Transferable Is Not Liquid

Nothing in this paper constitutes an offer to sell, or a solicitation of an offer to buy, any interest in a Woodfine direct-hold solution; any offering is made only by the applicable Private Placement Memorandum. Statements marked "planned," "intended," "targeted," "may," or "expected" are forward-looking and subject to change. Full disclosures appear at the end of this paper.

Working Paper WCP-014 · v0.1.0 · CC BY 4.0

Our thesis is that a right to sell and an easy way to sell are two different things, and that confusing them is the single most expensive misunderstanding available in private investment. A holding can be transferable — meaning the holder does not need anybody's discretionary permission to sell it — and still not be liquid, meaning there is no ready buyer standing by and no published price to sell at. Public reporting status delivers the first honestly and delivers nothing whatever about the second. The same distinction applies to information: a right to be told things is not the same as a deadline by which you will be told them.

Before any of that, the present fact. Only one of the four vehicles described in this company's structure exists today, the Canadian limited partnership, and its units cannot be transferred at all. It is subject to a cease-trade order issued by the British Columbia Securities Commission, arising from delayed continuous-disclosure filings rather than any finding of fraud or misconduct. While that order remains in effect no transfer of those units is possible, and the partnership must bring its outstanding filing obligations current and obtain the Commission's revocation before any future offering of its units can close. Section 2 explains in plain language what that order is and what it means for a holder or a prospective one. We have put it in the second paragraph rather than the back matter on purpose: a paper arguing that disclosure should reach a reader without being asked for would be refuting itself if a reader had to go looking for this.

What follows, then, is a paper with two halves that are really one argument. The first half is what public reporting status genuinely gives a unit holder — a transfer right that does not depend on the sponsor's goodwill, and an information stream that arrives on a schedule rather than on request. The second half is the honest limit on both: no exchange, no market maker, no buyer guaranteed, and a filing record that is currently not current. Both halves are about the same question, which is what this status is actually worth to the person holding the unit.

1. The thesis

Two questions get asked as one and have different answers.

Do I need someone's permission to sell? This is a question about legal and contractual rights. In these vehicles the answer, by design, is no. The governing entity's part in a transfer is a recording step, not a decision: it is contractually obliged to admit a transferee who is eligible and who completes the required transfer documentation, and it may decline only on a short, enumerated list of grounds. It exercises no business judgement about whether it likes the buyer. Neither the promoter nor any other unit holder has any approval role in an ordinary transfer. That is a real right, and it is materially different from the private-fund norm, where an issuer commonly holds an open-ended right of first refusal or discretionary approval over who may acquire an interest.

Will there be a buyer, at a sensible price, when I want one? This is a question about market structure, and the answer is that nothing in this structure addresses it. There is no exchange listing for these units. There is no market maker — no firm paid to stand ready to buy from a seller who wants out. There is no buyback facility and no redemption right: the issuer does not undertake to take units back. A holder who wants liquidity has to find a willing, eligible counterparty themselves and agree a price bilaterally. The over-the-counter market for the units of any one asset is thin, and it is thin by design rather than by failure: the supply of units in a single named building is fixed and small, and a structure built to hold assets indefinitely does not generate the turnover that makes a market deep.

Our position is that saying both of those things clearly is worth more than claiming the second. A great deal of private-market marketing uses the first fact to imply the second, and the implication is where investors get hurt — not at the moment of buying, but years later when they need to sell and discover that "freely transferable" described the paperwork rather than the market.

2. Where this vehicle stands today

This section is the one that a reader should not be able to miss, so it comes before the explanatory material rather than after it.

What a cease-trade order is. A securities regulator supervises companies that have taken money from the public. One of the obligations that comes with that status is filing certain documents on time — audited annual financial statements, interim statements, management's discussion of results. When an issuer falls behind on those filings, the regulator's standard response is not a fine. It is an order that stops trading in that issuer's securities until the filings are brought current. The logic is straightforward and is actually protective of investors: if the public record is out of date, nobody buying or selling the security knows what they are buying or selling, so the regulator closes the market rather than let people transact on stale information.

The order here, and what it arises from. Professional Centres Canada LP is currently subject to a cease-trade order issued by the British Columbia Securities Commission. It arises from delayed continuous-disclosure filings. It does not arise from, and does not involve, any finding of fraud or misconduct. That is the whole basis of it, and it is the same language the company uses in its own public disclosure, because it is the accurate language.

