Alberta Stock Exchange -
VSE salvation 11 days away, with many legal hoops to get through
Alberta Stock Exchange ASE
Shares issued 0 1899-12-30 close $0
Wednesday Nov 10 1999
See Vancouver Stock Exchange (VSE) Street Wire
AND VISIONS OF SUGAR PLUMS DANCED IN THEIR HEADS
by Stockwatch Business Reporter
When the survival-guide idea of merging the Alberta Stock Exchange with the Vancouver Stock Exchange arrived at their legal advisers, a nearby paralegal would probably have been able to see their eyes light up and their mental cash registers start dinging with thoughts of the fat fees involved. The question was: How do you go about merging two special act organizations, set up by their respective legislatures, and not ordinary companies created under general legislation such as the Alberta Business Corporations Act or the British Columbia Company Act? The problem, though complex, was not beyond the ingenuity of Ladner Downs's Neil de Gelder Q.C., once the Superintendent of Brokers for the B.C. Securities Commission, the lawyer for the VSE, and Tom Mayson and David Lefebvre, of Fraser Milner, the lawyers for the ASE and the proposed Canadian Venture Exchange (CDNX).
What part of the total estimated restructuring costs of $9,762,000 for the two exchanges is attributed to legal fees is unknown, but regular Stockwatch readers may recall that Mr. de Gelder charged $185,000 for his work on B. C Hydro chairman Brian Smith's investigation into the IPC International Power Corp. scandal.
At noon on Nov. 26, Pacific Time, the VSE members will meet, in person or by proxy, at the Arbutus Room in the Four Seasons Hotel, and at the same time, 1 o'clock p.m. in Alberta, the ASE members will foregather at the Strand/Tivoli Room, Metropolitan Centre, to vote on the measures needed to make the merger effective.
For Vancouver, the first step in making it possible will be to convert the VSE into an ordinary company, Vancouver Stock Exchange Inc., under the B.C. Company Act. This will require the prior consent of the B.C. Minister of Finance and Corporate Relations, and it is not known if this consent has been given, or even if application has been made for it. If the Minister's consent is obtained, and if at least three-quarters of the votes cast are in favour, the VSE will become VSE Inc.; the VSE seats, to a maximum of two per member, will become Class A shares in VSE Inc.; and seats in excess of two will become Class B Non-Voting shares in VSE Inc.
If those hurdles are successfully jumped, the next step will be to move the converted VSE Inc. from B.C. to Alberta, in order to make it a company under the Business Corporations Act of Alberta. This too requires approval by at least three-quarters of the votes cast at the meeting. The next, and final step for Vancouver members, will be to vote on merging the converted and continued VSE Inc., with what will then be the converted ASE Inc., into the Canadian Venture Exchange Inc. Each Class A VSE Inc. share will become a CDNX Class A share, and each Class B VSE Inc. share will become a CDNX Class B share. This will require approval by at least two-thirds of the votes cast by the holders of VSE Inc. Class A shares, voting as a separate class.
In Alberta the process of changing the ASE to ASE Inc. is, for some reason, not as simple as changing the VSE to VSE Inc. It will require a Special Act of the Alberta Legislature to give the ASE the legal capacity to apply to the Registrar for a Certificate of Continuance under the ABCA. This legislation will, in effect, be subject to its approval by the votes of at least three-quarters of the votes cast by ASE members on Nov. 26. If the Legislature passes the required Act, and it is proclaimed into force, and the ASE members approve it with the required majority, the ASE will become the ASE Inc., and the ASE seats will become shares in ASE Inc., on the same basis as the VSE seats will become shares in VSE Inc.
Then the ASE Inc. shareholders must approve the merger by at least two-thirds of the votes cast by holders of Class A shares of ASE Inc. Once all that is accomplished, the lawyers will apply to the Honourable Justice M. S. Paperny, of the Court of Queen's Bench of Alberta, at 2:30 p.m.on Nov. 26, for a final order approving the merger.
Thus, at the end of the day, the winning ASE members, who have seen the value of their equity per seat increase from approximately $299,000 at the end of 1997, to $311,000 at the end of 1998, and to $315,000 at Sept. 30, 1999, will have the same number of shares in CDNX per seat as the losing VSE members, whose equity per seat has declined from $352,000 to $294,000 over the same period of time.
The VSE's John Forbes declined to contribute any information to this story.
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