Special Committee of Genesis Land Development Corp. releases Interim Report
to Shareholders

CALGARY, May 17 /CNW/ - In response to requests from numerous shareholders of Genesis Land Development Corp. ("Genesis") and in light of the upcoming Annual General Meeting of Shareholders, the Special Committee has issued the attached Interim Report to Shareholders (the "Interim Report"). In summary, the Interim Report recommends that a strong independent slate of directors be elected at the upcoming annual and special meeting of shareholders of Genesis to assist with the ongoing efforts to improve governance, oversight and shareholder value.

In this regard, the Special Committee expects to work with the Corporate Governance Committee (which is constituted with the same directors) to consider an appropriate slate of candidates for the Annual General Meeting set to take place on June 29, 2010.

In the interim, the Special Committee has taken immediate actions to strengthen the governance, financial reporting and succession planning of Genesis. Among other actions, the Special Committee has empowered the Chairman of the Board of Directors to engage a strategic financial advisor(s) for the purpose of maximizing shareholder value.

Shareholders have the right to a corporation dedicated to the enhancement of shareholder value. The Special Committee will continue to keep shareholders apprised of developments, its recommendations and further actions.

About Genesis Land Development Corp.:

Genesis Land Development Corp. is a Calgary based land development company with an estimated inventory of more than 28,000 future residential building sites (single-family and multi-family) and over 1,000 acres of commercial/industrial lands in Western Canada, of which more than an estimated 14,000 residential lots and over 530 acres of commercial/industrial lands are in the Calgary and Edmonton metropolitan areas. The Special Committee of the board has a broad mandate and is composed of Mr. Keith Ferrel, Mr. Kevin Reed and Mr. Akhil Manro.

    
                       SPECIAL COMMITTEE INTERIM REPORT
                             TO THE SHAREHOLDERS
                                     OF
                       GENESIS LAND DEVELOPMENT CORP.


                                   PART I
                                 INTRODUCTION
    

The Special Committee of the Board of Directors ("Special Committee") of Genesis Land Development Corp. ("Genesis" or the "Corporation") was constituted for purposes of receiving a report prepared by the Audit Committee dated April 14, 2009 (the "Interim Report") which reviewed certain corporate transactions and events in specific response to the circumstances surrounding the restatement of the Q3 2008 interim financial statements of Genesis. A final report was delivered by the Audit Committee dated May 14, 2009.

The mandate of the Special Committee is broad. It is noted that:

    
    The mandate of the Special Committee is (a) to consider all matters
    pertaining to the recommendations in the (Interim) Report and, in the
    Committee's discretion, implement required changes, (b) to deal with any
    issue, matter, proposal or transaction that may arises with respect to
    the subject matter of the (Interim) Report and its recommendation from
    the date of the formation of the Committee through to the date by which
    the recommendation is fully implemented that gives rise to, or may give
    rise to, changes considered necessary or desirable with or without the
    concurrence of the President and Chief Executive Officer or other officer
    of the Corporation, and (c) to maintain the implementation of the
    recommendations contained in the Report and any actions taken in
    furtherance thereon.

    ...

    The Committee is formed in furtherance of the Board's fiduciary duties to
    the Corporation to act honestly and in good faith with the view to the
    best interest of the Corporation and to exercise the care, diligence, and
    skill that a reasonably prudent person would exercise in comparable
    circumstances. The (Special) Committee is established to maintain the
    independence from Gobi Singh who is presently the Chairman, a Director
    and President and Chief Executive Officer of the Corporation, and whose
    conduct is subject to review and recommendations in the (Interim) Report
    .... This mandate recognizes that it is both necessary and desirable in
    discharging the Board's fiduciary duties that a Committee of independent
    Directors should be formed for the purposes set out in this mandate.

    ...

    The Special Committee may, in its sole discretion, make and implement any
    and all decisions and determinations with respect to its mandate. The
    Committee may, in its sole discretion, refer certain decisions and
    determinations to the Board. Without limiting the generality of, the
    foregoing, the Committee has the authority to negotiate, enter into and
    deliver any and all commitments and agreements, for and on behalf of the
    Corporation, related to, or in, connection with, its mandate.

                                   PART II
                                  THE FACTS
    

The Interim Report was first tabled with the Special Committee of the Board of Directors and not the entire Board of Directors on April 16, 2009.

After completion of the Interim Report, the Special Committee terminated the employment of Mr. Frank Devcich, Chief Financial Officer, for cause, and retained an interim Chief Financial Officer and interim Chief Operating Officer on fixed term contracts. Gobi Singh, the President and Chief Executive Officer was suspended for fixed periods and then suspended indefinitely, during which time negotiations were ongoing with respect to the potential of Mr. Singh providing transitional assistance to the Corporation. No arrangements could be satisfactorily finalized and on April 23, 2009, Mr. Singh was terminated for cause.

