Pointe West Golf Club Corp. – s. 74(1)

Headnote

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

Statutes Cited

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 POINTE WEST GOLF CLUB CORP.

ORDER

(Subsection 74(1))

UPON the application (the Application) of Pointe West Golf Club Corp. (the Filer) 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 shall not apply to certain trades in Class A shares of the Filer (the Exemption Sought).

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

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

Background

1. The Filer was incorporated as a corporation under the Business Corporations Act (Ontario) on December 31, 1989.

2. Further to a special meeting of shareholders of the Filer that was held on September 20, 2021, the shareholders of the Filer approved amendments to the articles and by-laws of the Filer such that the Filer is now a shareholder-only golf club. The Filer is also a "for profit" corporation.

3. The Filer is not a "private issuer" within the meaning of National Instrument 45-106 Prospectus Exemptions (NI 45-106). The Filer received an order under subsection 1(10)(a)(ii) of the Act, dated July 2, 2024, pursuant to which the Filer ceased to be a reporting issuer in Ontario. The Filer is also not a reporting issuer in any other Canadian jurisdiction.

Share Capital of the Filer

4. The share capital of the Filer consists of an unlimited number of common shares and 600 Class A shares. Currently, 445 common shares and 408 Class A shares of the Filer have been issued. The common shares and the Class A shares of the Filer do not trade on any stock exchange.

5. The common shares of the Filer are classified as equity and each common share is entitled to one vote per meeting of the Filer, and the holder can stand for election to the board of directors of the Filer (the Board), including serving on various standing committees, provided they hold a membership at the Filer. The common shares of the Filer are fully transferable, and any capital appreciation in the value of a common share of the Filer accrues only to the shareholder. Currently, there is no initiation fee when someone buys a common share of the Filer, with Board approval. Holding a common share in the Filer does not guarantee membership in the Filer, which must be approved of by the Board. A holder of a common share of the Filer does not have to be a member of the Filer.

6. The Class A shares which can only be issued or cancelled by the Filer, are also classified as equity and have the same attributes as the Filer's common shares, except that they are non-transferrable and cannot be transferred or sold by the member of the Filer holding the Class A share (therefore, there cannot be a first trade of a Class A share of the Filer by a holder of a Class A share of the Filer), require a minimum annual membership and are forfeited if a minimum membership in the Filer is not maintained. There is no initiation fee when someone buys a Class A share from the Filer, with Board approval. Only Class A shares have playing rights and privileges that can only be assigned to co-residing spouses, children under 25 living at home with the Class A shareholder, grandchildren of the Class A shareholder between the ages of 7 and 12, and for corporate Class A shareholders up to four individuals who are either a director, officer or employee of the business. Proof of position or employment with the corporation is required by way of a company profile supplied by a business lawyer for the corporation. Purchasing a Class A share does not guarantee membership in the Filer, which must be approved of by the Board.

7. The Filer does not intend to issue any additional common shares.

Membership of the Filer

8. Anyone wishing to join the Filer as a member is expected to buy a Class A share from the Filer, subject to Board approval. On occasion someone might buy a common share of the Filer from its current holder, subject to Board approval.

9. The Filer also has 39 non-shareholder members, who do not hold a common share or a Class A share of the Filer, but who may in certain situations use the dining facilities of the Filer.

Issuance and Trading in Class A shares of the Filer

10. The Filer 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 Filer, including the fact that the distribution of Class A shares of the Filer is incidental to the Filer's principal activities, it does not receive any fees or other income from engaging in trades or acts in furtherance of distributions, and its activities do not have the attributes typical of a person or company carrying on the business of a dealer, and having considered the guidance in section 1.3 of the Companion Policy to NI 31-103, the Filer has concluded that it should not be considered to be engaged in registrable activities and therefore does not require relief from the registration requirements of NI 31-103 or the Act.

11. The Filer believes that the Exemption Sought is necessary as:

(a) the sale of Class A shares of the Filer may not be made to an "accredited investor" (as such term is defined in NI 45-106) in every case, as the Filer is not entitled to rely on the exemption provided in section 2.38 of NI 45-106 (the not-for-profit issuer exemption), and it does not appear that any of the other prospectus exemptions set forth in NI 45-106 will be available to the Filer in respect of trades in the Filer's Class A shares; and

(b) the ability to issue and sell Class A shares of the Filer to new and existing golf members is essential to the continued existence of the Filer.

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 of section 53 of the Act shall not apply to:

(a) the issuance of Class A shares by the Filer to new golf-playing members of the Filer;

for so long as,

(b) each purchaser of a Class A share of the Filer is provided with:

(i) the current articles and by-laws of the Filer, including any amendments thereto;

(ii) the most recent audited financial statements of the Filer, and any subsequent interim financial statements of the Filer;

(iii) a copy of this order; 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, and that the Class A shares of the Filer are non-transferrable (therefore, there cannot be a first trade of a Class A share of the Filer by a holder of a Class A share of the Filer);

(c) in respect of an issuance under paragraph (a), the issuance is approved by the Board;

(d) and that,

(i) the articles or by-laws of the Filer require that a new adult golf member, who is not related to an existing Class A shareholder of the Filer as set out above, owns a Class A share of the Filer;

(ii) the articles and by-laws of the Filer are not amended with respect to the transfer of shares of the Filer without notice to, and the consent of, the Director (as defined in the Act); and

(iii) any amendment of the by-laws of the Filer are approved of by the required shareholder vote.

DATED at Toronto this 20th day of December 2024.

OSC File #: 2023/0228