UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
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(Name of small business issuer in its charter)
British Columbia, Canada 75-2712845
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(State or other jurisdiction of (IRS Employer
incorporation or organization) I. D. Number)
1304 Avenue L, Cisco, Texas 76437
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (254) 442-2658
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Title of Class - Common Stock, No Par Value
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AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
Table of Contents
PART I
Item 1. Description of Business . . . . . . . . . . . . 3
Item 2. Plan of Operation . . . . . . . . . . . . . . . 8
Item 3. Description of Property . . . . . . . . . . . . 10
Item 4. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . 12
Item 5. Directors, Executive Officers, Promoters
And Control Persons . . . . . . . . . . . . . . 13
Item 6. Executive Compensation . . . . . . . . . . . . 15
Item 7. Certain Relationships and Related Transactions 15
Item 8. Description of Securities . . . . . . . . . . . 15
PART II
Item 1. Market Price and Dividends on the Registrant's
Common Equity and Other Shareholder Matters . . 16
Item 2. Legal Proceedings . . . . . . . . . . . . . . . 17
Item 3. Changes In and Disagreements With Accountants . 17
Item 4. Recent Sales of Unregistered Securities . . . . 17
Item 5. Indemnification of Directors and Officers . . . 17
PART F/S . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART III
Item 1. Index to Exhibits . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . 18
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development
Australian-Canadian Oil Royalties Ltd. ("ACOR" or "the Company") was
incorporated in British Columbia, Canada, in April of 1997. The Company
was organized to purchase, hold and sell producing and non-producing oil
and gas royalty interests in Australia, Canada and the United States.
Since its organization, ACOR has acquired overriding royalty interests
under fourteen concessions covering 27,319,087 gross surface acres in
Australia. Five of the properties where ACOR holds ORRI are producing oil
or gas, or production has recently been discovered. The Company is
currently receiving revenues from two of these ORRIs. The Company has
joined a group of four other investors to form a new Company, Cooper Basin
Oil & Gas, Inc. ("CBOG") for the purpose of making applications for areas
in the Cooper Eromanga Basin of Australia. ACOR is a twenty percent (20%)
shareholder of CBOG. CBOG has made application for six (6) areas
comprising 4,773,000 acres in the Cooper Eromanga Basin of South Australia
under what was Petroleum Licenses ("PELs") 5 and 6, until February 28,
1999. PELs 5 and 6, prior to expiration, were producing $215,982,000 per
year worth of oil, gas, and associated hydrocarbons. All previous
production is still held by the original concession holder under a number
of small Petroleum Production Licenses (PPLs). This is the first time in
forty years any areas have been made available, out of PELs 5 and 6, from
the government of South Australia. Cooper Basin Oil & Gas, Inc. has also
made application for one area in the adjoining state of Queensland, also in
the Cooper Eromanga Basin. These are excellent areas and are subject to
keen competition. Due to this competition, there is no guarantee that CBOG
will successfully acquire any of the properties.
The Company plans to further develop its business by forming consortiums of
oil and gas entities with the requisite financial strength to apply for
Australian oil and gas concessions requiring certain financial
requirements for exploration and drilling activities.
Since its organization in 1997, the Company has not been involved in any
bankruptcy, receivership, or similar proceeding and has undergone no
material reclassification, merger, or consolidation.
The Company held an initial public offering closing November 30, 1998, and
sold 1,150,000 shares of Company stock for $287,500. Proceeds to the
Company, after costs of the issue of $53,042, were $234,458. ACOR plans to
use these proceeds to acquire additional oil and gas properties in
Australia.
The following definitions are provided to clarify certain terms used in
this report:
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Authority to Prospect ("ATP") -- a concession granted by the State of
Queensland, Australia, which entitles its holders to an exclusive right to
explore for oil and natural gas in Queensland in the particular area
covered by the ATP. Each ATP has an initial term of four years. The area
covered by an ATP is reduced by relinquishment of approximately one-fourth
of the area at the start of the third year of its effectiveness and an
additional one-fourth of the original area at the start of the fourth year
of its effectiveness. The area to be relinquished is chosen by the holder
of the ATP. An ATP will require some kind of geological and/or geophysical
operations, such as new seismic or seismic interpretation, drilling or
other operations during the term of the tenure. The amount of work to be
performed depends upon the expenditures required for each specific year of
the tenure. Holders are only required to expend those amounts as set out
in the original concession document. Applications for renewal may be
filed at the time of expiration of an ATP.
Developmental Wells -- oil and gas wells drilled within the proven area of
an oil or gas reservoir to the depth of a stratigraphic horizon known to be
productive.
Dry Hole -- a well found to be incapable of producing oil or gas in
sufficient quantities to justify completion.
Exploratory Well -- a well drilled to find and produce oil and gas in an
unproved area or to find a new reservoir in a field previously found to be
productive of oil or gas in another reservoir.
Gross Production -- the total production of oil, gas, or natural gas
liquids from a property or group of properties for any specified period of
time.
MCF -- thousand cubic feet of natural gas
MMCF million cubic feet of natural gas
Net Royalty Acre -- generally, a measurement of royalty or overriding
royalty and the equivalent of the full customary one-eighth royalty of the
gross production of revenue free and clear of exploration, drilling and
production costs from one acre of land. The number of net royalty acres
used in this report applies to figures as of January 5, 1999 and the number
will change as relinquishments take place on the ATPs, as an ATP expires or
is canceled, or any new areas are added.
Overriding Royalty Interest ("ORRI") an interest assigned out of the
lessee's leasehold or working interest. The amounts payable from ORRIs are
payments calculated as a percentage of either gross production or the gross
revenues of the working interest (based on the wellhead price) from a
concession or lease, usually free and clear of all exploration, drilling
and development and production costs, except for any applicable taxes and
federal levies. In calculating the wellhead price, pipeline and trucking
costs have already been deducted from the refinery price. The overriding
royalties discussed herein are generally expressed as a percent of the
gross production.
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Petroleum Exploration License ("PEL") an exclusive oil and gas
exploration permit issued by the South Australian Department of Primary
Industries and Resources. The initial term of the tenure is for a five (5)
year period.
Producing Wells -- wells capable of producing oil or gas in commercial
quantities, including those wells capable of producing in commercial
quantities that are shut in, or wells which are not currently producing in
commercial quantities but have been commercially productive wells in the
past.
Royalty -- generally, a share of the production reserved by the grantor of
an oil or gas lease or concession. The royalty interest is customarily
free of cost or expense incident to exploration, development or production,
except for production or gathering taxes.
Working Interest ("WI") -- all or a fractional part of the ownership rights
granted by a concession or lease. The owner of a WI or a part thereof pays
all costs of exploration and is entitled to the gross production, less
royalties retained by the grantor or lessor, and less ORRIs or other non-
operating interests created and assigned from the WI. The owner of a WI
may incur operating expenses in excess of income.
(b) Business of Issuer
As a purchaser and holder of overriding royalty interests, ACOR's business
is related to the principal products of oil and gas, and is dependent on
various factors which are discussed following. The average sales price of
oil from Australia during 1998 was $US14.90.
The Company is presently involved, as a twenty percent (20%) interest
holder, in the application of seven (7) oil and gas exploration licenses in
Australia. There is no assurance these applications will be successful.
The Company will continue to further develop its business by forming, or
joining, consortiums of oil and gas entities with the requisite financial
strength to acquire, sell, and buy interests in oil and gas properties and
overriding royalties in the United States, Canada, and Australia.
The acquisition, exploration, development, production and sale of oil and
gas are subject to many factors that are outside the Company's control.
These factors include: market prices; national and international economic
conditions; import and export quotas; availability of drilling rigs,
casing, pipe, and other equipment and supplies; availability of and
proximity to pipelines and other transportation facilities; the supply and
price of competitive fuels; and the regulation of prices, production,
transportation, and marketing by domestic and foreign governmental
authorities. Additionally, the Company generally has no control over
whether the owner or operator of leases to which its overriding royalty
interests are attributable will elect to explore for oil and gas on such
properties, or to develop them following discoveries that may occur. Each
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of these factors may affect the rate at which oil and gas are produced on
properties in which the Company has an interest or affect whether wells
will be drilled on such properties, and could otherwise materially affect
ACOR's earnings.
The sections which follow describe the impact of competition and
governmental regulation on the Company's business, as well as the impact
of foreign currency regulation and foreign taxes on earnings from oil and
gas properties located outside the United States.
Competition
The oil and gas industry is highly competitive in all of its phases, with
competition for favorable producing royalties and overriding royalties
being particularly intense. The Company believes that price, geological
and geophysical skill, and familiarity with an area of operations are the
primary competitive factors in the identification, selection, and
acquisition of desirable leases. When attempting to purchase interests in
such properties, the Company competes with independent operators and
occasionally major oil companies, a number of which have substantially
greater technical and financial resources than the Company.
Governmental Regulation
Oil and gas operations are subject to federal, state and local laws and
regulations governing waste, environmental quality, pollution control,
conservation and other measures regarding environmental and ecological
matters. It is impossible to predict the impact of environmental
legislation and regulations on the Company's operations and earnings in the
future.
The Company's operations could also be affected from time to time by other
federal, state and local laws and regulations and by political
developments. The domestic production and sale of oil and gas are subject
to federal regulation by the Department of Energy and the Federal Energy
Regulation Commission. Rates of production of oil and gas have for many
years been subject to federal and state conservation laws and regulations.
In addition, oil and gas operations are subject to extensive federal and
state regulations concerning exploration, development, production,
transportation and pricing, and even to interruption or termination by
governmental authorities. Removal of import duties on oil entering the
U.S. has had an adverse affect on the domestic oil industry.
In foreign countries, the Company may be subject to governmental
restrictions on production, pricing and export controls. Regulations
existing or imposed upon the Company or its properties at the time of their
acquisition may change to an unpredictable extent. The Company will have
little or no control over the change of regulations or imposition of new
regulations and restrictions, expropriation or nationalization by foreign
governments or the imposition of additional foreign taxes. Management
believes that these actions are unlikely to be undertaken by the state
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governments of South Australia or Queensland, where all of the foreign oil
and gas properties from which the Company receives royalty income are
currently located.
Foreign Currency
Due to the nature of the Company's activities in Australia, portions of the
Company's operating capital may at times be held in various foreign
currencies. This subjects the Company to the risk of currency fluctuations
and changes in rates of conversion for different currencies. The Company
does not engage or expect to engage in any hedging or other transactions
that are intended to manage risks relating to foreign currency
fluctuations. Additionally, revenues generated in foreign countries in
which the Company has or may acquire interests may be subject to
governmental regulations which restrict the free convertibility of such
funds, and all remittances of funds out of these countries might require
the approval of the applicable government's exchange control agency.
Presently, the Company experiences no difficulties with the free
convertibility of funds from Australia. In the Company's opinion, the
foreign exchange control laws currently in effect in Australia do not
unreasonably delay the remittance of funds generated in Australia to the
United States.
Foreign Taxes and United States Tax Credits
As a result of its overriding royalty interests attributable to properties
outside the United States, the Company is subject to the imposition of
taxes by foreign governments upon the Company's income derived from such
foreign jurisdictions. These taxes are of various types, with differing
tax rates, and are subject to change. Generally, the Company's income from
a foreign jurisdiction will be taxed in the same manner as that for other
companies operating in the jurisdiction, but discriminatory taxation by a
particular jurisdiction may occur. The current corporate income tax rate
in Australia, for ORRIs, is approximately 30% of net profits.
As a Canadian corporation, the Company is liable for income taxes under the
laws of Canada. Under Canadian law the Company's Australian-source income
is subject to a 46% tax (on Canadian dollars).
The Company is taxable in the U.S. on U.S. source income. Because there
has been no U.S. source income nor any income effectively connected with a
U.S. trade or business there has been U.S. taxes incurred to date.
Employees
The Company employs two people who serve the Company as needed on a part-
time basis, and an outside consultant.
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ITEM 2. PLAN OF OPERATION
The Company believes it can satisfy its cash requirements for the next
twelve months. The Company has very few operating expenses and it is
expected that operating revenues will increase during the next year.
Operating revenues totaled $5,545 during 1998. This money was entirely oil
and gas revenues received from the Company's overrides in Australia on ATP
299 and ATP 267. Seven (7) new oil wells came in on ATP 299 in 1998.
Further, three (3) new gas fields were discovered on the Patchawarra
Southwest Block during 1999. The Company expects oil and gas revenues to
increase from its interests in Australia because of the following: (1)
additional wells are currently planned for drilling; (2) there are numerous
undrilled locations in the twelve producing fields on ATP 299 waiting for
drilling in the future; (3) three new wells were completed on ATP 560
during 1997, which are presently shut-in, from which the Company will
begin receiving revenues; (4) one gas well has been completed on ATP 543
from which the Company will begin receiving revenues; (5) the Company will
begin receiving revenues from the wells on the Patchawarra SW Block upon
completion of proper title transfer; and (6) the Company expects drilling
programs to begin on some of its currently non-producing concessions.
The Company has no material commitments for capital expenditures during the
next twelve months. However, if any of the previously mentioned oil and
gas exploration license applications are successful, the Company will be
required to put up twenty percent (20%) of the first year's expenditure
requirements on the successful applications. The Company plans to acquire
additional overriding royalty interests in oil and gas leases in Australia,
the United States, and Canada. In addition, in combination with affiliated
and non-affiliated entities, the Company will continue to attempt to form
or join consortiums of oil and gas entities with the requisite financial
strength to apply for Australian oil and gas working interest concessions,
involving financial requirements for exploration and drilling activities.
Acquisition of working interest concessions in Australia will place the
Company in an active role in oil and gas exploration, starting with a
substantial twenty percent (20%) working interest commitment. Australia's
state government agencies granting concessions require such companies or
consortiums to have approximately $1,000,000 in cash to perform the
necessary first two years exploration activities. Certain portions of
South Australia and Queensland concessions have been relinquished to the
governments of South Australia and Queensland for future bidding. The
Company has taken a twenty percent (20%) interest in Cooper Basin Oil &
Gas, Inc., which has applied for six (6) areas in South Australia and one
(1) area in Queensland. The other interest holders in Cooper Basin Oil &
Gas, Inc. are Ely Sakhai (20%), Robert Kamon (20%), Kaye Kamon Eliasen
(20%), and Golden Triangle Industries, Inc. (20%).
The six (6) areas under application in South Australia were released from
PELs 5 and 6 on February 28, 1999, encompassing a total of 4,773,000 acres.
This acreage was out of the original 16,000,000 acres of PELs 5 and 6.
PELs 5 and 6 are currently producing $215,982,000 per year in oil and gas
revenues. The previous holders of PELs 5 and 6, Santos-Exxon et al, have
the right to retain small PPLs over producing fields in the area. PELs 5
and 6 were held by Santos-Exxon et al forty (40) years prior to their
expiration in February, 1999. Companies have long awaited the opportunity
to acquire portions of PELs 5 and 6, which have the most profitable onshore
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production in Australia. Competition for these areas is keen. The
stockholders of Cooper Basin Oil & Gas, Inc. have combined net assets in
the order of $50,000,000, which will enable CBOG to meet the financial
requirements to be considered as a financially capable applicant. There is
$43.2 million worth of seismic on these six areas, which will be available
to the companies acquiring the areas without charge, except for the cost of
copying. Cooper Basin Oil & Gas, Inc. has reviewed the summary seismic in
preparation of the applications, which International Oil Lease Service
Corp., as leasing agent, has furnished to Cooper Basin Oil & Gas, Inc.
The following table sets out areas for which applications have been made in
South Australia. Note that for a very small cost, if the Company is the
successful applicant, it will acquire access to a huge amount of free
geophysical data which will be of significant value to the Company's
exploration program.
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<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20% of 20% of 20% OF 20% of
Total Area $US Worth Seismic 1st Year 1st Yr. Application Application Leasing Leasing Fee
(Acres) of seismic Cost Expenditure Expenditure Permit Fee Permit Fee Fee (if successful)
- ----------- ---------- ---------- -------- --------- --------- ---------- ------- ------------
C-1,232,000 $7,405,120 $1,481,024 $50,320 $10,064 $1,400 $280 $25,000 $5,000
E - 337,000 7,405,120 1,481,024 50,320 10,064 1,400 280 25,000 5,000
G - 711,000 7,498,635 1,499,727 37,740 7,548 1,400 280 25,000 5,000
H - 465,000 6,386,916 1,277,383 44,030 8,806 1,400 280 25,000 5,000
I - 668,000 5,353,496 1,070,699 44,030 8,806 1,400 280 25,000 5,000
J - 962,000 9,569,913 1,913,982 44,030 8,806 1,400 280 25,000 5,000
</TABLE>
(1) ACOR has agreed to pay twenty percent (20%) of the first year's
expenditures on any area of application the South Australian government
offers to CBOG. ACOR owns twenty percent (20%) of the issued and
outstanding shares of CBOG. Column five (5) above, sets out the 20% ACOR
has agreed to pay in the first year of each of the PELs, if one or more are
successful.
(2) For each area which is granted to CBOG, ACOR has also agreed to pay 20%
of the leasing fee due to International Oil Lease Service Corp. ("IOLS").
This total fee amounts to $25,000 each (being $5,000 each for ACOR's part),
plus a two percent (2%) overriding royalty assignment to IOLS from CBOG, if
one or more applications are successful.
