Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications. Exemptive relief granted from registrationand prospectus requirements for issuance by MT Services LimitedPartnership of limited partnership units to partnership trusts,subject to certain conditions. Partnership trusts are trustssettled by active partners, who are lawyers, patent agents,trademark agents, or senior officers employed by or who provideservices directly or through corporations to the law partnership.Similar relief was previously granted by the Commission in 1997.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.Sections 25, 53 and 74(1).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO, BRITISH COLUMBIAAND ALBERTA

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MT SERVICES LIMITED PARTNERSHIP

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta and Ontario (collectively, the"Jurisdictions") has received an application fromMT Services Limited Partnership (the "Applicant")for a decision under the securities legislation of each of theJurisdictions (the "Legislation") that the issuanceby the Applicant of limited partnership interests (the "Units")to certain trusts ("Partnership Trusts") settled underthe laws of the Jurisdictions by Active Partners (as such termis defined below) shall not be subject to the dealer registrationand prospectus requirements contained in the Legislation (the"Registration and Prospectus Requirements"), subjectto certain conditions;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 - Definitions;

AND WHEREAS the Applicant has representedto the Decision Makers that:

1. Each of the Applicant, the London McTétServices Limited Partnership, the Ottawa McTét ServicesLimited Partnership, the Hallmark Management Services LimitedPartnership and the Calgary MT Services Limited Partnership(each, a "Service Partnership" and, together, the"Services Partnerships") is a limited partnershipestablished under the laws of Ontario, British Columbia orAlberta, respectively, in 1997 for the primary purpose ofproviding secretarial, accounting, administrative, financialand other services for the Toronto, London, Ottawa, Vancouver,and Calgary offices of McCarthy Tétrault LLP (the "LawPartnership"). These services are provided pursuant toservices agreements entered into between each of the ServicePartnerships with the Law Partnership.

2. The Law Partnership is a limited liabilitypartnership of lawyers established under the laws of Ontariowith offices in London (Ontario), Ottawa, Toronto, Vancouver,Calgary, Montreal, Quebec City, London (England), and NewYork.

3. "Active Partners" are lawyers,patent agents, trademark agents, or senior officers who areemployed by or who provide services directly or through corporationsto the Law Partnership. All Active Partners devote over 75%of their time to the Law Partnership.

4. Partnership Trusts are trusts settled underthe laws of the Jurisdictions by Active Partners. PartnershipTrusts are settled for the benefit, directly or indirectly,of persons, including members of the family of the ActivePartner and, in certain circumstances, for the benefit ofthe Active Partner.

5. Partnership Trusts were created in 1997so that Active Partners could benefit from certain tax advantagesby flowing the income earned through to the Partnership Trusts.Each Partnership Trust has been or will be settled by an ActivePartner for the purpose of acquiring Units.

6. The minimum amount that an Active Partnermay contribute to a Partnership Trust is $1,000, and the maximumamount is $10,000.

7. Effective January 1, 2003 the Applicantwill acquire the other Services Partnerships to form the "NationalServices Partnership". The National Services Partnershipwill provide secretarial, accounting, administrative, financialand other services for all offices of the Law Partnership,and not solely for the Toronto office as is presently thecase.

8. The limited partnership interest of eachPartnership Trust in each of the Services Partnerships (and,beginning on January 1, 2003, the National Services Partnership)is a "Unit". Each of the Services Partnerships issuesUnits to Partnership Trusts settled by Active Partners.

9. Partnership Trusts hold the Units for thebenefit of the beneficiaries of the trust. For some ActivePartners, a beneficiary of a Partnership Trust may be anothertrust or trusts (the "Family Trust"), of which thebeneficiaries include or may include such family members ofthe Active Partner or the Active Partner him or herself.

10. No beneficiary of a Family Trust, otherthan the Active Partner, will directly or indirectly contributemoney or other assets to the Family Trust in order to financethe acquisition of Units, or will be liable for any loan orother financing obtained by the Family Trust for that purpose.No beneficiary of a Family Trust, other than the Active Partnerand any other beneficiary who is also a trustee, will be involvedin the making of any investment decision of the Family Trust.

11. Active Partners have not been and willnot be induced to settle Partnership Trusts for the purposeof acquiring and holding Units by expectation of partnershipor continued partnership or employment or continued employmentof the Active Partner by the Law Partnership. Each ActivePartner has made an individual choice to settle a PartnershipTrust.

12. Under the terms of the National ServicesPartnership limited partnership agreement, Units of the NationalServices Partnership will be automatically redeemed by theNational Services Partnership if the Active Partner who hassettled the Partnership Trust ceases to be an Active Partnerof the Law Partnership resident in Canada, at a redemptionprice equal to the contributed capital thereof. In addition,the holder of a redeemed Unit will be entitled to receivethe amount of any distributions owing or accrued in respectof such Unit as of the date of such redemption.

13. Units are not transferable except thatUnits may be charged or pledged as security for any obligationincurred by the Partnership Trust in order to finance or refinanceany capital contribution required to be made to the NationalServices Partnership. If the pledgee of a Unit realizes onsuch security, under the terms of the limited partnershipagreement, the Unit will be automatically redeemed by theNational Services Partnership at the redemption price referredto in paragraph 12, together with the amount of any distributionsowing or accrued in respect of such Unit as of the date ofsuch redemption.

14. Each Partnership Trust is or will be adiscretionary trust with three trustees, one of whom is orwill be the Active Partner who settled the Partnership Trust.

15. None of the Services Partnerships is areporting issuer in any province or territory of Canada andnone of the Services Partnerships has any present intentionof becoming a reporting issuer in any province or territoryof Canada.

16. The general partner of each Services Partnershipis a corporation incorporated under the laws of Ontario, BritishColumbia or Alberta, respectively, and the interest of eachgeneral partner in its related Services Partnership is nominal.

17. The National Services Partnership willprovide annual financial statements of the National ServicesPartnership to each Partnership Trust.

18. The Active Partners are provided withmonthly financial information and with annual financial statements(which are the subject of a review engagement report) withrespect to the Services Partnership in which they are limitedpartners (beginning January 1, 2003, this will be the NationalServices Partnership). Each Active Partner is also providedwith detailed memoranda regarding the Partnership Trusts,particularly the tax risks associated with the use of suchstructures. All Active Partners are and will continue to beprovided with the same amount and quality of information relatingto the Partnership Trusts.

19. Prior to the issuance of Units to a PartnershipTrust, the Applicant will obtain a written statement (a "Statement")from the Partnership Trust acknowledging receipt of a copyof the Decision Document and further acknowledging the subscriber'sunderstanding that certain protections under the Legislation,including the right of rescission, the right to make claimsfor damages and to receive continuous disclosure, are notavailable to the Partnership Trust in respect of the Units.

20. As the Units are not transferable, nomarket has developed or will develop for the Units.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the distribution by the Applicant ofUnits to each of the Partnership Trusts shall not be subjectto the Registration and Prospectus Requirements, provided that:

(a) the first trade in a Unit, other thana redemption of a Unit by the Applicant in accordance withits terms, shall be a distribution; and

(b) prior to the issuance of Units to aPartnership Trust, the Applicant:

(i) delivers a copy of this Decision Documentto the Partnership Trust, and

(ii) obtain a Statement from the PartnershipTrust.

December 31, 2002.

"Mary Theresa McLeod"                    "HaroldP. Hands"