Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - issuer is aspecial purpose vehicle trust and is a connected and related issuer of leadunderwriter - independent underwriter will underwrite 20% of offering - leadunderwriter exempt from independent underwriter requirements, subject toconditions.

Applicable Ontario Statutes Cited

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

Applicable Ontario Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., ss.224(1)(b) and 233, Form 12.

Applicable Ontario Rules Cited

In the matter of the Limitation on a Registrant Underwriting Securities of a RelatedIssuer or Connected Issuer of the Registrant (1997), 20 OSCB 1217 (March 1,1997).

Applicable Multi-Jurisdictional Instruments Cited

Proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts


IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA,ONTARIO, QUEBEC AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
GENESIS TRUST AND TD SECURITIES INC.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Ontario, Quebec and Newfoundland (the"Jurisdictions") has received an application from TD Securities Inc. ("TDSI"), and fromCanada Trustco Mortgage Company ("Canada Trust" or the "Administrative Agent"),as administrative agent of Genesis Trust (the "Trust"), on behalf of the Trust (the Trustand TDSI are collectively referred to herein as the "Filer") for a decision under thesecurities legislation of the Jurisdictions (the "Legislation") that the provisionscontained in the Legislation mandating independent underwriter requirements shall notapply to the Trust and TDSI in respect of the proposed offerings (the "ProposedOfferings") by the Trust of the PowerLine Line of Credit Receivables-Backed Notes,Series 2000-3 (the "Series 2000-3 Notes"), the PowerLine Line of Credit Receivables-Backed Notes, Series 2000-4 (the "Series 2000-4 Notes") and the PowerLine Line ofCredit Receivables-Backed Notes, Series 2000-5 (the "Series 2000-5 Notes") (theSeries 2000-3 Notes, the Series 2000-4 Notes and the Series 2000-5 Notes arecollectively referred to herein as the "Proposed Offering Notes");

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. The Trust was established under the laws of Ontario pursuant to a declarationof trust made as of September 22, 1999 (the "Declaration of Trust") by MontrealTrust Company as trustee of the Trust (the "Issuer Trustee").

2. The Trust is a special purpose trust whose activities are limited specifically toacquiring and dealing with an undivided co-ownership interest in revolving poolsof receivables generated in certain real estate secured variable rate PowerLineline of credit accounts originated by Canada Trust, the related security (primarilyeligible first and second residential mortgages) and certain other related assets(collectively, the "Account Assets"), and funding such activities with borrowedfunds or by issuing securities representing debt or equity obligations of the Trustor undivided co-ownership interests in Account Assets purchased by the Trust,obtaining credit enhancements or support in connection with such financing,granting security on all or any part of the Trust's fund and investing funds onhand in certain investments, and certain other activities.

3. Pursuant to an administration agreement made as of September 22, 1999 (the"Administration Agreement") between Canada Trust and the Issuer Trustee,Canada Trust has become the administrative agent of the Trust.

4. The Administrative Agent, on behalf of the Trust, has filed (final) long formprospectuses dated January 14, 2000 in connection with the completed publicofferings (the "Completed Offerings") by the Trust of the PowerLine Line ofCredit Receivables-Backed Notes, Series 2000-1 (the "Series 2000-1 Notes")and the PowerLine Line of Credit Receivables-Backed Notes, Series 2000-2(the "Series 2000-2 Notes") (the Series 2000-1 Notes and the Series 2000-2Notes are collectively referred to herein as the "Completed Offering Notes") andhas received receipts and/or final MRRS Decision Documents therefor.

5. The Trust has used the proceeds from the Completed Offerings to finance theinitial purchase of its undivided co-ownership interest in the Account Assets.Additional undivided co-ownership interests may be purchased from time to timeby the Trust with the proceeds of other series of notes issued by the Trust. TheTrust will use the cash flows generated from the Account Assets to pay theprincipal and interest owing from time to time on such notes, including principaland interest owing on the Completed Offering Notes.

6. As a special purpose trust, the only asset of the Trust currently is its undividedco-ownership interest purchased in the Account Assets which was financedthrough the Completed Offerings and its only liabilities are its obligations to payprincipal and interest owing on the Completed Offering Notes. In addition, theTrust has rights and is subject to obligations under certain agreements.

7. Canada Trust is a loan company existing under the Trust and Loan CompaniesAct (Canada). Canada Trust took the initiative in organizing the Trust, and assuch may be considered to be a "promoter" of the Trust within the meaning ofthe securities legislation of certain provinces of Canada. As noted above,Canada Trust is also the administrative agent of the Trust pursuant to theAdministration Agreement.

8. CT Financial Services Inc. ("CT Financial") is the parent holding company ofCanada Trust. Canada Trust became a subsidiary of The Toronto-DominionBank ("TD Bank") when CT Financial was acquired by TD Bank.

9. TDSI is a corporation incorporated under the Business Corporations Act(Ontario) and is a wholly-owned subsidiary of TD Bank.

10. TDSI is not a "reporting issuer" or the equivalent under the securities legislationof any of the provinces of Canada.

11. TDSI is registered as a dealer in the categories of "broker" and "investmentdealer" and is a member of the Investment Dealers Association of Canada.