For example, if Area C were to be issued to CBOG, ACOR's proportionate cost
for acquisition for the area would be $5,280 (20% of Leasing and
Application Permit total of $26,400), and the Company's first year's
expenditure would amount to $10,064 (20% of $50,320). The Company would
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acquire, with the area, seismic for the exploration program worth
$7,405,120, at the present cost of seismic, 20% of which would amount to
$1,481,024.
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The Company expects no significant change in the number of employees during
the next twelve months.
Disclosure Regarding Forward-Looking Statements
This Form 10-SB includes "forward-looking" statements within the meaning of
Section 27A of the Securities Act and the Company desires to take advantage
of the "safe harbor" provisions thereof. Therefore, the Company is
including this statement for the express purpose of availing itself of the
protections of such safe harbor provisions with respect to all of such
forward-looking statements. The forward-looking statements in this Form
10-SB reflect the Company's current views with respect to future events and
financial performance. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
from those anticipated. In the Form 10-SB, the words "anticipates,"
"believes, "expects," "intends," "future" and similar expressions identify
forward-looking statements. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that may arise after the date hereof. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by this
section.
ITEM 3. DESCRIPTION OF PROPERTY
ACOR holds overriding royalty interests in fourteen concessions covering
27,319,087 surface acres in the Eromanga and Cooper Basins in Australia.
Five of the concessions have producing wells and nine of the concessions
are currently non-producing. The Eromanga Basin encompasses the
southwestern portion of the province of Queensland and the northeast corner
of South Australia, and is Australia's main onshore producing oil and gas
basin. The Cooper Basin is located in the northeast part of the province
of South Australia. Management believes ACOR's overrides are in a prime
location since some 99% of ACOR's interests form nearly continuous blocks
adjoining the producing block of Santos et al. which has reserves in
excess of 1,056,000,000 barrels of oil equivalent and is making
$A930,000,000 worth of oil, gas and associated hydrocarbons per year
(equivalent to about $700 million in U. S. dollars).
On the 27,319,087 surface acres where ACOR holds overriding royalty
interests, there are giant anticlines, large faults and hundreds of seismic
highs, all of which indicate possibilities of oil and gas reserves. In
addition, about $30 million worth of seismic information has been completed
and is available on the areas.
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After record years in 1996 and 1997 with twenty-eight successful oil wells
completed on ATP 299, Santos, the operator controlling the prospect,
continued a successful drilling program in 1998 with the completion of
seven more new oil wells. Following is a list of the new wells completed
as producers: Kooroopa North #2, Ipundu #13, Ipundu #14, Ipundu #15, Ipundu
North #11, Talgeberry #7, and Ipundu #4A.
ACOR is currently receiving revenues from two of its overriding royalty
interests - ATP 267 and ATP 299. Twenty-one successful oil wells have been
completed on ATP 267 and sixty-five successful oil wells in twelve
different fields have been completed on ATP 299. With numerous undrilled
locations in each field, ACOR's revenues should be increasing from this
overriding royalty interest during coming years as development continues.
In addition to the drilling success on ATP 299, drilling and seismic
programs were conducted during 1997 and 1998 on several concessions under
which ACOR holds ORRIs. During 1997 three producing wells were completed
on ATP 560 - the Utopia #1, Utopia #2, and Utopia #3, and four wells were
dry holes. One well drilled on ATP 550 was a dry hole. During 1998, a 50
kilometer seismic survey was completed on ATP 267, a 153 kilometer seismic
survey was completed on ATP 299, and a 176 kilometer seismic survey was
completed on ATP 543. Two unsuccessful wells were drilled during 1998, one
on ATP 267 and one of ATP 415.Another productive concession under which
ACOR holds an ORRI is ATP 543 where a successful gas well was drilled
during 1996. The well had an initial potential test of 6.2 MMCFPD. This
well is expected to go on line in the summer of 1999, after completion of a
new pipeline. Revenues to ACOR will be expected to increase when oil and
gas from these new productive wells begins to be marketed.
The four producing concessions described above are located in Queensland,
Australia. The other producing concession under which ACOR holds an ORRI
is the Patchawarra SW Block located in South Australia. This concession
has a number of producing wells, and has had three new gas fields
discovered during 1999. Due to incomplete title, the Company is not yet
receiving royalty income from this concession (see Item Part II, Item 2.
Legal Proceedings).
The following table sets forth the ATP number of each Australian concession
in which the Company had an ORRI as of January 5, 1999 (date of the title
searches on the properties), and upon which productive wells had been
drilled, the percentage interest of the Company therein, the number of such
wells, the gross acreage of each concession, and the net royalty acres held
in each concession.
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Percentage
# of 1% of Net
of Gross Gross Royalty
Area Wells Concession Holder Acres Production Acres Blocks
- ---- ------ ---------------------- ------- ---------- ------- ------
267 21 Santos Producing Block 558,000 17.15% 7,656 30
299 65 Santos Producing Block 592,295 05.75% 2,732 32
543 1 Vernon E. Faulconer
Australia Inc. 1,545,600 25.00% 30,912 84
560 3 First Sourcenergy
Group Inc. 868,430 25.00% 17,369 46
Patchawarra
SW Santos Producing Block 1,069,717 06.25% 5,349 58
The following table sets forth the undeveloped acreage in which the Company
had an ORRI in Australia as of January 5, 1999, the date of the title
searches on the Queensland properties.
Percentage
of 1% of Net
Gross Gross Royalty
Area Concession Holder Acres Production Acres Blocks
- ----- ------------------------ ---------- ---------- ------- ------
415 Bridge Oil 704,281 05.75% 3,243 37
538 Dyad Australia, Inc. 1,159,373 03.80% 3,524 60
542 Ron Marsh 1,932,000 50.00% 77,280 105
544 Australian Petroleum 1,237,482 08.08% 8,002 65
Industries Pty. Ltd.
550 Discovery Geo (AUSTRALIA) 571,335 25.00% 11,427 30
Corporation
554 Dyad Australia, Inc. 483,072 25.00% 9,662 25
582 Cooper-Eromanga Oil, Inc. 6,716,000 67.10% 360,515 365
615 Oil Seeps, Inc. 9,659,107 46.40% 358,545 499
616 East Jackson Oil, Inc. 222,395 333.33% 59,305 12
The total acreage under which ACOR holds overriding royalty interests in
Queensland and South Australia is 955,521 net royalty acres under
27,319,087 gross surface acres.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the common stock of the Company as of January 1, 1999 by each
of the Company's officers and directors, each person who is known by the
Company to own beneficially more than 5% of the outstanding common stock
and all officers and directors of the Company as a group. The title of
class is common stock, no par value.
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# of Shares
Name and Beneficially Percent of
Address of Stockholder Owned Class
- -------------------------------------- ----------- --------
Australian Grazing & Pastoral 1,008,000 19.57%
Co. Pty. Ltd.*
1304 Avenue L
Cisco, Texas 76437
Larry Braun -0- 00.00%
26 Lake Fraser Place, SE
Calgary, Alberta, T2J 3T5
Canada
Ken Campbell 100,000 01.94%
Box 5, Site 16, SS1
Calgary, Alberta T2M 4N3
Canada
Robert Kamon 592,000 11.49%
1304 Avenue L
Cisco, Texas 76437
William A. Randall 20,000 00.39%
2100-1075 W. Georgia St.
Vancouver, British Columbia V6E 3G2
Canada
Ely Sakhai 1,400,000 27.18%
10 Windsor Dr.
Old Westbury, New York 11568
All officers and directors as a group 3,120,000 60.57%
Jan Soleimani 800,000 15.53%
21 Windsor Dr.
Old Westbury, New York 11568
*Australian Grazing is controlled by Robert Kamon.
Note: The stockholders identified in this table have sole voting and
investment power with respect to the shares beneficially owned by them.
The owners have no rights to acquire additional shares through options,
warrants, rights, or conversion privileges within the next sixty days.
Management is not aware of any current arrangements which would result in a
change of control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors - The Board of Directors of the Company presently consists of
five members. Each director is elected at the annual meeting of
shareholders to hold office until the next annual meeting of shareholders
and until his successor has been elected and qualified. The following
table sets forth information concerning the persons currently serving as
directors of the Company.
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Date First
Position With Elected
Name Age the Company as Director
---------------------- ---- ------------- -----------
Larry Braun 55 Director 1997
Kenneth W. Campbell 69 Director 1997
Robert Kamon 71 Director & 1997
Secretary
William A. Randall 58 Director 1997
Ely Sakhai 47 Director & 1997
President
Executive Officers - Unless otherwise specified by the Board, all executive
officers are elected for a term of one year, commencing with the date of
the first meeting of the Board following the annual meeting of
shareholders, and serve until their successors are elected or appointed and
qualified, or until their respective death, resignation,
removal or disqualification. All of the Company's officers are executive
officers. The following table sets forth certain information with respect
to the persons currently serving as executive officers of the Company.
Date First
Position With Elected
Name Age the Company as Director
---------------------- ---- ----------- ------------
Robert Kamon 71 Secretary and 1997
Director
Ely Sakhai 47 President and 1997
Director
There are no family relationships between any of the officers or directors
of the Company.
Larry Braun, Director, was president and owner of Cordoba Resources, Ltd.
previous to June 1993. Between June 1993 and May 1995, he was President of
Senercorp Ventures, Inc. Since May 1995, he has been a Vice President of
Carpatsky Petroleum in Calgary, Alberta, Canada.
Kenneth W. Campbell, Director, is a graduate of the University of Brandon
(Manitoba, Canada). He is President of Solar Energy Resources, Ltd., a
privately held independent Canadian oil and gas producer.
Robert Kamon, Director and Secretary, is a petroleum engineering graduate
of the University of Texas at Austin, Texas. Mr. Kamon has been President
of three NASDAQ listed companies. He is currently the President of several
private companies - Australian Grazing and Pastoral Co. Pty. Ltd. since
1954, International Oil Lease Service Corp. since 1961, and Tensleep Oil
and Production Inc. since 1989.
William A. Randall, Director, is a graduate of the University of British
Columbia and has an L.L.B. degree from the University of British Columbia.
He has been a practicing commercial attorney for the last thirty years, and
is currently a partner in the Vancouver firm of Russell and DuMoulin.
-14-
<PAGE>
<PAGE>
Ely Sakhai, Director and President, is a civil engineering graduate of
Columbia University. He has been engaged in the art gallery business in
New York City for the last fifteen years.
ITEM 6. EXECUTIVE COMPENSATION
The executive officers of ACOR have received no salary, bonus or stock
compensation since the organization of the Company. The Company has no
bonus, pension, or profit sharing plans.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Three of the directors of the Company, Robert Kamon, Ken Campbell and Larry
Braun, are active in the oil and gas industry personally. The activities
of each could result in a conflict of interest between their other oil and
gas activities and those of the Company.
Robert Kamon is President of International Oil Lease Service Corp. Mr.
Kamon is also President of Cooper Basin Oil & Gas, Inc. and Secretary of
Australian-Canadian Oil Royalties Ltd. Australia-Canadian Oil Royalties
Ltd. is a twenty percent (20%) stockholder is Cooper Basin Oil & Gas, Inc.
International Oil Lease Service Corp. Is in the business of applying for
and acquiring oil and gas concessions in Australia; therefore, its
activities may involve a conflict of interest with the Company.
Australian Grazing & Pastoral Co. Pty. Ltd., controlled by Robert Kamon, is
in the business of applying for and acquiring oil and gas concessions in
Australia and its activities may involve a conflict of interest with the
Company.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares
of common stock and 50,000,000 shares of preferred stock. Currently there
are 5,150,000 shares of common stock issued and outstanding, and 0 shares
of preferred stock issued and outstanding.
Dividend Rights and Policy - The holders of ACOR shares are entitled to
share equally, share for share, in such dividends as might be approved by
the Board of Directors. The Company does not anticipate paying cash
dividends in the foreseeable future. The Company intends to retain
earnings to provide funds for its operations. Future dividend policy will
be determined by the Board of Directors.
Voting Rights - Holders of ACOR are entitled to one vote per share with
respect to all matters that are required by law to be submitted to a vote
of shareholders. Cumulative voting rights are not available to ACOR
shareholders.
-15-
<PAGE>
<PAGE>
There are no British Columbia Law provisions specifically regulating
takeover bids or the acquisitions of a controlling interest.
Assessment and Redemption - All ACOR shares issued are and will be legally
issued, fully paid and non-assessable.
Purchase and Redemption Rights - Currently only one class of shares has
been issued and there are no purchase or redemption rights. However,
according to the Company's Articles, subject to the special rights and
restrictions attached to any class of shares, the Company may, by a
resolution of the Board of Directors, purchase any of its shares at the
price and upon the terms specified in such resolution or redeem any class
of its shares in accordance with the special rights and restrictions
attached thereto.
Preemptive Rights - Holders of ACOR shares have no preemptive rights.
Liability of Directors - See Part II, Item 5. Indemnification of Directors
and Officers
Liquidation Rights - Upon liquidation, dissolution or winding up of the
Company, the beneficial owners of the shares would be entitled to a pro
rata share of the assets of the Company.
Preferred Shares - To date, no shares of preferred stock have been issued.
The Company has reserved the right for the Board of Directors to designate
preferred shares in one or more classes or series, and to create, define
and attach special rights and restrictions to the preferred shares of each
series. Any such series or classes of preferred stock designated by the
Board in the future may effect the rights of the holders of the common
stock.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Currently, there is a public trading market for the Company's common stock
in the States of New York, Colorado, and Florida, for 1,150,000 of the
total 5,150,000 shares of the Company. There are currently 5,150,000
common shares issued and outstanding. The 5,150,000 shares are owned by 23
shareholders.
The Company plans to apply for listing on the OTC Bulletin Board in the
United States immediately, and in the future, apply for listing on the
Vancouver Stock Exchange in Canada, when the Company has met the
requirement of being operationally "active".
The Company does not anticipate the payment of cash dividends in the
foreseeable future. Payment of cash dividends is within the discretion of
the Company's Board of Directors and will depend on, among other factors,
earnings, capital requirements and the operating and financial condition of
the Company.
-16-
<PAGE>
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
The Company was not a party to any legal proceedings as of December 31,
1998. However, the Company is currently working with legal counsel in
Australia to undertake necessary litigation to perfect its title in an
overriding royalty interest in the Patchawarra Southwest Block of PEL 5 and
PEL 6. The overriding royalty interest was created in June, 1971, and
since that time has been assigned to six different companies with the last
assignee being ACOR. The Company has determined that due to the extensive
time elapsing between assignments and the failure of some intermediate
assignees to properly assign title, it will be necessary to engage in
litigation in order to collect past royalty payments of approximately
$36,081, and royalty payments in the future. The expected cost of the
barrister's fees for ACOR's part will be approximately $15,750 in addition
to any stamp duty which may be required, or other potential fees.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
NONE
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
NONE
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subject to the provisions of the Company Act, the directors shall cause the
Company to indemnify a director or former director of the Company and the
directors may cause the Company to indemnify a director or former director
of a corporation of which the Company is or was a member and the heirs and
personal representatives of any such person against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a
judgment, actually and reasonably incurred by him or them including an
amount paid to settle an action or satisfy a judgment in a civil, criminal
or administrative action or proceeding to which he is or they are made a
party by reason of his being or having been a director of the Company or a
director of such corporation, including any action brought by the Company
or any such corporation. Each director of the Company on being elected or
appointed shall be deemed to have contracted with the Company on the terms
of the foregoing indemnity.
Subject to the provisions of the Company Act, the directors may cause the
Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the Company is or was a member (notwithstanding that
he is also a director) and his heirs and personal representatives against
all costs, charges and expenses whatsoever incurred by him or them and
-17-
<PAGE>
<PAGE>
resulting from his acting as an officer, employee or agent of the Company
or such corporation. In addition the Company shall indemnify the Secretary
or an Assistant Secretary of the Company (if he shall not be a full time
employee of the Company and notwithstanding that he is also a director) and
his respective heirs and legal representatives against all costs, charges
and expenses whatsoever incurred by him or them and arising out of the
functions assigned to the secretary by the Company Act or these Articles
and each such secretary and assistant secretary shall on being appointed be
deemed to have contracted with the Company on the terms of the foregoing
indemnity.
PART F/S
The financial statement information for ACOR is set forth immediately
following the signature page. See the Index to Consolidated Financial
Statements on page F-1.
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit 1 - Articles of Incorporation
Exhibit 2 - Form F-X
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
Date: April 5, 1999 /s/ ELY SAKHAI
Ely Sakhai, President and
Director
/s/ ROBERT KAMON
Date: April 5, 1999 Robert Kamon, Secretary and
Director
-18-
<PAGE>
<PAGE>
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants . . . . F-2
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations and Comprehensive Income . . . . F-4
Statement of Changes in Stockholders' Equity . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . F-6
Notes to Audited Financial Statements . . . . . . . . . . F-7
F - 1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Australian-Canadian Oil Royalties Ltd.
Cisco, Texas
We have audited the accompanying balance sheet of Australian-Canadian Oil
Royalties Ltd. as of December 31, 1998, and 1997, and the related
statements of operations, changes in shareholders' equity, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Australian-Canadian Oil
Royalties Ltd. as of December 31, 1998, and 1997, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/S/ ROBERT EARLY & COMPANY, P.C.