The Audit Committee's Final Report (the "Report") was issued May 14, 2009. It included the finding that "After consideration of all of the facts, the (Audit) Committee has determined that ... Devcich and Singh knowingly misled the auditors, the (Audit) Committee and the Board of Directors". The Report provided in part:

    
    The members of the Audit Committee, being the directors of the
    Corporation other than Mr. Singh, are deeply troubled by the conclusions
    they have drawn from the facts uncovered in their investigation. The
    members of the Committee are well aware of the consequences brought about
    by these conclusions and are troubled that the two most senior officers
    of the Corporation would have allowed Genesis to be placed in the
    position it now finds itself under their leadership (or lack thereof).
    Regardless of actions recommended by the Committee, failure of Singh and
    Devcich to be frank, truthful and open in the lead up to the Interim
    Report and in the case of Mr. Singh after the Interim Report to the time
    of this Report, and the actions they have taken, will leave the
    Corporation with significant blemishes and unnecessary challenges in an
    already difficulty economic climate.

    It is noted that Mr. Singh is a significant shareholder of the
    Corporation. However, that being said, he is not the sole proprietor of
    the Corporation and, in reaching its conclusions, the Committee must act
    honestly and in good faith a view to the best interests of the
    Corporation, in order to discharge its fiduciary duty. The Committee must
    also exercise the care, diligence and skill that a reasonable prudent
    person would exercise in comparable circumstances, as they exercise their
    powers as directors. It should be noted that this same obligation is
    imposed by statute upon Singh and Devcich as officers of the Corporation
    and similarly upon Singh as a director of the Corporation.
    

The Report's recommendations addressed numerous items. Of particular importance were its observations regarding (a) governance and controls (internal and disclosure) and (b) the Board of Directors. In particular, it recommended that "Nominating and Governance Committee to be directed to consider new or additional directors."

Following the completion of the Report, the former independent members of the Board of Directors resigned en masse and were replaced by Keith Ferrel, Kevin Reed and Akhil Manro. These independent directors continued as members of the Special Committee. On May 22, 2009, the Special Committee re-appointed Mr. Singh as President and Chief Executive Officer. At that time, the Corporation's dire financial circumstances did not permit the transition to a new management team.

On July 23, 2009, the Corporation distributed its Management Information Circular with a new slate of directors, the former independent directors having resigned. The Management Information Circular reported as follows on the Special Committee:

    
    The Corporation has a Special Committee (that is composed entirely of
    independent directors). The Special Committee was constituted for the
    purpose of receiving a report of the Audit Committee dated April 14, 2009
    (the "Report"). The mandate of the Special Committee is: (a) to consider
    all matters pertaining to the recommendations in the Report and, in the
    Committee's discretion, implement required changes; (b) to deal with any
    issue, matter, proposal or transaction that may arise with respect to the
    subject matter of the Report and its recommendation from the date of the
    formation of the Committee through to the date by which the
    recommendation is fully implemented that gives rise to, or may give rise
    to, changes considered necessary or desirable with or without the
    concurrence of the President and Chief Executive Officer or other officer
    of the Corporation; and (c) to maintain the implementation of the
    recommendations contained in the Report and any actions taken in
    furtherance thereof.

    The Special Committee was one of four standing committees of the Board of
Directors:

    Audit Committee:
    Keith E. Ferrel, Chair; Kevin D. Reed; Akhil K. Manro

    Compensation Committee:
    Kevin D. Reed, Chair; Keith E. Ferrel; Akhil K. Manro

    Corporate Governance Committee:
    Akhil K. Manro, Chair; Keith E. Ferrel; Kevin D. Reed

    Special Committee:
    Keith E. Ferrel, Chair; Kevin D. Reed; Akhil K. Manro
    

On May 12, 2010, the Corporation gave notice that the Annual Shareholders' Meeting would take place on June 29, 2010.

    
                                   PART III
                                  DISCUSSION
    

It is a now a year following the events of March-May 2009. It is clear that additional steps must be taken to strengthen governance, management oversight and management itself.

Specifically, the Special Committee has determined that a strong independent board of directors is critical to the future success of the Corporation. In this regard, the Special Committee is reporting to shareholders on the serious historic issues that the Corporation faced, on the progress that has been made in strengthening governance and that additional steps that are required at the next Annual Shareholders' Meeting to position the Corporation for continued success.

In this regard, the Special Committee is recommending in this interim report that a strong independent slate of directors be elected to assist with the ongoing efforts to improve governance, oversight and shareholder value.

The Special Committee expects to work with the Corporate Governance Committee (which is constituted with the same directors) to consider an appropriate slate of candidates for the Annual General Meeting set to take place on June 29, 2010.

In the interim, the Special Committee has made a number of resolutions that are designed to enhance governance, financial reporting and succession planning. Among other actions, the Chairman of the Board of Directors is empowered to engage a strategic financial advisor for the purpose of maximizing shareholder value.

The Special Committee will continue to keep shareholders apprised of developments, its recommendations and further actions.

Approved by Resolution of the Special Committee.

SOURCE Genesis Land Development Corp.

For further information: For further information: Contact: Mr. Kevin Reed, Chairman of the Board of Directors, Phone: (403) 991-1455, Email: kevin@reedcorp.ca


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