Volume 32, Issue 42, Oct 16, 2009 · 10/16/2009 · Shuman and Innovative Gifting Inc. s. 127 M. Boswell in attendance for Staff Panel: JDC December 9, 2009 10:00 a.m. Nest Acquisitions

The Ontario Securities Commission

OSC Bulletin

October 16, 2009

Volume 32, Issue 42

(2009), 32 OSCB

The Ontario Securities Commission administers the Securities Act of Ontario (R.S.O. 1990, c. S.5) and the

Commodity Futures Act of Ontario (R.S.O. 1990, c. C.20)

The Ontario Securities Commission Published under the authority of the Commission by:Cadillac Fairview Tower Carswell, a Thomson Reuters businessSuite 1903, Box 55 One Corporate Plaza 20 Queen Street West 2075 Kennedy Road Toronto, Ontario Toronto, Ontario M5H 3S8 M1T 3V4

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October 16, 2009 (2009) 32 OSCB

Table of Contents

Chapter 1 Notices / News Releases ......................8337 1.1 Notices ..........................................................83371.1.1 Current Proceedings Before The Ontario Securities Commission ......................83371.2 Notices of Hearing........................................8342 1.2.1 Barry Landen – s. 127 ....................................83421.3 News Releases .............................................8345 1.3.1 OSC Implements New Process Aligning the Transparency of Changes to the Operations of Stock Exchanges and Alternative Trading Systems....................8345 1.4 Notices from the Office of the Secretary ............................................8345 1.4.1 Barry Landen..................................................8345 1.4.2 Global Energy Group, Ltd. and New Gold Limited Partnerships ......................8346 1.4.3 Gold-Quest International et al.........................8346 1.4.4 Gold-Quest International et al.........................8347 1.4.5 Shane Suman and Monie Rahman ................8347

Chapter 2 Decisions, Orders and Rulings ............8349 2.1 Decisions ......................................................8349 2.1.1 Dragonwave Inc. ............................................8349 2.1.2 First Place Tower Brookfield Properties Inc. ................................................83522.1.3 Goldman, Sachs & Co – s. 127(2)(h) of the Regulation and s. 3.1 of the Rule .........8355 2.1.4 Major Gold Ltd................................................8358 2.2 Orders............................................................8359 2.2.1 Global Energy Group, Ltd. and New Gold Limited Partnerships – ss. 127(1), 127(8) ........................................8359 2.2.2 Gold-Quest International et al. – ss. 127(1), 127(8) ........................................8360 2.2.3 Gold-Quest International et al. – s. 127...........................................................83622.2.4 CMC Markets UK plc and CMC Markets Canada Inc. – s. 74(1) .............83642.2.5 JovInvestment Management Inc. and The Gartman Letter, L.C. – ss. 78(1), 80 of the CFA ..............................8371 2.3 Rulings ........................................................... (nil)

Chapter 3 Reasons: Decisions, Orders and Rulings...................................................83753.1 OSC Decisions, Orders and Rulings ..........8375 3.1.1 Shane Suman and Monie Rahman ................8375 3.2 Court Decisions, Order and Rulings............ (nil)

Chapter 4 Cease Trading Orders...........................83794.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders .........................8379 4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders ..............8379 4.2.2 Outstanding Management & Insider Cease Trading Orders....................................8379

Chapter 5 Rules and Policies ..................................(nil)

Chapter 6 Request for Comments ........................ 8381 6.1.1 Notice and Request for Comments – Proposed Amendments to NI 81-106 Investment Fund Continuous Disclosure and Companion Policy 81-106CP Investment Fund Continuous Disclosure and Related Amendments ............................. 8381 6.2.1 CSA Notice and Request for Comment – Proposed Amendments to NI 45-106 Prospectus and Registration Exemptions, Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers, Form 45-106F3

Offering Memorandum for Qualifying Issuers and Companion Policy 45-106CP Prospectus and Registration Exemptions ...... 8464

Chapter 7 Insider Reporting.................................. 8505

Chapter 8 Notice of Exempt Financings............... 8613 Reports of Trades Submitted on Forms 45-106F1 and 45-501F1.............. 8613

Chapter 9 Legislation...............................................(nil)

Chapter 11 IPOs, New Issues and Secondary Financings............................................. 8617

Chapter 12 Registrations......................................... 8625 12.1.1 Registrants..................................................... 8625

Chapter 13 SRO Notices and Disciplinary Proceedings .......................................... 8627 13.1.1 MFDA Hearing Panel accepts Settlement Agreement with Professional Investment Services (Canada) Inc................. 8627 13.1.2 MFDA Hearing Panel reserves judgment on motion in the Matter of Gary A. Price ............................................. 8627

Chapter 25 Other Information ...................................(nil)

Index............................................................................ 8629

October 16, 2009 (2009) 32 OSCB 8337

Chapter 1

Notices / News Releases

1.1 Notices

1.1.1 Current Proceedings Before The Ontario Securities Commission

OCTOBER 16, 2009

CURRENT PROCEEDINGS

BEFORE

ONTARIO SECURITIES COMMISSION

- - - - - - - - - - - - - - - - - - - - - - - - -

Unless otherwise indicated in the date column, all hearings will take place at the following location:

The Harry S. Bray Hearing Room Ontario Securities Commission Cadillac Fairview Tower Suite 1700, Box 55 20 Queen Street West Toronto, Ontario M5H 3S8

Telephone: 416-597-0681 Telecopier: 416-593-8348

CDS TDX 76

Late Mail depository on the 19th Floor until 6:00 p.m.

- - - - - - - - - - - - - - - - - - - - - - - - -

THE COMMISSIONERS

W. David Wilson, Chair — WDW James E. A. Turner, Vice Chair — JEAT Lawrence E. Ritchie, Vice Chair — LER Sinan Akdeniz — SA James D. Carnwath — JDC Mary G. Condon — MGC Margot C. Howard — MCH Kevin J. Kelly — KJK Paulette L. Kennedy — PLK David L. Knight, FCA — DLK Patrick J. LeSage — PJL Carol S. Perry — CSP Charles Wesley Moore (Wes) Scott — CWMS

SCHEDULED OSC HEARINGS

October 19–23, 2009

10:00a.m.

Rene Pardo, Gary Usling, Lewis Taylor Sr., Lewis Taylor Jr., Jared Taylor, Colin Taylor and 1248136 Ontario Limited

s. 127

M. Britton in attendance for Staff

Panel: JDC/KJK

October 22, 2009

10:00 a.m.

Oversea Chinese Fund Limited Partnership, Weizhen Tang and Associates Inc., Weizhen Tang Corp., and Weizhen Tang

s. 127 and 127.1


Panel: DLK

October 29, 2009

10:00 a.m.

Barry Landen

s. 127

H. Craig in attendance for Staff

Panel: TBA

November 6, 2009

10:00 a.m.

Adrian Samuel Leemhuis, Future Growth Group Inc., Future Growth Fund Limited, Future Growth GlobalFund limited, Future Growth Market Neutral Fund Limited, Future Growth World Fund and ASL Direct Inc.

s. 127(5)

K. Daniels in attendance for Staff

Panel: TBA

November 11, 2009

12:00 p.m.

Imagin Diagnostic Centres Inc., Patrick J. Rooney, Cynthia Jordan, Allan McCaffrey, Michael Shumacher, Christopher Smith, Melvyn Harris and Michael Zelyony

s. 127 and 127.1

J. Feasby in attendance for Staff

Panel: MGC/MCH


October 16, 2009 (2009) 32 OSCB 8338

November 16, 2009

10:00 a.m.

Maple Leaf Investment Fund Corp. and Joe Henry Chau

s. 127

J. Superina in attendance for Staff

Panel: TBA

November 16-December 11, 2009

10:00 a.m.

Sulja Bros. Building Supplies, Ltd. (Nevada), Sulja Bros. Building Supplies Ltd., Kore International Management Inc., Petar Vucicevich and Andrew DeVries

s. 127 & 127.1


Panel: DLK/PLK

November 24, 2009

2:30 p.m.

W.J.N. Holdings Inc., MSI Canada Inc., 360 Degree Financial Services Inc., Dominion Investments Club Inc., Leveragepro Inc., Prosporex Investment Club Inc., Prosporex Investments Inc., Prosporex ltd., Prosporex Inc., Networth Financial Group Inc., Networth Marketing Solutions, Dominion Royal Credit Union, Dominion Royal Financial Inc., Wilton John Neale, Ezra Douse, Albert James, Elnonieth “Noni” James, David Whitely, Carlton Ivanhoe Lewis, Mark Anthony Scott, Sedwick Hill, Trudy Huynh, Dorlan Francis, Vincent Arthur, Christian Yeboah, Azucena Garcia and Angela Curry

s. 127

H. Daley in attendance for Staff

Panel: JDC/CSP

November 24, 2009

2:30 p.m.

Prosporex Investments Inc., Prosporex Forex SPV Trust, Anthony Diamond, Diamond+Diamond, and Diamond+Diamond Merchant Banking Bank

s. 127

H. Daley in attendance for Staff

Panel: JDC/CSP

November 30, 2009

10:00 a.m.

Paladin Capital Markets Inc., John David Culp and Claudio Fernando Maya

s. 127

C. Price in attendance for Staff

Panel: TBA

November 30, 2009

2:00 p.m.

Uranium308 Resources Inc., Uranium308 Resources PLC., Michael Friedman, George Schwartz, Peter Robinson, Alan Marsh Shuman and Innovative Gifting Inc.

s. 127

M. Boswell in attendance for Staff

Panel: JDC

December 9, 2009

10:00 a.m.

Nest Acquisitions and Mergers and Caroline Frayssignes

s. 127(1) and 127(8)


Panel: TBA

December 9, 2009

10:00 a.m.

IMG International Inc., Investors Marketing Group International Inc., and Michael Smith

s. 127


Panel: TBA

December 10, 2009

10:00 a.m.

Gold-Quest International, Health and Harmoney, Iain Buchanan and Lisa Buchanan

s. 127


Panel: TBA


October 16, 2009 (2009) 32 OSCB 8339

December 10, 2009

10:00 a.m.

Gold-Quest International, 1725587 Ontario Inc. carrying on business as Health and Harmoney, Harmoney Club Inc., Donald Iain Buchanan, Lisa Buchanan and Sandra Gale

s. 127


Panel: TBA

December 11, 2009

9:00 a.m.

Tulsiani Investments Inc. and Sunil Tulsiani

s. 127


Panel: JDC

December 16, 2009

9:00 a.m.

Goldpoint Resources Corporation, Lino Novielli, Brian Moloney, Evanna Tomeli, Robert Black, Richard Wylie and Jack Anderson

s. 127(1) and 127(5)


Panel: MGC/DLK

January 11, 2010

10:00 a.m.

Firestar Capital Management Corp., Kamposse Financial Corp., Firestar Investment Management Group, Michael Ciavarella and Michael Mitton

s. 127


Panel: TBA

January 12, 2010

10:00 a.m.

Shallow Oil & Gas Inc., Eric O’Brien, Abel Da Silva, Gurdip Singh Gahunia aka Michael Gahunia and Abraham Herbert Grossman aka Allen Grossman

s. 127(7) and 127(8)


Panel: TBA

January 12, 2010

10:30 a.m.

Abel Da Silva

s. 127


Panel: TBA

January 18, 2010; January 20-29, 2010

10:00 a.m.

January 19, 2010

2:30 p.m.

New Life Capital Corp., New Life Capital Investments Inc., New Life Capital Advantage Inc., New Life Capital Strategies Inc., 1660690 Ontario Ltd., L. Jeffrey Pogachar, Paola Lombardi and Alan S. Price

s. 127

S. Kushneryk in attendance for Staff

Panel: TBA

January 18, 2010; January 20-February 1, 2010; February 3-12, 2010

10:00 a.m.

January 19, 2010 February 2, 2010

2:30 p.m.

Borealis International Inc., Synergy Group (2000) Inc., Integrated Business Concepts Inc., Canavista Corporate Services Inc., Canavista Financial Center Inc., Shane Smith, Andrew Lloyd, Paul Lloyd, Vince Villanti, Larry Haliday, Jean Breau, Joy Statham, David Prentice, Len Zielke, John Stephan, Ray Murphy, Alexander Poole, Derek Grigor and Earl Switenky

s. 127 and 127.1

Y. Chisholm in attendance for Staff

Panel: TBA

January 25-26, 2010

10:00 a.m.

Lehman Cohort Global Group Inc., Anton Schnedl, Richard Unzer, Alexander Grundmann and Henry Hehlsinger

s. 127


Panel: TBA

February 5, 2010

10:00 a.m.

Hillcorp International Services, Hillcorp Wealth Management, Suncorp Holdings, 1621852 Ontario Limited, Steven John Hill, John C. McArthur, Daryl Renneberg and Danny De Melo

s. 127

A. Clark in attendance for Staff

Panel: TBA


October 16, 2009 (2009) 32 OSCB 8340

February 8-12, 2010

10:00 a.m.

Goldbridge Financial Inc., Wesley Wayne Weber and Shawn C. Lesperance

s. 127


Panel: TBA

February 17–March 1, 2010

10:00 .m.

M P Global Financial Ltd., and Joe Feng Deng

s. 127 (1)


Panel: TBA

March 1-8, 2010

10:00 a.m.

Teodosio Vincent Pangia

s. 127


Panel: TBA

March 3, 2010

10:00 a.m.

Brilliante Brasilcan Resources Corp., York Rio Resources Inc., Brian W. Aidelman, Jason Georgiadis, Richard Taylor and Victor York

s. 127

S. Horgan in attendance for Staff

Panel: TBA

March 10, 2010

10:00 a.m.

Global Energy Group, Ltd. And New Gold Limited Partnerships

s. 127


Panel: TBA

May 3-28, 2010

10:00 a.m.

Sextant Capital Management Inc., Sextant Capital GP Inc., Sextant Strategic Opportunities Hedge Fund L.P., Otto Spork, Robert Levack and Natalie Spork

s. 127

S. Kushneryk in attendance for Staff

Panel: TBA

May 31-June 4, 2010

10:00 a.m.

Lyndz Pharmaceuticals Inc., James Marketing Ltd., Michael Eatch and Rickey McKenzie

s. 127(1) & (5)


Panel: TBA

TBA Yama Abdullah Yaqeen

s. 8(2)


Panel: TBA

TBA Microsourceonline Inc., Michael Peter Anzelmo, Vito Curalli, Jaime S. Lobo, Sumit Majumdar and Jeffrey David Mandell

s. 127

J. Waechter in attendance for Staff

Panel: TBA

TBA Frank Dunn, Douglas Beatty, Michael Gollogly

s. 127

K. Daniels in attendance for Staff

Panel: TBA

TBA Juniper Fund Management Corporation, Juniper Income Fund, Juniper Equity Growth Fund and Roy Brown (a.k.a. Roy Brown-Rodrigues)

s. 127 and 127.1

D. Ferris in attendance for Staff

Panel: TBA

TBA Merax Resource Management Ltd. carrying on business as Crown Capital Partners, Richard Mellon and Alex Elin

s. 127


Panel: TBA


October 16, 2009 (2009) 32 OSCB 8341

TBA Gregory Galanis

s. 127

P. Foy in attendance for Staff

Panel: TBA

TBA Franklin Danny White, Naveed Ahmad Qureshi, WNBC The World Network Business Club Ltd., MMCL Mind Management Consulting, Capital Reserve Financial Group, and Capital Investments of America

s. 127


Panel: TBA

TBA Biovail Corporation, Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk and Kenneth G. Howling

s. 127(1) and 127.1

J. Superina, A. Clark in attendance for Staff

Panel: TBA

TBA Global Partners Capital, Asia Pacific Energy Inc., 1666475 Ontario Inc. operating as “Asian Pacific Energy”, Alex Pidgeon, Kit Ching Pan also known as Christine Pan, Hau Wai Cheung, also known as Peter Cheung, Tony Cheung, Mike Davidson, or Peter McDonald, Gurdip Singh Gahunia also known as Michael Gahunia or Shawn Miller, Basis Marcellinius Toussaint also known as Peter Beckford, and Rafique Jiwani also known as Ralph Jay

s. 127


Panel: TBA

TBA FactorCorp Inc., FactorCorp Financial Inc. and Mark Twerdun

s. 127

A. Sonnen in attendance for Staff

Panel: TBA

TBA Shane Suman and Monie Rahman

s. 127 & 127(1)


Panel: TBA

TBA Berkshire Capital Limited, GP Berkshire Capital Limited, Panama Opportunity Fund and Ernest Anderson

s. 127

E. Cole in attendance for Staff

Panel: TBA

TBA Paul Iannicca

s. 127


Panel: TBA

TBA MRS Sciences Inc. (formerly Morningside Capital Corp.), Americo DeRosa, Ronald Sherman, Edward Emmons and Ivan Cavric

s. 127 & 127(1)

D. Ferris in attendance for Staff

Panel: TBA

TBA Irwin Boock, Stanton Defreitas, Jason Wong, Saudia Allie, Alena Dubinsky, Alex Khodjiaints Select American Transfer Co., Leasesmart, Inc., Advanced Growing Systems, Inc., International Energy Ltd., Nutrione Corporation, Pocketop Corporation, Asia Telecom Ltd., Pharm Control Ltd., Cambridge Resources Corporation, Compushare Transfer Corporation, Federated Purchaser, Inc., TCC Industries, Inc., First National Entertainment Corporation, WGI Holdings, Inc. and Enerbrite Technologies Group

s. 127 & 127.1


Panel: TBA


October 16, 2009 (2009) 32 OSCB 8342

TBA Axcess Automation LLC, Axcess Fund Management, LLC, Axcess Fund, L.P., Gordon Alan Driver and David Rutledge

s. 127

M. Adams in attendance for Staff

Panel: TBA

ADJOURNED SINE DIE

Global Privacy Management Trust and Robert Cranston

S. B. McLaughlin

Livent Inc., Garth H. Drabinsky, Myron I. Gottlieb, Gordon Eckstein, Robert Topol

Portus Alternative Asset Management Inc., Portus Asset Management Inc., Boaz Manor, Michael Mendelson, Michael Labanowich and John Ogg

Maitland Capital Ltd., Allen Grossman, Hanouch Ulfan, Leonard Waddingham, Ron Garner, Gord Valde, Marianne Hyacinthe, Diana Cassidy, Ron Catone, Steven Lanys, Roger McKenzie, Tom Mezinski, William Rouse and Jason Snow

Global Petroleum Strategies, LLC, Petroleum Unlimited, LLC, Aurora Escrow Services, LLC, John Andrew, Vincent Cataldi, Charlotte Chambers, Carl Dylan, James Eulo, Richard Garcia, Troy Gray, Jim Kaufman, Timothy Kaufman, Chris Harris, Morgan Kimmel, Roger A. Kimmel, Jr., Erik Luna, Mitch Malizio, Adam Mills, Jenna Pelusio, Rosemary Salveggi, Stephen J. Shore and Chris Spinler

LandBankers International MX, S.A. De C.V.; Sierra Madre Holdings MX, S.A. De C.V.; L&B LandBanking Trust S.A. De C.V.; Brian J. Wolf Zacarias; Roger Fernando Ayuso Loyo, Alan Hemingway, Kelly Friesen, Sonja A. McAdam, Ed Moore, Kim Moore, Jason Rogers and Dave Urrutia

Hollinger Inc., Conrad M. Black, F. David Radler, John A. Boultbee and Peter Y. Atkinson

1.2 Notices of Hearing

1.2.1 Barry Landen – s. 127

IN THE MATTER OF THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF BARRY LANDEN

NOTICE OF HEARING Section 127

TAKE NOTICE THAT the Ontario Securities Commission (the "Commission") will hold a hearing pursuant to section 127 of the Act at the offices of the Commission at 20 Queen Street West, 17th Floor Hearing Room on Thursday, October 29th, 2009 at 10 a.m., or as soon thereafter as the hearing can be held, to consider whether, in the opinion of the Commission, it is in the public interest pursuant to subsection 127(1) and pursuant to subsection 127(10) of the Act to order that:

(i) trading in any securities the Respondent cease permanently or for such period as is specified by the Commission;

(ii) the acquisition of any securities by the Respondent is permanently prohibited or for such other period as is specified by the Commission;

(iii) any exemptions contained in Ontario securities law do not apply to the Respondent permanently for such period as is specified by the Commission;

(iv) the Respondent be reprimanded;

(v) the Respondent resign one or more positions that he holds as a director or officer of any issuer, registrant, or investment fund manager;

(vi) the Respondent be permanently prohibited or for such other period as is specified by the Commission from becoming or acting as a director or officer of any issuer;

(vii) the Respondent be permanently prohibited or for such other period as is specified by the Commission from becoming or acting as a promoter; and

(viii) whether to make such further orders as the Commission considers appropriate.

BY REASON OF the allegations as set out in the Statement of Allegations of Staff of the Commission dated


October 16, 2009 (2009) 32 OSCB 8343

October 6th, 2009 and such further additional allegations as counsel may advise and the Commission may permit;

AND BY REASON OF the evidence filed with the Commission and the testimony heard by the Commission;

AND TAKE FURTHER NOTICE that any party to the proceedings may be represented by counsel at the hearing;

AND TAKE FURTHER NOTICE that upon failure of any party to attend at the time and place aforesaid, the hearing may proceed in the absence of that party and such party is not entitled to any further notice of the proceedings.

DATED at Toronto this 7th day of October, 2009

“John Stevenson” Secretary to the Commission

IN THE MATTER OFTHE SECURITIES ACT,


AND


STATEMENT OF ALLEGATIONS OF THE STAFF OF THE

ONTARIO SECURITIES COMMISSION

Staff of the Ontario Securities Commission (the “Commission”) make the following allegations:

The Respondent

1. From September to November of 2003 (the “Material Time”), Barry Landen (“Landen”) was the Vice-President, Corporate Affairs of Agnico Eagle Mines Limited (“Agnico”). Common shares of Agnico trade on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange.

Conviction Before the Ontario Court of Justice and Operation of Section 127(10) of the Act

2. On October 24, 2008, following a trial in the Ontario Court of Justice conducted under the Provincial Offences Act, R.S.O. 1990, c.P.33, Justice Shamai found Landen guilty of one count of insider trading pursuant to s.76(1) and s.122(1) of the Act for the conduct described within.

3. On January 29, 2009, Justice Shamai sentenced Landen to a term of imprisonment of 45 days in jail and ordered him to pay a fine of $200,000, thereby entering a conviction against Landen.

Background

4. Agnico is a significant Canadian gold producer with operations located in Northwestern Quebec and exploration and development activities elsewhere in Canada and around the world. Agnico’s largest asset is the ownership of the LaRonde Mine, which contains the largest gold deposit in Canada.

5. Jakmin Investments Limited (“Jakmin”) is a corporation that held the investments of Paul Penna, the founder of Agnico. Mr. Penna is deceased, and Jakmin is controlled by a trust established under his Will.

6. During the Material Time, Landen was one of the trustees of Jakmin and exercised complete control over the business affairs and the investments of Jakmin. Landen was the only person who had trading authority over the investments of Jakmin. As of October 9, 2003, Jakmin owned 32,237 common shares of Agnico as part of its investment portfolio.


October 16, 2009 (2009) 32 OSCB 8344

7. By virtue of their special relationship with Agnico, both Landen and Jakmin were insiders of Agnico during the material time.

Agnico Eagle’s 2003 Third Quarter results and Long Term Forecasts

8. Members of senior management of Agnico, including Landen, were aware on October 9, 2003 that the La Ronde mine was experiencing a reconciliation problem in its gold production in the third quarter of 2003 (the “Reconciliation Problem”).

9. Also, early in October of 2003, members of senior management of Agnico, including Landen, were aware that Agnico might be required to lower its long term yearly gold production forecast.

10. The facts set out in paragraphs 7-8 (the “Material Information”) were material facts respecting Agnico that had not been generally disclosed to the public.

11. Agnico did not generally disclose the Material Information until it released its 2003 third quarter results on October 29, 2003. Included in this release was Agnico’s announcement that it would reduce the long-term gold production target at the LaRonde mine from 400,000 ounces per year to 300,000 ounces per year. At that time, Agnico also first disclosed the existence of the Reconciliation Problem that Landen became aware of on October 9, 2003.

12. On October 30, 2003, the common shares of Agnico opened on the TSX at $15.80, a fall of approximately 14% from the closing price of October 29, 2003.

Violations of the Act by Landen and Conduct Contrary to the Public Interest

13. Commencing on October 10, 2003, Landen caused Jakmin to sell its common shares of Agnico on the following dates in the following amounts (the “Trades”):

Date Number of Common Shares Sold Price

October 10, 2003 5,000 $17.05

October 10, 2003 5,000 $17.10

October 24, 2003 12,000 $18.20

October 24, 2003 10,237 $18.30

14. By the final trade on October 24, 2003, Landen had sold every single Agnico common share previously held by Jakmin.

15. The Trades were made by Landen at a time when he had knowledge of the Material Information which had not been generally disclosed. Accordingly, the Trades constituted illegal insider trading contrary to s. 76(1) of the

Securities Act, R.S.O. 1990, c.S.5 (the “Act”) and were contrary to the public interest.

16. In addition, an internal Agnico policy prohibited insiders of Agnico, including Landen and Jakmin, from trading in Agnico securities during a time period (the “Blackout Period”) from the first day following the end of a quarter until two business days after the public disclosure of quarterly results. For the third quarter of 2003, the Blackout Period would have commenced on October 1, 2003 and continued until November 1, 2003. As a Vice President and an insider of Agnico, Landen would have been aware of this policy and was therefore also trading in Agnico securities during the Blackout Period contrary to Agnico policy. This conduct by Landen was also contrary to the public interest.

17. As a result of these trades orchestrated by Landen, Jakmin was able to avoid a loss in the amount of $115,175 as calculated pursuant to s.122(6) of the Act.

18. Pursuant to paragraphs 1 and 2 of s.127(10) of the Act, the conviction of Landen by a judge of the Ontario Court of Justice for insider trading contrary to s.76(1) of the Act may form the basis for one or more orders in the public interest in Ontario under s. 127(1) of the Act.

19. Staff reserve the right to amend these allegations as they deem fit and the Commission may permit.

DATED at Toronto this 6th day of October, 2009.


October 16, 2009 (2009) 32 OSCB 8345

1.3 News Releases

1.3.1 OSC Implements New Process Aligning the Transparency of Changes to the Operations of Stock Exchanges and Alternative Trading Systems

FOR IMMEDIATE RELEASE October 9, 2009

OSC IMPLEMENTS NEW PROCESS ALIGNING THE TRANSPARENCY OF CHANGES TO THE OPERATIONS OF STOCK EXCHANGES AND

ALTERNATIVE TRADING SYSTEMS

TORONTO – The Ontario Securities Commission (OSC) today announced the implementation of a new process to align the transparency of changes for the operations of recognized stock exchanges (Exchanges) and Alternative Trading Systems (ATS) where their operations are similar.

“This new process recognizes the need for a similar degree of transparency for Exchanges and ATSs in certain areas,” said Susan Greenglass, Director of Market Regulation at the OSC.

Effective October 9, 2009, both Exchanges and ATSs will publish notice of certain proposed changes to their operations. There is no change to the current filing requirements for Exchanges and ATSs.

The process, described in OSC Staff Notice 21-703, will apply to new order types, changes to existing order types, and to other issues relating to trading such as procedures governing the entry and display of orders on marketplace systems.

OSC Staff Notice 21-703 Transparency of the Operations of Stock Exchanges and Alternative Trading Systems is available in the Securities Law & Instruments section of the OSC website, www.osc.gov.on.ca.

For media inquiries: Wendy Dey Director, Communications & Public Affairs 416-593-8120

Carolyn Shaw-Rimmington Assistant Manager, Public Affairs 416-593-2361

For investor inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)

1.4 Notices from the Office of the Secretary

1.4.1 Barry Landen




AND


TORONTO – The Office of the Secretary issued a Notice of Hearing on October 7, 2009 setting the matter down to be heard on October 29, 2009 at 10:00 a.m. or as soon thereafter as the hearing can be held in the above named matter.

A copy of the Notice of Hearing dated October 7, 2009 and Statement of Allegations of Staff of the Ontario Securities Commission dated October 6, 2009 are available atwww.osc.gov.on.ca.

OFFICE OF THE SECRETARY JOHN P. STEVENSON SECRETARY





October 16, 2009 (2009) 32 OSCB 8346

1.4.2 Global Energy Group, Ltd. and New Gold Limited Partnerships




AND

IN THE MATTER OF GLOBAL ENERGY GROUP, LTD. AND NEW GOLD LIMITED PARTNERSHIPS

TORONTO – Following a hearing held today, the Commission issued an Order in the above named matter which provides that (1) pursuant to subsection 127(8) of the Act, that the Temporary Order is extended to March 11, 2010; and (2) the hearing in this matter is adjourned to March 10, 2010, at 10:00 a.m.

A copy of the Order dated October 8, 2009 is available at www.osc.gov.on.ca.





1.4.3 Gold-Quest International et al.




AND

IN THE MATTER OF GOLD-QUEST INTERNATIONAL,

HEALTH AND HARMONEY, IAIN BUCHANAN, AND LISA BUCHANAN

TORONTO – Following a hearing held today, the Commission issued an Order which provides that (1) the Amended Temporary Order against Gold-Quest and the Ontario Respondents is extended to December 11, 2009 on the terms and conditions set forth in the Amended Temporary Order; and (2) a hearing to extend the Amended Temporary Order shall be held on December 10, 2009 at 10:00 a.m. or as soon thereafter as possible or on such other date as is agreed by the parties and determined by the Office of the Secretary.







October 16, 2009 (2009) 32 OSCB 8347

1.4.4 Gold-Quest International et al.




AND


1725587 ONTARIO INC. carrying on business as HEALTH AND HARMONEY, HARMONEY CLUB INC.,

DONALD IAIN BUCHANAN, LISA BUCHANAN AND SANDRA GALE

TORONTO – Following a hearing held today, the Commission issued an Order adjourning the Hearing to December 10, 2009 at 10:00 a.m. or such other date as is agreed by the parties and determined by the Office of the Secretary for the purpose of continuing the pre-hearing conference and for any other purpose that the parties may advise the Office of the Secretary.






1.4.5 Shane Suman and Monie Rahman




AND

IN THE MATTER OF SHANE SUMAN and MONIE RAHMAN

TORONTO – The panel issued its Reasons and Decision on a Motion to Exclude Evidence and a Non-Suit Motion heard on August 21, 2009 in the above named matter.

A copy of the Reasons and Decision dated October 9, 2009 is available at www.osc.gov.on.ca.






October 16, 2009 (2009) 32 OSCB 8348

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October 16, 2009 (2009) 32 OSCB 8349

Chapter 2

Decisions, Orders and Rulings

2.1 Decisions

2.1.1 Dragonwave Inc.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions – relief from registration and prospectus requirements in connection with the use of electronic roadshow materials – cross-border offering of securities – compliance with U.S. offering rules leads to non-compliance with Canadian regime – relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus and registration requirements – relief granted from sections 25 and 53 of the Securities Act(Ontario) in connection with a cross-border offering – decision subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53. National Policy 47-201 Trading Securities Using the

Internet and Other Electronic Means, s. 2.7

October 8, 2009

IN THE MATTER OF THE SECURITIES LEGISLATION OF

ONTARIO (THE “JURISDICTION”)

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF DRAGONWAVE INC.

(THE “FILER”)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for a decision exempting the posting of certain roadshow materials on the website of one or more comme-rcial services, such as www.retailroadshow.com and/or www.netroadshow.com during the “waiting period” from the prospectus requirement and, except with respect to British

Columbia where registration relief is not required, the registration requirement under the Legislation (collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application),

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador.

Interpretation

Defined terms contained in National Instrument 14-101 – Definitions and MI 11-102 have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts and represent-ations made by the Filer:

1. The Filer was incorporated under the Canada Business Corporations Act on February 24, 2000.

2. The principal office of the Filer is located at 411 Legget Drive, suite 600, Ottawa, Ontario, Canada, K2K 3C9.

3. The Filer is a reporting issuer in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. The Filer is not in default of any of its obligations as a reporting issuer under the applicable securities laws in each of these jurisdictions.

4. The authorized share capital of the Filer consists of an unlimited number of common shares of which 28,633,943 common shares are currently issued and outstanding.

5. On September 24, 2009, the Filer filed a preliminary short form base PREP prospectus (the Preliminary Prospectus) in connection with its offering of a new issue of common shares (the Treasury Shares) and a secondary offering by certain selling shareholders of the Filer (the Secondary Shares and together with the Trea-sury Shares the Offered Shares) (collectively, the


October 16, 2009 (2009) 32 OSCB 8350

Offering) with the securities regulatory authority in each of the provinces (other than Quebec) of Canada (collectively, the Canadian Juris-dictions) and contemporaneously filed a regis-tration statement on Form F-10 (the Form F-10)under the Securities Act of 1933 of the United States of America, as amended (the 1933 Act)with the United States Securities and Exchange Commission (the SEC) relating to the Offering. A receipt was issued for the Preliminary Prospectus on September 24, 2009 pursuant to National Instrument 11-202 Process for Prospectus Reviews in Multiple Jurisdictions (the PreliminaryReceipt).

6. The Filer intends to post certain roadshow materials on the website of one or more commer-cial services, such as www.retailroadshow.comand/or www.netroadshow.com.

7. The Filer’s outstanding common shares are currently listed on the Toronto Stock Exchange (the TSX). The Filer has applied to list the Treasury Shares on the TSX.

8. In connection with the Offering, the Offered Shares would continue to be listed on the TSX and the Filer’s outstanding common shares including the Offered Shares would also become listed on the NASDAQ Global Market.

9. During the interval between the date of the Preliminary Receipt and the date of issuance of a receipt for a final short form base PREP prospectus (such period being known as the “waiting period”), the Filer intends to utilize electronic roadshow materials (the Website Materials) as part of the marketing efforts for the Offering, as is now typical for an initial public offering in the United States.

10. Because the Filer will not be required to file reports with the SEC pursuant to section 13 or section 15(d) of the U.S. Securities Exchange Act of 1934, as amended until the time the Form F-10 has become effective pursuant to the 1933 Act, Rule 433(d)(8)(ii) under the 1933 Act which came into effect in December 2005, requires the Filer to either file the Website Materials with the SEC or make them “available without restriction by means of graphic communication to any person...”. The staff of the SEC have taken the position that the requirement to be “available without restriction” means that there cannot be any restrictions on access or viewing imposed, both with respect to persons in and outside of the United States.

11. Compliance with applicable U.S. securities laws thus requires either making the Website Materials available in a manner that affords unrestricted access to the public, or filing the Website Materials on the SEC’s EDGAR system, which will have the same effect of affording unrestricted

access; however, this is inconsistent with Canadian securities laws, in particular, the prospectus requirement and activities that are permissible during the waiting period which, when applied together, require that access to the Website Materials be controlled by the Filer or the underwriters by such means as password pro-tection and otherwise, as suggested by National Policy 47-201 – Trading Securities Using the Internet and Other Electronic Means.

12. The Filer wishes to comply with applicable U.S. securities laws by posting the Website Materials on the website of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com, without any restriction thereon, such as password protection.

13. The securities laws of the Canadian Jurisdictions do not, absent the Exemption Sought, allow the Filer to post the Website Materials during the waiting period in a manner that would allow the Website Materials to be accessible to all pros-pective investors in the Canadian Jurisdictions without restriction.

14. The Website Materials will contain a statement that information conveyed through the Website Materials does not contain all of the information in the Preliminary Prospectus, or any subsequent amendments thereto, or the final short form base PREP prospectus or any amendment thereto, or the supplemented short form PREP prospectus or any amendment thereto (the Final Prospectus), and that prospective purchasers should review all of those prospectuses, in addition to the Website Materials, for complete information regarding the Offered Shares.

15. The Website Materials will also contain a hyperlink to the prospectuses referred to in the foregoing paragraph, as at and after such time as a particular prospectus is filed.

16. The Website Materials, any amendments to the Preliminary Prospectus and the Final Prospectus will state that purchasers of the Offered Shares in the Canadian Jurisdictions will have a contractual right of action against the Filer and the under-writers in connection with the information contained in the Website Materials posted on the website of one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com.

17. At least one underwriter that signed the Preliminary Prospectus was, and in respect of any subsequently amended preliminary prospectus and the Final Prospectus will be, registered in each of the Canadian Jurisdictions.

18. Canadian purchasers will only be able to purchase the Offered Shares through an underwriter that is


October 16, 2009 (2009) 32 OSCB 8351

registered in the respective Canadian Jurisdiction of residence of the Canadian purchaser.

19. The Filer acknowledges that the Exemption Sought relates only to the posting of the Website Materials on the website of one or more commer-cial services, such as www.retailroadshow.comand/or www.netroadshow.com.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

1. Any amendments to the Preliminary Prospectus and the Final Prospectus state that purchasers of the Offered Shares in each of the Canadian Jurisdictions have a contractual right of action against the Filer and the Canadian underwriters, substantially in the following form:

“We may make available certain materials describing the offering (the Website Materials) on the website of one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com under the heading “Dragonwave Inc.” in accordance with U.S. securities law during the period prior to obtaining a final receipt for the final short form base PREP prospectus relating to this offering (the Final Prospectus) from the securities regulatory authorities in each of the Provinces of Canada, except the Province of Quebec (the Canadian Jurisdictions). In order to give purchasers in each of the Canadian Jurisdictions the same unrestricted access to the Website Materials as provided to U.S. purchasers, we have applied for and obtained exemptive relief from the securities regulatory authorities in each of the Canadian Jurisdictions. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that, in the event that the Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make any statement therein not misleading in the light of the circumstances in which is was made (a misrepresentation) a purchaser resident in any of the Canadian Jurisdictions who purchases common shares pursuant to the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresent-ation, rights against us and each Canadian underwriter with respect to such misrepresent-ations as are equivalent to the rights under section 130 of the Securities Act (Ontario) or the comparable provision of the securities legislation

of each of the other Canadian Jurisdictions, as if such misrepresentation was contained in the Final Prospectus.”

“David L. Knight” Commissioner Ontario Securities Commission

“Paulette L. Kennedy” Commissioner Ontario Securities Commission


October 16, 2009 (2009) 32 OSCB 8352

2.1.2 First Place Tower Brookfield Properties Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Application for an order than the issuer is not a reporting issuer under applicable securities laws – issuer legally defeased debentures – issuer has no public securityholders other than holders of defeased debentures who no longer require public disclosure in respect of the issuer – relief granted.


Securities Act (Ontario), ss. 1(10)(b).

October 13, 2009


BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARD ISLAND, NEWFOUNDLAND AND LABRADOR, AND YUKON

(the “JURISDICTIONS”)

AND



AND

IN THE MATTER OF FIRST PLACE TOWER BROOKFIELD PROPERTIES INC.

(the “FILER”)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the “Decision Maker”) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that the Filer is not a reporting issuer (the “Exemptive Relief Sought”).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a coordinated review application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the decision is the decision of the principal regulator and evidences the decision of each other Decision Maker.

Interpretation

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

1. The Filer was formed pursuant to an amalgamation under the Business Corporations Act (Ontario) (the “OBCA”) on October 21, 2005.

2. The Filer’s registered and head office is at 181 Bay Street, Brookfield Place, Suite 330, Toronto, Ontario, M5J 2T3.


October 16, 2009 (2009) 32 OSCB 8353

3. As of the date hereof, the Filer has issued and outstanding approximately $1.1 million (principal amount) in subordinated debentures maturing December 15, 2015 (the “Debentures”).

4. First Place Tower Inc. (the predecessor in interest to the Filer) was established in 1995 for the business purpose of owning and managing a substantial economic interest in First Canadian Place. In connection with the acquisition, First Place Tower Inc. issued, among other securities, $86 million principal amount of Debentures. The Debentures were issued as a part of a unit consisting of $10 principal amount of Debentures and 40 common shares.

5. The Debentures were created pursuant to a trust indenture made as of December 15, 1995 among First Place Tower Inc., Computershare Trust Company of Canada (as successor to Montreal Trust Company of Canada) (the “Canadian Trustee”) and The Bank of Nova Scotia Trust Company of New York (together with the Canadian Trustee, the “Trustees”) (the “Original Trust Indenture”). As originally issued, the Debentures were convertible and redeemable debentures of First Place Tower Inc.

6. Effective as of September 8, 1999, O&Y Properties Corporation (“OYPC”) completed the acquisition of First Place Tower Inc. (the “1999 Acquisition”). In connection with the 1999 Acquisition, the Original Trust Indenture was amended with the approval of holders of Debentures (the “Debentureholders”) to remove, on a going forward basis, certain transfer rights and covenants, and to remove (among other things) the redemption rights of the Debentures, and the right of the Debentures to be converted into common shares of First Place Tower Inc. (the Original Trust Indenture as so amended is referred to as the “1999 Trust Indenture”).

7. As part of the 1999 Acquisition, approximately $85 million of the $86 million (principal amount) of the Debentures were tendered to First Place Tower Inc. for repurchase. The remaining Debentures, in accordance with the 1999 Trust Indenture, became unsecured, non-convertible and non-redeemable obligations of First Place Tower Inc. and the Debentures were delisted from the Toronto Stock Exchange on September, 9, 1999.

8. As a result of the 1999 Acquisition, the successor in interest to First Place Tower Inc., O&Y FPT Inc., was created under the OBCA by Articles of Arrangement dated September 8, 1999.

9. In 2005, a consortium (the “Brookfield Consortium”) comprised of BPO Properties Ltd., a subsidiary of Brookfield Properties Corporation, and two institutional investors acquired all the issued and outstanding common shares of OYPC (the “2005 Arrangement”). As a result of the completion of the 2005 Arrangement, the Filer (as successor in interest to O&Y FPT Inc.) was created under the OBCA by Articles of Amalgamation on October 21, 2005.

10. The Filer continues to be a reporting issuer in each of the Jurisdictions and remains subject to the continuous disclosure obligations set out under National Instrument 51-102 – Continuous Disclosure Obligations.

11. The Filer has the following securities outstanding: (i) common shares, all of which are owned by the Brookfield Consortium, and (ii) a principal amount of Debentures which are owned as described below. None of the Filer’s securities are traded on a marketplace as defined in National Instrument 21-101 Marketplace Operation;

12. The principal amount of Debentures currently outstanding is $1,116,910.00. Based on search results conducted as of June 9, 2009 and carried out on behalf of the Filer, there are 64 beneficial holders of the Debentures across Canada, the United States and in other jurisdictions. Of these 64 beneficial holders of the Debentures, 52 beneficial owners are located in Canada, as follows:

Jurisdiction Number of Securityholders Alberta 4 British Columbia 6 Manitoba 3 New Brunswick 0 Newfoundland and Labrador 0 Northwest Territories 0 Nova Scotia 0 Ontario 32 Prince Edward Island 0 Québec 6 Saskatchewan 1 Yukon 0

13. At a meeting of Debentureholders held on September 30, 2009, Debentureholders approved a series of amendments to the 1999 Trust Indenture that allow the Filer to legally defease the outstanding Debentures. On July [7], 2009, the


October 16, 2009 (2009) 32 OSCB 8354

Filer entered into a supplement to the 1999 Trust Indenture (as amended, the “Amended Trust Indenture”) to allow the Filer to legally defease the Debentures, and the Filer has exercised its option to legally defease the Debentures.

14. Legal defeasance was accomplished by the Filer depositing in trust with the Canadian Trustee for the sole benefit of the Debentureholders, Government of Canada bonds which are sufficient to satisfy all principal and interest payments of the Debentures when due and payable, up to and including the maturity date of December 15, 2015. The defeased Debentures are now deemed to be fully paid, satisfied and discharged and the provisions of the Amended Trust Indenture are no longer binding on the Filer, except certain provisions dealing with payment of principal and interest, executing certificates for transfers and replacement certificates, maintaining a register of Debentureholders, and obligations vis-à-vis the Trustees with respect to payment and indemnity. Holders of defeased Debentures are now entitled to payment of principal and interest in accordance with the Amended Trust Indenture.

15. After giving effect to the defeasance, the Debentures now constitute essentially a right to receive payments of principal and interest, when due and payable, from the funds held in trust by the Canadian Trustee for the benefit of the Debentureholders. The Debentures are not traded on a marketplace as defined in National Instrument 21-101 Marketplace Operation, and are not convertible or redeemable at the option of the Debentureholder. Taken in this context, the Debentures no longer have the characteristics of a true security, but instead merely represent a right to receive cash which is being held in trust. From the perspective of a Debentureholder, the legal defeasance has, in effect, changed the Debentures from being an unsecured obligation of the Filer to being secured since the money needed to satisfy the payment of principal and interest, when due and payable, has been irrevocably deposited by the Filer with the Canadian Trustee and is being held solely for the benefit of the Debentureholders.

16. There is currently no obligation in the Amended Trust Indenture for the Filer to file any information or reports, includingannual or interim financial statements, with any securities regulatory authority or regulator in the Jurisdictions, and there is no obligation contained in the Amended Trust Indenture that the Filer must be a reporting issuer in any of the Jurisdictions.

17. The Filer is seeking a decision that it is not a reporting issuer from the local securities regulatory authority or regulator in each of the jurisdictions in which it is a reporting issuer;

18. The Filer is not in default of any of its obligations under the Legislation as a reporting issuer.

19. The Filer has no plans to seek public financing by way of an offering of securities in Canada.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemptive Relief Sought is granted.

“Paulette Kennedy”

“Margot Howard”


October 16, 2009 (2009) 32 OSCB 8355

2.1.3 Goldman, Sachs & Co. - s. 127(2)(h) of the Regulation and s. 3.1 of the Rule

Headnote

Decision pursuant to to section 3.1 of Rule 31-501 Registrant Relationships (the Rule) and subsection 127(2)(h) of the Regulation made under the Securities Act (Ontario) exempting salespersons of the applicants, which are affiliated companies, from certain of the dual registration restrictions out in the Rule, and exempting their salespersons from the provisions of subsection 127(1) of the Regulation, to the extent that those provisions would prohibit salespersons of one applicant from also being salespersons of the other applicant.

Statutes Cited

Regulation 1015 made under the Securities Act (Ontario), as am., ss.127(1), 127(2).

Rules Cited

Ontario Securities Commission Rule 31-501 Registrant Relationships, ss. 1.1(1), 3.1.


R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act)

AND

IN THE MATTER OF R.R.O. 1990, REGULATION 1015, AS AMENDED

(the Regulation)

AND

IN THE MATTER OF ONTARIO SECURITIES COMMISSION RULE 31-501

REGISTRANT RELATIONSHIPS (the Rule)

AND

IN THE MATTER OF GOLDMAN, SACHS & CO.

DECISION(Section 127(2)(h) of the Regulation and

Section 3.1 of the Rule)

UPON the Director (as defined in the Act) having received an application (the Application) from Goldman, Sachs & Co. (the Applicant) for a decision (or its equivalent) pursuant to section 3.1 of the Rule, exempting the employees of the Applicant who are, or will be, performing registerable activities on behalf of Goldman Sachs Canada Inc. (GS Canada) and, as such, who are, or will be, registered with the Ontario Securities Commission (the Commission) as salespersons of GS Canada (the Representatives) from the dual registration restrictions of section 1.1(1) of the Rule so as to permit the registration of

such Representatives with the Applicant (the Dual Registration Relief) and that a determination be made under section 127(2)(h) of the Regulation that the Representatives are carrying on activities which will not in the circumstances interfere with their duties and responsibilities as salespersons and that there are no conflicts of interest arising from the individuals’ duties as salespersons and their outside activities despite the fact that they are not employed full-time for either the Applicant or GS Canada as required by section 127(1) of the Regulation (the Full-Time Salesperson Determination);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Director that:

1. The Applicant is a limited partnership formed under the laws of the state of New York. The head office of the Applicant is located in New York, New York, United States of America (U.S.).

2. The Applicant is a wholly-owned subsidiary of The Goldman Sachs Group, Inc. (GS Group) and is one of the principal U.S. broker-dealer affiliates of GS Group in the U.S.

3. The Applicant is registered as a broker-dealer and investment adviser with the U.S. Securities and Exchange Commission (the SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). The Applicant is a direct member of all major U.S. stock exchanges and U.S. commodity futures exchanges. In Ontario, the Applicant is registered with the Commission as a limited market dealer, as an international dealer and as an international adviser.

4. GS Canada is a corporation governed by the laws of Ontario. GS Canada is a wholly-owned subsidiary of GS Group and its principal and executive office is in Toronto, Ontario. GS Canada is registered as an investment dealer in Ontario and is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

5. The GS Group relies on GS Canada to access, and trade on, Canadian marketplaces.

6. GS Canada does not conduct business activities outside of Canada, is not a member of any foreign marketplaces, is not a participant in any foreign clearing or depository organizations, and does not have the ability to settle trades in foreign securities that are not listed on a Canadian marketplace.

7. Currently, GS Canada’s Ontario resident clients are all “institutional customers” within the meaning of IIROC Rule 2700.


October 16, 2009 (2009) 32 OSCB 8356

8. Currently, the Representatives are registered in Canada exclusively with GS Canada.

9. GS Canada does not maintain a standalone group of sales and trading personnel due to the limited and specialized role of GS Canada within the GS Group. Rather, to serve GS Canada’s Ontario clients, GS Canada relies on other entities within the GS Group, particularly the Applicant, to provide trading and sales personnel, technical support, and other business functions.

10. The Applicant proposes that the Representatives be duly registered with GS Canada and the Applicant.

11. The Representatives will be registered with the Commission as salespersons or trading officers of the Applicant in order to provide trading services to institutional clients of the Applicant who are resident in the Province of Ontario.

12. Trading services provided to Ontario clients by the Representatives on behalf of GS Canada currently involve trading in securities of Canadian domiciled issuers and related derivatives (Canadian Securities). All other trading services currently provided to Ontario clients are provided on behalf of the Applicant. In the future, it is anticipated that all or substantially all of the trading services provided to Ontario clients with respect to Canadian Securities will be provided by the Representatives on behalf of the Applicant. However, it is expected that the Representatives will continue to act for GS Canada in its capacity as a trading or clearing member on Canadian marketplaces.

13. Each dually registered Representative will be registered with the Commission, the SEC and FINRA.

14. A dually registered Representative will not provide trading services to the same Ontario client on behalf of both GS Canada and the Applicant.

15. The dual registration of the Representatives will not be a source of any client confusion, and there is no conflict of interest as a result of the dual registration of the Representatives, because:

(a) a Representative, when acting on behalf of GS Canada for an Ontario client, will not deal with the same Ontario client when acting on behalf of the Applicant;

(b) a Representative, when acting on behalf of the Applicant for an Ontario client, will not deal with the same Ontario client when acting on behalf of GS Canada;

(c) both GS Canada and the Applicant are wholly owned by GS Group and each provides different trading services;

(d) for the purpose of maintaining their status as representatives of the Applicant, the Representatives are under the super-vision and control of the Applicant and are subject to all securities-related and conflict of interest policies and pro-cedures of the Applicant;

(e) for the purpose of maintaining their status as representatives of GS Canada, the Representatives are under the super-vision and control of GS Canada and subject to all securities-related and conflict of interest policies and pro-cedures of GS Canada;

(f) appropriate policies and procedures of both GS Canada and the Applicant are currently in place and will continue in effect, with changes made to the extent required to address any potential conflicts of interest that may arise;

(g) if any conflicts of interest for GS Canada or the Applicant were to arise in the future, such conflicts will be promptly assessed by compliance and/or legal staff of GS Canada or the Applicant, as applicable, and would be addressed through disclosure and, where appropriate, consent;

(h) Ontario clients who conduct business with both GS Canada and the Applicant have distinct and separate accounts with the two firms;

(i) Ontario clients who conduct business with both GS Canada and the Applicant will receive written disclosure of the dual registration of the Representatives and that they will not receive trading or sales services from the same dually registered Representative on behalf of both GS Canada and the Applicant;

(j) account opening documents, trade confirmations and monthly statements are clearly marked to identify the particular firm with which the Ontario client is dealing in respect of any particular trading or other business activity;

(k) the Representatives have met and will maintain all the proficiency requirements that apply to their roles in the businesses, or will obtain exemptions therefrom;


October 16, 2009 (2009) 32 OSCB 8357

(l) the dual registration of the Represent-atives will not hinder GS Canada or the Applicant in complying with the con-ditions of registration applicable to them;

(m) the trading services provided to Ontario clients by the Representatives in their capacity with GS Canada will not interfere with their duties or respon-sibilities on behalf of the Applicant;

(n) the trading services provided to Ontario clients by the Representatives in their capacity with the Applicant will not inter-fere with their duties or responsibilities on behalf of GS Canada;

(o) the Representatives who act on behalf of Ontario clients in respect of trades will comply with all requirements of applicable securities laws; and

(p) the Representatives shall act in the best interest of clients of GS Canada and Ontario clients of the Applicant and will deal fairly, honestly and in good faith with such clients.

16. Section 127(1) of the Regulation provides that (subject to section 127(2)) no individual may be registered as a salesperson unless he or she is employed full-time as a salesperson. Although not explicit, it may be implicit that such section is intended to require such full-time employment with one registrant.

17. Section 127(2) of the Regulation permits the Director to exempt a person from the full-time requirement under section 127(1) of the Regulation where the other activities of the subject salesperson will not interfere with his or her duties and responsibilities as a salesperson and there is no conflict of interest arising from his or her duties as a salesperson and his or her outside activity.

18. Section 1.1(1) of the Rule provides that no person registered as a salesperson of a registrant may act or be registered as a director, partner or officer of the registrant or as a salesperson, officer, partner or director of another registrant.

19. Section 3.1 of the Rule provides that the Director may grant an exemption from the Rule, in whole or in part.

20. IIROC Rule 18.14 permits registered represent-atives or investment representatives to have, and continue in, another gainful occupation provided the conditions outlined in IIROC Rule 18.14 are met.