Robert Early & Company, P.C.
Abilene, Texas
March 22, 1999
F - 2
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Balance Sheets
As of December 31, 1998 and 1997
1998 1997
--------- ---------
Assets
CURRENT ASSETS
Cash $ 263,188 $ 39,347
Accounts receivable 1,674 1,439
Prepaid expenses 1,965 2,858
--------- ---------
Total current assets 266,827 43,644
--------- ---------
PROPERTY AND EQUIPMENT
Oil and Gas Properties 307,976 307,976
Accumulated Depletion (2,061) (1,230)
--------- ---------
Net Property and Equipment 305,915 306,746
--------- ---------
OTHER ASSETS
Organization Costs (net of accumulated
amortization of $926 and $396 respectively) 1,719 2,249
--------- ---------
TOTAL ASSETS $ 574,461 $ 352,639
========= =========
Liabilities & Stockholders' Equity
LIABILITIES $ 3,356 $ -
STOCKHOLDERS' EQUITY
Preferred stock no par (50,000,000 shares
authorized, none outstanding) - -
Common stock, no par (50,000,000 shares
authorized, 5,150,000 and 4,000,000 shares
respectively outstanding) 602,448 352,990
Accumulated deficit (31,006) (154)
Other comprehensive income:
Foreign currency translation adjustment (337) (197)
--------- ---------
Total Stockholders' Equity 571,105 352,639
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 574,461 $ 352,639
========= =========
[FN]
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statements of Operations and Comprehensive Income
For the years ended December 31, 1998 and 1997
1998 1997
--------- ---------
OPERATING REVENUES
Oil & gas revenues $ 5,545 $ 8,201
OPERATING EXPENSES
Depletion and amortization 1,361 1,627
Personnel costs 6,136 1,640
Professional fees 24,164 -
General and administrative expenses 3,064 2,624
--------- ---------
Total operating expenses 34,725 5,891
--------- ---------
INCOME/(LOSS) BEFORE INCOME TAXES (29,180) 2,310
Australian income taxes 1,672 2,464
--------- ---------
NET LOSS (30,852) (154)
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment (140) (197)
--------- ---------
TOTAL COMPREHENSIVE LOSS $(30,992) $ (351)
========= =========
Net loss per weighted average share outstanding $ (0.01) $ 0.00
========= =========
Weighted average shares outstanding 4,098,833 4,000,000
========= =========
[FN]
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statement of Changes in Stockholders' Equity
For the years ended December 31
<TABLE>
<S> <C> <C> <C>
<C>
Accumulated
Accumulated
Other
Common Stock Earnings/
Comprehensive
Shares Amount (Deficit)
Income
BALANCES, January 1, 1997 - $ - $ -
$ -
Stock issued at inception 4,000,000 300,000 -
-
Additional contributed capital - 52,990 -
-
Net loss - - (154)
-
Other comprehensive income:
Foreign currency translation
adjustment - - -
(197)
--------- -------- ---------
----------
BALANCES, December 31, 1997 4,000,000 352,990 (154)
(197)
Stock issued 1,150,000 287,500 -
-
Direct costs of stock issue - (38,043) -
-
Net loss - - (30,852)
-
Other comprehensive income:
Foreign currency translation
adjustment - - -
(140)
--------- -------- ---------
----------
BALANCES, December 31, 1998 5,150,000 $602,448 $ (31,006)
$ (337)
========= ======== =========
==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Statements of Cash Flows
For the years ended December 31,
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(30,852) $ (154)
Adjustments to reconcile net income/(loss)
to net cash provided by operations:
Depletion and amortization 1,361 1,627
Adjustment for foreign currency
translation (140) (197)
(Increase) in accounts receivable (234) (1,439)
(Increase)/decrease in prepaid expenses 893 (2,858)
Increase in accounts payable 3,356 -
Stock issued for expenses - 4,217
--------- ---------
NET CASH PROVIDED/(USED) BY
OPERATING ACTIVITIES (25,616) 1,196
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Organization costs - (635)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 249,457 38,786
--------- ---------
Increase in cash for period 223,841 39,347
Cash, Beginning of period 39,347 -
--------- ---------
Cash, End of period $ 263,188 $ 39,347
========= =========
SUPPLEMENTAL DISCLOSURES:
Cash payments for:
Interest $ - $ -
Australian income taxes 1,654 1,846
Noncash investing and financing activities:
Stock issued for:
Oil and gas properties - 307,976
Organization costs and operating
expenses - 5,228
[FN]
The accompanying notes are an integral part of these financial statements.
F - 6
<PAGE>
<PAGE>
Australian-Canadian Oil Royalties Ltd.
Notes to Audited Financial Statements
December 31, 1998 and 1997
GENERAL:
Australian-Canadian Oil Royalties Ltd. (the Company) was incorporated
April
28, 1997 in Vancouver, British Columbia, Canada. Its primary business
activity is the purchase and sale of overriding royalties for long-term
passive income and capital gains. The Company also engages third parties
for leasing operations in various countries. At present, all of the
properties held by the Company are located in Australia's main onshore oil
and gas producing basin. These financial statements are prepared in U.S.
dollars for use in U.S. securities filings.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment -- The Company follows the full cost method of
accounting for oil and gas producing activities and, accordingly,
capitalizes all costs incurred in the acquisition, exploration, and
development of proved oil and gas properties, including the costs of
abandoned properties, dry holes, geophysical costs, and annual rentals.
Costs are recorded in cost centers on a country-by- country basis. At
present, all of the Company's oil and gas properties consist of overriding
royalty interests and are located in a single cost center - Australia.
The Company has not participated in the exploration and development of
proved oil and gas properties. Capitalized costs are subject to a "ceiling
test," which basically limits such costs to the aggregate of the "estimated
present value," discounted at a 10% interest rate of future net revenues
from proved reserves, based on current economic and operating conditions,
plus the lower of cost or fair market value of unproved properties. Costs
in excess of the ceiling test are adjusted against income. Sales or
abandonments of properties are accounted for as adjustments of overall
capitalized costs with no gain or loss recognized.
Costs of royalty interests are amortized using the percentage method under
which depletion is recorded at 15% of gross revenue.
Intangible Assets and Amortization -- Intangible assets consist of
organization costs. These costs, which were incurred in the formation of
the Company, are being amortized over a period of 60 months on a
straight-line basis. Amortization totaled $529 and $397 for 1998 and 1997.
These amounts are included with depletion expense for presentation
purposes.
Income Taxes -- Deferred tax liabilities and assets result from temporary
differences between the financial statement and income tax bases of assets
and liabilities. The Company records and adjusts any deferred tax asset
valuation based on judgments as to future realization of the deferred tax
benefits supported by demonstrated trends in the Company's operating
results.
F - 7
<PAGE>
<PAGE>
As a Canadian corporation, the Company is liable for income taxes under the
laws of Canada. Under Canadian law the Company's Australian-source income
is subject to a 46% tax (on Canadian dollars). The operating losses can be
carried forward for seven years. The Company has available at December 31,
1998, unused operating loss carryforwards that may be applied against
future Canadian taxable income and that expire as presented below. Because
the timing of realization of the tax benefit from these loss carryforwards
cannot be currently projected, a valuation allowance has been established
to completely offset this asset.
Amount of Unused Operating Expiring During Year Ended
Loss Carryforwards ($C) December 31,
$ 46 2004
29,171 2005
--------
$ 29,217
========
The Company has no U.S. source income nor any income effectively connected
with a U.S. trade or business. Therefore, there is no U.S. tax liability
or benefit related to its activities to date.
The Company's Australian oil royalty income is subject to a 30% Australian
income tax on oil and gas production which is withheld by the royalty
payer. The Company incurred Australian income taxes on oil and gas
production totaling $1,673 and $2,464 in 1998 and 1997.
Earnings Per Share -- Accounting rules provide for the calculation of
"Basic" and "Diluted" earnings per share. Basic earnings per common share
excludes dilutive securities and is computed by dividing net income
available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per common share
reflects the potential dilution of securities that could share in the
earnings of the entity on an as if converted basis. This is done by
dividing net income available to common shareholders, as adjusted if
necessary, by the weighted average number of common shares outstanding plus
potential dilutive securities.
Weighted average shares outstanding was 4,095,833 for 1998 and 4,000,000
for 1997.
Foreign Currency Transactions -- As noted above, these statements have been
prepared in U.S. dollars. However, the Company conducts transactions in
Canadian, Australian and U.S. dollars. Transactions denominated in
Canadian or Australian dollars are translated to equivalent U.S. dollars
for recording in the financial statements based on the currency exchange
rates existing at the dates of the transactions. Ending balances of
accounts which are denominated in Canadian dollars are translated to U.S.
dollars based on the currency exchange rates existing at December 31, 1998,
or 1997 respectively. The exchange gains and losses that result from
translating these amounts to U.S. dollars are accumulated and reported as a
separate component of the Company's stockholders' equity.
Comprehensive Income During 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income",
which establishes standards for the reporting and display of comprehensive
F - 8
<PAGE>
<PAGE>
income. Comprehensive income includes all changes in equity except those
resulting from investments by stockholders and distributions to
stockholders. The Company currently has only one component of
comprehensive income which is foreign currency translation adjustment. The
Company reported its current year change and accumulated amounts of
comprehensive income (loss) from foreign currency translation in its
financial statements. Due to the lack of probability of realizing the tax
benefit of its losses (as discussed under Income Taxes above), no income
tax effect is reported for comprehensive income amounts.
Cash Flows The Company considers cash to be its only cash equivalent for
purposes of presenting its Statement of Cash Flows.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2: ACCOUNTS RECEIVABLE
At December 31, 1998 and 1997 the Company has accrued receivables for oil
and gas production from its Australian overriding royalty interests
totaling $1,674 and $1,439, respectively. Collection of the accrued
Australian production generally occurs during the quarter following the
quarter of production. The cost basis of the receivable is believed to
approximate its fair value. No allowance for bad debts has been
established because the Company has not experienced any significant
inability to collect its receivables.
NOTE 3: PREPAID EXPENSES
During 1997, the Company advanced $C5,000 to Dales, Matheson, Carr-Hilton,
Chartered Accountants of Vancouver, British Columbia for services in
connection with the formation of the Company and the initial public
offering. As of December 31, 1997, this firm had billed the Company for
$C910 in services related to the corporate formation. These fees were
translated to $US635 and recorded as organization cost. The balance of the
advance was translated to $US2,858 and reported as prepaid expense. During
1998, the firm billed the Company for an additional $C1,070 for Canadian
accounting and tax services. This amount was translated to $US693 and
recorded as accounting fees. The balance of the advance as of December 31,
1998 was translated to $US1965 and reported as prepaid expense.
F - 9
<PAGE>
<PAGE>
NOTE 4: OIL AND GAS PROPERTIES
During 1997, the Company acquired a package of overriding royalty interests
comprising 1,005,142.8 net royalty acres under 28,572,609 gross surface
acres in Australia's main onshore oil and gas producing basin in exchange
for 4,000,000 shares of its common stock as described in NOTE 5 below. In
addition to the acquisition cost, the Company incurred costs associated
with preparation of assignments and registering chain of title transactions
in Australia. Below is a summary of capitalized costs related to these oil
and gas properties:
1998 1997
Acquisition cost $ 300,000 $ 300,000
Assignment and transfer costs 7,976 7,976
--------- ---------
Total 307,976 307,976
Less accumulated depletion (2,062) (1,230)
--------- ---------
Net Oil and Gas Properties $ 305,914 $ 306,746
========= =========
Costs of royalty interests are amortized using the percentage method of
depletion under which depletion is recorded at 15% of gross revenue.
Depletion expense totaled $831 and $1,230 for 1998 and 1997.
NOTE 5: STOCK TRANSACTIONS
During 1998, the Company undertook an offering of its common stock in New
York, Florida, and Colorado. Pursuant to this offering, the Company issued
1,150,000 shares of its no-par-value common stock for $287,500. The direct
costs incurred in the offering totaled $38,043.
NOTE 6: TRANSACTIONS WITH RELATED PARTIES
During 1997, the Company issued stock for the package of overriding royalty
interests comprising 1,005,142.8 net royalty acres in Australia as
described in NOTE 4 above. Since these properties were acquired from
related parties (stockholders), they were recorded by the Company at the
transferor's cost basis. On May 19, 1997, the Company acquired 60% of these
interests from Ely Sakhai, Jan Soleimani and Mike Altamura (Sakhai group)
for 2,400,000 shares of the Company's common stock. The Sakhai group had
previously acquired these royalties from Australian Grazing and Pastoral
Co., Pty. Ltd. (AGP) at a cost of $300,000. There was no affiliation
between the Sakhai group and AGP. Therefore, this transaction established
the cost basis of the Sakhai group. This in turn became the cost basis for
recording the properties as received by the Company in exchange for its
stock. On May 22, 1997, the Company acquired the remaining 40% of the
overriding royalty package from AGP and International Oil Lease Service.
(IOLS) for 1,600,000 shares of the Company's common stock. The cost basis
of AGP and IOLS in these royalties is immaterial and incapable of
reasonable, cost-effective estimation. As a result, this portion of the
royalty package was recorded by the Company at a cost of zero ($0).
F - 10
<PAGE>
<PAGE>
During 1997 the Company received cash totaling $12,800 from stockholders.
These cash transfers were made as capital contributions to the Company and
were recorded as additional paid-in capital.
In addition, the Company incurred costs and operating expenses during 1997
totaling $14,204 which were paid by a stockholder on its behalf. These
payments were recorded as additional paid-in capital.
During 1998, the Company undertook a private placement of its stock. The
chairman of the board of directors advanced $15,000 to an underwriter for
costs in connection with the placement of stock. The Company has
reimbursed the board chairman and recorded the associated expenses.
During 1998, the Company reimbursed a commonly-controlled entity for
personnel and offices expenses which were incurred in its behalf.
NOTE 7: FOREIGN OPERATIONS
The Company operates primarily in Australia where all of its properties are
presently located. All revenues reported by the Company during 1998 and
1997 were received from Australian oil and gas royalty interests.
Depletion expense and Australian income taxes reported by the Company
during 1998 and 1997 are also related to the revenue received from the
Australian royalties. The Company also incurred organization costs and
personnel and office expenses in the United States. All of the U.S. costs
and expenses were general and administrative in nature.
NOTE 8: SUBSEQUENT EVENT
Subsequent to its December 31, 1998 year-end, the Company acquired a 20%
interest in Cooper Basin Oil & Gas, Inc. Cooper Basin Oil & Gas, Inc. has
entered into an agreement with a third party to attempt to negotiate on its
behalf for six Petroleum Exploration Licenses in Australia. If the third
party is successful in negotiating these Australian concessions, Cooper
Basin Oil & Gas, Inc. will be required to pay the application, permit and
leasing fees, as well as the exploration costs required to keep the
concessions in effect. As the owner of a 20% interest in Cooper Basin Oil
& Gas, Inc. the Company has agreed to fund 20% of the costs of any
concession granted to Cooper Basin Oil & Gas, Inc. or forfeit its ownership
interest. Based on estimates of the costs to acquire and maintain the
concessions, the Company's resulting liability in the first year would
range from $15,344 for one concession to $85,774 for all six concessions.
However, these liabilities will only be incurred if the third party is
successful in negotiating the concessions.
NOTE 9: CONTINGENCY
The package of Australian overriding royalty interests acquired by the
Company in 1997 includes a 1/8 of 1% interest in all production from the
Patchawarra Southwest Block of PEL's 5 & 6. This overriding royalty
comprises approximately 5,348 net royalty acres under 1,069,717 surface
acres. The Patchawarra Southwest Block became productive in June, 1989 and
F - 11
<PAGE>
<PAGE>
has produced approximately $A67,119,716 in revenues from oil, gas and LPG
since that time. This overriding royalty was first created in June, 1971
as a 1/4 of 1% interest out of a 10% working interest. Since that time,
this interest has been assigned to six different companies with the last
assignee being Australian-Canadian Oil Royalties Ltd. During 1997, the
Company determined that, due to the extensive time elapsing between
assignments and the failure of some intermediate assignees to properly
assign title, it will be necessary to engage in litigation in order to
collect both past and future royalty payments. In addition to the legal
costs incurred in this litigation, the Company will be required to pay the
stamp duty, payable to the Australian government, for any previous
assignment between parties which has not been paid.
The Company is working with legal counsel in Australia to undertake the
necessary litigation to perfect its title in this royalty interest. As of
December 31, 1998, no litigation had been undertaken. Legal counsel has
advised the Company that the expected cost of the litigation process will
be in the range of $A25,000 in addition to any stamp duty which may be
required. The required stamp duty will be based on the state's
determination of value and will be required to be paid for each
unregistered transfer in the chain of title. At this time no estimate of
this cost can be made. Upon successfully clearing title to the property,
the Company expects to collect approximately $A42,000 in royalties on
previous production.
NOTE 10: CONCENTRATION OF RISK
The productive assets of the Company are all presently located in
Australia.
