MRF 2001 II Limited Partnership - MRRS Decision
Headnote
Issuer exempted from interim financial reportingrequirements for first and third quarter of each financial year.Exemption terminates upon the occurrence of a material changein the business affairs of the Issuer unless the Decision Makersare satisfied that the exemption should continue.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am,s. 77, 78, 79, s. 80(b)(iii) and 81(1).
Applicable Ontario Rules Cited
OSC Rule 51-501- AIF and MD&A, (2000) 23OSCB 8365, as am., s. 1.2(2), 2.1(1), 3.1, 4.1(1), 4.3 and 5.1.
OSC Rule 52-501- Financial Statements, (2000) 23 OSCB 8372,s. 2.2(2) and 4.1.
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA,
SASKATCHEWAN AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
MRF 2001 II LIMITED PARTNERSHIP
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan and Ontario (collectively,the "Jurisdictions") has received an application fromMRF 2001 II Limited Partnership (the "Partnership")for:
(i) a decision pursuant to the securities legislationof each of the Jurisdictions (the "Legislation") thatthe requirements contained in the Legislation to file and sendto its securityholders (the "Limited Partners") itsinterim financial statements for each of the first and thirdquarters of each of the Partnership's fiscal years (the "First& Third Quarter Interim Financials"), shall not applyto the Partnership; and
(ii) in Ontario and Saskatchewan only, a decisionpursuant to the securities legislation of Ontario and Saskatchewanthat the requirements to file and send to the Limited Partners,its:
(a) annual information form (the "AIF");
(b) annual management discussion and analysisof financial condition and results of operations (the "AnnualMD&A"); and
(c) interim management discussion and analysisof financial condition and results of operations (the "InterimMD&A");
shall not apply to the Partnership.
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System),the Ontario Securities Commission is the principal regulatorfor this application.
AND WHEREAS the Partnership has representedto the Decision Makers that:
1. the Partnership is a limited partnershipformed pursuant to the Limited Partnerships Act (Ontario) onOctober 31, 2001;
2. the Partnership was formed to invest in certaincommon shares ("Flow?Through Shares") of companiesinvolved primarily in oil and gas, mining or renewable energyexploration and development ("Resource Companies");
3. the Partnership will enter into agreements("Resource Agreements") with Resource Companies andunder the terms of each Resource Agreement, the Partnershipwill subscribe for Flow?Through Shares of the Resource Companyand the Resource Company will incur and renounce to the Partnership,in amounts equal to the subscription price of the Flow?ThroughShares, expenditures in respect of resource exploration anddevelopment which qualify as Canadian exploration expense oras Canadian development expense which may be renounced as Canadianexploration expense to the Partnership;
4. on November 29, 2001, the Decision Makers,together with the securities regulatory authority or regulatorfor Manitoba (in which jurisdiction no legislative requirementexists to file first and third quarter interim financial statements),issued a receipt under the System for the prospectus of thePartnership dated November 29, 2001 (the "Prospectus")relating to an offering of up to 600,000 units of the Partnership(the "Partnership Units");
5. the Prospectus contained disclosure thatthe Partnership intends to apply for an order from the DecisionMakers exempting it from the requirements to file and distributefinancial statements of the Partnership in respect of the firstand third quarters of each fiscal year of the Partnership;
6. the Partnership Units will not be listedor quoted for trading on any stock exchange or market;
7. at the time of purchase or transfer of PartnershipUnits, each purchaser or transferee consents to the applicationby the Partnership for an order from the Decision Makers exemptingthe Partnership from the requirements to file and distributefinancial statements of the Partnership in respect of the firstand third quarters of each fiscal year of the Partnership;
8. on or about January 30, 2004, the Partnershipwill be liquidated and the Limited Partners will receive theirpro rata share of the net assets of the Partnership; and itis the current intention of the general partner of the Partnershipto propose prior to the dissolution that the Partnership enterinto an agreement with Middlefield Mutual Funds Limited (the"Mutual Fund"), an open end mutual fund, whereby assetsof the Partnership would be exchanged for shares of the GrowthClass of the Mutual Fund; and upon dissolution, Limited Partnerswould then receive their pro rata share of the shares of theGrowth Class of the Mutual Fund;
9. since its formation on October 31, 2001,the Partnership's activities primarily included (i) collectingthe subscriptions from the Limited Partners, (ii) investingthe available Partnership funds in Flow-Through Shares of ResourceCompanies, and (iii) incurring expenses to maintain the fund;
10. unless a material change takes place inthe business and affairs of the Partnership, the Limited Partnerswill obtain adequate financial information concerning the Partnershipfrom the semi-annual financial statements and the annual reportcontaining audited financial statements of the Partnership togetherwith the auditors' report thereon distributed to the LimitedPartners and that the Prospectus and the semi-annual financialstatements provide sufficient background materials and the explanationsnecessary for a Limited Partner to understand the Partnership'sbusiness, its financial position and its future plans, includingdissolution on January 30, 2004;
11. given the limited range of business activitiesto be conducted by the Partnership and the nature of the investmentof the Limited Partners in the Partnership, the provision bythe Partnership of First & Third Quarter Interim Financials,AIF, Annual MD&A and Interim MD&A will not be of significantbenefit to the Limited Partners and may impose a material financialburden on the Partnership;
12. it is disclosed in the Prospectus that theGeneral Partner will apply on behalf of the Partnership forrelief from the requirements to send to Limited Partners theFirst & Third Quarter Interim Financials;
13. each of the Limited Partners has, by subscribingfor the units offered by the Partnership in accordance withthe Prospectus, agreed to the irrevocable power of attorneycontained in Article XIX of the Amended and Restated LimitedPartnership Agreement scheduled to the Prospectus and has therebyconsented to the making of this application for the exemptionrequested herein;
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each Decision Maker is ofthe opinion that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makerspursuant to the Legislation is that the requirements containedin the Legislation to file and send to the Limited Partnersits First & Third Quarter Interim Financials shall not applyto the Partnership provided that this exemption shall terminateupon the occurrence of a material change in the affairs of thePartnership unless the Partnership satisfies the Decision Makersthat the exemptions should continue, which satisfaction shallbe evidenced in writing.
May 24, 2002.
"H. Lorne Morphy" "Robert L. Shirriff"
THE FURTHER DECISION of the securitiesregulatory authority or securities regulator in each of Ontarioand Saskatchewan is that the requirements contained in the legislationof Ontario and Saskatchewan to file and send to its LimitedPartners its AIF, Annual MD&A and Interim MD&A shallnot apply to the Partnership provided that this exemption shallterminate upon the occurrence of a material change in the affairsof the Partnership unless the Partnership satisfies the DecisionMakers that the exemptions should continue, which satisfactionshall be evidenced in writing.
May 24, 2002.
"John Hughes"