Kingsgate Financial Group Limited - s. 5.1 of Rule 31-506

Headnote

Section 5.1 - OSC Rule 31-506 - exemption to mutual fund dealer from the requirement to be a member of the Mutual Fund Dealers Association of Canada - exemption for a limited period of time.

Applicable Ontario Securities Commission Rule

Rule 31-506 - SRO Membership - Mutual Fund Dealers.

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION RULE 31-506

SRO MEMBERSHIP B MUTUAL FUND DEALERS (the "Rule")

AND

IN THE MATTER OF

KINGSGATE FINANCIAL GROUP LIMITED

EXEMPTION

(Section 5.1 of the Rule)

UPON the Director having received an application (the "Application") from Kingsgate Financial Group Limited. ("Kingsgate") seeking a decision pursuant to section 5.1 of the Rule, to exempt Kingsgate from the application of section 2.1 of the Rule, which would require Kingsgate to be a member of the Mutual Fund Dealers Association of Canada(the "MFDA") by July 2, 2002 on the condition that Kingsgate is a member of the MFDA by April 1, 2003;

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

AND UPON Kingsgate having represented to the Director that:

1. Kingsgate is registered under the Act as a mutual fund dealer and has its head office in Ontario;

2. Kingsgate filed a membership application(the "MFDA Application") with the MFDA;

3. Kingsgate has complied, on a timely basis, with all requests by the MFDA for information and/or documents pertaining to its MFDA Application;

4. Kingsgate received an exemption from section2.1 of the Rule prior to July 2, 2002 ("the Initial Exemption")on the condition that Kingsgate was a member of the MFDA by December 1, 2002;

5. Kingsgate's has delivered to the MFDA an updated Financial Questionnaire and Report, a signed subordinated loan agreement and proof of a capital injection sufficient to rectify the risk adjusted capital deficiency it was experiencing;

6. Kingsgate is not aware of any issues which remain outstanding between it and the MFDA in respect of the MFDA Application;

7. Kingsgate is not, to its knowledge, in breach of any requirements of the Act or the regulations or rules made thereunder; and

8. Kingsgate will not be a member of the MFDA by December 1, 2002.

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 5.1 of the Rule, that Kingsgate is exempt from the requirement of section 2.1 of the Rule, as modified by the Initial Exemption, to be a member of the MFDA by December 1, 2002 on the condition that, from and after April 1, 2003, so long as Kingsgate is registered as a mutual fund dealer under the Act it is a member of the MFDA.

November 30, 2002.

"David M. Gilkes"