12. In connection with the Proposed Offerings by the Trust of the Proposed OfferingNotes, the Administrative Agent, on behalf of the Trust, has filed with thesecurities regulatory authority or regulator in each of the provinces of Canada:

(a) a preliminary prospectus dated February 29, 2000 in respect of theSeries 2000-3 Notes;

(b) a preliminary prospectus dated February 29, 2000 in respect of theSeries 2000-4 Notes; and

(c) a preliminary prospectus dated February 29, 2000 in respect of theSeries 2000-5 Notes.

13. In connection with the Proposed Offerings, the Administrative Agent, on behalfof the Trust, also intends to file with the securities regulatory authority orregulator in each of the provinces of Canada:

(a) a (final) prospectus in respect of the Series 2000-3 Notes (the "Series2000-3 Final Prospectus");

(b) a (final) prospectus in respect of the Series 2000-4 Notes (the "Series2000-4 Final Prospectus"); and

(c) a (final) prospectus in respect of the Series 2000-5 Notes (the "Series2000-5 Final Prospectus").

14. The Trust will use the proceeds from the Proposed Offerings to finance thepurchase of an additional undivided co-ownership interest in the Account Assetsand will use the cash flows generated from the Account Assets to pay theprincipal and interest owing from time to time on the Proposed Offering Notes.

15. TDSI proposes to act as the underwriter in connection with the distribution of upto 80% of the dollar value of the distribution for each of the Proposed Offeringsby the Trust.

  • The only financial benefits which TDSI will receive as a result of its participationin each of the Proposed Offerings are the normal arm's length underwritingcommissions and reimbursement of expenses associated with a public offeringin Canada.

17. In relation to TDSI, the Trust may be considered to be a "related issuer" or itsequivalent and a "connected issuer" or its equivalent as defined in theLegislation and may also be considered to be a "connected issuer" as definedin proposed Multi-Jurisdictional Instrument 33-105 for the purposes of each ofthe Proposed Offerings because:

(a) both Canada Trust and TDSI are subsidiaries of TD Bank;

(b) TD Bank is a Credit Enhancer in respect of the Series-2000 5 Notes,providing external credit enhancement for the Notes on market terms inthe form of a Letter of Credit;

(c) Canada Trust is a promoter of the Trust; and

(d) Canada Trust will provide services required in connection with theProposed Offerings and the ongoing operations, maintenance andregulatory compliance of the Trust as the administrative agent of theTrust pursuant to the Administration Agreement.

18. In connection with each of the Proposed Offerings by the Trust:

(a) the front page of the Series 2000-3 Final Prospectus, the Series 2000-4Final Prospectus and the Series 2000-5 Final Prospectus shall eachcontain:

(i) a statement, naming TDSI, in bold type which states that the Trustis a related and connected issuer of TDSI in connection with thedistribution;

(ii) a summary, naming TDSI, stating that the Trust is a related andconnected issuer of TDSI based on, among other things, thecommon ownership of TDSI and Canada Trust and CanadaTrust's role as promoter and administrative agent of the Trust; and

(iii) a cross-reference to the applicable section or sections in the bodyof the prospectus where further information concerning therelationship between the Trust and TDSI is provided;

(b) the body of the Series 2000-3 Final Prospectus, the Series 2000-4 FinalProspectus and the Series 2000-5 Final Prospectus shall each contain:

(i) a statement, naming TDSI, which states that the Trust is a relatedand connected issuer of TDSI in connection with the distribution;

(ii) the basis on which the Trust is a related and connected issuer ofTDSI, including details regarding the link between TD Bank,Canada Trust, TDSI and the Trust and other aspects of therelationship between TDSI and the Trust;

(iii) disclosure regarding the involvement of TDSI and of the Trust inthe decision to distribute the Series 2000-3 Notes, the Series2000-4 Notes and the Series 2000-5 Notes, respectively, and inthe determination of the terms of the distribution; and

(iv) details of the financial benefits which TDSI will receive from therespective Proposed Offering;

(c) in each of the Proposed Offerings either CIBC World Markets Inc., ScotiaCapital Inc., or RBC Dominion Securities Inc., each of which is an"independent underwriter" to the Trust as that term is defined in proposedMulti-Jurisdictional Instrument 33-105, shall underwrite no less than 20percent of the dollar value of the distribution for each of the ProposedOfferings, participate in the structuring and pricing of the distribution ofeach of the Proposed Offerings and in all future due diligence activitiesto be performed by the underwriters for the distributions, and sign theprospectus certificate for the (final) prospectus required by theLegislation; and

(d) the Series 2000-3 Final Prospectus, the Series 2000-4 Final Prospectusand the Series 2000-5 Final Prospectus shall identify the independentunderwriter and disclose the role of the independent underwriter in thestructuring and pricing of the applicable Proposed Offering as well as therole of the independent underwriter in the due diligence activitiesperformed by the underwriters for the distribution.

AND WHEREAS under the System, this Decision Document evidences thedecision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test containedin the Legislation that provides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers under the Legislation is that therequirement contained in the Legislation mandating independent underwriterrequirements shall not apply to the Trust and TDSI in connection with the ProposedOfferings provided that:

(i) the Proposed Offerings by the Trust are made as described insubparagraphs 18(a), 18(b), and 18(d); and

(ii) the independent underwriter participates in each of the ProposedOfferings as stated in subparagraph 18(c).

March 22nd, 2000.

"J. A. Geller"     "Robert W. Davis"