North Halton Golf & Country Club – s.74(1)

Headnote

Section 53, and subsection 74(1) of the Act -- certain sales, transfers, and issuances of Class G Common Shares of issuer not subject to prospectus requirements of the Act, subject to conditions

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c.S.5, as am. ss. 53, and 74(1).

IN THE MATTER OF THE SECURITIES ACT, R.S.O 1990, CHAPTER S.5, AS AMENDED (the Act) AND IN THE MATTER OF NORTH HALTON GOLF & COUNTRY CLUB

ORDER (Subsection 74(1))

UPON the application (the Application) of North Halton Golf & Country Club Limited (the Club) to the Ontario Securities Commission (the Commission) for an order pursuant to subsection 74(1) of the Act that the prospectus requirements of Section 53 of the Act (the Prospectus Requirements) shall not apply to certain trades in securities of the Club, as described below;

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

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

Background

1. The Club was incorporated as a corporation with share capital under the Corporations Act (Ontario) (the OCA) in 1954 and was continued as a corporation under the Canada Business Corporations Act (the CBCA) on June 6, 2008 (the Continuance). The Club amalgamated with NH Equity Corp. in 2011. The Club is not a "private company" within the meaning of the Act and is not a "private issuer" within the meaning of National Instrument 45-106 Prospectus Exemptions (NI 45-106). The Club is not, and does not intend to become, a reporting issuer under the Act or under the securities legislation of any other Canadian jurisdiction. The shares of the Club are not traded on any stock exchange. The Club is a "for profit" corporation.

2. On February 22, 2008, the Commission issued an Order under subsection 74(1) of the Act exempting the Club from the Prospectus Requirements subject to certain conditions. On March 1, 2013 the Commission issued an amended order to permit the Club to make certain amendments to its By-law that were inconsistent with the Order issued in 2008 (the Current Order).

3. The Club wishes to further amend its By-law (the Amended By-law) and certain of the proposed amendments to the By-law are inconsistent with the Current Order.

4. The Club has applied to revoke and replace the Current Order with this Order.

Capital

5. The authorized share capital of the Club currently consists of:

(a) 375 Class A Common Shares. The holders of Class A Common Shares are entitled to receive notice of and to attend all meetings of the shareholders of the Club and are entitled to one vote for each Class A Common Share held. On a winding up or liquidation of the Club, each Class A Common Share will be immediately converted into one Class G Common Share and 10 Class X Preference Shares. Class A Common Shares are not transferable. In order to transfer a Class A Common Share, the holder of a Class A Common Share will be required to exchange that Class A Common Share for one Class G Common Share and 10 Class X Preference Shares;

(b) 625 Class G Common Shares which rank pari passu with the Class A Common Shares as to the payment of dividends and the right to vote at meetings of the shareholders of the Club. The Class A Common Shares and the Class G Common Shares represent equity ownership of the Club and, upon conversion of all of the Class A Common Shares, the Class G Common Shares will represent the entire equity ownership of the Club;

(c) 3750 Class X Preference Shares which are non-voting and non-transferable, bear a 4% annual cumulative dividend and are redeemable by the Club and retractable by the holder at $1,000 per Share. The redemption right and the retraction right are currently exercisable.

The Club does not intend to create additional Class A Common Shares.

6. Each holder of a Class A Common Share is entitled (but not required) to exchange (the Class A Exchange Right) that Class A Common Share for one Class G Common Share and 10 Class X Preference Shares. Upon such exchange, the Class A Common Share will be cancelled.

7. Under the Current Order new adult golf-playing members of the Club are required to purchase one Class G Common Share. Existing holders of Class G Common Shares who hold Class X Preference Shares who wish to purchase a Class G Common Share for a "Family Golf Member" (i.e., a spouse, a common law spouse, a child or a grandchild, including a spouse of the child or grandchild, that is or will become, upon issue of the Class G Common Share, a golf member that pays annual golf fees) (the Family Membership Subscription Credit) are entitled to surrender up to 10 of their Class X Preference Shares to the Club in partial consideration for such purchase and will receive a credit of up to $10,000 ($1,000 per Class X Preference Share surrendered) against the amount payable in respect of such Class G Common Share. Any Class X Preference Shares so surrendered will be cancelled.

8. Purchases of Class G Common Shares by new members may be made: (a) from the Club (Treasury Issue); or (b) from another member or non-member shareholder (the Inter-Shareholder Transfer), subject to the approval of the Board of Directors of the Club (the Board). The first 150 Class G Common Shares sold to new members, following the Continuance were issued by the Club. The Board has established policies and procedures governing the issue/transfer of Class G Common shares to new members.