What it means concretely. While the order stands, no transfer of these units is possible. The transfer mechanism described in the rest of this paper — the recording step, the eligibility documentation, the bilateral sale — is suspended, not merely slowed. And the partnership cannot close any future offering of its units until it has brought its outstanding filing obligations current and obtained the Commission's revocation of the order. There is no partial version of this: the filings come current and the order is lifted, or the position stays as it is.

Why this paper exists partly to say so. The second half of this paper describes a practice of publishing more than the minimum, on the company's own website, between formal filing dates. That practice is real and we think it is worth defending. It also cannot be allowed to stand alone, because a company whose formal filings went late is precisely the company that should not be invited to claim credit for voluntary disclosure without the filing record beside it. The two facts belong on the same page. This is that page.

3. The problem, in the reader's terms

The vocabulary in this area is ordinary to people who work in securities and genuinely opaque outside it, so it is worth a plain account before going further. Four terms carry the argument.

A reporting issuer is a company or vehicle that has become subject to a securities regulator's ongoing reporting rules, usually because it raised money from the public. The status is not a badge of quality. It is a set of obligations: file these statements, by these dates, on this public system, and tell everyone at once when something significant happens.

Continuous disclosure is the name for that ongoing obligation. In Canada it is set out in a rule called National Instrument 51-102, which governs the annual and interim financial statements, management's discussion and analysis of them, and the reports an issuer must file when something material changes [ni-51-102]. "Material" here means something a reasonable investor would want to know before deciding to buy, hold or sell. The related national policy governs how forward-looking statements — statements about what a company plans or expects rather than what it has done — must be qualified and framed [np-51-201]. A separate and useful overview of what these obligations require in practice is published by the British Columbia Securities Commission itself [bcsc-continuous-disclosure]. The filings go onto SEDAR+, the public electronic filing system for Canadian securities documents, where anyone can read them without asking permission or identifying themselves [sedar-plus].

An exchange is a marketplace with published prices and a mechanism for matching buyers and sellers continuously. A market maker is a firm that quotes both a price at which it will buy and a price at which it will sell, and stands behind those quotes, which is what makes it possible to sell a listed share in seconds. Neither exists for these units.

Liquidity, then, is not a property of a document. It is a property of a market: the presence of enough willing counterparties that a holder can convert a holding to cash quickly without moving the price much. A thing can be perfectly legal to sell and effectively impossible to sell, and the two facts live in different places.

Here is the analogy we think does the most work, and it is one most readers have lived through.

A land title office keeps the public register of who owns which property. If your name is on the title, you do not need anyone's discretionary permission to sell your house. There is no committee that decides whether it likes the buyer. The registry confirms your right to transfer and records the transfer when it happens, and its role in that transaction is clerical rather than judgemental — which is exactly what makes property ownership secure and exactly why nobody worries about it.

What the land title office does not do is find you a buyer. It does not tell you what your house is worth. It does not undertake to buy the house itself if nobody else will. In a falling market with no buyers, your title is just as good as it was and your house is just as unsold. A homeowner who confused a clear title with a ready market would be making a mistake that sounds absurd stated plainly, and it is the same mistake an investor makes when they read "freely transferable" as a promise of liquidity. Two different services. Having one tells you nothing about the other.

4. What the transfer right actually is, and how the instruments narrow it

The design of the transfer right is worth setting out precisely, including the places where it is narrower than the headline suggests. None of what follows is currently in effect for the one established vehicle, for the reason given in Section 2; it is the design that applies once that order is revoked, and structurally to the planned vehicles once each is established.

The recording step. Units are recorded in a property ledger for each named asset. On a transfer, the transferee completes the required transfer documentation — the Transfer Certificate, the transfer-guard mechanism used for unlisted equity in these structures — and the governing entity records the transfer in the order received. The governing entity does not weigh whether the buyer is desirable. This is worth being exact about, because it is the point on which the paper's whole thesis turns: if the step were a discretionary approval, then the right to sell would in substance depend on the sponsor's goodwill and the thesis would have to be narrowed. It is not. It is a ministerial recording step, and the general partner in the Canadian vehicle is contractually obliged to admit an eligible transferee.

