MRF 2002 II Limited Partnership - MRRS Decision
Headnote
Issuer exempted from interim financial reportingrequirements for first and third quarter of each financial year- issuer also exempted from requirements to file annual informationforms and management's discussion and analysis - exemption terminatesupon the occurrence of a material change in the business affairsof the Issuer unless the Decision Makers are satisfied thatthe exemption should continue.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am,ss. 77, 79 and 80(b)(iii).
Applicable Ontario Rules
OSC Rule 51-501- AIF and MD&A, (2000) 23OSCB 8365, as am., ss. 1.2(2), 2.1(1), 3.1, 4.1(1), 4.3 and5.1.
OSC Rule 52-501- Financial Statements, (2000)23 OSCB 8372, ss. 2.2(2) and 4.1.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,
ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
MRF 2002 II LIMITED PARTNERSHIP
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the Decision Maker) in each of BritishColumbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland(the Jurisdictions) has received an application from MRF 2002II Limited Partnership (the Partnership) for:
1. a decision pursuant to the securities legislationof each of the Jurisdictions (the Legislation) that the requirementscontained in the Legislation to file and send to its securityholders(the Limited Partners) its interim financial statements foreach of the first and third quarters of each of the Partnership'sfiscal years (the First & Third Quarter Interim Financials),shall not apply to the Partnership; and
2. 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 Application (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)on February 12, 2002.
2. The Partnership was formed to invest incertain common shares (Flow-Through Shares) of companies involvedprimarily in oil and gas, mining or renewable energy explorationand development (Resource Companies).
3. The Partnership will enter into agreements(Resource Agreements) with Resource Companies and under theterms of each Resource Agreement, the Partnership will subscribefor Flow-Through Shares of the Resource Company and the ResourceCompany will incur and renounce to the Partnership, in amountsequal to the subscription price of the Flow-Through Shares,expenditures in respect of resource exploration and developmentwhich qualify as Canadian exploration expense or as Canadiandevelopment expense which may be renounced as Canadian explorationexpense to the Partnership.
4. On November 25, 2002, the Decision Makers,together with the securities regulatory authority or regulatorfor Manitoba, New Brunswick, Quebec and Prince Edward Island(in which jurisdictions no legislative requirement existsto file first and third quarter interim financial statements),issued a receipt under the System for the prospectus of thePartnership dated November 25, 2002 (the Prospectus) relatingto an offering of up to 800,000 units of the Partnership (thePartnership 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 thefirst and third quarters of each fiscal year of the Partnershipand from the requirements to prepare an annual informationform and interim and annual management discussion and analysis.
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 ofPartnership Units, each purchaser or transferee consents tothe application by the Partnership for an order from the DecisionMakers exempting the Partnership from the requirements tofile and distribute financial statements of the Partnershipin respect of the first and third quarters of each fiscalyear of the Partnership and from the requirements to preparethe AIF, the Annual MD&A and the Interim MD&A.
8. On or about January 31, 2005, 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 (theMutual Fund), an open end mutual fund, whereby assets of thePartnership would be exchanged for shares of the Growth Classof 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 February 12, 2002,the Partnership's activities primarily included (i) collectingthe subscriptions from the Limited Partners, (ii) investingthe available Partnership funds in Flow-Through Shares ofResource Companies, and (iii) incurring expenses to maintainthe fund.
10. Unless a material change takes place inthe business and affairs of the Partnership, the Limited Partnerswill obtain adequate financial information concerning thePartnership from the semi-annual financial statements andthe annual report containing audited financial statementsof the Partnership together with the auditors' report thereondistributed to the Limited Partners and that the Prospectusand the semi-annual financial statements provide sufficientbackground materials and the explanations necessary for aLimited Partner to understand the Partnership's business,its financial position and its future plans, including dissolutionon January 31, 2005.
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 provisionby the Partnership of the First and Third Quarter InterimFinancials, the AIF, the Annual MD&A and the Interim MD&Awill not be of significant benefit to the Limited Partnersand may impose a material financial burden on the Partnership.
12. It is disclosed in the Prospectus thatthe General Partner will apply on behalf of the Partnershipfor relief from the requirements to send to Limited Partnersthe First and Third Quarter Interim Financials and from therequirements to prepare the AIF, the Annual MD&A and theInterim MD&A.
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 hasthereby consented to the making of this application for theexemption requested 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 Makers pursuantto the Legislation is that the requirements contained in theLegislation to file and send to the Limited Partners its First& Third Quarter Interim Financials shall not apply to thePartnership provided that this exemption shall terminate uponthe occurrence of a material change in the affairs of the Partnershipunless the Partnership satisfies the Decision Makers that theexemptions should continue, which satisfaction shall be evidencedin writing.
February 25, 2003.
"H. Lorne Morphy" "RobertL. 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.
February 25, 2003.
"John Hughes"