Securities Law & Instruments

Headnote

Subsection 1(11)(b) -- Order that the issuer is a reporting issuer for the purposes of Ontario securities law -- Issuer is already a reporting issuer in British Columbia, Alberta and Saskatchewan -- Issuer's securities listed for trading on the TSX Venture Exchange -- Continuous disclosure requirements in British Columbia, Alberta and Saskatchewan are substantially the same as those in Ontario -- Issuer has a significant connection to Ontario.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(11)(b).

IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED
(the Act)

AND

IN THE MATTER OF
THE FLOWR CORPORATION
(the Applicant)

ORDER
(Section 1(11)(b))

UPON the application of the Applicant to the Ontario Securities Commission (the "Commission") for an order pursuant to subsection 1(11)(b) of the Act that, for the purposes of Ontario securities law, the Applicant is a reporting issuer in Ontario;

AND UPON considering the application and the recommendation of the staff of the Commission;

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

1. The Applicant was incorporated under the Business Corporations Act (Alberta) on June 1, 2016, under the name "The Needle Capital Corp" and changed its name to "The Flowr Corporation" pursuant to articles of amendment dated September 20, 2018. At the Applicant's Annual and Special General Meeting held on April 13, 2018, the Applicant received shareholder approval to certain special resolutions with respect to the Applicant continuing under the laws of the Province of Ontario pursuant to the Business Corporations Act (Ontario). The Applicant continued into the Province of Ontario on September 25, 2018.

2. The head office and registered office of the Applicant is located at 100 Allstate Parkway, Suite 201, Markham, Ontario, L3R 6H3.

3. The authorized capital of the Applicant consists of an unlimited number of common shares, of which 86,700,302 common shares are issued and outstanding as of the date hereof.

4. The Applicant is a reporting issuer under the Securities Act (Alberta) (the "Alberta Act"), the Securities Act (British Columbia) (the "B.C. Act") and the Securities Act (Saskatchewan) (the "Saskatchewan Act"). The Applicant became a reporting issuer in Alberta, British Columbia and Saskatchewan on June 16, 2017.

5. The Applicant is not currently a reporting issuer in any jurisdiction other than Alberta, British Columbia and Saskatchewan.

6. The Applicant's principal regulator is the Alberta Securities Commission. The Commission will be the principal regulator of the Applicant once it has obtained reporting issuer status in Ontario. Upon granting of this Order, the Applicant will amend its SEDAR profile to indicate that the Commission is its principal regulator.

7. The Applicant is not on the lists of defaulting reporting issuers maintained pursuant to the Alberta Act, the B.C. Act or the Saskatchewan Act and is not in default of any of its obligations under the Alberta Act, the B.C. Act or the Saskatchewan Act, or the rules and regulations made thereunder.

8. The Applicant is subject to the continuous disclosure requirements of the Alberta Act, the B.C. Act and the Saskatchewan Act. The continuous disclosure requirements of the Alberta Act, the B.C. Act and the Saskatchewan Act are substantially the same as the continuous disclosure requirements under the Act.

9. The continuous disclosure materials filed by the Applicant are available on the System for Electronic Document Analysis and Retrieval ("SEDAR"). The Applicant's first electronic filing on SEDAR occurred on April 26, 2017.

10. The common shares of the Applicant are listed and posted for trading on the TSX Venture Exchange (the "Exchange") under the trading symbol "FLWR". The Applicant has applied to list its common shares on the NASDAQ Capital Market.

11. The Applicant is not in default of any of the rules, regulations or policies of the Exchange.

12. Pursuant to the policies of the Exchange, a listed-issuer, which is not otherwise a reporting issuer in Ontario, must assess whether it has a "significant connection to Ontario" (as defined in the policies of the Exchange) and, upon becoming aware that it has a significant connection to Ontario, promptly make a bona fide application to the Commission to be deemed a reporting issuer in Ontario.

13. The Applicant has determined that it has a significant connection to Ontario for the reasons that: (i) based on a Non-Objecting Beneficial Owners List provided by Computershare Investor Services Inc., as of October 23, 2018, approximately 48% of the Applicant's shares were held by non-objecting beneficial owners (as defined in National Instrument 54-101 -- Communication with Beneficial Owners of Securities of a Reporting Issuer) who are residents of Ontario; (ii) the Applicant continued into the Province of Ontario on September 25, 2018; and (iii) the Applicant's head and registered office is located in Markham, Ontario.