- ---------------------------------------------------------------------
F - 12
<PAGE>
<PAGE>
SUPPLEMENTARY DATA - RESERVES OF OIL AND GAS
(UNAUDITED)
December 31, 1998 and 1997
Reserves of oil and gas - Royalty Interests
The quantities of proved reserves of oil and gas relating to royalty
interests are not presented because the necessary information is not
available or the Company's interests are not large enough to economically
obtain this information. The Company's share of oil and gas produced from
these interests is presented in the following schedule:
Australia
Oil (bbls.)
1998 1997
--------- ---------
For the year ended December 31 397 463
========= =========
Results of Operations for Producing Activities
For the Years Ended December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Sales of oil and gas $ 5,545 $ 8,201
Production costs (including taxes) - -
Acquisition & exploration costs - -
Depletion 832 1,230
--------- ---------
Results of operations from producing
activities (excluding corporate overhead) $ 4,713 $ 6,971
========= =========
Capitalized Costs Relating to Oil and Gas Producing Activities
At December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Unproved properties (not being amortized) $ 184,404 $ 184,404
Proved properties (being amortized) 123,572 123,572
Unevaluated proved properties - -
Total Capitalized Costs 307,976 307,976
Accumulated Depletion (2,061) (1,230)
--------- ---------
Net Capitalized Costs $ 305,915 $ 306,746
========= =========
F - 13
<PAGE>
<PAGE>
Costs Incurred in Oil and Gas Property Acquisition, Exploration and
Development
For the Years Ended December 31, 1998 and 1997
Australia
1998 1997
--------- ---------
Property acquisition costs:
Proved $ - $ 123,572
Unproved - 184,404
Exploration costs - -
Development costs - -
--------- ---------
Total $ - $ 307,976
========= =========
F - 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The following schedule contains summary financial information which
has been extracted from the consolidated financial statements of
Australian-Canadian Oil Royalties LTD.s for the annual financial statements
filed on Form 10SB for the periods presented. These summary schedules are
qualified in their entirety by reference to such financial statements and the
notes thereto.
</LEGEND>
<CIK> 0001061288
<NAME> AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 263,188 39,347
<SECURITIES> 0 0
<RECEIVABLES> 1,674 1,439
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 266,827 43,644
<PP&E> 307,976 307,976
<DEPRECIATION> (2,061) (2,061)
<TOTAL-ASSETS> 574,461 352,639
<CURRENT-LIABILITIES> 3,356 0
<BONDS> 0 0
0 0
0 0
<COMMON> 602,448 352,990
<OTHER-SE> (31,343) (351)
<TOTAL-LIABILITY-AND-EQUITY> 574,461 352,639
<SALES> 5,545 8,201
<TOTAL-REVENUES> 5,542 8,201
<CGS> 1,362 1,627
<TOTAL-COSTS> 1,361 1,627
<OTHER-EXPENSES> 33,364 4,264
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (29,180) 2,310
<INCOME-TAX> 1,672 2,464
<INCOME-CONTINUING> (30,852) (154)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (30,852) (154)
<EPS-PRIMARY> (0.01) (0.00)
<EPS-DILUTED> (0.01) (0.00)
</TABLE>
EXHIBIT 1
NUMBER: 541743
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
CERTIFICATE OF INCORPORATION
I Hereby Certify that
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
has this day been incorporated under the Company Act
Issued under my hand at Victoria, British Columbia on April 28, 1997
JOHN S. POWELL
Registrar of
Companies
<PAGE>
<PAGE>
PROVINCE OF BRITISH COLUMBIA
FORM 1
(Section 5)
COMPANY ACT
MEMORANDUM
I wish to be formed into a Company with limited liability under the Company
Act in pursuance of this memorandum.
1. The name of the Company is " AUSTRALIAN-CANADIAN OIL ROYALTIES LTD."
2. The authorized capital of the company consists of 100,000,000 shares
divided into:
50,000,000 Common shares without par value; and
50,000,000 Preferred shares without par value.
Each class of shares shall have attached thereto the special rights
and restrictions set forth in the Articles of the company.
3. I agree to take the number, kind and class of shares in the company set
opposite my name.
FULL NAME, RESIDENT ADDRESS NUMBER, KIND AND CLASS OF
AND OCCUPATION OF SUBSCREBER SHARES TAKEN BY SUBSCRIBER
_/s/ William A. Randall__________
William A. Randall One (1) Common
6137 Collingwood Place
Vancouver, B.C. V6N IV2
Lawyer
TOTAL SHARES TAKEN: One (1) Common
DATED March 20, 1997.
<PAGE>
<PAGE>
ARTICLES
of
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
TABLE OF CONTENTS
PART 1
INTERPRETATION
1.1 Definitions 1
1.2 Construction of Words 2
1.3 Definitions Same as Company Act 2
1.4 Interpretation Act Rules of Construction Apply 2
1.5 References in Writing. 2
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Member Entitled to Certificate 2
2.2 Form of Certificate 2
2.3 Replacement of Lost or Defaced Certificate 2
2.4 Execution of Certificates 3
2.5 Recognition of Trusts 3
2.6 Delivery to Joint Holders 3
PART 3
ISSUE OF SHARES
3.1 Directors Authorized 3
3.2 Commissions and Discounts 4
3.3 Conditions of Issue 4
PART 4
SHARE REGISTERS
4.1 Registers of Members, Transfers and Allotments 4
4.2 Branch Registers of Members 5
4.3 No Closing of Register of Members. 5
PART 5
TRANSFER OF SHARES
5.1 Transfers of Shares 5
5.2 Execution of Instrument of Transfer 5
5.3 Inquiry as to Title Not Required 5
5.4 Submission of Instruments of Transfer 6
5.5 Transfer Fee 6
5.6 Consent of Directors Required 6
-i-
<PAGE>
<PAGE>
PART 6
TRANSMISSION OF SHARES
6.1 Personal Representatives Recognized on Death 6
6.2 Death or Bankruptcy 7
6.3 Persons in Representative Capacity 7
PART 7
ALTERATION OF CAPITAL
7.1 Increase of Authorized Capital 7
7.2 Other Capital Alterations. 7
7.3 Creation, Variation and Abrogation of Special
Rights and Restrictions 7
7.4 Special Rights of Conversion 8
7.5 Class Meetings of Member 8
PART 8
PURCHASE AND REDEMPTION OF SHARES
8.1 Company Authorized to Purchase or Redeem its Shares 8
8.2 Offer to Purchase Made Pro Rata 8
8.3 Selection of Shares to be Redeemed 9
8.4 Purchased or Redeemed Shares Not Voted 9
PART 9
BORROWING POWERS
9.1 Powers of Directors. 9
9.2 Negotiability of Debt Obligations 9
9.3 Special Rights Attached to Debt Obligations 9
9.4 Register of Debentureholders 10
9.5 Execution of Debt Obligations 10
9.6 Register of Indebtedness 10
PART 10
GENERAL MEETINGS
10.1 Annual General Meetings 10
10.2 Waiver of Annual General Meeting 10
10.3 Classification of General Meetings 10
10.4 Calling of Meetings 10
10.5 Advance Notice for Election of Directors 11
10.6 Notice for General Meeting 11
10.7 Waiver or Reduction of Notice 11
10.8 Notice of Special Business at General Meeting 11
10.9 Postponement of Meeting following Advance Notice 11
PART 11
PROCEEDINGS AT GENERAL MEETINGS
11.1 Special Business 12
11.2 Requirement of Quorum 12
11.3 Quorum 12
11.4 Lack of Quorum 12
- ii -
<PAGE>
11.5 Chairman 12
11.6 Alternate Chairman 13
11.7 Adjournments 13
11.8 Resolutions Need Not be Seconded 13
11.9 Decisions by Show of Hands or Poll 13
11.10 Casting Vote 13
11.11 Manner of Taking Poll 13
11.12 Disputed Vote 14
11.13 Retention of Ballots Cast on a Poll 14
11.14 Casting of Votes 14
11.15 Ordinary Resolution Sufficient 14
11.16 Resolutions in Counterpart 14
PART 12
VOTES OF MEMBERS
12.1 Number of Votes Per Share or Member 14
12.2 Votes of Persons in Representative Capacity 14
12.3 Representative of a Corporate Member 15
12.4 Votes by Joint Holders 15
12.5 Votes by Committee for a Member 15
12.6 Appointment of Proxyholders 15
12.7 Qualification of Proxyholders 15
12.8 Execution of Form of Proxy 16
12.9 Deposit of Proxy 16
12.10 Directors May Make Regulations Relating
to Deposit of Proxies 16
12.11 Form of Proxy 16
12.12 Validity of Proxy Vote 16
12.13 Revocation of Proxy 17
12.14 Chairman to Determine Validity 17
PART 13
DIRECTORS
13.1 Number of Directors 17
13.2 Remuneration and Expenses of Directors 17
13.3 Qualification of Directors 18
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 Election at Annual General Meetings 18
14.2 Eligibility of Retiring Director 18
14.3 Continuance of Directors 18
14.4 Election of Less than Required Number of Directors 18
14.5 Filing a Casual Vacancy 19
14.6 Additional Directors 19
14.7 Alternate Directors 19
14.8 Termination of Directorship 19
14.9 Resignation of Directors 19
14.10 Removal of Directors 20
- iii -
<PAGE>
<PAGE>
PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 Management of Affairs and Business 20
15.2 Appointment of Attorney 20
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 Disclosure of Conflicting Interest 20
16.2 Voting and Quorum re Proposed Contract 20
16.3 Director May Hold Office or Position with the
Company 21
16.4 Director Acting in Professional Capacity 21
16.5 Director Receiving Remuneration from Other
Interests 21
PART 17
PROCEEDINGS OF DIRECTORS
17.1 Chairman and Alternate 22
17.2 Meetings - Procedure - Casting Vote 22
17.3 Meetings by Conference Telephone 22
17.4 Notice of Meeting 22
17.5 Waiver of Notice of Meeting 22
17.6 Quorum 23
17.7 Continuing Directors May Act During Vacancy 23
17.8 Validity of Acts of Directors 23
17.9 Resolutions in Writing Effective 23
17.10 Resolutions Need Not be Seconded and Chairman
May Move a Motion 23
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 Appointment of Executive Committee 23
18.2 Appointment of Committees 24
18.3 Procedure at Meetings 24
PART 19
OFFICERS
19.1 President and Secretary Required 25
19.2 Persons Holding More Than One Office and Remuneration 25
19.3 Disclosure of Conflicting Interest 25
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS
AND EMPLOYEES
20.1 Indemnification of Directors 25
20.2 Indemnification of Officers, Employees, Agents 25
20.3 Indemnification not Invalidated by Non-Compliance 26
20.4 Company May Purchase Insurance 26
- iv -
<PAGE>
<PAGE>
PART 21
DIVIDENDS AND RESERVE
21.1 Declaration of Dividends 26
21.2 Declared Dividend Rate 26
21.3 Proportionate to Number of Shares Held 26
21.4 Reserves 27
21.5 Receipts from Joint Holders 27
21.6 No Interest on Dividends 27
21.7 Payment of Dividends 27
21.8 Capitalization of Undistributed Surplus 27
21.9 Fractional Share Dividends 27
PART 22
DOCUMENTS, RECORDS AND REPORTS
22.1 Documents To Be Kept 28
22.2 Accounts To Be Kept 28
22.3 Inspection of Accounts 28
22.4 Financial Statements and Reports for General Meetings 28
22.5 Financial Statements and Reports for Members 28
PART 23
NOTICES
23.1 Method of Giving Notice 28
23.2 Notice to Joint Holders 29
23.3 Notice to Personal Representative 29
23.4 Persons to Receive Notice 29
PART 24
RECORD DATES
24.1 Record Date 29
24.2 No Record Date Fixed 29
PART 25
SEAL
25.1 Affixation of Seal to Documents 30
25.2 Reproduction of Seal 30
25.3 Official Seal for Other Jurisdictions 30
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
26.1 Instrument May Be Mechanically Signed 31
26.2 Definition of Instrument 31
PART 27
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED
SHARES
27.1 Directors' Right to Issue in One or More Series 31
-v-
<PAGE>
<PAGE>
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
of
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
PART 1
INTERPRETATION
1.1 Definitions. In these Articles, unless there is something in the subject
or context inconsistent therewith:
"Board of Directors", "Board", "the Directors" and "the directors" mean the
Directors or sole Director of the Company for the time being;
"Company" means the company named at the head of these Articles;
"Company Act" means the Company Act of the Province of British Columbia as
from time to time enacted and all amendments thereto and includes all
regulations and amendments thereto made pursuant to that Act;
"Member" means those persons defined as such in the Company Act and includes
any person who owns shares in the capital of the Company and whose name is
entered in the register of members or a branch register of members;
"Ordinary resolution" means an ordinary resolution as defined in the Company
Act;
"Registered owner" or "registered holder" when used with respect to a share in
the authorized capital of the Company means the person registered in the
register of members in respect of such share;
"Seal" means the common seal of the Company, if the Company has one;
"Solicitor of the Company" means any partner, associate or articled student of
the law firm retained by the Company in respect of the matter in connection
with which the term is used;
"Special resolution" means a special resolution as defined in the Company Act;
and "writing", "in writing" and like expressions include all modes of
representing, or reproducing, and recording words in visible form, including:
printing; lithographing; typewriting; and photostatic, electrostatic and
mechanical copying.
1.2 Construction of Words. Words importing the singular include the plural
and vice versa; and words importing male persons include female persons and
words importing persons shall include corporations.
1.3 Definitions Same as Company Act. Any words or phrases defined in the
Company Act shall, if not inconsistent with the subject or context, bear the
same meaning when used in these Articles.
1.4 Interpretation Act Rules of Construction Apply. The Rules of
Construction contained in the Interpretation Act of the Province of British
Columbia shall apply, mutatis mutandis, to the interpretation of these
Articles.
1.5 References in Writing. Reference in these Articles to writing shall be
construed as including references to printing, lithography, typewriting,
photography and other modes of representing or reproducing words in a visible
form.
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Member Entitled to Certificate. Every member is entitled, without
charge, to one certificate representing the share or shares of each class or
series held by him; provided that, in respect of a share or shares held
jointly by several persons, the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share to one of several
joint registered holders or to his duly authorized agent shall be sufficient
delivery to all; and provided further that the Company shall not be bound to
issue certificates representing redeemable shares, if such shares are to be
redeemed within one month of the date on which they were allotted. Any share
certificate may be sent through the mail by registered prepaid mail to the
member entitled thereto, and neither the Company nor any transfer agent shall
be liable for any loss occasioned to the member owing to any such share
certificate so sent being lost in the mail or stolen.
2.2 Form of Certificate. Every share certificate issued by the Company
shall be in such form as the Directors approve and shall comply with the
Company Act.
2.3 Replacement of Lost or Defaced Certificate. If a share certificate:
(a) is worn or defaced, the Directors shall, upon production to them of
the said certificate and upon such other terms, if any, as they may think
fit, order the said certificate to be canceled and shall issue a new
certificate in lieu thereof;
(b) is lost, stolen or destroyed, then, upon proof thereof to the
satisfaction of the Directors and upon such indemnity, if any, as the
Directors deem adequate being given, a new share certificate in lieu
thereof shall be issued to the person entitled to such lost, stolen or
destroyed certificate; or
(c) represents more than one share and the registered owner thereof
surrenders it to the Company with a written request that the Company issue
in his name two or more certificates each representing a specified number
of shares and in the aggregate representing the same number of shares as
the certificate so surrendered, the Company shall cancel the certificate
so surrendered and issue in lieu thereof certificates in accordance with
such request.
There shall be paid to the Company such sum, not exceeding ten dollars, as the
Directors may from time to time fix, for each certificate to be issued under
this Article.
2.4 Execution of Certificates. Every share certificate shall be signed
manually by at least one Officer or Director of the Company, or by or on
behalf of a registrar, branch registrar, transfer agent or branch transfer
agent of the Company and any additional signatures may be printed or otherwise
mechanically reproduced and, in such event, a certificate so signed is as
valid as if signed manually, notwithstanding that any person whose signature
is so printed or mechanically reproduced shall have ceased to hold the office
that he is stated on such certificate to hold at the date of the issue of the
share certificate.
2.5 Recognition of Trusts. Except as required by law, statute or these
Articles, no person shall be recognized by the Company as holding any share
upon any trust, and the Company shall not be bound by or compelled in any way
to recognize (even when having notice thereof) any equitable, contingent,
future or partial interest in any share or in any fractional part of a share
or (except only as by law, statute or these Articles provided or as ordered by
a court of competent jurisdiction) any other rights in respect of any share
except an absolute right to the entirety thereof in its registered holder.
2.6 Delivery to Joint Holders. The certificate representing shares
registered in the name of two or more persons shall be delivered to the person
first named on the register of members.
PART 3
ISSUE OF SHARES
3.1 Directors Authorized. Subject to the requirements of the Company Act
with respect to pro-rata offerings (if applicable) and otherwise and to any
direction to the contrary, save for a direction which, at the discretion of
the Directors, may not be proceeded with, contained in a resolution passed at
a general meeting authorizing any increase or alteration of capital, the
shares shall be under the control of the Directors who may, subject to the
rights of the holders of the shares of the Company for the time being
outstanding, issue, allot, sell or otherwise dispose of, and/or grant options
on or otherwise deal in, shares authorized but not outstanding, and
outstanding shares held by the Company, at such times, to such persons
(including Directors), in such manner, upon such terms and conditions and at
such price or for such consideration, as the Directors, in their absolute
discretion, may determine.