21. GS Canada and the Representatives are in compliance with IIROC Rule 18.14.

AND UPON the Director being satisfied, based on the representations set forth above, that registration of individuals as Representatives of both GS Canada and the Applicant would not result in interference with their duties and responsibilities as salespersons to either registrant and that there is no conflict of interest which would arise as a result of their dual registration;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS THE DECISION of the Director pursuant to section 3.1 of the Rule and section 127(2)(h) of the Regulation that, effective the date of the Decision:

(a) the Dual Registration Relief is granted; and

(b) the Full-Time Salesperson Determination is granted,

for so long as

(a) GS Canada and the Representatives remain in compliance with IIROC Rule 18.14;

(b) no dually registered Representative will provide trading services to the same Ontario client on behalf of both GS Canada and the Applicant; and

(c) all Ontario clients of GS Canada are “institutional customers” within the meaning of IIROC Rule 2700.

September 24, 2009

“Erez Blumberger” Manager, Registrant Regulation


October 16, 2009 (2009) 32 OSCB 8358

2.1.4 Major Gold Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Application for an order that the issuer is not a reporting issuer under applicable securities legislation - Relief granted.


Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10).

Citation: Major Gold Ltd., Re, 2009 ABASC 474

October 2, 2009


ALBERTA AND ONTARIO (THE JURISDICTIONS)

AND



AND

IN THE MATTER OF MAJOR GOLD LTD. (THE FILER)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer is not a reporting issuer in the Jurisdictions (the Exemptive Relief Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a coordinated review application):

(a) the Alberta Securities Commission is the principle regulator for this application; and

(b) the decision is the decision of the principal regulator and evidences the decision of each other Decision Maker.

Interpretation

Terms defined in National Instrument 14-101 Definitionshave the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was incorporated in British Columbia on December 12, 2005 under the Business Corporations Act (British Columbia) as “Major Gold Ltd.”.

2. The Filer's head office is at 12439 Klassen Place, Maple Ridge, BC V2X 8P3.

3. A director of the Filer resides in Alberta.

4. The Filer became a reporting issuer in the provinces of British Columbia, Alberta, and Ontario on August 29, 2008 by way of receipted prospectus (the Prospectus). The financing for this Prospectus did not complete and it expired after 90 days. No securities were ever issued under this Prospectus.

5. The Filer is no longer a reporting issuer in British Columbia. The only other jurisdictions where the Filer is a reporting issuer are Alberta and Ontario. The Filer has provided the notice contemplated by British Columbia Instrument 11-502 Voluntary Surrender of Reporting Issuer Status to the British Columbia Securities Commission. Pursuant to such Instrument, the Filer ceased to be a reporting issuer in British Columbia on May 8, 2009.

6. The Filer has no current intention to seek public financing by way of an offering of securities.

7. The Filer currently has the same security holders as it had prior to filing the Prospectus.

8. The outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by less than 15 security holders in each of the jurisdictions in Canada, except in British Columbia, where the Filer has 25 security holders, and less than 51 security holders in total in Canada.

9. The Filer has 44 security holders including 6 that are directors.

10. The Filer is not in default of any of its obligations as a reporting issuer under the Act except for its obligation to file: the annual financial statements for the year ended December 31, 2008 and its Management Discussion and Analysis in respect of such annual financial statements as required under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and the related certification for such annual financial statements as required under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109); and the interim financial statements for each of the periods ended


October 16, 2009 (2009) 32 OSCB 8359

March 31, 2009 and June 30, 2009 and its Management Discussion and Analysis in respect of each such interim financial statements as required under NI 51-102 and the related certification for each such interim financial state-ments as required under NI 52-109 (collectively, the Disclosure Documents).

11. The Filer is not currently listed on the Toronto Stock Exchange or any other stock exchange and is not trading Over-The-Counter. As such, none of the Filer's securities are listed or traded on a marketplace as defined in National Instrument 21-101 Marketplace Operation.

12. The Filer will not be a reporting issuer or the equivalent in any jurisdiction in Canada immediately following the granting of the Requested Relief.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemptive Relief Sought is granted.

“Blaine Young” Associate Director, Corporate Finance Alberta Securities Commission

2.2 Orders

2.2.1 Global Energy Group, Ltd. and New Gold Limited Partnerships – ss. 127(1), 127(8)



AND

IN THE MATTER OF GLOBAL ENERGY GROUP, LTD. AND NEW GOLD LIMITED PARTNERSHIPS

ORDER(Subsections 127(1) and (8))

WHEREAS on July 10, 2008, the Ontario Securities Commission (the "Commission") issued a Temporary Order, pursuant to subsections 127(1) and (5) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”), that all trading by Global Energy Group, Ltd. (“Global Energy”) and the New Gold Limited Partnerships (the “New Gold Partnerships”) and their officers, directors, employees and/or agents in securities of the New Gold Partnerships shall cease (the "Temporary Order");

AND WHEREAS on July 10, 2008, the Commission ordered that the Temporary Order shall expire on the 15th day after its making unless extended by order of the Commission;

AND WHEREAS on July 15, 2008, the Commission issued a Notice of Hearing to consider, among other things, the extension of the Temporary Order, such hearing to be held on July 23, 2008 at 11:00 a.m.;

AND WHEREAS the Notice of Hearing sets out that the hearing is to consider, inter alia, whether, in the opinion of the Commission, it is in the public interest, pursuant to subsections 127(7) and (8) of the Act, to extend the Temporary Order until such time as considered necessary by the Commission;

AND WHEREAS a hearing was held on July 23, 2008 at 11:00 a.m. where Staff and counsel for Global Energy appeared but no counsel appeared for the New Gold Partnerships;

AND WHEREAS on July 23, 2008, the Temporary Order was continued until August 6, 2008 and the hearing in this matter was adjourned until August 5, 2008 at 3:00 p.m. on consent of Staff and counsel for Global Energy;

AND WHEREAS a hearing was held on August 5, 2008 at 3:00 p.m. where Staff and counsel for Global Energy appeared but no counsel appeared for the New Gold Partnerships;

AND WHEREAS on August 5, 2008, the Temporary Order was continued until December 4, 2008 and the hearing in this matter was adjourned until


October 16, 2009 (2009) 32 OSCB 8360

December 3, 2008 at 10:00 a.m. on consent of Staff and counsel for Global Energy;

AND WHEREAS on December 3, 2008, on the basis of the record for the written hearing and on consent of Staff and counsel for Global Energy, a Panel of the Commission ordered that the Temporary Order be extended until June 11, 2009 and that the hearing in this matter be adjourned to June 10, 2009, at 10:00 a.m.;

AND WHEREAS on June 10, 2009, Staff advised the Commission that Victor Tsatskin, an agent of Global Energy, would not be attending the hearing and was not opposed to Staff’s request for the extension of the Temporary Order and no counsel has communicated with Staff on behalf of New Gold Partnerships;

AND WHEREAS on June 10, 2009, on hearing the submissions of Staff, a Panel of the Commission ordered that the Temporary Order be extended until October 9, 2009 and that the hearing in this matter be adjourned to October 8, 2009, at 10:00 a.m.;

AND WHEREAS, prior to the appearance before a Panel of the Commission on October 8, 2009, Staff communicated with Victor Tsatskin, an agent of Global Energy, advising him of this appearance and Victor Tsatskin advised Staff that he is not opposed to an extension of the Temporary Order until March 11, 2010;

AND WHEREAS no counsel or individual has communicated with Staff on behalf of New Gold Partnerships;

AND WHEREAS pursuant to subsection 127(8) satisfactory information has not been provided to the Commission by any of the Respondents;

AND WHEREAS the Panel of the Commission is of the opinion that it is in the public interest to make this Order;

IT IS HEREBY ORDERED, pursuant to subsection 127(8) of the Act, that the Temporary Order is extended to March 11, 2010 and that the hearing in this matter is adjourned to March 10, 2010, at 10:00 a.m.

DATED at Toronto this 8th day of October, 2009.

“David L. Knight”

2.2.2 Gold-Quest International et al. – ss. 127(1), 127(8)



AND


HEALTH AND HARMONEY, IAIN BUCHANAN, AND LISA BUCHANAN

ORDER(Subsections 127(1) and (8) of the Securities Act)

WHEREAS on the 1st day of April, 2008, the Ontario Securities Commission (the "Commission") ordered, pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") that all trading in any securities of Gold-Quest International (“Gold-Quest”) shall cease (the “Temporary Order”);

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Act that all trading in any securities by Health and HarMONEY, Iain Buchanan and Lisa Buchanan (the “Ontario Respondents”) shall cease;

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that any exemptions contained in Ontario securities law do not apply to Gold-Quest and the Ontario Respondents;

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that any exemptions contained in Ontario securities law do not apply to Gold-Quest’s officers, directors, agents or employees;

AND WHEREAS on April 8, 2008, the Commission issued a Notice of Hearing in this matter (the “Notice of Hearing”);

AND WHEREAS Gold-Quest and the Ontario Respondents were served with the Temporary Order, the Notice of Hearing and the Evidence Brief of Staff of the Commission (“Staff”) as set out in the Affidavit of Service of Dale Grybauskas dated April 14, 2008;

AND WHEREAS no correspondence has ever been sent to Staff on behalf of Gold-Quest and no one has ever appeared for Gold-Quest;

AND WHEREAS upon hearing submissions from counsel for Staff and on written consent of counsel for the Ontario Respondents dated April 11, 2008, the Com-mission extended the Temporary Order until July 14, 2008


October 16, 2009 (2009) 32 OSCB 8361

or until further order of the Commission, subject to a carve-out to permit Iain Buchanan to trade in securities listed on a recognized public exchange only in his own existing account(s), for his own benefit, and through a dealer registered with the Commission, and a carve-out to permit Lisa Buchanan to trade in securities listed on a recognized public exchange only in her own existing account(s), for her own benefit, and through a dealer registered with the Commission (the “Amended Temporary Order”);

AND WHEREAS on May 6, 2008, the U.S. Securities and Exchange Commission (the “SEC”) filed an emergency civil enforcement action against Gold-Quest, and U.S. District Court Judge Lloyd D. George issued numerous orders against Gold-Quest and persons related to Gold-Quest, including orders prohibiting the trading in securities of Gold-Quest, freezing assets related to the sale of Gold-Quest securities and appointing a permanent receiver for Gold-Quest;

AND WHEREAS on July 14, 2008, counsel for Staff attended before the Commission while counsel for the Ontario Respondents did not attend but provided correspondence with respect to the Temporary Order;

AND WHEREAS on July 14, 2008, upon hearing submissions from counsel for Staff and considering the correspondence from counsel for the Ontario Respondents, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until October 8, 2008 and the hearing was adjourned to October 7, 2008;

AND WHEREAS on October 7, 2008, counsel for Staff and counsel for the Ontario Respondents did not oppose the extension of the Amended Temporary Order;

AND WHEREAS on October 7, 2008, upon considering the correspondence from counsel for the Ontario Respondents, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until December 10, 2008 and the hearing was adjourned to December 9, 2008;

AND WHEREAS on December 9, 2008, counsel for Staff and counsel for the Ontario Respondents did not oppose the extension of the Amended Temporary Order;

AND WHEREAS on December 9, 2008, upon considering the correspondence from counsel for the Ontario Respondents, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until February 11, 2009 and the hearing was adjourned to February 10, 2009;

AND WHEREAS on February 10, 2009, counsel for Staff and counsel for the Ontario Respondents did not oppose the extension of the Amended Temporary Order;

AND WHEREAS on February 10, 2009, upon considering the correspondence from counsel for the Ontario Respondents, the Commission extended the Amended Temporary Order against Gold-Quest and the

Ontario Respondents until March 20, 2009 and the hearing was adjourned to March 20, 2009;

AND WHEREAS on March 12, 2009, Staff of the Commission issued a Statement of Allegations against Gold-Quest, the Ontario Respondents, the Harmoney Club Inc., and Sandra Gale alleging breaches of the Act related to trades in the securities of Gold-Quest and the Harmoney Club Inc.;

AND WHEREAS on March 20, 2009, upon considering the correspondence from counsel for the Ontario Respondents, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until May 27, 2009 and adjourned the hearing into the extension of the Amended Temporary Order against Gold-Quest and the Ontario Respondents until May 26, 2009;

AND WHEREAS on May 26, 2009, as no counsel appeared for Gold-Quest and Health and HarMONEY, and upon being informed that counsel for Iain Buchanan and Lisa Buchanan did not oppose the extension of the Amended Temporary Order until June 25, 2009, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until June 25, 2009 and adjourned the hearing into the extension of the Amended Temporary Order against Gold-Quest and the Ontario Respondents until June 25, 2009;

AND WHEREAS on June 25, 2009, as no counsel appeared for Gold-Quest and Health and HarMONEY and counsel for Iain Buchanan and Lisa Buchanan did not oppose the extension of the Amended Temporary Order until August 21, 2009, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until August 21, 2009 and adjourned the hearing regarding the extension of the Amended Temporary Order against Gold-Quest and the Ontario Respondents until August 20, 2009;

AND WHEREAS on August 20, 2009, no counsel appeared for Gold-Quest and Health and HarMONEY and counsel for Iain Buchanan and Lisa Buchanan did not oppose the extension of the Amended Temporary Order until October 13, 2009, the Commission extended the Amended Temporary Order against Gold-Quest and the Ontario Respondents until October 13, 2009 and adjourned the hearing regarding the extension of the Amended Temporary Order against Gold-Quest and the Ontario Respondents until October 9, 2009;

AND WHEREAS on October 9, 2009, no counsel appeared for Gold-Quest and Health and HarMONEY;

AND WHEREAS on October 9, 2009, counsel for Iain Buchanan and Lisa Buchanan did not oppose the extension of the Amended Temporary Order until December 11, 2009 and it is in the public interest to extend the Amended Temporary Order without prejudice to the right of the Ontario Respondents to bring an application before the Commission to challenge the scope of the Amended Temporary Order;


October 16, 2009 (2009) 32 OSCB 8362

AND WHEREAS on October 9, 2009, counsel for Staff and counsel for Iain Buchanan and Lisa Buchanan submitted that the hearing to extend the Amended Temporary Order should be scheduled for December 10, 2009;

IT IS ORDERED THAT:

1. The Amended Temporary Order against Gold-Quest and the Ontario Respondents is extended to December 11, 2009 on the terms and conditions set forth in the Amended Temporary Order; and

2. A hearing to extend the Amended Temporary Order shall be held on December 10, 2009 at 10:00 a.m. or as soon thereafter as possible or on such other date as is agreed by the parties and determined by the Office of the Secretary.


“Carol S. Perry”

2.2.3 Gold-Quest International et al. – s. 127

IN THE MATTER OF THE SECURITIES ACT


AND


1725587 Ontario Inc. carrying on business as HEALTH AND HARMONEY, HARMONEY CLUB INC.,

DONALD IAIN BUCHANAN, LISA BUCHANAN AND SANDRA GALE

ORDER(Section 127 of the Securities Act)

WHEREAS on April 1, 2008, the Ontario Securities Commission (the "Commission") ordered, pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") that all trading in any securities of Gold-Quest International (“Gold-Quest”) shall cease (the “Temporary Order”);

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Act that all trading in any securities by Health and HarMONEY, Donald Iain Buchanan and Lisa Buchanan shall cease;

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that any exemptions contained in Ontario securities law do not apply to Gold-Quest, Health and HarMONEY, Donald Iain Buchanan and Lisa Buchanan;

AND WHEREAS the Commission further ordered as part of the Temporary Order that pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that any exemptions contained in Ontario securities law do not apply to Gold-Quest’s officers, directors, agents or employees;

AND WHEREAS on April 8, 2008, the Com-mission issued a Notice of Hearing to consider among other things, the extension of Temporary Order (the “TCTO Hearing”);

AND WHEREAS on April 11, 2008 the Temporary Order was extended by the Commission with some amendments (the “Amended Temporary Order”);

AND WHEREAS the Amended Temporary Order has been extended from time to time, most recently until October 13, 2009, and the TCTO Hearing has been adjourned from time to time most recently until October 9, 2009;

AND WHEREAS on March 13, 2009, the Com-mission issued a Notice of Hearing of pursuant to sections


October 16, 2009 (2009) 32 OSCB 8363

127 and 127.1 of the Act (the “Hearing”) accompanied by a Statement of Allegations dated March 12, 2009, issued by Staff of the Commission (“Staff”) with respect to Gold-Quest, 1725587 Ontario Inc. carrying on business as Health and HarMONEY, the Harmoney Club, Donald Iain Buchanan, Lisa Buchanan and Sandra Gale;

AND WHEREAS on March 20, 2009, upon hearing submissions from Sandra Gale, counsel for Staff and counsel for Donald Iain Buchanan and Lisa Buchanan, it was ordered that the Hearing be adjourned to May 26, 2009;

AND WHEREAS on May 26, 2009, upon hearing submissions from Sandra Gale, counsel for Staff and counsel for Donald Iain Buchanan and Lisa Buchanan, it was ordered that the Hearing be adjourned to June 25, 2009;

AND WHEREAS on June 25, 2009, counsel for Staff, counsel for Sandra Gale and counsel for Donald Iain Buchanan and Lisa Buchanan attended before the Commission;

AND WHEREAS on June 25, 2009, no one appeared for Gold-Quest, Health and HarMONEY, or the Harmoney Club;

AND WHEREAS on June 25, 2009, upon hearing submissions from counsel for Staff, counsel for Sandra Gale, and counsel for Donald Iain Buchanan and Lisa Buchanan, it was ordered that the Hearing be adjourned to August 20, 2009;

AND WHEREAS on August 20, 2009, no one appeared for Gold-Quest, Health and HarMONEY, or the Harmoney Club;

AND WHEREAS on August 20, 2009, upon hearing submissions from counsel for Staff and counsel for Sandra Gale requesting that a pre-hearing conference be held on October 9, 2009;

AND WHEREAS on October 9, 2009, a pre-hearing conference was commenced and counsel for Staff, counsel for Sandra Gale and counsel for Donald Iain Buchanan and Lisa Buchanan attended before the Commission;

AND WHEREAS on October 9, 2009, no one appeared for Gold-Quest, Health and HarMONEY, or the Harmoney Club;

AND WHEREAS on October 9, 2009, counsel for Staff, counsel for Sandra Gale and counsel for Donald Iain Buchanan and Lisa Buchanan requested the pre-hearing conference be continued on December 10, 2009;

IT IS ORDERED THAT the Hearing is adjourned to December 10, 2009 at 10:00 a.m. or such other date as is agreed by the parties and determined by the Office of the Secretary for the purpose of continuing the pre-hearing

conference and for any other purpose that the parties may advise the Office of the Secretary.


“Carol S. Perry”


October 16, 2009 (2009) 32 OSCB 8364

2.2.4 CMC Markets UK plc and CMC Markets Canada Inc. – s. 74(1)

Headnote

Application by UK-based filer (Filer) and Canadian dealer affiliate (Dealer) (collectively, Applicants) for relief from prospectus requirement in connection with distribution by Filer through Dealer of "contracts for difference" and foreign exchange contracts (collectively CFDs ) to investors resident in Ontario subject to four-year sunset clause and other terms and conditions – Filer regulated by the Financial Services Authority (the FSA) in the United Kingdom and registered in Ontario as an i nternational dealer – Dealer is registered in Ontario as investment dealer and a member of the Investment Industry Regulatory Organization of Canada ( IIROC ) – In Ontario and elsewhere in Canada, other than Québec, Applicants currently offer CFDs to “accredited investors” in reliance on accredited investor exemption in section 2.3 of NI 45-106 Prospectus and Registration Exemptions (NI 45-106) – In Québec, Applicants currently offer CFDs to accredited investors and non-accredited investors in accordance with requirements of the Derivatives Act (Québec) and related relief – Applicants comply with IIROC Rules and IIROC acceptable practices applicable to offerings of CFDs – Applicants seeking relief to permit Applicants to offer CFDs to investors in Ontario on a similar basis as in Québec, including relief permitting Applicants to distribute CFDs on the basis of clear and plain language risk disclosure document rather than a prospectus – risk disclosure document contains disclosure substantially similar to risk disclosure document required for recognized options in OSC Rule 91-502 Trades in Recognized Optionsand the regime for OTC derivatives contemplated by former proposed OSC Rule 91-504 OTC Derivatives (which was not adopted) – Relief granted subject to conditions including conditions that

Filer remains registered with the FSA and in compliance with FSA Rules;

all CFDs offered by Filer to clients in Ontario shall be distributed through Dealer;

Dealer remains registered as an investment dealer and a member of IIROC;

all distributions of CFDs by Filer to clients in Ontario be conducted in accordance with IIROC Rules and IIROC acceptable practices applicable to offerings of CFDs;

prior to a client’s first CFD trade, the Applicants have provided to the client the risk disclosure document and have delivered, or previously delivered, a copy of the risk disclosure document to the Commission;

prior to the client’s first CFD trade and as part of the account opening process, the Applicants have obtained a written or electronic acknowledgement from the client confirming that the client has

received, read and understood the risk disclosure document;

Filer shall promptly inform the Commission in writing of any material change affecting Filer, being any change in the business, activities, operations or financial results or condition of Filer that may reasonably be perceived by a counterparty to a derivative to be material;

within 90 days following the end of its financial year, Filer shall submit to the Commission the audited annual financial statements of Filer's parent and a statement presenting the number of contracts concluded with Ontario residents for any CFDs offered to the public during the most recent financial year; and

the Requested Relief shall immediately expire upon the earliest of

four years from the date that the Order is issued;

the issuance of an order or decision by a court, the FSA, the AMF or other similar regulatory body that suspends or terminates the ability of the Filer to offer CFDs to clients in the UK or in Québec; and

the coming into force in Ontario of legislation or a rule regarding the distribution of OTC derivatives to investors in Ontario.

Legislation Cited

Securities Act, R.S.O. 1990, c.S.5, as am., s. 53 and 74(1). NI 45-106 Prospectus and Registration Exemptions , s. 2.3. OSC Rule 91-502 Trades in Recognized Options. OSC Rule 91-503 Trades in Commodity Futures Contracts

and Commodity Futures Options Entered into on Commodity Futures Exchanges Situate Outside of Ontario.

Proposed OSC Rule 91-504 OTC Derivatives (not adopted).


R.S.O. 1990, CHAPTER S. 5, AS AMENDED (the Act)

AND

IN THE MATTER OF CMC MARKETS UK PLC

AND CMC MARKETS CANADA INC.

ORDER(Subsection 74(1) of the Act)

UPON the application (the Application) of CMC Markets UK plc (CMC UK) and CMC Markets Canada Inc.


October 16, 2009 (2009) 32 OSCB 8365

(CMC Canada) (together, the Applicants) to the Ontario Securities Commission (the Commission) for an order, pursuant to subsection 74(1) of the Act, that each of the Applicants and their respective officers, directors and representatives be exempt from the prospectus require-ment of section 53 of the Act in respect of the distribution of contracts for difference and foreign exchange contracts (collectively, CFDs) to investors resident in Ontario (the Requested Relief) subject to the terms and conditions below;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicants having represented to the Commission that:

CMC UK

1. CMC UK is a company organized under the laws of England and Wales with its principal office in London, United Kingdom. Founded in 1989, CMC UK is an established international on-line trading company which, with its affiliates, offers CFDs to a broad range of clients in many countries.

2. CMC UK is a privately held company, controlled indirectly by its principal founder, Mr. Peter Cruddas. CMC Markets Plc, the ultimate parent company of both CMC UK and CMC Canada, is a privately held company controlled directly by its principal founder, Mr. Peter Cruddas.

3. CMC UK and its affiliates (CMC Markets) has a presence in 13 countries with 15 offices including the United Kingdom, Australia, Austria, Canada, China, Germany, Ireland, Japan, New Zealand, Sweden, Singapore, Spain and Norway. CMC Markets handled over 20.1 million trades during the period from March 31, 2007 to March 31, 2008 with the trades executed having a total value of over US$1.4 trillion.

4. CMC UK is authorized and regulated by the Financial Services Authority (the FSA) in the United Kingdom. CMC UK is currently registered as a BIPRU 730k firm with the FSA and is registered with the Commission as a dealer in the category of international dealer. CMC UK is licensed in the U.K., among other things, to act as principal to its clients in the products it offers and may deal with all categories of clients, including directly with retail clients. Furthermore, CMC UK is regulated on a consolidated basis in the UK by the FSA.

5. CMC UK is a “regulated entity” as defined in the rules and regulations (the IIROC Rules) of the Investment Industry Regulatory Organization of Canada (IIROC).

6. CMC UK has established a Canadian dealer affiliate, CMC Canada, to act as a dealer for CFDs offered by CMC UK to Canadian clients.

7. CMC UK currently offers CFDs to “accredited investors” (as defined in National Instrument 45-106 Prospectus and Registration Exemptions) (NI45-106) in Canada, other than in the province of Québec, on a private placement basis through CMC Canada as dealer and predominantly through CMC UK’s Marketmaker® on-line trading platform. CMC UK’s on-line trading platform software can be downloaded from http://www.cmcmarkets.com.

8. CMC UK is not, to the best of its knowledge, in default of any requirements of securities legis-lation in Ontario, securities or derivatives legis-lation in Québec, or similar legislation in the United Kingdom.

9. In Québec, the Applicants currently offer CFDs to both accredited and non-accredited investors (referred to herein as retail investors), pursuant to the provisions of the Derivatives Act (Québec)(the QDA) and the conditions contained in the Order dated June 16, 2009 issued by the Autorité des marchés financiers (the AMF) (the AMF Order). The AMF Order exempts CMC UK from the qualifying requirement set forth in section 82 of the QDA relating to the creation or marketing of CFDs offered to the public, subject to certain terms and conditions.

10. CMC UK wishes to offer CFDs to investors, including retail investors, in Ontario on a similar basis as in Québec and on substantially the same terms and conditions as articulated in the QDA and in the AMF Order. For the Interim Period (defined below), both CMC UK and CMC Canada are seeking the Requested Relief in connection with this proposed offering in Ontario.

11. None of CMC UK nor any of its affiliates has any securities listed or quoted on an exchange or marketplace in any jurisdiction inside or outside of Canada.

CMC Canada

12. CMC Canada is a corporation amalgamated under the laws of Canada with its principal office in Toronto, Ontario. CMC Canada is an affiliate of CMC UK. CMC Markets plc is the ultimate parent company of both CMC UK and CMC Canada. CMC Canada is registered as a dealer in the category of investment dealer in all provinces and territories except Alberta and is a member of IIROC (formerly the Investment Dealers’ Association or IDA).

13. CMC Canada is not, to the best of its knowledge, in default of any requirements of securities legis-


October 16, 2009 (2009) 32 OSCB 8366

lation in Ontario, including requirements relating to the filing of forms and payment of fees relating to the distribution of securities in reliance on the “accredited client exemption” in NI 45-106.

14. CMC Canada is required by IIROC to maintain a certain level of capital to address the business risks associated with its activities. The capital reporting required by IIROC (as per the calculation in the Joint Financial Regulatory Questionnaire (the JFRQ) and the Monthly Financial Reports to IIROC) is based predominantly on the generation of financial statements and calculations as to ensure capital adequacy. CMC Canada as an IIROC member is required to have a specified minimum capital which includes having any additional capital required with regards to margin requirements and other risks. This risk calculation is summarized as a risk adjusted capital calculation which is submitted in the firm’s JFRQ and required to be kept positive at all times.

15. As a member of IIROC, CMC Canada is only permitted to distribute CFDs pursuant to IIROC Rules. CMC Canada is not, to the best of its knowledge, in default of any IIROC Rules. In addition, IIROC has communicated to its members certain additional expectations as to acceptable business practices (IIROC acceptable practices)as articulated in the IIROC CFD Paper (as defined below) for any IIROC member proposing to offer CFDs or foreign exchange contracts (forex contracts) to investors. To the best of its knowledge, CMC Canada is in compliance with IIROC acceptable practices for its offerings of CFDs. CMC Canada will continue to offer CFDs in accordance with IIROC acceptable practices as may be established from time to time.

Structure of CFDs

16. A CFD is a derivative product that allows clients to obtain economic exposure to the price movement of an underlying instrument, such as a share, index, market sector, foreign currency, treasury or commodity, without the need for ownership and physical settlement of the underlying instrument.

17. CFDs allow clients to take a long or short position on an underlying instrument, but unlike futures contracts they have no fixed expiry date or standard contract size, or in some cases, an obligation for physical delivery of the underlying instrument. Similarly, unlike certain over-the-counter (OTC) derivatives like forward contracts, CFDs do not require or oblige either CMC UK nor CMC Canada to deliver the underlying instrument.

18. CFDs offered by CMC UK are distributed on an OTC basis and are not transferable.

19. In the case of CFDs offered by CMC UK in respect of which the underlying interest is a

security, the CFDs do not confer the right or obligation to acquire or deliver the underlying security, and do not confer any other rights of holders of the underlying security, such as voting rights. Rather, a CFD is a derivative instrument which is represented by an agreement between a counterparty and a client to exchange the difference between the opening price of a CFD position and the price of the CFD at the closing of the position. The value of the CFD is generally reflective of the movement in prices at which the underlying instrument is traded at the time of opening and closing the position in the CFD.

20. In the case of CFDs offered by CMC UK to investors in Ontario in reliance on the Requested Relief, CMC UK will act as the counterparty and such CFDs will be offered through CMC Canada as dealer.

21. CFDs allow clients to obtain exposure to markets and instruments that may not be available directly, or may not be available in a cost-effective manner. CFDs typically have

(a) execution costs ranging from 0.2-0.25% (calculated on size of the position and charged on opening and closing the position and including spreads and, for certain instruments, commissions), and

(b) no physical settlement of the underlying instrument and therefore no clearing, settlement and custody charges, no stock borrowing costs for short contract positions and no stamp duty (applicable in certain foreign jurisdictions, such as the United Kingdom).

To the extent that clients have long or short positions in an underlying instrument, CFDs can also serve as a tool for hedging this direct exposure.

22. The ability to leverage an investment has traditionally been one of the principal features of CFDs. Leverage allows clients to magnify poten-tial investment returns (or losses) by reducing the initial capital outlay required to achieve the same market exposure that would be obtained by investing directly in the underlying instrument.

23. IIROC Rules and IIROC acceptable practices set out detailed requirements and expectations relating to leverage and margin for offerings of CFDs and forex contracts. Consequently, CFDs offered in Canada in accordance with IIROC Rules and IIROC acceptable practices will generally employ the same degree of leverage as traditional margin accounts for long and short positions in securities. However, the degree of leverage may be amended in accordance with


October 16, 2009 (2009) 32 OSCB 8367

IIROC Rules and IIROC acceptable practices as may be established from time to time.

24. CFDs are currently available to retail clients without a prospectus in OTC markets in countries, including, but not limited to, United Kingdom, Germany, Switzerland, Singapore, Australia and New Zealand. With the implementation of the European Markets in Financial Instruments Directive in November 2007, CFDs are now considered “core” investment services and activities that registered investment firms can offer throughout Europe (via a “passport system” of securities regulation).

25. In Québec, the Applicants currently offer CFDs to investors, including retail investors, pursuant to the provisions of the QDA and the conditions contained in the AMF Order.

26. A detailed description of CFDs can be found in the publication titled “Regulatory Analysis of Contracts for Differences (CFDs)” published by IIROC on June 6, 2007 (the IIROC CFD Paper), as amended on September 12, 2007.

CFDs Distributed in Ontario

27. CFDs and similar OTC derivative contracts, when offered to investors in Ontario, may be considered to be “securities” under the Act.

28. Pursuant to Section 13.12 Restriction on lending to clients of National Instrument 31-103 Registration Requirements which came into force as of September 28, 2009, only those firms that are registered as investment dealers (a condition of which is to be a member of IIROC) may lend money, extend credit or provide margin to a client.

29. CFDs offered by CMC UK are currently distributed through CMC Canada to accredited investors in Ontario on a private placement basis in reliance on the “accredited investor” exemption in section 2.3 of NI 45-106 and are therefore not qualified by a prospectus.

30. Investors wishing to purchase CFDs must open an account with CMC Canada and complete a principal contract with CMC UK.

31. Prior to a client’s first CFD trade and as part of the account opening process, CMC Canada and CMC UK will provide the client with a separate risk disclosure document that clearly explains, in plain language, the product and the risks associated with an investment in the product (the risk disclosure document) and other documents as required by the FSA Rules and Guidance including a risk warning notice and execution policy summary. The risk disclosure document includes the required risk disclosure set forth in Schedule A to the Regulations to the QDA and

leverage risk disclosure required under IIROC Rules. The risk disclosure document contains disclosure that is substantially similar to the risk disclosure statement required for recognized options in OSC Rule 91-502 Trades in Recognized Options (which provides both registration and prospectus exemptions) and the regime for OTC derivatives contemplated by proposed OSC Rule 91-504 OTC Derivatives(which was not adopted) (Proposed Rule 91-504). The Applicants will ensure that, prior to a client’s first CFD trade, a complete copy of the risk disclosure document provided to that client has been delivered, or has previously been delivered, to the Commission.

32. Prior to the client’s first CFD trade and as part of the account opening process, the Applicants will obtain a written or electronic acknowledgement from the client confirming that the client has received, read and understood the risk disclosure document. Such acknowledgment will be separate and prominent from other acknowledgements provided by the client as part of the account opening process.

33. Investors purchase CFDs through CMC Markets’ on-line trading platform, Marketmaker®. CMC UK’s on-line platform is similar to those developed for on-line brokerages and day-trading in that the investor trades without other communication with, or advice from, the dealer. The Marketmaker® is not a “marketplace” as defined in National Instrument 21-101 Marketplace Operation since a marketplace is any facility that brings together multiple buyers and sellers by matching orders in fungible contracts in a non-discretionary manner. The Marketmaker® does not bring together multiple buyers and sellers; rather it is a market maker that quotes the buy and sell price of a CFD offered by CMC UK to the investor on a principal basis.

34. The role of CMC Canada is limited to acting as an execution-only dealer, as it currently does in connection with private placements of CFDs. In connection with its role as execution-only dealer, CMC Canada is, among other things, responsible for marketing, trade execution, administration of account opening and investor approval (including know-your-client diligence and suitability confirm-ations) for all Canadian clients.

35. IIROC Rules exempt member firms that provide execution-only services such as discount broker-age from the obligation to determine whether each trade is suitable for the client. However, IIROC has exercised its discretion to impose additional requirements on members proposing to issue CFDs and requires that:


October 16, 2009 (2009) 32 OSCB 8368

(a) Applicable risk disclosure documents and client suitability waivers provided must be in a form acceptable to IIROC.

(b) The firm’s policies and procedures, amongst other things, must assess the depth of investment knowledge and trading experience of the client to assess whether the CFD product itself is appropriate for the client before an account is approved to be opened. IIROC has also imposed its proficiency requirements for futures trading on CMC Canada’s registered salespeople, who conduct the know your client and initial product suitability analysis, as well as their supervisory trading officer.

(c) The relationship and responsibilities, including conflicts of interest between the issuer and dealer, must be fully disclosed to the client and acknowledged in writing.

(d) Cumulative loss limits for each client’s account must be established (this is a measure normally applied by IIROC in connection with futures trading accounts).

36. The CFDs are offered in compliance with the leverage (margin) rates approved by IIROC and other IIROC acceptable practices. IIROC has prescribed margin limits for CFDs based on IIROC methodologies and principles as applied to existing products offered in Canada (particularly Montreal Bourse single stock futures).

37. IIROC limits the underlying instruments in respect of which a member firm may issue CFDs since only certain securities are eligible for reduced margin rates. For example, underlying equity securities must be listed or quoted on certain “recognized exchanges” (as that term is defined in IIROC rules) such as TSX or the NYSE. The purpose of these limits is to ensure that CFDs offered in Canada will only be available in respect of underlying instruments that are traded in well-regulated markets, in significant enough volumes and with adequate publicly available information, so that investors can form a sufficient under-standing of the exposure represented by a given CFD.

38. Unlike recognized clearing organizations that act as a central counterparty and guarantee the performance and payment obligations of contract positions to all its participants, CMC Canada has no obligations in the event of credit default by CMC UK or the investor, except to manage the flow of money between the two parties to the CFD.

FSA regulatory regime applicable to CMC UK

39. CMC UK is authorized and regulated by the Financial Services Authority (the FSA) in the United Kingdom. CMC UK is currently registered as a BIPRU 730k firm with the FSA. CMC UK is licensed, among other things, to act as principal to its clients in the products offered and may deal with all categories of clients, including directly with retail investors.

40. In order for a firm to be authorized and regulated by the FSA, the FSA must be satisfied that the firm meets certain threshold conditions prescribed by the Financial Services and Markets Act 2000 and under the FSA’s Handbook of Rules and Guidance. In similar fashion to reviews conducted by IIROC and the Commission, the FSA reviews, among other things, the firm’s legal status, location of offices, adequacy of resources and suitability. In order to remain authorized, a registered firm must demonstrate its continuing compliance with these conditions.

41. As an FSA-regulated firm, CMC UK is required to comply with certain rules of the FSA (the FSA Rules). The FSA Rules seek to ensure, among other things, that regulated firms satisfy certain minimum standards. These minimum standards include the requirement that CMC UK maintain adequate financial resources at all times, so that CMC UK is able to meet its liabilities as they fall due. The FSA requires CMC UK to maintain capital resources equal to or in excess of its base capital requirement plus a firm specific variable capital requirement to address market, capital and operational risks. CMC UK monitors its regulatory capital on a daily basis (or more frequently depending on market conditions).

42. The FSA also requires CMC UK to

(a) file financial reports on a monthly basis with the FSA;

(b) immediately notify the FSA of any breach of the capital adequacy requirement; and

(c) submit its audited financial statements within three months of the financial year end together with an annual return and reconciliation of the annual return to the audited financial statements.

Rationale for the Requested Relief

43. The Requested Relief, if granted, would substantially harmonize the Commission’s position on the offering of CFDs to investors in Ontario with how those products are offered to investors in Quebec under the QDA. The QDA provides a legislative framework to govern derivatives activities within the province. Among other things,


October 16, 2009 (2009) 32 OSCB 8369

the QDA requires such products to be offered to investors through an IIROC member and the distribution of a standardized risk disclosure document rather than a prospectus in order to distribute CFDs to investors resident in Quebec.

44. The Commission has previously recognized that the prospectus requirement may not be well suited for the distribution of certain derivative products to investors in Ontario, and that alternative require-ments, including requirements based on clear and plain language risk disclosure, may be better suited for certain derivatives. Both OSC Rule 91-502 Trades in Recognized Options (OSC Rule 91-502) and OSC Rule 91-503 Trades in Commodity Futures Contracts and Commodity Futures Options Entered into on Commodity Futures Exchanges Situate Outside of Ontario (OSC Rule 91-503) provide for a prospectus exemption for the trading of derivative products to clients. The Requested Relief is consistent with the principles and requirements of OSC Rule 91-502, OSC Rule 91-503 and Proposed Rule 91-504.

45. The Applicants also submit that the Requested Relief, if granted, would harmonize the Com-mission’s position on the offering of CFDs with certain other foreign jurisdictions. CMC UK distributes CFDs to retail clients in numerous other jurisdictions around the world. None of these jurisdictions requires a prospectus for a distrib-ution of CFDs. Securities regulators in these jurisdictions appear to have concluded that a clear, plain language risk disclosure document is appropriate for retail CFD clients.

46. CMC UK is of the view that requiring compliance with the prospectus requirements for the distrib-ution of CFDs to retail clients in Ontario would not be appropriate for the following reasons:

a. the disclosure of a great deal of the information required under the pros-pectus and under the reporting issuer regime is not material to a CFD client. The information to be given to a CFD client should principally focus on enhancing the client’s appreciation of product risk including counterparty risk;

b. CFDs are in continuous distribution;

c. most CFDs are of short duration (positions are generally opened and closed on the same day and are in any event marked to market and cash settled daily); and

d. there are frequent changes to the array of available underlying financial instru-ments.

47. CMC UK is regulated by the FSA which has a robust compliance regime including specific requirements to address market, capital and operational risks.

48. CMC Canada is regulated by IIROC which has a robust compliance regime including specific requirements to address market, capital and operational risks.

49. The Applicants submit that the regulatory regimes developed by the FSA, the AMF and IIROC for the offering of CFDs adequately addresses issues relating to the potential risk to the client of CMC UK acting as counterparty. In view of these regulatory regimes, investors would receive little or no additional benefit from requiring CMC UK to also comply with the prospectus requirement for the distribution of CFDs to investors in Ontario.

50. The Requested Relief is conditional on CMC Canada being registered as an investment dealer with the Commission and maintaining its membership with IIROC and that all CFD trades distributed by CMC Canada be conducted pursuant to IIROC Rules imposed on members seeking to distribute CFDs and in accordance with IIROC acceptable practices.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to subsection 74(1) of the Act, that for the duration of the Interim Period (as defined below) the Requested Relief is granted, provided that:

(a) CMC UK remains registered with the FSA and in compliance with FSA Rules;

(b) all CFDs offered by CMC UK to clients resident in Ontario shall be distributed through CMC Canada;

(c) CMC Canada remains registered as a dealer in the category of investment dealer with the Commission and a member of IIROC;

(d) all distributions of CFDs by CMC Canada to clients resident in Ontario be conducted pursuant to IIROC Rules imposed on members seeking to distribute CFDs and in accordance with IIROC acceptable practices, as amended from time to time;

(e) all distributions of CFDs by CMC Canada to clients resident in Ontario be conducted pursuant to the rules and regulations of the QDA and the AMF, as amended from time to time, unless and to the extent there is a conflict between i) the rules and regulations of the QDA and the AMF, and ii) the requirements of Ontario securities law, the IIROC Rules and IIROC acceptable practices, in which case the latter shall prevail;


October 16, 2009 (2009) 32 OSCB 8370

(f) prior to a client’s first CFD trade, the Applicants have provided to the client the risk disclosure document described in paragraph 31 and have delivered, or have previously delivered, a copy of the risk disclosure document provided to that client to the Commission;

(g) prior to the client’s first CFD trade and as part of the account opening process, the Applicants have obtained a written or electronic acknowledgement from the client, as described in paragraph 32, confirming that the client has received, read and understood the risk disclosure document;

(h) CMC UK has furnished to the Commission the name and principal occupation of its officers or directors, together with either the personal information form and authorization of indirect collection, use and disclosure of personal information provided for in National Instrument 41-101 General Prospectus Requirements or the registration information form for an individual provided for in Form 33-109F4 of National Instrument 33-109 Registration Information Requirements completed by any officer or director;

(i) CMC UK shall promptly inform the Commission in writing of any material change affecting CMC UK, being any change in the business, activities, operations or financial results or condition of CMC UK that may reasonably be perceived by a counterparty to a derivative to be material;

(j) CMC UK and/or CMC Canada shall promptly inform the Commission in writing if a self-regulatory organization or any other regulatory authority or organization initiates proceedings or renders a judgment related to disciplinary matters against CMC UK or CMC Canada concerning the conduct of activities with respect to CFDs;

(k) within 90 days following the end of its financial year, CMC UK shall submit to the Commission the audited annual financial statements of CMC Markets Plc and a statement presenting the number of contracts concluded with Ontario residents for any CFDs offered to the public during the most recent financial year;

(l) the Requested Relief shall immediately expire upon the earliest of

(i) four years from the date that this Order is issued;

(ii) the issuance of an order or decision by a court, the FSA, the AMF or other similar regulatory body that suspends or terminates the ability of CMC UK to offer CFDs to clients in the UK or the ability of the Applicants to offer CFDs to clients in Quebec; and

(iii) the coming into force in Ontario of legislation or a rule regarding the distrib-ution of OTC derivatives to investors in Ontario (the Interim Period).

October 8, 2009

“James Turner Vice-ChairOntario Securities Commission

“David Knight” Commissioner Ontario Securities Commission


October 16, 2009 (2009) 32 OSCB 8371

2.2.5 JovInvestment Management Inc. and The Gartman Letter, L.C. – ss. 78(1), 80 of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) – Relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to sub-adviser not ordinarily resident in Ontario in respect of advice regarding trades in commodity futures contracts and commodity futures options, subject to certain terms and conditions. Relief mirrors exemption available in section 7.3 of OSC Rule 35-502 – Non-Resident Advisers (Rule 35-502) made under the Securities Act (Ontario).

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 78 and 80.

Securities Act, R.S.O. 1990, c. S.5, as am. – Rule 35-502 – Non Resident Advisers.

IN THE MATTER OF THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C.20, AS AMENDED (the CFA)

AND

IN THE MATTER OF JOVINVESTMENT MANAGEMENT INC.

AND THE GARTMAN LETTER, L.C.

ORDER(Section 78(1) and Section 80 of the CFA)

UPON the application (the Application) of JovInvestment Management Inc. (the Principal Adviser)and The Gartman Letter, L.C. (the Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order:

(a) pursuant to section 78(1) of the CFA, revoking the exemption order granted by the Commission to the Sub-Adviser on October 20, 2006; and

(b) pursuant to section 80 of the CFA, that the Sub-Adviser be exempt, for a period of five years, from the adviser registration requirement in paragraph 22(1)(b) of the CFA when acting as an adviser for the Principal Adviser in respect of its Clients (as defined below) regarding commodity futures contracts and commodity futures options traded on commodity futures exchanges (collectively, the Commodity Instruments) and cleared through clearing corporations;

AND UPON considering the Application and the recommendations of staff of the Commission;

AND UPON the Sub-Adviser and the Principal Adviser having represented to the Commission that:

The Parties

1. The Principal Adviser is a corporation incorporated under the laws of Ontario and its principal business office is located in Toronto, Ontario.

2. The Principal Adviser is currently registered as:

(a) an adviser in the category of portfolio manager under the Securities Act(Ontario) (the OSA); and

(b) as a commodity trading counsel and as a commodity trading manager under the CFA.

3. The Sub-Adviser is a limited liability company organized under the laws of Virginia. The head office of The Sub-Adviser is in Suffolk, Virginia.

4. The Sub-Adviser is exempt from registration as an adviser in the United States.

The Clients

5. The Principal Adviser provides portfolio manage-ment services to its clients in Ontario including mutual funds and other investment vehicles (collectively, the Clients).

6. The Principal Adviser may, pursuant to a written agreement with each Client:

(a) act as an adviser (as defined in the OSA) to that Client in respect of trading securities; and

(b) act as an adviser (as defined in the CFA) to that Client in respect of trading Commodity Instruments

by exercising discretionary authority in respect of the investment portfolio of that Client, with discretionary authority to purchase or sell on behalf of that Client:

(i) securities; and

(ii) Commodity Instruments.

7. In connection with the Principal Adviser acting as an adviser to a Client in respect of the purchase or sale of Commodity Instruments, the Principal Adviser may, from time to time, pursuant to a written agreement made between the Principal Adviser and the Sub-Adviser, retain the Sub-Adviser to act as an adviser to it (the Proposed Advisory Services) by exercising discretionary authority on behalf of the Principal Adviser, in respect of the investment portfolio of the Client,


October 16, 2009 (2009) 32 OSCB 8372

including discretionary authority to buy or sell Commodity Instruments for the Client, provided that:

(a) in each case, the Commodity Instruments must be cleared through an acceptable clearing corporation; and

(b) such investments are consistent with the investment objectives and strategies of the Client.

8. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser. Under the CFA “adviser” means a person or company engaging in or holding himself, herself or itself out as engaging in the business of advising others as to trading in “contracts”, and “contracts” means commodity futures contracts and commodity futures options.

9. By providing the Proposed Advisory Services, the Sub-Adviser will be acting as an adviser with respect to Commodity Instruments, and in the absence of being granted the requested relief, would be required to register as an adviser under the CFA.

10. There is presently no rule or other regulation under the CFA that provides an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA for a person or company acting as an adviser in respect of Commodity Instruments that is similar to the exemption from the adviser registration requirement in paragraph 25(1)(c) of the OSA for acting as an adviser (as defined in the OSA) in respect of securities that is provided under section 7.3 of OSC Rule 35-502 Non Resident Advisers (OSC Rule 35-502).

11. The relationship among the Principal Adviser, the Sub-Adviser and the Clients will satisfy the requirements of section 7.3 of Rule 35-502.

12. As would be required under section 7.3 of OSC Rule 35-502:

(a) the duties and obligations of the Sub-Adviser will be set out in a written agreement with the Principal Adviser;

(b) the Principal Adviser will contractually agree with its Clients to be responsible for any loss that arises out of the failure of the Sub-Adviser:

(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in the

best interests of the Principal Adviser and its Clients; or

(ii) to exercise the degree of care, diligence and skill that a reason-ably prudent person would exercise in the circumstances (together with (i), the Assumed Obligations); and

(c) the Principal Adviser cannot be relieved by its Clients from responsibility for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations.

13. The Sub-Adviser is not a resident of any province or territory of Canada.

14. The Sub-Adviser is entitled to rely on appropriate exemptions from such registrations or licences, to provide advice to the Clients pursuant to the applicable legislation of its principal jurisdictions.

15. Prior to purchasing any Commodity Instruments for Clients that reside in Ontario, such Clients will receive written disclosure that includes:

(a) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(b) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or the individual represent-atives of the Sub-Adviser) advising the relevant Client, because such entity is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

Previous Order

16. Pursuant to an order of the Commission dated October 20, 2006, reported at Re Jove Investment Management Inc. and The Gartman Letter, L.C.(2006), 29 OSCB 8434 (the Previous Order), the OSC granted the Sub-Adviser an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA in respect of advice regarding trades in Commodity Instruments provided on a sub-advisory basis to the Principal Adviser (formerly known as Jove Investment Management Inc.), subject to certain terms and conditions. The Previous Order is scheduled to expire on October 20, 2009.

AND UPON the OSC being satisfied that it would not be prejudicial to the public interest for the OSC to grant the exemption requested on the basis of the terms and conditions proposed;


October 16, 2009 (2009) 32 OSCB 8373

IT IS ORDERED, pursuant to section 78(1) of the CFA, that the Previous Order is revoked; and

IT IS FURTHER ORDERED, pursuant to section 80 of the CFA, that the Sub-Adviser is exempted from the advisory registration requirement in paragraph 22(1)(b) of the CFA, in respect of the Proposed Advisory Services provided to the Principal Adviser for a period of five years, provided that at the relevant time that such activities are engaged in:

(a) the Principal Adviser is registered under the CFA as an adviser in the category of commodity trading manager;

(b) the Sub-Adviser is appropriately regis-tered or licensed, or is entitled to rely on appropriate exemptions from such regis-trations or licences, to provide advice to the Principal Adviser relating to Commodity Instruments pursuant to the applicable legislation of its principal jurisdiction;

(c) the duties and obligations of the Sub-Adviser are set out in a written agree-ment with the Principal Adviser;

(d) the Principal Adviser has contractually agreed with its Clients to be responsible for any loss that arises out of any failure of the Sub-Adviser to meet the Assumed Obligations;

(e) the Principal Adviser cannot be relieved by its Clients from its responsibility for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(f) prior to purchasing any Commodity Instruments for Clients in Ontario, such Clients will receive written disclosure that includes:

(i) a statement that the Principal Adviser is responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Assumed Obligations; and

(ii) a statement that there may be difficulty in enforcing any legal rights against the Sub-Adviser (or the individual represent-atives of the Sub-Adviser) advising the relevant Client, because such entity is resident outside of Canada and all or substantially all of its assets are situated outside of Canada.

October 13, 2009

“Carol S. Perry” Commissioner Ontario Securities Commission

“Paulette L. Kennedy” Commissioner Ontario Securities Commission


October 16, 2009 (2009) 32 OSCB 8374


October 16, 2009 (2009) 32 OSCB 8375

Chapter 3

Reasons: Decisions, Orders and Rulings

3.1 OSC Decisions, Orders and Rulings

3.1.1 Shane Suman and Monie Rahman



AND

IN THE MATTER OF SHANE SUMAN AND MONIE RAHMAN

REASONS AND DECISION ON A MOTION TO EXCLUDE EVIDENCE

AND A NON-SUIT MOTION

Hearing: August 21, 2009

Decision: October 9, 2009

Panel: James E. A. Turner Vice-Chair and Chair of the Panel Paulette L. Kennedy Commissioner

Counsel: Cullen Price For the Ontario Securities Commission Matthew Britton

Shane Suman Representing himself

Randy Bennett For Monie Rahman Sara Erskine Mario Thomaidis

I. Introduction

[1] This matter arises out of a Statement of Allegations and Notice of Hearing dated July 24, 2007. Staff of the Commission (“Staff”) alleges that Shane Suman (“Suman”), a former employee of MDS Sciex, a division of MDS Inc. (“MDS”), communicated material non-public information about MDS to his wife, Monie Rahman (“Rahman”). The information concerned the proposed acquisition by MDS of Molecular Devices Corporation (“MDCC”), a U.S. issuer listed on NASDAQ (the “Acquisition”). The Acquisition was publicly announced on January 29, 2007.

[2] The hearing on the merits started on July 27, 2009. Suman and Rahman (collectively, the “Respondents”) and Staff entered into a Statement of Agreed Facts which states that there is no dispute that the Respondents purchased 12,000 MDCC shares and 900 MDCC options contracts between January 24, 2007 and January 26, 2007 and liquidated them by March 16, 2007. Accordingly, the main dispute between the parties is whether Suman and Rahman purchased the securities with knowledge of material non-public information about the proposed Acquisition.

[3] Staff called eight witnesses. Five witnesses from MDS testified about MDS, the events leading up to the Acquisition, Suman’s role at MDS and the opportunities Suman allegedly had to acquire material non-public information about the proposed Acquisition. An official from the Chicago Board of Options Exchange (the “CBOE”) testified about the CBOE investigation of the MDCC trades by the Respondents. Two Staff investigators testified. George Gunn, Manager of Surveillance at the Commission, testified about the opening of the investigation on or about January 30, 2007, and about his involvement in the initial Commission investigation. Colin McCann, a senior investigator at the Commission (“McCann”), was the primary investigator in this matter. He testified at length about the investigation, including his examination of the contents of certain computers used by Suman. He testified that he used NetAnalysis, a forensic software program, to reconstruct Suman’s internet browser history, andthe resulting internet browser schedules were entered into evidence (the “NetAnalysis Evidence”). Steven Rogers (“Rogers”)


October 16, 2009 (2009) 32 OSCB 8376

was qualified by Staff and accepted by the Panel as an expert in computer forensics. He gave lengthy opinion evidence about the conclusions he drew based on the NetAnalysis Evidence and based on his analysis of the contents of Suman’s computers.

