Sprott Asset Management LP and Sprott Physical Copper Trust

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from qualification criteria in paragraph 2.2(d) of NI 44-101 to permit a fund that has not completed a financial year to use a short form prospectus under NI 44-101 or a shelf prospectus under NI 44-102 for subsequent offerings -- relief subject to conditions.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus, ss. 2.2(d) and 8.1.

June 14, 2024

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 SPROTT ASSET MANAGEMENT LP (the Filer) AND IN THE MATTER OF SPROTT PHYSICAL COPPER TRUST (the Trust)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Trust for a decision under the securities legislation of the Jurisdiction (the Legislation) granting an exemption to the Trust from paragraph 2.2(d) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) to permit the Trust to file a short form prospectus pursuant to NI 44-101 or a shelf prospectus pursuant to National Instrument 44-102 Shelf Distributions (NI 44-102) even though the Trust does not have current annual financial statements or a current AIF (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 subsection 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 (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106), MI 11-102, NI 44-101 or NI 44-102 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:

The Filer

1. The Filer is a limited partnership formed and organized under the laws of the Province of Ontario. The general partner of the Filer is Sprott Asset Management GP Inc., a corporation incorporated under the laws of the Province of Ontario. The head office of the Filer is located in Ontario.

2. The Filer is registered under the securities legislation: (i) in Ontario as an adviser in the category of portfolio manager; (ii) in Ontario, Newfoundland and Labrador and Quebec as an investment fund manager; and (iii) in British Columbia, Alberta, Quebec, Saskatchewan, Manitoba, Ontario, New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador as a dealer in the category of exempt market dealer.

3. The Filer is the investment fund manager and portfolio manager of the Trust.

4. Neither the Filer nor the Trust is in default of securities legislation in any of the Jurisdictions.

The Trust

5. The Trust is (i) a trust established under a trust agreement dated April 12, 2024, as amended and restated on May 10, 2024 (the Trust Agreement), (ii) is an "investment fund" and a "non-redeemable investment fund" each as defined in the Legislation, and (ii) a "reporting issuer" as defined in the securities legislation of each of the Jurisdictions.

6. The Trust's financial year end is December 31.

7. The Trust is authorized to issue an unlimited number of units of the Trust ("Units").

Reasons for the Exemption Sought

8. On May 31, 2024, the Trust filed a final long form prospectus with the securities regulatory authority in each of the provinces and territories of Canada (the "IPO Prospectus") in connection with an initial public offering of the Units (the "IPO"). The Trust became a reporting issuer in each of the Jurisdictions on May 31, 2024. The Trust completed the IPO on June 7, 2024.

9. Accordingly, the Trust has not had its first-year end as a reporting issuer and since commencing operations and, therefore, the Trust (i) has no audited financial statements in respect of a period ending on a year end, and (ii) has no current AIF.

10. As of June 7, 2024, there were 10,000,000 Units issued and outstanding. The Units are listed on the Toronto Stock Exchange under the symbols "CUP.UN" (Canadian dollar denominated trading) and "COP.U" (U.S. dollar denominated trading).

11. The Trust wishes to be in a position to file a short form prospectus in accordance with NI 44-101 or a shelf prospectus in accordance with NI 44-102 in order to expedite future offerings of additional Units to the public.

12. For the Trust, filing a short form prospectus in accordance with NI 44-101 or a shelf prospectus in accordance with NI 44-102 is an efficient, expedient, and cost-effective alternative to filing a long form prospectus in accordance with National Instrument 41-101 General Prospectus Requirements (NI 41-101).

13. Absent the Exemption Sought, the Trust would be required to file a long form prospectus in accordance with NI 41-101 and Form 41-101F2 as the Trust has yet to complete a financial year end as a reporting issuer and since commencing operations and therefore does not have current annual financial statements.

14. The Trust intends to file, in accordance with NI 81-106, audited annual financial statements of the Trust for the year ended December 31, 2024 (the "2024 Annual Financial Statements"), prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises.

15. The Trust intends to file, in accordance with NI 81-106, unaudited interim financial statements of the Trust for the period ended June 30, 2024 (the "2024 Interim Financial Statements"), prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises.

16. The IPO Prospectus includes audited financial statements presenting the financial results of the Trust for the period from April 12, 2024 to April 19, 2024 (the "IPO Financial Statements").

17. In the event that the Trust wishes to file a short form prospectus in accordance with NI 44-101 or a shelf prospectus in accordance with NI 44-102 prior to filing the 2024 Annual Financial Statements, the Trust proposes to incorporate by reference into such prospectus:

(a) the IPO Financial Statements, or, if April 19, 2024 is more than 90 days before the date of such prospectus, audited financial statements filed by the Trust presenting the financial results of the Trust for the period from April 12, 2024 to a date after April 19, 2024 that is not more than 90 days before the date of such prospectus, prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises (the "Initial Financial Statements");

(b) if such prospectus incorporates by reference the Initial Financial Statements, a management report of fund performance for the period covered by the Initial Financial Statements; and

(c) if such prospectus is filed more than 60 days after June 30, 2024:

(i) the 2024 Interim Financial Statements; and

(ii) a management report of fund performance for the period covered by the 2024 Interim Financial Statements.

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:

(a) in any short form prospectus or shelf prospectus filed by the Trust,

(i) the Trust incorporates by reference the IPO Financial Statements or, if April 19, 2024 is more than 90 days before the date of such prospectus, the Initial Financial Statements;

(ii) if such prospectus incorporates by reference the Initial Financial Statements, a management report of fund performance for the period covered by the Initial Financial Statements;

(iii) the Trust includes or incorporates by reference the disclosure that would have been required in a current AIF, had the Trust been required to prepare a current AIF; and

(iv) the Trust includes disclosure regarding this decision in accordance with the requirements of section 19.1 of Form 44-101F1 Short Form Prospectus; and

(b) the Exemption Sought will expire on the earlier of

(i) the date upon which the Trust files the 2024 Annual Financial Statements; and

(ii) June 7, 2025.

Application File #: 2024/0348

SEDAR+ File #: 6143991