3.2 Commissions and Discounts. Subject to the provisions of the Company
Act, the Company, or the Directors on behalf of the Company, may pay a
commission or allow a discount to any person in consideration of his
subscribing or agreeing to subscribe, whether absolutely or conditionally, for
any shares in the Company, or procuring or agreeing to procure subscriptions,
whether absolutely or conditionally, for any such shares, provided that, if
the Company is not a specially limited company, the rate of the commission and
discount shall not in the aggregate exceed 25 per cent of the amount of the
subscription price of such shares, and if the Company is a specially limited
company, the rate of the commission and discount shall not in the aggregate
exceed 95 per cent of the amount of the subscription price of such shares.
3.3 Conditions of Issue. No share may be issued until it is fully paid
and the Company shall have received tile full consideration therefor in cash,
property or past services actually performed for the Company. The value of
property or services for the purposes of this Article shall be the value
determined by the Directors by resolution to be, in all circumstances of the
transaction, the fair market value thereof, and the full consideration
received for a share issued by way of dividend shall be the amount declared by
the Directors to be the amount of the dividend.
PART 4
SHARE REGISTERS
4.1 Registers of Members, Transfers and Allotments. The Company shall keep
or cause to be kept a register of members, a register of transfers and a
register of allotments within British Columbia, all as required by the Company
Act, and may combine one or more of such registers. If the Company's capital
shall consist of more than one class of shares, a separate register of
members, register of transfers and register of allotments may be kept in
respect of each class of shares. The Directors on behalf of the Company may
appoint a trust company to keep the register of members, register of transfers
and register of allotments or, if there is more than one class of shares, the
Directors may appoint a trust company, which need not be the same trust
company, to keep the register of members, the register of transfers and the
register of allotments for each class of shares. The Directors on behalf of
the Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or of a class thereof, as
transfer agent for its shares or such class thereof, as the case may be, and
the same or another trust company or companies as registrar for its shares or
such class thereof, as the case may be. The Directors may terminate the
appointment of any such trust company at any time and may appoint another
trust company in its place.
4.2 Branch Registers of Members. Subject to the provisions of the Company
Act, the Company may keep or cause to be kept one or more branch registers of
members at such place or places as the Directors may from time to time
determine.
4.3 No Closing! of Register of Members. The Company shall not at any time
close its register of members.
PART 5
TRANSFER OF SHARES
5.1 Transfers of Shares. Subject to the restrictions, if any, set forth
in the Memorandum and these Articles, any member may transfer any of his
shares by instrument in writing executed by or on behalf of such member and
delivered to the Company or its transfer agent. The instrument of transfer of
any share of the Company shall be in the form, if any, on the back of the
Company's share certificates or in such other form as the Directors may from
time to time approve. If the Directors so determine, each instrument of
transfer shall be in respect of only one class of share. Except to the extent
that the Company Act may otherwise provide, the transferor shall be deemed to
remain the holder of the shares until the name of the transferee is entered in
the register of members or a branch register of members in respect thereof.
5.2 Execution of Instrument of Transfer. The signature of the registered
owner of any shares, or of his duly authorized attorney, upon an authorized
instrument of transfer shall constitute a complete and sufficient authority to
the Company, its Directors, Officers and agents to register, in the name of
the transferee as named in the instrument of transfer, the number of shares
specified therein or, if no number is specified, all the shares of the
registered owner represented by share certificates deposited with the
instrument of transfer. If no transferee is named in the instrument of
transfer, the instrument of transfer shall constitute a complete and
sufficient authority to the Company, its Directors, Officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of
having the transfer registered, the number of shares if specified in the
instrument of transfer or, if no number is specified, all the shares
represented by all share certificates deposited with the instrument of
transfer.
5.3 Inquiry as to Title Not Required. Neither the Company nor any
Director, Officer or agent thereof shall be bound to inquire into the title of
the person named in the form of transfer as transferee, or, if no person is
named therein as transferee, of the person on whose behalf the certificate is
deposited with the Company for the purpose of having the transfer registered
or be liable to any claim by such registered owner or by any intermediate
owner or holder of the certificate or of any of the shares represented thereby
or any interest therein for registering the transfer, and the transfer, when
registered, shall confer upon the person in whose name the shares have been
registered a valid title to such shares.
5.4 Submission of Instruments of Transfer. Every instrument of transfer
shall be executed by the transferor and left at the registered office of the
Company or at the office of its transfer agent or registrar for registration
together with the share certificate for the shares to be transferred and such
other evidence, if any, as the Directors or the transfer agent or registrar
may require to prove the title of the transferor or his right to transfer the
shares and the right of the transferee to have the transfer registered. All
instruments of transfer, where the transfer is registered, shall be retained
by the Company or its transfer agent or registrar and any instrument of
transfer, where the transfer is not registered, shall be returned to the
person depositing the same together with the share certificate which
accompanied the same when tendered for registration.
5.5 Transfer Fee. There shall be paid to the Company in respect of the
registration of any transfer such sum, if any, as the Directors may from time
to time determine.
5.6 Consent of Directors Required. Notwithstanding any other provision
of these Articles, if the Company is, or becomes:
(a) a company which is not a reporting company; or
(b) a reporting company that has not, with respect to any of its
securities, filed a prospectus with the Executive Director of the British
Columbia Securities Commission ("Executive Director") or any similar
securities regulatory body within or outside British Columbia and
obtained therefor a receipt or its equivalent;
then no shares shall be transferred and entered on the register of members
without the previous consent of the Directors expressed by a resolution of the
Board and the Directors shall not be required to give any reason for refusing
to consent to any such proposed transfer. The consent of the Board required
by this Article may be in respect of a specific proposed trade or trades or
trading generally, whether or not over a specified period of time,
or by specific persons or with such other restrictions or requirements as the
Directors may determine.
PART 6
TRANSMISSION OF SHARES
6.1 Personal Representatives Recognized on Death. In the case of the death
of a member, the survivor or survivors, where the deceased was a Joint
registered holder, and the legal personal representative of the deceased,
where he was the sole holder, shall be the only persons recognized by the
Company as having any title to his interest in the shares. Before recognizing
any legal personal representative the Directors may require him to deliver to
the Company the original or a court-certified copy of a grant of probate or
letters of administration in British Columbia or such other evidence and
documents as the Directors consider appropriate to establish the right of the
personal representative to such title to the interest in the shares of the
deceased member.
6.2 Death or Bankruptcy. Upon the death or bankruptcy of a member, his
personal representative or trustee in bankruptcy, although not a member, shall
have the same rights, privileges and obligations that attach to the shares
formerly held by the deceased or bankrupt member if the documents required by
the Company Act shall have been deposited with the Company. This Article does
not apply on the death of a member with respect to shares registered in his
name and the name of another person in joint tenancy.
6.3 Persons in Representative Capacity. Any person becoming entitled to a
share in consequence of the death or bankruptcy of a member shall, upon such
documents and evidence being produced to the Company as the Company Act
requires, or who becomes entitled to a share as a result of an order of a
Court of competent jurisdiction or a statute, has the right either to be
registered as a member in his representative capacity in respect of such
share, or, if he is a personal representative, instead of being registered
himself, to make such transfer of the shares as the deceased or bankrupt
person could have made; but the Directors shall, as regards a transfer by a
personal representative or trustee in bankruptcy, have the right, if any, to
decline or suspend registration of a transferee as they would have in the case
of a transfer of a share by the deceased or bankrupt person before the death
or bankruptcy.
PART 7
ALTERATION OF CAPITAL
7.1 Increase of Authorized Capital. The Company may, by ordinary
resolution filed with the Registrar, amend its Memorandum to increase the
authorized capital of the Company by:
(a) creating shares with par value or shares without par value, or both;
(b) increasing the number of shares with par value or shares without par
value, or both; or
(c) increasing the par value of a class of shares with par value, if no
shares of that class are issued.
7.2 Other Capital Alterations. The Company may, by special resolution,
alter its Memorandum to subdivide, consolidate, change from shares with par
value to shares without par value, or from shares without par value to shares
with par value, or change the designation of, all or any of its shares but
only to such extent, in such manner and with such consents of members holding
shares of a class or series which is the subject of or affected by such
alteration, as the Company Act provides.
7.3 Creation, Variation and Abrogation of Special Rights and Restrictions.
The Company may alter its Memorandum or these Articles:
(a) by special resolution, to create, define and attach special rights
or restrictions to any shares; and
(b) by special resolution and by otherwise complying with any applicable
provision of its Memorandum or these Articles, to vary or abrogate any
special rights and restrictions attached to any shares;
and in each case by filing a certified copy of such resolution with the
Registrar, but no right or special right attached to any issued shares shall
be prejudiced or interfered with unless all members holding shares of each
class or series whose right or special right is so prejudiced or interfered
with consent thereto in writing, or unless a resolution consenting thereto is
passed at a separate class or series meeting of the holders of the shares of
each such class or series by a majority of three-fourths of the issued shares
of such class or series or such greater majority as may be specified by the
special rights attached to the class or series of shares.
7.4 Special Rights of Conversion. If the Company is or becomes a
reporting company, and if so required by the Company Act, no resolution to
create, vary or abrogate any special right of conversion attaching to any
class of shares shall be submitted to a general meeting or a class meeting of
members unless the Executive Director of the British Columbia Securities
Commission have first consented to the resolution.
7.5 Class Meetings of Members. Unless these Articles otherwise provide,
the provisions of these Articles relating to general meetings shall apply,
with the necessary changes and so far as they are applicable, to a class or
series meeting of members holding a particular class or series of shares,
provided that the quorum at a class or series meeting shall be one or more
persons holding or representing by proxy not less than one-third of the shares
affected.
PART 8
PURCHASE AND REDEMPTION OF SHARES
8.1 Company Authorized to Purchase or Redeem its Shares. Subject to the
special rights and restrictions attached to any class of shares, the Company
may, by a resolution of the Directors and in compliance with the Company Act,
purchase any of its shares at the price and upon the terms specified in such
resolution or redeem any class of its shares in accordance with the special
rights and restrictions attaching thereto. No such purchase or redemption
shall be made if the Company is insolvent at the time of the proposed purchase
or redemption or if the proposed purchase or redemption would render the
Company insolvent.
8.2 Offer to Purchase Made Pro Rata. Unless the shares of the Company are
to be purchased through a stock exchange, or from a bona fide employee or bona
fide former employee of the Company or of an affiliate of the Company, or his
personal representative, in respect of shares beneficially owned by such
employee or former employee, or the Company is purchasing the shares from
dissenting members pursuant to the requirements of the Company Act, the
Company shall make its offer to purchase pro rata to every member who holds
shares of the class or series to be purchased.
8.3 Selection of Shares to be Redeemed. If the Company proposes at its
option to redeem some but not all of the shares of any class or series, the
Directors may, subject to the special rights and restrictions attached to such
shares, decide the manner in which the shares to be redeemed shall be selected
and such redemption may or may not be made pro rata among every member holding
any such shares as the Directors may determine.
8.4 Purchased or Redeemed Shares Not Voted. Subject to the provisions of
the Company Act, any shares purchased or redeemed by the Company may be sold
or, if canceled, reissued by it, but, while such shares which have not been
canceled are held by the Company, it shall not exercise any vote in respect of
these shares and no dividend or other distribution shall be paid or made
thereon.
PART 9
BORROWING POWERS
9.1 Powers of Directors. Subject to the provisions of the Company Act, the
Directors may from time to time authorize the Company to:
(a) borrow money in such manner and amount, on such security, from such
sources and upon such terms and conditions as they think fit;
(b) issue bonds, debentures, and other debt obligations either outright
or as security for any liability or obligation of the Company or any other
person;
(c) mortgage, charge, whether by way of specific or floating charge,
or give other security on the undertaking or on the whole or any part of
the property and assets of the Company, both present and future; and
(d) give financial assistance to any person, directly or indirectly, by
way of loan, guarantee, the provision of security, or otherwise.
9.2 Negotiability of Debt Obligations. The Directors may make any bonds,
debentures or other debt obligations issued by the Company by their terms
assignable free from any equities between the Company and the person to whom
they may be issued or any other person who lawfully acquires them by
assignment, purchase or otherwise.
9.3 Special Rights Attached to Debt Obligations. The Directors may
authorize the issue of any bonds, debentures or other debt obligations of the
Company at a discount, premium or otherwise and with special or other rights
or privileges as to redemption, surrender, drawings, allotment of or
conversion into or exchange for shares, attending at general meetings of the
Company and otherwise as the Directors may determine at or before the time of
issue.
9.4 Register of Debentureholders. The Company shall keep or cause to be
kept within the Province of British Columbia in accordance with the Company
Act a register of its debentures and a register of debentureholders, which
registers may be combined, and, subject to the provisions of the Company Act,
may keep or cause to be kept one or more branch registers of its
debentureholders at such place or places as the Directors may from time to
time determine and the Directors may by resolution, regulation or otherwise
make such provisions as they think fit respecting the keeping of such branch
registers.
9.5 Execution of Debt Obligations. Every bond, debenture or other debt
obligation of the Company shall be signed manually by at least one Director or
Officer of the Company or by or on behalf of a trustee, registrar, branch
registrar, transfer agent or branch transfer agent for the bond, debenture or
other debt obligations appointed by the Company or under any instrument under
which the bond, debenture or other debt obligation is issued and any
additional signatures may be printed or otherwise mechanically reproduced
thereon and, in such event, a bond, debenture or other debt obligation so
signed is as valid as if signed manually notwithstanding that any person whose
signature is so printed or mechanically reproduced shall have ceased to hold
the office that he is stated on such bond, debenture or other debt obligation
to hold at the date of the issue thereof.
9.6 Register of Indebtedness. If the Company is or becomes a reporting,
company, the Company shall keep or cause to be kept a register of its
indebtedness to every Director or Officer of the Company or an associate of
any of them in accordance with the provisions of the Company Act.
PART 10
GENERAL MEETINGS
10.1 Annual General Meetings. Subject to any extensions of time permitted
pursuant to the Company Act, the first annual general meeting of the Company
shall be held within 15 months from the date of incorporation and thereafter
an annual general meeting shall be held once in every calendar year at such
time (not being more than 13 months after the holding of the last preceding
annual general meeting) and place as may be determined by the Directors.
10.2 Waiver of Annual General Meeting. If the Company is, or becomes, a
company which is not a reporting company and all the members entitled to
attend and vote at an annual general meeting consent in writing to all the
business which is required or desired to be transacted at the meeting, such
annual general meeting shall be deemed for the purpose of this Part to have
been held on the date specified in the consent, and it is not necessary for
the Company to hold that annual general meeting.
10.3 Classification of General Meetings. All general meetings other than
annual general meetings are herein referred to as and may be called
extraordinary general meetings.
10.4 Calling of Meetings. The Directors may, whenever they think fit,
convene an extraordinary general meeting. An extraordinary general meeting,
if requisitioned in accordance with the Company Act, shall be convened by the
Directors or, if not convened by the Directors, may be convened by the
requisitionists as provided in the Company Act.
10.5 Advance Notice for Election of Directors. If the Company is or becomes
a reporting company, advance notice of any general meeting at which Directors
are to be elected shall be published in the manner required by the Company
Act.
10.6 Notice for General Meeting. A notice convening a general meeting
specifying the place, the day, and the hour of the meeting, and, in case of
special business, the general nature of that business, shall be given as
provided in the Company Act and in the manner hereinafter in these Articles
mentioned, or in such other manner as may be prescribed by the Directors to
such persons as are entitled by law or under these Articles to receive such
notice from the Company. Accidental omission to give notice of a meeting to,
or the non-receipt of notice of a meeting by, any member shall not invalidate
the proceedings at that meeting.
10.7 Waiver or Reduction of Notice. All the members of the Company
entitled to attend and vote at a general meeting may, by unanimous consent in
writing given before, during or after the meeting, or if they are present at
the meeting by a unanimous vote, waive or reduce the period of notice of such
meeting and an entry in the minute book of such waiver or reduction shall be
sufficient evidence of the due convening of the meeting.
10.8 Notice of Special Business at General Meeting. Except as otherwise
provided by the Company Act, where any special business at a general meeting
includes considering, approving, ratifying, adopting or authorizing any
document or the execution thereof or the giving of effect thereto, the notice
convening the meeting shall, with respect to such document, be sufficient if
it states that a copy of the document or proposed document is or will be
available for inspection by members at the registered office or records office
of the Company or at some other place in British Columbia designated in the
notice during the usual business hours up to the date of such general meeting.
10.9 Postponement of Meeting following Advance Notice. Where, in
accordance with the Company Act, the Company has published in prescribed
manner an advance notice of a general meeting at which Directors are to be
elected, the Company may, notwithstanding such notice, postpone the general
meeting to a date other than that specified in such notice. In the event of
such a postponement, the Company shall publish, in the same manner prescribed
for the original notice, a notice of the postponement of the meeting which
notice shall include, if the date to which the meeting is postponed is known,
the same information as is required by the Company Act to be included in the
original notice. If the date to which the meeting is postponed is not known,
the notice of postponement need state only that the meeting is postponed until
further notice, provided however that once such date is known, the Company
shall publish a new advance notice which shall comply with the Company Act.
The date to which any such meeting is postponed shall be deemed to be the date
of the meeting for the purpose of complying with any time limitations in
respect of general meetings prescribed by the Company Act.
