Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from the requirement in the definition of venture issuer that an issuer not have any of its securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace or a marketplace outside of Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations.

Citation: Canacol Energy Ltd., Re, 2010 ABASC 429

September 8, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CANACOL ENERGY LTD.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for relief from the requirement in the definition of venture issuer in section 1.1 of each of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings (NI 52-109), National Instrument 52-110 Audit Committees (NI 52-110) and National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) that a reporting issuer not, at the relevant time, have any of its securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace or a marketplace outside of Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

In this decision,

"BVC" means the Bolsa de Valores de Colombia, the Colombian stock market; and

"TSXV" means the TSX Venture Exchange Inc.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation continued under the Business Corporations Act (Alberta). Its head office is located in Calgary, Alberta.

2. The Filer is an international oil and gas company involved in the production, development, appraisal and exploration of hydrocarbons. The Filer's key interests are in Colombia and Brazil, with further interests in Guyana. The Filer's asset portfolio encompasses production, development, appraisal and exploration properties.

3. The Filer is a reporting issuer in the provinces of Alberta, Ontario, British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and is not, to its knowledge, in default of its obligations as a reporting issuer under the securities legislation of the Jurisdictions.

4. The common shares of the Filer (the Shares) are listed on the TSXV under the trading symbol "CNE".

5. The financial year end of the Filer is June 30.

6. On December 22, 2009, the Filer entered into an agreement with Citvalores S.A. to assist the Filer in cross listing the Shares on the BVC.

7. On July 22, 2010, the Shares began trading on the BVC.

8. The Filer listed the Shares on the BVC due to the Filer's connection to Colombia and to facilitate the sale and transfer of the Shares in Colombia.

9. The BVC is structured for venture and non-venture issuers and is comparable in size to the Alternative Investment Market of the London Stock Exchange.

10. Under BVC rules, issuers are required to make timely disclosure of material information, announce semi-annual results within 45 days after the end of the period, and year end results must be announced not later than 10 business days after the date the Filer receives director approval for such year end results. This is similar to TSXV, however, the TSXV requires quarterly results to be announced not later than 60 days after the end of the period, and year end results to be announced not later than 120 days after year end.

11. The BVC is similar to the TSXV in terms of its requirements and the Filer does not expect more rigorous continuous disclosure requirements because the Shares are listed on the BVC.

12. The information that the Filer has provided herein about the BVC is accurate as at the date of this decision.

13. Pursuant to section 1.1 of each of NI 51-102, NI 52-109, NI 52-110 and NI 58-101, a venture issuer is defined as a reporting issuer that does not, at the relevant time, have any of its securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace or a marketplace outside of Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.

14. Absent the Exemption Sought, the Filer would no longer meet the definition of venture issuer upon listing on the BVC.

15. In all other respects, the Filer falls within the definition of venture issuer as provided by section 1.1 of each of NI 51-102, NI 52-109, NI 52-110 and NI 58-101.

16. Subsection 13.1 of NI 51-102, subsection 8.6 of NI 52-109, subsection 8.1 of NI 52-110 and subsection 3.1 of NI 58-101 provide that the regulator or securities regulatory authority may grant an exemption from such National Instruments, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) the Filer continues to have the Shares listed on the TSXV;

(b) the BVC is not restructured in a manner that makes it unreasonable to conclude that it is still a junior market equivalent;

(c) the representations listed in paragraphs 9-12 above continue to be true; and

(d) the Filer does not have any securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace or a marketplace outside of Canada and the United States of America other than BVC, the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.

"Blaine Young"
Associate Director, Corporate Finance
Alberta Securities Commission