the representations in section 8, above, continue to be true;

(c)           the Filer has Common Shares listed on the TSXV;

(d)           the Filer does not have any of its securities listed or quoted on any of the Toronto Stock Exchange, Aequitas NEO Exchange Inc., a U.S. marketplace, or a marketplace outside of Canada and the United States other than the AltX, the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.;

(e)           in the event an exemption under Canadian securities legislation applies to a requirement in the Instruments applicable to the Filer, and a condition to the exemption requires the issuer to be a venture issuer, the Filer may invoke the benefit of that exemption if the Filer meets the conditions required by the exemption except for the condition that the Filer be a venture issuer;

(f)            in the event an exemption under Canadian securities legislation applies to a requirement applicable to the Filer as a reporting issuer who is not a venture issuer in the Instruments, and a condition to the exemption requires the issuer to not be a venture issuer, the Filer does not invoke the benefit of the exemption; and

(g)           the Minority Approval Relief is granted further provided that, in addition to conditions (a) through (f) above, the Filer would be exempt from the minority approval requirements in section 5.6 of MI 61-101, but for the fact that it does not meet the requirements of subparagraph 5.7(1)(b)(i) of MI 61-101.

“Michael Balter”
Manager, Corporate Finance
Ontario Securities Commission