[4] On August 13, 2009, immediately after Staff closed its case, Rahman brought two motions: a motion to exclude the NetAnalysis Evidence and the entirety of Rogers’ expert evidence (the “Exclusion of Evidence Motion”) and a motion for a non-suit (the “Non-Suit Motion”). Suman joined in the motions. Staff and the Respondents agreed on a timetable for the submission of written materials and for the hearing of the motions on August 21, 2009. Following the motions hearing, we reserved our decision.

[5] Upon considering the parties’ written and oral submissions, we have concluded that both motions must be dismissed. Our reasons are as follows.

II. The Exclusion of Evidence Motion

[6] The Respondents submit that the NetAnalysis Evidence is hearsay evidence and therefore is presumptively inadmissible. They argue it is inherently unreliable and therefore not admissible under the “principled exception” to the hearsayrule set out in R. v. Blackman (2006), 84 O.R. (3d) 292 (Ont. C.A.), affirmed 2008 SCC 37 (S.C.C.), and the cases cited therein. They submit that they have “no opportunity to cross-examine the software”, and that Staff’s evidence shows that “the software operating in its normal course will produce an inaccurate report”. They submit, for example, that neither McCann nor Rogers was able to explain an apparent discrepancy in the NetAnalysis Evidence as to the timing of certain internet searches Suman is alleged to have made prior to the MDS announcement of the Acquisition. Moreover, they submit that the cross-examination of McCann and Rogers showed that the NetAnalysis Evidence “can mislead a person purporting to be an expert in the software, thereby causing that person to in turn mislead the Panel.” Finally, they note that there are no reported cases mentioning NetAnalysis in the Quicklaw Canadian database. For these reasons, the Respondents submit that the NetAnalysis Evidence should be excluded as hearsay evidence that has failed the test of threshold reliability.

[7] In the second part of the Exclusion of Evidence Motion, the Respondents submit that Rogers’ expert evidence should be excluded on the basis that it does not satisfy the criteria for admissibility established in R. v. Mohan [1994] 2 S.C.R. 9 and the cases following it. The Respondents did not object to Rogers’ qualification as an expert at the outset of his testimony, but didreserve the right to cross-examine him on certain areas of his knowledge. In their motion, the Respondents submit that Rogers’ testimony demonstrated that he was not a properly qualified expert on a number of specific matters to which he testified, and that he was not independent or impartial. For example, the Respondents submit that in cross-examination Rogers was led to retract evidence he had given in chief with respect to the timing of the delivery of certain emails, the timing of certain internet searches, and whether attempts had been made to delete certain emails, internet searches and other evidence from the computers’ log files. The Respondents submit that Rogers did not undertake the investigations to be expected from a witness giving neutral, unbiased testimony and did not provide material facts that were necessary to give his opinion context. In summary, the Respondents submit that Rogers’ evidence is compromised and unreliable and should be excluded.

[8] Staff submits that the Exclusion of Evidence Motion should be dismissed on the basis that it was brought belatedly, after the NetAnalysis Evidence and Rogers’ expert evidence had been admitted without objection, and on the basis that this evidence is reliable and properly admitted.

[9] With respect to the NetAnalysis Evidence, Staff submits that it is not hearsay, since McCann, who testified before us, was the person who generated the results from what is described as an “industry-leading software tool”. Alternatively, if it ishearsay, Staff submits that hearsay is admissible by administrative tribunals and questions of reliability go to the weight to be given such evidence.

[10] Turning to Rogers’ evidence, Staff submits that he was properly qualified as an expert and that he demonstrated his neutrality by highlighting any areas of uncertainty in his opinions and acknowledged errors in his conclusions that were established on cross-examination. Staff submits that after a “rigorous cross-examination”, Rogers’ evidence leaves no doubt thatthree critical pieces of evidence were found on Suman’s computers – evidence of relevant internet searches, selective use of a data “washing” software tool, and fragments of calendar entries of other MDS employees related to the proposed Acquisition. Staff submits that Rogers’ expert evidence is reliable and that it is necessary because analysis of the raw data presented on theforensic copies of Suman’s computers is likely outside the experience and knowledge of the Panel.

Analysis and Conclusion on the Exclusion of Evidence Motion

[11] We note that if the NetAnalysis evidence is hearsay evidence, it is hearsay that can be assessed and challenged by the Respondents through their own analysis of the information on Suman’s computers and by themselves running NetAnalysis on those computers. The Respondents have been able to do that and have made a number of important points in cross-examination as a result. In our view, the Respondents’ vigorous testing of the NetAnalysis Evidence through cross-examination of McCann and Rogers shows that the NetAnalysis Evidence possesses sufficient threshold reliability to be admitted under the


October 16, 2009 (2009) 32 OSCB 8377

principled exception to the hearsay rule. We also find that the NetAnalysis evidence is necessary because analysis of the raw data presented on the forensic copies of Suman’s computers is outside our experience and knowledge.

[12] The Commission has stated that: “Although hearsay evidence is admissible under [subsection 15(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22], the weight to be accorded to such evidence must be determined by the panel. Care must be taken to avoid placing undue reliance on uncorroborated evidence that lacks sufficient indicia of reliability” (ReSunwide Finance Inc. (2009), 32 O.S.C.B. 4671, at para. 22). It is for us to decide the relevance and weight to be given to theNetAnalysis Evidence and, in doing so, we will take into account the matters that the Respondents have successfully challenged through cross-examination.

[13] We are not satisfied that the Respondents have shown that Rogers is biased or that his evidence is inherently unreliable. He has modified his evidence and conclusions where the Respondents’ cross-examination has raised questions. While he was admitted by us as an expert, he has also acknowledged those areas where he does not have expertise. The Panel will carefully consider the relevance and weight to be given to Rogers’ expert evidence and, in doing so, we will take into consideration the submissions made to us by the Respondents with respect to the weaknesses of that evidence demonstrated by cross-examination.

[14] Staff has argued that the Exclusion of Evidence Motion is not in order because any challenge to the introduction of evidence must be made at the time such evidence is introduced and not after Staff has closed its case. In the circumstances, wehave not found it necessary to determine whether the Respondents’ Exclusion of Evidence Motion can be properly brought by the Respondents at the close of Staff’s case as occurred here.

[15] We therefore dismiss the Exclusion of Evidence Motion.

III. The Non-Suit Motion

[16] The Respondents also bring a separate motion for non-suit.

[17] The parties agree that the test for a non-suit motion is “whether there is any evidence which, taken at its highest, establishes or gives rise to a reasonable inference in favour of the party responding to the motion. Any doubts in that respect are to be resolved in favour of the responding party” (Toronto (City) v. Toronto Civic Employees’ Union, Local 416 (Espinola Grievance) (2000), 93 L.A.C. (4th) 372 (QL) at para. 22) and ATI Technologies Inc. (2005), 28 O.S.C.B. 9667 at paras. 23 and 24 (“ATI”).

[18] We also note that in ATI, the Commission held that a non-suit motion may be brought in Commission proceedings and that the Commission has discretion whether to put the moving party to an election whether he or she will call evidence before the Commission considers the non-suit motion.

[19] The Respondents submit that Staff’s evidence does not establish a prima facie case to be met, and therefore, the Respondents should not be required to present evidence in response to Staff’s allegations. The Respondents submit that a non-suit motion should be granted if Staff has failed to make out a prima facie case with respect to any of the elements of the allegations. In this case, those allegations include that: (i) Suman had actual knowledge of material non-public information about the proposed Acquisition; (ii) he informed Rahman about it; and (iii) Suman and Rahman traded in MDCC securities with actual knowledge of the proposed Acquisition.

[20] The Respondents submit that Staff has failed to make out a prima facie case with respect to any of these three elements. They submit that Staff has not called any witness who can attest that Suman had actual knowledge of the proposed Acquisition and that Staff’s evidence in this respect is entirely circumstantial. They submit that Staff’s case is speculative and consists entirely of a chain of inferences that are not founded on established facts. They submit that those inferences rest entirely on the forensic computer evidence, introduced through McCann and Rogers, which the Respondents submit is inherently unreliable. Further, the Respondents submit that Staff cannot resist a non-suit motion in the hope that the Respondents’ evidence will bolster Staff’s case.

[21] Staff submits that where the allegations rest on circumstantial evidence, and there is no direct evidence on point, the Panel must engage in limited weighing of the circumstantial evidence because, by definition, there is an inferential gap betweenthe circumstantial evidence and the matter to be proven. The Panel must weigh the evidence to determine whether, if believed, it is reasonably capable of supporting the inferences that Staff asks us to draw (R. v. Arcuri, [2001] S.C.J. No. 52 (S.C.C.) at para. 23).

[22] Applying these principles, Staff submits that, in an insider trading and tipping case, Staff will rarely be able to prove actual knowledge of material non-public information by direct evidence, and the matter will often turn on circumstantial evidence.Such circumstantial evidence will relate to such matters as the opportunity to obtain the material information, contacts betweenthe alleged tipper and tippee, and the circumstances surrounding the particular trading. In this case, Staff submits there is ample


October 16, 2009 (2009) 32 OSCB 8378

circumstantial evidence that Suman possessed material non-public information about the proposed Acquisition, that he communicated that information to Rahman, and that they acquired MDCC securities or options to acquire such securities while in possession of that information.

Analysis and Conclusion on the Non-Suit Motion

[23] In this case, we do not find it appropriate to put the Respondents to an election whether to call evidence before we consider the Non-Suit Motion. The Respondents have raised legitimate questions based on the evidence and testimony before us and are not simply taking a tactical position.

[24] We accept that the test for a non-suit motion is whether there is some evidence which, taken at its highest, gives rise toreasonable inferences in favour of Staff, and that any doubts in that respect are to be resolved in favour of Staff. In this case, we conclude that Staff’s evidence, if believed, gives rise to reasonable inferences capable of supporting Staff’s allegations referred to in paragraph 19 of these reasons. Whether ultimately we conclude that Staff has proven its case on a balance of probabilitiesis a matter to be decided at the conclusion of the hearing on the merits based on all of the evidence then before us. All we aredeciding here is that Staff has shown a sufficient case to survive a non-suit motion.

[25] We therefore dismiss the Non-Suit Motion.

IV. Decision

[26] The Exclusion of Evidence Motion and the Non-Suit Motion are dismissed.

[27] The hearing on the merits will resume on a date to be fixed by the Office of the Secretary. The parties are requested to immediately contact the Office of the Secretary to arrange an agreed date for proceeding.

DATED in Toronto this 9th day of October, 2009.

“James E. A. Turner”

“Paulette L. Kennedy”

October 16, 2009 (2009) 32 OSCB 8379

Chapter 4

Cease Trading Orders

4.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Company Name Date of Temporary

Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/Revoke

Redcorp Ventures Ltd. 02 Oct 09 14 Oct 09 14 Oct 09

4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders

Company Name Date of Order or

Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer

Temporary Order

There are no items for this week.

4.2.2 Outstanding Management & Insider Cease Trading Orders

Company Name Date of Order or

Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer Temporary

Order

Sprylogics International Corp. 02 June 09 15 June 09 15 June 09

Norwall Group Inc. 02 Sept 09 14 Sept 09 14 Sept 09

Strategic Resource Acquisition Corporation

23 Sept 09 05 Oct 09 05 Oct 09

Coalcorp Mining Inc. 07 Oct 09 19 Oct 09

Cease Trading Orders

October 16, 2009 (2009) 32 OSCB 8380


October 16, 2009 (2009) 32 OSCB 8381

Chapter 6

Request for Comments

6.1.1 Notice and Request for Comments – Proposed Amendments to NI 81-106 Investment Fund Continuous Disclosure and Companion Policy 81-106CP Investment Fund Continuous Disclosure and Related Amendments

NOTICE AND REQUEST FOR COMMENTS

PROPOSED AMENDMENTS TO NATIONAL INSTRUMENT 81-106 INVESTMENT FUND CONTINUOUS DISCLOSURE

AND COMPANION POLICY 81-106CP INVESTMENT FUND CONTINUOUS DISCLOSURE AND RELATED AMENDMENTS

Introduction

The Canadian Securities Administrators (CSA or we), except the Autorité des marchés financiers and the New Brunswick Securities Commission, are publishing for a 90 day comment period proposed amendments to:

National Instrument 81-106 Investment Fund Continuous Disclosure (the Instrument) and

Companion Policy 81-106CP Investment Fund Continuous Disclosure (the Policy).

We are also publishing for comment proposed amendments to:

Form 41-101F2 Information Required in an Investment Fund Prospectus,

National Instrument 81-101 Mutual Fund Prospectus Disclosure,

Companion Policy 81-101CP Mutual Fund Prospectus Disclosure,

National Instrument 81-102 Mutual Funds, and

National Instrument 81-104 Commodity Pools.

We are publishing all of the proposed amendments with this Notice. You can also find the proposed amendments on the websites of many CSA members.

This notice forms parts of a series of notices that address proposed changes to securities legislation arising from the upcomingchangeover to International Financial Reporting Standards (IFRS). This notice sets out the proposed changes specific to investment funds.

Substance and purpose of the amendments

Background

The Instrument currently refers to existing Canadian generally accepted accounting principles (GAAP) which are established by the Canadian Accounting Standards Board (AcSB) and published in the Canadian Institute of Chartered Accountants (CICA) Handbook. Following a period of public consultation, the AcSB adopted a strategic plan to move financial reporting for Canadian publicly accountable enterprises to IFRS as issued by the International Accounting Standards Board (IASB). For financial years beginning on or after January 1, 2011, Canadian GAAP for publicly accountable enterprises will be IFRS incorporated into the CICA Handbook.

Purpose

The purpose of the proposed amendments published today is to accommodate the transition to IFRS. The proposed amendments require investment funds, for financial years beginning on or after January 1, 2011, to prepare financial statementsin accordance with Canadian GAAP applicable to publicly accountable enterprises and to report compliance with IFRS. We are


October 16, 2009 (2009) 32 OSCB 8382

also proposing to update the accounting terms and phrases in the Instrument to reflect that, for financial years beginning on orafter January 1, 2011, Canadian GAAP for publicly accountable enterprises will be IFRS incorporated into the CICA Handbook.

The proposed amendments to the Instrument are consistent with the CSA’s proposal to repeal and replace National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (to be renamed Acceptable Accounting Principles and Auditing Standards) (NI 52-107), published for comment on September 25, 2009. The proposed amendments are also consistent with proposed changes to National Instrument 51-102 Continuous Disclosure Obligations, National Instrument 41-101 General Prospectus Requirements and National Instrument 14-101 Definitions also published for comment on September 25, 2009.

The changeover to IFRS will also result in certain consequential amendments to other rules and forms applicable to investment funds, including the prospectus rules (Form 41-101F2 Information Required in an Investment Fund Prospectus and National Instrument 81-101 Mutual Fund Prospectus Disclosure, including Form 81-101F1 Contents of Simplified Prospectus).

The proposed amendments are not intended to substantively alter securities law requirements, but the adoption of IFRS will change the accounting principles currently used by investment funds, and will impact the presentation of financial statements. The proposed amendments cover terminology differences between Canadian GAAP and IFRS (a list of changed terms is in Appendix A), and also reflect changes to financial statement presentation stemming from the adoption of IFRS. Two of the major changes that impact investment funds are the classification of securities issued by investment funds and consolidation.

Classification of Investment Fund Securities (Puttable Instruments)

International Accounting Standard (IAS) 32 Financial Instruments: Presentation classifies a puttable financial instrument as a financial liability, unless the instrument has certain features, in which case it is classified as an equity instrument. Generally, puttable instruments are securities which are redeemable by the securityholder. As most investment funds issue redeemable securities, investment funds will have to determine if their securities are puttable instruments, and if so, whether they should be classified as financial liabilities or as equity instruments.

Currently, the Instrument contemplates that the securities issued by investment funds are usually classified as equity. The proposed amendments alter some of the line items in the financial statements to accommodate either an equity or liability presentation. The proposed amendments attempt to keep the financial statement presentation as consistent as possible, regardless of whether the investment fund’s own securities are classified as equity or liability under IFRS. For example, the proposed amendments allow an investment fund to disclose either total equity (if the fund’s own securities are classified as equity) or net assets attributable to securityholders (if the fund’s own securities are classified as liabilities).

While the classification of an investment fund’s securities as either equity instruments or financial liabilities will affect the presentation of the financial statements, we do not expect it to impact other aspects of investment fund disclosure such as performance or management expense ratios.

The CSA is seeking feedback on this approach to the treatment of the classification of securities issued by investment funds.

Consolidation

Under current Canadian GAAP, the requirement to consolidate (Accounting Guideline 15 Consolidation of Variable Interest Entities) does not apply to investment funds that account for their investments at fair value in accordance with Accounting Guideline 18 Investment Companies (AcG-18). Generally, AcG-18 requires investment funds to measure their portfolio assets at fair value and present them on this basis in their financial statements.

Current Canadian GAAP differs from IFRS as IAS 27 Consolidated and Separate Financial Statements applies to all entities including investment funds. Paragraph 16 of IAS 27 stipulates that “a subsidiary is not excluded from consolidation simply because the investor is a venture capital organisation, mutual fund, unit trust or similar entity.”

The IASB is currently reviewing the consolidation requirements under IFRS. The IASB published Exposure Draft 10 - Consolidated Financial Statements (ED 10) for comment in December 2008. Investment funds are included in the scope of the proposed revised standard which is expected to be issued later this year. The objective of ED 10 is to clarify the definition of control in IFRS and to provide more specific application guidance. The interpretation of “control” could lead to situations where investment funds may have to consolidate underlying investments.

Some respondents to the IASB’s request for comments on ED 10, including members of the Canadian investment fund industry, asked the IASB to reconsider the application of the consolidation standard to investment funds. Some respondents noted that consolidation does not provide meaningful, relevant information to readers of the financial statements. These respondents are of the view that investment funds should always measure and present their investments at fair value, whereas consolidation could result in underlying investments being presented using another valuation method employed by the subsidiary (for


October 16, 2009 (2009) 32 OSCB 8383

example, at cost). In 2009, the CICA published a research report, Financial Reporting By Investment Funds (Second Edition)1,which outlines a study group’s views on financial reporting issues that may arise from the changeover to IFRS for investment funds, including the preparation of consolidated financial statements.

It is unclear how many investment funds will have to prepare consolidated financial statements under IFRS given certain restrictions, either in securities law or the investment fund’s own policies, on their ability to control or become involved in the management of issuers in which they invest. However, the proposed definition of control in ED 10 will result in some investmentfunds concluding that they have to consolidate certain portfolio investments when preparing their financial statements under IFRS. This could be a significant change in a long-standing Canadian accounting practice and will affect the presentation of investment fund financial statements.

Consolidation for investment funds is an important issue which the CSA will continue to monitor. Currently, it appears that under IFRS, investment funds may be required to present consolidated financial statements, but the specifics of this requirement willnot be known until the IASB publishes its decision with respect to ED 10. Until then, the proposed amendments to the Instrument contemplate that:

investment funds will prepare and file consolidated financial statements (other than the statement of investment portfolio), if required by IFRS

the statement of investment portfolio will be prepared on a non-consolidated basis

the statement of investment portfolio will be audited

the financial highlights in the management reports of fund performance will be presented on a non-consolidated basis.

The CSA is seeking feedback on this approach to consolidation for investment funds. We would like specific information about the impact of consolidation on Canadian investment funds, including your analysis and determination of how this standard will be applied and the consequences to the presentation of the financial statements.

We also invite focused comments on the ability of investment funds to prepare the statement of investment portfolio on a non-consolidated basis, and to have this statement audited in accordance with Canadian GAAS using a fair presentation framework. In addition, will the proposed requirement to explain differences between the statement of investment portfolio and the statement of financial position result in useful disclosure about the relationship between these two statements? If not, would a numericalreconciliation achieve this result?

The CSA is of the view that the consolidation requirement will not impact the calculation of net asset value, as this calculationmust continue to be done using the fair value standard established in the Instrument. However, the requirement to consolidate could result in additional differences between net assets (as shown on the financial statements) and net asset value, which could impact the reconciliation of these amounts required to be disclosed in the notes to the financial statements. Please consider whether this will result in any additional presentation issues.

Financial Statements Not Required by IFRS

As the statement of investment portfolio is not one of the financial statements listed in the complete set of financial statements in IAS 1 Presentation of Financial Statements, please provide your views on whether it can be audited as part of annual financial statements audited in accordance with Canadian GAAS using a fair presentation framework. If not, can disclosure equivalent to the disclosure currently provided in the statement of investment portfolio be instead provided in the notes to the financial statements or in an audited supplementary schedule?

Summary of proposed amendments

We summarized the significant proposed amendments in Appendix A. This summary is not a complete list of all the amendments.

We are publishing amending instruments as follows:

for the Instrument (Appendix B)

for the Policy (Appendix C)

1 This document is periodically updated by the CICA. The latest version currently available is dated July 2009.


October 16, 2009 (2009) 32 OSCB 8384

for Form 41-101F2 Information Required in an Investment Fund Prospectus (Appendix D)

for National Instrument 81-101 Mutual Fund Prospectus Disclosure (Appendix E)

for Companion Policy 81-101CP Mutual Fund Prospectus Disclosure (Appendix F)

for National Instrument 81-102 Mutual Funds (Appendix G)

for National Instrument 81-104 Commodity Pools (Appendix H)

We are also publishing blacklined versions of the Instrument and Policy that show the proposed changes (Appendix I).

Alternatives considered

No alternatives were considered. The proposed amendments reflect the changes to the CICA Handbook for publicly accountable enterprises.

Impact on Investors

The CSA support the AcSB’s plan to move financial reporting for Canadian publicly accountable enterprises to IFRS – a globally accepted, high quality set of accounting principles. The proposed amendments are intended to provide investment funds with an efficient transition to IFRS.

The proposed amendments introduce IFRS terminology. By replacing existing Canadian GAAP terms and phrases with IFRS terms and phrases, we expect that a more consistent interpretation will be given to the Instrument than would be the case if theproposed amendments were not implemented. More consistent disclosure practices should increase transparency and thereby benefit investors.

The proposed amendments attempt to maintain comparability of financial statement presentation and performance reporting among investment funds. The changeover to IFRS is not expected to substantially impact the disclosure provided to investors inthe management report of fund performance, nor to affect the calculation of the management expense ratio or the trading expense ratio. The fair value principles on which the calculation of net asset value is based should also remain unchanged.

Anticipated costs and benefits

The anticipated costs and benefits of adopting IFRS as the basis for financial reporting in Canada were included in the notice accompanying the proposed changes to NI 52-107 published on September 25, 2009.

Unpublished materials

In proposing the amendments, we have not relied on any significant unpublished study, report or other written materials.

Local Notices and Amendments

In connection with the implementation of the proposed amendments to the Instrument, certain securities regulatory authorities will amend local securities legislation. These jurisdictions will publish any proposed local changes or other information requiredby local securities legislation in Appendix J to this notice.

Publications in Quebec and New Brunswick

The Autorité des marchés financiers and the New Brunswick Securities Commission are publishing for comment today staff notices that set out the substantive proposed changes reflected in the amending instruments published in the other CSA jurisdictions. Because of the legal obligation to publish amending instruments simultaneously in French and English in Québec and New Brunswick, and because the French IFRS terminology is still in a state of flux, publication for comment of amending instruments in these provinces is presently not feasible. It is expected that the Autorité des marchés financiers and the New Brunswick Securities Commission will publish for comment corresponding amending instruments, in French and in English, during the first quarter of 2010. However, investment funds in Québec and New Brunswick are encouraged to comment on the substantive proposed changes presented in the staff notices and on the amendments published by the other CSA jurisdictions.


October 16, 2009 (2009) 32 OSCB 8385


We welcome your comments on the proposed amendments.

Please submit your comments in writing on or before January 14, 2010. If you are not sending your comments by email, you should also send an electronic file containing your submission (in Windows format, Word).

Address your submission to the following members of the CSA:

British Columbia Securities Commission Alberta Securities Commission Saskatchewan Financial Services Commission – Securities Division Manitoba Securities Commission Ontario Securities Commission Superintendent of Securities, Prince Edward Island Nova Scotia Securities Commission Financial Services Regulation Division, Department of Government Services, Newfoundland and Labrador Superintendent of Securities, Northwest Territories Superintendent of Securities, Yukon Territory Superintendent of Securities, Nunavut

Deliver your comments only to the address that follows. Your comments will be forwarded to the other participating CSA member jurisdictions.

John Stevenson, Secretary Ontario Securities Commission 20 Queen Street West 19th Floor, Box 55 Toronto, Ontario M5H 3S8 Fax: (416) 593-2318 e-mail: [email protected]

Comments received will be made publicly available and posted at www.osc.gov.on.ca and the websites of certain other securities regulatory authorities. We cannot keep submissions confidential because securities legislation in certain provincesrequires publication of a summary of the written comments received during the comment period.

Questions

Please refer your questions to any of:

Vera Nunes Assistant Manager, Investment Funds Ontario Securities Commission 416-593-2311 [email protected]

Stacey Barker Senior Accountant, Investment Funds Ontario Securities Commission 416-593-2391 [email protected]

Viraf Nania Senior Accountant, Investment Funds Ontario Securities Commission 416-593-8267 [email protected]

Christopher Birchall Senior Securities Analyst British Columbia Securities Commission 604-899-6722 or 1-800-373-6393 [email protected]


October 16, 2009 (2009) 32 OSCB 8386

Manny Albrino Associate Chief Accountant British Columbia Securities Commission 604-899-6641 or 1-800-373-6393 [email protected]

Wayne Bridgeman Senior Analyst, Corporate Finance Manitoba Securities Commission 204-945-4905 [email protected]

October 16, 2009


October 16, 2009 (2009) 32 OSCB 8387

APPENDIX A

SUMMARY OF PROPOSED AMENDMENTS

Terminology Changes

Certain terminology changes were made to conform terms used in the Instrument and other investment fund rules with IFRS terms, where applicable. Throughout the Instrument and other rules for which we have proposed amendments:

References to Are changed to

former auditor predecessor auditor

interim financial statements interim financial report

net assets (in financial statements) total equity or net assets attributable to securityholders

reservation of an audit opinion modification of opinion

retroactive retrospective

shareholders’ equity equity

statement of changes in net assets statement of changes in financial position

statement of net assets (or balance sheet) statement of financial position

statement of operations statement of comprehensive income

Amendments to NI 81-106 Investment Fund Continuous Disclosure

Part 1 Definitions and Applications

Section 1.1 – Definitions

Added the definition “financial statements” to clarify that this term includes interim financial reports.

Amended the definition of “net asset value”.

The definition of “net asset value” was amended to clarify that when the investment fund’s own securities are classified as liabilities (rather than equity), total liabilities of the investment fund do not include net assets attributable to securityholders, as this represents the value of the investment fund’s own securities.

Added the definition “publicly accountable enterprise” consistent with the definition in NI 52-107.

Added the definition “statement of changes in financial position”.

Under IFRS, an investment fund will have to classify its own securities as either equity instruments or financial liabilities. This classification will impact financial statement presentation. The new definition recognizes that if an investment fund’s securities are classified as equity, that investment fund will prepare and file a statement of changes in equity, but if the investment fund’s securities are classified as liabilities, the fund will prepare and file a statement ofchanges in net assets attributable to securityholders.

Part 2 Financial Statements

Sections 2.1 and 2.3 – Annual and Interim Financial Statements

For financial years beginning on or after January 1, 2011, all investment funds will have to file a comparative statement of cash flows as required by IFRS.

For financial years beginning on or after January 1, 2011, if an investment fund applies an accounting policy retrospectively, makes a retrospective restatement, or reclassifies items in its financial statements, the investment fund must also file a statement of financial position as at the beginning of the comparative year or period. As we believe


October 16, 2009 (2009) 32 OSCB 8388

investors need this information to understand how the change affected the investment fund’s reported financial position, financial performance and cash flows, the Instrument will require the presentation of this opening statement of financial position in both annual financial statements and interim financial reports.

Section 2.6 – Acceptable Accounting Principles

This section is amended to state that investment fund financial statements are prepared using current Canadian GAAP for financial years before 2011. For years beginning on or after January 1, 2011, investment funds must prepare financial statements using IFRS, defined as Canadian GAAP applicable to publicly accountable enterprises.

Added a requirement to use the same accounting principles for all periods presented in the financial statements. An investment fund’s first IFRS financial statements must include comparatives that are also prepared in accordance with IFRS.

Section 2.7 – Acceptable Auditing Standards

For financial years beginning before January 1, 2011, we maintained the current auditing standards. For financial years beginning on or after January 1, 2011, audited financial statements must be accompanied by an auditor’s report in the form specified by Canadian GAAS for financial statements prepared in accordance with a fair presentation framework. The proposed amendments also require the auditor’s report to refer to IFRS as the applicable fair presentation framework.

Part 3 Financial Disclosure Requirements

Section 3.1 – Statement of Financial Position

Changed line items 14 and 15 from “total net assets and securityholders’ equity” to “total equity or net assets attributable to securityholders” to accommodate either the equity or liability presentation depending on how the investment fund classifies its securities.

Section 3.2 – Statement of Comprehensive Income

Removed line item 12 “capital tax” and amended line item 14 to read “income tax” rather than “provision for income tax”.

Added line 17.1 to require disclosure of the type of distributions made by an investment fund, when the investment fund’s own securities are classified as financial liabilities. Under IFRS, if an investment fund’s securities are classified as a liability, distributions are included in financing costs and recognized as an expense.

Changed line items 18 and 19 from “increase or decrease in net assets from operations” to “increase or decrease in total equity from operations, or in net assets attributable to securityholders (excluding distributions) from operations” to accommodate either the equity or liability presentation depending on how the investment fund classifies its securities.

If the investment fund’s own securities are classified as financial liabilities, causing distributions to be recognized as an expense, distributions are excluded from these line items to maintain comparability with investment funds that classify their securities as equity instruments.

Section 3.3 – Statement of Changes in Financial Position

Modified statement to specifically reflect investment fund activities.

Removed “increase or decrease in net assets from operations” line item as equivalent disclosure is mandated by IFRS.

Section 3.4 – Statement of Cash Flows

Removed “net investment income or loss” line item as IFRS provides alternative methods of calculating cash flows from operating activities (for example, investment funds may use the direct method of calculating cash flows).

Section 3.5 – Statement of Investment Portfolio

Specified that this statement must be prepared on a non-consolidated basis (IFRS does not mandate a statement of investment portfolio). Also added a requirement to identify any investment positions that were consolidated and to explain any differences between the statement of investment portfolio and the statement of financial position relating to


October 16, 2009 (2009) 32 OSCB 8389

the basis of accounting for investments so that users of the financial statements can reconcile the statement of investment portfolio to the statement of financial position.

Section 3.6 – Notes to Financial Statements

Added a requirement to disclose the basis for classifying the investment fund’s own securities as either equity instruments or financial liabilities.

Added a requirement to disclose an explicit and unreserved statement of compliance with IFRS.

Part 15 Calculation of Management Expense Ratio

Sections 15.1 and 15.2 – Calculation of MER

Maintained the status quo with respect to the calculation of MER by excluding distributions from total expenses, when distributions are recognized as an expense due to the classification of the investment fund’s own securities as financial liabilities. The MER calculation should not be affected by the classification of the securities issued by an investment fund as either equity instruments or financial liabilities.

Part 18 Effective Date and Transition

Section 18.5.1 – Transition to IFRS

An opening statement of financial position as at the date of transition to IFRS must be filed with an investment fund’s first interim and first annual financial statements for periods beginning on or after January 1, 2011.

IFRS 1 First-time Adoption of International Financial Reporting Standards requires issuers to prepare an opening IFRS statement of financial position at the date of transition to IFRS along with various reconciliations relating to the date of transition. As we believe investors need this information to understand how the transition from Canadian GAAP to IFRS affected the investment fund’s reported financial position, financial performance and cash flows, we are requiring all investment funds to include this disclosure in their first IFRS interim financial report and first IFRS annual financial statements.

While the terminology in the Instrument has been modified to adopt IFRS terms, a transition provision has been added to allow investment funds to use the previous terminology and format for financial statements pertaining to financial years beginning before January 1, 2011, but filed after the proposed amendments come into force.

Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance

Part B Content Requirements for Annual Management Report of Fund Performance

Item 3 – Financial Highlights

In “The Fund’s Net Assets per [Unit/Share]” table, specified that total expenses should not include distributions, if distributions are an expense for the investment fund, and changed the term “income” to the more specific term “net investment income”.

Specified that the financial highlights are to be shown on a non-consolidated basis.

Added transition provisions relating to the adoption of IFRS. Financial highlights for years prior to 2011 can be shown based on the original financial statements which were prepared using Canadian GAAP as it existed at that time. Financial highlights for years beginning on or after January 1, 2011 are based on financial statements prepared using IFRS. However, when showing the first IFRS year, the financial highlights for the prior year must also be based on IFRS, as this information will be available as comparative audited information in the first IFRS financial statements.

Financial highlights for the first interim period beginning on or after January 1, 2011 will be based on IFRS financial statements, while the prior financial years can continue to be shown based on the original financial statements.

Companion Policy 81-106CP

The proposed amendments to the Policy reflect the changes to the Instrument, and explain the CSA’s approach to the transition by investment funds from current Canadian GAAP to IFRS.


October 16, 2009 (2009) 32 OSCB 8390

Consequential Amendments

We are also publishing for comment proposed consequential amendments to Form 41-101F2, National Instrument 81-101, National Instrument 81-102, and National Instrument 81-104.

These consequential amendments predominantly relate to the adoption of IFRS terminology.

Investment Funds should also review the proposed amendments to National Instrument 41-101 published by the CSA on September 25, 2009 as these may impact directly on investment funds that use the long form prospectus.

We note that the term “equity security” is used in certain rules including National Instrument 41-101 and National Instrument 81-101. We are not proposing to amend this term as we are of the view that its meaning is clear in the context in which it is usedand should not be confused with the classification of an investment fund’s own securities as either equity instruments or financialliabilities.


October 16, 2009 (2009) 32 OSCB 8391

APPENDIX B

PROPOSED AMENDMENT INSTRUMENT FOR NATIONAL INSTRUMENT 81-106

INVESTMENT FUND CONTINUOUS DISCLOSURE

Although this amendment instrument amends section headers in National Instrument 81-106, section headers do not form part of the instrument and are inserted for ease of reference only.

1. National Instrument 81-106 Investment Fund Continuous Disclosure is amended by this instrument.

2. Section 1.1 of National Instrument 81-106 is amended by

(a) adding the following after the definition of “EVCC”:

“financial statements” includes interim financial reports;;

(b) repealing the definition of “net asset value” and substituting the following:

“net asset value” means the value of the total assets of the investment fund less the value of the total liabilities, other than net assets attributable to securityholders, of the investment fund, as at a specific date, determined in accordance with Part 14;;

(c) adding the following after the definition of “non-redeemable investment fund”:

“publicly accountable enterprise” means a publicly accountable enterprise determined in accordance with the Handbook;; and

(d) adding the following after the definition of “scholarship plan”:

“statement of changes in financial position” means a statement of changes in equity or in net assets attributable to securityholders, as applicable to the investment fund;.


(a) striking out “statement of net assets” in paragraph (1)(a) wherever it occurs and substituting “statement of financial position”;

(b) striking out “statement of operations” in paragraph (1)(b) wherever it occurs and substituting “statementof comprehensive income”;

(c) striking out “statement of changes in net assets” in paragraph (1)(c) wherever it occurs and substituting“statement of changes in financial position”;

(d) repealing paragraph (1)(d) and substituting the following:

(d) for financial years beginning on or after January 1, 2011, a statement of cash flows for that financial year and a statement of cash flows for the immediately preceding financial year;; and

(e) repealing paragraph (1)(f) and substituting the following:

(f) a statement of financial position as at the beginning of the immediately preceding financial year if the investment fund discloses in its annual financial statements an explicit and unreserved statement of compliance with IFRS and if the investment fund:

(i) applies an accounting policy retrospectively in its annual financial statements,

(ii) makes a retrospective restatement of items in its annual financial statements, or

(iii) reclassifies items in its annual financial statements; and

(g) notes to the annual financial statements.


October 16, 2009 (2009) 32 OSCB 8392

4. Section 2.3 of National Instrument 81-106 is repealed and substituted by

(a) in the title, striking out “Interim Financial Statements” and substituting “Interim Financial Report”;

(b) striking out “interim financial statements” and substituting “an interim financial report”;

(c) striking out “include” and substituting “includes”;

(d) striking out “statement of net assets” in paragraph (a) wherever it occurs and substituting “statement of financial position”;

(e) striking out “statement of operations” in paragraph (b) wherever it occurs and substituting “statement of comprehensive income”;

(f) striking out “statement of changes in net assets” in paragraph (c) wherever it occurs and substituting“statement of changes in financial position”;

(g) repealing paragraph (d) and substituting the following:

(d) for financial years beginning on or after January 1, 2011, a statement of cash flows for that interim period and a statement of cash flows for the corresponding period in the immediately preceding financial year;; and

(h) repealing paragraph (f) and substituting the following:

(f) a statement of financial position as at the beginning of the immediately preceding financial year if the investment fund discloses in its interim financial report compliance with International Accounting Standard 34 Interim Financial Reporting and if the investment fund:

(i) applies an accounting policy retrospectively in its interim financial report,

(ii) makes a retrospective restatement of items in its interim financial report, or

(iii) reclassifies items in its interim financial report; and

(g) notes to the interim financial report.


(a) in the title, striking out “Interim Financial Statements” and substituting “Interim Financial Report”; and

(b) striking out “interim financial statements” and substituting “interim financial report”.

6. Section 2.6 of National Instrument 81-106 is repealed and substituted by the following:

2.6 Acceptable Accounting Principles

(1) For financial years beginning before January 1, 2011, the financial statements of an investment fund must be prepared in accordance with Canadian GAAP determined in accordance with Part IV of the Handbook applicable to public enterprises.

(2) For financial years beginning on or after January 1, 2011, the financial statements of an investment fund must be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises.

(3) Financial statements must be prepared in accordance with the same accounting principles for all periods presented in the financial statements.


October 16, 2009 (2009) 32 OSCB 8393

7. Section 2.7 of National Instrument 81-106 is amended by repealing subsection (2) and substituting the following:

(2) For financial years beginning before January 1, 2011, audited financial statements must be accompanied by an auditor’s report prepared in accordance with Canadian GAAS and the following requirements:

1. The auditor’s report must not contain a reservation.

2. The auditor’s report must identify all financial periods presented for which the auditor has issued an auditor’s report.

3. If the investment fund has changed its auditor and a comparative period presented in the financial statements was audited by a different auditor, the auditor’s report must refer to the former auditor’s report on the comparative period.

4. The auditor’s report must identify the auditing standards used to conduct the audit and the accounting principles used to prepare the financial statements.

(3) For financial years beginning on or after January 1, 2011, audited financial statements must be accompanied by an auditor’s report prepared in accordance with Canadian GAAS and the following requirements:

1. The auditor’s report does not contain a modification of opinion.

2. The auditor’s report identifies all financial periods presented for which the auditor has issued an auditor’s report.

3. The auditor’s report is in the form specified by Canadian GAAS for an audit of financial statements prepared in accordance with a fair presentation framework.

4. The auditor’s report refers to IFRS as the applicable fair presentation framework.

5. If the investment fund has changed its auditor and a comparative period presented in the financial statements was audited by a different auditor, the auditor’s report is accompanied by the predecessor auditor’s report on the comparative period or refers to the predecessor auditor’s report on the comparative period.


(a) striking out “interim financial statements” wherever it occurs and substituting “an interim financial report”;

(b) striking out “statement of net assets” wherever it occurs and substituting “statement of financial position”;

(c) striking out “statement of operations” wherever it occurs and substituting “statement of comprehensive income”;

(d) striking out “statement of changes in net assets” wherever it occurs and substituting “statement of changes in financial position”;

(e) in subsection (4), striking out “subsections 4.8(7) and (8)” and substituting “paragraphs 4.8(7)(a), (7)(b), (8)(a) and (8)(b)”;

(f) striking out “, if applicable,” in subparagraph (4)(a)(ii) and subparagraph (4)(b)(ii); and

(g) striking out “statement of cashflows” and substituting “statement of cash flows” in subparagraph (4)(a)(ii) and subparagraph (4)(b)(ii).

9. Section 2.10 of National Instrument 81-106 is amended in paragraph (j) by striking out “interim and annual financial statements” and substituting “interim financial report and annual financial statements”.


(a) in the title, striking out “Interim Financial Statements” and substituting “Interim Financial Report”;


October 16, 2009 (2009) 32 OSCB 8394

(b) striking out “interim financial statements” wherever it occurs and substituting “interim financial report”;and

(c) in subsection (2), striking out “have” and substituting “has”.


(a) in the title, striking out “Statement of Net Assets” and substituting “Statement of Financial Position”;

(b) striking out “statement of net assets” and substituting “statement of financial position”;

(c) repealing paragraph 14 and substituting the following:

14. total equity or net assets attributable to securityholders and, if applicable, for each class or series.;and

(d) repealing paragraph 15 and substituting the following:

15. total equity per security or net assets attributable to securityholders per security, or if applicable, per security of each class or series.

12. Section of 3.2 of National Instrument 81-106 is amended by

(a) in the title, striking out “Statement of Operations” and substituting “Statement of Comprehensive Income”;

(b) striking out “statement of operations” and substituting “statement of comprehensive income”;

(c) repealing paragraph 12;

(d) striking out “provision for” in paragraph 14;

(e) adding the following after paragraph 17:

17.1 if recognized as an expense, distributions, showing separately the amount distributed out of net investment income, out of realized gains on portfolio assets sold, and return of capital.;

(f) repealing paragraph 18 and substituting the following:

18. increase or decrease in total equity from operations, or in net assets attributable to securityholders (excluding distributions) from operations, and, if applicable, for each class or series.; and

(g) repealing paragraph 19 and substituting the following:

19. increase or decrease in total equity from operations per security, or in net assets attributable to securityholders (excluding distributions) from operations per security, or, if applicable, per security of each class or series.


(a) in the title, striking out “Statement of Changes in Net Assets” and substituting “Statement of Changes in Financial Position”;

(b) striking out “statement of changes in net assets” and substituting “statement of changes in financial position”;

(c) repealing paragraph 1 and substituting the following:

1. total equity or net assets attributable to securityholders at the beginning of the period.;

(d) repealing paragraph 2;


October 16, 2009 (2009) 32 OSCB 8395

(e) repealing paragraph 6 and substituting the following:

6. if not recognized as an expense, distributions, showing separately the amount distributed out of net investment income, out of realized gains on portfolio assets sold, and return of capital.; and

(f) repealing paragraph 7 and substituting the following:

7. total equity or net assets attributable to securityholders at the end of the period.


(a) in the title, striking out “Statement of Cashflows” and substituting “Statement of Cash Flows”;

(b) striking out “statement of cashflows” and substituting “statement of cash flows”;

(c) repealing paragraph 1; and

(d) repealing paragraph 3 and substituting the following:

3. payments for the purchase of portfolio assets.

15. Section 3.5 of National Instrument 81-106 is amended by adding the following after subsection 8:

(8.1) Despite any requirement in Canadian GAAP for an investment fund to prepare consolidated financial statements, the statement of investment portfolio must:

(a) be presented on a non-consolidated basis;

(b) identify any portfolio assets which represent investments that have been consolidated in the statement of financial position; and

(c) include an explanation of any differences relating to the basis of accounting for investments between the statement of investment portfolio and the statement of financial position.


(a) adding the following after paragraph (1)1:

1.1 for financial years beginning on or after January 1, 2011, the basis for classifying the investment fund’s outstanding securities, or each class or series of outstanding securities, as either equity instruments or financial liabilities.;

(b) striking out “statement of changes in net assets” in paragraph (1)4 and substituting “statement of changes in financial position”;

(c) repealing paragraph (1)5 and substituting the following:

5. the net asset value per security as at the date of the financial statements compared to the total equity per security or net assets attributable to securityholders per security as shown on the statement of financial position, and an explanation of each of the differences between these amounts.; and

(d) adding the following after subsection (2):

(3) For financial years beginning on or after January 1, 2011, the notes to the financial statements must disclose:

(a) in the case of annual financial statements, an explicit and unreserved statement of compliance with IFRS; and

(b) in the case of interim financial reports, compliance with International Accounting Standard 34 Interim Financial Reporting.


October 16, 2009 (2009) 32 OSCB 8396


(a) striking out “statement of net assets” in subsection (2) and substituting “statement of financial position”;and

(b) striking out “statement of operations” in subsection (3) and substituting “statement of comprehensive income”.


(a) striking out “statement of net assets” wherever it occurs in subsection (2) and substituting “statement of financial position”; and



(a) striking out “statement of net assets” in subsection (2) and substituting “statement of financial position”;and



(a) striking out “statement of net assets” in subparagraph (1)(a)(iii) and substituting “statement of financial position”;

(b) striking out “statement of operations” in paragraph (1)(c) and substituting “statement of comprehensive income”; and

(c) repealing subsection (2) and substituting the following:

(2) Despite the requirements of sections 3.1 and 3.2, an investment fund that is a scholarship plan may omit the “total equity per security or net assets attributable to securityholders per security” and “increase or decrease in total equity from operations per security, or in net assets attributable to securityholders (excluding distributions) from operations per security” line items from its financial statements.

21. Section 4.2 of National Instrument 81-106 is amended by striking out “interim financial statements” and substituting “interim financial report”.

22. Section 5.1 of National Instrument 81-106 is amended in paragraph (2)(b) by striking out “interim financial statements” and substituting “the interim financial report”.

23. Section 8.2 of National Instrument 81-106 is amended in paragraph (d) by striking out “interim financial statements” and substituting “an interim financial report”.

24. Section 8.4 of National Instrument 81-106 is amended by striking out “the net assets” and substituting “of the total equity or net assets attributable to securityholders”.

25. Section 8.5 of National Instrument 81-106 is amended in paragraph (b) by striking out “[net assets/venture investments]” and substituting “[total equity/net assets attributable to securityholders/venture investments]”.

26. Section 15.1 of National Instrument 81-106 is amended by repealing clause (1)(a)(i)(A) and substituting the following:

(A) total expenses of the investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the financial year or interim period, as shown on its statement of comprehensive income; and .


October 16, 2009 (2009) 32 OSCB 8397


(a) repealing subparagraph (1)(a)(i) and substituting the following:

(i) multiplying the total expenses of each underlying investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the financial year or interim period, by ; and

(b) repealing paragraph (1)(b) and substituting the following:

(b) the total expenses of the investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the period.

28. Part 18 of National Instrument 81-106 is amended by adding the following before section 18.6:

18.5.1 Transition to IFRS

(1) For the first interim period in the financial year beginning on or after January 1, 2011, an investment fund must file, with its interim financial report for that interim period, an opening statement of financial position as at the date of transition to IFRS.

(2) For the first financial year beginning on or after January 1, 2011, an investment fund must file, with its annual financial statements for that financial year, an audited opening statement of financial position as at the date of transition to IFRS.

(3) Despite sections 3.1, 3.2, 3.3 and 3.4, for financial years beginning before January 1, 2011, an investment fund may present line items and use terminology in its financial statements consistent with the immediately preceding financial year.

29. Part A, Item 1 of Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance is amended by

(a) striking out “This concept of materiality is consistent with the financial reporting notion of materiality contained in the Handbook.” in paragraph (e); and

(b) striking out the first sentence in paragraph (f) and substituting the following:

All references to “net assets” or “net assets per security” in this Form are references to total equity or net assets attributable to securityholders determined in accordance with Canadian GAAP as presented in the financial statements of the investment fund.

30. Part B, Item 1 of Form 81-106F1 is amended by repealing the third paragraph and substituting the following:

Securityholders may also contact us using one of these methods to request a copy of the investment fund’s interim financial report, proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure.

31. Part B, Item 3, section 3.1 of Form 81-106F1 is amended by

(a) in subsection (1), striking out “total expenses” in The Fund’s Net Assets Per [Unit/Share] table and substituting “total expenses [excluding distributions]”;

(b) in subsection (1), striking out “From income (excluding dividends)” in The Fund’s Net Assets Per [Unit/Share] table and substituting “From net investment income (excluding dividends)”;

(c) in subsection (1), striking out “(excluding commissions and other portfolio transaction costs)” in footnote (2) to the Ratios and Supplemental Data table and substituting “(excluding [distributions], commissions and other portfolio transaction costs)”;

(d) adding the following after subsection (3):

(3.1) Show the financial highlights on a non-consolidated basis. ; and


October 16, 2009 (2009) 32 OSCB 8398

(e) adding the following after subsection (7):

(7.1) (a) For financial years beginning before January 1, 2011, the financial highlights may be derived from the investment fund’s financial statements prepared in accordance with subsection 2.6(1) of the Instrument.

(b) For financial periods beginning on or after January 1, 2011, derive the financial highlights from the investment fund’s financial statements prepared in accordance with subsection 2.6(2) of the Instrument.

(c) Despite (a), an annual MRFP for a financial year beginning on or after January 1, 2011 must disclose financial highlights for the immediately preceding financial year which are derived from financial statements prepared in accordance with subsection 2.6(2) of the Instrument.

(d) If the financial highlights relate to financial periods beginning both before and on or after January 1, 2011, disclose, in a note to the table, the accounting principles applicable to each period.

32. Part B, Item 3, section 3.2 of Form 81-106F1 is amended by

(a) striking out “Balance Sheet” in the Financial & Operating Highlights (with comparative figures) table and substituting “Statement of Financial Position”; and

(b) striking out “Statement of Operations” in the Financial & Operating Highlights (with comparative figures) table and substituting “Statement of Comprehensive Income”.

33. Part C, Item 1 of Form 81-106F1 is amended by repealing the second paragraph and substituting the following:

This interim management report of fund performance contains financial highlights, but does not contain either the interim financial report or annual financial statements of the investment fund. You can get a copy of the interim financial report or annual financial statements at your request, and at no cost, by calling [toll-free/collect call telephone number], by writing to us at [insert address] or by visiting our website at [insert address] or SEDAR at www.sedar.com.

34. This Instrument comes into force on January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8399

APPENDIX C

PROPOSED AMENDMENTS TO COMPANION POLICY 81-106CP – TO

NATIONAL INSTRUMENT 81-106 INVESTMENT FUND CONTINUOUS DISCLOSURE

1. Companion Policy 81-106CP to National Instrument 81-106 Investment Fund Continuous Disclosure is amended.

2. Section 1.3 is amended by adding the following after subsection (2):

(3) The Instrument uses terminology that may be defined or referred to in Canadian GAAP. Some of these terms may be defined differently in securities legislation. National Instrument 14-101 Definitions provides that a term used in the Instrument and defined in the securities statute of a local jurisdiction has the meaning given to it in the statute unless the definition in that statute is restricted to a specific portion of the statute, or the context otherwise requires.

3. Section 2.1 is amended by

(a) adding the following before subsection (2):

(1.1) Subsection 2.6(2) of the Instrument, applicable to financial years beginning on or after January 1, 2011, refers to Canadian GAAP for publicly accountable enterprises, which is IFRS incorporated into the Handbook contained in Part I of the Handbook. Subsection 2.6(1) of the Instrument, applicable to financial years beginning before January 1, 2011, refers to Canadian GAAP applicable to public enterprises contained in Part IV of the Handbook. ;

(b) repealing subsection (2) and substituting the following:

(2) The CSA believe that an investment fund’s financial statements must include certain information, at a minimum, in order to provide full disclosure. The Instrument sets out these minimum requirements, but does not mandate all the required disclosure. Canadian GAAP applicable to publicly accountable enterprises also contains minimum requirements relating to the content of financial statements. An investment fund’s financial statements must meet these requirements as well.

In some cases, the Instrument prescribes line items that may already be required by Canadian GAAP, but these line items are expressed more specifically for the activities of an investment fund. For example, Canadian GAAP requires a “trade and other receivables” line item on the statement of financial position, but the Instrument requires accounts receivable to be broken down into more specific categories. In other instances, the line items prescribed in the Instrument are in addition to those in Canadian GAAP. Investment funds are responsible for disclosing all material information concerning their financial position and results in the financial statements. ; and

(c) repealing subsection (3).

4. Part 2 is amended by adding the following after section 2.1:

2.1.1 Classification of Securities Issued by an Investment Fund

(1) One goal of the Instrument is comparable financial statement presentation between investment funds. However, the adoption of IFRS results in certain changes to this presentation. For example, the presentation is impacted by the classification of an investment fund’s securities as either equity instruments or financial liabilities. Certain line items, such as “total equity or net assets attributable to securityholders”, acknowledge the difference between an equity and liability presentation, but maintain a comparable measurement between investment funds regardless of this classification.

(2) If an investment fund’s securities are classified as financial liabilities, IFRS requires financing costs to include the distributions made by the investment fund to those securityholders. However, if an investment fund’s securities are classified as equity instruments, distributions to holders of these securities are not included in financing costs (and are not recognized as an expense), creating a difference that reduces comparability. To address this, the Instrument requires distributions to be excluded from certain calculations, specifically: (i) increase or decrease in net assets attributable to


October 16, 2009 (2009) 32 OSCB 8400

securityholders from operations as disclosed in the statement of comprehensive income, and (ii) determination of total expenses for the management expense ratio (MER).

(3) For investment funds that classify their own securities as financial liabilities, “net assets attributable to securityholders” represents the equivalent of “total equity” for investment funds that classify their own securities as equity instruments. Net assets attributable to securityholders does not include amounts owed on securities issued by the investment fund that provide leverage to the fund.

