Norrep Performance 2006 Flow-Through Limited Partnership - MRRS Decision
Headnote
MRRS for exemptive relief applications - Exemption from Annual Information Form (AIF) Requirements of Part 9 of National Instrument 81-106 (NI 81-106) - Flow-through limited partnership issuer - seeks relief from AIF requirements - the costs of complying with AIF requirements in NI 81-106 far outweigh the benefits - limited partners have adequate alternative continuous disclosure in the prospectus, financial statements and management report of fund performance - given issuers limited range of activities and intended liquidation, AIF of minimal benefit to limited partners.
Applicable Legislative Provisions
NI 81-106 Investment Fund Continuous Disclosure, ss. 9.2, 17.1.
Multilateral Instrument 11-101 Principal Regulator System.
Citation: Norrep Performance 2006 Flow-Through Limited Partnership, 2008 ABASC 167
March 27, 2008
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
(the Jurisdictions)
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
NORREP PERFORMANCE 2006 FLOW-THROUGH
LIMITED PARTNERSHIP
(the Filer)
MRRS DECISION DOCUMENT
Background
1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the requirement in Section 9.2 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to prepare and file an annual information form (AIF) (the Requested Relief).
2. For the purposes of this decision, the term "Filer" includes other partnerships that are established from time to time that:
(a) have a general partner with the same parent as the general partner of the Filer; and
(b) are identical to the Filer in all other respects that are material to this MRRS decision document.
Application of Principal Regulator System
3. Under Multilateral Instrument 11-101 Principal Regulator System (MI 11-101) and the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Alberta Securities Commission is the principal regulator for the Filer;
(b) the Filer is relying on the exemption in Part 3 of MI 11-101 in all of the provinces of Canada except Alberta and Ontario; and
(c) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
4. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
Representations
5. This decision is based on the following facts represented by the Filer:
(a) The Filer is a limited partnership duly formed under the laws of the Province of Ontario on January 26, 2006.
(b) The principal place of business and registered office of the Filer is located in Calgary, Alberta.
(c) The Filer is a reporting issuer, where such status exists, in each of the provinces of Canada and is not in default of its obligations as a reporting issuer.
(d) The Filer is a non-redeemable investment fund.
(e) The Filer was organized to invest in flow-through shares of issuers whose principal business is oil and gas exploration, development and production, or mineral exploration, development and production (Resource Companies) and to participate in exploration, development and production of oil and gas by investing in flow-through shares of corporations incorporated by the general partner whose shares are wholly-owned by the Filer (Subsidiary Companies), which Subsidiary Companies enter into oil and gas drilling joint ventures.
(f) The Filer enters into flow-through investment agreements, pursuant to which the Filer subscribes for flow-through shares of the Resource Company or Subsidiary Company and the Resource Company or Subsidiary Company agrees to incur and renounce to the Filer, in amounts equal to the subscription price of the flow-through shares, expenditures in respect of resource exploration and development which qualify as Canadian exploration expense or as Canadian development expense which may be renounced as Canadian exploration expense to the Filer.
(g) The limited partnership units of the Filer are not and will not be listed or quoted for trading on any stock exchange or market. None of the limited partnership units of the Filer are redeemable by the limited partners. Generally, limited partnership units are not transferred since limited partners must be holders of units on the last day of each fiscal year of the Filer in order to obtain the desired tax deduction. In addition, other than the issuance of the initial limited partnership units to the initial limited partners and other than as described in this order, the Filer has not issued any limited partnership units.
(h) Unless a material change takes place in the business and affairs of the Filer:
(i) the limited partners of the Filer will obtain adequate financial information concerning the Filer from the interim financial statements and annual audited financial statements of the Filer together with the auditor's report distributed to the limited partners; and
(ii) the Prospectus (defined below) for the Filer and the interim financial statements provide sufficient background materials and the explanations necessary for a limited partner to understand the business, financial position and future plans of the Filer.
(i) If a material change takes place in the business and affairs of the Filer, the Filer will ensure that a timely material change report is filed with the securities regulatory authority in each of the Jurisdictions in compliance with applicable securities laws.
(j) The Filer received a final receipt dated March 27, 2006 on behalf of the local securities regulatory authority or regulator in each of the provinces of Canada for the Filer's prospectus dated March 27, 2006 (the Prospectus) relating to an offering of up to 8,500,000 limited partnership units in the Jurisdictions. On April 12, 2006, the Filer completed the issue and sale of 8,500,000 limited partnership units under the Prospectus. The Filer became a reporting issuer, where such status exists, in each of the provinces of Canada.
(k) In accordance with the Filer's partnership agreement, the general partner intends to implement, at a date no later than September 30, 2009, a transaction pursuant to which the assets of the Filer will be transferred to Norrep Opportunities Corp. or another mutual fund corporation on a tax deferred basis, in exchange for securities of Norrep Opportunities Corp., following which the securities of Norrep Opportunities Corp. will be distributed to the limited partners of the Filer on a pro rata tax deferred basis upon the dissolution of the Filer. If the foregoing transaction is not implemented by September 30, 2009, the partnership agreement states that the Filer will be terminated by December 31, 2009.
(l) The Filer's range of business activities is limited to (i) completing the issue and sale of limited partnership units under the Prospectus, (ii) investing its available funds in flow-through shares of the Resource Companies and Subsidiary Companies, (iii) participating in joint ventures, and (iv) incurring expenses as described in the Prospectus.
(m) Given the limited range of business activities to be conducted by the Filer, the short duration of its existence and the nature of the investments of the limited partners, the preparation and distribution of an AIF by the Filer will not be of benefit to the limited partners and may impose a material financial burden on the Filer.
(n) Upon the occurrence of any material change to the Filer, limited partners would receive all relevant information from the material change reports that the Filer is required to file in accordance with applicable securities laws.
Decision
6. The Decision Makers being satisfied that each has jurisdiction to make this decision and that the relevant test under the Legislation has been met, the Requested Relief is granted.