Parkland Income Fund - MRRS Decision
Headnote
MRRS - open-ended investment trust exempt fromregistration and prospectus requirements in connection withissuance of additional units to existing unitholders pursuantto a distribution reinvestment plan whereby distributions ofincome are reinvested in additional units of the trust, subjectto certain conditions - First trade relief provided, subjectto certain conditions.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25(1), 53(1) and 74(1).
Applicable Ontario Rules
Rule 45-502 - Dividend or Interest Reinvestmentand Stock Dividend Plans.
Applicable Instrument
Multilateral Instrument 45-501 - Resale of Securities- s. 2.6.
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, BRITISH COLUMBIA, MANITOBA,
NEW BRUNSWICK, NEWFOUNDLAND AND LABRADOR, THE NORTHWEST TERRITORIES,
NOVA SCOTIA, NUNAVUT, ONTARIO,
PRINCE EDWARD ISLAND, QUÉBEC, SASKATCHEWAN AND THE YUKONTERRITORY
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
PARKLAND INCOME FUND
MRRS DECISION DOCUMENT
1. WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, British Columbia, Manitoba, New Brunswick, Newfoundlandand Labrador, the Northwest Territories, Nova Scotia, Nunavut,Ontario, Prince Edward Island, Québec, Saskatchewan andthe Yukon Territory (the "Jurisdictions") has receivedan application from Parkland Income Fund (the "Fund")for a decision under the securities legislation (the "Legislation")of the Jurisdictions that the requirements under the Legislationto be registered to trade in a security (the "RegistrationRequirement") and to file and obtain a receipt for a preliminaryprospectus and a prospectus (the "Prospectus Requirement"),will not apply in respect of certain trades or distributionsof securities to be made in connection with a distribution reinvestmentplan (the "Plan") relating to units (the "Units")in the Fund;
2. AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Application (the "System"),the Alberta Securities Commission is the principal regulatorfor the application;
3. AND WHEREAS the Fund has representedto the Decision Makers that:
3.1 Parkland Industries Ltd. ("Parkland")is a corporation incorporated under the Business CorporationsAct (Alberta);
3.2 Parkland, a wholly owned subsidiary of Parklandand affiliated companies, entered into a plan of arrangement(the "Arrangement") pursuant to which the shareholdersof Parkland became holders of Units in the Fund or holders ofClass B limited partnership units (the "Rollover LP Units")of Parkland Holdings Limited Partnership ("Holdings LP");
3.3 as a result of the Arrangement, the sharesof Parkland were delisted from trading on TSX Inc. ("TSX")and Parkland has made application to cease to be a reportingissuer, or the equivalent, in British Columbia, Alberta, Saskatchewan,Manitoba and Ontario;
3.4 the Fund is an open-ended limited purposetrust formed under the laws of the Province of Alberta undera declaration of trust (the "Fund Declaration of Trust")dated April 30, 2002;
3.5 the Fund is authorized to issue an unlimitednumber of Units of which there were 5,196,893 Units outstandingas of July 1, 2002;
3.6 there were also 6,929,820 Rollover LP Unitsoutstanding as of July 1, 2002, each of which is indirectlyexchangeable for Units on a one for one basis;
3.7 the Fund holds all of the outstanding units("Trust Units") and notes ("Trust Notes")of Parkland Investment Trust (the "Trust");
3.8 the Trust owns all of the Class A limitedpartnership units of Holdings LP;
3.9 Holdings LP holds 99.9% of the participatingLP units of Parkland Industries Limited Partnership ("IndustriesLP"), all of the shares of Parkland and all of the notesof Parkland issued pursuant to the Arrangement;
3.10 Parkland is the general partner of IndustriesLP and holds a 0.1% equity interest in Industries LP in itscapacity as general partner, as well as all of the preferredLP units in Industries LP;
3.11 Industries LP currently carries on thebusiness historically carried on by Parkland and its subsidiaries;
3.12 the Fund is an electronic filer under NationalInstrument 13-101, SEDAR;
3.13 on the effective date of the Arrangement,June 28, 2002, the Fund became a reporting issuer in BritishColumbia, Alberta, Saskatchewan, and Ontario;
3.14 the Units are listed for trading on theTSX;
3.15 under the terms of the Fund Declarationof Trust, the Fund will make monthly distributions of distributableincome, if any, to the holders ("Unitholders") ofUnits;
3.16 the amount of cash to be distributed tothe Unitholders monthly per Unit will generally be equal toa pro rata share of all amounts received by the Fund in eachmonth, including without limitation, interest payments and principalrepayments on the Trust Notes and distributions on or in respectof Trust Units, less:
3.16.1 costs and expenses of the Fund; and
3.16.2 any amounts which have become payablein cash by the Fund relating to the redemption of Units;
3.17 at the option of the trustees of the Fund,the distributions payable may include additional Units or fractionsof Units, if necessary;
3.18 the Fund's income is initially expectedto consist of the interest income on the principal amount ofthe Trust Notes and distributions (if any) received on the TrustUnits;
3.19 the Fund may make additional distributionsin excess of the monthly distributions during the year as thetrustees of the Fund may determine;
3.20 a Unitholder may elect at any time to participatein the Plan;
3.21 distributions paid on any Units held withinthe Plan will be applied to acquire:
3.21.1 additional Units ("Additional Units")from treasury; or