5. Section 2.3 is repealed.

6. Section 2.5 is amended by striking out “statement of operations” wherever it occurs and substituting “statement of comprehensive income”.

7. Subsection 2.7(2) is amended by striking out “statement of net assets” and substituting “statement of financial position”.

8. Subsection 2.8(3) is amended by striking out “Interim financial statements” and substituting “The interim financial report”.

9. Section 3.2 is repealed and the following substituted:

3.2 Modification of Opinion

(1) The Instrument generally prohibits an auditor’s report from containing a modification of opinion under Canadian GAAS. A modification of opinion includes a qualification of opinion, an adverse opinion, and a disclaimer of opinion.

(2) Part 17 of the Instrument permits the regulator or securities regulatory authority to grant exemptive relief from the Instrument, including the requirement that an auditor’s report not contain a modification of opinion or other similar communication that would constitute a modification of opinion under Canadian GAAS. However, we believe that such exemptive relief should not be granted if the modification of opinion or other similar communication is

(a) due to a departure from accounting principles permitted by the Instrument, or

(b) due to a limitation in the scope of the auditor’s examination that

(i) results in the auditor being unable to form an opinion on the financial statements as a whole,

(ii) is imposed or could reasonably be eliminated by management, or

(iii) could reasonably be expected to be recurring.

10. Section 3.3 is repealed and the following substituted:

3.3 Auditor’s Involvement with Management Reports of Fund Performance – Investment funds’ auditors are expected to comply with the Handbook with respect to their involvement with the annual and interim management reports of fund performance required by the Instrument as these reports contain financial information extracted from the financial statements.


(a) in the title, striking out “Interim Financial Statements” and substituting “Interim Financial Reports”;

(b) in subsection (1), striking out “interim financial statements” and substituting “interim financial reports”;

(c) in subsection (2), striking out the first occurrence of “interim financial statements” and substituting“interim financial reports”;

(d) in subsection (2), striking out the second occurrence of “interim financial statements” and substituting“an interim financial report”; and


October 16, 2009 (2009) 32 OSCB 8401

(e) repealing subsections (3) and (4) and substituting the following:

(3) The terms “review” and “written review report” used in section 2.12 of the Instrument refer to the auditor’s review of and report on an interim financial report using standards for a review of an interim financial report by the auditor as set out in the Handbook.

(4) The Instrument does not specify the form of notice that should accompany an interim financial report that has not been reviewed by the auditor. The notice accompanies, but does not form part of, the interim financial report. We expect that the notice will normally be provided on a separate page appearing immediately before the interim financial report, in a manner similar to an audit report that accompanies annual financial statements.


(a) striking out “defines” and substituting “describes”; and

(b) striking out “who are under no compulsion to act” and substituting “motivated by normal business considerations”.


(a) repealing subsection (2) and substituting the following:

(2) Paragraph 15.1(1)(a) requires the investment fund to use its "total expenses" (other than distributions if these are an expense for the investment fund) before income taxes for the relevant period as the basis for the calculation of MER. Total expenses, before income taxes, include interest charges and taxes, including sales taxes, GST and capital taxes payable by the investment fund. Withholding taxes need not be included in the MER calculation.

The CSA is of the view that if an investment fund issues securities that provide leverage to the fund, amounts paid to holders of these securities are financing costs and should not be excluded from total expenses when calculating the MER of the investment fund’s residual securities. Securities that provide leverage generally include preferred shares.

Non-optional fees paid directly by investors in connection with the holding of an investment fund’s securities do not have to be included in the MER calculation, which differs from the previous requirement in NI 81-102. ;

(b) in subsection (5),

(i) striking out “Handbook Section 1506 Accounting Changes” and substituting “International Accounting Standard 8 Accounting Policies, Changes in Accounting Estimates and Errors” in the first paragraph;

(ii) striking out “retroactive restatement of the financial information” and substituting “retrospective application of the change” in the first paragraph; and

(iii) striking out “retroactively” in the second paragraph.

14. Appendix B is amended by

(a) in the address for New Brunswick Securities Commission,

(i) striking out “606 – 133 Prince William Street” and substituting “85 Charlotte Street, Suite 300”,and

(ii) striking out “E2L 2B5” and substituting “E2L 2J2”;


October 16, 2009 (2009) 32 OSCB 8402

(b) striking out

Newfoundland and Labrador Securities Commission P.O. Box 8700 2nd Floor, West Block Confederation Building 75 O’Leary Avenue St. John’s, NFLD A1B 4J6 Attention: Director of Securities

and substituting

Financial Services Regulation Division Department of Government Services P.O. Box 8700St. John’s, NL A1B 4J6 Attention: Superintendent of Securities

(c) in the address for Department of Justice, Northwest Territories,

(i) striking out “Legal Registries” and substituting “Securities Office”, and

(ii) striking out “Director, Legal Registries” and substituting “Superintendent of Securities”;

(d) in the address for Department of Justice, Nunavut, striking out “Attention: Director, Legal Registries Division” and substituting “Attention: Superintendent of Securities”;

(e) in the address for Autorité des marchés financiers, striking out “Direction des marchés des capitaux” and substituting “Direction des fonds d’investissement et de l’information continue”;

(f) in the address for the Saskatchewan Financial Services Commission, striking out “S4P 3V7” and substituting “S4P 4H2”; and

(g) in the address for the Government of Yukon, striking out “Registrar of Securities” wherever it occurs and substituting “Superintendent of Securities”.

15. These amendments become effective on January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8403

APPENDIX D


GENERAL PROSPECTUS REQUIREMENTS

Although this amendment instrument amends section headers in National Instrument 41-101, section headers do not form part of the instrument and are inserted for ease of reference only.

1. National Instrument 41-101 General Prospectus Requirements is amended by this instrument.

2. The general instructions of Form 41-101F2 Information Required in an Investment Fund Prospectus are amended in instruction 3 by striking out “This concept of materiality is consistent with the financial reporting notion of materiality contained in the Handbook.”

3. Section 1.5 of Form 41-101F2 is amended by striking out “reporting”.

4. Section 1.15 of Form 41-101F2 is amended by striking out “interim financial statements” and substituting “interim financial report”.

5. Section 37.1 of Form 41-101F2 is amended by striking out “interim financial statements” and substituting “interim financial report”.

6. Subsection 38.1(4) of Form 41-101F2 is amended by striking out “opening balance sheet” and substituting“opening statement of financial position”.

7. Section 38.2 of Form 41-101F2 is amended by striking out “Interim Financial Statements” and substituting “Interim Financial Reports” in the section header.



October 16, 2009 (2009) 32 OSCB 8404

APPENDIX E


MUTUAL FUND PROSPECTUS DISCLOSURE

1. National Instrument 81-101 Mutual Fund Prospectus Disclosure is amended by this instrument.

2. Section 1.1 of National Instrument 81-101 is amended by adding the following after the definition of “executive officer”:

“financial statements” includes interim financial reports;.

3. Clause 2.3(1)(b)(i)(A) of National Instrument 81-101 is amended by striking out “draft opening balance sheet” and substituting “draft opening statement of financial position”.

4. Subparagraph 2.3(3)(a)(ii) of National Instrument 81-101 is amended by striking out “audited balance sheet” and substituting “audited statement of financial position”.

5. Section 3.1 of National Instrument 81-101 is amended by striking out “interim financial statements” and substituting “interim financial report”.

6. Section 3.1.1 of National Instrument 81-101 is amended by striking out “interim financial statements” and substituting “interim financial reports”.

7. Section 3.1 of Part A of Form 81-101F1 Contents of Simplified Prospectus is amended by striking out “interim financial statements” and substituting “interim financial report”.

8. Section 3.2 of Part A of Form 81-101F1 is amended by striking out “interim financial statements” and substituting“interim financial report”.



October 16, 2009 (2009) 32 OSCB 8405

APPENDIX F

PROPOSED AMENDMENTS TO COMPANION POLICY 81-101CP – TO NATIONAL INSTRUMENT 81-101

MUTUAL FUND PROSPECTUS DISCLOSURE

1. Companion Policy 81-101CP to National Instrument 81-101 Mutual Fund Prospectus Disclosure is amended.

2. Section 2.4 is amended by striking out “interim statements” and substituting “interim financial reports”.

3. These amendments become effective on January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8406

APPENDIX G


MUTUAL FUNDS

1. National Instrument 81-102 Mutual Funds is amended by this instrument.


(a) repealing the definition of “net asset value” and substituting the following:

“net asset value” means the value of the total assets of the investment fund less the value of the total liabilities, other than net assets attributable to securityholders, of the investment fund, as at a specific date, determined in accordance with Part 14 of National Instrument 81-106 Investment Fund Continuous Disclosure;, and

(b) in the definition of “report to securityholders”, striking out “annual or interim financial statements” and substituting “annual financial statements or interim financial reports”.

3. Subparagraph 5.6(1)(f)(ii) of National Instrument 81-102 is amended by striking out “annual and interim financial statements” and substituting “annual financial statements and interim financial reports”.

4. Subsection 5.6(2) of National Instrument 81-102 is amended by striking out “contains a reservation” and substituting “contains a modified opinion”.

5. Section 6.2 of National Instrument 81-102 is amended by striking out “shareholders’ equity” wherever it occurs and substituting “equity”.

6. Section 6.3 of National Instrument 81-102 is amended by striking out “shareholders’ equity” wherever it occurs and substituting “equity”.

7. Paragraph 15.8(3)(b) of National Instrument 81-102 is amended by striking out “balance sheet” and substituting“statement of financial position”.

8. Appendix B-1 – Audit Report, Appendix B-2 – Audit Report, and Appendix B-3 – Audit Report of National Instrument 81-102 are amended by striking out “We conducted our audit in accordance with the standards for assurance engagements established by The Canadian Institute of Chartered Accountants.” and substituting “Weconducted our audit in accordance with the standards for assurance engagements in the Handbook.”.

9. This instrument comes into force on January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8407

APPENDIX H


COMMODITY POOLS

1. National Instrument 81-104 Commodity Pools is amended by this instrument.

2. Subsection 8.5(1) of National Instrument 81-104 is amended by striking out “interim financial statements” and substituting “interim financial reports”.



October 16, 2009 (2009) 32 OSCB 8408

APPENDIX I

BLACKLINES


[unofficial consolidation – for reference purposes only]

PART 1 DEFINITIONS AND APPLICATIONS 1.1 Definitions 1.2 Application 1.3 Interpretation 1.4 Language of Documents

PART 2 FINANCIAL STATEMENTS 2.1 Comparative Annual Financial Statements and Auditor’s Report 2.2 Filing Deadline for Annual Financial Statements 2.3 Interim Financial StatementsReport2.4 Filing Deadline for Interim Financial StatementsReport2.5 Approval of Financial Statements 2.6 Acceptable Accounting Principles 2.7 Acceptable Auditing Standards 2.8 Acceptable Auditors 2.9 Change in Year End 2.10 Change in Legal Structure 2.11 Filing Exemption for Mutual Funds that are Non-Reporting Issuers 2.12 Disclosure of Auditor Review of Interim Financial StatementsReport

PART 3 FINANCIAL DISCLOSURE REQUIREMENTS 3.1 Statement of Net AssetsFinancial Position3.2 Statement of OperationsComprehensive Income3.3 Statement of Changes in Net AssetsFinancial Position3.4 Statement of CashflowsCash Flows3.5 Statement of Investment Portfolio 3.6 Notes to Financial Statements 3.7 Inapplicable Line Items 3.8 Disclosure of Securities Lending Transactions 3.9 Disclosure of Repurchase Transactions 3.10 Disclosure of Reverse Repurchase Transactions 3.11 Scholarship Plans

PART 4 MANAGEMENT REPORTS OF FUND PERFORMANCE 4.1 Application 4.2 Filing of Management Reports of Fund Performance 4.3 Filing of Annual Management Report of Fund Performance for an Investment Fund that is a Scholarship Plan 4.4 Contents of Management Reports of Fund Performance 4.5 Approval of Management Reports of Fund Performance

PART 5 DELIVERY OF FINANCIAL STATEMENTS AND MANAGEMENT REPORTS OF FUND PERFORMANCE 5.1 Delivery of Certain Continuous Disclosure Documents 5.2 Sending According to Standing Instructions 5.3 Sending According to Annual Instructions 5.4 General 5.5 Websites

PART 6 QUARTERLY PORTFOLIO DISCLOSURE 6.1 Application 6.2 Preparation and Dissemination

PART 7 BINDING AND PRESENTATION 7.1 Binding of Financial Statements and Management Reports of Fund Performance 7.2 Multiple Class Investment Funds


October 16, 2009 (2009) 32 OSCB 8409

PART 8 INDEPENDENT VALUATIONS FOR LABOUR SPONSORED OR VENTURE CAPITAL FUNDS 8.1 Application 8.2 Exemption from Requirement to Disclose Individual Current Values for Venture Investments 8.3 Disclosure Concerning Independent Valuator 8.4 Content of Independent Valuation 8.5 Independent Valuator’s Consent

PART 9 ANNUAL INFORMATION FORM 9.1 Application 9.2 Requirement to File Annual Information Form 9.3 Filing Deadline for Annual Information Form 9.4 Preparation and Content of Annual Information Form

PART 10 PROXY VOTING DISCLOSURE FOR PORTFOLIO SECURITIES HELD 10.1 Application 10.2 Requirement to Establish Policies and Procedures 10.3 Proxy Voting Record 10.4 Preparation and Availability of Proxy Voting Record

PART 11 MATERIAL CHANGE REPORTS 11.1 Application 11.2 Publication of Material Change

PART 12 PROXY SOLICITATION AND INFORMATION CIRCULARS 12.1 Application 12.2 Sending of Proxies and Information Circulars 12.3 Exemption 12.4 Compliance with National Instrument 51-102

PART 13 CHANGE OF AUDITOR DISCLOSURE 13.1 Application 13.2 Change of Auditor

PART 14 CALCULATION OF NET ASSET VALUE 14.1 Application 14.2 Calculation, Frequency and Currency 14.3 Portfolio Transactions 14.4 Capital Transactions

PART 15 CALCULATION OF MANAGEMENT EXPENSE RATIO 15.1 Calculation of Management Expense Ratio 15.2 Fund of Funds Calculation

PART 16 ADDITIONAL FILING REQUIREMENTS 16.1 Application 16.2 Additional Filing Requirements 16.3 Voting Results 16.4 Filing of Material Contracts

PART 17 EXEMPTIONS 17.1 Exemption

PART 18 EFFECTIVE DATE AND TRANSITION 18.1 Effective Date 18.2 [repealed] 18.3 [repealed] 18.4 [repealed] 18.5 [repealed] 18.5.1 Transition to IFRS18.6 Existing Exemptions


October 16, 2009 (2009) 32 OSCB 8410


PART 1 DEFINITIONS AND APPLICATIONS

1.1 Definitions - In this Instrument

“annual management report of fund performance” means a document prepared in accordance with Part B of Form 81-106F1;

“current value” means, for an asset held by, or a liability of, an investment fund, the value calculated in accordance with Canadian GAAP;

“education savings plan” means an agreement between one or more persons and another person or organization, in which the other person or organization agrees to pay or cause to be paid, to or for one or more beneficiaries designated in connection with the agreement, scholarship awards;

“EVCC” means an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments;

“financial statements” includes interim financial reports;

“independent review committee” means the independent review committee of the investment fund established under National Instrument 81-107 Independent Review Committee for Investment Funds;

“independent valuation” means a valuation of the assets and liabilities, or of the venture investments, of a labour sponsored or venture capital fund that contains the opinion of an independent valuator as to the current value of the assets and liabilities, or of the venture investments, and that is prepared in accordance with Part 8;

“independent valuator” means a valuator that is independent of the labour sponsored or venture capital fund and that has appropriate qualifications;

“interim management report of fund performance” means a document prepared in accordance with Part C of Form 81-106F1;

“interim period” means, in relation to an investment fund,

(a) a period of at least three months that ends six months before the end of a financial year of the investment fund, or

(b) in the case of a transition year of the investment fund, a period commencing on the first day of the transition year and ending six months after the end of its old financial year;

“investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an EVCC and a VCC;

“labour sponsored or venture capital fund” means an investment fund that is

(a) a labour sponsored investment fund corporation or a labour sponsored venture capital corporation under provincial legislation,

(b) a registered or prescribed labour sponsored venture capital corporation as defined in the ITA,

(c) an EVCC, or

(d) a VCC;

“management expense ratio” means the ratio, expressed as a percentage, of the expenses of an investment fund to its average net asset value, calculated in accordance with Part 15;


October 16, 2009 (2009) 32 OSCB 8411

“management fees” means the total fees paid or payable by an investment fund to its manager or one or more portfolio advisers or sub-advisers, including incentive or performance fees, but excluding operating expenses of the investment fund;

“management report of fund performance” means an annual management report of fund performance or an interim management report of fund performance;

“material change” means, in relation to an investment fund,

(a) a change in the business, operations or affairs of the investment fund that would be considered important by a reasonable investor in determining whether to purchase or continue to hold securities of the investment fund, or

(b) a decision to implement a change referred to in paragraph (a) made

(i) by the board of directors of the investment fund or the board of directors of the manager of the investment fund or other persons acting in a similar capacity,

(ii) by senior management of the investment fund who believe that confirmation of the decision by the board of directors or such other persons acting in a similar capacity is probable, or

(iii) by senior management of the manager of the investment fund who believe that confirmation of the decision by the board of directors of the manager or such other persons acting in a similar capacity is probable;

“material contract” means, for an investment fund, a document that the investment fund would be required to list in an annual information form under Item 16 of Form 81-101F2 if the investment fund filed a simplified prospectus under National Instrument 81-101 Mutual Fund Prospectus Disclosure;

“mutual fund in the jurisdiction” means an incorporated or unincorporated mutual fund that is a reporting issuer in, or that is organized under the laws of, the local jurisdiction, but does not include a private mutual fund;

“National Instrument 51-102” means National Instrument 51-102 Continuous Disclosure Obligations;

“National Instrument 81-107” means National Instrument 81-107 Independent Review Committee for Investment Funds;

“net asset value” means the value of the total assets of the investment fund less the value of the total liabilities, other than net assets attributable to securityholders, of the investment fund, as at a specific date, determined in accordance with Part 14;

“non-redeemable investment fund” means an issuer,

(a) whose primary purpose is to invest money provided by its securityholders,

(b) that does not invest,

(i) for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or

(ii) for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and

(c) that is not a mutual fund;

“publicly accountable enterprise” means a publicly accountable enterprise determined in accordance with the Handbook;

“quarterly portfolio disclosure” means the disclosure prepared in accordance with Part 6;

“scholarship award” means any amount, other than a refund of contributions, that is paid or payable directly or indirectly to further the education of a beneficiary designated under an education savings plan;


October 16, 2009 (2009) 32 OSCB 8412

“scholarship plan” means an arrangement under which contributions to education savings plans are pooled to provide scholarship awards to designated beneficiaries;

“statement of changes in financial position” means a statement of changes in equity or in net assets attributable to securityholders, as applicable to the investment fund;

“transition year” means the financial year of an investment fund in which a change of year end occurs;

“VCC” means a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments; and

“venture investment” means an investment in a private company or an investment made in accordance with the requirements of provincial labour sponsored or venture capital fund legislation or the ITA.

1.2 Application

(1) Except as otherwise provided in this Instrument, this Instrument applies to

(a) an investment fund that is a reporting issuer; and

(b) subject to subsection (2), a mutual fund in the jurisdiction.

(2) Despite paragraph (1)(b), in Alberta, British Columbia, Manitoba and Newfoundland and Labrador, this Instrument does not apply to a mutual fund that is not a reporting issuer.

(3) In Saskatchewan, this Instrument does not apply to a Type B corporation within the meaning of The Labour-sponsored Venture Capital Corporations Act (Saskatchewan).

(4) In Québec, this Instrument does not apply to a reporting issuer organized under

(a) an Act to establish the Fonds de solidarité des travailleurs du Québec (F.T.Q.) R.S.Q., chapter F-3.2.1;

(b) an Act to establish Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi (R.S.Q., chapter F-3.1.2); or

(c) an Act constituting Capital régional et coopératif Desjardins, Loi constituant Capital régional et coopératif Desjardins (R.S.Q., chapter C-6.1).

1.3 Interpretation

(1) Each section, part, class or series of a class of securities of an investment fund that is referable to a separate portfolio of assets is considered to be a separate investment fund for the purposes of this Instrument.

(2) Terms defined in National Instrument 81-102 Mutual Funds, National Instrument 81-104 Commodity Poolsand National Instrument 81-105 Mutual Fund Sales Practices and used in this Instrument have the respective meanings ascribed to them in those Instruments except that references in those definitions to “mutual fund” must be read as references to “investment fund”.

1.4 Language of Documents

(1) A document that is required to be filed under this Instrument must be prepared in French or English.

(2) If an investment fund files a document in French or in English, and a translation of the document into the other language is sent to a securityholder, the investment fund must file the translated document not later than when it is sent to the securityholder.

(3) In Québec, the linguistic obligations and rights prescribed by Québec law must be complied with.


October 16, 2009 (2009) 32 OSCB 8413

PART 2 FINANCIAL STATEMENTS

2.1 Comparative Annual Financial Statements and Auditor’s Report

(1) An investment fund must file annual financial statements for the investment fund’s most recently completed financial year that include

(a) a statement of net assetsfinancial position as at the end of that financial year and a statement of net assetsfinancial position as at the end of the immediately preceding financial year;

(b) a statement of operationscomprehensive income for that financial year and a statement of operationscomprehensive income for the immediately preceding financial year;

(c) statement of changes in net assetsfinancial position for that financial year and a statement of changes in net assetsfinancial position for the immediately preceding financial year;

(d) for financial years beginning on or after January 1, 2011, a statement of cashflowscash flows for that financial year and a statement of cashflowscash flows for the immediately preceding financial year, unless it is not required by Canadian GAAP;

(e) a statement of investment portfolio as at the end of that financial year; and

(f) a statement of financial position as at the beginning of the immediately preceding financial year if the investment fund discloses in its annual financial statements an explicit and unreserved statement of compliance with IFRS and if the investment fund:

(i) applies an accounting policy retrospectively in its annual financial statements,

(ii) makes a retrospective restatement of items in its annual financial statements, or

(iii) reclassifies items in its annual financial statements; and

(g) notes to the annual financial statements.

(2) Annual financial statements filed under subsection (1) must be accompanied by an auditor’s report.

2.2 Filing Deadline for Annual Financial Statements - The annual financial statements and auditor’s report required to be filed under section 2.1 must be filed on or before the 90th day after the investment fund’s most recently completed financial year.

2.3 Interim Financial StatementsReport - An investment fund must file an interim financial statementsreport for the investment fund’s most recently completed interim period that includeincludes

(a) a statement of net assetsfinancial position as at the end of that interim period and a statement of net assetsfinancial position as at the end of the immediately preceding financial year;

(b) a statement of operationscomprehensive income for that interim period and a statement of operationscomprehensive income for the corresponding period in the immediately preceding financial year;

(c) a statement of changes in net assetsfinancial position for that interim period and a statement of changes in net assetsfinancial position for the corresponding period in the immediately preceding financial year;

(d) for financial years beginning on or after January 1, 2011, a statement of cashflows for and as at the end ofcash flows for that interim period and a statement of cashflowscash flows for the corresponding period in the immediately preceding financial year, unless it is not required by Canadian GAAP;

(e) a statement of investment portfolio as at the end of that interim period;


October 16, 2009 (2009) 32 OSCB 8414

(f) a statement of financial position as at the beginning of the immediately preceding financial year if the investment fund discloses in its interim financial report compliance with International Accounting Standard 34 Interim Financial Reporting and if the investment fund:

(i) applies an accounting policy retrospectively in its interim financial report,

(ii) makes a retrospective restatement of items in its interim financial report, or

(iii) reclassifies items in its interim financial report; and

(g) (f) andnotesnotes to the interim financial statementsreport.

2.4 Filing Deadline for Interim Financial StatementsReport - The interim financial statementsreport required to be filed under section 2.3 must be filed on or before the 60th day after the end of the most recent interim period of the investment fund.

2.5 Approval of Financial Statements

(1) The board of directors of an investment fund that is a corporation must approve the financial statements of the investment fund before those financial statements are filed or made available to securityholders or potential purchasers of securities of the investment fund.

(2) The trustee or trustees of an investment fund that is a trust, or another person or company authorized to do so by the constating documents of the investment fund, must approve the financial statements of the investment fund, before those financial statements are filed or made available to securityholders or potential purchasers of securities of the investment fund.

2.6 Acceptable Accounting Principles

(1) For financial years beginning before January 1, 2011, the financial statements of an investment fund must be prepared in accordance with Canadian GAAP determined in accordance with Part IV of the Handbook as applicable to public enterprises.

(2) For financial years beginning on or after January 1, 2011, the financial statements of an investment fund must be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises.

(3) Financial statements must be prepared in accordance with the same accounting principles for all periods presented in the financial statements.

2.7 Acceptable Auditing Standards

(1) Financial statements that are required to be audited must be audited in accordance with Canadian GAAS.

(2) AuditedFor financial years beginning before January 1, 2011, audited financial statements must be accompanied by an auditor’s report prepared in accordance with Canadian GAAS and the following requirements:

1. The auditor’s report must not contain a reservation.

2. The auditor’s report must identify all financial periods presented for which the auditor has issued an auditor’s report.

3. If the investment fund has changed its auditor and a comparative period presented in the financial statements was audited by a different auditor, the auditor’s report must refer to the former auditor’s report on the comparative period.

4. The auditor’s report must identify the auditing standards used to conduct the audit and the accounting principles used to prepare the financial statements.

(3) For financial years beginning on or after January 1, 2011, audited financial statements must be accompanied by an auditor’s report prepared in accordance with Canadian GAAS and the following requirements:

1. The auditor’s report does not contain a modification of opinion.


October 16, 2009 (2009) 32 OSCB 8415

2. The auditor’s report identifies all financial periods presented for which the auditor has issued an auditor’s report.

3. The auditor’s report is in the form specified by Canadian GAAS for an audit of financial statements prepared in accordance with a fair presentation framework.

4. The auditor’s report refers to IFRS as the applicable fair presentation framework.

5. If the investment fund has changed its auditor and a comparative period presented in the financial statements was audited by a different auditor, the auditor’s report is accompanied by the predecessor auditor’s report on the comparative period or refers to the predecessor auditor’s report on the comparative period.

2.8 Acceptable Auditors - An auditor’s report must be prepared and signed by a person or company that is authorized to sign an auditor’s report by the laws of a jurisdiction of Canada, and that meets the professional standards of that jurisdiction.

2.9 Change in Year End

(1) This section applies to an investment fund that is a reporting issuer.

(2) Section 4.8 of National Instrument 51-102 applies to an investment fund that changes its financial year end, except that

(a) a reference to “interim period” must be read as “interim period” as defined in this Instrument;

(b) a requirement under National Instrument 51-102 to include specified financial statements must be read as a requirement to include the financial statements required under this Part; and

(c) a reference to “filing deadline” in subsection 4.8(2) of National Instrument 51-102 must be read as a reference to the filing deadlines provided for under section 2.2 and 2.4 of this Instrument.

(3) Despite section 2.4, an investment fund is not required to file an interim financial statementsreport for any period in a transition year if the transition year is less than nine months in length.

(4) Despite subsectionsparagraphs 4.8(7)(a), (7)(b), (8)(a) and (8)(b) of National Instrument 51-102,

(a) for an interim financial statementsreport for an interim period in the transition year, the investment fund must include as comparative information

(i) a statement of net assetsfinancial position as at the end of its old financial year; and

(ii) a statement of operationscomprehensive income , a statement of changes in net assetsfinancial position, and, if applicable, a statement of cashflowscash flows, for the interim period of the old financial year;

(b) for an interim financial statementsreport for an interim period in a new financial year, the investment fund must include as comparative information

(i) a statement of net assetsfinancial position as at the end of the transition year; and

(ii) a statement of operationscomprehensive income, a statement of changes in net assetsfinancial position, and, if applicable, a statement of cashflowscash flows, for the period that is one year earlier than the interim period in the new financial year.

2.10 Change in Legal Structure - If an investment fund that is a reporting issuer is party to an amalgamation, arrangement, merger, winding-up, reorganization or other transaction that will result in

(a) the investment fund terminating or ceasing to be a reporting issuer,

(b) another entity becoming an investment fund,

(c) a change in the investment fund’s financial year end, or


October 16, 2009 (2009) 32 OSCB 8416

(d) a change in the name of the investment fund,

the investment fund must, as soon as practicable, and in any event not later than the deadline for the first filing required by this Instrument following the transaction, file a notice stating:

(e) the names of the parties to the transaction;

(f) a description of the transaction;

(g) the effective date of the transaction;

(h) if applicable, the names of each party that terminated or ceased to be a reporting issuer following the transaction and of each continuing entity;

(i) if applicable, the date of the investment fund’s first financial year end following the transaction; and

(j) if applicable, the periods, including the comparative periods, if any, of the interim financial report and annual financial statements required to be filed for the investment fund’s first financial year following the transaction.

2.11 Filing Exemption for Mutual Funds that are Non-Reporting Issuers - A mutual fund that is not a reporting issuer is exempt from the filing requirements of section 2.1 for a financial year or section 2.3 for an interim period if

(a) the mutual fund prepares the applicable financial statements in accordance with this Instrument;

(b) the mutual fund delivers the financial statements to its securityholders in accordance with Part 5 within the same time periods as if the financial statements were required to be filed;

(c) the mutual fund has advised the regulator or securities regulatory authority that it is relying on this exemption not to file its financial statements; and

(d) the mutual fund has included in a note to the financial statements that it is relying on this exemption not to file its financial statements.

2.12 Disclosure of Auditor Review of Interim Financial StatementsReport

(1) This section applies to an investment fund that is a reporting issuer.

(2) If an auditor has not performed a review of the interim financial statementsreport required to be filed, the interim financial statementsreport must be accompanied by a notice indicating that the interim financial statements havereport has not been reviewed by an auditor.

(3) If an investment fund engaged an auditor to perform a review of the interim financial statementsreport required to be filed and the auditor was unable to complete the review, the interim financial statementsreport must be accompanied by a notice indicating that the auditor was unable to complete a review of the interim financial statementsreport and the reasons why.

(4) If an auditor has performed a review of the interim financial statementsreport required to be filed and the auditor has expressed a reservation in the auditor’s interim review report, the interim financial statementsreport must be accompanied by a written review report from the auditor.

PART 3 FINANCIAL DISCLOSURE REQUIREMENTS

3.1 Statement of Net AssetsFinancial Position - The statement of net assetsfinancial position of an investment fund must disclose the following as separate line items, each shown at current value:

1. cash, term deposits and, if not included in the statement of investment portfolio, short term debt instruments.

2. investments.

3. accounts receivable relating to securities issued.

4. accounts receivable relating to portfolio assets sold.


October 16, 2009 (2009) 32 OSCB 8417

5. accounts receivable relating to margin paid or deposited on futures or forward contracts.

6. amounts receivable or payable in respect of derivatives transactions, including premiums or discounts received or paid.

7. deposits with brokers for portfolio securities sold short.

8. accrued expenses.

9. accrued incentive arrangements or performance compensation.

10. portfolio securities sold short.

11. liabilities for securities redeemed.

12. liabilities for portfolio assets purchased.

13. income tax payable.

14. total equity or net assets andattributable to securityholders' equity and, if applicable, for each class or series.

15. total equity per security or net assets attributable to securityholders per security, or if applicable, per security of each class or series.

3.2 Statement of OperationsComprehensive Income - The statement of operationscomprehensive income of an investment fund must disclose the following information as separate line items:

1. dividend revenue.

2. interest revenue.

3. income from derivatives.

4. revenue from securities lending.

5. management fees, excluding incentive or performance fees.

6. incentive or performance fees.

7. audit fees.

8. directors' or trustees' fees.

8.1 independent review committee fees.

9. custodial fees.

10. legal fees.

10.1 commissions and other portfolio transaction costs.

11. securityholder reporting costs.

12. capital tax.[repealed]

13. amounts that would otherwise have been payable by the investment fund that were waived or paid by the manager or a portfolio adviser of the investment fund.

14. provision for income tax.

15. net investment income or loss for the period.


October 16, 2009 (2009) 32 OSCB 8418

16. realized gains or losses.

17. unrealized gains or losses.

17.1 if recognized as an expense, distributions, showing separately the amount distributed out of net investment income, out of realized gains on portfolio assets sold, and return of capital.

18. increase or decrease innet assetsfrom operationsin total equity from operations, or in net assets attributable to securityholders (excluding distributions) from operations, and, if applicable, for each class or series.

19. increase or decrease in total equity from operations per security, or in net assets attributable to securityholders (excluding distributions) from operations per security, or, if applicable, per security of each class or series.

3.3 Statement of Changes in Net AssetsFinancial Position - The statement of changes in net assetsfinancial position of an investment fund must disclose, for each class or series, the following as separate line items:

1. total equity or net assets attributable to securityholders at the beginning of the period to which the statement applies.

2. increase or decrease in net assets from operations.[repealed]

3. proceeds from the issuance of securities of the investment fund.

4. aggregate amounts paid on redemption of securities of the investment fund.

5. securities issued on reinvestment of distributions.

6. if not recognized as an expense, distributions, showing separately the amount distributed out of net investment income and, out of realized gains on portfolio assets sold, and return of capital.

7. total equity or net assets attributable to securityholders at the end of the period reported upon.

3.4 Statement of CashflowsCash Flows - The statement of cashflowscash flows of an investment fund must disclose the following as separate line items:

1. net investment income or loss.[repealed]

2. proceeds of disposition of portfolio assets.

3. payments for the purchase of portfolio assets.

4. proceeds from the issuance of securities of the investment fund.

5. aggregate amounts paid on redemption of securities of the investment fund.

6. compensation paid in respect of the sale of securities of the investment fund.

3.5 Statement of Investment Portfolio

(1) The statement of investment portfolio of an investment fund must disclose the following for each portfolio asset held or sold short:

1. the name of the issuer of the portfolio asset.

2. a description of the portfolio asset, including

(a) for an equity security, the name of the class of the security.

(b) for a debt instrument not included in paragraph (c), all characteristics commonly used commercially to identify the instrument, including the name of the instrument, the interest rate of the instrument, the maturity date of the instrument, whether the instrument is


October 16, 2009 (2009) 32 OSCB 8419

convertible or exchangeable and, if used to identify the instrument, the priority of the instrument.

(c) for a debt instrument referred to in the definition of “money market fund” in National Instrument 81-102 Mutual Funds, the name, interest rate and maturity date of the instrument.

(d) for a portfolio asset not referred to in paragraph (a), (b) or (c), the name of the portfolio asset and the material terms and conditions of the portfolio asset commonly used commercially in describing the portfolio asset.

3. the number or aggregate face value of the portfolio asset.

4. the cost of the portfolio asset.

5. the current value of the portfolio asset.

(2) For the purposes of subsection (1), disclosure for a long portfolio must be segregated from the disclosure for a short portfolio.

(3) For the purposes of subsection (1) and subject to subsection (2), disclosure must be aggregated for portfolio assets having the same description and issuer.

(4) Despite subsection (1) and (3) and subject to subsection (2), the information referred to in subsection (1) may be provided in the aggregate for those short term debt instruments that

(a) are issued by a bank listed in Schedule I, II or III to the Bank Act (Canada) or a loan corporation or trust corporation registered under the laws of a jurisdiction, or

(b) have achieved an investment rating within the highest or next highest categories of ratings of each approved credit rating organization.

(5) If an investment fund discloses short term debt instruments as permitted by subsection (4), the investment fund must disclose separately the aggregate short term debt instruments denominated in any currency if the aggregate exceeds 5% of the total short term debt.

(6) If an investment fund holds positions in derivatives, the investment fund must disclose in the statement of investment portfolio or the notes to that statement,

(a) for long and short positions in options,

(i) the quantity of the underlying interest, the number of options, the underlying interest, the strike price, the expiration month and year, the cost and the current value, and

(ii) if the underlying interest is a future, information about the future in accordance with subparagraph (i);

(b) for positions in futures and forwards, the number of futures and forwards, the underlying interest, the price at which the contract was entered into, the delivery month and year and the current value;

(c) for positions in swaps, the number of swap contracts, the underlying interest, the principal or notional amount, the payment dates, and the current value; and

(d) if a rating of a counterparty has fallen below the approved credit rating level.

(7) If applicable, the statement of investment portfolio included in the financial statements of the investment fund, or the notes to the statement of investment portfolio, must identify the underlying interest that is being hedged by each position taken by the investment fund in a derivative.

(8) An investment fund may omit the information required by subsection (1) about mortgages from a statement of investment portfolio if the statement of investment portfolio discloses

(a) the total number of mortgages held;


October 16, 2009 (2009) 32 OSCB 8420

(b) the aggregate current value of mortgages held;

(c) a breakdown of mortgages, by reference to number and current value among mortgages insured under the National Housing Act (Canada), insured conventional mortgages and uninsured conventional mortgages;

(d) a breakdown of mortgages, by reference to number and current value, among mortgages that are pre-payable and those that are not pre-payable; and

(e) a breakdown of mortgages, by reference to number, current value, amortized cost and outstanding principal value, among groups of mortgages having contractual interest rates varying by no more than one quarter of one percent.

(8.1) Despite any requirement in Canadian GAAP for an investment fund to prepare consolidated financial statements, the statement of investment portfolio must:

(a) be presented on a non-consolidated basis;

(b) identify any portfolio assets which represent investments that have been consolidated in the statement of financial position; and

(c) include an explanation of any differences relating to the basis of accounting for investments between the statement of investment portfolio and the statement of financial position.

(9) An investment fund must maintain records of all portfolio transactions undertaken by the investment fund.

3.6 Notes to Financial Statements

(1) The notes to the financial statements of an investment fund must disclose the following:

1. the basis for determining current value and cost of portfolio assets and, if a method of determining cost other than by reference to the average cost of the portfolio assets is used, the method used.

1.1 for financial years beginning on or after January 1, 2011, the basis for classifying the investment fund’s outstanding securities, or each class or series of outstanding securities, as either equity instruments or financial liabilities.

2. if the investment fund has outstanding more than one class or series of securities ranking equally against its net assets, but differing in other respects,

(a) the number of authorized securities of each class or series;

(b) the number of securities of each class or series that have been issued and are outstanding;

(c) the differences between the classes or series, including differences in sales charges, and management fees;

(d) the method used to allocate income and expenses, and realized and unrealized capital gains and losses, to each class;

(e) the fee arrangements for any class-level expenses paid to affiliates; and

(f) transactions involving the issue or redemption of securities of the investment fund undertaken in the period for each class of securities to which the financial statements pertain.

3. to the extent the amount is ascertainable, the soft dollar portion of the total commissions and other portfolio transaction costs paid or payable to dealers by the investment fund, where the soft dollar portion is the amount paid or payable for goods and services other than order execution.

4. the total cost of distribution of the investment fund’s securities recorded in the statement of changes in net assetsfinancial position.


October 16, 2009 (2009) 32 OSCB 8421

5. the net asset value per security as at the date of the financial statements compared to the total equity per security or net assets attributable to securityholders per security as shown on the statement of net assetsfinancial position, and an explanation of each of the differences between these amounts.

(2) If not disclosed elsewhere in the financial statements, an investment fund that borrows money must, in a note to the financial statements, disclose the minimum and maximum amount borrowed during the period to which the financial statements or management report of fund performance pertain.

(3) For financial years beginning on or after January 1, 2011, the notes to the financial statements must disclose:

(a) in the case of annual financial statements, an explicit and unreserved statement of compliance with IFRS; and

(b) in the case of interim financial reports, compliance with International Accounting Standard 34 Interim Financial Reporting.

3.7 Inapplicable Line Items - Despite the requirements of this Part, an investment fund may omit a line item from the financial statements for any matter that does not apply to the investment fund or for which the investment fund has nothing to disclose.

3.8 Disclosure of Securities Lending Transactions

(1) An investment fund must disclose, in the statement of investment portfolio included in the financial statements of the investment fund, or in the notes to the financial statements,

(a) the aggregate dollar value of portfolio securities that were lent in the securities lending transactions of the investment fund that are outstanding as at the date of the financial statements; and

(b) the type and aggregate amount of collateral received by the investment fund under securities lending transactions of the investment fund that are outstanding as at the date of the financial statements.

(2) The statement of net assetsfinancial position of an investment fund that has received cash collateral from a securities lending transaction that is outstanding as of the date of the financial statements must disclose separately

(a) the cash collateral received by the investment fund; and

(b) the obligation to repay the cash collateral.

(3) The statement of operationscomprehensive income of an investment fund must disclose income from a securities lending transaction as revenue.

3.9 Disclosure of Repurchase Transactions

(1) An investment fund, in the statement of investment portfolio included in the financial statements of the investment fund, or in the notes to that statement, must, for a repurchase transaction of the investment fund that is outstanding as at the date of the statement, disclose

(a) the date of the transaction;

(b) the expiration date of the transaction;

(c) the nature and current value of the portfolio securities sold by the investment fund;

(d) the amount of cash received and the repurchase price to be paid by the investment fund; and

(e) the current value of the sold portfolio securities as at the date of the statement.

(2) The statement of net assetsfinancial position of an investment fund that has entered into a repurchase transaction that is outstanding as of the date of the statement of net assetsfinancial position must disclose separately the obligation of the investment fund to repay the collateral.


October 16, 2009 (2009) 32 OSCB 8422

(3) The statement of operationscomprehensive income of an investment fund must disclose income from the use of the cash received on a repurchase transaction as revenue.

(4) The information required by this section may be presented on an aggregate basis.

3.10 Disclosure of Reverse Repurchase Transactions

(1) An investment fund, in the statement of investment portfolio or in the notes to that statement, must, for a reverse repurchase transaction of the investment fund that is outstanding as at the date of the statement, disclose

(a) the date of the transaction;

(b) the expiration date of the transaction;

(c) the total dollar amount paid by the investment fund;

(d) the nature and current value or principal amount of the portfolio securities received by the investment fund; and

(e) the current value of the purchased portfolio securities as at the date of the statement.

(2) The statement of net assetsfinancial position of an investment fund that has entered into a reverse repurchase transaction that is outstanding as of the date of the financial statements must disclose separately the reverse repurchase agreement relating to the transaction at current value.

(3) The statement of operationscomprehensive income of an investment fund must disclose income from a reverse repurchase transaction as revenue.

(4) The information required by this section may be presented on an aggregate basis.

3.11 Scholarship Plans

(1) In addition to the requirements of this Part, an investment fund that is a scholarship plan must disclose, as of the end of its most recently completed financial year, a separate statement or schedule to the financial statements that provides

(a) a summary of education savings plans and units outstanding by year of eligibility, including

(i) disclosure of the number of units by year of eligibility for the opening units, units purchased, units forfeited and the ending units,

(ii) disclosure of the principal amounts and the accumulated income per year of eligibility, and their total balances, and

(iii) a reconciliation of the total balances of the principal amounts and the accumulated income in the statement or schedule to the statement of net assetsfinancial position of the scholarship plan;

(b) the total number of units outstanding; and

(c) a statement of scholarship awards paid to beneficiaries, and a reconciliation of the amount of scholarship awards paid with the statement of operationscomprehensive income.

(2) Despite the requirements of sections 3.1 and 3.2, an investment fund that is a scholarship plan may omit the “total equity per security or net assets attributable to securityholders per security” and “increase or decrease in net assetstotal equity from operations per security, or in net assets attributable to securityholders (excluding distributions) from operations per security” line items from its financial statements.

PART 4 MANAGEMENT REPORTS OF FUND PERFORMANCE

4.1 Application - This Part applies to an investment fund that is a reporting issuer.


October 16, 2009 (2009) 32 OSCB 8423

4.2 Filing of Management Reports of Fund Performance - An investment fund, other than an investment fund that is a scholarship plan, must file an annual management report of fund performance for each financial year and an interim management report of fund performance for each interim period at the same time that it files its annual financial statements or its interim financial statementsreport for that financial period.

4.3 Filing of Annual Management Report of Fund Performance for an Investment Fund that is a Scholarship Plan - An investment fund that is a scholarship plan must file an annual management report of fund performance for each financial year at the same time that it files its annual financial statements.

4.4 Contents of Management Reports of Fund Performance - A management report of fund performance required by this Part must

(a) be prepared in accordance with Form 81-106F1; and

(b) not incorporate by reference information from any other document that is required to be included in a management report of fund performance.

4.5 Approval of Management Reports of Fund Performance

(1) The board of directors of an investment fund that is a corporation must approve the management report of fund performance of the investment fund before the report is filed or made available to a holder or potential purchaser of securities of the investment fund.

(2) The trustee or trustees of an investment fund that is a trust, or another person or company authorized to do so by the constating documents of the investment fund, must approve the management report of fund performance of the investment fund before the report is filed or made available to a holder or potential purchaser of securities of the investment fund.

PART 5 DELIVERY OF FINANCIAL STATEMENTS AND MANAGEMENT REPORTS OF FUND PERFORMANCE

5.1 Delivery of Certain Continuous Disclosure Documents

(1) In this Part, “securityholder” means a registered holder or beneficial owner of securities issued by an investment fund.

(2) Subject to section 5.2 or section 5.3, an investment fund must send to a securityholder, by the filing deadline for the document, the following:

(a) annual financial statements;

(b) the interim financial statementsreport;

(c) if required to be prepared by the investment fund, the annual management report of fund performance;

(d) if required to be prepared by the investment fund, the interim management report of fund performance.

(3) An investment fund must apply the procedures set out in National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer when complying with this Part.

(4) Despite subsection (3), National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer does not apply to an investment fund with respect to a requirement under this Part if the investment fund has the necessary information to communicate directly with a beneficial owner of its securities.

5.2 Sending According to Standing Instructions

(1) Subsection 5.1(2) does not apply to an investment fund that requests standing instructions from a securityholder in accordance with this section and sends the documents listed in subsection 5.1(2) according to those instructions.


October 16, 2009 (2009) 32 OSCB 8424

(2) An investment fund relying on subsection 5.2(1) must send, to each securityholder, a document that

(a) explains the choices a securityholder has to receive the documents listed in subsection 5.1(2);

(b) solicits instructions from the securityholder about delivery of those documents; and

(c) explains that the instructions provided by the securityholder will continue to be followed by the investment fund until they are changed by the securityholder.

(3) If a person or company becomes a securityholder of an investment fund, the investment fund must solicit instructions in accordance with subsection (2) from the securityholder as soon as reasonably practicable after the investment fund accepts a purchase order from the securityholder.

(4) An investment fund must rely on instructions given under this section until a securityholder changes them.

(5) At least once a year, an investment fund must send each securityholder a reminder that

(a) the securityholder is entitled to receive the documents listed in subsection 5.1(2);

(b) the investment fund is relying on delivery instructions provided by the securityholder;

(c) explains how a securityholder can change the instructions it has given; and

(d) the securityholder can obtain the documents on the SEDAR website and on the investment fund’s website, if applicable, and by contacting the investment fund.

5.3 Sending According to Annual Instructions

(1) Subsection 5.1(2) does not apply to an investment fund that requests annual instructions from a securityholder in accordance with this section and sends the documents listed in subsection 5.1(2) according to those instructions.

(2) Subsection (1) does not apply to an investment fund that has previously relied on subsection 5.2(1).

(3) An investment fund relying on subsection 5.3(1) must send annually to each securityholder a request form the securityholder may use to instruct the investment fund as to which of the documents listed in subsection 5.1(2) the securityholder wishes to receive.

(4) The request form described in subsection (3) must be accompanied by a notice explaining that

(a) the securityholder is providing delivery instructions for the current year only; and

(b) the documents are available on the SEDAR website and on the investment fund’s website, if applicable, and by contacting the investment fund.

5.4 General

(1) If a securityholder requests any of the documents listed in subsection 5.1(2), an investment fund must send a copy of the requested documents by the later of

(a) the filing deadline for the requested document; and

(b) ten calendar days after the investment fund receives the request.

(2) An investment fund must not charge a fee for sending the documents referred to in this Part and must ensure that securityholders can respond without cost to the solicitations of instructions required by this Part.

(3) Investment funds under common management may solicit one set of delivery instructions from a securityholder that will apply to all of the investment funds under common management held by that securityholder.

(4) Despite subsection 7.1(3), for the purposes of delivery to a securityholder, an investment fund may bind its management report of fund performance with the management report of fund performance for one or more other investment funds if the securityholder holds each investment fund.


October 16, 2009 (2009) 32 OSCB 8425

5.5 Websites - An investment fund that is a reporting issuer and that has a website must post to the website any documents listed in subsection 5.1(2) no later than the date that those documents are filed.

PART 6 QUARTERLY PORTFOLIO DISCLOSURE

6.1 Application - This Part applies to an investment fund that is a reporting issuer, other than a scholarship plan or a labour sponsored or venture capital fund.

6.2 Preparation and Dissemination

(1) An investment fund must prepare quarterly portfolio disclosure that includes

(a) a summary of investment portfolio prepared in accordance with Item 5 of Part B of Form 81-106F1 as at the end of

(i) each period of at least three months that ends three or nine months before the end of a financial year of the investment fund; or

(ii) in the case of a transition year of the investment fund, each period commencing on the first day of the transition year and ending either three, nine or twelve months, if applicable, after the end of its old financial year; and

(b) the total net asset value of the investment fund as at the end of the periods specified in (a)(i) or (ii).

(2) An investment fund that has a website must post to the website the quarterly portfolio disclosure within 60 days of the end of the period for which the quarterly portfolio disclosure was prepared.

(3) An investment fund must promptly send the most recent quarterly portfolio disclosure, without charge, to any securityholder of the investment fund, upon a request made by the securityholder 60 days after the end of the period to which the quarterly portfolio disclosure pertains.

PART 7 BINDING AND PRESENTATION

7.1 Binding of Financial Statements and Management Reports of Fund Performance

(1) An investment fund must not bind its financial statements with the financial statements of another investment fund in a document unless all information relating to the investment fund is presented together and not intermingled with information relating to the other investment fund.

(2) Despite subsection (1), if a document contains the financial statements of more than one investment fund, the notes to the financial statements may be combined and presented in a separate part of the document.

(3) An investment fund must not bind its management report of fund performance with the management report of fund performance for another investment fund.

7.2 Multiple Class Investment Funds

(1) An investment fund that has more than one class or series of securities outstanding that are referable to a single portfolio must prepare financial statements and management reports of fund performance that contain information concerning all of the classes or series.

(2) If an investment fund has more than one class or series of securities outstanding, the distinctions between the classes or series must be disclosed in the financial statements and management reports of fund performance.

PART 8 INDEPENDENT VALUATIONS FOR LABOUR SPONSORED OR VENTURE CAPITAL FUNDS

8.1 Application - This Part applies to a labour sponsored or venture capital fund that is a reporting issuer.

8.2 Exemption from Requirement to Disclose Individual Current Values for Venture Investments - Despite item 5 of subsection 3.5(1), a labour sponsored or venture capital fund is exempt from the requirement to present separately in a statement of investment portfolio the current value of each venture investment that does not have a market value if


October 16, 2009 (2009) 32 OSCB 8426

(a) the labour sponsored or venture capital fund discloses in the statement of investment portfolio

(i) the cost amounts for each venture investment,

(ii) the total cost of the venture investments,

(iii) the total adjustment from cost to current value of the venture investments, and

(iv) the total current value of the venture investments;

(b) the labour sponsored or venture capital fund discloses in the statement of investment portfolio tables showing the distribution of venture investments by stage of development and by industry classification including

(i) the number of venture investments in each stage of development and industry class,

(ii) the total cost and aggregate current value of the venture investments for each stage of development and industry class, and

(iii) the total cost and aggregate current value of venture investments for each stage of development and industry class as a percentage of total venture investments;

(c) for a statement of investment portfolio contained in annual financial statements, the labour sponsored or venture capital fund has obtained an independent valuation relating to the value of the venture investments or to the net assets of the fund and has filed the independent valuation concurrently with the filing of the annual financial statements;

(d) for a statement of investment portfolio contained in an interim financial statementsreport, the labour sponsored or venture capital fund obtained and filed the independent valuation referred to in paragraph (c) in connection with the preparation of the most recent annual financial statements of the labour sponsored or venture capital fund; and

(e) the labour sponsored or venture capital fund has disclosed in the applicable financial statements that an independent valuation has been obtained as of the end of the applicable financial year.

8.3 Disclosure Concerning Independent Valuator - A labour sponsored or venture capital fund that obtains an independent valuation must include, in the statement of investment portfolio contained in its annual financial statements, or in the notes to the annual financial statements,

(a) a description of the independent valuator’s qualifications, and

(b) a description of any past, present or anticipated relationship between the independent valuator and the labour sponsored or venture capital fund, its manager or portfolio adviser.

8.4 Content of Independent Valuation - An independent valuation must provide the aggregate current value of the venture investments or of the total equity or net assets attributable to securityholders of the labour sponsored or venture capital fund as at the fund’s financial year end.

8.5 Independent Valuator’s Consent - A labour sponsored or venture capital fund obtaining an independent valuation must

(a) obtain the independent valuator’s consent to its filing; and

(b) include a statement in the valuation report, signed by the independent valuator, in substantially the following form:

“We refer to the independent valuation of the [total equity/net assets attributable to securityholders/venture investments] of [name of labour sponsored or venture capital fund] as of [date of financial year end] dated . We consent to the filing of the independent valuation with the securities regulatory authorities.”


October 16, 2009 (2009) 32 OSCB 8427

PART 9 ANNUAL INFORMATION FORM


9.2 Requirement to File Annual Information Form - An investment fund must file an annual information form if theinvestment fund has not obtained a receipt for a prospectus during the last 12 months preceding its financial year end.

9.3 Filing Deadline for Annual Information Form - An investment fund required under section 9.2 to file an annual information form must file the annual information form no later than 90 days after the end of its most recently completed financial year.

9.4 Preparation and Content of Annual Information Form

(1) An annual information form required to be filed under section 9.2 must be prepared as of the end of the most recently completed financial year of the investment fund to which it pertains.