PART 11
PROCEEDINGS AT GENERAL MEETINGS
11.1 Special Business. All business shall be deemed special business which
is transacted at:
(a) an extraordinary general meeting other than the conduct of and voting
at, such meeting; and
(b) an annual general meeting, with the exception of the conduct of, and
voting at, such meeting, the consideration of the financial statement and
of the respective reports of the Directors and auditor, fixing or changing
the number of Directors, approval of a motion to elect two or more
Directors by a single resolution, the election of Directors, the
appointment of the auditor, the fixing of the remuneration of the auditor
and such other business as by these Articles or the Company Act ought to
be transacted at a general meeting without prior notice thereof being
given to the members or any business which is brought under consideration
by the report of the Directors.
11.2 Requirement of Quorum. No business, other than election of the
chairman or the adjournment of the meeting, shall be transacted at any general
meeting unless a quorum of members in person or by proxy, entitled to attend
and vote, is present at the commencement of the meeting, but the quorum need
not be present throughout the meeting.
11.3 Quorum. Save as herein otherwise provided, a quorum shall be one
member, or one proxyholder representing members, holding not less than
one-twentieth of the issued shares entitled to be voted at the meeting. If
there is only one member the quorum is one person present and being, or
representing by proxy, such member. The Directors, the Secretary or, in his
absence, an Assistant Secretary, and the solicitor of the Company shall be
entitled to attend at any general meeting but no such person shall be counted
in the quorum or be entitled to vote at any general meeting unless he shall be
a member or proxyholder entitled to vote thereat.
11.4 Lack of Quorum. If within half an hour from the time appointed for a
general meeting a quorum is not present, the meeting, if convened upon the
requisition of members, shall be dissolved. In any other case it shall stand
adjourned to the same day in the next week, at the same time and place, and,
if at the adjourned meeting a quorum is not present within half an hour from
the time appointed for the meeting, the person or persons present and being,
or representing by proxy, a member or members entitled to attend and vote at
the meeting shall be a quorum.
11.5 Chairman. The Chairman of the Board, if any, or in his absence the
President of the Company or in his absence a Vice-President of the Company, if
any, shall be entitled to preside as chairman at every general meeting of the
Company. Notwithstanding the foregoing, with the consent of the meeting,
which consent may be expressed by the failure to object of any person present
and entitled to vote, the solicitor of the Company may act as chairman of the
meeting.
11.6 Alternate Chairman. If at any general meeting neither the Chairman of
the Board nor President nor a Vice-President is present within fifteen minutes
after the time appointed for holding the meeting or is willing to act as
chairman, the Directors present, shall choose someone of their number, or the
solicitor of the Company, to be chairman. If all the Directors present, and
the solicitor of the Company, decline to take the chair or fail to so choose
or if no Director be present, the persons present and entitled to vote shall
choose one of their number to be chairman.
11.7 Adjournments. The Chairman may and shall, if so directed by the
meeting, adjourn the meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place. When a
meeting is adjourned for 30 days or more, notice, but not the advance notice
otherwise required with respect to the election of Directors of a reporting
Company, of the adjourned meeting shall be given as in the case of an original
meeting. Save as aforesaid, it shall not be necessary to give any notice of an
adjourned meeting or of the business to be transacted at an adjourned meeting.
11.8 Resolutions Need Not be Seconded. No motion proposed at a general
meeting need be seconded and the chairman may propose or second a motion.
11.9 Decisions by Show of Hands or Poll. Subject to the provisions of the
Company Act at any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands, unless (before or on the declaration of
the result of the show of hands) a poll is directed by the chairman or
demanded by at least one member entitled to vote who is present in person or
by proxy. The chairman shall declare to the meeting the decision on every
question in accordance with the result of the show of hands or the poll, and
such decision shall be entered in the book of proceedings of the Company. A
declaration by the chairman that a resolution has been carried, or carried
unanimously, or by a particular majority, or lost or not carried by a
particular majority and an entry to that effect in the book of the proceedings
of the Company shall be conclusive evidence of the fact, without proof of the
number or proportion of the votes recorded in favor of, or against, that
resolution.
11.10 Casting Vote. In the case of an equality of votes, whether on a show
of hands or on a poll, the chairman of the meeting at which the show of hands
takes place or at which the poll is demanded shall not be entitled to a
casting vote in addition to the vote or votes to which he may be entitled as a
member or proxyholder.
11.11 Manner of Taking Poll. No poll may be demanded on the election of a
chairman. A poll demanded on a question of adjournment shall be taken at the
meeting without adjournment. A poll demanded on any other question shall be
taken as soon as, in the opinion of the chairman, is reasonably convenient,
but in no event later than seven days after the meeting and at such time and
place and in such manner as the chairman of the meeting directs. The result
of the poll shall be deemed to be the resolution of and passed at the meeting
at which the poll was demanded. Any business other than that upon which the
poll has been demanded may be proceeded with pending the taking of the poll.
A demand for a poll may be withdrawn.
11.12 Disputed Vote. In the case of any dispute as to the admission or
rejection of a vote, whether by show of hands or on a poll, the chairman shall
determine the same, and his determination made in good faith is final and
conclusive.
11.13 Retention of Ballots Cast on a Poll. Every ballot cast upon a poll and
every proxy appointing a proxyholder who casts a ballot upon a poll shall be
retained by the Secretary for such period and be subject to such inspection as
the Company Act may provide.
11.14 Casting of Votes. On a poll a person entitled to cast more than one
vote need not, if he votes, use all his votes or cast all the votes he uses in
the same way.
11.15 Ordinary Resolution Sufficient. Unless the Company Act, the
Memorandum or these Articles otherwise provide, any action to be taken by a
resolution of the members may be taken by an ordinary resolution.
11.16 Resolutions in Counterpart. A resolution submitted to all members
entitled to vote and consented to in writing, whether by document, telegram,
telex or any method of transmitting legibly recorded messages or other means,
by all of the members entitled to vote, in the case of a special resolution,
or so consented to by members holding shares carrying 75% of the votes
entitled to be cast in the case of an ordinary resolution shall be as valid
and effectual as if it had been passed at a meeting of the members duly called
and held. Such resolution may be in two or more counterparts which together
shall be deemed to constitute one resolution in writing. Such resolution
shall be filed with the minutes of the proceedings of the members and shall be
effective on the date stated thereon or on the latest date stated on any
counterpart.
PART 12
VOTES OF MEMBERS
12.1 Number of Votes Per Share or Member. Subject to any special voting
rights or restrictions attached to any class of shares and the restrictions on
joint registered holders of shares, on a show of hands every member who is
present in person or by proxy and entitled to vote thereat shall have one
vote and on a poll every member shall have one vote for each share of which he
is the registered holder and may exercise such vote either in person or by
proxy.
12.2 Votes of Persons in Representative Capacity. Any person who is not
registered as a member but is entitled to vote at any general meeting in
respect of a share, may vote the share in the same manner as if he were a
member; but, unless the Directors have previously admitted his right to vote
at that meeting in respect of the share, he shall satisfy the Directors of his
right to vote the share before the time for holding the meeting, or adjourned
meeting, as the case may be, at which he proposes to vote.
12.3 Representative of a Corporate Member. Any corporation not being a
subsidiary which is a member of the Company may by resolution of its Directors
or other governing body authorize such person as it thinks fit to act as its
representative at any general meeting or class meeting. The person so
authorized shall be entitled to exercise in respect of and at such meeting the
same powers on behalf of the corporation which he represents as that
corporation could exercise if it were an individual member of the Company
personally present, including, without limitation, the right, unless
restricted by such resolution, to appoint a proxyholder to represent such
corporation, and shall be counted for the purpose of forming a quorum if
present at the meeting. Evidence of the resolution appointing any such
representative may be sent to the Company by written instrument, telegram,
telex or any method of transmitting legibly recorded messages.
Notwithstanding the foregoing, a corporation being a member may appoint a
proxyholder.
12.4 Votes by Joint Holders. Where there are joint members registered in
respect of any share, any one of the joint members may vote at any meeting in
person, by proxy or by authorized representative in respect of the share as if
he were solely entitled to it. If more than one of the joint members is
present at any meeting in person, by proxy or by authorized representative,
the joint member so present whose name stands first on the register of members
in respect of the share shall alone be entitled to vote in respect of that
share. For the purpose of this Article several executors or administrators of
a deceased member in whose sole name any share stands shall be deemed joint
members.
12.5 Votes by Committee for a Member. A member of unsound mind entitled to
attend and vote, in respect of whom an order has been made by any court having
jurisdiction, may vote, whether on a show of hands or on a poll, by his
committee or other person in the nature of a committee appointed by that
court, and any such committee, or other person may appoint a proxyholder. The
chairman may require such proof of such appointment as he sees fit.
12.6 Appointment of Proxyholders. A member holding more than one share in
respect of which he is entitled to vote shall be entitled to appoint one or
more (but, in the case of a non-reporting Company, not more than five)
proxyholders to attend, act and vote for him on the same occasion. If such a
member should appoint more than one proxyholder for the same occasion he shall
specify the number of shares each proxyholder shall be entitled to vote. A
member may also appoint one or more alternate proxyholders to act in the place
and stead of an absent proxyholder.
12.7 Qualification of Proxyholders. Any person, having attained the age of
majority, may act as proxyholder whether or not he is entitled on his own
behalf to be present and to vote at the meeting at which he acts as
proxyholder. The proxy may authorize the person so appointed to act as
proxyholder for the appointor for the period, at any meeting or meetings, and
to the extent permitted by the Company Act.
12.8 Execution of Form of Proxy. A proxy shall be in writing under the hand
of the appointor or of his attorney duly authorized in writing, or, if the
appointor is a corporation, either under the seal of the corporation or under
the hand of a duly authorized officer or attorney of that corporation.
12.9 Deposit of Proxy. Unless the Directors fix some other time by which
proxies must be deposited, a proxy and the power of attorney or other
authority, if any, under which it is signed, or a notarially certified copy
thereof, shall be deposited at the registered office of the Company or at such
other place as is specified for that purpose in the notice convening the
meeting, not less than 48 hours (excluding Saturdays and holidays) before the
time for holding the meeting in respect of which the person named in the
instrument is appointed.
12.10 Directors May Make Regulations Relating to Deposit of Proxies. In
addition to any other method of depositing proxies provided for in these
Articles, the Directors may by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time for
depositing the proxies. If the Company is or becomes a reporting company, the
time so fixed shall not exceed 48 hours (excluding Saturdays and holidays)
preceding the meeting or adjourned meeting specified in the notice calling a
meeting of members and providing for particulars of such proxies to be sent to
the Company or any agent of the Company in writing or by letter, telegram,
telex or any method of transmitting legibly recorded messages so as to arrive
before the commencement of the meeting or adjourned meeting at the office of
the Company or of any agent of the Company appointed for the purpose of
receiving such particulars and providing that proxies so deposited may be
acted upon as though the proxies themselves were deposited as required by this
Part and votes given in accordance with such regulations shall be valid and
shall be counted.
12.11 Form of Proxy. Unless the Company Act or any other statute or law
requires any other form of proxy, a proxy, whether for a specified meeting or
otherwise, shall be either in the form following or in any other form that the
Directors or the chairman of the meeting shall approve:
(Name of Company)
The undersigned, being a member of the above named Company, appoints _________
_________________of _______________or failing him________________________
of _______________for the undersigned to attend, act and vote for and on
behalf of the undersigned at the general meeting of the Company to be held on
the __day of ________and at any adjournment thereof.
Signed this ________________19__.
_______________________________
(Signature of Member).
12.12 Validity of Proxy Vote. A vote given in accordance with the terms of a
proxy is valid notwithstanding the previous death or incapacity of the member
giving the proxy or the revocation of the proxy or of the authority under
which the form of proxy was executed or the transfer of the share in respect
of which the proxy is given, provided that no notification in writing of such
death, incapacity, revocation or transfer shall have been received at the
registered office of the Company or by the chairman of the meeting or
adjourned meeting for which the proxy was given before the vote was taken.
12.13 Revocation of Proxy. Every proxy may be revoked by an instrument in
writing:
(a) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a corporation, by a duly
authorized officer or attorney of the corporation; and
(b) delivered either at the registered office of the Company at any time
up to and including the last business day preceding the day of the
meeting, or any adjournment thereof at which the proxy is to be used, or
to the chairman of the meeting on the day of the meeting or any
adjournment thereof before any vote in respect of which the proxy is to be
used shall have been taken;
or in any other manner provided by law.
12.14 Chairman to Determine Validity. The chairman of the meeting may
determine whether or not a proxy, deposited for use at such meeting, which may
not strictly comply with the requirements of this Part as to form, execution,
accompanying documentation, time of filing, or otherwise, shall be valid for
use at such meeting and any such determination made in good faith shall be
final, conclusive and binding upon such meeting.
PART 13
DIRECTORS
13.1 Number of Directors. The subscribers to the Memorandum of the Company
are the first Directors. The Directors to succeed the first Directors may be
appointed in writing by a majority of the subscribers or at a meeting of the
subscribers, or if not so appointed, they shall be elected by the members
entitled to vote on the election of Directors. The number of Directors,
excluding additional Directors, may be fixed or changed from time to time by
ordinary resolution, whether previous notice thereof has been given or not,
but notwithstanding anything contained in these Articles the number of
Directors shall never be less than one or, if the Company is or becomes a
reporting company, less than three.
13.2 Remuneration and Expenses of Directors. The remuneration of the
Directors may from time to time be determined by the Directors unless by
ordinary resolution the members determine that such remuneration shall be
determined by the members. Such remuneration may be in addition to any salary
or other remuneration paid to any Director in his capacity as Officer or
employee of the Company. The Directors shall be reimbursed for reasonable
traveling, hotel and other expenses they incur in and about the business of
the Company and if any Director shall perform any professional or other
services for the Company that in the opinion of the Directors are outside the
ordinary duties of a Director or shall otherwise be specially occupied in or
about the Company's business, he may be paid a remuneration to be fixed by the
Board, or, at the option of such Director, by the Company in general meeting,
and such remuneration may be either in addition to, or in substitution for any
other remuneration that he may be entitled to receive. The Directors on
behalf of the Company, unless otherwise determined by ordinary resolution, may
pay a gratuity or pension or allowance on retirement to any Director who has
held any office or position with the Company or to his spouse or dependents
and may make contributions to any fund and pay premiums for the purchase or
provision of any such gratuity, pension or allowance.
13.3 Qualification of Directors. A Director shall not be required to hold a
share in the capital of the Company as qualification for his office but shall
be qualified as required by the Company Act to become or act as a Director.
Any Director who is not a member shall be deemed to have agreed to be bound by
the provisions of the articles to the same extent as if he were a member of
the Company.
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 Election at Annual General Meetings. At each annual general meeting of
the Company all the Directors shall retire and the members entitled to vote
thereat shall elect a Board of Directors consisting of the number of Directors
for the time being fixed pursuant to these Articles.
14.2 Eligibility of Retiring Director. A retiring Director shall be
eligible for re-election.
14.3 Continuance of Directors. Where the Company fails to hold an annual
general meeting in accordance with the Company Act, the Directors then in
office shall be deemed to have been elected or appointed as Directors on the
last day on which the annual general meeting could have been held pursuant to
these Articles and they may hold office until other Directors are appointed or
elected or until the day on which the next annual general meeting is held.
14.4 Election of Less than Required Number of Directors. If at any general
meeting at which there should be an election of Directors the places of any of
the retiring Directors are not filled by such election, such of the retiring
Directors who are not re-elected as may be requested by the newly-elected
Directors shall, if willing to do so, continue in office to complete the
number of Directors for the time being fixed pursuant to these Articles until
further new Directors are elected at a general meeting convened for the
purpose. If any such election or continuance of Directors does not result in
the election or continuance of the number of Directors for the time being
fixed pursuant to these Articles such number shall be fixed at the number of
Directors actually elected or continued in office.
14.5 Filing a Casual Vacancy. The remaining Directors or Director shall
have the power from time to time to appoint any person as a Director to fill
any casual vacancy occurring in the Board of Directors.
14.6 Additional Directors. Between successive annual general meetings the
Directors shall have power to appoint one or more additional Directors but the
number of additional Directors shall not be more than one-third of the number
of Directors elected or appointed at the last annual general meeting. Any
Director so appointed shall hold office only until the next following annual
general meeting of the Company, but shall be eligible for election at such
meeting and, so long as he is an additional Director, the number of Directors
shall be increased accordingly.
14.7 Alternate Directors. Any Director may by instrument in writing
delivered to the Company appoint any person to be his alternate to act in his
place at meetings of the Directors at which he is not present unless the
Directors shall have reasonably disapproved the appointment of such person as
an alternate Director and shall have given notice to that effect to the
Director appointing the alternate Director within a reasonable time after
delivery of such instrument to the Company. Every such alternate shall be
entitled to notice of meetings of the Directors and to attend and vote as a
Director at a meeting at which the person appointing him is not personally
present, and, if he is a Director, to have a separate vote on behalf of the
Director he is representing in addition to his own vote. A Director may at
any time by instrument, telegram, telex or any method of transmitting legibly
recorded messages delivered to the Company revoke the appointment of an
alternate appointed by him. The remuneration payable to such an alternate
shall be payable out of the remuneration of the Director appointing him.