The enumerated grounds on which it can be declined. "Obliged" does not mean "unconditionally." A short list of specific grounds exists, and each is a rule rather than a judgement. A transfer may be declined where completing it would breach securities law or where the transferee's eligibility representations are untrue. A transfer to a person may be refused where the governing entity becomes aware that beneficial owners of forty-five per cent or more of outstanding units are, or may be, financial institutions, unless that person confirms it is not one — a threshold that exists for tax reasons rather than as a view about financial institutions. And separately from any transfer, a holder whose own status changes in a way that would create adverse Canadian tax consequences for the partnership can be required to sell at appraised value. That last one is a real curtailment of a holder's right to stay, not only of their right to sell, and it should be read as such.

The eligibility representations, which recur. A transferee makes the same representations about residency, investor status and similar matters that the original subscriber made, on each transfer. This is not a re-approval and it is not discretionary. It is also not nothing: it is a real, recurring procedural step, and describing the transfer as frictionless would overstate it. In Canada an initial four-month statutory hold period also applies after an initial distribution, before units become freely transferable at all.

The thresholds that change the rules at scale. A buyer accumulating a large position does not simply keep buying. An offer that would take the offeror to twenty per cent or more of outstanding units is a take-over bid, and the governing entity rejects a transfer under such an offer unless the offeror has made an irrevocable offer for all outstanding units, at the same price and terms, open for at least thirty-five days. If such a bid is accepted to the point where the offeror reaches ninety per cent, the remainder can be acquired at the same price. And a holder crossing seventy-five per cent triggers a buyout right — the option to acquire the rest at appraised value — failing which the other holders hold the mirror-image right to require being bought out. These provisions protect a minority holder from being stranded beside a controlling one. They also mean the transfer right is not identical at all scales, and a reader should not generalise from the ordinary small transfer to a large one.

How settlement actually happens. Units in the Canadian vehicle settle through CDS Clearing and Depository Services Inc., Canada's central securities depository. On closing, units arrive electronically rather than as a paper certificate, and an investor holds the position through the book-based records of a participant — typically a brokerage or custodian — rather than as a certificate registered in their own name. This is entirely standard and it is worth naming, because a reader expecting a framed certificate for a private real-estate holding will not get one, and because the same function is performed by a different institution in each of the other three planned jurisdictions.

And what is deliberately absent. No formal secondary market. No matched-order book. No market maker. No corporate buyback facility and no put right. No redemption queue, because there is no redemption. When an asset is eventually sold, the ledger for it is closed and the proceeds are distributed — but nothing forces that sale on a schedule, because the vehicle has no terminal date. That absence is the price of the perpetual structure, and the structure buys something real in exchange: no forced sale at a predetermined date, and none of the discount that fund-cycle vehicles realise when they must wind down whatever the market is doing.

5. What the company publishes, and when

The second half of what reporting status gives a holder is information, and it is worth separating what is obliged from what is volunteered, because they are different commitments with different reliability.

What the obligation requires. As a reporting issuer, the vehicle files on the public record [ni-51-102]: audited annual financial statements prepared under International Financial Reporting Standards, with the independent auditor's report attached; management's discussion and analysis of the year, including the assumptions behind any forward-looking statements; interim statements through the year; and, where a material change occurs, a press release immediately on determination followed by a material change report on SEDAR+ within ten days. An annual information form is required of some issuers and not of others, depending on a classification made when an issuer becomes a reporting issuer. The annual package is due within ninety days of the December year end, or one hundred and twenty for a venture issuer. An auditor, in this context, is an independent accounting firm with no other role in the business, whose job is to test the statements and say whether they fairly present the position — it is an outside opinion, not management's own summary.

The word doing the work in all of that is when. Everything on that list was available to a private-fund investor before, on request, from the manager. What changes with reporting status is that it arrives on a published schedule whether anyone asks or not, and it arrives to everybody at once. That is what actually removes the information gap that private lock-ups exist to manage, and it is the honest reason a transfer right is defensible here: a buyer can read the same record the seller read.

