Policy 3.5 Restricted Shares

Scope of Policy

This Policy sets out the restrictions imposed on Issuers proposing to issue non-voting, subordinate voting, multiple voting and restricted voting securities (collectively, "Restricted Shares"). This Policy, except where otherwise specified, applies to all Issuers which have listed or unlisted Restricted Shares. This Policy should be read in conjunction with applicable Securities Laws relating to Restricted Shares.

The main headings in the Policy are:

1. Introduction

1.1

The Green Stock Exchange (GREENSX) may limit the voting rights and other rights attached to Restricted Shares. The Green Stock Exchange (GREENSX) may also deem a class of securities to be Multiple Voting, Non-Voting, Subordinate Voting or Restricted Voting Shares, impose any terms or conditions it considers appropriate and require an Issuer to designate the securities in a manner satisfactory to the Green Stock Exchange (GREENSX) even though the securities do not fall within the applicable definition in this Policy. The Green Stock Exchange (GREENSX) will not consent to anything that it deems not to be in the public's interest.


1.2 Conference

If an Issuer proposes to list Restricted Shares or Multiple Voting Shares, the Issuer must arrange for a pre-filing conference, as contemplated by Policy 2.7—Pre-Filing Conferences.

2. Definitions

2.1

In this Policy:

"Common Shares" means Equity Shares with voting rights exercisable in all circumstances, irrespective of the number of securities owned. A class of securities cannot be described as or include the word "common" in its legal designation unless they are Common Shares.

"Equity Shares" means securities of an Issuer that carry a residual right to participate to an unlimited degree in earnings of the Issuer and in its assets upon liquidation or winding up.

"Majority of the Minority Approval" means approval at a properly constituted meeting of the holders of Equity Shares of the Issuer of a resolution to create a new class or new series of Multiple Voting Shares, to approve a reorganization or form of business combination which creates new Multiple Voting Shares, to approve the issuance of new Multiple Voting Shares or to approve a distribution that creates or affects Restricted Shares; which the resolution must be approved by a majority of the votes cast by the holders of Equity Shares who vote at the meeting, other than Promoters, directors, officers or other Insiders of the Issuer and of any proposed recipient of new Multiple Voting Shares and their Associates and Affiliates.

"Multiple Voting Shares" means:

(a) securities which entitle the holder to exercise a greater number of votes per security than the holder of any other class or series of securities of the Issuer;

(b) securities which are issued at a price per security which is significantly lower than the market price per security of any class of listed Equity Shares; or

(c) any security which is issued on a Reorganization or form of business combination which would fall in subsections (a) or (b) above.

"Non-Voting Shares" means Restricted Shares which carry a right to vote only in specified circumstances (e.g., to elect a limited number of directors or to vote in circumstances where the applicable corporate legislation provides the right to vote for securities which are otherwise nonvoting);

"Preference Shares" means securities that have a preference or right over another class of securities of the Issuer but does not include Equity Shares; a class of securities cannot be designated as "preference" or "preferred" unless, in the opinion of the Green Stock Exchange (GREENSX) after examining all relevant circumstances, the class carries a genuine right or preference.

"Related Parties" means Promoters, directors, officers or other Insiders of the Issuer and of any proposed recipient of Multiple Voting Shares and their Associates and Affiliates;

"Restricted Shares" means Equity Shares that are not Common Shares.

"Restricted Voting Shares" means securities which carry a right to vote if the number or percentage of securities which may be voted by a Person or group of Persons is limited (unless the restriction limit applies only to Persons that are not Canadian citizens or residents);

"Shareholders' Meeting" means a meeting of the holders of Common Shares or Voting Shares of the Issuer;

"Subordinate Voting Shares" means Restricted Shares that carry a right to vote but another class of securities is outstanding that carries a greater right to vote on a per security basis; and

"Voting Shares" means securities that carry the right to vote under all circumstances if the Issuer also has a class of Restricted Shares.

3. Legal Designation

3.1 Restricted Shares

The legal designation of a class of securities must be set out in the constating documents of the Issuer and must appear on all certificates representing the securities. Except where the securities are Preference Shares and are designated as preference or preferred shares, the legal designation must state that shares are:

(a) "subordinate voting" if the shares are Subordinate Voting Shares;
(b) "non-voting" if the shares are Non-Voting Shares;
(c) "restricted voting" if the shares are Restricted Voting Shares (unless the Green Stock Exchange (GREENSX) accepts another term); and
(d) "multiple voting" if the shares are Multiple Voting Shares.

The Green Stock Exchange (GREENSX) can abbreviate the designations for Restricted Shares in Green Stock Exchange (GREENSX) publications and can identify Restricted Shares with a code in the quotations prepared for the financial press.

 

4. Notice, Disclosure and Shareholder Approval

4.1 Notice of and Attendance at Shareholders' Meetings

Every Issuer must give notice of each Shareholders' Meeting to holders of Restricted Shares - Information Circulars, notices of meeting, annual reports and financial statements. The notice must be sent at least 30 days before the meeting.

4.2 New Multiple Voting Shares

After the Direct Public Offering ("DPO") or Initial Public Offerings ("IPO"), in order to issue a new class or new series of Multiple Voting Shares or complete a reorganization that would create Multiple Voting Shares, the creation of that new class or new series must receive Majority of the Minority Approval.

However, these requirements do not apply to a security split of all the issued and outstanding Equity Shares of the Issuer if such split does not change the ratio of outstanding Restricted Shares to outstanding Common Shares or securities that are issued prior to the DPO.

4.3 Reorganization

The Green Stock Exchange (GREENSX) will not consent to a capital reorganization or Take-Over bids or pro rata distribution of securities to Shareholders of an Issuer which would create a new class of Restricted Shares or change the ratio of outstanding Restricted Shares to Common Shares, unless the proposal receives Majority of the Minority Approval.