If you worked at the OSC, what would you do?Suppose you worked at the OSC and you received a prospectus to approve. Here are the facts you are looking at:
- July 21: A Director (Gubitz) sells almost all of his shares at 36-37 cents
- Aug 21: Bioniche halts the stock to announce the next day a 23 cent/unit offering
- The 1/2 warrant in the unit expires in 5 years which makes it almost a perpetual warrant. The company has previously issued warrants expiring in 2 years.
- The preliminary prospectus does not seem to disclose what the warrant is worth according the Black-Scholes option pricing model. So it is not evident to the reader what the embedded share in the unit is being priced at.
What would you recommend to your boss?
Will your boss ask you what the Securities Act and National Instruments say about issuing shares 31 days after an insider sells? Are there any rules saying you must issue for a share price of at least 36 cents because of the director's sale? Does waiting 31 days extinguish this requirement? Why didn't they halt at 29 days? If it's not in the Securities Act, does the OSC have any undocumented policies on these issues?
Aren't you glad you don't work at the OSC? (If you do, you probably shouldn't be posting to this board.)