What is volunteered on top. Beyond that minimum, the company treats its own corporate website as part of the public record rather than as marketing. Material published there is treated as publicly available disclosure, reviewable under the same continuous-disclosure standard as formally filed documents, and the material-change test is applied to a page before it goes live. Forward-looking statements carry qualifying language as a matter of convention throughout, not as a footnote — which is why a reader will find "planned," "intended" and "target" used insistently, including about structures that are fully designed but not yet formed. That practice is a real discipline with a real cost: it constrains what the company can say about itself, and it means pages are held rather than published when the filing position is not settled.

And what is not in place. A voluntary practice is not a substitute for the instruments that formalise it, and most of those are not adopted. Of the governance documents that would normally regulate this, only the audit committee charter is currently in place. There is no investor relations policy — the instrument that would name who may speak for the issuer, establish quiet periods before results, and set out how guidance is updated or withdrawn. No press release or material change report has been issued to date, and no earnings release or investor call has happened, because the reporting channel has not opened. Those are all described in the company's own material as intentions rather than practices, and they should be read that way.

One blunt sentence to close this section, since the alternative is to let the reader assemble it themselves. A company that publishes more than it must, and also filed late enough to draw a cease-trade order, has demonstrated that voluntary disclosure and reliable filing are separate capabilities. We would rather write that sentence ourselves than have it written for us.

What this changes for the reader

The first change is a question a reader can ask of any private offering, in these words: is this transferable, and separately, is it liquid? Almost nothing in the market volunteers the distinction, and an offering document that answers both questions clearly has told a reader something important about its own candour. If the answer to the second is "there is a secondary market" without naming who makes it, the answer is no.

The second is a set of specific follow-up questions that work anywhere. Who records a transfer, and can they refuse? On what grounds, exactly, and are they listed or open-ended? Is there a market maker, and if so who pays them? Is there a redemption right, and if so what can suspend it? Those four answers describe the real liquidity of any private holding better than any adjective.

The third is about what to do with a company's website. Treat it as a working supplement to the filing record and never as a substitute for it. The filings are the record a regulator can enforce; a website is a record a company maintains. When the two diverge, the filings govern, and a gap between them is itself information.

The trade-offs belong in one place. The transfer right described here is real but procedurally encumbered, and it is suspended entirely today. The perpetual structure that removes forced-sale risk is the same structure that guarantees thin trading. The absence of a market maker means a holder needing cash quickly is in a weak position, and this is the structure's most significant ordinary-course risk to an individual investor. And the disclosure practice that this paper partly defends is, at the date of writing, a practice without the formal governance instruments that would make it durable if the people maintaining it changed.

An open invitation

The questions here belong to people who study market structure and securities regulation rather than to people who develop property.

To securities-law and market-structure researchers: the open design question is what would actually have to exist to convert structural transferability into genuine liquidity for an asset-specific, fixed-supply, perpetual instrument. A matching service? A designated market maker paid by the issuer, with the conflicts that introduces? A periodic auction rather than continuous trading? Each of those has been tried somewhere for something, and we do not know which — if any — survives contact with an instrument whose whole supply is the units of one building. We are not claiming to have solved this. We are claiming to have been clear that we have not.

To researchers on disclosure and investor comprehension: the empirical question underneath this paper is whether the distinction it draws actually reaches a reader. Our suspicion, which we cannot test from here, is that "freely transferable" is read as a liquidity promise by most retail investors regardless of the surrounding language, and that no amount of careful drafting fixes it — that only a plain negative statement does. If that is right, it has consequences for how these documents should be written that go well beyond our own.

To practitioners in valuation of illiquid holdings: where there is no market price and no market maker, a holder wanting to sell has no reference point except an annual appraisal produced for a different purpose. What a fair bilateral price ought to be, and what discount to appraised value is genuinely attributable to illiquidity rather than to a weak bargaining position, is a real question for anyone holding one of these units. We do not publish a recommended discount and we would not know how to.

Conclusion

Reporting status gives a unit holder two real things: a transfer right that does not depend on the sponsor's permission, and an information stream that arrives on a schedule instead of on request. It does not give them a buyer. There is no exchange, no market maker and no buyback here, and the market for units in any single building is thin by design. Those facts sit alongside the present position of the one vehicle that exists, which is under an active cease-trade order arising from delayed continuous-disclosure filings rather than any finding of fraud or misconduct, whose units cannot be transferred at all while the order stands, and which must bring its filings current and obtain the Commission's revocation before any future offering can close. Transferable is not liquid; voluntary disclosure is not a current filing record; and a paper that made either of those sound like the other would be the wrong kind of document.