(2) An annual information form required to be filed must be prepared in accordance with Form 81-101F2, except that

(a) a reference to “mutual fund” must be read as a reference to “investment fund”;

(b) General Instructions (3), (10) and (14) of Form 81-101F2 do not apply;

(c) subsections (3), (4) and (6) of Item 1.1 of Form 81-101F2 do not apply;

(d) subsections (3), (4) and (6) of Item 1.2 of Form 81-101F2 do not apply;

(e) Item 5 of Form 81-101F2 must be completed in connection with all of the securities of the investment fund;

(f) Item 15 of Form 81-101F2 does not apply to an investment fund that is a corporation, except for the disclosure in connection with the independent review committee; and

(g) Items 19, 20, 21 and 22 of Form 81-101F2 do not apply.

(3) An investment fund required to file an annual information form must at the same time file copies of all material incorporated by reference in the annual information form that it has not previously filed.

PART 10 PROXY VOTING DISCLOSURE FOR PORTFOLIO SECURITIES HELD

10.1 Application – This Part applies to an investment fund that is a reporting issuer.

10.2 Requirement to Establish Policies and Procedures

(1) An investment fund must establish policies and procedures that it will follow to determine whether, and how, to vote on any matter for which the investment fund receives, in its capacity as securityholder, proxy materials for a meeting of securityholders of an issuer.

(2) The policies and procedures referred to in subsection (1) must include

(a) a standing policy for dealing with routine matters on which the investment fund may vote;

(b) the circumstances under which the investment fund will deviate from the standing policy for routine matters;

(c) the policies under which, and the procedures by which, the investment fund will determine how to vote or refrain from voting on non-routine matters; and

(d) procedures to ensure that portfolio securities held by the investment fund are voted in accordance with the instructions of the investment fund.


October 16, 2009 (2009) 32 OSCB 8428

(3) An investment fund that has not prepared an annual information form in accordance with Part 9 or in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure must include a summary of the policies and procedures required by this section in its prospectus.

10.3 Proxy Voting Record - An investment fund must maintain a proxy voting record that includes, for each time that the investment fund receives, in its capacity as securityholder, materials relating to a meeting of securityholders of a reporting issuer or the equivalent of a reporting issuer in a foreign jurisdiction,

(a) the name of the issuer;

(b) the exchange ticker symbol of the portfolio securities, unless not readily available to the investment fund;

(c) the CUSIP number for the portfolio securities;

(d) the meeting date;

(e) a brief identification of the matter or matters to be voted on at the meeting;

(f) whether the matter or matters voted on were proposed by the issuer, its management or another person or company;

(g) whether the investment fund voted on the matter or matters;

(h) if applicable, how the investment fund voted on the matter or matters; and

(i) whether votes cast by the investment fund were for or against the recommendations of management of the issuer.

10.4 Preparation and Availability of Proxy Voting Record

(1) An investment fund must prepare a proxy voting record on an annual basis for the period ending on June 30 of each year.

(2) An investment fund that has a website must post the proxy voting record to the website no later than August 31 of each year.

(3) An investment fund must promptly send the most recent copy of the investment fund’s proxy voting policies and procedures and proxy voting record, without charge, to any securityholder upon a request made by the securityholder after August 31.

PART 11 MATERIAL CHANGE REPORTS


11.2 Publication of Material Change

(1) If a material change occurs in the affairs of an investment fund, the investment fund must

(a) promptly issue and file a news release that is authorized by an executive officer of the manager of the investment fund and that discloses the nature and substance of the material change;

(b) post all disclosure made under paragraph (a) on the website of the investment fund or the investment fund manager;

(c) as soon as practicable, but in any event no later than 10 days after the date on which the change occurs, file a report containing the information required by Form 51-102F3, except that a reference in Form 51-102F3 to

(i) the term “material change” must be read as “material change” under this Instrument;

(ii) “section 7.1 of National Instrument 51-102” in Item 3 of Part 2 must be read as a reference to “section 11.2 of National Instrument 81-106”;


October 16, 2009 (2009) 32 OSCB 8429

(iii) “subsection 7.1(2) of National Instrument 51-102” in Item 6 of Part 2 must be read as a reference to “subsection 11.2(2) of National Instrument 81-106”;

(iv) “subsection 7.1(5) of National Instrument 51-102” in Items 6 and 7 of Part 2 must be read as a reference to “subsection 11.2(4) of National Instrument 81-106”; and

(v) “executive officer of your company” in Item 8 of Part 2 must be read as a reference to “officer of the investment fund or of the manager of the investment fund”; and

(d) file an amendment to its prospectus or simplified prospectus that discloses the material change in accordance with the requirements of securities legislation.

(2) If

(a) in the opinion of the board of directors or trustee of an investment fund or the manager, and if that opinion is arrived at in a reasonable manner, the disclosure required by subsection (1) would be unduly detrimental to the investment fund’s interest; or

(b) the material change

(i) consists of a decision to implement a change made by senior management of the investment fund or senior management of the manager of the investment fund who believe that confirmation of the decision by the board of directors or persons acting in a similar capacity is probable; and

(ii) senior management of the investment fund or senior management of the manager of the investment fund has no reason to believe that persons with knowledge of the material change have made use of that knowledge in purchasing or selling securities of the investment fund,

the investment fund may, instead of complying with subsection (1), immediately file the report required under paragraph (1)(c) marked to indicate that it is confidential, together with written reasons for non-disclosure.

(3) [repealed]

(4) If a report has been filed under subsection (2), the investment fund must advise the regulator or securities regulatory authority in writing within ten days of the initial filing of the report if it believes the report should continue to remain confidential and every 10 days thereafter until the material change is generally disclosed in the manner referred to in subsection (1) or, if the material change consists of a decision of the type referred to in paragraph (2)(b), until that decision has been rejected by the board of directors of the investment fund or the board of directors of the manager of the investment fund.

(5) Despite filing a report under subsection (2), an investment fund must promptly and generally disclose the material change in the manner referred to in subsection (1) upon the investment fund becoming aware, or having reasonable grounds to believe, that a person or company is purchasing or selling securities of the investment fund with knowledge of the material change that has not been generally disclosed.

PART 12 PROXY SOLICITATION AND INFORMATION CIRCULARS


12.2 Sending of Proxies and Information Circulars

(1) If management of an investment fund or the manager of an investment fund gives or intends to give notice of a meeting to registered holders of the investment fund, management or the manager must, at the same time as or before giving that notice, send to each registered holder who is entitled to notice of the meeting a form of proxy for use at the meeting.

(2) A person or company that solicits proxies from registered holders of an investment fund must

(a) in the case of a solicitation by or on behalf of management of the investment fund, send with the notice of meeting to each registered holder whose proxy is solicited a completed Form 51-102F5; or


October 16, 2009 (2009) 32 OSCB 8430

(b) in the case of a solicitation by or on behalf of any person or company other than management of the investment fund, at the same time as or before the solicitation, send a completed Form 51-102F5 and a form of proxy to each registered holder whose proxy is solicited.

(3) [repealed]

12.3 Exemption

(1) Subsection 12.2(2) does not apply to a solicitation by a person or company in respect of securities of which the person or company is the beneficial owner.

(2) Paragraph 12.2(2)(b) does not apply to a solicitation if the total number of securityholders whose proxies are solicited is not more than 15.

(3) For the purposes of subsection (2), two or more persons or companies who are joint registered owners of one or more securities are considered to be one securityholder.

12.4 Compliance with National Instrument 51-102 - A person or company that solicits proxies under section 12.2 must comply with sections 9.3 and 9.4 of National Instrument 51-102 as if those sections applied to the person or company.

PART 13 CHANGE OF AUDITOR DISCLOSURE


13.2 Change of Auditor - Section 4.11 of National Instrument 51-102 applies to an investment fund that changes its auditor, except that references in that section to the “board of directors” are to be read as references to,

(a) if the investment fund is a corporation, the “board of directors of the investment fund”, or

(b) if the investment fund is a trust, the “trustee or trustees or another person or company authorized by the constating documents of the investment fund”.

PART 14 CALCULATION OF NET ASSET VALUE


14.2 Calculation, Frequency and Currency

(1) The net asset value of an investment fund must be calculated using the fair value of the investment fund’s assets and liabilities.

(1.1) The net asset value of an investment fund must include the income and expenses of the investment fund accrued up to the date of calculation of the net asset value.

(1.2) For the purposes of subsection (1), fair value means

(a) the market value based on reported prices and quotations in an active market, or

(b) if the market value is not available, or the manager of the investment fund believes that it is unreliable, a value that is fair and reasonable in all the relevant circumstances.

(1.3) The manager of an investment fund must

(a) establish and maintain appropriate written policies and procedures for determining the fair value of the investment fund’s assets and liabilities; and

(b) consistently follow those policies and procedures.

(1.4) The manager of an investment fund must maintain a record of the determination of fair value and the reasons supporting that determination.


October 16, 2009 (2009) 32 OSCB 8431

(2) For the purposes of calculating net asset value for purchases and redemptions of its securities as required by Parts 9 and 10 of National Instrument 81-102 Mutual Funds, a labour sponsored or venture capital fund that has included a deferred charge for sales commissions in the calculation may continue to do so, provided that

(a) the calculation reflects the amortization of this deferred charge over the remaining amortization period, and

(b) the labour sponsored or venture capital fund ceased adding to this deferred charge by December 31, 2003.

(3) The net asset value of an investment fund must be calculated,

(a) if the investment fund does not use specified derivatives, at least once in each week; or

(b) if the investment fund uses specified derivatives, at least once every business day.

(4) A mutual fund that holds securities of other mutual funds must have dates for the calculation of net asset value that are compatible with those of the other mutual funds.

(5) Despite paragraph (3)(a), an investment fund that, at the date that this Instrument comes into force, calculates net asset value no less frequently than once a month may continue to calculate net asset value at least as frequently as it does at that date.

(6) The net asset value of an investment fund must be calculated in the currency of Canada or in the currency of the United States of America or both.

(7) An investment fund that arranges for the publication of its net asset value in the financial press must ensure that its current net asset value is provided on a timely basis to the financial press.

14.3 Portfolio Transactions - The net asset value of an investment fund must include each purchase or sale of a portfolio asset no later than in the next calculation of the net asset value after the date the purchase or sale becomes binding.

14.4 Capital Transactions - The investment fund must include each issue or redemption of a security of the investment fund in the next calculation of net asset value the investment fund makes after the calculation of net asset value used to establish the issue or redemption price.

PART 15 CALCULATION OF MANAGEMENT EXPENSE RATIO

15.1 Calculation of Management Expense Ratio

(1) An investment fund may disclose its management expense ratio only if the management expense ratio is calculated for the financial year or interim period of the investment fund and if it is calculated by

(a) dividing

(i) the aggregate of

(A) total expenses of the investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the financial year or interim period, as shown on its statement of operationscomprehensive income; and

(B) any other fee, charge or expense of the investment fund that has the effect of reducing the investment fund’s net asset value;

by

(ii) the average net asset value of the investment fund for the financial year or interim period, obtained by

(A) adding together the net asset values of the investment fund as at the close of business of the investment fund on each day during the financial year or interim


October 16, 2009 (2009) 32 OSCB 8432

period on which the net asset value of the investment fund has been calculated, and

(B) dividing the amount obtained under clause (A) by the number of days during the financial year or interim period on which the net asset value of the investment fund has been calculated; and

(b) multiplying the result obtained under paragraph (a) by 100.

(2) If any fees and expenses otherwise payable by an investment fund in a financial year or interim period were waived or otherwise absorbed by a member of the organization of the investment fund, the investment fund must disclose, in a note to the disclosure of its management expense ratio, details of

(a) what the management expense ratio would have been without any waivers or absorptions;

(b) the length of time that the waiver or absorption is expected to continue;

(c) whether the waiver or absorption can be terminated at any time by the member of the organization of the investment fund; and

(d) any other arrangements concerning the waiver or absorption.

(3) Investment fund expenses rebated by a manager or an investment fund to a securityholder must not be deducted from total expenses of the investment fund in determining the management expense ratio of the investment fund.

(4) An investment fund that has separate classes or series of securities must calculate a management expense ratio for each class or series, in the manner required by this section, modified as appropriate.

(5) The management expense ratio of an investment fund for a financial period of less than or greater than twelve months must be annualized.

(6) If an investment fund provides its management expense ratio to a service provider that will arrange for public dissemination of the management expense ratio,

(a) the investment fund must provide the management expense ratio calculated in accordance with this Part; and

(b) the requirement to provide note disclosure contained in subsection (2) does not apply if the investment fund indicates, as applicable, that fees have been waived, expenses have been absorbed, or that fees or expenses were paid directly by investors during the period for which the management expense ratio was calculated.

15.2 Fund of Funds Calculation

(1) For the purposes of subparagraph 15.1(1)(a)(i), the total expenses for a financial year or interim period of an investment fund that invests in securities of other investment funds is equal to the sum of

(a) the total expenses incurred by the investment fund that are for the period for which the calculation of the management expense ratio is made and that are attributable to its investment in each underlying investment fund, as calculated by

(i) multiplying the total expenses of each underlying investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the financial year or interim period, by

(ii) the average proportion of securities of the underlying investment fund held by the investment fund during the financial year or interim period, calculated by

(A) adding together the proportion of securities of the underlying investment fund held by the investment fund on each day in the period, and


October 16, 2009 (2009) 32 OSCB 8433

(B) dividing the amount obtained under clause (A) by the number of days in the period; and

(b) the total expenses of the investment fund, excluding distributions if recognized as an expense, commissions and other portfolio transaction costs, before income taxes, for the period.

(2) An investment fund that has exposure to one or more other investment funds through the use of derivatives in a financial year or interim period must calculate its management expense ratio for the financial year or interim period in the manner described in subsection (1), treating each investment fund to which it has exposure as an “underlying investment fund” under subsection (1).

(3) Subsection (2) does not apply if the derivatives do not expose the investment fund to expenses that would be incurred by a direct investment in the relevant investment funds.

(4) Management fees rebated by an underlying fund to an investment fund that invests in the underlying fund must be deducted from total expenses of the underlying fund if the rebate is made for the purpose of avoiding duplication of fees between the two investment funds.

PART 16 ADDITIONAL FILING REQUIREMENTS


16.2 Additional Filing Requirements - If an investment fund sends to its securityholders any disclosure document other than those required by this Instrument, the investment fund must file a copy of the document on the same date as, or as soon as practicable after, the date on which the document is sent to its securityholders.

16.3 Voting Results - An investment fund must, promptly following a meeting of securityholders at which a matter was submitted to a vote, file a report that discloses, for each matter voted upon

(a) a brief description of the matter voted upon and the outcome of the vote; and

(b) if the vote was conducted by ballot, the number and percentage of votes cast, which includes votes cast in person and by proxy, for, against, or withheld from, each vote.

16.4 Filing of Material Contracts - An investment fund that is not subject to National Instrument 81-101 Mutual Fund Prospectus Disclosure, or securities legislation that imposes a similar requirement, must file a copy of any material contract of the investment fund not previously filed, or any amendment to any material contract of the investment fund not previously filed

(a) with the final prospectus of the investment fund; or

(b) upon the execution of the material contract or amendment.

PART 17 EXEMPTIONS

17.1 Exemption

(1) The regulator or securities regulatory authority may grant an exemption from this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

(2) Despite subsection (1), in Ontario only the regulator may grant an exemption from any part of this Instrument.

PART 18 EFFECTIVE DATE AND TRANSITION

18.1 Effective Date - This Instrument comes into force on June 1, 2005.

18.2 [repealed]

18.3 [repealed]

18.4 [repealed]

18.5 [repealed]


October 16, 2009 (2009) 32 OSCB 8434

18.5.1 Transition to IFRS

(1) For the first interim period in the financial year beginning on or after January 1, 2011, an investment fund must file, with its interim financial report for that interim period, an opening statement of financial position as at the date of transition to IFRS.

(2) For the first financial year beginning on or after January 1, 2011, an investment fund must file, with its annual financial statements for that financial year, an audited opening statement of financial position as at the date of transition to IFRS.

(3) Despite sections 3.1, 3.2, 3.3 and 3.4, for financial years beginning before January 1, 2011, an investment fund may present line items and use terminology in its financial statements consistent with the immediately preceding financial year.

18.6 Existing Exemptions

(1) An investment fund that has obtained an exemption or waiver from, or approval under, securities legislation, National Policy 39, National Instrument 81-101 Mutual Fund Prospectus Disclosure, National Instrument 81-102 Mutual Funds, National Instrument 81-104 Commodity Pools or National Instrument 81-105 Mutual Fund Sales Practices relating to its continuous disclosure obligations is exempt from any substantially similar provision of this Instrument to the same extent and on the same conditions, if any, as contained in the exemption, waiver or approval, unless the regulator or securities regulatory authority has revoked that exemption, waiver or approval under authority provided to it in securities legislation.

(2) An investment fund must, at the time that it first intends to rely on subsection (1) in connection with a filing requirement under this Instrument, inform the securities regulatory authority in writing of

(a) the general nature of the prior exemption, waiver or approval and the date on which it was granted; and

(b) the provision in respect of which the prior exemption, waiver or approval applied and the substantially similar provision of this Instrument.


October 16, 2009 (2009) 32 OSCB 8435

FORM 81-106F1CONTENTS OF ANNUAL AND INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

[unofficial consolidation – for reference purposes only]

PART A INSTRUCTIONS AND INTERPRETATION Item 1 General Item 2 Management Discussion of Fund Performance

PART B CONTENT REQUIREMENTS FOR ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE Item 1 First Page Disclosure Item 2 Management Discussion of Fund Performance Item 3 Financial Highlights Item 4 Past Performance Item 5 Summary of Investment Portfolio Item 6 Other Material Information

PART C CONTENT REQUIREMENTS FOR INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE Item 1 First Page Disclosure Item 2 Management Discussion Of Fund Performance Item 3 Financial Highlights Item 4 Past Performance Item 5 Summary of Investment Portfolio Item 6 Other Material Information


October 16, 2009 (2009) 32 OSCB 8436

FORM 81-106F1 CONTENTS OF ANNUAL AND INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

PART A INSTRUCTIONS AND INTERPRETATION

Item 1 General

(a) The Form

The Form describes the disclosure required in an annual or interim management report of fund performance (MRFP) of an investment fund. Each item of the Form outlines disclosure or format requirements. Instructions to help you comply with these requirements are printed in italic type.

(b) Plain Language

An MRFP must state the required information concisely and in plain language (as defined in National Instrument 81-101 Mutual Fund Prospectus Disclosure). Refer to Part 1 of Companion Policy 81-106CP for a discussion concerning plain language and presentation.

When preparing an MRFP, respond as simply and directly as is reasonably possible and include only as much information as is necessary for readers to understand the matters for which you are providing disclosure.

(c) Format

Present the MRFP in a format that assists readability and comprehension. The Form generally does not mandate the use of a specific format to achieve these goals, except in the case of disclosure of financial highlights and past performance as required by Items 3 and 4 of each of Parts B and C of the Form; that disclosure must be presented in the format specified in the Form.

An MRFP must use the headings and sub-headings shown in the Form. Within this framework, investment funds are encouraged to use, as appropriate, tables, captions, bullet points or other organizational techniques that assist in presenting the required disclosure clearly and concisely. Disclosure provided in response to any item does not need to be repeated elsewhere.The interim MRFP must use the same headings as used in the annual MRFP.

The Form does not prohibit including information beyond what the Form requires. An investment fund may include artwork and educational material (as defined in National Instrument 81-101 Mutual Fund Prospectus Disclosure) in its annual and interim MRFP. However, an investment fund must take reasonable care to ensure that including such material does not obscure the required information and does not lengthen the MRFP excessively.

(d) Focus on Material Information

You do not need to disclose information that is not material. You do not need to respond to any item in this Form that is inapplicable and you may omit negative answers.

(e) What is Material?

Would a reasonable investor’s decision to buy, sell or hold securities of an investment fund likely be influenced or changed if the information in question was omitted or misstated? If so, the information is material. This concept of materiality is consistent with the financial reporting notion of materiality contained in the Handbook. In determining whether information is material, take into account both quantitative and qualitative factors.

(f) Terminology

All references to “net assets” or “net assets per security” in this Form are references to total equity or net assets attributable to securityholders determined in accordance with Canadian GAAP as presented in the financial statements of the investment fund. All references to “net asset value” or “net asset value per security” in this Form are references to net asset value determined in accordance with Part 14 of the Instrument.

Investment funds must use net assets as shown on the financial statements in the ‘‘The Fund’s Net Assets per [Unit/Share]”table. All other calculations for the purposes of the MRFP must be made using net asset value.


October 16, 2009 (2009) 32 OSCB 8437

Item 2 Management Discussion of Fund Performance

The management discussion of fund performance is an analysis and explanation that is designed to complement and supplement an investment fund’s financial statements. The discussion is the equivalent to the corporate management discussion and analysis (MD&A) with specific modifications for investment funds. It provides the manager of an investment fundwith the opportunity to discuss the investment fund’s position and financial results for the relevant period. The discussion isintended to give a reader the ability to look at the investment fund through the eyes of management by providing both a historical and prospective analysis of the investment activities and operations of the investment fund. Coupled with the financial highlights, this information should enable readers to better assess the investment fund’s performance and future prospects.

Focus the management discussion on material information about the performance of the investment fund, with particular emphasis on known material trends, commitments, events, risks or uncertainties that the manager reasonably expects to have a material effect on the investment fund’s future performance or investment activities.

The description of the disclosure requirements is intentionally general. This Form contains a minimum number of specific instructions in order to allow, as well as encourage, investment funds to discuss their activities in the most appropriate mannerand to tailor their comments to their individual circumstances.

PART B CONTENT REQUIREMENTS FOR ANNUAL MANAGEMENT REPORT OF FUND PERFORMANCE

Item 1 First Page Disclosure

The first page of an annual MRFP must contain disclosure in substantially the following words:

“This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling [toll-free/collect call telephone number], by writing to us at [insert address] or by visiting our website at [insert address] or SEDAR at www.sedar.com. Securityholders may also contact us using one of these methods to request a copy of the investment fund’s interim financial report, proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure.”

INSTRUCTION:

If the MRFP is bound with the financial statements of the investment fund, modify the first page wording appropriately.


2.1 Investment Objective and Strategies

Disclose under the heading “Investment Objective and Strategies” a brief summary of the fundamental investment objective and strategies of the investment fund.

INSTRUCTION:

Disclosing the fundamental investment objective provides investors with a reference point for assessing the information contained in the MRFP. It must be a concise summary of the fundamental investment objective and strategies of the investment fund, and not merely copied from the prospectus.

2.2 Risk

Disclose under the heading “Risk” a discussion of how changes to the investment fund over the financial year affected the overall level of risk associated with an investment in the investment fund.

INSTRUCTION:

Ensure that the discussion is not merely a repeat of information contained in the prospectus of the investment fund, but rather a discussion that reflects any changes in risk level of the investment fund over the financial year.

Consider how the changes in the risks associated with an investment in the investment fund affect the suitability or investor risk tolerance stated in the prospectus or offering document. All investment funds should refer to Items 9 and 10 of Part B of Form 81-101F1 as if those sections applied to them.


October 16, 2009 (2009) 32 OSCB 8438

2.3 Results of Operations

(1) Under the heading “Results of Operations” provide a summary of the results of operations of the investment fund for the financial year to which the MDFP pertains, including a discussion of

(a) any material changes in investments in specific portfolio assets and overall asset mix from the previous period;

(b) how the composition and changes to the composition of the investment portfolio relate to the investment fund’s fundamental investent objective and strategies or to changes in the economy, markets or unusual events;

(c) unusual trends in redemptions or sales and the effect of these on the investment fund;

(d) significant components and changes to the components of revenue and expenses;

(e) risks, events, trends and commitments that had a material effect on past performance; and

(f) unusual or infrequent events or transactions, economic changes and market conditions that affected performance.

(2) An investment fund that borrows money, other than immaterial operating overdrafts, must disclose,

(a) the minimum and maximum amount borrowed during the period;

(b) the percentage of net assets of the investment fund that the borrowing represented as of the end of the period;

(c) how the borrowed money was used; and

(d) the terms of the borrowing arrangements.

INSTRUCTION:

Explain the nature of and reasons for changes in your investment fund’s performance. Do not simply disclose the amount of change in a financial statement item from period to period. Avoid the use of boilerplate language. Your discussion should assist the reader to understand the significant factors that have affected the performance of the investment fund.

2.4 Recent Developments

Under the heading “Recent Developments” discuss the developments affecting the investment fund, including

(a) known changes to the strategic position of the investment fund;

(b) known material trends, commitments, events or uncertainties that might reasonably be expected to affect the investment fund;

(c) changes to the manager or portfolio adviser, or change of control of the manager, of the investment fund;

(d) the effects of any actual or planned reorganizations, mergers or similar transactions;

(e) the estimated effects of changes in accounting policies adopted subsequent to year end; and

(f) changes to the composition or members of the independent review committee of the investment fund.

INSTRUCTION:

(1) Preparing the management discussion necessarily involves some degree of prediction or projection. The discussion must describe anticipated events, decisions, circumstances, opportunities and risks that management considers reasonably likely to materially impact performance. It must also describe management’s vision, strategy and targets.


October 16, 2009 (2009) 32 OSCB 8439

(2) There is no requirement to provide forward-looking information. If any forward-looking information is provided, it must contain a statement that the information is forward-looking, a description of the factors that may cause actual results to differ materially from the forward-looking information, your material assumptions and appropriate risk disclosure and cautionary language. You must also discuss any forward-looking information disclosed for a prior period which, in light of intervening events and absent further explanations, may be misleading.

2.5 Related Party Transactions

Under the heading “Related Party Transactions” discuss any transactions involving related parties to the investment fund.

INSTRUCTIONS:

(1) In determining who is a related party, investment funds should look to the Handbook. In addition, related parties include the manager and portfolio adviser (or their affiliates) and a broker or dealer related to any of the investment fund, its manager or portfolio adviser.

(2) When discussing related party transactions, include the identity of the related party, the relationship to the investment fund, the purpose of the transaction, the measurement basis used to determine the recorded amount and any ongoing commitments to the related party.

(3) Related party transactions include portfolio transactions with related parties of the investment fund. When discussing these transactions, include the dollar amount of commission, spread or any other fee that the investment fund paid to any related party in connection with a portfolio transaction.

(4) If the investment fund has an independent review committee, state whether the investment fund has relied on the positive recommendation or approval of the independent review committee to proceed with the transaction, and provide details of any conditions or parameters surrounding the transaction imposed by the independent review committee in its positive recommendation or approval.

Item 3 Financial Highlights

3.1 Financial Highlights

(1) Provide selected financial highlights for the investment fund under the heading “Financial Highlights” in the form of the following tables, appropriately completed, and introduced using the following words:

“The following tables show selected key financial information about the Fund and are intended to help you understand the Fund’s financial performance for the past [insert number] years.


October 16, 2009 (2009) 32 OSCB 8440

The Fund’s Net Assets per [Unit/Share] (1)

[insert year] [insert year] [insert year] [insert year] [insert year]Net Assets, beginning of year $ $ $ $ $

Increase (decrease) from operations: total revenue $ $ $ $ $ total expenses [excluding distributions] $ $ $ $ $ realized gains (losses) for the period $ $ $ $ $ unrealized gains (losses) for the period $ $ $ $ $ Total increase (decrease) from operations (2)

$ $ $ $ $

Distributions: From net investment income (excluding dividends)

$ $ $ $ $

From dividends $ $ $ $ $ From capital gains $ $ $ $ $ Return of capital $ $ $ $ $ Total Annual Distributions(3) $ $ $ $ $ Net assets at [insert last day of financial year] of year shown

$ $ $ $ $

(1) This information is derived from the fund’s audited annual financial statements. The net assets per security presented in the financial statements differs from the net asset value calculated for fund pricing purposes. [An explanation of these differences can be found in the notes to the financial statements./This difference is due to [explain].]

(2) Net assets and distributions are based on the actual number of [units/shares] outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of [units/shares] outstanding over the financial period.

(3) Distributions were [paid in cash/reinvested in additional [units/shares] of the Fund, or both].

Ratios and Supplemental Data

[insert year] [insert year] [insert year] [insert year] [insert year]Total net asset value (000’s)(1) $ $ $ $ $ Number of [units/shares] outstanding(1) Management expense ratio(2) % % % % % Management expense ratio before waivers or absorptions

% % % % %

Trading expense ratio(3) % % % % % Portfolio turnover rate(4) % % % % % Net asset value per [unit/share] $ $ $ $ $ Closing market price [if applicable] $ $ $ $ $

(1) This information is provided as at [insert date of end of financial year] of the year shown.

(2) Management expense ratio is based on total expenses (excluding [distributions], commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period.

(3) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period.

(4) The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a fund’s portfolio turnover rate in a year, the greater the trading costs payable by the fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a fund.

(2) [repealed]

(3) Modify the table appropriately for corporate investment funds.

(3.1) Show the financial highlights on a non-consolidated basis.


October 16, 2009 (2009) 32 OSCB 8441

(4) Show the financial highlights individually for each class or series, if a multi-class fund.

(5) Provide per unit or per share amounts to the nearest cent, and provide percentage amounts to two decimal places.

(6) Except for net assets, net asset value and distributions, calculate per unit/share values on the basis of the weighted average number of unit/shares outstanding over the financial period.

(7) Provide the selected financial information required by this Item in chronological order for each of the five most recently completed financial years of the investment fund for which audited financial statements have been filed, with the information for the most recent financial year in the first column on the left of the table.

(7.1) (a) For financial years beginning before January 1, 2011, the financial highlights may be derived from the investment fund’s financial statements prepared in accordance with subsection 2.6(1) of the Instrument.

(b) For financial periods beginning on or after January 1, 2011, derive the financial highlights from the investment fund’s financial statements prepared in accordance with subsection 2.6(2) of the Instrument.

(c) Despite (a), an annual MRFP for a financial year beginning on or after January 1, 2011 must disclose financial highlights for the immediately preceding financial year which are derived from financial statements prepared in accordance with subsection 2.6(2) of the Instrument.

(d) If the financial highlights relate to financial periods beginning both before and on or after January 1, 2011, disclose, in a note to the table, the accounting principles applicable to each period.

(8) If the investment fund has merged with another investment fund, include in the table only the financial information of the continuing investment fund.

(9) Calculate the management expense ratio of the investment fund as required by Part 15 of the Instrument.Include a brief description of the method of calculating the management expense ratio in a note to the table.

(10) If the investment fund,

(a) changed, or proposes to change, the basis of the calculation of the management fees or of the other fees, charges or expenses that are charged to the investment fund; or

(b) introduces or proposes to introduce a new fee,

and if the change would have had an effect on the management expense ratio for the last completed financial year of the investment fund if the change had been in effect throughout that financial year, disclose the effect of the change on the management expense ratio in a note to the “Ratios and Supplemental Data” table.

(11) Do not include disclosure concerning portfolio turnover rate for a money market fund.

(12) (a) Calculate the trading expense ratio by dividing

(i) the total commissions and other portfolio transaction costs disclosed in the statement of operations, by

(ii) the same denominator used to calculate the management expense ratio.

(b) If an investment fund invests in securities of other investment funds, calculate the trading expense ratio using the methodology required for the calculation of the management expense ratio in section 15.2 of the Instrument, making reasonable assumptions or estimates when necessary.

(13) Provide the closing market price only if the investment fund is traded on an exchange.


October 16, 2009 (2009) 32 OSCB 8442

INSTRUCTIONS:

(1) Calculate the investment fund’s portfolio turnover rate by dividing the lesser of the amounts of the cost of purchases and proceeds of sales of portfolio securities for the financial year by the average of the value of the portfolio securities owned by the investment fund in the financial year. Calculate the monthly average by totalling the values of portfolio securities as at the beginning and end of the first month of the financial year and as at the end of each of the succeeding 11 months and dividing the sum by 13. Exclude from both numerator and denominator amounts relating to all portfolio securities having a remaining term to maturity on the date of acquisition by the investment fund of one year or less.

(2) Further to instruction (1), include:

(a) proceeds from a short sale in the value of the portfolio securities sold during the period;

(b) the cost of covering a short sale in the value of portfolio securities purchased during the period;

(c) premiums paid to purchase options in the value of portfolio securities purchased during the period; and

(d) premiums received from the sale of options in the value of the portfolio securities sold during the period.

(3) If the investment fund acquired the assets of another investment fund in exchange for its own shares during the financial year in a purchase-of-assets transaction, exclude from the calculation of portfolio turnover rate the value of securities acquired and sold to realign the fund’s portfolio. Adjust the denominator of the portfolio turnover computation to reflect these excluded purchases and sales and disclose them in a footnote.


An investment fund that is a scholarship plan must comply with Item 3.1, except that the following table must replace “The Fund’s Net Assets per [Unit/Share]” table and the “Ratios and Supplemental Data” table.

Financial & Operating Highlights (with comparative figures)

[insert year] [insert year] [insert year] [insert year] [insert year]Balance SheetStatement of Financial Position

Total Assets $ $ $ $ $ Net Assets $ $ $ $ $ % change of Net Assets % % % % % Statement of OperationsComprehensive Income

Scholarship Awards $ $ $ $ $ Canadian Education Savings Grant $ $ $ $ $ Net investment income $ $ $ $ $ Other Total number of [agreements/units] in plans

% change in the total number of agreements

% % % % %

3.3 Management Fees

Disclose the basis for calculating the management fees paid by the investment fund and a breakdown of the services received in consideration of the management fees, as a percentage of management fees.

INSTRUCTION:

The disclosure must list the major services paid for out of the management fees, including portfolio adviser compensation, waived or absorbed expenses, trailing commissions and sales commissions, if applicable. Services may be grouped together so that commercially sensitive information, such as the specific compensation paid to a portfolio adviser or the manager’s profit, is not determinable.


October 16, 2009 (2009) 32 OSCB 8443

Item 4 Past Performance

4.1 General

(1) In responding to the requirements of this Item, an investment fund must comply with sections 15.2, 15.3, 15.9, 15.10, 15.11 and 15.14 of National Instrument 81-102 Mutual Funds as if those sections applied to the annual MRFP.

(2) Despite the specific requirements of this Item, do not provide performance data for any period if the investment fund was not a reporting issuer at all times during the period.

(3) Set out in the footnotes to the chart or table required by this Item the assumptions relevant to the calculation of the performance information, including any assumptions or estimates made in order to calculate the return on the short portfolio, if applicable. Include a statement of the significance of the assumption that distributions are reinvested for taxable investments.

(4) In a general introduction to the “Past Performance” section, indicate, as applicable, that

(a) the performance information shown assumes that all distributions made by the investment fund in the periods shown were reinvested in additional securities of the investment fund;

(b) the performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance; and

(c) how the investment fund has performed in the past does not necessarily indicate how it will perform in the future.

(5) Use a linear scale for each axis of the bar chart required by this Item.

(6) The x-axis must intersect the y-axis at 0 for the “Year-by-Year Returns” bar chart.

4.2 Year-by-Year Returns

(1) Provide a bar chart, under the heading “Past Performance” and under the sub-heading “Year-by-Year Returns”, that shows, in chronological order with the most recent year on the right of the bar chart, the annual total return of the investment fund for the lesser of

(a) each of the ten most recently completed financial years; and

(b) each of the completed financial years in which the investment fund has been in existence and which the investment fund was a reporting issuer.

(2) Provide an introduction to the bar chart that

(a) indicates that the bar chart shows the investment fund’s annual performance for each of the years shown, and illustrates how the investment fund’s performance has changed from year to year; and

(b) indicates that the bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year.

(3) If the investment fund holds short portfolio positions, show separately the annual total return for both the long portfolio positions and the short portfolio positions in addition to the overall total return.

4.3 Annual Compound Returns

(1) If the investment fund is not a money market fund, disclose, in the form of a table, under the sub-heading “Annual Compound Returns”

(a) the investment fund’s past performance for the ten, five, three and one year periods ended on the last day of the investment fund’s financial year; and

(b) if the investment fund was a reporting issuer for more than one and less than ten years, the investment fund’s past performance since the inception of the investment fund.


October 16, 2009 (2009) 32 OSCB 8444

(2) Include in the table, for the same periods for which the annual compound returns of the investment fund are provided, the historical annual compound total returns or changes of

(a) one or more appropriate broad-based securities market indices; and

(b) at the option of the investment fund, one or more non-securities indices or narrowly-based market indices that reflect the market sectors in which the investment fund invests.

(3) Include a brief description of the broad-based securities market index (or indices) and provide a discussion of the relative performance of the investment fund as compared to that index.

(4) If the investment fund includes in the table an index that is different from the one included in the most recently filed MRFP, explain the reasons for the change and include the disclosure required by this Item for both the new and former indices.

(5) Calculate the annual compound return in accordance with the requirements of Part 15 of National Instrument 81-102.

(6) If the investment fund holds short portfolio positions, show separately the annual compound returns for both the long and the short portfolio positions in addition to the overall annual compound returns.

INSTRUCTIONS:

(1) An “appropriate broad-based securities market index” is one that

(a) is administered by an organization that is not affiliated with any of the mutual fund, its manager, portfolio adviser or principal distributor, unless the index is widely recognized and used; and

(b) has been adjusted by its administrator to reflect the reinvestment of dividends on securities in the index or interest on debt.

(2) It may be appropriate for an investment fund that invests in more than one type of security to compare its performance to more than one relevant index. For example, a balanced fund may wish to compare its performance to both a bond index and an equity index.

(3) In addition to the appropriate broad-based securities market index, the investment fund may compare its performance to other financial or narrowly-based securities indices (or a blend of indices) that reflect the market sectors in which the investment fund invests or that provide useful comparatives to the performance of the investment fund. For example, an investment fund could compare its performance to an index that measured the performance of certain sectors of the stock market (e.g. communications companies, financial sector companies, etc.) or to a non-securities index, such as the Consumer Price Index, so long as the comparison is not misleading.


An investment fund that is a scholarship plan must comply with this Item, except that year-by-year returns and annual compound returns must be calculated based on the scholarship plan’s total portfolio adjusted for cash flows.

Item 5 Summary of Investment Portfolio

(1) Include, under the heading “Summary of Investment Portfolio”, a summary of the investment fund’s portfolio as at the end of the financial year of the investment fund to which the annual MRFP pertains.

(2) The summary of investment portfolio

(a) must break down the entire portfolio of the investment fund into appropriate subgroups, and must show the percentage of the aggregate net asset value of the investment fund constituted by each subgroup;

(b) must disclose the top 25 positions held by the investment fund, each expressed as a percentage of net asset value of the investment fund;

(c) must disclose long positions separately from short positions; and


October 16, 2009 (2009) 32 OSCB 8445

(d) must disclose separately the total percentage of net asset value represented by the long positions and by the short positions.

(3) Indicate that the summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund and a quarterly update is available.

INSTRUCTIONS:

(1) The summary of investment portfolio is designed to give the reader an easily accessible snapshot of the portfolio of the investment fund as at the end of the financial year for which the annual MRFP pertains. As with the other components of the annual MRFP, care should be taken to ensure that the information in the summary of investment portfolio is presented in an easily accessible and understandable way.

(2) The Canadian securities regulatory authorities have not prescribed the names of the categories into which the portfolio should be broken down. An investment fund should use the most appropriate categories given the nature of the fund. If appropriate, an investment fund may use more than one breakdown, for instance showing the portfolio of the investment fund broken down according to security type, industry, geographical locations, etc.

(3) Instead of a table, the disclosure required by (2)(a) of this Item may be presented in the form of a pie chart.

(4) If the investment fund owns more than one class of securities of an issuer, those classes should be aggregated for the purposes of this Item, however, debt and equity securities of an issuer must not be aggregated.

(5) Portfolio assets other than securities should be aggregated if they have substantially similar investment risks and profiles. For instance, gold certificates should be aggregated, even if they are issued by different financial institutions.

(6) Treat cash and cash equivalents as one separate discrete category.

(7) In determining its holdings for purposes of the disclosure required by this Item, an investment fund should, for each long position in a derivative that is held by the investment fund for purposes other than hedging and for each index participation unit held by the investment fund, consider that it holds directly the underlying interest of that derivative or its proportionate share of the securities held by the issuer of the index participation unit.

(8) If an investment fund invests substantially all of its assets directly or indirectly (through the use of derivatives) in securities of one other fund, list only the 25 largest holdings of the other investment fund by percentage of net asset value of the other investment fund, as disclosed by the other investment fund as at the most recent quarter end.

(9) If the investment fund invests in other investment funds, include a statement to the effect that the prospectus and other information about the underlying investment funds are available on the internet at www.sedar.com.

(10) A labour sponsored or venture capital fund must disclose its top 25 positions, but is not required to express any of its venture investments as a percentage of the fund’s net asset value if it complies with the condition in Part 8 of the Instrument to be exempt from disclosing the individual current values of venture investments in its statement of investment portfolio.

Item 6 Other Material Information

Provide any other material information relating to the investment fund not otherwise required to be disclosed by this Part, including information required to be disclosed pursuant to an order or exemption received by the investment fund.

PART C CONTENT REQUIREMENTS FOR INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

Item 1 First Page Disclosure

The first page of an interim MRFP must contain disclosure in substantially the following words:

“This interim management report of fund performance contains financial highlights, but does not contain either the interim financial report or annual financial statements of the investment fund. You can get a copy of the interim financial report or annual financial statements at your request, and at no cost, by calling [toll-free/collect call telephone number], by writing to us at [insert address] or by visiting our website at [insert address] or SEDAR at www.sedar.com.


October 16, 2009 (2009) 32 OSCB 8446

Securityholders may also contact us using one of these methods to request a copy of the investment fund’s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure.”

INSTRUCTION:

If the MRFP is bound with the financial statements of the investment fund, modify the first page wording appropriately.


2.1 Results of Operations

Update the analysis of the investment fund’s results of operations provided in the most recent annual MRFP. Discuss any material changes to any of the components listed in Item 2.3 of Part B.

2.2 Recent Developments

If there have been any significant developments affecting the investment fund since the most recent annual MRFP, discuss those developments and their impact on the investment fund, in accordance with the requirements of Item 2.4 of Part B.

2.3 Related Party Transactions

Provide the disclosure required by Item 2.5 of Part B.

INSTRUCTIONS:

(1) If the first MRFP you file in this Form is not an annual MRFP, you must provide all the disclosure required by Part B, except for Items 3 and 4, in the first MRFP.

(2) The discussion in an interim MRFP is intended to update the reader on material developments since the date of the most recent annual MRFP. You may assume the reader has access to your annual MRFP, so it is not necessary to restate all of the information contained in the most recent annual discussion.

(3) The discussion in an interim MRFP should deal with the financial period to which the interim MRFP pertains.

Item 3 Financial Highlights

(1) Provide the disclosure required by Item 3.1 of Part B, with an additional column on the left of the table representing the interim period.

(2) Provide the disclosure required by Item 3.3 of Part B of the form.

INSTRUCTION:

If the distributions cannot be allocated by type at the end of the interim period, provide only total distributions by unit/share.

Item 4 Past Performance

Provide a bar chart prepared in accordance with Item 4.2 of Part B, and include the total return calculated for the interim period.

Item 5 Summary of Investment Portfolio

(1) Include a summary of investment portfolio as at the end of the financial period to which the interim MRFP pertains.

(2) The summary of investment portfolio must be prepared in accordance with Item 5 of Part B.

Item 6 Other Material Information

Provide any other material information relating to the investment fund not otherwise required to be disclosed by this Part including information required to be disclosed pursuant to an order or exemption received by the investment fund.


October 16, 2009 (2009) 32 OSCB 8447

COMPANION POLICY 81-106CP TO NATIONAL INSTRUMENT 81-106 INVESTMENT FUND CONTINUOUS DISCLOSURE

[Unofficial consolidation – for reference purposes only]

PART 1 PURPOSE AND APPLICATION OF THE COMPANION POLICY

1.1 Purpose – The purpose of this Companion Policy (the Policy) is to help you understand how the Canadian securities regulatory authorities (CSA or we) interpret or apply certain provisions of National Instrument 81-106 Investment Fund Continuous Disclosure (the Instrument).

1.2 Application

(1) The Instrument applies to investment funds. The general nature of an investment fund is that the money invested in it is professionally managed on the basis of a stated investment policy, usually expressed in terms of investment objectives and strategies, and is invested in a portfolio of securities. The fund has the discretion to buy and sell investments within the constraints of its investment policy. Investment decisions are made by a manager or portfolio adviser acting on behalf of the fund. An investment fund provides a means whereby investors can have their money professionally managed rather than making their own decisions about investing in individual securities.

(2) An investment fund generally does not seek to obtain control of or become involved in the management of companies in which it invests. Exceptions to this include labour sponsored or venture capital funds, where some degree of involvement in the management of the investees is an integral part of the investment strategy.

Investment funds can be distinguished from holding companies, which generally exert a significant degree of control over the companies in which they invest. They can also be distinguished from the issuers known as “Income Trusts” which generally issue securities that entitle the holder to net cash flows generated by (i) an underlying business owned by the trust or other entity, or (ii) the income-producing property owned by the trust or other entity. Examples of entities that are not investment funds are business income trusts, real estate investment trusts and royalty trusts.

(3) Investment funds that meet the definition of “mutual fund” in securities legislation – generally because their securities are redeemable on demand or within a specified period after demand at net asset value per security – are referred to as mutual funds. Other investment funds are generally referred to as non-redeemable investment funds. The definition of “non-redeemable investment fund” included in this instrument summarises the concepts discussed above. Because of their similarity to mutual funds, they are subject to similar reporting requirements. Examples include closed-end funds, funds traded on exchanges with limited redeemability, certain limited partnerships investing in portfolios of securities such as flow-through shares, and scholarship plans (other than self-directed RESPs as defined in OSC Rule 46-501 Self-Directed Registered Education Savings Plans).

(4) Labour sponsored and venture capital funds may or may not be considered to be mutual funds depending on the requirements of the provincial legislation under which they are established (for example, shares of Ontario labour sponsored funds are generally redeemable on demand, while shares of British Columbia employee venture capital corporations are not). Nevertheless, these issuers are investment funds and must comply with the general disclosure rules for investment funds as well as specific requirements for labour sponsored and venture capital funds included in Part 8 of this Instrument.

1.3 Definitions

(1) A term used in the Instrument and defined in the securities statute of a local jurisdiction has the meaning given to it in that statute unless (a) the definition in that statute is restricted to a specific portion of the statute that does not govern continuous disclosure, or (b) the context otherwise requires.

(2) For instance, the term “material change” is defined in local securities legislation of most jurisdictions. The CSA consider the meaning given to this term in securities legislation to be substantially similar to the definition set out in the Instrument.

(3) The Instrument uses terminology that may be defined or referred to in Canadian GAAP. Some of these terms may be defined differently in securities legislation. National Instrument 14-101 Definitions provides that a term used in the Instrument and defined in the securities statute of a local jurisdiction has the meaning given to it in


October 16, 2009 (2009) 32 OSCB 8448

the statute unless the definition in that statute is restricted to a specific portion of the statute, or the context otherwise requires.

1.4 Plain Language Principles – The CSA believe that plain language will help investors understand an investment fund’s disclosure documents so that they can make informed investment decisions. You can achieve this by

using short sentences

using definite, everyday language

using the active voice

avoiding unnecessary words

organizing the document into clear, concise sections, paragraphs and sentences

avoiding jargon

using personal pronouns to speak directly to the reader

avoiding reliance on glossaries and defined terms unless it helps to understand the disclosure

using technical terms only where necessary and explaining those terms clearly

avoiding boilerplate wording

using concrete terms and examples

using charts and tables where it makes the disclosure easier to understand.

1.5 Signature and Certificates – The directors, trustee or manager of an investment fund are not required to file signed or certified continuous disclosure documents. They are responsible for the information in the investment fund’s disclosure documents whether or not a document is signed or certified, and it is an offence under securities legislation to make a false or misleading statement in any required document.

1.6 Filings on SEDAR – All documents required to be filed under the Instrument must be filed in accordance with National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR).

1.7 Corporate Law Requirements – Some investment funds may be subject to requirements of corporate law that address matters similar to those addressed by the Instrument, and which may impose additional or more onerous requirements. For example, applicable corporate law may require investment funds to deliver annual financial statements to securityholders. This Instrument cannot provide exemptions from these requirements.

PART 2 FINANCIAL STATEMENTS

2.1 Interrelationship of Financial Statements with Canadian GAAP

(1) [repealed]

(1.1) Subsection 2.6(2) of the Instrument, applicable to financial years beginning on or after January 1, 2011, refers to Canadian GAAP for publicly accountable enterprises, which is IFRS incorporated into the Handbook contained in Part I of the Handbook. Subsection 2.6(1) of the Instrument, applicable to financial years beginning before January 1, 2011, refers to Canadian GAAP applicable to public enterprises contained in Part IV of the Handbook.

(2) Canadian GAAP provides some general requirements for the preparation of financial statements that apply to investment fund financial statements. Canadian GAAP does not contain detailed requirements for thecontents of investment fund financial statements. The CSA believe that an investment fund’s financial statements must include certain information, at a minimum, in order to provide full disclosure. The Instrument sets out these minimum requirements. When preparing these documents, include any additional information necessary to ensure that all material information concerning the financial position and results of the investment fund is disclosed., but does not mandate all the required disclosure. Canadian GAAP applicable to


October 16, 2009 (2009) 32 OSCB 8449

publicly accountable enterprises also contains minimum requirements relating to the content of financial statements. An investment fund’s financial statements must meet these requirements as well.

(3) Handbook Section 1100 Generally Accepted Accounting Principles has changed the definition of what was considered to be Canadian GAAP. Prior to the introduction of Section 1100, the investment funds industry relied on paragraph 1000.60(a), which permitted accounting policies that “are generally accepted by virtue of their use in similar circumstances by a significant number of entities in Canada.” This is no longer the case as Section 1100 requires the application of all relevant primary sources of Canadian GAAP. Accounting Guideline 18 Investment Companies provides specific guidance on certain topics. When no relevant primary source of Canadian GAAP is available, professional judgement and the concepts described in Section 1000 should be used to set accounting policies consistent with Canadian GAAP.

In some cases, the Instrument prescribes line items that may already be required by Canadian GAAP, but these line items are expressed more specifically for the activities of an investment fund. For example, Canadian GAAP requires a “trade and other receivables” line item on the statement of financial position, but the Instrument requires accounts receivable to be broken down into more specific categories. In other instances, the line items prescribed in the Instrument are in addition to those in Canadian GAAP. Investment funds are responsible for disclosing all material information concerning their financial position and results in the financial statements.

(3) [repealed]

2.1.1 Classification of Securities Issued by an Investment Fund

(1) One goal of the Instrument is comparable financial statement presentation between investment funds. However, the adoption of IFRS results in certain changes to this presentation. For example, the presentation is impacted by the classification of an investment fund’s securities as either equity instruments or financial liabilities. Certain line items, such as “total equity or net assets attributable to securityholders”, acknowledge the difference between an equity and liability presentation, but maintain a comparable measurement between investment funds regardless of this classification.

(2) If an investment fund’s securities are classified as financial liabilities, IFRS requires financing costs to include the distributions made by the investment fund to those securityholders. However, if an investment fund’s securities are classified as equity instruments, distributions to holders of these securities are not included in financing costs (and are not recognized as an expense), creating a difference that reduces comparability. To address this, the Instrument requires distributions to be excluded from certain calculations, specifically: (i) increase or decrease in net assets attributable to securityholders from operations as disclosed in the statement of comprehensive income, and (ii) determination of total expenses for the management expense ratio (MER).

(3) For investment funds that classify their own securities as financial liabilities, “net assets attributable to securityholders” represents the equivalent of “total equity” for investment funds that classify their own securities as equity instruments. Net assets attributable to securityholders does not include amounts owed on securities issued by the investment fund that provide leverage to the fund.

2.2 Filing Deadline for Annual Financial Statements and Auditor’s Report – Section 2.2 of the Instrument sets out the filing deadline for annual financial statements. While section 2.2 of the Instrument does not address the auditor’s report date, investment funds are encouraged to file their annual financial statements as soon as possible after the date of the auditor’s report.

2.3 Timing and Content of Interim Financial Statements – Handbook Section 1751 Interim Financial Statementsrequires that interim financial statements include each of the headings and subtotals included in the most recent annual financial statements. In addition, the principles of paragraph 14 of Section 1751 should be applied to the requirements in section 3.6 of the Instrument regarding the notes to the financial statements.[repealed]

2.4 Length of Financial Year – For the purposes of the Instrument, unless otherwise expressly provided, references to a financial year apply regardless of the length of that year. The first financial year of an investment fund commences on the date of its incorporation or organization and ends at the close of that year.

2.5 Contents of Statement of OperationsComprehensive Income – The amount of fund expenses waived or paid by the manager or portfolio adviser of the investment fund disclosed in the statement of operationscomprehensive incomeexcludes amounts waived or paid due to an expense cap that would require securityholder approval to change.


October 16, 2009 (2009) 32 OSCB 8450

2.5.1 Disclosure of Investment Portfolio – If an investment fund invests substantially all of its assets directly, or indirectly through the use of derivatives, in securities of one other investment fund, the investment fund should provide in the statement of investment portfolio, or the notes to that statement, additional disclosure concerning the holdings of the other investment fund, as available, in order to assist investors in understanding the actual portfolio to which the investment fund is exposed. The CSA is of the view that such disclosure is consistent with the requirements in the Handbook relating to financial instrument disclosure.

2.6 Disclosure of Soft Dollars – The notes to the financial statements of an investment fund must contain disclosure of soft dollar amounts when such amounts are ascertainable. When calculating these amounts, investment funds should include the quantifiable value of goods and services, beyond the amount attributed to order execution, received directly from the dealer executing the fund’s portfolio transactions, or from a third party.