Trading in securities of the Club

9. The Club has considered whether, under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and the Act, it could be considered to be engaged in or holding itself out as engaging in the business of trading in securities and therefore required to register as a dealer, rely on another exemption from the dealer registration requirement or seek exemptive relief from the dealer registration requirement. In light of the particular facts and circumstances of the Club, and having considered the guidance in section 1.3 of the Companion Policy to NI 31-103, the Club has concluded that it should not be considered to be engaged in registrable activities and therefore does not require relief from the registration requirement of the Act.

Changes to the By-law

10. The change to the Club's existing By-law contemplated by the Amended By-law which requires an amendment to the Current Order is as follows: at present the By-law provides that a Transfer Fee of 20% of the price at which Class G Shares are then being issued by the Club must be paid to the Club on the transfer of a Class G Share by a shareholder other than a selling or transferring member: (x) who acquired the Class G Common Share being sold or transferred pursuant to the Class A Exchange Right under the Continuance; or (y) who was a golf member before November 1, 2005, subscribed for the Class G Share prior to July 21, 2008 and has owned the Class G Share for more than four years. Such selling or transferring members are only required to pay a fee to cover administrative costs associated with the transfer in an amount to be determined by the Board from time to time. The Club has determined that in the case where a Class G Shareholder has incurred a loss on the sale of his or her share, the transfer fee should also be a nominal administrative fee in an amount to be determined by the Board.

11. In addition, the By-law is being amended as follows:

(a) Section 1.01: Definition of "Membership Fees": This definition has been revised to include references to other fees and levies that may be made by the Board of the Club from time to time.

(b) Section 8.02: Certain of the revisions that were made to this section in June of 2017 have been deleted as they are no longer relevant as they refer to the determination by the shareholders as to whether or not to sell the Club. Specifically, the commencement of the permissible length of the "trial member" was tied to the earlier of November 1, 2018 or "the date the shareholders determine whether or not to sell the property of the Club". As the determination not to sell was made, the date of "October 4, 2017" has been substituted.

(c) Section 8.06: Clarifying amendments re: the age ranges for Intermediate Golf Members.

(d) Section 8.08: Changes similar to the ones made in Section 8.02 and for the same purpose.

(e) Section 9.03: Amendments to provide clarity regarding the requirement for shareholders to pay Membership Fees and to provide relief from the Membership Fees in certain circumstances. Specifically, the provision confirms that all Class G Shareholders who became golf members before November 1, 2005 must pay Membership Fees commencing October 31, 2017. All Class G shareholders who became golf members after November 1, 2005 must pay Membership Fees immediately. However, a "resigning member" who is 75 or older may elect to pay only 20% of the assessed Membership Fees provided that when such member's Class G Share reaches the top of the sale list such member must sell the share if the price offered is not less than the average of the last three private sales or the price at which the Club is selling Class G Shares from treasury. The Section also clarifies that a resigning member may also avail him/herself of the other fee mitigating provisions of the By-law including the "leave of absence" policy and the share "licensing" provision.

(f) Sections 9.04 and 12.02: Clarifying amendments to these sections to confirm that if the holder of a Class A Share or a Class G Share has never been a golf member they are not subject to the payment of Membership Fees (unless they become a golf member) and may become a social member, at no cost, upon application.

(g) Section 13.02: Revised to provide the Board with the power, on majority vote, to expel or suspend members or to bar from attendance at the Club's premises any member or non-member shareholder, in the event certain determinations as to conduct are made by the Board. The section clarifies that the provision shall not affect the right of a shareholder to attend meetings of the Club.

(h) Section 13.09: Amendment to clarify that the Board may, on application of a golfing member, grant a leave of absence and a reduction in Membership Fees payable during that leave of absence in accordance with the leave of absence policies then in effect.

(i) Section 14.01: The provision has been amended to allow (subject to Board approval) licensing of a membership for up to two years provided that: (A) the licensor has been a member for at least one year; (B) the term of such licence is not greater than two years; (C) the licensor has not licensed his or her Class G Common Share more than two years in any five year period; (D) the licensee agrees to pay all charges incurred by the licensee, their guests and family members while using the Club's facilities; and (E) the fee payable to the licensor for the licensing of the Class G Common Share does not exceed the amount of the annual membership fee which the licensor would otherwise be required to pay. During that period, the licensee is liable for the Membership Fees.

(j) Section 14.04: Sets limits on the number of Class G Shares any corporate entity may own at 3, except in the case of companies that held four or more shares prior to July 21, 2008.