3.21.2 additional Units on the market;
3.22 the acquisition of Units under the Planwill be made either on the market at the prevailing market priceor issued from treasury at a price equal to the 10 day weightedaverage trading price of the Units, whichever price is lower;
3.23 no fees or commissions will be payableby Unitholders in connection with the acquisition of additionalUnits under the Plan;
3.24 under the Plan, Unitholders do not havethe option of making cash payments to purchase Additional Units;
3.25 the Fund may, in its discretion, limitthe number of Units available to Unitholders under the Plan;
3.26 a Unitholder may terminate its participationin the Plan at any time by submitting a termination form tothe Plan agent (the "Plan Agent");
3.27 the Fund reserves the right to amend, suspendor terminate the Plan at any time;
3.28 the Plan is open to participation by allUnitholders, other than residents and citizens of the UnitedStates of America;
3.29 the Plan Agent will be purchasing Unitsfrom the Fund only in accordance with the mechanism describedin the Plan;
3.30 the distribution of Additional Units bythe Fund under the Plan cannot be made in reliance on certainexisting exemptions from the Registration Requirement and ProspectusRequirement contained in the Legislation as the Plan involvesthe reinvestment of distributions of distributable income ofthe Fund and not the reinvestment of dividends, interest ordistributions of capital gains or out of earnings or surplus;
3.31 the distribution of Additional Units bythe Fund under the Plan cannot be made in reliance on exemptionsfrom the Registration Requirement and Prospectus Requirementcontained in the Legislation for distribution reinvestment plansof mutual funds, as the Fund is not a "mutual fund"as defined in the Legislation, since the holders of Units arenot entitled to receive on demand an amount computed by referenceto the value of a proportionate interest in the whole or inpart of the net assets of the Fund;
4. AND WHEREAS under the System, thisMRRS Decision Document evidences the decision of each of theDecision Makers (collectively, the "Decision");
5. AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the Jurisdiction to make theDecision has been met;
6. THE DECISION of the Decision Makersunder the Legislation is that the Registration Requirement andthe Prospectus Requirement will not apply to trades and distributionsby the Fund of Additional Units under the Plan provided that:
6.1 at the time of the trade or distribution,the Fund is a reporting issuer in a jurisdiction listed in AppendixB of Multilateral Instrument 45-102, Resale of Securities ("MI45-102") and is not in default of any of the requirementsof the Legislation;
6.2 no sales charge is payable by the Unitholderin respect of the trade or distribution;
6.3 the Fund has caused to be sent annuallyto the person or company to whom the Additional Units are issued,not more than 12 months before the trade or distribution, astatement describing:
6.3.1 their right to withdraw from the Plan;and
6.3.2 instructions on how to exercise the rightreferred to in paragraph 6.3.1 above;
6.4 disclosure of the initial distribution ofAdditional Units under this Decision is made to the relevantJurisdictions by providing particulars of the date of the distributionof such Additional Units, the number of such Additional Unitsand the purchase price paid or to be paid for such AdditionalUnits in:
6.4.1 an information circular or take-over bidcircular filed in accordance with the Legislation; or
6.4.2 a letter filed with the Decision Makerin the relevant Jurisdiction by a person or company certifyingthat the person or company has knowledge of the facts containedin the letter,
when the Fund distributes such Additional Unitsfor the first time and thereafter, not less frequently thanannually, unless the aggregate number of Additional Units sotraded in any month exceeds 1% of the Units outstanding at thebeginning of the month in which the Additional Units were traded,in which case a separate report will be filed in each relevantJurisdiction in respect of that month within 10 days of theend of such month;
6.5 the first trade in Additional Units acquiredunder this Decision will be deemed to be a distribution or aprimary distribution to the public under the Legislation unless:
6.5.1 except in Québec, the conditionsin subsections (3) or (4) of section 2.6 of MI 45-102 are satisfied,except that for the purposes of determining the period of timethat the Fund has been a reporting issuer under section 2.6of MI 45-102 the period of time that Parkland was a reportingissuer immediately before the Arrangement may be included;
6.5.2 in Québec,
6.5.2.1 the first trade (alienation) of AdditionalUnits is made on an organized market outside of Québecor upon the Fund becoming a reporting issuer in Québecand having, or being deemed to have, complied with the appropriaterequirements for more than 12 months immediately preceding thetrade or distribution;
6.5.2.2 no unusual effort is made to preparethe market or to create a demand for the Additional Units thatare the subject of the trade or distribution;
6.5.2.3 no extraordinary commission or considerationis paid to a person or company in respect of the trade or distribution;and
6.5.3.4 the vendor of the Additional Units,if an insider or officer of the Fund, has no reasonable groundsto believe that the Fund is in default of any requirement ofthe securities legislation in Québec.
August 28, 2002.
"Glenda A. Campbell" "James E. Allard"