2.7 Accounting for Securities Lending Transactions

(1) Section 3.8 of the Instrument imposes certain reporting requirements on investment funds in connection with any securities lending transactions entered into by the investment fund. These requirements were included to ensure that all securities lending transactions are accounted for on the same basis.

The general accounting principle concerning whether a given transaction is a recordable transaction is based on determining whether risk and rewards have transferred in the transaction. The substance of a securities lending transaction is that the manager treats the original securities as if they had not been lent. The investment fund must be able to call the original securities back at any time, and the securities returned must be the same or substantially the same as the original securities. These conditions reduce the risk of the investment fund not being able to transact the original securities. The original securities remain on the books of the investment fund.

(2) The accounting treatment of the collateral in a securities lending transaction depends on the ability of the lender to control what happens with the collateral. If non-cash collateral is received by the investment fund, the collateral is not reflected on the statement of net assetsfinancial position of the investment fund if the non-cash collateral cannot be sold or repledged. If the investment fund lender receives cash collateral, the investment fund has the ability to either hold or reinvest the cash. The lender has effective control over the cash, even though it uses an agent to effect the reinvestment on its behalf. The cash collateral, subsequent reinvestment, and obligation to repay the collateral are recorded on the books of the investment fund.

2.8 Change in Year End

(1) The change in year end reporting requirements are adopted from National Instrument 51-102, with appropriate modifications to reflect that investment funds report on a six month interim period.

(2) The definition of “interim period” in the Instrument differs from the definition of this term in National Instrument 51-102. An investment fund cannot have more than one interim period in a transition year.

(3) InterimThe interim financial statementsreport for the new financial year will have comparatives from the corresponding months in the preceding year, whether or not they are from the transition year or from the old financial year, they were previously prepared or not, or they straddle a year-end.

(4) If an investment fund voluntarily reports on a quarterly basis, it should follow the requirements set out in National Instrument 51-102 for a change in year end, with appropriate modifications.

(5) Appendix A to this Policy outlines the financial statement filing requirements under section 2.9 of the Instrument for an investment fund that changes its year end.

2.9 [repealed]

2.10 Mutual Funds that are Non-Reporting Issuers – The requirement in subsection 2.11(c) to advise the applicable regulator or securities regulatory authority of a mutual fund’s reliance on the financial statement filing exemption provided in section 2.11 of the Instrument can be satisfied by a one-time notice.

PART 3 AUDITORS AND THEIR REPORTS

3.1 Acceptable Auditor – Securities legislation in most jurisdictions prohibits a regulator or securities regulatory authority from issuing a receipt for a prospectus if it appears that a person or company who has prepared any part of the


October 16, 2009 (2009) 32 OSCB 8451

prospectus, or is named as having prepared or certified a report used in connection with a prospectus, is not acceptable.

Investment funds that are reporting issuers, and their auditors, should refer to National Instrument 52-108 Auditor Oversight for requirements relating to auditor oversight by the Canadian Public Accountability Board.

3.2 Reservations in an Auditor’s ReportModification of Opinion

(1) The Instrument generally prohibits an auditor’s report from containing a reservation, qualificationmodificationof opinion, or other similar communication that would constitute a reservation under Canadian GAAS. A modification of opinion includes a qualification of opinion, an adverse opinion, and a disclaimer of opinion.

(2) Part 17 of the Instrument permits the regulator or securities regulatory authority to grant exemptive relief from the Instrument, including the requirement that an auditor’s report not contain a reservation, qualificationmodification of opinion or other similar communication that would constitute a reservationmodification of opinion under Canadian GAAS. However, we believe that such exemptive relief should not be granted if the reservation, qualificationmodification of opinion or other similar communication is

(a) due to a departure from accounting principles permitted by the Instrument, or

(b) due to a limitation in the scope of the auditor’s examination that

(i) results in the auditor being unable to form an opinion on the financial statements as a whole,

(ii) is imposed or could reasonably be eliminated by management, or

(iii) could reasonably be expected to be recurring.

3.3 Auditor’s Involvement with Management Reports of Fund Performance – Investment funds’ auditors are expected to comply with the Handbook Section 7500 Auditor Association with Annual Reports, Interim Reports and Other Public Documents, when preparingwith respect to their involvement with the annual and interim management reports of fund performance required by the Instrument as these reports contain financial information extracted from the financial statements.

3.4 Auditor Involvement with Interim Financial StatementsReports

(1) The board of directors of an investment fund that is a corporation or the trustees of an investment fund that is a trust, in discharging their responsibilities for ensuring reliable interim financial statementsreports, should consider engaging an external auditor to carry out a review of the interim financial statementsreports.

(2) Section 2.12 of the Instrument requires an investment fund to disclose if an auditor has not performed a review of the interim financial statementsreports, to disclose if an auditor was unable to complete a review and why, and to file a written report from the auditor if the auditor performed a review and expressed a reservation in the auditor’s interim review report. No positive statement is required when an auditor performed a review and provided an unqualified communication. If an auditor was engaged to perform a review on an interim financial statementsreport applying review standards set out in the Handbook, and the auditor was unable to complete the review, the investment fund’s disclosure of the reasons why the auditor was unable to complete the review should normally include a discussion of

(a) inadequate internal control,

(b) a limitation on the scope of the auditor’s work, or

(c) a failure of management to provide the auditor with written representations the auditor believes are necessary.

(3) The terms “review” and “written review report” used in section 2.12 of the Instrument refer to the auditor’s review of and report on an interim financial statementsreport using standards for a review of an interim financial statementsreport by the auditor as set out in the Handbook Section 7050 Auditor Review of Interim Financial Statements.


October 16, 2009 (2009) 32 OSCB 8452

(4) The Instrument does not specify the form of notice that should accompany an interim financial statementsreport that havehas not been reviewed by the auditor. The notice accompanies, but does not form part of, the interim financial statementsreport. We expect that the notice will normally be provided on a separate page appearing immediately before the interim financial statementsreport, in a manner similar to an audit report that accompanies annual financial statements.

PART 4 DELIVERY OF FINANCIAL STATEMENTS AND MANAGEMENT REPORTS OF FUND PERFORMANCE

4.1 Delivery Instructions

(1) The Instrument gives investment funds the following choices for the delivery of financial statements and management reports of fund performance:

(a) send these documents to all securityholders;

(b) obtain standing instructions from securityholders with respect to the documents they wish to receive; or

(c) obtain annual instructions from securityholders by sending them an annual request form they can use to indicate which documents they wish to receive.

The choices are intended to provide some flexibility concerning the delivery of continuous disclosure documents to securityholders. An investment fund can use any combination of the delivery options for its securityholders. However, the Instrument specifies that once an investment fund chooses option (b) for a securityholder, it cannot switch back to option (c) for that securityholder at a later date. The purpose of this requirement is to encourage investment funds to obtain standing instructions and to ensure that if a securityholder provides standing instructions, the investment fund will abide by those instructions unless the securityholder specifically changes them.

(2) When soliciting delivery instructions from a securityholder, an investment fund can deem no response from the securityholder to be a request by the securityholder to receive all, some or none of the documents listed in subsection 5.1(2) of the Instrument. When soliciting delivery instructions, an investment fund should make clear what the consequence of no response will be to its securityholders.

(3) Investment funds should solicit delivery instructions sufficiently ahead of time so that securityholders can receive the requested documents by the relevant filing deadline. Securityholders should also be given a reasonable amount of time to respond to a request for instructions. Investment funds should provide securityholders with complete contact information for the investment fund, including a toll-free telephone number or a number for collect calls.

(4) Investment funds under common management can solicit one set of delivery instructions from a securityholder that will apply to all of the funds in the same fund family that the securityholder owns. If a securityholder has given an investment fund standing delivery instructions and then later acquires the securities of another investment fund managed by the same manager, the newly acquired fund can rely on those standing instructions.

(5) The Instrument requires investment funds to deliver the quarterly portfolio disclosure and the proxy voting record to securityholders upon request, but does not require investment funds to solicit delivery instructions from securityholders with respect to this disclosure. Investment funds are obligated to state on the first page of their management reports of fund performance that this disclosure is available.

4.2 Communication with Beneficial Owners – Generally, investment funds must apply the procedures set out in National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer for the purposes of Part 5 of the Instrument, but an exemption from National Instrument 54-101 is available to investment funds that have beneficial owner information.

We recognize that different types of investment funds have different access to beneficial owner information (for example, mutual funds are more likely to have beneficial owner information than exchange-traded funds) and that the procedures in National Instrument 54-101 may not be efficient for every investment fund. We intend the provisions in Part 5 of the Instrument to provide investment funds with flexibility to communicate directly with the beneficial owners of their securities. If an investment fund has the necessary information to communicate directly with one or more beneficial owners of its securities, it can do so, even though it may need to rely on National Instrument 54-101 to communicate with other beneficial owners of its securities.


October 16, 2009 (2009) 32 OSCB 8453

4.3 Binding – For the purposes of delivery to a securityholder, the Instrument permits more than one management report of fund performance to be bound together if the securityholder owns all of the funds to which the management reports relate. There is no prohibition in the Instrument against binding the management report of fund performance with the financial statements for one investment fund for the purposes of delivering these documents to a securityholder who has requested them.

4.4 Electronic Delivery – Any documents required to be sent under the Instrument may be sent by electronic delivery, as long as such delivery is made in compliance with National Policy 11-201 Delivery of Documents by Electronic Meansand, in Quebec, Quebec Staff Notice The Delivery of Documents by Electronic Means. In particular, the annual reminder required by section 5.2 and the request form required by section 5.3 of the Instrument may be given in electronic form and may be combined with other notices. Request forms and notices may alternatively be sent with account statements or other materials sent to securityholders by an investment fund.

4.5 Website Disclosure – The Instrument does not specify the length of time that continuous disclosure documents must remain on an investment fund’s website. In the CSA’s view, the documents should stay on the website for a reasonable length of time, and at least until they are replaced by more current versions.

PART 5 INDEPENDENT VALUATIONS

5.1 Independent Valuations

(1) Part 8 of the Instrument is designed to address the concerns raised by labour sponsored or venture capital funds that disclosing a fair value for their venture investments may disadvantage the private companies in which they invest. Section 8.2 permits alternative disclosure by a labour sponsored or venture capital fund of its statement of investment portfolio. Labour sponsored or venture capital funds must disclose the individual securities in which they invest, but may aggregate all changes from costs of the venture investments, thereby only showing an aggregate adjustment from cost to fair value for these securities. This alternative disclosure is only permitted if the labour sponsored or venture capital fund has obtained an independent valuation in accordance with Part 8 of the Instrument.

(2) The CSA expect the independent valuator's report to provide either a number or a range of values which the independent valuator considers to be a fair and reasonable expression of the value of the venture investments or of the net asset value of the labour sponsored or venture capital fund. The independent valuation should include a critical review of the valuation methodology and an assessment of whether it was properly applied. A report on compliance with stated valuation policies and practices cannot take the place of an independent valuation.

The valuation report should disclose the scope of the review, including any limitations on the scope, and the implications of these limitations on the independent valuator’s conclusion.

(3) The independent valuator should refer to the reporting standards of the Canadian Institute of Chartered Business Valuators for guidance.

(4) A labour sponsored or venture capital fund obtaining an independent valuation should furnish the independent valuator with access to its manager, advisers and all material information in its possession relevant to the independent valuation.

5.2 Independent Valuators

(1) It is a question of fact as to whether a valuator is independent of the labour sponsored or venture capital fund. In determining the independence of the valuator, a number of factors may be relevant, including whether

(a) the valuator or an affiliated entity has a material financial interest in future business in respect of which an agreement, commitment or understanding exists involving the fund or a person or company listed in paragraph (2)(a); or

(b) the valuator or its affiliated entity is a lender of a material amount of indebtedness to any of the issuers of the fund’s illiquid investments.

(2) The CSA would generally consider a valuator not to be independent of a labour sponsored or venture capital fund where

(a) the valuator or an affiliated entity of the valuator is


October 16, 2009 (2009) 32 OSCB 8454

(i) the manager of the fund,

(ii) a portfolio adviser of the fund,

(iii) an insider of the fund,

(iv) an associate of the fund,

(v) an affiliated entity of the fund, or

(vi) an affiliated entity of any of the persons or companies named in this paragraph (a);

(b) the compensation of the valuator or an affiliated entity of the valuator depends in whole or in part upon an agreement, arrangement or understanding that gives the valuator, or its affiliated entity, a financial incentive in respect of the conclusions reached in the valuation; or

(c) the valuator or an affiliated entity of the valuator has a material investment in the labour sponsored or venture capital fund or in a portfolio asset of the fund.

PART 6 PROXY VOTING DISCLOSURE FOR PORTFOLIO SECURITIES HELD

6.1 Proxy Voting Disclosure

(1) An investment fund's manager, acting on the investment fund's behalf, has the right and obligation to vote proxies relating to the investment fund's portfolio securities. As a practical matter, the manager may delegate this function to the investment fund's portfolio adviser as part of the adviser's general management of investment fund assets. In either case, the manager or portfolio adviser voting proxies on behalf of an investment fund must do so in a manner consistent with the best interests of the fund and its securityholders.

(2) Because of the substantial institutional voting power held by investment funds, the increasing importance of the exercise of that power to securityholders, and the potential for conflicts of interest with respect to the exercise of proxy voting, we believe that investment funds should disclose their proxy voting policies and procedures, and should make their actual proxy voting records available to securityholders.

(3) The Instrument requires that the investment fund establish policies and procedures for determining whether, and how, to vote on any matter for which the investment fund receives proxy materials for a meeting of securityholders of an issuer. The CSA consider an investment fund to “receive” a document when it is delivered to any service provider or to the investment fund in respect of securities held beneficially by the investment fund. Proxy materials may be delivered to a manager, a portfolio adviser or sub-adviser, or a custodian. All of these deliveries are considered delivered “to” the investment fund.

(4) The Instrument requires an investment fund to maintain an annual proxy voting record as of June 30 and to post this to the fund’s website if it has one. However, investment funds may choose to disclose their proxy votes throughout the course of the year, and may also choose to disclose how they intend to vote prior to the shareholder meeting.

6.2 Proxy Voting Policies and Procedures

(1) Section 10.2 of the Instrument sets out, in general terms, what the securities regulatory authorities consider to be minimum policies and procedures for the proxy voting process. Investment funds are responsible for adopting any additional policies relevant to their particular situation. For example, investment funds should consider whether they require any specific policies dealing with shareholder meetings of issuers resident in other countries.

(2) An investment fund sometimes needs to vote securities held by it in order to protect its interests in connection with corporate transactions or developments relating to the issuers of its portfolio securities. The manager and portfolio adviser, or the agent of the investment fund administering a securities lending program on behalf of the investment fund, should monitor corporate developments relating to portfolio securities that are loaned by the investment fund in securities lending transactions, and take all necessary steps to ensure that the investment fund can exercise a right to vote the securities when necessary.


October 16, 2009 (2009) 32 OSCB 8455

PART 7 MATERIAL CHANGE

7.1 Material Changes – Determining whether a change is a material change will depend on the specific facts and circumstances surrounding the change. However, the CSA is of the view that

(a) the change of portfolio adviser of an investment fund will generally constitute a material change for the investment fund, and

(b) the departure of a high-profile individual from the employ of a portfolio adviser of an investment fund may constitute a material change for the investment fund, depending on how prominently the investment fund featured that individual in its marketing. An investment fund that emphasized the ability of a particular individual to encourage investors to purchase the fund could not later take the position that the departure of that individual was immaterial to investors and therefore not a material change.

7.2 Confidential Material Change Report – The CSA are of the view that in order for an investment fund to file a confidential material change report under Section 11.2 of the Instrument, the investment fund or its manager should advise insiders of the prohibition against trading during the filing period of a confidential material change report and must also take steps to monitor trading activity.

PART 8 INFORMATION CIRCULARS

8.1 Sending of Proxies and Information Circulars – Investment funds are reminded that National Instrument 54-101 prescribes certain procedures relating to the delivery of proxy-related materials sent to beneficial owners of securities.

PART 9 NET ASSET VALUE

9.1 Publication of Net Asset Value Per Security – An investment fund that arranges for the publication of its net asset value per security should calculate its net asset value per security and make the results of that calculation available to the financial press as quickly as is commercially practicable. An investment fund should attempt to meet the deadlines of the financial press for publication in order to ensure that its net asset values per security are publicly available as quickly as possible.

9.2 Fair value guidance – Section 14.2 of the Instrument requires an investment fund to calculate its net asset value based on the fair value of the investment fund’s assets and liabilities. While investment funds are required to comply with the definition of “fair value” in the Instrument when calculating net asset value, they may also look to the Handbook for guidance on the measurement of fair value. The fair value principles articulated in the Handbook can be applied by investment funds when valuing assets and liabilities.

9.3 Meaning of fair value – The Handbook definesdescribes fair value as being the amount of the consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to actmotivated by normal business considerations. Accordingly, fair value should not reflect the amount that would be received or paid in a forced transaction, involuntary liquidation or distress sale.

9.4 Determination of fair value

(1) A market is generally considered active when quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices reflect actual and regularly occurring market transactions on an arm’s length basis.

(2) A market is not considered to be active, and prices derived from it may be unreliable for valuation purposes, if, at the time the investment fund begins to calculate its net asset value, any of the following circumstances are present:

markets on which portfolio securities are principally traded closed several hours earlier (e.g. some foreign markets may close as much as 15 hours before the time the investment fund begins to calculate its net asset value)

trading is halted

events occur that unexpectedly close entire markets (e.g. natural disasters, power blackouts, public disturbances, or similar major events)

markets are closed due to scheduled holidays

the security is illiquid and trades infrequently.


October 16, 2009 (2009) 32 OSCB 8456

If an investment fund manager determines that an active market does not exist for a security, the manager should consider whether the last available quoted market price is representative of fair value. If a significant event (i.e. one that may impact the value of the portfolio security) has occurred between the time the last quoted market price was established and the time the investment fund begins to calculate its net asset value, the last quoted market price may not be representative of fair value.

(3) Whether a particular event is a significant event for a security depends on whether the event may affect the value of the security. Generally, significant events fall into one of three categories: (i) issuer specific events – e.g. the resignation of the CEO or an after-hours earnings announcement, (ii) market events – e.g. a natural disaster, a political event, or a significant governmental action like raising interest rates, and (iii) volatility events – e.g. a significant movement in North American equity markets that may directly impact the market prices of securities traded on overseas exchanges.

Whether a market movement is significant is a matter to be determined by the manager through the establishment of tolerance levels which it may choose to base on, for example, a specified intraday and/or interday percentage movement of a specific index, security or basket of securities. In all cases, the appropriate triggers should be determined based on the manager’s own due diligence and understanding of the correlations relevant to each investment fund’s portfolio.

9.5 Fair value techniques – The CSA do not endorse any particular fair value technique as we recognize that this is a constantly evolving process. However, whichever technique is used, it should be applied consistently for a portfolio security throughout the fund complex and reviewed for reasonableness on a regular basis.

9.6 Valuation policies and procedures – An investment fund’s valuation policy should be approved by the manager’s board of directors. The policies and procedures should describe the process for monitoring significant events or other situations that could call into question whether a quoted market price is representative of fair value. They should also describe the methods by which the manager will review and test valuations to evaluate the quality of the prices obtained as well as the general functioning of the valuation process. The manager should also consider whether its valuation process is a conflict of interest matter as defined in NI 81-107.

PART 10 CALCULATION OF MANAGEMENT EXPENSE RATIO

10.1 Calculation of Management Expense Ratio

(1) Part 15 of the Instrument sets out the method to be used by an investment fund to calculate its management expense ratio (MER). The requirements apply in all circumstances in which an investment fund calculates and discloses an MER. This includes disclosure in a sales communication, a prospectus, an annual information form, financial statements, a management report of fund performance or a report to securityholders.

(2) Paragraph 15.1(1)(a) requires the investment fund to use its "total expenses" (other than distributions if these are an expense for the investment fund) before income taxes for the relevant period as the basis for the calculation of MER. Total expenses, before income taxes, include interest charges and taxes, including sales taxes, GST and capital taxes payable by the investment fund. Canadian GAAP currently permits an investment fund to deduct withholding taxes from the income to which they apply. Accordingly, withholding taxes are not recorded as "total expenses" on the investment fund's income statement andWithholding taxesneed not be included in itsthe MER calculation.

The CSA is of the view that if an investment fund issues securities that provide leverage to the fund, amounts paid to holders of these securities are financing costs and should not be excluded from total expenses when calculating the MER of the investment fund’s residual securities. Securities that provide leverage generally include preferred shares.

Non-optional fees paid directly by investors in connection with the holding of an investment fund’s securities do not have to be included in the MER calculation, which differs from the previous requirement in NI 81-102.

(3) The CSA recognize that an investment fund may incur fees and charges that are not included in total expenses, but that reduce the net asset value and the amount of investable assets of the investment fund. Sales commissions paid by an investment fund in connection with the sale of the investment fund’s securities are an example of such fees and charges. We believe that these fees and charges should be reflected in the MER of the investment fund.


October 16, 2009 (2009) 32 OSCB 8457

(4) While brokerage commissions and other portfolio transaction costs are expenses of an investment fund for accounting purposes, they are not included in the MER. These costs are reflected in the trading expense ratio.

(5) In its management report of fund performance, an investment fund must disclose historical MERs for five years calculated in accordance with Part 15. If the investment fund has not calculated the historical MERs in the manner required by the Instrument, we are of the view that the change in the method of calculating the MER should be treated in a manner similar to a change in accounting policy under Handbook Section 1506International Accounting Standard 8 Accounting Policies, Changes in Accounting Estimates and Errors .Under Canadian GAAP, a change in accounting policy requires a retroactive restatementretrospective application of the financial informationchange for all periods shown. However, the Handbook acknowledges that there may be circumstances where the data needed to restate the financial information is not reasonably determinable.

If an investment fund retroactively restates its MER for any of the five years it is required to show, the investment fund should describe this restatement in the first document released and in the first management report of fund performance in which the restated MERs are reported.

If an investment fund does not restate its MER for prior periods because, based on specific facts and circumstances, the information required to do so is not reasonably determinable, the MER for all financial periods ending after the effective date of the Instrument must be calculated in accordance with Part 15. In this case, the investment fund must also disclose

(i) that the method of calculating MER has changed, specifying for which periods the MER has been calculated in accordance with the change;

(ii) that the investment fund has not restated the MER for specified prior periods;

(iii) the impact that the change would have had if the investment fund had restated the MER for the specified prior periods (for example, would the MER have increased or decreased and an estimate of the increase or decrease); and

(iv) a description of the main differences between an MER calculated in accordance with the Instrument and the previous calculations.

The disclosure outlined above should be provided for all periods presented until such time as all MERs presented are calculated in accordance with the Instrument.


October 16, 2009 (2009) 32 OSCB 8458

APPENDIX A EXAMPLES OF FILING REQUIREMENTS FOR CHANGES IN YEAR END

The following examples assume the old financial year ended on December 31, 20X0

Transition Year

Comparative Annual Financial Statements to Transition Year

New Financial Year

Comparative Annual Financial Statements to New Financial Year

InterimPeriods forTransition Year

Comparative InterimPeriods to Transition Year

InterimPeriods for New Financial Year

Comparative InterimPeriods to New Financial Year

Up to 3 months 3 months

ended 3/31/X1

12 months ended 12/31/X0

3/31/X2 3 months ended 3/31/X1 and 12 months ended 12/31/X0

Notapplicable

Notapplicable



4 to 6 months 6 months

ended 6/30/X1



Notapplicable

Notapplicable



7 or 8 months 8 months ended 8/31/X1



Notapplicable

Notapplicable



9 to 11 months 11 months ended 11/30/X1


11/30/X2 11 months ended 11/30/X1





11 to 15 months 15 months ended 3/31/X2


3/31/X3 15 months ended 3/31/X2






October 16, 2009 (2009) 32 OSCB 8459

APPENDIX B CONTACT ADDRESSES

Alberta Securities Commission 4th Floor 300 – 5th Avenue S.W. Calgary, Alberta T2P 3C4 Attention: Corporate Finance

British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, British Columbia V7Y 1L2 Attention: Financial Reporting

Manitoba Securities Commission 500 – 400 St. Mary Avenue Winnipeg, Manitoba R3C 4K5 Attention: Corporate Finance

New Brunswick Securities Commission 606 – 133 Prince William85 Charlotte Street, Suite 300Saint John, NB E2L 2B5J2Attention: Corporate Finance

Financial Services Regulation DivisionDepartment of Government ServicesNewfoundland and Labrador Securities CommissionP.O. Box 8700 2nd Floor, West BlockConfederation Building75 O’Leary AvenueSt. John’s, NFLDNLA1B 4J6 Attention: DirectorSuperintendent of Securities

Department of Justice, Northwest Territories Legal RegistriesSecurities OfficeP.O. Box 1320 1st Floor, 5009-49th Street Yellowknife, NWT X1A 2L9 Attention: Director, Legal RegistriesSuperintendent of Securities

Nova Scotia Securities Commission 2nd Floor, Joseph Howe Building 1690 Hollis Street Halifax, Nova Scotia B3J 3J9 Attention: Corporate Finance

Department of Justice, Nunavut Legal Registries Division P.O. Box 1000 – Station 570 1st Floor, Brown Building Iqaluit, NT X0A 0H0 Attention: Director, Legal Registries DivisionSuperintendent of Securities


October 16, 2009 (2009) 32 OSCB 8460

Ontario Securities Commission Suite 1903, Box 55 20 Queen Street West Toronto, ON M5H 3S8 Attention: Continuous Disclosure, Investment Funds

Registrar of Securities, Prince Edward Island P.O. Box 2000 95 Rochford Street, 5th Floor, Charlottetown, PEI C1A 7N8 Attention: Registrar of Securities

Autorité des marchés financiers 800 Square Victoria, 22nd Floor P.O. Box 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Attention: Direction des marchés des capitauxfonds d’investissement et de l’information continue

Saskatchewan Financial Services Commission – Securities Division 6th Floor, 1919 Saskatchewan Drive Regina, SK S4P 3V74H2Attention: Deputy Director, Corporate Finance

RegistrarSuperintendent of Securities, Government of Yukon Corporate Affairs J-9 P.O. Box 2703 Whitehorse, Yukon Y1A 5H3 Attention: RegistrarSuperintendent of Securities


October 16, 2009 (2009) 32 OSCB 8461

APPENDIX J

ADDITIONAL INFORMATION REQUIRED IN ONTARIO

This appendix contains 2 parts:

Part 1 provides notice of proposed amendments to a local rule and requests comments on these proposed amendments; and

Part 2 sets out the authority of the Ontario Securities Commission to make certain amendments to national instruments and the local rule.

PART I – ONTARIO SECURITIES COMMISSION NOTICE AND REQUEST FOR COMMENTS

Proposed Amendments to OSC Rule 81-801 Implementing National Instrument 81-106 Investment Fund Continuous Disclosure

Introduction and Background

The Canadian Securities Administrators (CSA), except the Autorité des marchés financiers and the New Brunswick Securities Commission, are proposing changes to National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) and Companion Policy 81-106CP Investment Fund Continuous Disclosure.

These proposed amendments (the CSA Amendments) are described in the CSA Notice to which this Ontario Securities Commission (OSC) notice is appended. In connection with the CSA Amendments, the OSC is proposing related amendments to OSC Rule 81-801 Implementing National Instrument 81-106 Investment Fund Continuous Disclosure (OSC Rule 81-801). The purpose of this notice is to supplement the CSA Notice and describe and request comment on the proposed amendments to OSC Rule 81-801.

Substance and Purpose of the Proposed Amendments to OSC Rule 81-801

OSC Rule 81-801 is a local Ontario rule implementing NI 81-106. The primary purpose of the proposed amendments to OSC Rule 81-801 is to reflect the proposed changes to NI 81-106 resulting from the transition by investment funds to International Financial Reporting Standards (IFRS) for financial years beginning on or after January 1, 2011. The proposed amendments to OSC Rule 81-801 will replace existing Canadian GAAP terms with IFRS terms and phrases. The proposed amendments to OSC Rule 81-801 will only apply to financial periods relating to financial periods beginning on or after January 1, 2011.

Text of Proposed Amendments to OSC Rule 81-801

The proposed amendments to OSC Rule 81-801 on which we are seeking comment are as follows:

Proposed Amendment Instrument for Ontario Securities Commission Rule 81-801 Implementing National Instrument 81-106 Investment Fund Continuous

Disclosure

Although this amendment instrument amends section headers in Ontario Securities Commission Rule 81-801, section headers do not form part of the rule and are inserted for ease of reference only.

1. Ontario Securities Commission Rule 81-801 Implementing National Instrument 81-106 Investment Fund Continuous Disclosure is amended by this instrument.

2. Section 3.2 is amended in the title by striking out “Interim Financial Statements – Content” and substituting“Interim Financial Reports – Content”.

3. Section 3.4 is amended in the title by striking out “Filing Interim Financial Statements – Exemption” andsubstituting “Filing Interim Financial Reports – Exemption”.

4. Paragraph 3.5(b) is amended by striking out “interim financial statements” and substituting “interim financial reports”.


October 16, 2009 (2009) 32 OSCB 8462

5. Section 4.1 is amended by renumbering it as subsection 4.1(1) and by adding the following after subsection (1):

(2) Despite subsection (1), the amendments to this Rule which came into force on January 1, 2011 only apply to financial periods relating to financial years beginning on or after January 1, 2011.

6. These amendments only apply to financial periods relating to financial years beginning on or after January 1, 2011.

7. This instrument comes into force on January 1, 2011.

Anticipated Costs and Benefits

The anticipated costs and benefits of adopting IFRS as the basis for financial reporting in Canada were included in the CSA Notice accompanying the proposed changes to National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (to be renamed Acceptable Accounting Principles and Auditing Standards) published for comment on September 25, 2009.


In proposing the amendments to OSC Rule 81-801, we have not relied on any significant unpublished study, report or other written materials.


We are publishing the proposed amendments to OSC Rule 81-801 for a 90 day comment period. Please provide your comments in writing by January 14, 2010. If you are not sending your comments by email, an electronic file containing the submissions should also be provided (Windows format, Word). Address your submission to:

John Stevenson, Secretary Ontario Securities Commission 20 Queen Street West 19th Floor, Box 55 Toronto, Ontario M5H 3S8 Fax: (416) 593-2318 e-mail: [email protected]

Comments received will be made publicly available and posted at www.osc.gov.on.ca. We cannot keep submissions confidential because securities legislation in Ontario requires that a summary of the written comments received during the comment period be published.

Questions


Vera Nunes Assistant Manager, Investment Funds Ontario Securities Commission 416-593-2311 [email protected]

Stacey Barker Senior Accountant, Investment Funds Ontario Securities Commission 416-593-2391 [email protected]

Viraf Nania Senior Accountant, Investment Funds Ontario Securities Commission 416-593-8267 [email protected]

October 16, 2009


October 16, 2009 (2009) 32 OSCB 8463

PART II – AUTHORITY FOR AMENDMENTS

In Ontario, the following provisions of the Securities Act (Ontario) (the Act) provide the OSC with the authority to make the CSA Amendments and the amendments to OSC Rule 81-801:

Paragraph 15 of subsection 143(1) of the Act which authorizes the OSC to make rules prescribing categories or subcategories of issuers for purposes of the prospectus requirements under the Act, the regulations and the rules and classifying issuers into categories or subcategories.

Paragraph 16 of subsection 143(1) of the Act which authorizes the OSC to make rules regulating in respect of, or varying the Act to facilitate, expedite or regulate in respect of, the distribution of securities or the issuing of receipts.

Paragraph 22 of subsection 143(1) of the Act which authorizes the OSC to prescribe requirements in respect of the preparation, dissemination and other use by reporting issuers of documents providing for continuous disclosure that are in addition to the requirements under the Act.

Paragraph 23 of subsection 143(1) of the Act which authorizes the OSC to exempt reporting issuers from any requirement of Part XVIII (Continuous Disclosure) of the Act.

Paragraph 24 of subsection 143(1) of the Act which authorizes the OSC to require issuers or other persons and companies to comply, in whole or in part, with Part XVIII (Continuous Disclosure), or rules made under paragraph 22 of subsection 143(1).

Paragraph 25 of subsection 143(1) of the Act which authorizes the OSC to prescribe requirements in respect of financial accounting, reporting and auditing for the purposes of the Act, the regulations and the rules.

Paragraph 31 of subsection 143(1) of the Act which authorizes the OSC to make rules regulating investment funds and the distribution and trading of the securities of investment funds, including varying Part XV (Prospectuses – Distribution) or Part XVIII (Continuous Disclosure) by prescribing additional disclosure requirements.

Paragraph 34 of subsection 143(1) of the Act which authorizes the OSC to make rules regulating commodity pools.

Paragraph 37 of subsection 143(1) of the Act which authorizes the OSC to make rules regulating labour sponsored investment fund corporations registered under Part III (Labour Sponsored Investment Fund Corporations) of the Community Small Business Investment Funds Act.

Paragraph 39 of subsection 143(1) of the Act which authorizes the OSC to make rules requiring or respecting the media, format, preparation, form, content, execution, certification, dissemination and other use, filing and review of all documents required under or governed by the Act, the regulations or the rules and all documents determined by the regulations or the rules to be ancillary to the documents.

Paragraph 39.1 of subsection 143(1) of the Act which authorizes the OSC to make rules governing the approval of any document described in paragraph 39 of subsection 143(1) of the Act.

Paragraph 44 of subsection 143(1) of the Act which authorizes the OSC to vary the Act to permit or require the use of an electronic or computer-based system for the filing, delivery or deposit of documents or information required under or governed by the Act, the regulations or rules and documents determined by the regulations or rules to be ancillary to documents required under or governed by the Act, the regulations or rules.

Paragraph 47 of subsection 143(1) of the Act which authorizes the OSC to regulate scholarship plans and the distribution and trading of the securities of scholarship plans.

Paragraph 49 of subsection 143(1) of the Act which authorizes the OSC to vary the Act to permit or require methods of filing or delivery, to or by the Commission, issuers, security holders or others, of documents, information, notices, books, records, things, orders, authorizations or other communications required under or governed by Ontario securities laws.


October 16, 2009 (2009) 32 OSCB 8464

6.2.1 CSA Notice and Request for Comment – Proposed Amendments to National Instrument 45-106 Prospectus and Registration Exemptions, Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers, Form 45-106F3 Offering Memorandum for Qualifying Issuers and Companion Policy 45-106CP Prospectus and Registration Exemptions

NOTICE AND REQUEST FOR COMMENT

PROPOSED AMENDMENTS TO NATIONAL INSTRUMENT 45-106 PROSPECTUS AND REGISTRATION EXEMPTIONS,

FORM 45-106F2 OFFERING MEMORANDUM FOR NON-QUALIFYING ISSUERS,FORM 45-106F3 OFFERING MEMORANDUM FOR QUALIFYING ISSUERS

AND COMPANION POLICY 45-106CP PROSPECTUS AND REGISTRATION EXEMPTIONS

Introduction

We, the Canadian Securities Administrators (CSA), except the Autorité des marchés financiers and the New Brunswick Securities Commission, are publishing for a 90 day comment period proposed amendments to:

National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106),

Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers and Form 45-106F3 Offering Memorandum for Qualifying Issuers (collectively, the OM Forms) and

Companion Policy 45-106CP Prospectus and Registration Exemptions (45-106CP).

This notice forms parts of a series of notices that address proposed changes to securities legislation arising from the upcomingchangeover to International Financial Reporting Standards (IFRS).

Proposed Text

Appendix A provides a summary of certain proposed amendments, including a list of the changes to accounting terms and phrases as well as a summary of the main transition changes related to IFRS. Other proposed amendments are described in this notice.

Appendix B sets out the proposed amendments to NI 45-106 and 45-106CP.

Appendix C sets out a blackline showing proposed changes to the OM Forms from the versions of those documents currently in force.

We invite comment on the proposed amendments to NI 45-106, the OM Forms and 45-106CP (proposed amendments). As the proposed amendments relate to the upcoming changeover to IFRS in Canada and need to be in place before January 1, 2011, we are not inviting comment on the provisions of the rules and policies that will not be affected by the changeover to IFRS.

Background

NI 45-106 provides certain exemptions from the prospectus and registration requirements of Canadian securities legislation. NI 45-106 and the OM Forms refer to and rely on references to Canadian generally accepted accounting principles (GAAP), which are established by the Canadian Accounting Standards Board (AcSB) and published in the CICA (Canadian Institute of Chartered Accountants) Handbook. Following a period of public consultation, the AcSB adopted a strategic plan to move financial reporting for Canadian publicly accountable enterprises to IFRS as issued by the International Accounting Standards Board (IASB). For financial years beginning on or after January 1, 2011, Canadian GAAP for publicly accountable enterprises will be IFRS incorporated into the CICA Handbook.

Substance and Purpose of the Proposed Amendments

The purpose of these changes is to accommodate the transition to IFRS. We are proposing to update the accounting terms and references in NI 45-106, the OM Forms and 45-106CP to reflect the fact that, for financial years beginning on or after January 1,2011, Canadian GAAP for publicly accountable enterprises will be IFRS incorporated into the CICA Handbook.


October 16, 2009 (2009) 32 OSCB 8465

Summary of the Proposed Amendments

The proposed amendments are a result of amendments to National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (to be renamed Acceptable Accounting Principles and Auditing Standards) (NI 52-107) proposed to require domestic issuers to comply with IFRS. NI 52-107 sets out the accounting principles and auditing standards that apply to financial statements filed in a jurisdiction. We have also proposed amendments similar to those being proposed to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and National Instrument 41-101 General Prospectus Requirements (NI 41-101) to maintain the harmony between the general prospectus requirements, the prospectus and registration exemptions and the continuous disclosure and short form prospectus disclosure regimes. We refer you to our notice and request for comment on the proposed amendments to NI 51-102 and the notice and request for comment on the proposed amendments to NI 41-101. Where appropriate, we have also included a number of amendments that result from changes to other CSA rules because of the changeover to IFRS.

As we discuss below, the proposed amendments primarily relate to changes to accounting terms used in the OM Forms. In addition to the changes that we propose to the OM Forms, we propose to add a definition of “financial statements” to NI 45-106 to clarify that financial statements include interim financial reports.

The proposed amendments we are publishing for comment will:

Replace Canadian GAAP terms and phrases with IFRS terms and phrases.

Change disclosure requirements in instances where IFRS contemplates different financial statements than existing Canadian GAAP.

Provide a 30 day extension to the deadline for reporting issuers to include in an offering memorandum the first interim financial report in the year of adopting IFRS in respect of an interim period beginning on or after January 1, 2011.

Clarify an existing provision or amend or delete it where part or all of the provision is no longer accurate or appropriate.

Accounting Terms and Phrases

The proposed amendments include new terms and phrases that are consistent with those used in IFRS and replace terms and phrases used in existing Canadian GAAP.

The proposed amendments do not reflect the impact of exposure drafts or discussion papers from the IASB prior to their adoption into IFRS. The proposed definition of IFRS in National Instrument 14-101 Definitions (NI 14-101) would take into account amendments made from time to time.

The proposed amendments are not intended to substantively alter securities law requirements. For example, we are proposing to replace the existing Canadian GAAP term “results of operations” with the corresponding IFRS term “financial performance”. This is intended to be a change in terminology only.

The proposed amendments also incorporate a number of new or revised definitions from NI 51-102. For example, we have incorporated a definition of “forward-looking information”. Currently, definitions of “forward-looking information” are found in the securities acts of the various provinces and territories. As all of the acts may not be amended prior to January 1, 2011 to reflectthe changeover to IFRS, we have defined forward-looking information in a manner consistent with IFRS.

A detailed list of the changes to accounting terms and phrases is set out in Appendix A to this notice.

Changes to Financial Statement Requirements in Form 45-106F2

1. Reconciliations and transition opening statement of financial position required by IFRS 1 – First-time adoption of International Financial Reporting Standards

IFRS 1 requires the preparation of an opening IFRS statement of financial position at the date of transition to IFRS along withvarious reconciliations relating to the date of transition. We are requiring the opening IFRS statement of financial position to be presented in an issuer’s first IFRS interim financial report and first IFRS financial statements. We believe this disclosure isnecessary to explain how the transition from previous GAAP to IFRS has affected an issuer’s reported financial position, financial performance and cash flows.

This disclosure may not be included in interim financial reports for the second and third quarters. However, an issuer may file an offering memorandum at a time when the second or third quarter interim financial report is required to be included in the offering memorandum. To obtain consistent disclosure in all offering memoranda in the year of adopting IFRS, we have added a


October 16, 2009 (2009) 32 OSCB 8466

disclosure requirement to include these reconciliations and the date of transition opening statement of financial position in anissuer’s offering memorandum.

2. Opening Statement of Financial Position

When an issuer applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements, IAS 1 Presentation of Financial Statement requires the disclosure of a statement of financial position as at the beginning of the earliest comparative period. Form 45-106F2 will require the disclosure of this opening statement of financial position in both annual financial statements and interim financial reports.

3. Presentation of Statement of Cash Flows

We have proposed amendments to reflect the financial statement presentation requirements in IFRS. Current Form 45-106F2 (and Canadian GAAP) requires issuers to present in their interim financial statements a cash flow statement for the three monthperiod ending on the last day of the interim period and the corresponding comparative interim period and, for periods other thanthe first interim period, the year to date period. As IFRS requires only a statement of cash flows for the year to date period and the corresponding comparative period, we have proposed amendments to reflect this.

4. Presentation of Statement of Comprehensive Income

We added disclosure requirements in Form 45-106F2 for the statement of comprehensive income based on the presentation options available under IFRS. If a reporting issuer presents the components of profit or loss in a separate income statement, theseparate income statement must be displayed immediately before the statement of comprehensive income.

Transition Provisions - Extension for Inclusion of First IFRS Interim Financial Report in Form 45-106F2

Part B, section 16 of Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers includes transition provisions that provide reporting issuers with a 30 day extension for including in the offering memorandum the first IFRS interim financial report filed with an offering memorandum dated before June 29, 2012. We believe this extension should be provided, as the first IFRS interim financial report will be due not long after the filing of the Canadian GAAP annual financial statements. We recognize that boards of directors, audit committees, and in some cases auditors, will require additional time to review and approve the first set of IFRS financial statements. Other jurisdictions that transitioned to IFRS also granted filing extensions for the first IFRS filing, even though they only require issuers to file on a half-yearly basis.

We have not provided reporting issuers with an extension to the deadline for including in an offering memorandum subsequent IFRS interim financial reports or the first annual financial statements prepared in accordance with IFRS as we believe the deadlines applicable to these financial statements are reasonable and appropriate after the initial changeover to IFRS.

The CSA regulators will generally not grant exemptive relief to an issuer to extend a deadline for including financial information in an offering memorandum. While we recognize that some issuers filing their offering memoranda may face difficulties in complying with the financial statement disclosure requirements as a result of the changeover to IFRS, we do not believe it is appropriate to grant exemptive relief to an issuer to allow it to proceed with an offering memorandum that does not include current financial information.

Amendments from NI 52-107

Proposed changes to other CSA rules, including NI 52-107 and NI 14-101, were published for comment on September 25, 2009.

In addition, NI 52-107 proposes, except in Ontario, that acquisition statements in respect of probable and completed acquisitions be permitted to be prepared in accordance with Canadian GAAP applicable to private enterprises in certain circumstances. Changes are being made to Part 8 of NI 51-102 and 51-102CP to address this proposal. As a result, this option would be available to an offering memorandum filer in respect of financial statements included in the issuer’s offering memorandum for probable and completed acquisitions. These proposed changes will apply to offering memoranda which include acquisition statements for any period relating to a financial year that begins on or after January 1, 2011.

Even though the proposed amendments replace existing Canadian GAAP terms and phrases with IFRS terms and phrases, the proposed amendments include references to “Canadian GAAP”. This is because NI 14-101 will continue to define “Canadian GAAP” to mean generally accepted accounting principles determined with reference to the CICA Handbook. Once the AcSB incorporates IFRS into the Handbook, the Handbook will contain two versions of Canadian GAAP for publicly accountable enterprises:

IFRS for financial years beginning on or after January 1, 2011 (the mandatory effective date) (proposed Part 1 of the Handbook), and


October 16, 2009 (2009) 32 OSCB 8467

the standards constituting Canadian GAAP before the mandatory effective date (proposed Part IV of the Handbook).

Certain offering memorandum filings require the presentation of both annual and interim financial information. During the IFRS transition period, we recognize that offering memoranda may contain financial information in respect of an issuer prepared usingboth existing Canadian GAAP and IFRS. For example, an offering memorandum filed in 2011 may include annual financial statements prepared in accordance with Canadian GAAP and an interim financial report that complies with IFRS.

Additional Amendments

The CSA’s mandate in bringing forth the proposed amendments is to revise NI 45-106, the OM Forms and 45-106CP to accommodate the adoption of IFRS. Where appropriate, we have also proposed certain grammatical changes to NI 45-106.

Transition

After the IFRS changeover date on January 1, 2011, non calendar year-end issuers will continue to prepare financial statements in accordance with existing Canadian GAAP until the start of their new financial year. To accommodate for this, we are proposing to include transition provisions that provide that the proposed amendments only apply to an offering memorandum of an issuer which includes or incorporates by reference financial statements of the issuer in respect of periods relating to financial years beginning on or after January 1, 2011. Thus, during the transition period,

issuers only including or incorporating by reference financial statements in an offering memorandum that are prepared in accordance with existing Canadian GAAP will be required to comply with the versions of NI 45-106 and the OM Forms that contain existing Canadian GAAP terms and phrases.

issuers including or incorporating by reference financial statements in an offering memorandum that comply with IFRS will be required to comply with the versions of NI 45-106 and the OM Forms that contain IFRS terms and phrases.

After the transition period all issuers will be required to comply with the versions NI 45-106 and the OM Forms that contain IFRSterms and phrases.

To further assist issuers and their advisors and to increase transparency, during the transition period certain jurisdictions willpost two different unofficial consolidations of NI 45-106, the OM Forms and 45-106CP on their websites:

The existing versions of NI 45-106, the OM Forms and 45-106CP that contain existing Canadian GAAP terms and phrases, which apply to an offering memorandum of an issuer which includes or incorporates by reference financial statements of the issuer in respect of periods relating to financial years beginning before January 1, 2011.

The new versions of NI 45-106, the OM Forms and 45-106CP that contain IFRS terms and phrases, which apply to an offering memorandum of an issuer which includes or incorporates by reference financial statements of the issuer in respect of periods relating to financial years beginning on or after January 1, 2011.

Alternatives Considered

Instead of proposing these amendments, we considered leaving the existing Canadian GAAP terms and references in NI 45-106 and issuing a notice to the effect that, if an issuer is required or permitted under NI 52-107 to include financial statements that comply with IFRS, then the issuer may interpret any reference in the rules to a term or provision defined, or referred to, in existing Canadian GAAP as a reference to the corresponding term or provision in IFRS.

We decided not to proceed with this option for several reasons. Leaving the existing Canadian GAAP terms and phrases in the rules raises the potential for significant confusion as these terms will become less well known as time passes. In addition, theuse of different terminology in securities legislation and accounting rules detracts from the goal of moving to a global accountinglanguage.

Impact on Investors

The proposed amendments will benefit investors in several respects:

By replacing existing Canadian GAAP terms and phrases with IFRS terms and phrases, we expect that a more consistent interpretation will be given to the prospectus and registration exemptions rule than would be the case if the proposed amendments were not implemented. More consistent disclosure practices should increase transparency to the market and thereby benefit investors.

IFRS 1 requires issuers to prepare an opening IFRS statement of financial position at the date of transition to IFRS along with various reconciliations relating to the date of transition. As we believe investors need this information to


October 16, 2009 (2009) 32 OSCB 8468

understand how the transition from previous GAAP to IFRS affected the issuer’s reported financial position, financial performance and cash flows, we will require that this disclosure be included by all reporting issuers in their first IFRS interim financial report and first IFRS financial statements and all non-reporting issuers in their first, second and third IFRS interim financial reports and first IFRS financial statements.

In certain instances, where an issuer applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements, IFRS requires the presentation of an opening statement of financial position. As we believe investors need this information to understand how the change affected the issuer’s reported financial position, financial performance and cash flows, the OM Forms will require the presentation of this opening statement of financial position in both annual financial statements and interim financial reports.

As a consequence of providing a 30 day extension to the disclosure deadline for the first IFRS interim financial report in respect of an interim period beginning on or after January 1, 2011, the financial disclosure in an offering memorandum filed during such period may be less current. However, we expect that by providing issuers with the additional time to review and approve their first IFRS financial report the quality of this disclosure will improve.

Anticipated Costs and Benefits

A description of the anticipated costs and benefits of adopting IFRS as the basis for financial reporting in Canada is included in the notice accompanying the proposed changes to NI 52-107 (the NI 52-107 notice).

NI 45-106, the OM Forms and 45-106CP refer to and rely on references to Canadian GAAP. For financial years beginning on or after January 1, 2011, Canadian GAAP for publicly accountable enterprises will be IFRS incorporated into the CICA Handbook. As a result, the proposed amendments are necessary to adapt our rules to the new IFRS environment.

Although there are costs contemplated under the NI 52-107 notice relating to the transition to IFRS, the preparation of all offering memoranda filings using the same terminology as used in the financial statements provides more meaningful information to investors. Issuers and their advisors will benefit by having exemptions rules that refer to current accounting terms.


In proposing the proposed amendments, we have not relied on any significant unpublished study, report, or other written materials.

Local Notices and Amendments

Certain jurisdictions will publish other information required by local securities legislation in Appendix D to this notice.

Publications in Quebec and New Brunswick

The Autorité des marchés financiers and the New Brunswick Securities Commission are publishing for comment today a staff notice that sets out the substantive proposed changes reflected in the proposed amendments published in the other CSA jurisdictions. Because of the legal obligation to publish amending instruments simultaneously in French and English in Québec and New Brunswick, and because the French IFRS terminology is still in a state of flux, publication for comment of proposed amendments in these provinces is presently not feasible. It is expected that the Autorité des marchés financiers and the New Brunswick Securities Commission will publish for comment corresponding proposed amendments, in French and in English, during the first quarter of 2010. However, market participants in Québec and New Brunswick are encouraged to comment on the substantive proposed changes presented in the staff notices and on the amendments published by the other CSA jurisdictions.

Comments

We request your comments on the proposed amendments outlined above. Please provide your comments in writing by January 18, 2010. If you are not sending your comments by email, an electronic file containing the submissions should also be provided (Windows format, Word).

Address your submission to the following Canadian securities regulatory authorities:

British Columbia Securities Commission Alberta Securities Commission Saskatchewan Financial Services Commission Manitoba Securities Commission


October 16, 2009 (2009) 32 OSCB 8469

Ontario Securities Commission Superintendent of Securities, Prince Edward Island Nova Scotia Securities Commission Securities Commission of Newfoundland and Labrador Superintendent of Securities, Yukon Territory Superintendent of Securities, Northwest Territories Superintendent of Securities, Nunavut

Deliver your comments only to the address that follows. Your comments will be distributed to the other participating CSA member jurisdictions.

Gordon Smith Senior Legal Counsel, Corporate Finance British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, BC, V7Y 1L2 Fax: (604) 899-6814 Email: [email protected]

Please note that comments received will be made publicly available and posted at www.osc.gov.on.ca and the websites of certain other securities regulatory authorities. We cannot keep submissions confidential because securities legislation in certain provinces requires that a summary of the written comments received during the comment period be published.

Questions


Gordon Smith Senior Legal Counsel, Corporate Finance British Columbia Securities Commission (604) 899-6656 Toll free: 800 373-6393 (toll free across Canada) [email protected]

Anita Cyr Senior Securities Analyst, Corporate Finance British Columbia Securities Commission (604) 899-6579 Toll free: 800 373-6393 (toll free across Canada) [email protected]

Taryn Montgomery Legal Counsel Alberta Securities Commission(403) 297-4968 [email protected]

Tracy Clark Legal Counsel Alberta Securities Commission(403) 355-4424 [email protected]

Dean Murrison Deputy Director, Legal/Registration Securities Division Saskatchewan Financial Services Commission (306) 787-5879 [email protected]


October 16, 2009 (2009) 32 OSCB 8470

Chris Besko Legal Counsel - Deputy Director The Manitoba Securities Commission (204) 945-2561 [email protected]

Jo-Anne Matear Assistant Manager, Corporate Finance Branch Ontario Securities Commission(416) 593-2323 [email protected]

Jason Koskela Legal Counsel, Corporate Finance Ontario Securities Commission(416) 595-8922 [email protected]

Shirley Lee Director, Policy and Market Regulation Nova Scotia Securities Commission (902) 424-5441 [email protected]

Steve Dowling Superintendent of Securities Prince Edward Island (902) 368-4552 [email protected]

Don Boyles Program & Policy Development Securities Commission of Newfoundland and Labrador Government of Newfoundland & Labrador (709) 729-4501 [email protected]

Louis Arki, Director, Legal Registries Department of Justice, Government of Nunavut (867) 975-6587 [email protected]

Donn MacDougall Deputy Superintendent, Legal & Enforcement Office of the Superintendent of Securities Government of the Northwest Territories PO Box 1320 Yellowknife, NT X1A 2L9 Tel: (867) 920-8984 Fax: (867) 873-0243 E-mail: [email protected]

Frederik J. Pretorius Manager Corporate Affairs (C-6) Dept of Community Services Government of Yukon (867) 667-5225 [email protected]

October 16, 2009


October 16, 2009 (2009) 32 OSCB 8471

Appendix A

Summary of Changes to Accounting Terms and Phrases and Other Changes for

National Instrument 45-106 Prospectus and Registration Exemptions and Companion Policy

A. TERMINOLOGY CHANGES

Accounting Terms or Phrases

We replaced the following terms and phrases used in the prospectus and registration exemption rule with comparable IFRS terms or phrases.

