At the request of the TSX Venture Exchange (the "Exchange")
GC-Global Capital Corp. ("Global Capital" or the "Company") (TSX
VENTURE:GDE.A) announces that the Exchange has completed a review
of the Company's affairs and has imposed additional requirements
for the Company.
The Exchange conducted a review of the affairs of the Company
and determined that the Company had contravened certain Exchange
policies including press release disclosure, failure to file a
reviewable transaction with the Exchange, and provide Exchange
notice of non-arm's length party transactions. In addition, it was
identified that the Company's corporate governance practices were
deficient in ensuring compliance with Exchange Policies and its own
internal policies.
The contraventions of Exchange policies and requirements
identified by the Exchange and the actions taken by the Company in
light of the Exchange's determinations are summarized below.
Non-Arm's Length Party Transactions
1) The Company purchased a real estate property in November 2005
for US$1,000,000 from a non-arm's length party, GDV Resources Inc.
(formerly Global Development Resources Inc.)(TSX VENTURE:GDV.H). In
December 2006, the Company sold this property on a 50% basis to
each of Development Resources Inc., a company owned by a director
at the time Mr. Kent Smith (now a former director of the Company)
and Mr. Gordon Ewart, the Company's Chairman. The aggregate
proceeds on the sale was US$2,128,000, based on the estimated fair
value given its development potential, allocated as follows:
-- A promissory note for US$564,000 due July 1, 2007 to each of Mr. Gordon
Ewart and Development Resources Inc. for a total of US$1,128,000,
equivalent to the Company's costs on the property. Payment was received
October 15, 2007.
-- A promissory note for US$500,000 due December 29, 2007 to each Mr.
Gordon Ewart and Development Resources Inc. for a total of US$1,000,000.
Payment has not been received for these notes.
-- An extension fee for US$125,000 due from each Mr. Gordon Ewart and
Development Resources Inc. for a total of US$250,000 to extend the
maturity date of the above promissory due date from December 29, 2007 to
December 29, 2008. Payment was not received for the extension fees.
In December 2008, the Company's management decided to write down
the US$500,000 due from Development Resources Inc. Further, in
December 2009 the Company's management approved a valuation
allowance on the US$500,000 due from Mr. Gordon Ewart, even though
the promissory note was secured by a personal guarantee and no
payments had been received. At no time did Mr. Gordon Ewart provide
any indication to the Company that he did not intend to repay the
note.
Subsequent to the sale, the county in which the property was
located denied the development plan, the US real estate market
suffered a meltdown and the Company learned Development Resources
Inc.'s financier began foreclosure proceedings.
During the Exchange's review in 2011, Mr. Gordon Ewart agreed to
a payment plan for the repayment of the US$500,000 owed to Company
in which he will pay US$100,000 per year for the next five years
commencing in March 2012 with an interest rate at prime. Until this
promissory note has been fully paid the Company has agreed not to
advance, loan or enter into any promissory notes with Mr. Gordon
Ewart. Mr. Gordon Ewart has advised the Company that his intent
initially was to repay the Company out of proceeds from the
development of the property. As the property has now been
forfeited, Mr. Ewart will repay the Company out of personal funds
at a loss of US$500,000.
2) In August 2006, the Company sold 886,900 common shares of GDV
Resources Inc. for US$372,498 to a non-arm's length private company
owned by Mr. Gordon Ewart and Mr. Kent Smith, directors of the
Company at the time. The Company received only partial
consideration of US$263,000 at the time of the sale. In November
2006 the Company entered into a promissory note with the related
party company for US$309,490, which included US$109,490 owing on
the shares and a further US$200,000 cash loan. This promissory note
was secured by the partially paid shares and at an interest rate of
12%.
Subsequently, at December 31, 2009 the Company wrote-off the
outstanding principal balance of US$209,490 on the promissory note
due to the loss in the value of the security. Additionally, no
interest was collected on the promissory note.
3) In 2008 the Company entered into bridge loans with GDV
Resources Inc., a non-arm's length party totalling US$1,207,333. In
January 2009, the Company settled the principal and interest owing
on these bridge loans in return for three real estate
properties.
The above was a Reviewable Transaction requiring Exchange
approval and a third party valuation pursuant to Exchange policy.
The Company did not make an application with the Exchange. Further,
the Company did not obtain a third party valuation on the
properties resulting in the Exchange being unable to consider the
acceptability of this related party transaction. As a result the
Company contravened Exchange Policy.
