GS Investment Strategies Canada Inc. - s. 74(1)

Headnote

Relief from the adviser registration requirements of paragraph 25(1)(c) of the Act granted to Ontario resident sub-adviser in respect of advice regarding certain non-resident investment funds, the principal advisers of which are certain non-Canadian advisers, subject to certain terms and conditions.

Rules Cited

Securities Act, R.S.O. 1990, c. S. 5, as amended, ss. 25(1)(c), 74(1).

February 15, 2008

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, c. S.5, AS AMENDED (the Act)

AND

IN THE MATTER OF

GS INVESTMENT STRATEGIES CANADA INC.

ORDER

(Subsection 74(1) of the Act)

UPON the application (the Application) of GS Investment Strategies Canada Inc. (GSIS Canada) to the Ontario Securities Commission (the Commission) for an order, pursuant to subsection 74(1) of the Act, that GSIS Canada (including its directors, partners, officers and employees) be exempt from the requirements of paragraph 25(1)(c) of the Act in respect of acting as a sub-adviser to GS Investment Strategies, LLC (GSIS) and certain other non-Canadian advisers with respect to the investments of certain investment funds domiciled outside of Canada;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON GSIS Canada having represented to the Commission that:

1. GSIS Canada is a corporation established under the laws of Ontario and a wholly-owned subsidiary of The Goldman Sachs Group, Inc. (GS Group). GSIS Canada will initially employ three investment professionals, all of whom will be based in GSIS Canada's office in Toronto;

2. GSIS Canada's sole activity will be that of a sub-adviser to GSIS and other non-Canadian advisers (each, a GS Adviser) wholly-owned by GS Group and registered as investment advisers with the U.S. Securities and Exchange Commission (the SEC). GSIS Canada will provide advice with respect to the investments of Liberty Harbor Master Fund 1 L.P. (the Master Fund), an investment fund domiciled outside of Canada, and other investment funds (each, a GS Managed Fund) domiciled outside of Canada and managed by GSIS or another GS Adviser (the Proposed Advisory Services);

3. GSIS is a Delaware limited liability company and wholly-owned subsidiary of GS Group. GSIS acts as an investment adviser to the Master Fund. GSIS is registered as an investment adviser with the SEC;

4. The Master Fund is a limited partnership established under the laws of the Cayman Islands on March 20, 2007. The only investors in the Master Fund are four feeder funds domiciled outside of Canada (the Feeder Funds);

5. The Feeder Funds are primarily offered outside of Canada and, currently, have no Canadian-resident investors except three Canadian residents (two Quebec residents and one Alberta resident) who have committed approximately US$4 million to one of the Feeder Funds. This Feeder Fund invests all of its assets in the Master Fund. Each Canadian-resident investor is an "accredited investor" within the meaning of National Instrument 45-106 - Prospectus and Registration Exemptions (NI 45-106) and has committed at least US$1 million to this Feeder Fund. Investors have committed a total of US$2.613 billion to the four Feeder Funds;

6. In the future, the securities of the Feeder Funds and GS Managed Funds will be primarily offered outside of Canada and will only be distributed in Ontario through a dealer registered under the Act and in reliance upon the prospectus exemption for trades to accredited investors set forth in NI 45-106;

7. Initially, GSIS Canada will only provide investment advice to GSIS and only with respect to the Master Fund. In the future, GSIS may act as sub-adviser and provide investment advice to GSIS or another GS Adviser with respect to other GS Managed Funds;

8. In providing sub-advisory services to GSIS or another GS Adviser with respect to the Master Fund or other GS Managed Fund, GSIS Canada will comply with all applicable registration and other requirements of U.S. securities law and, if applicable, securities laws of the Cayman Islands and other jurisdictions;

9. GSIS Canada (including its directors, partners, officers and employees) will not at any time directly advise a person or company resident in Ontario or in any other Canadian jurisdiction;

AND UPON being satisfied that to make this order would not be prejudicial to the public interest;

IT IS ORDERED THAT, pursuant to subsection 74(1) of the Act, GSIS Canada (including its directors, partners, officers and employees) is exempted from the requirements of paragraph 25(1)(c) of the Act in respect of the Proposed Advisory Services provided to GSIS or another GS Adviser, provided that:

(a) GSIS Canada (including its directors, partners, officers and employees) complies with all applicable registration and other requirements of the securities legislation of the United States and, if applicable, the securities laws of the Cayman Islands and other jurisdictions;

(b) the obligations and duties of GSIS Canada are set out in a written agreement with GSIS;

(c) the GS Adviser contractually agrees with the Master Fund or other GS Managed Fund to be responsible for any loss that arises out of the failure of GSIS Canada:

(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in accordance with its fiduciary duties to the GS Adviser and the Master Fund or other GS Managed Fund, or

(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances (together with (i), the Assumed Obligations);

(d) the GS Adviser cannot be relieved by the Master Fund or other GS Managed Fund from its responsibility for any loss that arises out of the failure of GSIS Canada to meet the Assumed Obligations; and

(e) prior to purchasing any securities in one or more of the Feeder Funds or GS Managed Funds, all investors in the Feeder Funds or GS Managed Funds who are Ontario residents received written disclosure that includes:

(i) a statement that the GS Adviser is responsible for any loss that arises out of the failure of GSIS Canada to meet the Assumed Obligations; and

(ii) a statement that GSIS Canada is not, or will not be, registered as an adviser under the Act and, accordingly, the protections available to clients of a registered adviser under the Act will not be available to purchasers of units of the relevant Feeder Fund or GS Managed Fund.