14.8 Termination of Directorship. A Director ceases to hold office when he:
(a) dies;
(b) resigns his office by notice in writing delivered to the registered
office of the Company;
(c) is convicted of an indictable offence and the other Directors shall
have resolved to remove him;
(d) ceases to be qualified to act as a Director pursuant to the Company
Act; or
(e) is removed in accordance with Article 14.10.
14.9 Resignation of Directors. Every resignation of a Director becomes
effective at the time a written resignation is delivered to the registered
office of the Company or at the time specified in the resignation, whichever
is later.
14.10 Removal of Directors. The Company may, by special resolution, remove
any Director before the expiration of his period of office and may by an
ordinary resolution appoint another person in his stead.
PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 Management of Affairs and Business. The Directors shall manage or
supervise the management of the affairs and business of the Company and shall
have the authority to exercise all such powers of the Company as are not, by
the Company Act or by the Memorandum or these Articles, required to be
exercised by the Company in general meeting.
15.2 Appointment of Attorney. The Directors may from time to time by power
of attorney or other instrument under seal appoint any person to be the
attorney of the Company for such purposes, and with such powers, authorities
and discretions (not exceeding those vested in or exercisable by the Directors
under these Articles and excepting the powers of the Directors relating to the
constitution of the Board and of any of its committees and the appointment or
removal of Officers and the power to declare dividends) and for such period,
with such remuneration and subject to such conditions as the Directors may
think fit, and any such appointment may be made in favor of any of the
Directors or any of the members of the Company or in favor of any corporation,
or of any of the members, Directors, nominees or managers of any corporation,
firm or joint venture and any such power of attorney may contain such
provisions for the protection or convenience of persons dealing with such
attorney as the Directors think fit. Any such attorney may be authorized by
the Directors to sub-delegate all or any of the powers, authorities and
discretions for the time being vested in him.
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 Disclosure of Conflicting Interest. A Director who is in any way,
directly or indirectly, interested in an existing or proposed contract or
transaction with the Company or who holds any office or possesses any property
whereby, directly or indirectly, a duty or interest might be created to
conflict with his duty or interest as a Director shall declare the nature and
extent of his interest in such contract or transaction or of the conflict or
potential conflict with his duty and interest as a Director, as the case may
be, in accordance with the provisions of the Company Act.
16.2 Voting and Quorum re Proposed. Contract. A Director shall not vote
in respect of any such contract or transaction with the Company in which he is
interested and if he shall do so his vote shall not be counted, but he shall
be counted in the quorum present at the meeting at which such vote is taken.
Subject to the provisions of the Company Act, the prohibitions contained in
this Part shall not apply to
(a) any contract or transaction relating to a loan to the Company, the
repayment of all or part of which a Director or a specified corporation or
a specified firm in which he has an interest has guaranteed or joined in
guaranteeing;
(b) any contract or transaction made, or to be made, with or for the
benefit of an affiliated corporation of which a Director is a Director or
Officer;
(c) any contract by a Director to subscribe for or underwrite shares or
debentures to be issued by the Company or a subsidiary of the Company, or
any contract, arrangement or transaction in which a Director is, directly
or indirectly, interested if all the other Directors are also, directly or
indirectly, interested in the contract, arrangement or transaction;
(d) determining the remuneration of the Directors;
(e) purchasing and maintaining insurance to cover Directors against
liability incurred by them as Directors; or
(f) the indemnification of any Director by the Company.
These exceptions may from time to time be suspended or amended to any extent
approved by the Company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or
for any particular period.
16.3 Director May Hold Office or Position with Company. A Director may hold
any office or position with the Company, other than the office of auditor of
the Company, in conjunction with his office of Director for such period and on
such terms, as to remuneration or otherwise, as the Directors may determine
and no Director or intended Director shall be disqualified by his office from
contracting with the Company either with regard to his tenure of any such
other office or position or as vendor, purchaser or otherwise, and, subject to
compliance with the provisions of the Company Act, no contract or transaction
entered into by or on behalf of the Company in which a Director is in any way
interested shall be liable to be voided by reason thereof.
16.4 Director Acting in Professional Capacity. Subject to compliance with
the provisions of the Company Act, a Director or his firm may act in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director.
16.5 Director Receiving Remuneration from Other Interests. A Director may
be or become a director or other officer or employee of, or otherwise
interested in, any corporation or firm in which the Company may be interested
as a member or otherwise, and, subject to compliance with the provisions of
the Company Act, such Director shall not be accountable to the Company for any
remuneration or other benefits received by him as director, officer or
employee of, or from his interest in, such other corporation or firm.
PART 17
PROCEEDINGS OF DIRECTORS
17.1 Chairman and Alternate. The Chairman of the Board, if any, or in his
absence the President, shall preside as chairman at every meeting of the
Directors, or if there is no Chairman of the Board or neither the Chairman of
Board nor the President is present within fifteen minutes of the time
appointed for holding the meeting or is willing to act as chairman, or, if the
Chairman of the Board, if any, and the President have advised the Secretary
that they will not be present at the meeting, the Directors present shall
choose one of their number to be chairman of the meeting. With the consent of
the meeting, the solicitor of the Company may act as Chairman of a meeting of
the Directors.
17.2 Meetings - Procedure - Casting Vote. The Directors may meet together
for the dispatch of business, adjourn and otherwise regulate their meetings,
as they think fit. Questions arising at any meeting shall be decided by a
majority of votes. In case of an equality of votes the chairman shall not
have a second or casting vote. Meetings of the Board held at regular
intervals may be held at such place, at such time and upon such notice (if
any) as the Board may by resolution from time to time determine.
17.3 Meetings by Conference Telephone. A Director may participate in a
meeting of the Board or of any committee of the Directors by means of
conference telephones or other communications facilities by means of which all
Directors participating in the meeting can hear each other and provided that
all such Directors agree to such participation. A Director participating in a
meeting in accordance with this Article shall be deemed to be present at the
meeting and to have so agreed and shall be counted in the quorum therefor and
be entitled to speak and vote thereat.
17.4 Notice of Meeting. A Director may, and the Secretary or an Assistant
Secretary upon request of a Director shall, call a meeting of the Board at any
time. Reasonable notice shall be given for any meeting specifying the place,
day and hour of such meeting shall be given by mail, postage prepaid,
addressed to each of the Directors and alternate Directors at his address as
it appears on the books of the Company or by leaving it at his usual business
or residential address or by telephone, telegram, telex, or any method of
transmitting legibly recorded messages. It shall not be necessary to give
notice of a meeting of Directors to any Director or alternate Director if such
meeting is to be held immediately following a general meeting at which such
Director shall have been elected or is the meeting of Directors at which such
Director is appointed. Accidental omission to give notice of a meeting of
Directors to, or by the non-receipt of notice by, any Director shall not
invalidate the proceedings at that meeting.
17.5 Waiver of Notice of Meeting. Waiver of Notice of Meeting Any Director
of the Company may file with the Secretary a document executed by him waiving
notice of any past, present or future meeting or meetings of the Directors
being, or required to have been, sent to him and may at any time withdraw such
waiver with respect to meetings held thereafter. After the filing of such
waiver with respect to future meetings, and until such waiver is withdrawn, no
notice of any meeting of the Directors need be given to such Director or,
unless the Director otherwise requires in writing to the Secretary, to his
alternate Director, and all meetings of the Directors so held shall be deemed
not to be improperly called or constituted by reason of notice not having been
given to such Director or alternate Director.
17.6 Quorum. The quorum necessary for the transaction of the business of
the Directors may be fixed by the Directors and if not so fixed shall be a
majority of the Directors or, if the number of Directors is fixed at one,
shall be one Director.
17.7 Continuing Directors May Act During Vacancy. The Directors may act
notwithstanding any vacancy in their body, but, if and so long as their number
is reduced below the number fixed pursuant to these Articles as the necessary
quorum of Directors, the Directors may act for the purpose of increasing the
number of Directors to that number, or of summoning a general meeting of the
Company, but for no other purpose.
17.8 Validity of Acts of Directors. Subject to the provisions of the
Company Act, all acts done by any meeting of the Directors or of a committee
of Directors, or by any person acting as a Director, shall, notwithstanding
that it be afterwards discovered that there was some defect in the
qualification, election or appointment of any such Directors or of the members
of such committee or person acting as aforesaid, or that they or any of them
were disqualified, be as valid as if every such person had been duly elected
or appointed and was qualified to be a Director.
17.9 Resolutions in Writing Effective. A resolution consented to in
writing, whether by document, telegram, telex or any method of transmitting
legibly recorded messages or other means, by all of the Directors or their
alternates shall be as valid and effectual as if it had been passed at a
meeting of the Directors duly called and held. Such resolution may be in two
or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the Directors and shall be effective on the date stated thereon
or on the latest date stated on any counterpart.
17.10 Resolutions Need Not be Seconded and Chairman May Move a Motion. No
resolution proposed at a meeting of Directors need be seconded, and the
chairman of any meeting is entitled to move or propose a resolution.
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 Appointment of Executive Committee. The Directors may by resolution
appoint an Executive Committee to consist of such member or members of their
body as they think fit, which Committee shall have, and may exercise during
the intervals between the meetings of the Board, all the powers vested in the
Board except the power to fill vacancies in the Board, the power to change the
membership of, or fill vacancies in, said Committee or any other committee of
the Board and such other powers, if any, as may be specified in the
resolution.
The said Committee shall keep regular minutes of its transactions and shall
cause them to be recorded in books kept for that purpose, and shall report the
same to the Board of Directors at such times as the Board of Directors may
from time to time require. The Board shall have the power at any time to
revoke or override the authority given to or acts done by the Executive
Committee, except as to acts done before such revocation or overriding, and to
terminate the appointment or change the membership of such Committee and to
fill vacancies in it. The Executive Committee may make rules for the conduct
of its business and may appoint such assistants as it may deem necessary. A
majority of the members of said Committee shall constitute a quorum thereof.
18.2 Appointment of Committees. The Directors may by resolution appoint one
or more committees consisting of such member or members of their body as they
think fit and may delegate to any such committee between meetings of the Board
such powers of the Board (except the power to fill vacancies in the Board and
the power to change the membership of or fill vacancies in any committee of
the Board and the power to appoint or remove Officers appointed by the Board)
subject to such conditions as may be prescribed in such resolution, and all
committees so appointed shall keep regular minutes of their transactions and
shall cause them to be recorded in books kept for that purpose, and shall
report the same to the Board of Directors at such times as the Board of
Directors may from time to time require. The Directors shall also have power
at any time to revoke or override any authority given to or acts to be done by
any such committees except as to acts done before such revocation or
overriding and to terminate the appointment or change the membership of a
committee and to fill vacancies in it. Committees may make rules for the
conduct of their business and may appoint such assistants as they may deem
necessary. A majority of the members of a committee shall constitute a quorum
thereof.
18.3 Procedure at Meetings. The Executive Committee and any other committee
may meet and adjourn as it thinks proper. Questions arising at any meeting
shall be determined by a majority of votes of the members of the committee
present, and in case of an equality of votes the chairman shall not have a
second or casting vote. A resolution approved in writing by all the members
of the Executive Committee or any other committee shall be as valid and
effective as if it had been passed at a meeting of such Committee duly called
and constituted. Such resolution may be in two or more counterparts which
together shall be deemed to constitute one resolution in writing. Such
resolution shall be filed with the minutes of the proceedings of the committee
and shall be effective on the date stated thereon or on the latest date stated
in any counterpart.
PART 19
OFFICERS
19.1 President and Secretary Required. The Directors shall, from time to
time, appoint a President and a Secretary and such other Officers, if any, as
the Directors shall determine and the Directors may, at any time, terminate
any such appointment. No Officer shall be appointed unless he is qualified in
accordance with the provisions of the Company Act.
19.2 Persons Holding More Than One Office and Remuneration. One person may
hold more than one of such offices except that the offices of President and
Secretary must be held by different persons unless the Company has only one
member. Any person appointed as the Chairman of the Board, the President or
the Managing Director shall be a Director. The other Officers need not be
Directors. The remuneration of the Officers of the Company as such and the
terms and conditions of their tenure of office or employment shall from time
to time be determined by the Directors; such remuneration may be by way of
salary, fees, wages, commission or participation in profits or any other means
or all of these modes and an Officer may in addition to such remuneration be
entitled to receive after he ceases to hold such office or leaves the
employment of the Company a pension or gratuity. The Directors may decide
what functions and duties each Officer shall perform and may entrust to and
confer upon him any of the powers exercisable by them upon such terms and
conditions and with such restrictions as they think fit and may from time to
time revoke, withdraw, alter or vary all or any of such functions, duties and
powers. The Secretary shall, inter alia, perform the functions of the
Secretary specified in the Company Act.
19.3 Disclosure of Conflicting Interest. Every Officer of the Company who
holds any office or possesses any property whereby, whether directly or
indirectly, duties or interests might be created in conflict with his duties
or interests as an Officer of the Company shall, in writing, disclose to the
President the fact and the nature, character and extent of the conflict.
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
20.1 Indemnification of Directors. Subject to the provisions of the
Company Act, the Directors shall cause the Company to indemnify a Director or
former Director of the Company and the Directors may cause the Company to
indemnify a Director or former Director of a corporation of which the Company
is or was a member and the heirs and personal representatives of any such
person against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, actually and reasonably incurred by
him or them including an amount paid to settle an action or satisfy a judgment
in a civil, criminal or administrative action or proceeding to which he is or
they are made a party by reason of his being or having been a Director of the
Company or a Director of such corporation, including any action brought by the
Company or any such corporation. Each Director of the Company on being
elected or appointed shall be deemed to have contracted with the Company on
the terms of the foregoing indemnity.
20.2 Indemnification of Officers, Employees, Agents. Subject to the
provisions of the Company Act, the Directors may cause the Company to
indemnify any Officer, employee or agent of the Company or of a corporation of
which the Company is or was a member (notwithstanding that he is also a
Director) and his heirs and personal representatives against all costs,
charges and expenses whatsoever incurred by him or them and resulting from his
acting as an Officer, employee or agent of the Company or such corporation.
In addition the Company shall indemnify the Secretary or an Assistant
Secretary of the Company (if he shall not be a full time employee of the
Company and notwithstanding that he is also a Director) and his respective
heirs and legal representatives against all costs, charges and expenses
whatsoever incurred by him or them and arising out of the functions assigned
to the Secretary by the Company Act or these Articles and each such Secretary
and Assistant Secretary shall on being appointed be deemed to have contracted
with the Company on the terms of the foregoing indemnity.
20.3 Indemnification not Invalidated by noncompliance. The failure of a
Director or Officer of the Company to comply with the provisions of the
Company Act or of the Memorandum or these Articles shall not invalidate any
indemnity to which he is entitled under this Part.
20.4 Company May Purchase Insurance. The Directors may cause the Company to
purchase and maintain insurance for the benefit of any person who is or was
serving as a Director, Officer, employee or agent of the Company or as a
Director, Officer, employee or agent of any corporation of which the Company
is or was a member and his heirs or personal representatives against any
liability incurred by him as such Director, Officer, employee or agent.
PART 21
DIVIDENDS AND RESERVE
21.1 Declaration of Dividends. The Directors may from time to time declare
and authorize payment of such dividends, if any, as they may deem advisable
and need not give notice of such declaration to any member. No dividend shall
be paid otherwise than out of funds and/or assets properly available for the
payment of dividends and a declaration by the Directors as to the amount of
such funds or assets available for dividends shall be conclusive. The Company
may pay any such dividend wholly or in part by the distribution of specific
assets, and in particular by paid up shares, bonds, debentures or other
securities of the Company or any other corporation, or in any one or more such
ways as may be authorized by the Company or the Directors, and where any
difficulty arises with regard to such a distribution the Directors may settle
the same as they think expedient, and in particular may fix the value for
distribution of such specific assets or any part thereof, and may determine
that cash payments in substitution for all or any part of the specific assets
to which any members are entitled shall be made to any members on the basis of
the value so fixed to adjust the rights of all parties, and may vest any such
specific assets in trustees for the persons entitled to the dividend as may
seem expedient to the Directors.
21.2 Declared Dividend Rate. Any dividend declared on shares of any class
by the Directors may be made payable on such date as is fixed by the
Directors.
21.3 Proportionate to Number of Shares Held. Subject to the rights of
members (if any) holding shares with specific rights as to dividends, all
dividends on shares of any class shall be declared and paid according to the
number of such shares held.
21.4 Reserves. The Directors may, before declaring any dividend, set aside
out of the funds properly available for the payment of dividends such sums as
they think proper as a reserve or reserves, which shall, at the discretion of
the Directors, be applicable for meeting contingencies, or for equalizing
dividends, or for any other purpose to which such funds of the Company may be
properly applied, and pending such application may, at the like discretion,
either be employed in the business of the Company or be invested in such
investments as the Directors may from time to time think fit. The Directors
may also, without placing the same in reserve, carry forward such funds which
they think prudent not to divide.
21.5 Receipts from Joint Holders. If several persons are registered as
joint holders of any share, any one of them may give an effective receipt for
any dividend, bonus or other moneys payable in respect of the share.
21.6 No Interest on Dividends. No dividend shall bear interest against the
Company. Where the dividend to which a member is entitled includes a fraction
of a cent, such fraction shall be disregarded in making payment thereof and
such payment shall be deemed to be payment in full.