(k) Sections 15.08 and 15.09: The Club has determined to suspend sales of Class G Shares from Treasury for an indefinite period in order to reduce the number of shares sought to be sold by existing shareholders. These sections have been amended to reflect a revised rotation system. Potential purchasers of Class G Shares will be referred to the persons at the top of a list of non-golfing members (List 1) and a list of golfing members (List 2) who in each case wish to sell their Class G Share in rotation commencing with the shareholder at the top of List 1. When sales from treasury resume, the rotation will be: List 1, Treasury, List 2, Treasury, List 1 and so on. Shareholders on the Lists (except retiring shareholders who have elected not to pay full Membership Fees) may elect not to sell. If they so elect, they retain their position on the List.

12. The Club believes that the requested relief is necessary as:

(a) the trades outlined in paragraphs (a) through (c) below will not be made to "accredited" investors (as such term is defined in NI 45-106) in every case where such a trade is made; (ii) the Club is not entitled to rely on the exemption provided in Paragraph 2.38 of NI 45-106 and it does not appear that any of the other exemptions set forth in NI 45-106 will be available in respect of such trades;

(b) the ability of the Club to sell Class G Common Shares to new and existing golf members including sales pursuant to the Family Membership Subscription Credit, the Subscription Plan and the ability to conduct a limited licensing program is essential to the continued existence of the Club;

(c) the ability of the Club to provide incentives to potential members in the form of the Trial Membership and the Subscription Plan is essential to attracting new members; and

(d) under the Current Order all amendments to the Articles or By-laws of the Club must be approved by the Director.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to subsection 74(1) of the Act, that the Prospectus Requirements shall not apply to:

(a) the issue of Class G Common Shares by the Club to new golf playing members of the Club (including Class G Common Shares issued pursuant to the Family Member Subscription Credit and the Subscription Plan); and;

(b) the sale or transfer of Class G Common Shares to new golf-playing members of the Club or to non-shareholder golf members;

for so long as,

(c) each purchaser or transferee of Class G Common Shares under paragraph (a) or (b) is provided with

i. the By-Laws and Articles of the Club, and all amendments thereto;

ii. the most recent annual audited financial statements of the Club, and a copy of any subsequent interim financial statements;

iii. a copy of this decision; and

iv. a written statement that certain protections, rights and remedies provided by the Act, including statutory rights of rescission and damages, will be unavailable to that purchaser or transferee and that there are restrictions imposed on the disposition or transfer of the Class G Common Shares;

(d) in respect of a sale, transfer or issue under paragraph (a) or (b):

i. the sale, transfer, or issue is approved by the Board;

ii. in respect of a sale under paragraph (a), the Board only gives its approval under subparagraph (i) if it has determined that it is appropriate to approve such a sale or transfer in lieu of issuing new Class G Common Shares from Treasury of the Club,

iii. in respect of a sale or transfer under paragraph (b), the Club charges the transferring member a "transfer fee" in an amount equal to 20% of the last price at which Class G Common Shares were issued by the Club provided however that a selling or transferring member: (x) who acquired the Class G Common Share being sold or transferred pursuant to the Class A Exchange Right under the Continuance; or (y) who was a golf member before November 1, 2005, subscribed for the Class G Share prior to July 21, 2008 and has owned the Class G Share for more than four (4) years; or (z) incurred a loss on the sale of the Class G Common Share, shall only be required to pay a fee to cover administrative costs associated with the transfer in an amount to be determined by the Board from time to time, and

iv. the restrictions in subparagraphs (i), (ii) and (iii) are, at the time of the sale, transfer, or issue, contained in the conditions attached to the Class G Common Shares which form part of the Articles of the Club.

(e) the Club has not issued any securities from Treasury since the Continuance other than Class G Common Shares and Class X Preference Shares;

(f) the By-laws or Articles of the Club require that a new adult golf member of the Club (i) own a Class A Common Share or a Class G Common Share; or (ii) have agreed to subscribe for a Class G Common Share pursuant to the terms of a Subscription Plan that has been approved by the Board; or (iii) be a participant in a trial membership program, the terms of which program have been approved by the Board;

(g) the By-laws and Articles of the Club are not amended without notice to, and the consent of, the Director (as defined in the Act);

(h) the first trade of any Class G Common Shares purchased or acquired pursuant to paragraph (a) or (b) will be a distribution; and

(i) the amendment of the By-laws in the manner described in representations 10 and 11 hereof is approved by the required shareholder vote.

AND IT IS ORDERED that the Current Order is revoked.

DATED at Toronto this 27th of July, 2018.

"Philip Anisman"	"Deborah Leckman"
Commissioner	Commissioner
Ontario Securities Commission	Ontario Securities Commission