References

British Columbia Securities Commission. Continuous Disclosure Obligations — overview. https://www.bcsc.bc.ca/industry/issuer-regulation/continuous-disclosure-obligations

Canadian Securities Administrators. National Instrument 51-102 — Continuous Disclosure Obligations. https://www.bcsc.bc.ca/securities-law/law-and-policy/instruments-and-policies/5-ongoing-requirements-for-issuers-insiders/current/51-102

Canadian Securities Administrators. National Policy 51-201 — Disclosure Standards.

Canadian Securities Administrators. SEDAR+ — the filing and public disclosure system for Canadian securities. https://www.sedarplus.ca/

Contributors

Prepared by Woodfine Management Corp.

How this paper was produced

This paper is grounded in the operating and development work the preparing staff do themselves, and in what they have learned from the people they work with routinely: the graphic designers, web developers, and software developers and engineers who build the platform alongside them, and the architects and structural, building-services, and civil engineers they develop buildings with. No outside professional reviewed or approved this paper, and nothing in it is professional advice. It was drafted and edited with AI assistance under editorial direction, and the analysis and conclusions are Woodfine's own.

Disclosures

Woodfine Capital Projects Inc. ("Woodfine") is the author of record and is the promoter of the vehicles described in this paper; Woodfine Management Corp. employs the staff and retains the consultants who prepared this material. Woodfine has a direct commercial interest in the structure argued for here. This work was funded internally; no external research funding was received. Nothing in this paper constitutes an offer to sell, or a solicitation of an offer to buy, any interest in a Woodfine direct-hold solution; any offering is made only by the applicable Private Placement Memorandum, which prospective investors should review with their own professional advisors. Professional Centres Canada LP is currently subject to a cease-trade order issued by the British Columbia Securities Commission, arising from delayed continuous-disclosure filings rather than any finding of fraud or misconduct; while that order is in effect its units are not transferable, and the partnership must bring its outstanding filing obligations current and obtain the Commission's revocation before any future offering of units can close. The United States, Spain and Mexico vehicles referred to are planned and not yet established. The transfer, take-over-bid, buyout and eligibility provisions described are terms of a governing limited partnership agreement summarised here in plain language; that agreement, and not this paper, governs, and the parallel vehicles will be governed by separate instruments not described here. Nothing in this paper is legal advice. Some statements above describe planned or intended future arrangements; language such as "planned," "intended," "targeted," "may," and "expected" marks this forward-looking content, which is subject to change and does not constitute a commitment regarding future performance.

Data and reproducibility

There is nothing measured in this paper. It contains three kinds of statement.

The transfer mechanics — the recording step and the obligation to admit an eligible transferee, the enumerated grounds for declining, the recurring eligibility representations, the four-month statutory hold, the twenty per cent take-over-bid threshold and the ninety per cent compulsory-acquisition mechanic, the seventy-five per cent buyout and takeout rights, the forty-five per cent financial-institution ground, the adverse-tax-status divestment requirement, and the absence of any redemption or buyback — are terms of the established Canada vehicle's governing agreement, summarised in plain language. They are commitments rather than observations, they are specific to that vehicle, and none of them is currently operative because of the cease-trade order. A reader relying on any of them should read the agreement rather than this summary.

The regulatory description — what a cease-trade order is, what continuous disclosure requires, what the annual and interim filing package contains, and what SEDAR+ is — restates public rules that are published in full at the sources listed above, and those sources govern over this paper's plain-language account of them. The characterisation of this particular order as arising from delayed continuous-disclosure filings rather than from any finding of fraud or misconduct is the company's own published characterisation of it; the order itself is a public document of the British Columbia Securities Commission and a reader who wants the primary record should read it there rather than rely on this description.

The disclosure practice — treating published corporate material as reviewable disclosure, applying the material-change test before publication, and qualifying forward-looking statements by convention — is a practice, not an instrument. Of the governance documents that would formalise it, only the audit committee charter is in place; there is no investor relations policy, no quiet-period practice and no guidance policy in force. No press release, material change report, earnings release or investor call has occurred. No independent party has reviewed this paper's account of the transfer mechanics against the underlying agreement, or its account of the disclosure position against the filing record.

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