Cornerstone Capital Resources Inc. – s. 1(11)(b)
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, Nova Scotia and Newfoundland and Labrador -- Issuer's securities listed for trading on the TSX Venture Exchange -- Continuous disclosure requirements in British Columbia, Alberta, Nova Scotia and Newfoundland and Labrador 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 CHAPTER S.5, AS AMENDED (the Act) AND IN THE MATTER OF CORNERSTONE CAPITAL RESOURCES INC. (the Applicant)
ORDER (Paragraph 1(11)(b))
UPON the application of the Applicant to the Ontario Securities Commission (the Commission) for an order pursuant to paragraph 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 July 21, 1999. The Applicant's head office is located at 1730 St. Laurent Blvd., Suite 800, Ottawa, Ontario, K1G 3Y7.
2. The authorized share capital of the Applicant consists of an unlimited number of common shares (the Common Shares), an unlimited number of first preferred shares and an unlimited number of second preferred shares. As at November 13, 2020: (a) 32,485,661 Common Shares were issued and outstanding; and (b) no preferred shares were issued and outstanding.
3. The Applicant is a reporting issuer under the Securities Act (Alberta) (the Alberta Act), the Securities Act (British Columbia) (the BC Act), the Securities Act (Nova Scotia) (the NS Act) and the Securities Act (Newfoundland and Labrador) (the NL Act). The Applicant became a reporting issuer in: (a) Alberta on November 1, 1999; and (b) British Columbia, Nova Scotia and Newfoundland and Labrador on June 20, 2001. The Applicant is not a reporting issuer or the equivalent in any jurisdiction in Canada other than Alberta, British Columbia, Nova Scotia and Newfoundland and Labrador.
4. The Applicant's principal regulator is the Alberta Securities Commission (the ASC). The Commission will be the principal regulator of the Applicant once the Applicant has obtained reporting issuer status in Ontario. Upon granting of this Order, the Applicant will amend its profile on the System for Electronic Document Analysis and Retrieval (SEDAR) to indicate that the Commission is its principal regulator.
5. Other than as set out in representation 6 below, the Applicant is not on the lists of defaulting reporting issuers maintained pursuant to the Alberta Act, the BC Act, the NS Act or the NL Act and is not in default of any requirement under the Alberta Act, the BC Act, the NS Act or the NL Act or the rules and regulations made thereunder.
6. On August 6, 2020, the Applicant was noted in default (the Default) on the reporting issuer list maintained by the ASC pursuant to Section 2(d) of Appendix A of ASC Policy 51-601 Reporting Issuers List (ASC Policy 51-601). A reporting issuer is noted in default under Section 2(d) of Appendix A of ASC Policy 51-601 where "the reporting issuer's technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or NI 51-101". The Applicant was formally notified of the Default pursuant to a letter from the ASC dated August 24, 2020 (the Notice of Default). In the Notice of Default, the ASC informed the Applicant that the Default relates to the National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) technical report (the Technical Report) for the Alpala Porphyry Copper-Gold Silver Deposit in the Cascabel Property (the Cascabel Property) in Ecuador filed by the Applicant on SEDAR on May 22, 2020. Specifically, the ASC informed the Applicant that the Cascabel Property is an "advanced property" (as such term is defined in NI 43-101) and that the Technical Report did not include specified information required to be disclosed in respect of an advanced property (the Omitted Technical Information). Instead of disclosing the Omitted Technical Information, the Technical Report referenced a prior NI 43-101 technical report filed by the Applicant on SEDAR on November 20, 2019 that contained such omitted information (the Previous Report). The ASC advised the Applicant that the "qualified persons" (as such term is defined in NI 43-101) who took responsibility for the Omitted Technical Information disclosed in the Previous Report would be required to again take responsibility for the Omitted Technical Information, which would need to be included in an amended NI 43-101 technical report. The Applicant is actively pursuing the receipt of an amended Technical Report which includes the Omitted Technical Information from the manager of the Cascabel Property who is responsible for preparing same.
7. The Applicant is subject to the continuous disclosure requirements of the Alberta Act, the BC Act, the NS Act and the NL Act. The continuous disclosure requirements of the Alberta Act, the BC Act, the NS Act and the NL Act are substantially the same as the requirements under the Act.