Original Term or Phrase IFRS Term or Phrase balance sheet statement of financial position cash flow statement statement of cash flows date of acquisition acquisition date earnings profit or loss (as appropriate) income statement statement of comprehensive income interim financial statements interim financial report sales/operating revenues revenue (as appropriate) statement of retained earnings statement of changes in equity

Amendments to Definitions

Defined Term Amendment to Definition date of transition to IFRS

As a definition of “date of transition to IFRS” was added to NI 51-102, a reference to the definition was added to Form 45-106F2.

financial statements We added a definition of “financial statements” to NI 45-106 to clarify that financial statements includes interim financial reports.

first IFRS financial statements

As a definition of “first IFRS financial statements” was added to NI 51-102, a reference to the definition was added to Form 45-106F2.

forward-looking information

As a definition of “forward-looking information” was added to NI 51-102, a reference to the definition was added to Form 45-106F2.

operating income As a definition of “operating income” was added to NI 51-102, a reference to the definition was added to Form 45-106F2.

Other Changes to Accounting Terms or Phrases

Term Explanation of Change business acquisitions Section C.2(b) in Form 45-106F2 was revised to refer to NI 51-102 for changes to how

the investment test is performed as a result of the transition to IFRS.

debt We clarified that the reference to “debt” in Form 45-106F2 should have the legal meaning by revising the term to “debt securities”.

financial information related to an investment accounted for using the equity method

We revised the language describing the disclosure requirements for summarized financial information for an investment that will be accounted for using the equity method to be consistent with IFRS terminology. Refer to Form 45-106F2, sections B.1 and D.3

comparative financial information exemption

Language was added to Form 45-106F2 to clarify that an issuer cannot rely on the exemption from comparative financial information if the issuer previously prepared financial statements in accordance with a prior GAAP. Refer to section B.8 Financial Statements – General in Form 45-106F2.


October 16, 2009 (2009) 32 OSCB 8472

Term Explanation of Change net income As the offering memorandum purchaser could be an individual or a company, the term

“profit” was added to section 3.8 of 45-106CP to be consistent with IFRS terminology.

Section 1701 of the CICA Handbook

We removed subsection 4(c) of Part D because this condition is not necessary in order for the alternative oil and gas disclosure to be appropriate business acquisition disclosure. As a result, there is no longer a reference in subsection 4(c) of Part D to section 1701 of the CICA Handbook.

B. TRANSITION CHANGES

Item Explanation of Change Reference IAS 1 opening statement of financial position

In certain instances, where an issuer applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements, IAS 1 Presentation of Financial Statements requires the presentation of an opening statement of financial position. Form 45-106F2 will require the disclosure of this opening statement of financial position in both annual financial statements and interim financial reports.

Form 45-106F2, Part B, paragraph 4(c) Annual Financial Statements

Form 45-106F2, Part B, paragraph 5(d) Interim Financial Reports

IFRS 1 opening statement of financial position

IFRS 1 requires the preparation of an opening statement of financial position at the date of transition to IFRS. We are requiring the IFRS 1 opening statement of financial position to be presented in an issuer’s first IFRS interim financial report and first IFRS annual financial statements. This opening statement of financial position is the starting point for an issuer’s accounting under IFRS and provides meaningful information to investors.

Form 45-106F2, Part B, paragraph 4(d) Annual Financial Statements

Form 45-106F2, Part B, paragraph 5(e) Interim Financial Reports

IFRS 1 reconciliations IFRS 1 requires interim and annual reconciliations to be included in an issuer’s first IFRS interim financial report and first IFRS annual financial statements. IFRS 1 only requires interim reconciliations for subsequent quarters in the first year of IFRS adoption. The annual IFRS reconciliations are key to describing the impact of the IFRS transition to investors.

Since an issuer may file an offering memorandum at a time when the second or third quarter interim financial report is required to be included in the offering memorandum, and the first quarter interim financial report is no longer required to be included in the offering memorandum, we have added a disclosure requirement to include these reconciliations and the IFRS 1 opening statement of financial position in an issuer’s offering memorandum.

Form 45-106F2, Part B, paragraph 5(f)

presentation of statement of cash flows

Currently, Form 45-106F2 and existing Canadian GAAP require issuers to present an interim cash flow statement for the current interim period and the year-to-date interim period (e.g., 3 months ending June 30 and 6 months ending June 30).

IFRS only requires the presentation of a statement of cash flows for the year-to-date interim period (e.g., 6 months ending June 30). We have revised Form 45-106F2 to eliminate the requirement to include in an offering memorandum, a statement of cash flows for the most recent interim period (i.e., 3 months ending June 30) because it is not required in IFRS.

Form 45-106F2, Part B, paragraph 5(a) Interim Financial Reports

Form 45-106F2, Part C, paragraph 4(b)(ii) Interim Financial Reports


October 16, 2009 (2009) 32 OSCB 8473

Item Explanation of Change Reference presentation of statement of comprehensive income

We added disclosure requirements for the statement of comprehensive income based on the presentation options available under IFRS. If an issuer presents the components of profit or loss in a separate income statement, the separate income statement must be displayed immediately before the statement of comprehensive income.

Form 45-106F2, Part B, section 4.1 Annual Financial Statements

Form 45-106F2, Part B, section 5.1 Interim financial report

extension for first IFRS interim financial report

Paragraph B.16 of Form 45-106F2 includes transition provisions that provide reporting issuers with a 30 day extension to the deadline for including in an offering memorandum the first IFRS interim financial report in respect of an interim period beginning on or after January 1, 2011. This extension applies only to reporting issuers.

We believe this extension should be provided as the first IFRS interim financial report will be due not long after Canadian GAAP annual financial statements are required to be included in the offering memorandum. We recognize that boards of directors, audit committees, and auditors, will require additional time to review and approve the first set of IFRS financial statements. It should also be noted that other jurisdictions which transitioned to IFRS also granted filing extensions for the first IFRS filing, even though they only require issuers to file on a half-yearly basis.

We have not provided reporting issuers with an extension to the deadline for including in a offering memorandum, subsequent IFRS interim financial reports or the first IFRS annual financial statements as we believe the filing deadlines applicable to financial statements are reasonable and appropriate after the initial changeover to IFRS.

Form 45-106F2, section B.16


October 16, 2009 (2009) 32 OSCB 8474

Appendix B

Schedule B-1 Proposed Amending Instrument for National Instrument 45-106 Prospectus and Registration Exemptions,Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers, and Form 45-106F3 Offering Memorandum for

Qualifying Issuers

1. National Instrument 45-106 Prospectus and Registration Exemptions, Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers, and Form 45-106F3 Offering Memorandum for Qualifying Issuers are amended by this Instrument.

2. National Instrument 45-106 Prospectus and Registration Exemptions is amended

(a) in section 1.1 by adding the following before “founder”:

“financial statements” includes interim financial reports;,

(b) in subparagraph 5.2(e)(i)(C) by striking out “statements” and substituting “reports”,

(c) in subsection 6.2(1) by striking out “section 6.1(a)” and substituting “section 6.1(1)(a)”, and

(d) in subsection 6.5(1) by striking out “subsection 2.9(12) or subsection 3.9(12) and substituting “subsection 2.9(15)”.

3. Item 4.2 of Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers is amended

(a) by striking out the heading “4.2 Long Term Debt” and substituting “4.2 Long Term Debt Securities”, and

(b) by striking out “the current portion of the long-term debt” and substituting “the portion of the debt”.

4. Item 8(b) of Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers is amended by striking out “sales” and substituting “revenue”.

5. Part B Financial Statements – General of the Instructions for Completing Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers is amended

(a) in section 1 by adding “aggregated amounts of” before “assets”, by adding “, revenues and profit or loss” after “liabilities”, by striking out “and results of operations”, by striking out “Acceptable Accounting Principles, Auditing Standards and Reporting Currency” and substituting “Acceptable Accounting Principles and Auditing Standards”, and by striking out “Under NI 52-107, a non-qualifying issuer that uses Canadian GAAP cannot use differential reporting as set out in the Handbook.” and substituting “Under NI 52-107, financial statements are required to be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises. NI 52-107 does provide exemptions from this general requirement for foreign issuers or SEC issuers (as defined in NI 52-107). An issuer using this form cannot use Canadian GAAP applicable to private enterprises, except for financial statements for a business referred to in C.1.”,

(b) in paragraph 3(a) by striking out “an income statement” and substituting “a statement of comprehensive income”, by striking out “statement of retained earnings” and substituting “statement of changes in equity”, and by striking out “cash flow statement” and substituting “statement of cash flows”,

(c) in paragraph 3(b) by striking out “balance sheet” and substituting “statement of financial position”,

(d) in paragraph 4(a) by striking out “an income statement” and substituting “a statement of comprehensive income”, by striking out “statement of retained earnings” and substituting “statement of changes in equity”, and by striking out “cash flow statement” and substituting “statement of cash flows”,

(e) in paragraph 4(b) by striking out “balance sheet” and substituting “statement of financial position” and by striking out “and”,


October 16, 2009 (2009) 32 OSCB 8475

(f) in paragraph 4(c) by striking out “(c) notes to the financial statements.” and substituting:

(c) a statement of financial position as at the beginning of the earliest comparative period for which financial statements that are included in the offering memorandum comply with IFRS in the case of an issuer that

(i) discloses in its annual financial statements an explicit and unreserved statement of compliance with IFRS, and

(ii) does any of the following

(A) applies an accounting policy retrospectively in its annual financial statements,

(B) makes a retrospective restatement of items in its annual financial statements, or

(C) reclassifies items in its annual financial statements,

(d) in the case of an issuer’s first IFRS financial statements (as defined in NI 51-102), the opening IFRS statement of financial position at the date of transition to IFRS (as defined in NI 51-102), and

(e) notes to the financial statements.

4.1 If an issuer presents the components of profit or loss in a separate income statement, the separate income statement must be displayed immediately before the statement of comprehensive income filed under Item 4 above.

(g) in section 5 by striking out “interim financial statements” and substituting “an interim financial report”,

(h) in paragraphs 5(a) and 5(b) by striking out “an income statement” and substituting “a statement of comprehensive income”, by striking out “statement of retained earnings” and substituting “statement of changes in equity”, and by striking out “cash flow statement” and substituting “statement of cash flows”,

(i) in paragraph 5(c) by striking out “balance sheet” and substituting “statement of financial position”, and by striking out “the periods required by paragraphs (a) and (b)” , and substituting “the period required by paragraph (a) and the end of the immediately preceding financial year”,

(j) by adding the following after paragraph 5(c):

(d) a statement of financial position as at the beginning of the earliest comparative period for which financial statements that are included in the offering memorandum comply with IFRS in the case of an issuer that

(i) discloses in its interim financial report compliance with International Accounting Standard 34 Interim Financial Reporting, and


(A) applies an accounting policy retrospectively in its interim financial report,

(B) makes a retrospective restatement of items in its interim financial report, or

(C) reclassifies items in its interim financial report,


October 16, 2009 (2009) 32 OSCB 8476

(e) in the case of the first interim financial report in the year of adopting IFRS, the opening IFRS statement of financial position at the date of transition to IFRS, and

(f) for an issuer that is not a reporting issuer in at least one jurisdiction immediately before filing the offering memorandum, if the issuer is including an interim financial report of the issuer for the second or third interim period in the year of adopting IFRS include:

(i) the issuer’s first interim financial report in the year of adopting IFRS, or

(ii) both

(A) the opening IFRS statement of financial position at the date of transition to IFRS, and

(B) the annual and date of transition to IFRS reconciliations required by IFRS 1 First-time Adoption of International Financial Reporting Standards to explain how the transition from previous GAAP to IFRS affected the issuer’s reported financial position, financial performance and cash flows, and

(g) notes to the financial statements.

5.1 If an issuer presents the components of profit or loss in a separate income statement, the separate income statement must be displayed immediately before the statement of comprehensive income filed under item 5 above.

(k) by adding the following as the last sentence in section 8:

An issuer cannot rely on this exemption if the issuer previously prepared financial statements in accordance with a prior GAAP.

(l) in section 13 by striking out “statements” and substituting “reports”,

(m) in section 14 by adding “, as defined in NI 51-102,” after “Forward looking information”, and

(n) by adding the following after section 15:

16. Despite section B.5, an issuer may include a comparative interim financial report of the issuer for the most recent interim period, if any, ended:

(a) subsequent to the most recent financial year in respect of which annual financial statements of the issuer are included in the offering memorandum, and

(b) more than 90 days before the date of the offering memorandum.

This section does not apply unless:

(a) the comparative interim financial report is the first interim financial report required to be filed in the year of adopting IFRS,

(b) the issuer is a reporting issuer in any jurisdiction immediately before the date of the offering memorandum, and

(c) the offering memorandum is dated before June 29, 2012.

6. Part C Financial Statements – Business Acquisitions of the Instructions for Completing Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers is amended

(a) in paragraph 2(a), 2(b), and section 2.1 by striking out “date of acquisition” and substituting “acquisition date”,


October 16, 2009 (2009) 32 OSCB 8477

(b) in paragraph 2(b) by adding the following after “offering memorandum for a proposed acquisition.”:

For information about how to perform the investment test identified in this section 2(b), please refer to subsections 8.3(4.1) and (4.2) of NI 51-102 and subsections 8.2(3.1) and (4) of NI 51-102CP Continuous Disclosure Obligations.,

(c) in subparagraph 4(a)(i) by striking out “an income statement” and substituting “a statement of comprehensive income”, by striking out “statement of retained earnings” and substituting “statement of changes in equity”, and by striking out “cash flow statement” and substituting “statement of cash flows”,

(d) in subparagraph 4(a)(i)(B) by striking out “date of acquisition” and substituting “acquisition date”,

(e) in subparagraph 4(a)(ii) by striking out “balance sheet” and substituting “statement of financial position”,

(f) in subparagraph 4(b)(i)(A) by striking out “an income statement” and substituting “a statement of comprehensive income”, by striking out “statement of retained earnings” and substituting “statement of changes in equity”, and by striking out “cash flow statement” and substituting “statement of cash flows”,

(g) in subparagraph 4(b)(i)(A)(i) by striking out “date of acquisition” and substituting “acquisition date”,

(h) in subparagraph 4(b)(i)(B) by striking out “balance sheet” and substituting “statement of financial position”,

(i) by repealing subparagraph 4(b)(ii) and substituting the following:

(ii) an interim financial report comprised of:

A) the following financial information:

(i) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the most recently completed year-to-date interim period ending on the last date of the interim period that ended before the acquisition date and more than 60 days before the date of the offering memorandum and ended after the date of the financial statements required under C.4(b)(i)(A)i, and a statement of comprehensive income and a statement of changes in equity for the three month period ending on the last date of the interim period that ended before the acquisition date and more than 60 days before the date of the offering memorandum and ended after the date of the financial statements required under C.4(b)(i)(A)i, or

(ii) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the period from the first day after the financial year referred to in C.4(b)(i) to a date before the acquisition date and after the period end in C.4(b)(ii)(A)i, and

B) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the corresponding period in the immediately preceding financial year, if any,

C) a statement of financial position as at the end of the period required by subparagraph (A) and the end of the immediately preceding financial year, and

D) notes to the financial statements.

Refer to Instruction B.7 for the meaning of “interim period”.

(j) in section 6 by striking out “date of acquisition” and substituting “acquisition date”, and


October 16, 2009 (2009) 32 OSCB 8478

(k) in section 8 by striking out “accounted for as” and by striking out “, as that term is defined in the CICA Handbook,”.

7. Part D Financial Statement – Exemptions of the Instructions for Completing Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers is amended

(a) in paragraph 2 by striking out “section 3.2(a)” and substituting “section 3.3(1)(a)(i)”,

(b) in paragraph 2(a) and 2(b) by striking out “balance sheet” and substituting “statement of financial position”,

(c) in subparagraph 3(a)(i)) by adding “aggregated amounts of” before “assets”, by adding “, revenue and profit or loss” after “liabilities”, and by striking out “and results of operations”,

(d) in subparagraph 3(a)(ii)) by striking out “earnings” and substituting “profit or loss”,

(e) in subparagraph 3(c)(ii) by striking out the following:

If the financial information included in an offering memorandum under D.3(a) has been derived from financial statements of a business incorporated or organized in a foreign jurisdiction that have been prepared in accordance with foreign GAAP, the information must be accompanied by a note that explains and quantifies the effect of material differences between Canadian GAAP and the foreign GAAP.

(f) in paragraph 4(b) by striking out “accounted for as” , by striking out ““reverse take-over”” and substituting “reverse take-over”, and by adding “and” after “NI 51-102,”,

(g) by repealing paragraph 4(c),

(h) by adding the following to subparagraph 4(d)(i)(D) “, as defined in NI 51-102” after “operating income”,

(i) in section 5 by striking out “date of acquisition” and substituting “acquisition date” , and

(j) in paragraph 5(iii) by striking out “D.5(b)(ii)” and substituting “D.5(ii)”.

8. Item 8(b) of Form 45-106F3 Offering Memorandum for Qualifying Issuers is amended by striking out “sales” and substituting “revenue”.

9. Section 1, Part B Financial Statements of the Instructions for Completing Form 45-106F3 Offering Memorandum for Qualifying Issuers is amended by striking out “Acceptable Accounting Principles, Auditing Standards and Reporting Currency” and substituting “Acceptable Accounting Principles and Auditing Standards”.

10. Section 2, Part C Required Updates to the Offering Memorandum of the Instructions for Completing Form 45-106F3 Offering Memorandum for Qualifying Issuers is amended by striking out “interim financial statements” and substituting “interim financial reports”.

11. Paragraph 1(c), Part D Information about the Issuer of the Instructions for Completing Form 45-106F3 Offering Memorandum for Qualifying Issuers is amended by striking out “interim financial statements” and substituting “interim financial report”, and by striking out “interim financial statements that are” and substituting “an interim financial report that is”.

12. Sections 3 to 11 of this instrument apply to an offering memorandum of an issuer which includes or incorporates by reference financial statements of the issuer in respect of periods relating to financial years beginning on or after January 1, 2011.

13. This instrument comes into force January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8479

Appendix B

Schedule B-2 Proposed Amending Instrument for Companion Policy 45-106CP Prospectus and Registration Exemptions

1. Companion Policy 45-106CP to National Instrument 45-106 Prospectus and Registration Exemptions is amended by this Instrument.

2. Subsection 3.8(1) is amended by adding “or profit” after “$75 000 pre-tax net income”.

3. This instrument only applies to financial periods relating to financial years beginning on or after January 1, 2011.

4. This instrument comes into force January 1, 2011.


October 16, 2009 (2009) 32 OSCB 8480

Appendix C

Schedule C-1 Blackline Showing Proposed Changes to Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers

Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers

Date: [Insert the date from the certificate page.]

The Issuer

Name: Head office: Address:

Phone #: E-mail address: Fax #:

Currently listed or quoted? [If no, state in bold type: “These securities do not trade on any exchange or market”. If yes, state where, e.g., TSX/TSX Venture Exchange.] Reporting issuer? [Yes/No. If yes, state where.] SEDAR filer? [Yes/No]

The Offering

Securities offered: Price per security: Minimum/Maximum offering: [If there is no minimum, state in bold type: “There is no minimum.” and also state in bold type: “You may be the only purchaser.”]State in bold type: Funds available under the offering may not be sufficient to accomplish our proposed objectives. Minimum subscription amount: [State the minimum amount each investor must invest, or state “There is no minimum subscription amount an investor must invest.”] Payment terms: Proposed closing date(s): Income tax consequences: There are important tax consequences to these securities. See item 6. [If income tax consequencesare not material, delete this item.] Selling agent? [Yes/No. If yes, state “See item 7”. The name of the selling agent may also be stated.]

Resale restrictions

State: “You will be restricted from selling your securities for [4 months and a day/an indefinite period]. See item 10.”

Purchaser's rights

State: “You have 2 business days to cancel your agreement to purchase these securities. If there is a misrepresentation in thisoffering memorandum, you have the right to sue either for damages or to cancel the agreement. See item 11.” State in bold type: “No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this offering memorandum. Any representation to the contrary is an offence. This is a risky investment. See item 8.” [All of the above information must appear on a single cover page.]

Item 1: Use of Available Funds

1.1 Funds - Using the following table, disclose the funds available as a result of the offering. If the issuer plans to combine additional sources of funding with the available funds from the offering to achieve its principal capital-raising purpose, pleaseprovide details about each additional source of funding. If there is no minimum offering, state “$0” as the minimum.

Disclose also the amount of any working capital deficiency, if any, of the issuer as at a date not more than 30 days prior to the date of the offering memorandum. If the working capital deficiency will not be eliminated by the use of available funds, statehow the issuer intends to eliminate or manage the deficiency.


October 16, 2009 (2009) 32 OSCB 8481

Assuming min. offering Assuming max. offering A. Amount to be raised by this offering $ $ B. Selling commissions and fees $ $ C. Estimated offering costs (e.g., legal, accounting, audit.) $ $ D. Available funds: D = A - (B+C) $ $ E. Additional sources of funding required $ $ F. Working capital deficiency $ $ G. Total: H = (D+E) – F $ $

1.2 Use of Available Funds - Using the following table, provide a detailed breakdown of how the issuer will use the available funds. If any of the available funds will be paid to a related party, disclose in a note to the table the name of the related party, the relationship to the issuer, and the amount. If the issuer has a working capital deficiency, disclose the portion, if any, of the available funds to be applied against the working capital deficiency. If more than 10% of the available funds will be used by the issuer to pay debt and the issuer incurred the debt within the two preceding financial years, describe why the debt was incurred.

Description of intended use of available funds listed in order of priority

Assuming min. offering Assuming max. offering

$ $ $ $ Total: Equal to G in the Funds table above $ $

1.3 Reallocation - The available funds must be used for the purposes disclosed in the offering memorandum. The board of directors can reallocate the proceeds to other uses only for sound business reasons. If the available funds may be reallocated, include the following statement:

“We intend to spend the available funds as stated. We will reallocate funds only for sound business reasons.”

Item 2: Business of [name of issuer or other term used to refer to issuer]

2.1 Structure - State the business structure (e.g., partnership, corporation or trust), the statute and the province, state or other jurisdiction under which the issuer is incorporated, continued or organized, and the date of incorporation, continuance ororganization.

2.2 Our Business - Describe the issuer's business. The disclosure must provide sufficient information to enable a prospective purchaser to make an informed investment decision. For a non-resource issuer this disclosure may include principal products or services, operations, market, marketing plans and strategies and a discussion of the issuer’s current andprospective competitors. For a resource issuer this will require a description of principal properties (including interest held) and a summary of material information including, if applicable: the stage of development, reserves, geology, operations, productionand mineral reserves or mineral resources being explored or developed. A resource issuer disclosing scientific or technical information for a mineral project must follow General Instruction A.8 of this Form. A resource issuer disclosing information about its oil and gas activities must follow General Instruction A.9 of this Form.

2.3 Development of Business - Describe (generally, in one or two paragraphs) the general development of the issuer's business over at least its two most recently completed financial years and any subsequent period. Include the major events thathave occurred or conditions that have influenced (favourably or unfavourably) the development of the issuer.

2.4 Long Term Objectives - Describe each significant event that must occur to accomplish the issuer’s long term objectives, state the specific time period in which each event is expected to occur, and the costs related to each event.

2.5 Short Term Objectives and How We Intend to Achieve Them

(a) Disclose the issuer's objectives for the next 12 months. (b) Using the following table, disclose how the issuer intends to meet those objectives for the next 12 months.

What we must do and how we will do it

Target completion date or, if not known, number of months to complete Our cost to complete

$ $


October 16, 2009 (2009) 32 OSCB 8482

2.6 Insufficient Funds - If applicable, disclose that the funds available as a result of the offering either may not or will not be sufficient to accomplish all of the issuer's proposed objectives and there is no assurance that alternative financing will beavailable. If alternative financing has been arranged, disclose the amount, source and all outstanding conditions that must be satisfied.

2.7 Material Agreements - Disclose the key terms of all material agreements

(a) to which the issuer is currently a party, or (b) with a related party

including the following information:

(i) if the agreement is with a related party, the name of the related party and the relationship, (ii) a description of any asset, property or interest acquired, disposed of, leased, under option, etc., (iii) a description of any service provided, (iv) purchase price and payment terms (e.g., paid in instalments, cash, securities or work commitments), (v) the principal amount of any debenture or loan, the repayment terms, security, due date and interest

rate,(vi) the date of the agreement, (vii) the amount of any finder's fee or commission paid or payable to a related party in connection with the

agreement, (viii) any material outstanding obligations under the agreement, and (ix) for any transaction involving the purchase of assets by or sale of assets to the issuer from a related

party, state the cost of the assets to the related party, and the cost of the assets to the issuer.

Item 3: Interests of Directors, Management, Promoters and Principal Holders

3.1 Compensation and Securities Held - Using the following table, provide the specified information about each director, officer and promoter of the issuer and each person who, directly or indirectly, beneficially owns or controls 10% or more of anyclass of voting securities of the issuer (a “principal holder”). If the principal holder is not an individual, state in a note to the table the name of any person that, directly or indirectly, beneficially owns or controls more than 50% of the voting rights of the principal holder. If the issuer has not completed its first financial year, then include compensation paid since inception. Compensation includes any form of remuneration including cash, shares and options.

Name and municipality of principal residence

Positions held (e.g., director, officer, promoter and/or principal holder) and the date of obtaining that position

Compensation paid by issuer or related party in the most recently completed financial year and the compensation anticipated to be paid in the current financial year

Number, type and percentage of securities of the issuer held after completion of min. offering

Number, type and percentage of securities of the issuer held after completion of max. offering

3.2 Management Experience - Using the following table, disclose the principal occupations of the directors and executive officers over the past five years. In addition, for each individual, describe any relevant experience in a business similar to theissuer's.

Name Principal occupation and related experience

3.3 Penalties, Sanctions and Bankruptcy

(a) Disclose any penalty or sanction (including the reason for it and whether it is currently in effect) that has been in effect during the last 10 years, or any cease trade order that has been in effect for a period of more than 30 consecutive days during the past 10 years against

(i) a director, executive officer or control person of the issuer, or (ii) an issuer of which a person referred to in (i) above was a director, executive officer or control person

at the time.


October 16, 2009 (2009) 32 OSCB 8483

(b) Disclose any declaration of bankruptcy, voluntary assignment in bankruptcy, proposal under any bankruptcy or insolvency legislation, proceedings, arrangement or compromise with creditors or appointment of a receiver, receiver manager or trustee to hold assets, that has been in effect during the last 10 years with regard to any

(i) director, executive officer or control person of the issuer, or (ii) issuer of which a person referred to in (i) above was a director, executive officer or control person at

that time.

3.4 Loans - Disclose the principal amount of any debenture or loan, the repayment terms, security, due date and interest rate due to or from the directors, management, promoters and principal holders as at a date not more than 30 days prior to the date of the offering memorandum.

Item 4: Capital Structure

4.1 Share Capital - Using the following table, provide the required information about outstanding securities of the issuer (including options, warrants and other securities convertible into shares). If necessary, notes to the table may be added to describe the material terms of the securities.

Description of security

Number authorized to be issued

Price per security

Number outstanding as at [a date not more than 30 days prior to the offering memorandum date]

Number outstanding after min. offering

Number outstanding after max. offering

4.2 Long Term Debt Securities - Using the following table, provide the required information about outstanding long term debt of the issuer. Disclose the current portion of the long-term debt due within 12 months of the date of the offering memorandum. If the securities being offered are debt securities, add a column to the table disclosing the amount of debt that will be outstanding after both the minimum and maximum offering. If the debt is owed to a related party, indicate that in a note to the table and identify the related party.

Description of long term debt (including whether secured) Interest rate Repayment terms

Amount outstanding at [a date not more than 30 days prior to the offering memorandum date]

$ $

4.3 Prior Sales - If the issuer has issued any securities of the class being offered under the offering memorandum (or convertible or exchangeable into the class being offered under the offering memorandum) within the last 12 months, use the following table to provide the information specified. If securities were issued in exchange for assets or services, describe in a note to the table the assets or services that were provided.

Date of issuance Type of security issued

Number of securities issued Price per security Total funds received

Item 5: Securities Offered

5.1 Terms of Securities - Describe the material terms of the securities being offered, including:

(a) voting rights or restrictions on voting, (b) conversion or exercise price and date of expiry, (c) rights of redemption or retraction, and (d) interest rates or dividend rates.


October 16, 2009 (2009) 32 OSCB 8484

5.2 Subscription Procedure

(a) Describe how a purchaser can subscribe for the securities and the method of payment. (b) State that the consideration will be held in trust and the period that it will be held (refer at least to the

mandatory two day period). (c) Disclose any conditions to closing, e.g., receipt of additional funds from other sources. If there is a minimum

offering, disclose when consideration will be returned to purchasers if the minimum is not met, and whether the issuer will pay the purchasers interest on consideration.

Item 6: Income Tax Consequences and RRSP Eligibility

6.1 State: “You should consult your own professional advisers to obtain advice on the income tax consequences that apply to you.”

6.2 If income tax consequences are a material aspect of the securities being offered (e.g., flow-through shares), provide

(a) a summary of the significant income tax consequences to Canadian residents, and (b) the name of the person providing the income tax disclosure in (a).

6.3 Provide advice regarding the RRSP eligibility of the securities and the name of the person providing the advice or state “Not all securities are eligible for investment in a registered retirement savings plan (RRSP). You should consult your own professional advisers to obtain advice on the RRSP eligibility of these securities.”

Item 7: Compensation Paid to Sellers and Finders

If any person has or will receive any compensation (e.g., commission, corporate finance fee or finder's fee) in connection withthe offering, provide the following information to the extent applicable:

(a) a description of each type of compensation and the estimated amount to be paid for each type, (b) if a commission is being paid, the percentage that the commission will represent of the gross proceeds of the

offering (assuming both the minimum and maximum offering), (c) details of any broker's warrants or agent's option (including number of securities under option, exercise price

and expiry date), and (d) if any portion of the compensation will be paid in securities, details of the securities (including number, type

and, if options or warrants, the exercise price and expiry date).

Item 8: Risk Factors

Describe in order of importance, starting with the most important, the risk factors material to the issuer that a reasonable investor would consider important in deciding whether to buy the issuer's securities.

Risk factors will generally fall into the following three categories:

(a) Investment Risk - risks that are specific to the securities being offered. Some examples include arbitrary determination of price, no market or an illiquid market for the securities, resale restrictions, and subordination of debt securities.

(b) Issuer Risk - risks that are specific to the issuer. Some examples include insufficient funds to accomplish the issuer's business objectives, no history or a limited history of salesrevenue or profits, lack of specific management or technical expertise, management's regulatory and business track record, dependence on key employees, suppliers or agreements, dependence on financial viability of guarantor, pending and outstanding litigation, and political risk factors.


October 16, 2009 (2009) 32 OSCB 8485

(c) Industry Risk - risks faced by the issuer because of the industry in which it operates. Some examples include environmental and industry regulation, product obsolescence, and competition.

Item 9: Reporting Obligations

9.1 Disclose the documents, including any financial information required by the issuer’s corporate legislation, constating documents, or other documents under which the issuer is organized, that will be sent to purchasers on an annual or on-going basis. If the issuer is not required to send any documents to the purchasers on an annual or on-going basis, state in bold type: “We are not required to send you any documents on an annual or ongoing basis.”

9.2 If corporate or securities information about the issuer is available from a government, securities regulatory authority or regulator, SRO or quotation and trade reporting system, disclose where that information can be located (including website address).

Item 10: Resale Restrictions

10.1 General Statement - For trades in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan and Yukon, state:

“These securities will be subject to a number of resale restrictions, including a restriction on trading. Until the restrictionon trading expires, you will not be able to trade the securities unless you comply with an exemption from the prospectus and registration requirements under securities legislation.”

10.2 Restricted Period - For trades in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan and Yukon state one of the following, as applicable:

(a) If the issuer is not a reporting issuer in a jurisdiction at the distribution date state: “Unless permitted under securities legislation, you cannot trade the securities before the date that is 4 months and a day after the date [insert name of issuer or other term used to refer to the issuer] becomes a reporting issuer in any province or territory of Canada.”

(b) If the issuer is a reporting issuer in a jurisdiction at the distribution date state: “Unless permitted under securities legislation, you cannot trade the securities before the date that is 4 months and a day after the distribution date.”

10.3 Manitoba Resale Restrictions - For trades in Manitoba, if the issuer will not be a reporting issuer in a jurisdiction at the time the security is acquired by the purchaser state:

“Unless permitted under securities legislation, you must not trade the securities without the prior written consent of the regulator in Manitoba unless

(a) [name of issuer or other term used to refer to issuer] has filed a prospectus with the regulator in Manitoba with respect to the securities you have purchased and the regulator in Manitoba has issued a receipt for that prospectus, or

(b) you have held the securities for at least 12 months.

The regulator in Manitoba will consent to your trade if the regulator is of the opinion that to do so is not prejudicial to thepublic interest.”

Item 11: Purchasers' Rights

State the following:

“If you purchase these securities you will have certain rights, some of which are described below. For information about your rights you should consult a lawyer.


October 16, 2009 (2009) 32 OSCB 8486

(1) Two Day Cancellation Right - You can cancel your agreement to purchase these securities. To do so, you must send a notice to us by midnight on the 2nd business day after you sign the agreement to buy the securities.

(2) Statutory Rights of Action in the Event of a Misrepresentation - [Insert this section only if the securities legislation of the jurisdiction in which the trade occurs provides purchasers with statutory rights in the event of a misrepresentation in an offering memorandum. Modify the language, if necessary, to conform to the statutory rights.] If there is a misrepresentation in this offering memorandum, you have a statutory right to sue:

(a) [name of issuer or other term used to refer to issuer] to cancel your agreement to buy these securities, or (b) for damages against [state the name of issuer or other term used to refer to issuer and the title of any other

person against whom the rights are available].

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are variousdefences available to the persons or companies that you have a right to sue. In particular, they have a defence if you knew ofthe misrepresentation when you purchased the securities.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must commence your action to cancel the agreement within [state time period provided by the securities legislation]. You must commence your action for damages within [state time period provided by the securities legislation.]

(3) Contractual Rights of Action in the Event of a Misrepresentation - [Insert this section only if the securities legislation of the jurisdiction in which the purchaser is resident does not provide purchasers with statutory rights in the event of a misrepresentation in an offering memorandum.] If there is a misrepresentation in this offering memorandum, you have a contractual right to sue [name of issuer or other term used to refer to issuer]:

(a) to cancel your agreement to buy these securities, or (b) for damages.

This contractual right to sue is available to you whether or not you relied on the misrepresentation. However, in an action fordamages, the amount you may recover will not exceed the price that you paid for your securities and will not include any part ofthe damages that [name of issuer or other term used to refer to issuer] proves does not represent the depreciation in value of the securities resulting from the misrepresentation. [Name of issuer or other term used to refer to issuer] has a defence if itproves that you knew of the misrepresentation when you purchased the securities.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must commence your action to cancel the agreement within 180 days after you signed the agreement to purchase the securities. You must commence your action for damages within the earlier of 180 days after learning of the misrepresentation and 3 years after you signed the agreement to purchase the securities.”

Item 12: Financial Statements

Include in the offering memorandum immediately before the certificate page of the offering memorandum all required financial statements as set out in the Instructions.

Item 13: Date and Certificate

State the following on the certificate page of the offering memorandum:

“Dated [insert the date the certificate page of the offering memorandum is signed].

This offering memorandum does not contain a misrepresentation.”


October 16, 2009 (2009) 32 OSCB 8487

Instructions for Completing Form 45-106F2

Offering Memorandum for Non-Qualifying Issuers

A. General Instructions

1. Draft the offering memorandum so that it is easy to read and understand. Be concise and use clear, plain language. Avoid technical terms. If technical terms are necessary, provide definitions.

2. Address the items required by the form in the order set out in the form. However, it is not necessary to provide disclosure about an item that does not apply.

3. The issuer may include additional information in the offering memorandum other than that specifically required by the form. An offering memorandum is generally not required to contain the level of detail and extent of disclosure required by a prospectus. Generally, this description should not exceed 2 pages. However, an offering memorandum must provide a prospective purchaser with sufficient information to make an informed investment decision.

4. The issuer may wrap the offering memorandum around a prospectus or similar document. However, all matters required to be disclosed by the offering memorandum must be addressed and the offering memorandum must provide a cross-reference to the page number or heading in the wrapped document where the relevant information is contained. The certificate to the offering memorandum must be modified to indicate that the offering memorandum, including the document around which it is wrapped, does not contain a misrepresentation.

5. It is an offence to make a misrepresentation in the offering memorandum. This applies both to information that is required by the form and to additional information that is provided. Include particulars of any material facts, which have not been disclosed under any of the Item numbers and for which failure to disclose would constitute a misrepresentation in the offering memorandum. Refer also to section 3.8(3) of Companion Policy 45-106CP for additional information.

6. When the term “related party” is used in this form, it refers to:

(a) a director, officer, promoter or control person of the issuer, (b) in regard to a person referred to in (a), a child, parent, grandparent or sibling, or other relative living in the

same residence, (c) in regard to a person referred to in (a) or (b), his or her spouse or a person with whom he or she is living in a

marriage-like relationship, (d) an insider of the issuer, (e) a company controlled by one or more individuals referred to in (a) to (d), and (f) in the case of an insider, promoter or control person that is not an individual, any person that controls that

insider, promoter or control person.

(If the issuer is not a reporting issuer, the reference to “insider” includes persons or companies who would be insiders of the issuer if that issuer were a reporting issuer.)

7. Disclosure is required in item 3.1 of compensation paid directly or indirectly by the issuer or a related party to a director, officer, promoter and/or principal holder if the issuer receives a direct benefit from such compensation paid.

8. Refer to National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) when disclosing scientific or technical information for a mineral project of the issuer.

9. If an oil and gas issuer is disclosing information about its oil and gas activities it must ensure that the information is disclosed in accordance with Part 4 and Part 5 of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101). Under section 5.3 of NI 51-101 disclosure of reserves or resources must be consistent with the reserves and resources terminology and categories set out in the Canadian Oil and Gas Evaluation Handbook. For the purposes of this instruction references to reporting issuer in Part 4 and Part 5 of NI 51-101 will be deemed to include all issuers.

10. Securities legislation restricts what can be told to investors about the issuer's intent to list or quote securities on an exchange or market. Refer to applicable securities legislation before making any such statements.

11. If an issuer uses this form in connection with a distribution under an exemption other than section 2.9 (offering memorandum) of National Instrument 45-106 Prospectus and Registration Exemptions, the issuer must modify the disclosure in item 11 to correctly describe the purchaser's rights. If a purchaser does not have statutory or contractual


October 16, 2009 (2009) 32 OSCB 8488

rights of action in the event of a misrepresentation in the offering memorandum, that fact must be stated in bold on the face page.

12. During the course of a distribution of securities, any material forward-looking information disseminated must only be that which is set out in the offering memorandum. If an extract of FOFI, as defined in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), is disseminated, the extract or summary must be reasonably balanced and have a cautionary note in boldface stating that the information presented is not complete and that complete FOFI is included in the offering memorandum.

B. Financial Statements - General

1. All financial statements, operating statements for an oil and gas property that is an acquired business or a business to be acquired and summarized financial information as to the aggregated amounts of assets, liabilities, revenues and results of operationsprofit or loss of a business relating to an acquisition that is, or will be, an investment accounted for by the issuer using the equity method included in the offering memorandum must comply with National Instrument 52-107 Acceptable Accounting Principles, and Auditing Standards and Reporting Currency (NI 52-107), regardless of whether the issuer is a reporting issuer or not. Under NI 52-107, a non-qualifying issuer that uses Canadian GAAP cannot use differential reporting as set out in the Handbook.financial statements are required to be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises. NI 52-107 does provide exemptions from this general requirement for foreign issuers or SEC issuers (as defined in NI 52-107). An issuer using this form cannot use Canadian GAAP applicable to private enterprises, except for financial statements for a business referred to in C.1

2. Include all financial statements required by these instructions in the offering memorandum immediately before the certificate page of the offering memorandum.

3. If the issuer has not completed one financial year or its first financial year end is less than 120 days from the date of theoffering memorandum, include in the offering memorandum financial statements of the issuer consisting of:

(a) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for the period from inception to a date not more than 90 days before the date of the offering memorandum,

(b) a balance sheetstatement of financial position as at the end of the period referred to in paragraph (a), and

(c) notes to the financial statements.

4. If the issuer has completed one or more financial years, include in the offering memorandum annual financial statements of the issuer consisting of:

(a) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for

(i) the most recently completed financial year that ended more than 120 days before the date of the offering memorandum, and

(ii) the financial year immediately preceding the financial year in clause (i), if any,

(b) a balance sheetstatement of financial position as at the end of each of the periods referred to in paragraph (a),

(c) a statement of financial position as at the beginning of the earliest comparative period for which financial statements that are included in the offering memorandum comply with IFRS in the case of an issuer that

(i) discloses in its annual financial statements an explicit and unreserved statement of compliance with IFRS, and


(A) applies an accounting policy retrospectively in its annual financial statements,

(B) makes a retrospective restatement of items in its annual financial statements, or


October 16, 2009 (2009) 32 OSCB 8489

(C) reclassifies items in its annual financial statements,

(d) in the case of an issuer’s first IFRS financial statements (as defined in NI 51-102), the opening IFRS statement of financial position at the date of transition to IFRS (as defined in NI 51-102), and

(e) (c) notes to the financial statements.

4.1 If an issuer presents the components of profit or loss in a separate income statement, the separate income statement must be displayed immediately before the statement of comprehensive income filed under Item 4 above.

5. If the issuer has completed one or more financial years, include in the offering memorandum an interim financial statementsreport of the issuer comprised of:

(a) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for the most recently completed interim period that ended

(i) more than 60 days before the date of the offering memorandum, and

(ii) after the year-end date of the financial statements required under B.4(a)(i),

(b) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for the corresponding period in the immediately preceding financial year, if any,

(c) a balance sheetstatement of financial position as at the end of the periodsperiod required by paragraphs (a) and the end of the immediately preceding financial year(b), and

(d) a statement of financial position as at the beginning of the earliest comparative period for which financial statements that are included in the offering memorandum comply with IFRS in the case of an issuer that

(i) discloses in its interim financial report compliance with International Accounting Standard 34 Interim Financial Reporting, and


(A) applies an accounting policy retrospectively in its interim financial report,

(B) makes a retrospective restatement of items in its interim financial report, or

(C) reclassifies items in its interim financial report,

(e) in the case of the first interim financial report in the year of adopting IFRS, the opening IFRS statement of financial position at the date of transition to IFRS, and

(f) for an issuer that is not a reporting issuer in at least one jurisdiction immediately before filing the offering memorandum, if the issuer is including an interim financial report of the issuer for the second or third interim period in the year of adopting IFRS include:

(i) the issuer’s first interim financial report in the year of adopting IFRS, or

(ii) both

(A) the opening IFRS statement of financial position at the date of transition to IFRS, and

(B) the annual and date of transition to IFRS reconciliations required by IFRS 1 First-time Adoption of International Financial Reporting Standards to explain how the transition from previous GAAP to IFRS affected the issuer’s reported financial position, financial performance and cash flows, and

(g) notes to the financial statements.

5.1 If an issuer presents the components of profit or loss in a separate income statement, the separate income statement must be displayed immediately before the statement of comprehensive income filed under item 5 above.


October 16, 2009 (2009) 32 OSCB 8490

6. An issuer is not required to include the comparative financial information for the period in B.4.(a)(ii) in an offering memorandum if the issuer includes financial statements for a financial year ended less than 120 days before the date of the offering memorandum.

7. For an issuer that is not an investment fund, the term “interim period” has the meaning set out in NI 51-102. In most cases, an interim period is a period ending nine, six, or three months before the end of a financial year. For an issuer that is an investment fund, the term “interim period” has the meaning set out in National Instrument 81-106 – Investment Fund Continuous Disclosure (NI 81-106).

8. The comparative financial information required under B.5(b) and (c) may be omitted if not previously prepared. An issuer cannot rely on this exemption if the issuer previously prepared financial statements in accordance with a prior GAAP.

9. The financial statements required by B.3 and the financial statements of the most recently completed financial period referred to in B.4 must be audited. The financial statements required under B.5, B.6 and the comparative financial information required by B.4 may be unaudited; however, if any of those financial statements have been audited, the auditor’s report must be included in the offering memorandum.

10. Refer to National Instrument 52-108 Auditor Oversight for requirements relating to reporting issuers and public accounting firms.

11. All unaudited financial statements and unaudited comparatives must be clearly labelled as unaudited.

12. If the offering memorandum does not contain audited financial statements for the issuer's most recently completed financial year, and if the distribution is ongoing, update the offering memorandum to include the annual audited financial statements and the accompanying auditor’s report as soon as the issuer has approved the audited financial statements, but in any event no later than the 120th day following the financial year end.

13. The offering memorandum does not have to be updated to include interim financial statementsreports for periods completed after the date that is 60 days before the date of the offering memorandum unless it is necessary to prevent the offering memorandum from containing a misrepresentation.

14. Forward looking information, as defined in NI 51-102, included in an offering memorandum must comply with section 4A.2 of NI 51-102 and must include the disclosure described in section 4A.3 of NI 51-102. In addition to the foregoing, FOFI or a financial outlook, each as defined in NI 51-102, included in an offering memorandum must comply with Part 4B of NI 51-102. For an issuer that is not a reporting issuer, references to “reporting issuer” in section 4A.2, section 4A.3 and Part 4B of NI 51-102 should be read as references to an “issuer”. Additional guidance may be found in the companion policy to NI 51-102.

15. If the issuer is a limited partnership, in addition to the financial statements required for the issuer, include in the offering memorandum the financial statements in accordance with Part B for the general partner and, if the limited partnership has active operations, for the limited partnership.

16. Despite section B.5, an issuer may include a comparative interim financial report of the issuer for the most recent interim period, if any, ended:

(a) subsequent to the most recent financial year in respect of which annual financial statements of the issuer are included in the offering memorandum, and

(b) more than 90 days before the date of the offering memorandum.

This section does not apply unless:

(a) the comparative interim financial report is the first interim financial report required to be filed in the year of adopting IFRS,

(b) the issuer is a reporting issuer in any jurisdiction immediately before the date of the offering memorandum, and

(c) the offering memorandum is dated before June 29, 2012.


October 16, 2009 (2009) 32 OSCB 8491

C. Financial Statements - Business Acquisitions

1. If the issuer

(a) has acquired a business during the past two years and the audited financial statements of the issuer included in the offering memorandum do not include the results of the acquired business for 9 consecutive months, or

(b) is proposing to acquire a business and the acquisition has progressed to a state where a reasonable person would believe that the likelihood of the acquisition being completed is high,

include the financial statements specified in C.4 for the business if either of the tests in C.2 is met, irrespective of how the issuer accounts, or will account, for the acquisition.

2. Include the financial statements specified in C.4 for a business referred to in C.1 if either:

(a) the issuer's proportionate share of the consolidated assets of the business exceeds 40% of the consolidated assets of the issuer calculated using the annual financial statements of each of the issuer and the business for the most recently completed financial year of each that ended before the date of acquisition date or, for a proposed acquisition, the date of the offering memorandum or

(b) the issuer's consolidated investments in and advances to the business as at the date of acquisition date or the proposed date of acquisition date exceeds 40% of the consolidated assets of the issuer, excluding any investments in or advances to the business, as at the last day of the issuer's most recently completed financial year that ended before the date of acquisition date or the date of the offering memorandum for a proposed acquisition. For information about how to perform the investment test identified in this section 2(b), please refer to subsections 8.3(4.1) and (4.2) of NI 51-102 and subsections 8.2(3.1) and (4) of NI 51-102CP Continuous Disclosure Obligations.

2.1 In this Instruction C, the term “date of acquisition date” means the date of acquisition date used for accounting purposes.

3. If an issuer or a business has not yet completed a financial year, or its first financial year ended within 120 days of the offering memorandum date, use the financial statements referred to in B.3 to make the calculations in C.2.

4. If under C.2 you must include in an offering memorandum financial statements for a business, the financial statements must include:

(a) If the business has not completed one financial year or its first financial year end is less than 120 days from the date of the offering memorandum

(i) an incomea statement of comprehensive income, a statement of retained earningschanges in equityand a statement of cash flow statementflows

A) for the period from inception to a date not more than 90 days before the date of the offering memorandum, or

B) if the date of acquisition date precedes the ending date of the period referred to in (A), for the period from inception to the date of acquisition date or a date not more than 45 days before the date of acquisition date,

(ii) a balance sheetstatement of financial position dated as at the end of the period referred to in clause (i), and

(iii) notes to the financial statements.

(b) If the business has completed one or more financial years include

(i) annual financial statements comprised of:

A) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for the following annual periods:

i. the most recently completed financial year that ended before the date of


October 16, 2009 (2009) 32 OSCB 8492

acquisition date and more than 120 days before the date of the offering memorandum, and

ii. the financial year immediately preceding the most recently completed financial year specified in clause i, if any,

B) a balance sheetstatement of financial position as at the end of each of the periods specified in (A),

C) notes to the financial statements, and

(ii) an interim financial statementsreport comprised of:

A) an income statement, a statement of retained earnings and a cash flow statement for either:the following financial information:

i. a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the most recently completed year-to-date interim period andending on the last date of the interim period that ended before the acquisition date and more than 60 days before the date of the offering memorandum and ended after the date of the financial statements required under C.4(b)(i)(A)i, and a statement of comprehensive income and a statement of changes in equity for the three month period ending on the last date of the interim period that ended before the date of acquisition date and more than 60 days before the date of the offering memorandum and ended after the date of the financial statements required under C.4(b)(i)(A)i, or

ii. a statement of comprehensive income, a statement of changes in equity and a statement of cash flows for the period from the first day after the financial year referred to in C.4(b)(i) to a date before the date of acquisition date and after the period end in C.4(b)(ii)(A)i, and

B) an incomea statement of comprehensive income, a statement of retained earningschanges in equity and a statement of cash flow statementflows for the corresponding period in the immediately preceding financial year, if any,

C) a balance sheetstatement of financial position as at the end of the periodsperiod required by subparagraph (A) and (B)the end of the immediately preceding financial year, and

D) notes to the financial statements.

Refer to Instruction B.7 for the meaning of “interim period”.

5. The information for the most recently completed financial period referred to in C.4(b)(i) must be audited and accompanied by an auditor’s report. The financial statements required under C.4(a), C.4(b)(ii) and the comparative financial information required by C.4(b)(i) may be unaudited; however, if those financial statements or comparative financial information have been audited, the auditor’s report must be included in the offering memorandum.

6. If the offering memorandum does not contain audited financial statements for a business referred to in C.1 for the business’s most recently completed financial year that ended before the date of acquisition date and the distribution is ongoing, update the offering memorandum to include those financial statements accompanied by an auditor’s report when they are available, but in any event no later than the date 120 days following the year-end.

7. The term “business” should be evaluated in light of the facts and circumstances involved. Generally, a separate entity or a subsidiary or division of an entity is a business and, in certain circumstances, a lesser component of an entity may also constitute a business, whether or not the subject of the acquisition previously prepared financial statements. The subject of an acquisition should be considered a business where there is, or the issuer expects there will be, continuity of operations. The issuer should consider:

(a) whether the nature of the revenue producing activity or potential revenue producing activity will remain generally the same after the acquisition, and


October 16, 2009 (2009) 32 OSCB 8493

(b) whether any of the physical facilities, employees, marketing systems, sales forces, customers, operating rights, production techniques or trade names are acquired by the issuer instead of remaining with the vendor after the acquisition.

8. If a transaction or a proposed transaction for which the likelihood of the transaction being completed is high has been or will be accounted for as a reverse take-over as defined in NI 51-102, include financial statements for the legal subsidiary in the offering memorandum in accordance with Part A. The legal parent, as that term is defined in the CICA Handbook, is considered to be the business acquired. C.1 may also require financial statements of the legal parent.

9. An issuer satisfies the requirements in C.4 if the issuer includes in the offering memorandum the financial statements required in a business acquisition report under NI 51-102.

D. Financial Statement - Exemptions

1. An issuer will satisfy the financial statement requirements of this form if it includes the financial statements required bysecurities legislation for a prospectus.

2. Notwithstanding the requirements in section 3.23.3(1)(a)(i) of NI 52-107, an auditor’s report that accompanies financial statements of an issuer or a business contained in an offering memorandum of a non-reporting issuer may contain a qualification of opinion relating to inventory if

(a) the issuer includes in the offering memorandum a balance sheetstatement of financial position that is for a date that is subsequent to the date to which the qualification relates, and

(b) the balance sheetstatement of financial position referred to in paragraph (a) is accompanied by an auditor’s report that does not contain a qualification of opinion relating to closing inventory, and

(c) the issuer has not previously filed financial statements for the same entity accompanied by an auditor’s report for a prior year that contained a qualification of opinion relating to inventory.

3. If an issuer has, or will account for a business referred to in C.1 using the equity method, then financial statements for abusiness required by Part C are not required to be included if:

(a) the offering memorandum includes disclosure for the periods for which financial statements are otherwise required under Part C that:

(i) summarizes information as to the aggregated amounts of assets, liabilities, revenue and results of operationsprofit or loss of the business, and

(ii) describes the issuer's proportionate interest in the business and any contingent issuance of securities by the business that might significantly affect the issuer's share of earningsprofit or loss;

(b) the financial information provided under D.3(a) for the most recently completed financial year has been audited, or has been derived from audited financial statements of the business; and

(c) the offering memorandum discloses that:

(i) the financial information provided under D.3(a) for any completed financial year has been audited, or identifies the audited financial statements from which the financial information provided under D.3(a) has been derived; and

(ii) the audit opinion with respect to the financial information or financial statements referred to in D.3(c)(i) was issued without a reservation of opinion.

If the financial information included in an offering memorandum under D.3(a) has been derived from financial statements of a business incorporated or organized in a foreign jurisdiction that have been prepared in accordance with foreign GAAP, the information must be accompanied by a note that explains and quantifies the effect of material differences between Canadian GAAP and the foreign GAAP.