21.7 Payment of Dividends. Any dividend, bonus or other moneys payable in
cash in respect of shares may be paid by cheque or warrant sent through the
post directed to the registered address of the holder, or in the case of joint
holders, to the registered address of that one of the joint holders who is
first named on the register, or to such person and to such address as the
holder or joint holders may direct in writing. Every such cheque or warrant
shall be made payable to the order of the person to whom it is sent. The
mailing of such cheque or warrant shall, to the extent of the sum represented
thereby (plus the amount of any tax required by law to be deducted) discharge
all liability for the dividend, unless such cheque or warrant shall not be
paid on presentation or the amount of tax so deducted shall not be paid to the
appropriate taxing authority.
21.8 Capitalization of Undistributed Surplus. Notwithstanding anything
contained in these Articles, the Directors may from time to time capitalize
any undistributed surplus on hand of the Company and may from time to time
issue as fully paid and non-assessable any unissued shares, or any bonds,
debentures or debt obligations of the Company as a dividend representing such
undistributed surplus on hand or any part thereof.
21.9 Fractional Share Dividends. Notwithstanding any other provisions of
these articles should any dividend result in any members being entitled to a
fractional part of a share of the Company, the Directors shall have the right
to pay such members in place of that fractional share, the cash equivalent
thereof calculated on the par value thereof or, in the case of shares without
par value, calculated on the price or consideration for which such shares were
or were deemed to be issued, and shall have the further right and complete
discretion to carry out such distribution and to adjust the rights of the
members with respect thereon on as practical and equitable a basis as possible
including the right to arrange through a fiscal agent or otherwise for the
sale, consolidation or other disposition of those fractional shares on behalf
of those members of the Company.
PART 22
DOCUMENTS, RECORDS AND REPORTS
22.1 Documents To Be Kept. The Company shall keep at its records office or
at such other place as the Company Act may permit, the documents, copies,
registers, minutes, and records which the Company is required by the Company
Act to keep at its records office or such other place, as the case may be.
22.2 Accounts To Be Kept. The Company shall cause to be kept proper books
of account and accounting records in respect of all financial and other
transactions of the Company to record properly the financial affairs and
condition of the Company and to comply with the Company Act.
22.3 Inspection of Accounts. Unless the Directors determine otherwise, or
unless otherwise determined by an ordinary resolution, no member of the
Company shall be entitled to inspect the accounting records of the Company.
22.4 Financial Statements and Reports for General Meetings. The Directors
shall from time to time at the expense of the Company cause to be prepared and
laid before the Company in general meeting such financial statements and
reports as are required by the Company Act.
22.5 Financial Statements and Reports for Members. Every member shall be
entitled, on demand, to be furnished with a copy of the latest financial
statement of the Company including the auditor's report on it, if any, and, if
so required by the Company Act, a copy of each annual financial statement and
interim financial statement shall be mailed to each member.
PART 23
NOTICES
23.1 Method of Giving Notice. A notice, statement, report or other document
may be given or delivered by the Company to any member either by delivery to
him personally or by sending it by mail to his address as recorded in the
register of members. Where a notice, statement, report or other document is
sent by mail, service or delivery of the notice, statement or report shall be
deemed to be effected by properly addressing, prepaying and mailing the
notice, statement or report and to have been given on the day, Saturdays and
holidays excepted, following the date of mailing. A certificate signed by the
Secretary or other Officer of the Company or of any other corporation acting
in that behalf for the Company that the letter, envelope or wrapper containing
the notice, statement, report or other document was so addressed, prepaid and
mailed shall be conclusive evidence thereof.
23.2 Notice to Joint Holders. A notice, statement, report or other
document may be given or delivered by the Company to the joint holders of a
share by giving the notice to the joint holder first named in the register of
members in respect of the share.
23.3 Notice to Personal Representative. A notice, statement, report or
other document may be given or delivered by the Company to the persons
entitled to a share in consequence of the death, bankruptcy or incapacity of a
member by sending it by mail, prepaid, addressed to them by name or by the
title of representatives of the deceased or incapacitated person or trustee of
the bankrupt, or by any like description, at the address (if any) supplied to
the Company for the purpose by the persons claiming to be so entitled, or
(until such address has been so supplied) by giving the notice in a manner in
which the same might have been given if the death, bankruptcy or incapacity
had not occurred.
23.4 Persons to Receive Notice. Notice of every general meeting or meeting
of members holding shares of a particular class or series shall be given in a
manner herein before authorized to every member holding at the time of the
issue of the notice or the date fixed for determining the members entitled to
such notice, whichever is the earlier, shares which confer the right to notice
of and to attend and vote at any such meeting. No other person except the
auditor of the Company and the Directors of the Company shall be entitled to
receive notices of any such meeting.
PART 24
RECORD DATES
24.1 Record Date. The Directors may fix in advance a date, which shall not
be more than the maximum number of days permitted by the Company Act,
preceding the date of any meeting of members, including class and series
meetings, or of the payment of any dividend or of the proposed taking of any
other proper action requiring the determination of members, as the record date
for the determination of the members entitled to notice of, or to attend and
vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend or for any other proper purpose and, in such
case, notwithstanding anything elsewhere contained in these Articles, only
members of record on the date so fixed shall be deemed to be members for the
purposes aforesaid.
24.2 No Record Date Fixed. Where no record date is so fixed for the
determination of members as provided in the preceding Article the date on
which the notice is mailed or on which the resolution declaring the dividend
is adopted, as the case may be, shall be the record date for such
determination.
PART 25
SEAL
25.1 Affixation of Seal to Documents. The Directors may provide a seal for
the Company and, if they do so, shall provide for the safe custody of the seal
which shall not be affixed to any instrument except in the presence of the
following persons, namely:
(a) any two Directors; or
(b) any one of the Chairman of the Board, the President, the Managing
Director, a Director or a Vice-President together with any one of the
Secretary, the Treasurer, the Secretary- Treasurer, an Assistant
Secretary, an Assistant Treasurer and an Assistant Secretary-Treasurer; or
(c) if the Company shall have only one member, the President or the
Secretary; or
(d) such person or persons as the Directors may from time to time by
resolution appoint; and the said Directors, Officers, person or persons in
whose presence the seal is so affixed to an instrument shall sign such
instrument. For the purpose of certifying under seal true copies of any
document or resolution the seal may be affixed in the presence of any one
of the foregoing persons.
25.2 Reproduction of Seal. To enable the seal of the Company to be affixed
to any bonds, debentures, share certificates, or other securities of the
Company, whether in definitive or interim form, on which facsimiles of any of
the signatures of the Directors or Officers of the Company are, in accordance
with the Company Act and/or these Articles, printed or otherwise mechanically
reproduced there may be delivered to the firm or company employed to engrave,
lithograph or print such definitive or interim bonds, debentures, share
certificates or other securities one or more unmounted dies reproducing the
Company's seal and the Chairman of the Board, the President, the Managing
Director or a Vice-President and the Secretary, Treasurer,
Secretary-Treasurer, an Assistant Secretary, an Assistant Treasurer or an
Assistant Secretary-Treasurer may by a document authorize such firm or company
to cause the Company's seal to be affixed to such definitive or interim bonds,
debentures, share certificates or other securities by the use of such dies.
Bonds, debentures, share certificates or other securities to which the
Company's seal has been so affixed shall for all purposes be deemed to be
under and to bear the Company's seal lawfully affixed thereto.
25.3 Official Seal for Other Jurisdictions. The Company may have an
official seal for use in any other province, state, territory or country, and
all of the powers conferred by the Company Act with respect thereto may be
exercised by the Directors or by a duly authorized agent of the Company.
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
26.1 Instrument May Be Mechanically Signed. The signature of any Officer,
Director, registrar, branch registrar, transfer agent or branch agent of the
Company, unless otherwise required by the Company Act or by these Articles,
may, if authorized by the Directors, be printed, lithographed, engraved or
otherwise mechanically reproduced upon all instruments executed or issued by
the Company or any Officer thereof; and any instrument on which the signature
of any such person is so reproduced shall be deemed to have been manually
signed by such person whose signature is so reproduced and shall be as valid
to all intents and purposes as if such instrument had been signed manually,
and notwithstanding that the person whose signature is so reproduced may have
ceased to hold the office that he is stated on such instrument to hold at the
date of the delivery or issue of such instrument.
26.2 Definition of Instrument. The term "instrument" as used in Article 26.
1, shall include deeds, mortgages, hypothecs, charges, conveyances, transfers
and assignments of property, real or personal, agreements, releases, receipts
and discharges for the payment of money or other obligation, shares and share
warrants of the Company, bonds, debentures and other debt obligations of the
Company, and all paper writings.
PART 27
SPECIAL RIGHTS AND RESTRICTIONS ATTACHED TO PREFERRED SHARES
27.1 Directors' Right to Issue in One or More Series. Preferred shares may,
at any time and from time to time, be issued in one or more series. The
Directors may from time to time, by resolution passed before the issue of any
Preferred shares of any particular series, alter the Memorandum and Articles
of the Company to fix the number of Preferred shares in, to determine the
designation of the Preferred shares of that series and to create, define and
attach special rights and restrictions to the Preferred shares of that series,
including, but without in any way limiting or restricting the generality of
the foregoing:
(a) the rate, amount or method of calculation of dividends and whether
they are cumulative, partly cumulative, or non-cumulative, and whether
such rate, amount or method of calculation shall be subject to change or
adjustment in the future;
(b) the date, place, manner and currency of payments of dividends, and
that date or dates from which they accrue or become payable;
(c) any rights of redemption, retraction or purchase, the redemption,
retraction or purchase prices and the terms and conditions of redemption,
retraction or purchase, with or without provision for purchase or similar
funds;
(d) any voting rights;
(e) any conversion, exchange or reclassification rights;
(f) any rights to receive the remaining property of the Company upon
liquidation, dissolution or winding up and the amount and preference of
any such rights; and any other terms not inconsistent with these
provisions.
DATED March 20, 1997.
___/S/ WILLIAM A. RANDALL_____
Subscriber
OMB APPROVAL
OMB Number: 3235-0379
Expires: March 31, 2000
ESTIMATED AVERAGE BURDEN
HOURS PER RESPONSE 2.0
UNIITED STATES
SECURTIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-X
APPOINTMENT OF AGENT FOR SERVICE OF PROCESS AND UNDERTAKING
GENERAL INSTRUCTIONS
I. FORM F-X SHALL BE FILED WITH THE COMMISSION:
(a) by any issuer registering securities on Form F-8, F-9, F-10 or
F-80 under the Securities Act of 1933;
(b) by any issuer registering securities on Form 40-F under the
Securities Exchange Act of 1934 (the "Exchange Act");
(c) by any issuer filing a periodic report on Form 40-F, if it has not
previously filed a Form F-X in connection with the class of securities in
relation to which the obligation to file a report on Form 40-F arises;
(d) by any issuer or other non-U.S. person filing tender offer
documents on Schedule 13E-4F, 14D-IF or 14D-9F;
(e) by any non-U. S. person acting as trustee with respect to
securities registered on Form F-7, F-8, F-9, F-10, F-80, or SB-2; and
(f) by a Canadian issuer qualifying an offering statement pursuant to
the provisions of Regulation A, or registering securities on Form SB-2.
A Form F-X filed in conjunction with any other Commission form should not be
bound together with, or be included only as an exhibit to, such other form.
II. SIX COPIES OF THE FORM F-X, ONE OF WHICH MUST BE MANUALLY SIGNED, SHALL
BE FILED WITH THE COMMISSION AT ITS PRINCIPAL OFFICE.
A. Name of issuer or person filing ("Filer"):
Australian-Canadian Oil Royalties Ltd.
B. This is [check one]
[X] an original filing for the Filer an amended filing for the Filer
C. Identify the filing in conjunction with which this Form is being
filed:
Name of registrant Australian-Canadian Oil Royalties Ltd. .
Form type- 10-SB
File Number (if known)
Filed by Robert Kamon
Date Filed (if filed concurrently, so indicate) May 12, 1998
D. The Filer is incorporated or organized under the laws of (Name of
the jurisdiction under whose laws the issuer is organized or
in-corporated) British Columbia, Canada
and has its principal place of business at (Address in full and telephone
number) 1304 Avenue L, P. 0. Box 1629, Cisco, Texas 76437
254-442-2658 - Telephone 254-442-3843 - Fax
SEC 2288 (12-97)
E. The Filer designates and appoints (Name of United States person
serving as agent) Robert Kamon ("Agent") located at (address
in full in the United States and telephone number) 1304 Avenue L,
P. 0. Box 1629, Cisco, Texas 76437 254-442-2658 as the agent of the
Filer upon whom may be served any process, pleadings, subpoenas, or other
papers in
(a) any investigation or administrative proceeding conducted by the
Commission; and
(b) any civil suit or action brought against the Filer or to which
the Filer has been joined as defendant or respondent, in any
appropriate court in any place subject to the jurisdiction of any
state or of the United States or of any of its territories or
possessions or of the District of Columbia, where the investigation,
proceeding or cause of action arises out of or relates to or concerns
(i) any offering made or purported to be made in connection with
the securities registered or qualified by the Filer on Form (Name
of form) 10-SB on (Date) May 6, 1998 or any purchases or sales of
any security in connection therewith;
(ii) the securities in relation to which the obligation to file an
annual report on Form 40-F arises, or any purchases or sales of
such securities;
(iii) any tender offer for the securities of a Canadian issuer
with respect to which filings are made by the Filer with the
Commission on Schedule 13E-4F, 14D-IF or 14D-9F; or
(iv) the securities in relation to which the Filer acts as trustee
pursuant to an exemption under Rule 4d-1 under the Trust Indenture
Act of 1939. The Filer stipulates and agrees that any such civil
suit or action or administrative proceeding may be commenced by
the service of process upon, and that service of an administrative
subpoena shall be effected by service upon such agent for service
of process, and that the service as aforesaid shall be taken and
held in all courts and administrative tribunals to be valid and
binding as if personal service thereof had been made.
F. Each person filing this Form in connection with:
(a) the use of Form F-9, F-10, 40-F, or SB-2 or Schedule 13E-4F,
14D- IF or 14D-9F stipulates and agrees to appoint a successor agent
for service of process and file an amended Form F-X if the Filer
discharges the Agent or the Agent is unwilling or unable to accept
service on behalf of the Filer at any time until six years have
elapsed from the date the issuer of the securities to which such Forms
and Schedules relate has ceased reporting under the Exchange Act;
(b) the use of Form F-8 or Form F-80 stipulates and agrees to
appoint a successor agent for service of process and file an amended
Form F-X if the Filer discharges the Agent or the Agent is unwilling
or unable to accept service on behalf of the Filer at any time until
six years have elapsed following the effective date of the latest
amendment to such Form F-8 or Form F-80;
(c) its status as trustee with respect to securities registered on
Form F-7, F-8, F-9, F-10, F-80, or SB-2 stipulates and agrees to
appoint a successor agent for service of process and file an amended
Form F-X if the Filer discharges the Agent or the Agent is unwilling
or unable to accept service on behalf of the Filer at any time during
which any of the securities subject to the indenture remain
outstanding; and
(d) the use of Form I -A or other Commission form for an offering
pursuant to Regulation A stipulates and agrees to appoint a successor
agent for service of process and file an amended Form F-X if the Filer
discharges the Agent or the Agent is unwilling or unable to accept
service on behalf of the Filer at any time until six years have
elapsed from the date of the last sale of securities in reliance upon
the Regulation A exemption.
Each Filer further undertakes to advise the Commission promptly of any
change to the Agent's name or address during the applicable period by
amendment of this Form, referencing the file number of the relevant
form in conjunction with which the amendment is being filed.
G. Each person filing this Form, other than a trustee filing in
accordance with General Instruction I.(e) of this Form, undertakes to make
available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly, when
requested to do so by the Commission staff, information relating to: the
Forms, Schedules and offering statements described in General Instructions
I.(a),I.(b), I.(c), I.(d), and I.(f) of this Form, as applicable; the
securities to which such Forms, Schedules and offering statements relate;
and the transactions in such securities.
The Filer certifies that it has duly caused this power of attorney, consent,
stipulation and agreement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cisco, Texas, Country of U.S.A. this
6th day of May , 1998.
Australian-Canadian Oil Royalties Ltd. /s/Robert Kamon, Secretary & Director
Filer: By: (Signature and Title)
This statement has been signed by the following persons in the capacities
and on the dates indicated.
(Signature) /s/ ROBERT KAMON
(Title) Secretary & Director
(Date) May 6, 1998
Instructions
1. The power of attorney, consent, stipulation and agreement shall be
signed by the Filer and its authorized Agent in the United States.
2. The name of each person who signs Form F-X shall be typed or printed
beneath such person's signature. Any person who occupies more than one of
the specified positions shall indicate each capacity in which such person
signs Form F-X. If any name is signed pursuant to a board resolution, a
copy of the resolution shall be filed with each copy of Form F-X. A
certified copy of such resolution shall be filed with the manually signed
copy of Form F-X. If any name is signed pursuant to a power of attorney,
a copy of the power of attorney shall be filed with each copy of Form F-X.
A manually signed copy of such power of attorney shall be filed with the
manually signed copy of Form F-X.
