OTTAWA, Dec. 11, 2012 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch"
or the "Company") (TSX.V:INX) announces that, on or before December 31,
2012, it will make a loan in the amount of $193,725 to Michael Gaffney,
its Chief Executive Officer and a director, and a loan in the amount of
$173,800 to Neil Milton, a director and Chairman, to assist them in
complying with recently enacted changes to the Income Tax Act (Canada) which prohibit individuals who hold greater than a 10%
ownership in companies from holding any shares of such companies within
registered plans. The Company has 14,276,312 common shares issued and
outstanding. Mr. Gaffney holds 2,260,794 common shares of the Company
(15.9%), of which 615,000 shares (4.3%) are held in his RRSP, and Mr.
Milton owns 2,401,348 common shares of the Company (16.9%), of which
552,000 shares (3.9%) are held in his RRSP. Plan owners such as
Messrs. Gaffney and Milton are obliged to divest such prohibited
interests within their registered plans not later than December 31,
2012 or be faced with substantial tax penalties. The principal amount
of each loan is based on the closing price of the common shares on the
TSX Venture Exchange on December 10, 2012, namely, $0.315, and the loan
proceeds will be used by each of Mr. Gaffney and Mr. Milton to purchase
all of the common shares of the Company held by their respective RRSPs.
The loans will be repayable on December 10, 2013, and will bear interest
at the rate of 3% per annum, being the current prime rate of Canadian
chartered banks. The loans will be secured by a pledge of the shares
purchased by each of Messrs. Gaffney and Milton from their RRSPs.
The loans from the Company to Messrs. Gaffney and Milton constitute
related party transactions under Multilateral Instrument 61-101 Protection of Minority Security Holders (MI 61-101). These transactions are exempt from the requirement for
minority approval under MI 61-101 pursuant to section 5.5(a), as the
subject matter and consideration for the transaction does not exceed
25% of the market capitalization of In-Touch, and the transactions are
also exempt from the formal valuation requirement under MI 61-101 based
on both such market capitalization threshold and because In-Touch is
listed on the TSX Venture Exchange.
The sole independent director of In-Touch, Rainer Paduch, has reviewed
the proposed loan transactions pursuant to Section 5.2(1)(e) of MI
61-101, and approved the loans as being in the best interests of
In-Touch, having regard to the potential for depressing the trading
price of the Company's common shares if Messrs. Gaffney and Milton were
required to cause their RRSPs to sell shares in the market in a short
time frame in order to obtain the funds required to purchase all of the
shares of the Company held in their RRSPs.
The material change report with respect to these transactions is being
filed less than 21 days before the making of the loans as the
transactions to remove the shares of the Company from the RRSPs of
Messrs. Gaffney and Milton must be completed by them on or before
December 31, 2012, and these changes to the Income Tax Act (Canada) came to the attention of Messrs. Gaffney and Milton and the
Company only recently.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE: In-Touch Survey Systems Ltd.
For further information:
Controller and Corporate Secretary