8. The continuous disclosure materials filed by the Applicant are available on SEDAR. The first filing on the Applicant's SEDAR profile was made on October 12, 1999.
9. The Common Shares are listed and posted for trading on the TSX Venture Exchange (the TSXV) under the symbol "CGP" and the over the counter market in the United States under the symbol "CTNXF". The Common Shares are also listed on the Frankfurt Stock Exchange and the Berlin Stock Exchange under the symbol "GWN". The Common Shares are not traded on any other stock exchange or trading or quotation system.
10. Other than as a result of the Default described in representation 6, the Applicant is not in default of any of the rules, regulations or policies of the TSXV.
11. The TSXV requires a listed issuer that is not otherwise a reporting issuer in Ontario to assess whether it has a "significant connection to Ontario" (as such term is defined in Policy 1.1 Interpretation of the TSXV Corporate Finance Manual), and, upon first becoming aware that it has a significant connection to Ontario, to promptly make a bona fide application to the Commission to be designated a reporting issuer in Ontario.
12. The Applicant has determined that it has a significant connection to Ontario in accordance with the policies of the TSXV. Specifically: (a) based on a Non-Objecting Beneficial Owners List, as at July 13, 2020, approximately 8,702,642 of the 32,415,661 outstanding Common Shares, or 26.85%, were beneficially owned by non-objecting beneficial owners resident in Ontario; and (b) the Applicant's head office is located in Ontario.
13. Other than as set out in representation 16 below, none of the Applicant, any of its officers or directors, or any shareholder holding a sufficient number of securities of the Applicant to affect materially the control of the Applicant, has:
(a) been subject to 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.
14. Other than as set out in representations 16 and 17 below, none of the Applicant, any of its officers or directors, or any shareholder holding a sufficient number of securities of the Applicant to affect materially the control of the Applicant, is or has been subject to:
(a) any known ongoing or concluded investigations by:
(i) a Canadian securities regulatory authority; or
(ii) 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.
15. Other than as set out in representation 17 below, none of the officers or directors of the Applicant or any shareholder holding a sufficient number of securities of the Applicant to affect materially the control of the Applicant 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:
(i) any cease trade order 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
(ii) 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. In December of 2015, Greg Chamandy, the Chairman of the Applicant's board of directors, was fined $5,000 by the Autorité des marchés financiers for misstating in an insider report filing the increase in his ownership in securities of Richmont Mines Inc. following a purchase of securities of the issuer.
17. Mr. Chamandy was the Chairman and Chief Financial Officer of Liquid Nutrition Group Inc. when Liquid Nutrition Group Inc.'s securities were subject to: (a) a cease trade order issued by the British Columbia Securities Commission on June 12, 2015; (b) a cease trade order issued by the Commission on June 24, 2015; and (c) a cease trade order issued by the ASC on September 23, 2015 (collectively, the CTOs). The CTOs were issued due to a failure to file interim financial statements for the period ended March 31, 2015, management's discussion and analysis for the period ended March 31, 2015 and certification of such filings. The CTOs have not been revoked as of the date hereof. Mr. Chamandy was also the Chairman and Chief Financial Officer of Liquid Nutrition Group Inc. on May 27, 2015 when Liquid Nutrition Group Inc.'s wholly-owned subsidiary, Liquid Nutrition Franchising Corporation, of which Mr. Chamandy was then a director, filed a proposal to its creditors pursuant to the Bankruptcy and Insolvency Act (the BIA). Ratification of the proposal was dismissed by the Superior Court of Quebec on May 16, 2017, and Liquid Nutrition Franchising Corporation was deemed to have made an assignment pursuant to subsection 62(2)(a) of the BIA. Mr. Chamandy is currently a director of Liquid Nutrition Group Inc. and Liquid Nutrition Franchising Corporation.
AND UPON the Commission being satisfied that granting this Order would not be prejudicial to the public interest;
IT IS HEREBY ORDERED pursuant to paragraph 1(11)(b) of the Act that the Applicant is a reporting issuer for the purposes of Ontario securities law.
DATED at Toronto on this 1st day of December, 2020.
"Garnet Fenn"
Commissioner
Ontario Securities Commission
"Cathy Singer"
Commissioner
Ontario Securities Commission