4. Financial statements relating to the acquisition or proposed acquisition of a business that is an interest in an oil and gasproperty are not required to be included in an offering memorandum if the acquisition is significant based only on the asset test or:


October 16, 2009 (2009) 32 OSCB 8494

(a) the issuer is unable to provide the financial statements in respect of the significant acquisition otherwise required because those financial statements do not exist or the issuer does not have access to those financial statements,

(b) the acquisition was not or will not be accounted for as a “reverse take-over” as defined in NI 51-102, and

(c) the business did not or does not constitute a “reportable segment” of the seller, as defined in section 1701 of the CICA Handbook, at the time of acquisition, and

(c) Repealed (January 1, 2011)

(d) (d) the offering memorandum contains alternative disclosure for the business which includes:

(i) an operating statement for each of the financial periods for which financial statements would, but for this section, be required under C.4, presenting for the business, at a minimum, the following line items:

A) gross revenue,

B) royalty expenses,

C) production costs, and

D) operating income, as defined in NI 51-102,

The operating statement for the most recently completed financial period referred to in C.4(b)(i) must be audited.

(ii) a description of the property or properties and the interest acquired by the issuer,

(iii) information with respect to the estimated reserves and related future net revenue attributable to the business, the material assumptions used in preparing the estimates and the identity and relationship to the issuer or to the seller of the person who prepared the estimates,

(iv) actual production volumes of the property for the most recently completed year, and

(v) estimated production volumes of the property for the first year reflected in the estimate disclosed under D.4(d)(iv).

5. Financial statements for a business that is an interest in an oil and gas property, or for the acquisition or proposed acquisition by an issuer of a property, are not required to be audited if during the 12 months preceding the date of acquisition date or the proposed date of acquisition date, the daily average production of the property on a barrel of oil equivalent basis (with gas converted to oil in the ratio of six thousand cubic feet of gas being the equivalent of one barrel of oil) is less than 20 per cent of the total daily average production of the seller for the same or similar periods and:

(i) despite reasonable efforts during the purchase negotiations, the issuer was prohibited from including in the purchase agreement the rights to obtain an audited operating statement of the property,

(ii) the purchase agreement includes representations and warranties by the seller that the amounts presented in the operating statement agree to the seller's books and records, and

(iii) the offering memorandum discloses

1. that the issuer was unable to obtain an audited operating statement,

2. the reasons for that inability,

3. the fact that the purchase agreement includes the representations and warranties referred to in D.5(b)(ii), and

4. that the results presented in the operating statements may have been materially different if the statements had been audited.


October 16, 2009 (2009) 32 OSCB 8495

Appendix C

Schedule C-2 Blackline Showing Proposed Changes to Form 45-106F3 Offering Memorandum for Qualifying Issuers

Form 45-106F3 Offering Memorandum for Qualifying Issuers

Date: [Insert the date from the certificate page.]

The Issuer

Name:Head office: Address: Phone #: E-mail address: Fax #: Where currently listed or quoted? [e.g., TSX/TSX Venture Exchange] Jurisdictions in which the issuer is a reporting issuer:

The Offering

Securities offered: Price per security: Minimum/Maximum offering: [If there is no minimum state in bold: “There is no minimum.” and also state in bold type: “Youmay be the only purchaser.”]State in bold type: Funds available under the offering may not be sufficient to accomplish our proposed objectives.Minimum subscription amount: [State the minimum amount each investor must invest, or state “There is no minimum subscription amount an investor must invest.”] Payment terms: Proposed closing date(s): Income Tax consequences: “There are important tax consequences to these securities. See item 6.” [If income tax consequences are not material, delete this item.] Selling agent? [Yes/No. If yes, state “See item 7”. The name of the selling agent may also be stated.]

Resale restrictions

State: “You will be restricted from selling your securities for 4 months and a day. See item 10”.

Purchaser’s rights

State: “You have 2 business days to cancel your agreement to purchase these securities. If there is a misrepresentation in thisoffering memorandum, you have the right to sue either for damages or to cancel the agreement. See item 11.”

State in bold type: “No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this offering memorandum. Any representation to the contrary is an offence. This is a risky investment. See item 8.” [All of the above information must appear on a single cover page.]

Item 1: Use of Available Funds

1.1 Available Funds - Using the following table, disclose the funds available as a result of the offering. If the issuer plans to combine additional sources of funding with the available funds from the offering to achieve its principal capital-raising purpose, please provide details about each additional source of funding. If there is no minimum offering, state “$0” as the minimum.

Disclose also the amount of any working capital deficiency, if any, of the issuer as at a date not more than 30 days prior to the date of the offering memorandum. If the working capital deficiency will not be eliminated by the use of available funds, statehow the issuer intends to eliminate or manage the deficiency.


October 16, 2009 (2009) 32 OSCB 8496

Assuming min. offering

Assuming max. offering

A Amount to be raised by this offering $ $ B Selling commissions and fees $ $ C Estimated offering costs (e.g., legal, accounting, audit) $ $ D Available funds: D = A - (B+C) $ $ E. Additional sources of funding required $ $ F. Working capital deficiency $ $ H. Total: H = (D+E) – F $ $

1.2 Use of Available Funds - Using the following table, provide a detailed breakdown of how the issuer will use the available funds. If any of the available funds will be paid to an insider, associate or affiliate of the issuer, disclose in a note to the table the name of the insider, associate or affiliate, the relationship to the issuer, and the amount. If the issuer has a working capital deficiency, disclose the portion, if any, of the available funds to be applied against the working capital deficiency. If more than 10% of the available funds will be used by the issuer to pay debt and the issuer incurred the debt within the two precedingfinancial years, describe why the debt was incurred.

Description of intended use of available funds listed in order of priority. Assuming min. offering

Assuming max. offering

$ $ $ $

Total: Equal to G in the Funds table above $ $

1.3 Reallocation - The available funds must be used for the purposes disclosed in the offering memorandum. The board of directors can reallocate the proceeds to other uses only for sound business reasons. If the available funds may be reallocated, include the following statement:

“We intend to spend the available funds as stated. We will reallocate funds only for sound business reasons.”

1.4 Insufficient Funds - If applicable, disclose that the funds available as a result of the offering either may not or will not be sufficient to accomplish all of the issuer’s proposed objectives and that there is no assurance that alternative financing will be available. If alternative financing has been arranged, disclose the amount, source and any outstanding conditions that must be satisfied.

Item 2: Information About [name of issuer or other term used to refer to issuer]

2.1 Business Summary - Briefly (in one or two paragraphs) describe the business intended to be carried on by the issuer over the next 12 months. State whether this represents a change of business. The disclosure must provide sufficient information to enable a prospective purchaser to make an informed investment decision. If the issuer is a non-resource issuer,describe the products that the issuer is or will be developing or producing and the stage of development of each of the products. If the issuer is a resource issuer, state: whether the issuer’s principal properties are primarily in the exploration or in thedevelopment or production stage; what resources the issuer is engaged in exploring, developing or producing; and the locations of the issuer’s principal properties. A resource issuer who discloses information about its oil and gas activities must follow General Instruction A-9 of this Form.

2.2 Existing Documents Incorporated by Reference - State:

“Information has been incorporated by reference into this offering memorandum from documents listed in the table below, which have been filed with securities regulatory authorities or regulators in Canada. The documents incorporated by reference are available for viewing on the SEDAR website at www.sedar.com. In addition, copies of the documents may be obtained on request without charge from [insert complete address and telephone and the name of a contact person].

Documents listed in the table and information provided in those documents are not incorporated by reference to the extent that their contents are modified or superseded by a statement in this offering memorandum or in any other subsequently filed document that is also incorporated by reference in this offering memorandum.”


October 16, 2009 (2009) 32 OSCB 8497

Using the following table, list all of the documents incorporated by reference (as required by Instruction D.1):

Description of document (In the case of material change reports, provide a brief description of the nature of the material change) Date of document

2.3 Existing Documents Not Incorporated by Reference - State:

“Other documents available on the SEDAR website (for example, most press releases, take-over bid circulars, prospectuses and rights offering circulars) are not incorporated by reference into this offering memorandum unless they are specifically referenced in the table above. Your rights as described in item 11 of this offering memorandum apply only in respect of information contained in this offering memorandum and documents or information incorporated by reference.”

2.4 Existing Information Not Incorporated by Reference - Certain specified information (as outlined in Instruction D.2) contained in the documents incorporated by reference may be, but is not required to be, incorporated by reference into the offering memorandum. If the issuer does not wish to incorporate that information into the offering memorandum, the issuer muststate that and include a statement in the offering memorandum identifying:

(a) the information that is not being incorporated by reference, and (b) the document in which the information is contained.

2.5 Future Documents Not Incorporated by Reference - State:

“Documents filed after the date of this offering memorandum are not deemed to be incorporated into this offering memorandum. However, if you subscribe for securities and an event occurs, or there is a change in our business or affairs, that makes the certificate to this offering memorandum no longer true, we will provide you with an update of this offering memorandum, including a newly dated and signed certificate, and will not accept your subscription until you have re-signed the agreement to purchase the securities.”

Item 3: Interests of Directors, Executive Officers, Promoters and Principal Holders

3.1 Using the following table, provide information about each director, executive officer, promoter and each person who, directly or indirectly, beneficially owns or controls 10% or more of any class of voting securities of the issuer (a “principalholder”). If the principal holder is not an individual, state in a note to the table the name of any person or company that, directly or indirectly, beneficially owns or controls more than 50% of the voting rights of the principal holder.

Name and municipality of principal residence Position(s) with the issuer

3.2 State: “You can obtain further information about directors and executive officers from [insert the name and date of the document(s) with the most current information, e.g., management information circular, annual information form or material change report].”

3.3 State: “Current information regarding the securities held by directors, executive officers and principal holders can be obtained from [refer to the SEDI website at www.sedi.ca or, if information cannot be obtained from the SEDI website, refer to the securities regulatory authority(ies) or regulator(s) from which the information can be obtained, including any website(s)]. [Name of issuer or other term used to refer to issuer] can not guarantee the accuracy of this information.”

3.4 Loans - Disclose the principal amount of any debenture or loan, the repayment terms, security, due date and interest rate due to or from the directors, management, promoters and principal holders as at a date not more than 30 days prior to the date of the offering memorandum.

Item 4: Capital Structure

Using the following table, provide the required information about outstanding securities of the issuer (including options, warrantsand other securities convertible into shares). If necessary, notes to the table may be added to describe the material terms of the securities.


October 16, 2009 (2009) 32 OSCB 8498

Description of security

Number authorized to be issued

Price per security

Number outstanding as at [a date not more than 30 days prior to the offering memorandum date]

Number outstanding after min. offering

Number outstanding after max. offering

Item 5: Securities Offered

5.1 Terms of Securities - Describe the material terms of the securities being offered, including:

(a) voting rights or restrictions on voting, (b) conversion or exercise price and date of expiry, (c) rights of redemption or retraction, and (d) interest rates or dividend rates.

5.2 Subscription Procedure

(a) Describe how a purchaser can subscribe for the securities and the method of payment. (b) State that the consideration will be held in trust and the period that it will be held (refer at least to the

mandatory two day period). (c) Disclose any conditions to closing e.g., receipt of additional funds from other sources. If there is a minimum

offering, disclose when consideration will be returned to purchasers if the minimum is not met.

Item 6: Income Tax Consequences and RRSP Eligibility

6.1 State: “You should consult your own professional advisers to obtain advice on the income tax consequences that apply to you”.

6.2 If income tax consequences are a material aspect of the securities being offered (e.g., flow-through shares), provide

(a) a summary of the significant income tax consequences to Canadian residents, and (b) the name of the person or company providing the income tax disclosure in (a).

6.3 Provide advice regarding the RRSP eligibility of the securities and the name of the person or company providing the advice or state “Not all securities are eligible for investment in a registered retirement savings plan (RRSP). You should consult your own professional advisers to obtain advice on the RRSP eligibility of these securities.”

Item 7: Compensation Paid to Sellers and Finders

If any person or company has or will receive any compensation (e.g., commission, corporate finance fee or finder’s fee) in connection with the offering, provide the following information to the extent applicable:

(a) a description of each type of compensation and the estimated amount to be paid for each type, (b) if a commission is being paid, the percentage that the commission will represent of the gross proceeds of the

offering (assuming both the minimum and maximum offering), (c) details of any broker’s warrants or agent’s option (including number of securities under option, exercise price

and expiry date), and (d) if any portion of the compensation will be paid in securities, details of the securities (including number, type

and, if options or warrants, the exercise price and expiry date).

Item 8: Risk Factors

Describe in order of importance, starting with the most important, the risk factors material to the issuer that a reasonable investor would consider important in deciding whether to buy the issuer’s securities.


October 16, 2009 (2009) 32 OSCB 8499

Risk factors will generally fall into the following three categories:

(a) Investment Risk - risks that are specific to the securities being offered. Some examples include • arbitrary determination of price, • no market or an illiquid market for the securities, • resale restrictions, and • subordination of debt securities.

(b) Issuer Risk - risks that are specific to the issuer. Some examples include • insufficient funds to accomplish the issuer’s business objectives, • no history or a limited history of salesrevenue or profits, • lack of specific management or technical expertise, • management’s regulatory and business track record, • dependence on key employees, suppliers or agreements, • dependence on financial viability of guarantor, • pending and outstanding litigation, and • political risk factors.

(c) Industry Risk - risks faced by the issuer because of the industry in which it operates. Some examples include • environmental and industry regulation, • product obsolescence, and • competition.

Item 9: Reporting Obligations

9.1 Disclose the documents that will be sent to purchasers on an annual or on-going basis.

9.2 If corporate or securities information about the issuer is available from a government, securities regulatory authority or regulator, SRO or quotation and trade reporting system, disclose where that information can be located (including website address).

Item 10: Resale Restrictions

For trades in Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Québec, Saskatchewan and Yukon, state:

“These securities will be subject to a number of resale restrictions, including a restriction on trading. Until the restriction on trading expires, you will not be able to trade the securities unless you comply with an exemption from the prospectus and registration requirements under securities legislation.

Unless permitted under securities legislation, you cannot trade the securities before the date that is 4 months and a day after the distribution date.”

Item 11: Purchasers’ Rights

State the following:

“If you purchase these securities you will have certain rights, some of which are described below. For information about your rights you should consult a lawyer.

(1) Two-Day Cancellation Right - You can cancel your agreement to purchase these securities. To do so, you must send a notice to us by midnight on the 2nd business day after you sign the agreement to buy the securities.

(2) Statutory Rights of Action in the Event of a Misrepresentation - [Insert this section only if the securities legislation of the jurisdiction in which the trade occurs provides purchasers with statutory rights in the event of a misrepresentation in an offering memorandum. Modify the language, if necessary, to conform to the statutory rights.] If there is a misrepresentation inthis offering memorandum, you have a statutory right to sue:

(a) [name of issuer or other term used to refer to issuer] to cancel your agreement to buy these securities, or (b) for damages against [state the name of issuer or other term used to refer to issuer and the title of any other

person or company against whom the rights are available].


October 16, 2009 (2009) 32 OSCB 8500

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are variousdefences available to the persons or companies that you have a right to sue. In particular, they have a defence if you knew ofthe misrepresentation when you purchased the securities.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must commence your action to cancel the agreement within [state time period provided by the securities legislation]. You must commence your action for damages within [state time period provided by the securities legislation].

(3) Contractual Rights of Action in the Event of a Misrepresentation - [Insert this section only if the securities legislation of the jurisdiction in which the purchaser is resident does not provide purchasers with statutory rights in the event of a misrepresentation in an offering memorandum.] If there is a misrepresentation in this offering memorandum, you have a contractual right to sue [name of issuer or other term used to refer to issuer]:

(a) to cancel your agreement to buy these securities, or (b) for damages.

This contractual right to sue is available to you whether or not you relied on the misrepresentation. However, in an action fordamages, the amount you may recover will not exceed the price that you paid for your securities and will not include any part ofthe damages that [name of issuer or other term used to refer to issuer] proves does not represent the depreciation in value of the securities resulting from the misrepresentation. [Name of issuer or other term used to refer to issuer] has a defence if itproves that you knew of the misrepresentation when you purchased the securities.

If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must commence your action to cancel the agreement within 180 days after you signed the agreement to purchase the securities. You must commence your action for damages within the earlier of 180 days after learning of the misrepresentation and 3 years after you signed the agreement to purchase the securities.”

Item 12: Date and Certificate

State the following on the certificate page of the offering memorandum:

“Dated [insert the date the certificate page of the offering memorandum is signed].

This offering memorandum does not contain a misrepresentation.”


October 16, 2009 (2009) 32 OSCB 8501

Instructions for Completing Form 45-106F3

Offering Memorandum for Qualifying Issuers

A. General Instructions

1. Only a “qualifying issuer” may use this form.

2. An issuer using this form to draft an offering memorandum must incorporate by reference certain parts of its existing continuous disclosure base. An issuer that does not want to do this must use Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers.

3. Draft the offering memorandum so that it is easy to read and understand. Be concise and use clear, plain language. Avoid technical terms. If technical terms are necessary, provide definitions.

4. Address the items required by the form in the order set out in the form. However, it is not necessary to provide disclosure about an item that does not apply.

5. The issuer may include additional information in the offering memorandum other than that specifically required by the form. The offering memorandum is generally not required to contain the level of detail and extent of disclosure required by a prospectus. However, an offering memorandum must provide a prospective purchaser with sufficient information to make an informed investment decision.

6. The issuer may wrap the offering memorandum around a prospectus or similar document. However, all matters required to be disclosed by the offering memorandum must be addressed and the offering memorandum must provide a cross-reference to the page number or heading in the wrapped document where the relevant information is contained. The certificate to the offering memorandum must be modified to indicate that the offering memorandum, including the document around which it is wrapped, does not contain a misrepresentation.

7. It is an offence to make a misrepresentation in the offering memorandum. This applies both to information that is required by the form and to additional information that is provided. Include particulars of any material facts, which have not been disclosed under any of the Item numbers and for which failure to disclose would constitute a misrepresentation in the offering memorandum. Refer also to section 3.8(3) of Companion Policy 45-106CP for additional information.

8. Refer to National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) when disclosing scientific or technical information for a mineral project of the issuer.

9. If an oil and gas issuer is disclosing information about its oil and gas activities it must ensure that the information is disclosed in accordance with Part 4 and Part 5 of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101). Under section 5.3 of NI 51-101 disclosure of reserves or resources must be consistent with the reserves and resources terminology and categories set out in the Canadian Oil and Gas Evaluation Handbook. For the purposes of this instruction, references to reporting issuer in Part 4 and Part 5 of NI 51-101 will be deemed to include all issuers.

10. Securities legislation restricts what can be told to investors about the issuer’s intent to list or quote securities on an exchange or market. Refer to applicable securities legislation before making any such statements.

11. If an issuer uses this form in connection with a distribution under an exemption other than section 2.9 (offering memorandum) of National Instrument 45-106 Prospectus and Registration Exemptions, the issuer must modify the disclosure in item 12 to correctly describe the purchaser’s rights. If a purchaser does not have statutory or contractual rights of action in the event of a misrepresentation in the offering memorandum, that fact must be stated in bold on the face page.

12. During the course of a distribution of securities, any material forward-looking information disseminated must only be that which is set out in the offering memorandum. If an extract of FOFI, as defined in NI 51-102 Continuous Disclosure Obligations (NI 51-102), is disseminated, the extract or summary must be reasonably balanced and have a cautionary note in boldface stating that the information presented is not complete and that complete FOFI is included in the offering memorandum.


October 16, 2009 (2009) 32 OSCB 8502

B. Financial Statements

1. All financial statements incorporated by reference into the offering memorandum must comply with NI 51-102 and National Instrument 52-107 Acceptable Accounting Principles, and Auditing Standards and Reporting Currency.

2. Forward-looking information included in an offering memorandum must comply with section 4A.2 of NI 51-102 and must include the disclosure described in section 4A.3 of NI 51-102. In addition to the foregoing, FOFI or a financial outlook, each as defined in NI 51-102, included in an offering memorandum must comply with Part 4B of NI 51-102. Additional guidance may be found in the companion policy to NI 51-102.

C. Required Updates to the Offering Memorandum

1. If the offering memorandum does not incorporate by reference the issuer's AIF, and audited financial statements for its most recently completed financial year, update the offering memorandum for any financial statements that are required to be filed prior to the distribution to incorporate by reference the documents as soon as the documents are filed on SEDAR.

2. Except for documents referred to in C.1, the offering memorandum does not have to be updated to incorporate by reference interim financial statementsreports or other documents referred to in D.1 unless it is necessary to do so to prevent the offering memorandum from containing a misrepresentation.

D. Information about the Issuer

1. Existing Documents Incorporated by Reference - In addition to any other document that an issuer may choose to incorporate by reference, the issuer must incorporate the following documents:

(a) the issuer’s AIF for the issuer’s most recently completed financial year for which annual financial statements are either required to be filed or have been filed,

(b) material change reports, except confidential material change reports, filed since the end of the financial year in respect of which the issuer’s AIF is filed,

(c) the interim financial statementsreport for the issuer’s most recently completed interim period for which the issuer prepares an interim financial statementsreport that areis required to be filed or have been filed and which ends after the most recently completed financial year referred to in (d),

(d) the comparative financial statements, together with the accompanying auditor’s report, for the issuer’s most recently completed financial year for which annual financial statements are required to be filed or have been filed,

(e) if, before the offering memorandum is filed, financial information about the issuer for a financial period more recent than the period for which financial statements are required under D.1(c) and (d) is publicly disseminated by, or on behalf of, the issuer through news release or otherwise, the content of the news release or public communication,

(f) management’s discussion and analysis (MD&A) as required under NI 51-102 for the period specified in D.1(c) and D.1(d),

(g) each business acquisition report required to be filed under NI 51-102 for acquisitions completed since the beginning of the financial year in respect of which the issuer’s AIF is filed, unless the issuer incorporated the business acquisition report by reference into its AIF for its most recently completed financial year for which annual financial statements are either required to be filed or have been filed, or incorporated at least 9 months of the acquired business or related businesses operations into the issuer’s most recent audited financial statements,

(h) any information circular filed by the issuer since the beginning of the financial year in respect of which the issuer’s most recent AIF is filed, other than an information circular prepared in connection with an annual general meeting if the issuer has filed and incorporated by reference an information circular for a subsequent annual general meeting,

(i) if the issuer has oil and gas activities, as defined in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, the most recent Form 51-101F1, Form 51-101F2 and Form 51-101F3, filed by an SEC issuer, unless


October 16, 2009 (2009) 32 OSCB 8503

(i) the issuer's current AIF is in the form of Form 51-102F2;or

(ii) the issuer is otherwise exempted from the requirements of NI 51-101,

(j) any other disclosure document which the issuer has filed pursuant to an undertaking to a provincial and territorial securities regulatory authority or regulator since the beginning of the financial year in respect of which the issuer’s most recent AIF is filed, and

(k) any other disclosure document of the type listed above that the issuer has filed pursuant to an exemption from any requirement under securities legislation since the beginning of the financial year in respect of which the issuer’s most recent AIF is filed.

2. Mineral Property – If a material part of the funds available as a result of the distribution is to be expended on a particular mineral property and if the issuer’s most recent AIF does not contain the disclosure required under section 5.4 of Form 51-102F2 for the property or that disclosure is inadequate or incorrect due to changes, disclose the information required under section 5.4 of Form 51-102F2.

An issuer may incorporate any additional document provided that the document is available for viewing on the SEDAR website and that, on request by a purchaser, the issuer provides a copy of the document to the purchaser, without charge.


October 16, 2009 (2009) 32 OSCB 8504

Appendix D

Additional Information Required in Ontario

Authority for Amendments – Ontario

In Ontario, paragraphs 8 and 20 of subsection 143(1) of the Securities Act give the Ontario Securities Commission the authority to make the proposed amendments.

Chapter 7

Insider Reporting This chapter is available in the print version of the OSC Bulletin, as well as as in Carswell's internet service SecuritiesScource (see www.carswell.com). This chapter contains a weekly summary of insider transactions of Ontario reporting issuers in the System for Electronic Disclosure by Insiders (SEDI). The weekly summary contains insider transactions reported during the seven days ending Sunday at 11:59 pm. To obtain Insider Reporting information, please visit the SEDI website (www.sedi.ca).

October 16, 2009 (2009) 32 OSCB 8613

Chapter 8

Notice of Exempt Financings

REPORTS OF TRADES SUBMITTED ON FORMS 45-106F1 AND 45-501F1

Transaction Date

# of Purchasers

Issuer/Security Total Purchase Price ($)

# of Securities Distributed

09/04/2009 14 Annapolis Investment Limited Partnership V - Units

18,300,000.00 18,300,000.00

09/21/2009 28 Canadian Platinum Corp. - Common Shares

1,535,000.00 14,080,000.00

01/01/2008 to 12/31/2008

6 Canso Bank Loan Fund - Units 12,419,328.85 N/A

01/01/2008 to 12/31/2008

2 Canso Canadian Bond Fund - Units 1,014,500.00 N/A

01/01/2008 to 12/31/2008

3 Canso Canadian Equity Fund - Units 66,452.00 N/A

01/01/2008 to 12/31/2008

3 Canso Catalina Fund - Units 33,488.11 N/A

01/01/2008 to 12/31/2008

7 Canso Corporate and Infrastructure Debt Fund - Units

92,084.52 N/A

01/01/2008 to 12/31/2008

5 Canso Corporate and Infrastructure Debt Fund - Units

23,702,081.59 -10.00

01/01/2008 to 12/31/2008

3 Canso Corporate Bond Fund - Units 2,121,861.82 N/A

01/01/2008 to 12/31/2008

9 Canso Corporate Bond Fund - Units 17,416,457.20 N/A

01/01/2008 to 12/31/2008

15 Canso Corporate Value Fund - Units 1,069,570.43 N/A

01/01/2008 to 12/31/2008

46 Canso Corporate Value Fund - Units 11,263,432.51 N/A

01/01/2008 to 12/31/2008

2 Canso Credit Opportunities Fund - Units 35,000.00 N/A

01/01/2008 to 12/31/2008

9 Canso Hurricane Fund - Units 326,442.14 N/A

01/01/2008 to 12/31/2008

4 Canso Income Fund - Units 108,419.80 N/A

01/01/2008 to 12/31/2008

10 Canso India Fund - Units 87,433.97 N/A

01/01/2008 to 12/31/2008

5 Canso Inflation-Linked Fund - Units 442,656.55 N/A

01/01/2008 to 12/31/2008

1 Canso Long/Short Fund - Units 1,125,029.97 N/A

01/01/2008 to 12/31/2008

2 Canso North Star Fund - Units 34,875.35 7,218.01


October 16, 2009 (2009) 32 OSCB 8614

Transaction Date

# of Purchasers



01/01/2008 to 12/31/2008

1 Canso Private Debt Fund - Units 1,637,676.76 N/A

01/01/2008 to 12/31/2008

1 Canso Reconnaissance Fund - Units 152,802.78 N/A

01/01/2008 to 12/31/2008

2 Canso Retirement and Savings Fund - Units

861,367.37 N/A

01/01/2008 to 12/31/2008

1 Canso Salvage Fund - Units 65,000.00 N/A

01/01/2008 to 12/31/2008

11 Canso Short Term and Floating Rate Income Fund - Flow-Through Shares

1,497,282.75 N/A

10/01/2009 2 Capital Direct I Income Trust - Units 177,000.00 17,700.00

09/18/2009 to 09/27/2009

26 CBI Property Income Corp. - Notes 849,000.00 8,588.00

09/20/2009 to 09/29/2009

15 CMC Markets UK plc - Contracts for Differences

64,960.56 N/A

09/29/2009 1 Colony Financial, Inc. - Common Shares 2,174,000.00 100,000.00

09/28/2009 1 Consolidated Abaddon Resources Inc. - Common Shares

4,250.00 50,000.00

09/10/2009 1 Cree, Inc. - Common Shares 11,514,000.00 11,000,000.00

01/01/2008 to 12/31/2008

1 Dakota Fund - Units 52,007.79 N/A

09/22/2009 1 Development Notes Limited Partnership - Units

225,000.00 1.00

09/23/2009 21 DOT Resources Ltd. - Flow-Through Units 854,059.96 14,234,332.00

09/22/2009 1 First Leaside Expansion Limited Partnership - Units

175,000.00 175,000.00

09/23/2009 to 09/24/2009

1 First Leaside Expansion Limited Partnership - Units

80,000.00 80,000.00

09/21/2009 to 09/22/2009

2 First Leaside Fund - Trust Units 110,000.00 110,000.00

09/24/2009 to 09/29/2009

4 First Leaside Fund - Trust Units 455,840.00 455,840.00

09/25/2009 1 First Leaside Fund - Trust Units 153,517.00 153,517.00

09/21/2009 to 09/22/2009

2 First Leaside Premier Limited Partnership - Units

250,000.00 229,992.00

09/25/2009 1 First Leaside Premier Limited Partnership - Units

300,000.00 272,727.00

09/17/2009 to 09/22/2009

4 First Leaside Progressive Limited Partnership - Units

625,000.00 625,000.00

09/24/2009 to 09/25/2009

2 First Leaside Progressive Limited Partnership - Units

550,000.00 550,000.00

09/17/2009 to 09/18/2009

3 First Leaside Wealth Management Inc. - Preferred Shares

496,976.00 496,976.00


October 16, 2009 (2009) 32 OSCB 8615

Transaction Date

# of Purchasers



09/23/2009 1 First Leaside Wealth Management Inc. - Preferred Shares

12,901.00 12,901.00

09/18/2009 1 Fuel Transfer Technologies Inc. - Preferred Shares

5,200.00 1,600.00

09/14/2009 to 09/18/2009

12 IGW Real Estate Investment Trust - Trust Units

336,142.56 342,495.73

08/31/2009 6 Newstart Canada - Notes 179,000.00 1.00

09/01/2009 3 North American Financial Group Inc. - Debt 220,000.00 N/A

09/22/2009 91 Parlane Resource Corp. - Common Shares 1,020,000.00 6,000,000.00

09/16/2009 1 Ramco-Gershenson Properties Trust - Common Shares

17,220.75 12,075,000.00

09/11/2009 60 Richfield Ventures Corp. - Flow-Through Shares

867,299.65 6,118,875.00

09/16/2009 2 RTI International Metals, Inc. - Common Shares

53,315,000.00 6,900,000.00

01/01/2008 to 12/31/2008

4 The Canso Fund - Units 91,863.74 N/A

09/09/2009 10 Travelzest plc - Common Shares 10,194,810.15 114,170,000.00

08/13/2009 to 08/20/2009

17 Viridis Energy Inc. - Common Shares 525,000.00 5,250,000.00

09/09/2009 36 Wealth Minerals Inc. - Common Shares 1,049,620.00 4,037,000.00

01/01/2008 to 12/31/2008

1 Wellington Fund - Units 4,385.69 874.92


October 16, 2009 (2009) 32 OSCB 8616


October 16, 2009 (2009) 32 OSCB 8617

Chapter 11

IPOs, New Issues and Secondary Financings

Issuer Name: Ag Growth International Inc. Principal Regulator - Manitoba Type and Date: Preliminary Short Form Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $100,000,000.00 - 7.0% Convertible Unsecured Subordinated Debentures Price: $1,000.00 per Debenture Underwriter(s) or Distributor(s): TD Securities Inc. CIBC World Markets Inc. National Bank Financial Inc. Cormark Securities Inc. Wellington West Capital Markets Inc. Genuity Capital Markets Macquarie Capital Markets Canada Ltd. Promoter(s):-Project #1484681

_______________________________________________ Issuer Name: Air Canada Principal Regulator - Quebec Type and Date: Preliminary Short Form Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $260,010,000.00 - 160,500,000 Units Price: $1.62 per Unit Underwriter(s) or Distributor(s): Genuity Capital Markets G.P. TD Securities Inc. National Bank Financial Inc. GMP Securities L.P. Raymond James Ltd. Salman Partners Inc. Promoter(s):-Project #1484667

_______________________________________________

Issuer Name: Core Canadian Dividend Trust Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: Warrants to Subscribe for up to Units at a Subscription Price of $* Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484324

_______________________________________________ Issuer Name: First Premium Income Trust Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: Warrants to Subscribe for up to * Units at a Subscription Price of $* Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484325

______________________________________________ Issuer Name: Gammon Gold Inc. Principal Regulator - Quebec Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated Offering Price and Description: US$ * - * Common Shares Price: US$ * per Common Share Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc.UBS Securities Canada Inc. Dundee Securities Corporation Macquarie Capital Markets Canada Ltd. Canaccord Capital Corporation Research Capital Corporation Promoter(s):-Project #1483634

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8618

Issuer Name: Gammon Gold Inc. Principal Regulator - Quebec Type and Date: Amended and Restated Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: US$100,036,000.00 - 11,240,000 Common Shares Price: U.S.$8.90 per Purchased Share Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc.UBS Securities Canada Inc. Dundee Securities Corporation Macquarie Capital Markets Canada Ltd. Canaccord Capital Corporation Research Capital Corporation Promoter(s):-Project #1483634

_______________________________________________ Issuer Name: Horizons AlphaPro Seasonal Rotation ETF Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated October 6, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: -Underwriter(s) or Distributor(s): -Promoter(s):AlphaPro Management Inc. Project #1483660

_______________________________________________ Issuer Name: IA Clarington Inhance Balanced SRI Portfolio IA Clarington Inhance Canadian Equity SRI Class IA Clarington Inhance Conservative SRI Portfolio IA Clarington Inhance Global Equity SRI Class IA Clarington Inhance Growth SRI Portfolio IA Clarington Inhance Monthly Income SRI Fund Principal Regulator - Quebec Type and Date: Preliminary Simplified Prospectuses dated October 2, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: Series A, F, T6, I and V Units Series A, F, T6, I and V Class of Shares Underwriter(s) or Distributor(s): -Promoter(s):Clarington Sector Fund Inc. Project #1483183

_______________________________________________

Issuer Name: Invesco Canadian Dividend Index Class Invesco FTSE RAFI Canadian Fundamental Index Class PowerShaers FTSE RAFI Emerging Markets Fundamental ClassPowerShares Global Agriculture Class PowerShares Global Clean Energy Class PowerShares Global Gold and Precious Metals Class PowerShares Global Water Class PowerShares Golden Dragon China Class PowerShares India Class Principal Jurisdiction - OntarioType and Date: Preliminary Simplified Prospectuses dated October 5, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: Series A, F and I Shares Underwriter(s) or Distributor(s): -Promoter(s):Invesco Trimark Ltd. Project #1483518

_______________________________________________ Issuer Name: Jov Diversified Flow-Through 2009 Limited Partnership Principal Regulator - British Columbia Type and Date: Preliminary Long Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: $25,000,000.00 (Maximum) 1,000,000 Limited Partnership Units Price per Unit: $25.00 Minimum Purchase: $5,000 (200 Units) Underwriter(s) or Distributor(s): CIBC World Markets Inc. BMO Nesbitt Burns Inc. HSBC Securities (Canada) Inc. National Bank Financial Inc. Scotia Capital Inc. TD Securities Inc. Canaccord Capital Corporation Dundee Securities Corporation Manulife Securities Incorporated Wellington West Capital Markets Inc. Blackmont Capital Inc. M Partners Inc. GMP Securities L.P. MGI Securities Limited Promoter(s):Jov Flow-Through Holdings Corp. Project #1483787

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8619

Issuer Name: Lazard Global Convertible Bond Fund Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated October 8, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: $ * - * Units - Price: $10.00 per Unit Minimum Purchase: 200 Units Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc.CIBC World Markets Inc. RBC Dominion Securities Inc. Scotia Capital Inc. Canaccord Capital Corporation Dundee Securities Corporation HSBC Securities (Canada) Inc. Raymond James Ltd. Blackmont Capital Inc.Rothenberg Capital Management Inc. Wellington West Capital Markets Inc. Desjardins Securities Inc. GMP Securities L.P. Manulife Securities Incorporated Research Capital Corporation Promoter(s):Navina Capital Corp. Project #1484233

_______________________________________________ Issuer Name: Newalta Inc. Principal Regulator - Alberta Type and Date: Preliminary Short Form Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $40,162,500.00 -5,250,000 Common Shares Price: $7.65 per Share Underwriter(s) or Distributor(s): CIBC World Markets Inc. Canaccord Capital Corporation RBC Dominion Securities Inc. BMO Nesbitt Burns Inc. National Bank Financial Inc. Promoter(s):-Project #1484642

_______________________________________________

Issuer Name: OCP Investment Trust Principal Regulator - Ontario Type and Date: Preliminary Long Form Non-Offering Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 13, 2009 Offering Price and Description: -Underwriter(s) or Distributor(s): -Promoter(s):Onex Credit Partners, LLC Project #1484914

_______________________________________________ Issuer Name: S Split Corp. Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: Warrants to Subscribe for up to * Units (each Unit consisting of consisting of one Class A Share and one Preferred Share) at a Subscription Price of $* Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484320

_______________________________________________ Issuer Name: Student Transportation of America Ltd. Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $45,000,000.00 -7.5% Convertible Subordinated Unsecured Debentures Price: $1,000 per Debenture Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc. CIBC World Markets Inc. Scotia Capital Inc. Cormark Securities Inc. Wellington West Capital Markets Inc. National Bank Financial Inc. Raymond James Ltd. Promoter(s):-Project #1484634

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8620

Issuer Name: Top 10 Canadian Financial Trust Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: Warrants to Subscribe for up to * Units at a Subscription Price of $* Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484322

_______________________________________________ Issuer Name: TransAlta Corporation Principal Regulator - Alberta Type and Date: Preliminary Base Shelf Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $1,000,000,000.00 - Common Shares First Preferred Shares, Warrants and Subscription Receipts Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484740

_______________________________________________ Issuer Name: World Financial Split Corp. Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: Warrants to Subscribe for up to * Units (each Unit consisting of consisting of one Class A Share and one Preferred Share) at a Subscription Price of $* Underwriter(s) or Distributor(s): -Promoter(s):-Project #1484321

_______________________________________________

Issuer Name: Argosy Energy Inc. Principal Regulator - Alberta Type and Date: Final Short Form Prospectus dated October 8, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: $6,000,000.00 - 4,800,000 Common Shares Issuable upon Exercise of Outstanding Special Warrants Underwriter(s) or Distributor(s): National Bank Financial Inc. Canaccord Capital Corporation Maison Placements Canada Inc. Promoter(s):-Project #1482320

_______________________________________________ Issuer Name: Avalon Rare Metals Inc. Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated October 6, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $17,514,250.00 - 6,745,000 Common Shares and 3,372,500 Common Share Purchase Warrants Issuable on Exercise of 6,745,000 Special Warrants; And 755,000 Flow-Through Common Shares Issuable on Exercise of 755,000 Flow-Through Special Warrants Underwriter(s) or Distributor(s): CIBC World Markets Inc. Cormark Securities Inc. Research Capital Corporation Promoter(s):-Project #1477800

_______________________________________________ Issuer Name: BE Resources Inc. Principal Regulator - Ontario Type and Date: Amendment #1 dated October 5, 2009 to the Long Form Prospectus dated September 30, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: Cdn$1,500,000.00 - 5,000,000 Shares at Cdn $0.30 per ShareUnderwriter(s) or Distributor(s): Canaccord Capital Corporation Promoter(s):-Project #1444606

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8621

Issuer Name: Calloway Real Estate Investment Trust Principal Regulator - Ontario Type and Date: Final Short Form Base Shelf Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $2,000,000,000.00: UnitsSubscription Receipts Warrants Debt Securities Underwriter(s) or Distributor(s): -Promoter(s):-Project #1482043

_______________________________________________ Issuer Name: Canadian Natural Resources Limited Principal Regulator - Alberta Type and Date: Final Shelf Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $3,000,000,000.00 - Medium Term Notes (unsecured) Underwriter(s) or Distributor(s): RBC Dominion Securities Inc. Scotia Capital Inc. CIBC World Markets Inc. BMO Nesbitt Burns Inc. Merrill Lynch Canada Inc. Desjardins Securities Inc. Promoter(s):-Project #1482206

_______________________________________________

Issuer Name: Dollarama Inc. Principal Regulator - Quebec Type and Date: Final Long Form Base PREP Prospectus dated October 8, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: $299,999,997.50 - 17,142,857 Common Shares Price: $17.50 per Common Share Underwriter(s) or Distributor(s): RBC Dominion Securities Inc. CIBC World Markets Inc. Credit Suisse Securities (Canada) Inc. Scotia Capital Inc. Barclays Capital Canada Inc. National Bank Financial Inc. Desjardins Securities Inc. HSBC Securities (Canada) Inc. Merrill Lynch Canada Inc. Raymond James Ltd. Promoter(s):-Project #1474736

_______________________________________________ Issuer Name: GENIVAR Income Fund Principal Regulator - Quebec Type and Date: Final Short Form Prospectus dated October 8, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: $99,999,375.00 - 3,809,500 units Price: $26.25 per Unit Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc. CIBC World Markets Inc. National Bank Financial Inc. Raymond James Ltd. TD Securities Inc. Canaccord Capital Corporation Desjardins Securities Inc. Laurentian Bank Securities Inc. Macquarie Capital Markets Canada Ltd. Blackmont Capital Inc. Cormark Securities Inc.Dundee Securities Corporation Promoter(s):-Project #1482129

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8622

Issuer Name: Harvest Banks & Buildings Income Fund Principal Regulator - Ontario Type and Date: Final Long Form Prospectus dated October 2, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: Maximum Offering: $75,000,000.00 (6,250,000 Units); Minimum Offering: $20,000,000.00 (1,666,667 Units) Minimum Purchase: 200 Units Price per Unit: $12.00 Underwriter(s) or Distributor(s): BMO Nesbitt Burns Inc. CIBC World Markets Inc. Scotia Capital Inc. HSBC Securities (Canada) Inc. Canaccord Capital Corporation Raymond James Ltd. Blackmont Capital Inc. Dundee Securities Corporation Wellington West Capital Markets Inc. Desjardins Securities Inc. GMP Securities L.P. Industrial Alliance Securities Inc. Promoter(s):Harvest Portfolios Group Inc. Project #1472310

_______________________________________________ Issuer Name: imaxx Global Equity Growth Fund Principal Regulator - Ontario Type and Date: Amendment #1 dated October 1, 2009 to the Simplified Prospectus and Annual Information Form dated May 28, 2009 NP 11-202 Receipt dated October 13, 2009 Offering Price and Description: A and F Class Units Underwriter(s) or Distributor(s): -Promoter(s):AEGON Fund Management Inc. Project #1406032

_______________________________________________ Issuer Name: Moly Mines Limited Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: C$31,500,000.00 - 42,000,000 Units (Each Unit consisting of one ordinary share and one-third of an ordinary share purchase warrant) Price: C$0.75 per Unit Underwriter(s) or Distributor(s): Paradigm Capital Inc. GMP Securities L.P. CIBC World Markets Inc. Promoter(s):-Project #1472622

_______________________________________________

Issuer Name: Northland Power Income Fund Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated October 7, 2009 NP 11-202 Receipt dated October 7, 2009 Offering Price and Description: $60,340,500.00 - 5,830,000 Trust Units; and $80,000,000.00 - 6.25% Convertible Unsecured Subordinated Debentures, Series A Due December 31, 2014 Price: $10.35 per Trust Unit Underwriter(s) or Distributor(s): CIBC World Markets Inc. BMO Nesbitt Burns Inc. National Bank Financial Inc. RBC Dominion Securities Inc. Scotia Capital Inc. Canaccord Capital Corporation FirstEnergy Capital Corp. Cormark Securities Inc. Macquarie Captial Markets Canada Ltd. Promoter(s):-Project #1481615

_______________________________________________ Issuer Name: Second Wave Petroleum Inc. Principal Regulator - Alberta Type and Date: Final Short Form Prospectus dated October 13, 2009 NP 11-202 Receipt dated October 13, 2009 Offering Price and Description: $13,501,600.00 - 9,644,000 Common Shares; and $3,000,500.00 - 1,765,000 Flow-Through Shares Price: $1.40per Common Share $1.70per Flow-Through Share Underwriter(s) or Distributor(s): Wellington West Capital Markets Inc. CIBC World Markets Inc.Acumen Capital Finance Partners Limited Promoter(s):-Project #1483119

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8623

Issuer Name: The Descartes Systems Group Inc. Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated October 13, 2009 NP 11-202 Receipt dated October 13, 2009 Offering Price and Description: $40,002,300.00 - 6,838,000 Common Shares Price: $5.85 per Share Underwriter(s) or Distributor(s): GMP Securities L.P. CIBC World Markets Inc.Thomas Weisel Partners Canada Inc. Versant Partners Inc. Paradigm Capital Inc. Promoter(s):-Project #1483009

_______________________________________________ Issuer Name: Transition Therapeutics Inc. Principal Regulator - Ontario Type and Date: Final Short Form Base Shelf Prospectus dated October 8, 2009 NP 11-202 Receipt dated October 8, 2009 Offering Price and Description: US$75,000,000.00: Common Shares Warrants UnitsUnderwriter(s) or Distributor(s): -Promoter(s):-Project #1480210

_______________________________________________ Issuer Name: Vector Aerospace Corporation Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated October 9, 2009 NP 11-202 Receipt dated October 9, 2009 Offering Price and Description: $45,085,000.00 - 7,100,000 Common Shares Price: $6.35 per Common Share Underwriter(s) or Distributor(s): TD Securities Inc. Dundee Securities Corporation CIBC World Markets Inc. Scotia Capital Inc. Versant Partners Inc. Promoter(s):-Project #1482918

_______________________________________________

Issuer Name: Webb Enhanced Growth Fund Webb Enhanced Income Fund Principal Regulator - Ontario Type and Date: Amendment #1 dated September 29, 2009 to the Simplified Prospectuses and Annual Information Forms dated July 29, 2009 NP 11-202 Receipt dated October 13, 2009 Offering Price and Description: -Underwriter(s) or Distributor(s): -Promoter(s):Webb Asset Management Canada, Inc. Project #1447924

_______________________________________________


October 16, 2009 (2009) 32 OSCB 8624


October 16, 2009 (2009) 32 OSCB 8625

Chapter 12

Registrations

12.1.1 Registrants

Type Company Category of Registration Effective Date

Name Change From: Vantage Capital LP

To: Guardian Capital Management LP

Exempt Market Dealer and Portfolio Manager

September 21, 2009

Consent to Suspension West Oak Capital Partners Inc. Exempt Market Dealer October 2, 2009

Consent to Suspension Windsong Partners Inc. Exempt Market Dealer October 2, 2009

Consent to Suspension Ewen Mackenzie Investment Advisors Ltd.

Portfolio Manager October 7, 2009

Consent to Suspension Montazah Equities Inc. Exempt Market Dealer October 8, 2009

Registrations

October 16, 2009 (2009) 32 OSCB 8626


October 16, 2009 (2009) 32 OSCB 8627

Chapter 13

SRO Notices and Disciplinary Proceedings

13.1.1 MFDA Hearing Panel accepts Settlement Agreement with Professional Investment Services (Canada) Inc.

NEWS RELEASE For immediate release

MFDA HEARING PANEL ACCEPTS SETTLEMENT AGREEMENT WITH

PROFESSIONAL INVESTMENT SERVICES (CANADA) INC.

October 9, 2009 (Toronto, Ontario) – A Settlement Hearing in the matter of Professional Investment Services (Canada) Inc. (the “Respondent”) was held today in Calgary, Alberta before a Hearing Panel of the Prairie Regional Council of the Mutual Fund Dealers Association of Canada (the “MFDA”).

The Hearing Panel accepted the Settlement Agreement between the Respondent and MFDA Staff, as a consequence of which the Respondent:

Has paid a fine in the amount of $50,000;

Has paid the costs of the proceeding in the amount of $25,000; and

Shall retain an independent monitor at its expense to resolve all existing compliance deficiencies and any deficiencies that the independent monitor identifies during its review.

The Hearing Panel will issue written reasons for its decision in due course. A copy of the Settlement Agreement is available on the MFDA website at www.mfda.ca.

The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 145 Members and their approximately 75,000 Approved Persons with a mandate to protect investors and the public interest.

For further information, please contact: Shaun Devlin Vice-President, Enforcement 416-943-4672 or [email protected]

13.1.2 MFDA Hearing Panel reserves judgment on motion in the Matter of Gary A. Price

NEWS RELEASE For immediate release

MFDA HEARING PANEL RESERVES JUDGMENT ON MOTION

IN THE MATTER OF GARY A. PRICE

October 13, 2009 (Toronto, Ontario) – The Mutual Fund Dealers Association of Canada (“MFDA”) commenced a disciplinary proceeding in respect of Gary Alan Price by Notice of Hearing dated June 23, 2008, amended by Order of the Hearing Panel on January 14, 2009.

As announced on July 23, 2009, the hearing of this matter with respect to penalty was scheduled to resume today, however the Hearing Panel agreed to hear a motion in camera brought by MFDA Enforcement Counsel. The Hearing Panel reserved its judgment with respect to the motion, and announced that it would issue its decision and written reasons in due course. The hearing with respect to penalty was adjourned to a date to be determined.

A copy of the Amended Notice of Hearing is available on the MFDA website at www.mfda.ca.

The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 145 Members and their approximately 75,000 Approved Persons with a mandate to protect investors and the public interest.

For further information, please contact: Marco Wynnyckyj Hearings Coordinator 416-945-5146 or [email protected]

SRO Notices and Disciplinary Proceedings

October 16, 2009 (2009) 32 OSCB 8628


October 16, 2009 (2009) 32 OSCB 8629

Index

1725587 Ontario Inc. Notice from the Office of the Secretary .....................8347 Order – s. 127 ...........................................................8362

Buchanan, Donald Iain Notice from the Office of the Secretary .....................8347

Order – s. 127 ...........................................................8362

Buchanan, Iain Notice from the Office of the Secretary .....................8346

Order – ss. 127(1), 127(8).........................................8360

Buchanan, Lisa Notice from the Office of the Secretary .....................8346 Notice from the Office of the Secretary .....................8347 Order – ss. 127(1), 127(8).........................................8360 Order – s. 127 ...........................................................8362

CMC Markets Canada Inc. Order – s. 74(1).........................................................8364

CMC Markets UK plc Order – s. 74(1).........................................................8364

Coalcorp Mining Inc. Cease Trading Order ................................................8379

Companion Policy 45-106CP Prospectus and Registration Exemptions Request for Comments ............................................8464

Companion Policy 81-101CP Mutual Fund Prospectus Disclosure

Request for Comments ............................................8381

Companion Policy 81-106CP Investment Fund Continuous Disclosure


Dragonwave Inc. Decision ....................................................................8349

Ewen Mackenzie Investment Advisors Ltd. Consent to Suspension.............................................8625

First Place Tower Brookfield Properties Inc. Decision ....................................................................8352

Form 41-101F2 Information Required in an Investment Fund Prospectus


Form 45-106F2 Offering Memorandum for Non-Qualifying Issuers


Form 45-106F3 Offering Memorandum for Qualifying Issuers

Request for Comments ............................................ 8464

Gale, Sandra Notice from the Office of the Secretary .................... 8347

Order – s. 127 .......................................................... 8362

Global Energy Group, Ltd. Notice from the Office of the Secretary .................... 8346

Order – ss. 127(1), 127(8) ........................................ 8359

Goldman, Sachs & Co. Decision - s. 127(2)(h) of the Regulation and s. 3.1

of the Rule ............................................................... 8355

Gold-Quest International, Notice from the Office of the Secretary .................... 8346

Notice from the Office of the Secretary .................... 8347 Order – ss. 127(1), 127(8) ........................................ 8360 Order – s. 127 .......................................................... 8362

Guardian Capital Management LP Name Change .......................................................... 8625

Harmoney Club Inc., Notice from the Office of the Secretary .................... 8347

Order – s. 127 .......................................................... 8362

Health and Harmoney, Notice from the Office of the Secretary .................... 8346

Notice from the Office of the Secretary .................... 8347 Order – ss. 127(1), 127(8) ........................................ 8360 Order – s. 127 .......................................................... 8362

JovInvestment Management Inc. and Order – ss. 78(1), 80 of the CFA .............................. 8371

Landen, Barry Notice of Hearing – s. 127 ........................................ 8342

Notice from the Office of the Secretary .................... 8345

Major Gold Ltd. Decision.................................................................... 8358

Montazah Equities Inc. Consent to Suspension ............................................ 8625

New Gold Limited Partnerships Notice from the Office of the Secretary .................... 8346

Order – ss. 127(1), 127(8) ........................................ 8359

NI 45-106 Prospectus and Registration Exemptions Request for Comments ............................................ 8464

NI 81-101 Mutual Fund Prospectus Disclosure Request for Comments ............................................ 8381

Index

October 16, 2009 (2009) 32 OSCB 8630

NI 81-102 Mutual Funds Request for Comments ............................................8381

NI 81-104 Commodity Pools Request for Comments ............................................8381

NI 81-106 Investment Fund Continuous Disclosure Request for Comments ............................................8381

Norwall Group Inc. Cease Trading Order ................................................8379

OSC Staff Notice 21-703 Transparency of the Operations of Stock Exchanges and Alternative Trading Systems News Release...........................................................8345

Price, Gary A. SRO Notices and Disciplinary Proceedings ..............8627

Professional Investment Services (Canada) Inc. SRO Notices and Disciplinary Proceedings ..............8627

Rahman, Monie Notice from the Office of the Secretary .....................8347 OSC Reasons ...........................................................8375

Redcorp Ventures Ltd. Cease Trading Order ................................................8379

Sprylogics International Corp. Cease Trading Order ................................................8379

Strategic Resource Acquisition Corporation Cease Trading Order ................................................8379

Suman, Shane Notice from the Office of the Secretary .....................8347

OSC Reasons ...........................................................8375

The Gartman Letter, L.C. Order – ss. 78(1) and s. 80 of the CFA .....................8371

Vantage Capital LP Name Change...........................................................8625

West Oak Capital Partners Inc. Consent to Suspension.............................................8625

Windsong Partners Inc. Consent to Suspension.............................................8625