via cba.org - Amalgamations And Wind-Ups

If Golden Band were to engage in a going private transaction, they would begin with an amalgamation before a minority squeeze-out.  

On January 20, 2010, they announced a short-form vertical amalgamation with Jolu Development Corporation.

But there were details not mentioned, such as what a short-form vertical amalgamation might mean in the eventuality.  It just might mean to prepare in the event of a going private transaction.

"In  a vertical  shortform  amalgamation, the shares  of  each  predecessor  subsidiary corporation  are cancelled.  The amalgamated  corporation  issues  no  securities  and  the articles are the same as  the articles of  the  predecessor  parent  corporation."

The company announced a vertical short form amalgamation, the news release made it appear a horizontal short form amalgamation.  With the cancellation of shares, the vertical short form is the actual outcome(rather than horizontal) and going private aught to be the result.

So the cancellation of shares is part of the going private process actually initiated in 2010, and presumably to have closed on the effective date in 2010 but may be extended over a period of YEARS until the financials are finally rectified. 

For the purposes of continuation, and under the clauses of the CBCA,(or the SBCA, as the case may be) the taxation of the amalgamated corporation follows from the deemed continuation, that the whole of the capital raise, or in-substantive defeasance deemed to be a continuation of the amalgamation process of the Jolu Development Corporation with Golden Band Resources!

"Deemed  Continuation

Many of  the provisions  in  subsection  87(2)  state  that  for  a particular  purpose, the amalgamated  corporation “shall  be deemed  to  be the same corporation  as, and  a continuation  of, each  predecessor  corporation”.  That  is,  having deemed  the amalgamated  corporation  to  be a  new corporation, the  drafters  then  go  back to the continuing corporation  concept  to  provide continuity in  respect  of  specific  tax  matters.   For  example, subparagraph  87(2)(f)  provides that  the amalgamated  corporation is  deemed  to  be the same corporation  as, and  a continuation  of, each predecessor  corporation  for  the  purposes  of  determining any  amounts  relating to  cumulative eligible capital,  an  eligible capital  amount, an  eligible capital  expenditure or eligible capital property."

Thus the retraction and cancellation of shares follows on the amalgamation years before, not as part of the pro-forma insolvency this year.

So primarily the company intended an open-ended going private transaction for the forseeable future in 2010 on the closure of the defeasesance irrevocability trust of five years, through a pro-forma insolvency and an arms length merger of two separate financial aspects under the Jolu Development Corporation carrying the financial interest of the capital raise and cost of capital.  Technically the company has taken steps to realize the going private aspect by the retraction and cancellation of shares, the creation of a special share or a change-in-control put with PROCON and the voluntary delisting and surrendering of reporting status.

The squeeze out of minority shareholders in this instance was due to the declaration of a 30:1 reverse spllit in November 2014, which was never carried out in the interim, and the vast majority of shareholders who sold attempted to recuperate whatever monies had been invested.  Shareholders who voted against the special resolution in the October 2015 annual shareholder meeting were probably unaware that they were dissenting and were probably having their shares cancelled before the close of going private. The beneficial shareholders, people who had held for sixty days or more through to the trading halt and bought sufficient and voted in favour probably did not see a cancellation of shares.

The remaining shares are held in a defacto escrow as GBRIF which is not subscribed.

It must be noted that anything the company says it will carry out, has actually carried out even though it was not carried out immediately. Basically with the short form vertical amalgamation, the reorganization was not completed until 2016, even though the effective date was Feb 1, 2010.

Due to 'deemed continuation' all aspects of the in-substantive defeasance(meaning off balance sheet financing) went undisclosed.  If the company were to continue as a publicly traded entity once the raising of capital were completed, then they would have to report it for the end of the taxation year. But the company voluntarily gave up reporting status.  None of the details of the capital raise and monies spent in The La Ronge Gold Belt will become public.

According to Revenue Canada, the default end of taxation year of a company with no real end of year would be the last taxable day of December, presumably the close of Golden Band as a publicly-traded company.

What is unmistakeable here is the agency of the crown.  It should not be considered strange or aberrant that the crown would be closely involved in mining developments as they have in Saskatchewan.  The crown was a major player in the development of Uranium mining in Canada for decades.

Sprott, the only private company to hold gold at the Royal Canadian Mint, and the Mint itself obtained their gold initially from one source, Golden Band.  Somehow the hundreds of millions in revenue that would have been generated by the exchange of 60 tonnes or more unrefined gold for cash at the mint has absent-mindedly disappeared.  Earnings were retained.

The federal government modified the metals, mining and effluent regulations act to facilitate the development of Golden Band's La Ronge Gold Project via parliamentary committee.  A rare and unlikely circumstance.  

The province has allowed service matters related to court to go unquestioned in the Saskatchewan Court Of The Queen's Bench for insolvency proceedings, which were evidently pro-forma.  The province upgraded the Island Falls/Key Lake transmission line which runs over Golden Band's property.  The Jolu Development Corporation was the gold interest held by SMDC prior to the merger of SMDC with Eldorado to create Cameco.  The corporate structure of Golden Band then becomes similar to Cameco, except that Golden Band is ulltimately going private and Cameco was formed to create a publicly traded company.

Revenue Canada goes completely unconcerned at the lack of financial reporting and vague revenue sources, something which they're not exactly known for.

The BCSC is obviously wet broccoli at wanly suggesting technical teports cannot be relied upon.  The technical reports have serious shortcomings, and drill results are almost all below cut-off grade.  For their part, they rubber stamped a delisting and surrender of reporting status, and ignored an exchange of options on the OTC grey market in the U.S. of options in Golden Band shares which were the equivalent of half the float during an extended trading halt.(presumably for shares to be cancelled)  They also allowed a vote on a special resolution without the company disclosing what the special resolution might be, that the majority of the minority carried the vote under all circumstanes and the truly dissenting vote were merely 15% of the total shareholders, who obviously sold or had their shares cancelled.

http://www.cba.org/cba/cle/PDF/Tax10_Richler_Ron_Paper.pdf

-F6