Brandes International - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Extension of mutual fund prospectus lapse date to permit the continued distribution of units of the fund to the existing unitholder until the termination of the fund.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5 as am., s. 147.

January 21, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA

SCOTIA, PRINCE EDWARD ISLAND, NEWFOUNDLAND AND LABRADOR, YUKON TERRITORY AND NUNAVUT (THE

JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BRANDES INTERNATIONAL EQUITY FUND II (THE FUND)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Fund for a decision under the securities legislation of the Jurisdictions (the Legislation) that

• the time limits pertaining to the distribution of securities under the simplified prospectus and annual information form (collectively, the Fund Prospectus) of the Fund be extended to permit the continued distribution of units of the Fund (Units) to the existing Unitholder (as defined below) of the Fund until the earlier of (i) the termination of the Fund; and (ii) February 28, 2005 (the Requested Relief).

Under the Mutual Reliance Review System (MRRS) for Exemptive Relief Applications

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

The decision is based on the following facts represented by the Fund:

1. The Fund is an open-end mutual fund trust established under the laws of Ontario and governed by amended and restated declarations of trust dated June 9, 2004.

2. The Fund is a reporting issuer in each of the Jurisdictions and is not in default of any filing requirements under the securities legislation of any of the Jurisdictions.

3. The Units are qualified for distribution in each of the Jurisdictions by means of the Fund Prospectus that was prepared and filed in accordance with Canadian securities regulatory requirements. The lapse date of the Fund Prospectus is January 23, 2005.

4. The Units are held solely by one unitholder (the "Unitholder"). The Unitholder is a "top fund" that is managed by MD Funds Management Inc., a professional portfolio manager, and purchases Units of the Fund pursuant to the Fund Prospectus. The Fund is therefore a "bottom fund" for this purpose.

5. Brandes and the Unitholder have decided to transfer the Unitholder's investment in the Fund through an in specie redemption to a fully managed account of Brandes because it now appears unlikely that the Fund will have the requisite number (i.e. 150) of unitholders under the Income Tax Act (Canada) by March 31, 2005 in order to qualify as a mutual fund trust. This transfer, however, is not expected to occur until on or about February 15, 2005 because various approvals and administrative changes are required to be obtained, and/or implemented, by the Unitholder.

6. Following the transfer of the Unitholder's investment to a fully managed account of Brandes, the Fund will be terminated and will cease being a reporting issuer in each of the Jurisdictions.

7. The extension of the lapse date until the earlier of (i) the termination of the Fund; and (ii) February 28, 2005 will provide Brandes and the Unitholder with an appropriate amount of time within which to effect the transfer of the Unitholder's investment in the Fund into a fully managed account of Brandes.

8. The filing of a renewal simplified prospectus and annual information form would involve financial costs and time associated with producing, filing and printing the renewal disclosure documents, which would be unduly onerous for Brandes considering the Fund is expected to be terminated on or about February 15, 2005.

9. The lapse date extension will not prejudice the interests of the Unitholder since the Fund Prospectus provides accurate information, in all material respects, about the Fund and such Unitholder, being managed by a professional portfolio manager, does not require the protection of updated disclosure akin to other investors.

10. A lapse date extension would not prejudice the public interest in any way since the extension is being granted in order to accommodate the wishes of the sole Unitholder of the Fund, and no additional Units will be sold pursuant to the Fund Prospectus to purchasers other than the Unitholder.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.