With respect to each of the above non-arm's length party
transactions, the Company did not comply with its own Code of
Business Conduct and Ethics and contravened Exchange Policy 3.1
Director, Officers, Other Insides & Personnel and Corporate
Governance. Both require that, in the case of transactions
involving conflicts of interest, such as these non-arm's length
party transactions, the Company obtain approval from the
disinterested members of the Board of Directors, which the Company
failed to do.
In addition, the Company failed to comply with Exchange Policy
by not providing the Exchange with notice and not issuing press
release disclosure of the related party transactions as required.
However, certain transactions were disclosed in the Company's
audited financial statements dated December 31, 2007 to 2010.
It was not the Company's intent to disregard Exchange Policy or
its own Code of Business Conduct and Ethics and Exchange Policy.
The Company considered these transactions to be normal course in
the Company's business of providing loans and making other
investments and, as such, non-compliance with Exchange Policy and
the Company's own policy was an oversight. However, the Company now
realizes non-arm's length party transactions should not be
considered normal course transactions and good corporate governance
practices are required for these transactions to ensure the
protection of its security holders.
Finders Fees and Commissions
On May 17, 2011 the Company issued a press release disclosing
that it had entered into a bridge loan with a private US company
for $3,000,000 for which a director was to receive a commission on
the transaction. The proposed commission payable (which amount was
never determined) to a related party was a contravention of
Exchange policy. The commission was not paid.
Corporate Governance Practices
As described above, the Company's corporate governance practices
were deficient with respect to its non-arm's length party
transactions. The disinterested directors did not review or approve
these transactions as required pursuant to the Company's own Code
of Business Conduct and Ethics and Exchange Policy 3.1 Director,
Officers, Other Insides & Personnel and Corporate
Governance.
In addition, and notwithstanding the existence of a Corporate
Governance Committee since December 31, 2005 there were no formal
meetings held by this committee.
Disclosure
The Exchange considers the Company's disclosure that it had in
place certain corporate governance practices and a Corporate
Governance Committee to be misleading to shareholders and potential
investors. The Company represented it had practices and procedures
for oversight and protection of its security holders but it failed
to apply these controls.
The Company has issued certain press releases that detailed
activities of its client companies. The Exchange has advised that
this practice constituted selective disclosure. As a result the
Company has discontinued this activity. Management's intention was
to provide updates with regards to the operations and corporate
milestones achieved by their bridge loan client companies.
Actions Taken by the Company
The Company set up an Independent Committee of Directors in
November 2010 to develop and monitor the internal controls,
disclosure and corporate governance activities of the Company. The
Board of Directors passed a further Resolution in March 2011 as an
initial step towards addressing the contraventions identified by
the Exchange.
Additional Exchange Requirements Imposed
Pursuant to the Exchange's review, the Exchange has imposed the
following additional requirements:
1) The Company is to develop and implement a corporate governance
policy specifically addressing non-arm's length party transactions.
2) The Company is to develop and implement a disclosure policy.
3) The Company is required to add a new Independent Director with
satisfactory TSX Venture Exchange experience by February 13, 2012.
The Company's trading status is conditional upon satisfying this
requirement.
4) The Company has been placed on Notice to Comply with Exchange
Requirements. Any further violations of Exchange Requirements will
result in a review being commenced and further action being
initiated by the Exchange against the Company and its management,
directors and officers.
5) Certain senior management must complete educational requirements by
August 12, 2012. Should management fail to complete this requirement
in the prescribed time period their immediate resignation will be
required from the Company and any other Exchange listed issuers.
6) At this time the Chairman of the Corporate Governance, Compensation
and Independent Committee has been required to resign from these
specific positions. Mr. Phillip Marleau has been appointed as
Chairman of the Corporate Governance, Compensation and Independent
Committee.
About GC-Global Capital Corp.
Global Capital is a merchant bank, which provides bridge loan
services (asset back/collateralized financing), to companies across
many industries such as oil & gas, mining, real estate,
manufacturing, retail, financial services, technology and
biotechnology.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. No stock exchange, securities commission
or other regulatory authority has approved or disapproved the
information contained herein.
Contacts: GC-Global Capital Corp. Jason G. Ewart CEO &
Director (416) 488-7760www.gcglobalcapital.ca
GC-Global Capital Corp. (TSXV:GDE.A)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
GC-Global Capital Corp. (TSXV:GDE.A)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024