First National Financial Corporation

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted to a successor issuer from the requirement to file a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the filing of a preliminary short form prospectus -- disclosure regarding the predecessor issuer will effectively be the disclosure of the successor issuer -- predecessor issuer is qualified to file a short form prospectus.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions.

January 4, 2011

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

FIRST NATIONAL FINANCIAL CORPORATION

(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 pursuant to Section 8.1 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) exempting the Filer from the requirement, contained in section 2.8 of NI 44-101, to file a notice declaring its intention to be qualified to file a short form prospectus (the Notice of Intention) at least 10 business days prior to the filing of its first preliminary short form prospectus after the Notice of Intention (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 each of the other provinces and territories of Canada.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have 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 is a corporation incorporated and existing under the laws of Ontario.

2. The head and registered office of the Filer is located at 100 University Avenue, North Tower, Suite 700, Toronto, Ontario, M5J 1V6.

3. The Filer became a reporting issuer in each of the provinces and territories of Canada following the completion on January 1, 2011 of the conversion (the Conversion) of First National Financial Income Fund (the Fund) to a corporate structure by way of a plan of arrangement and subsequent amalgamation.

4. The Filer is not, to its knowledge, in default of its obligations under the Legislation or the securities legislation of the other jurisdictions.

5. The authorized share capital of the Filer consists of an unlimited number of common shares (the Common Shares) and an unlimited number of preferred shares (the Preferred Shares) issuable in series. As of January 5, 2011, the Filer had 59,967,429 Common Shares and no Preferred Shares outstanding.

6. The Filer's Common Shares are listed on the Toronto Stock Exchange.

7. On January 1, 2011, the Conversion was completed in accordance with the Ontario Business Corporations Act (the OBCA).

8. The Filer is a "successor issuer" to the Fund as defined in NI 44-101 and is eligible to make use of the exemption provided under section 2.7(2) of NI 44-101 to qualify to file a prospectus in the form of a short form prospectus.

9. The Fund was a limited purpose trust established under the laws of the Province of Ontario by a declaration of trust dated April 19, 2006, as amended and restated on June 8, 2006.

10. The Fund was a reporting issuer in each of jurisdictions until the completion of the Conversion on January 1, 2011; and at the time of the Conversion, the Fund was not, to its knowledge, in default of its obligations under the Legislation or the securities legislation of the other jurisdictions.

11. The Fund was qualified to file a prospectus in the form of a short form prospectus pursuant to section 2.2 of NI 44-101 and filed a Notice of Intention to be qualified to file a short form prospectus on November 11, 2009.

12. The Fund's Conversion from a unit trust structure to a share corporation was subject to unitholder and other approvals and was undertaken pursuant to a statutory plan of arrangement under the OBCA that was approved by unitholders at a special meeting held on May 4, 2010 and subsequent amalgamation.

13. The Filer intends to file a preliminary short form prospectus (the Preliminary Prospectus) relating to the issuance of $100 million of Class A Preference Shares, Series 1 on or about January 11, 2011.

14. On January 4, 2011, the Filer, in anticipation of the filing of the Preliminary Prospectus, filed a Notice of Intention. In the absence of the Exemption Sought, the Filer will not be qualified to file the Preliminary Prospectus until January 18, 2011.

15. Pursuant to the qualification criteria set forth in section 2.2 of NI 44-101, the Filer is qualified to file a short form prospectus on the basis that it satisfies the requirements of section 2.2 of NI 44-101 and can make use of the exemption provided under section 2.7(2) of NI 44-101 to qualify to file a prospectus in the form of a short form prospectus.

16. Notwithstanding section 2.2 of NI 44-101, section 2.8(1) of NI 44-101 provides that an issuer is not qualified to file a short form prospectus unless it has filed a Notice of Intention at least 10 business days prior to the issuer filing its first preliminary short form prospectus.

17. The Filer will not satisfy the requirement in section 2.8(1) of NI 44-101 by January 11, 2011, and will not be qualified to file the Preliminary Prospectus at that time, unless the Exemption Sought is granted.

18. The Filer is otherwise qualified to file a short form prospectus as successor to the Fund for all other purposes of NI 44-101.

19. Prior to the Conversion, the Fund was qualified to file a short form prospectus, and shareholders of the Filer (who were, immediately prior to the Conversion, unitholders of the Fund) have the benefit of access to the historical continuous disclosure of the Fund, the predecessor to the Filer. The Filer, as the successor issuer of the Fund, has a market capitalization of approximately $1.12 billion as at January 5, 2011. As the Filer does not have an independent public disclosure record and its continuous disclosure record is that of the Fund, there is no continuous disclosure review interest with respect to the Filer that would be impacted if the Notice of Intention Exemption were granted.

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, at the time the Filer files the Preliminary Prospectus, the Filer meets the requirements of:

(a) paragraphs 2.2(a), (b), (c) and (e) of NI 44-101, and

(b) the exemption for successor issuers set forth in subsection 2.7(2) of NI 44-101.

This decision will terminate on January 18, 2011, the date which is 10 business days following the proposed filing of the Notice of Intention.