Champignon Brands Inc. has been served a Cease Trade Order (CTO) by the British Columbia Securities Commission [view the document here].
The Order covers the Company as a whole, as opposed to addressing specific Insiders.
The Order was issued due to Champignon’s failure to file Business Acquisition Reports (Form 51-102F4) for three significant acquisitions:
- Artisan Growers Ltd.
- Novo Formulations Ltd.
- Tassili Life Sciences Corp.
These acquisitions were announced in Q1 2020, but the associated documentation has not been filed.
Due to this failure to file multiple business acquisition reports, the BC Securities Commission issued the CTO on the 19th June, 2020.
Trading of Champignon securities is halted.
Cease trade orders remain in effect indefinitely, until they are revoked by the British Columbia Securities Commission. This CTO will remain in effect until the missing reports are filed.
Despite this CTO, some sale of securities is allowed, as stipulated in Paragraph 3:
Despite this order, a beneficial shareholder of Champignon who is not, and was not at the date of this order, an insider or control person of Champignon may sell securities of Champignon acquired before the date of this order, if both of the following apply:
1. the sale is made through a “foreign organized regulated market”, as defined in section 1.1 of the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada, and
2. the sale is made through an investment dealer registered in British Columbia.
Comparisons to Hollister Biosciences CTO
Some spectators have noted that Hollister Biosciences received a similar cease trade order, with little change in stock price and no halting of trading.
However, readers should be wary that there are substantive differences between this CTO and the one placed on Champignon Brands.
On June 16th, 2020, Hollister Biosciences was served a cease trade order that concerned only the CFO and CEO of the Company. Hollister received this Order due to their failure to file annual audited financial statements or a form 51-102F1 (Management’s Discussion and Analaysis, or MDA).
As such, the CFO and CEO (referred to collectively as the Insiders) could have knowledge of, or access to, a material fact or change that has not been publicly disclosed.
So, in the case of Hollister Biosciences, the CTO only prevented ‘trading by’ those two Insiders: the CFO and CEO.
In contrast, the CTO served to Champignon covers the ‘trading of’ Company securities as a whole.
These differences are summarised by the ‘trading by’ versus ‘trading of’ classification, as used by the CSA.
As aforementioned, this CTO will remain in effect until Champignon files the missing documents.
Until then, many will speculate as to whether this is simply an oversight, or filing error; or whether there is a different reason for the lack of filings.
Many will anxiously await the beginning of next week, when we may learn whether Champignon has rectified the matter swiftly; or if further delays affect trading.