14. Neither the Applicant, nor any of its officers or directors, nor any of its controlling shareholders has:

(a) been the subject of any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority;

(b) entered into a settlement agreement with a Canadian securities regulatory authority; or

(c) been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor making an investment decision.

15. Other than as set out in representation 17, neither the Applicant, nor any of its officers or directors, nor any of its controlling shareholders, is or has been subject to:

(a) any known ongoing or concluded investigation by a Canadian securities regulatory authority, or a court or regulatory body, other than a Canadian securities regulatory authority, that would be likely to be considered important to a reasonable investor making an investment decision; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver manager or trustee, within the preceding 10 years.

16. Other than as set out in representation 18, neither the Applicant, nor any of its officers or directors, nor any of its controlling shareholders, is or has been at the time of such event an officer or director of any other issuer which is or has been subject to:

(a) any cease trade or similar orders, or orders that denied access to any exemptions under Ontario securities law, for a period of more than 30 consecutive days, within the preceding 10 years; or

(b) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years.

17. Thomas Flow was declared bankrupt on April 6, 2011. On January 7, 2012, Thomas Flow was discharged pursuant to subsection 168.1(1) of the Bankruptcy and Insolvency Act, (Canada) from all debts, except those matters referred to in subsection 178(1) of the Bankruptcy and Insolvency Act, (Canada).

18. Francesco Tallarico was the Chief Legal Officer and Secretary of Concordia International Corp. ("Concordia"), a reporting issuer in Canada and listed on the Toronto Stock Exchange. In September 2018, Concordia completed a solvent debt restructuring pursuant to the provisions of the Canada Business Corporations Act, whereby Concordia reduced its debt by approximately US$2.4 billion.

19. The Filer has provided an undertaking to the Commission stating that, in complying with its reporting issuer obligations, and for as long as the Filer is a reporting issuer and The Flowr Group (Okanagan) Inc. ("Flowr Okanagan") would be treated as an operating entity if the Filer were an income trust, that:

(a) The Filer will treat The Flowr Canada Holdings ULC ("Flowr ULC") and Flowr Okanagan as subsidiaries of the Filer; however, if generally accepted accounting principles ("GAAP") used by the Filer prohibit the consolidation of the financial information of Flowr ULC and Flowr Okanagan and the Filer, then for as long as Flowr ULC and Flowr Okanagan represent significant assets of the Filer, the Filer will provide shareholders with separate audited annual financial statements and interim financial reports and management's discussion and analysis for Flowr ULC and Flowr Okanagan, prepared in accordance with the same GAAP as the Filer's financial statements and interim financial reports and in accordance with National Instrument 51-102 -- Continuous Disclosure Obligations, or its successor;

(b) for so long as Flowr ULC and Flowr Okanagan represent significant assets of the Filer, then the Filer will take the appropriate measures to direct each person who would be an "insider" (as defined in the Securities Act (Ontario)) of either Flowr ULC or Flowr Okanagan or a "person or company in a special relationship" (as defined in the Securities Act (Ontario)) with either Flowr ULC or Flowr Okanagan, if either Flowr ULC or Flowr Okanagan was a reporting issuer, as applicable, to comply with statutory prohibitions against insider trading under applicable Canadian securities laws;

(c) for so long as Flowr ULC and Flowr Okanagan represent significant assets of the Filer, then the Filer will take the appropriate measures to direct each person who would be a "reporting insider" (as that term is defined in National Instrument 55-104 -- Insider Reporting Requirements and Exemptions ("NI 55-104")) of either Flowr ULC or Flowr Okanagan, if either Flowr ULC or Flowr Okanagan was a reporting issuer, as applicable, to file insider reports about trades in the securities of the Filer (including securities which are exchangeable into securities of the Filer); and

(d) the Filer will annually certify as to its compliance with the above undertakings and file the certificate on SEDAR concurrently with the filing of its annual financial statements.

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

AND UPON the Commission being satisfied that granting this Order would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to subsection 1(11)(b) of the Act that the Applicant is a reporting issuer for the purposes of Ontario securities laws.

DATED at Toronto, Ontario on this 25th day of April 2019.

"Michael Balter"
Manager, Corporate Finance
Ontario Securities Commission