Securities Law & Instruments


Exemptiongranted to labour sponsored investment fund corporation to permitit to pay certain specified distribution costs out of fund assetscontrary to section 2.1 of National Instrument 81-105 Mutual FundSales Practices. Exemption granted on the condition that the distributioncosts so paid are permitted by, and otherwise paid in accordancewith the National Instrument.


SecuritiesAct, R.S.O. 1990, c.S.5, as am.


NationalInstrument 81-105 Mutual Fund Sales Practices.



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










WHEREAS the application (the "Application")of VentureLink Brighter Future (Balanced) Fund Inc. (the "Fund")filed with the Ontario Securities Commission (the "DecisionMaker") for an exemption pursuant to section 9.1 of NationalInstrument 81-105 Mutual Fund Sales Practices ("NI 81-105")from section 2.1 of NI 81-105 to permit the Fund to make certainpayments to participating dealers;

AND WHEREAS considering the Application andthe recommendation of staff of the Decision Maker;

AND WHEREAS the Fund and Skylon Funds ManagementInc. (the "Manager"), the manager of the Fund, have representedto the Decision Maker as follows:

1.The Fund is a corporation incorporated under the Business CorporationsAct (Ontario) which is registered as a labour sponsored investmentfund corporation under the Community Small Business InvestmentsFund Act (Ontario) (the "Ontario Act") and is a prescribed labour-sponsoredventure capital corporation under the Income Tax Act (Canada).

2.The Fund is a mutual fund as defined in subsection 1(1) of theAct. The Fund has filed a preliminary prospectus dated September28, 2001 (the "Preliminary Prospectus") with the Decision Makerand intends to distribute Class A Shares (the "Class A Shares")until March 1, 2002 at a price of $10 per share.

3.The authorized capital of the Fund consists of an unlimitednumber of Class A Shares of which none are currently issuedand outstanding as of the date hereof and an unlimited numberof Class B Shares, of which 100 shares are issued and outstandingas of the date hereof.

4.The Manager and the United Steelworkers of America, TCU NationalLocal 1976 (the "Sponsor") formed and organized the Fund.

5.The Fund proposes to pay directly to participating dealers certaincosts associated with the distribution of its Class A Shares.These costs are:

(i) the fee of the Agent, CIBC World Markets Inc., for the publicoffering of the Class A Shares, on a best effort basis, equalto 0.5% of the aggregate gross proceeds of the offering as describedin the final prospectus as well as the Agent's out of pocketexpenses incurred on or before March 1, 2002 for advisory servicesrendered to the Fund (collectively, the "Corporate Finance Fee"),

(ii) a sales commission of 6% of the selling price for eachClass A Share subscribed for (the "6% Sales Commission").

6.The Fund may also pay for the reimbursement of co-operativemarketing expenses (the "Co-op Expenses") incurred by certaindealers in promoting sales of the Class A Shares, pursuant toco-operative marketing agreements the Fund may enter into withsuch dealers.

7.All of the costs associated with the distribution of Class AShares, including the 6% Sales Commission, the Corporate FinanceFee and the Co-op Expenses (collectively the "Distribution Costs")are fully disclosed in the Preliminary Prospectus. The factthat the Fund intends to pay these costs out of assets of theFund is also disclosed in the Preliminary Prospectus.

8.For accounting purposes, the Fund will

(i) defer and amortize the amount paid or payable in respectof the 6% Sales Commission to retained earnings on a straightline basis over eight years;

(ii) defer and amortize the amount paid or payable in respectof the Corporate Finance Fee to income on a straight line basisover eight years; and

(iii) expense the Co-op Expenses in the fiscal period when incurredand the Fund will not defer and amortize any Co-op Expenses.

9.Gross investment amounts will be contributed to the Fund inrespect of each subscription. This is to ensure that the entiresubscription amount contributed by the investor is counted forthe purpose of the applicable federal and provincial tax creditsin connection with the purchase of Class A Shares.

10.Due to the structure of the Fund, the most tax efficient wayfor the Distribution Costs to be financed is for the Fund topay them directly.

11.The Manager, or its affiliate, is the only member of the organizationof the Fund, other than the Fund, available to pay the DistributionCosts. The Manager does not have sufficient resources to paythe Distribution Costs, and unless the requested discretionaryrelief is granted, would be obliged to finance these costs throughborrowing.

12.Any loans obtained by the Manager to finance the DistributionCosts would result in the Manager increasing the managementfee chargeable to the Fund, by an amount equal to the borrowingcosts incurred by the Manager plus an amount required to compensatethe Manager for any risks associated with fluctuations in thenet asset value of the Fund and, therefore, fluctuations inthe manager's fee. Requiring compliance with section 2.1 ofNI 81-105 would cause the expenses of the Fund to increase abovethose contemplated in the Preliminary Prospectus.

13.Requiring the Manager to pay the Distribution Costs of the Fundwhile granting exemptions to other labour funds permitting suchfunds to pay directly, similar Distribution Costs, would putthe Fund at a permanent and serious competitive disadvantagewith the exempted labour funds.

14.The Fund undertakes to comply with all other provisions of NI81-105. In particular, the Fund undertakes that all DistributionCosts paid by it will be compensation permitted to be paid toparticipating dealers under NI 81-105.

AND WHEREAS the Decision Maker being satisfiedthat to do so would not be prejudicial to the public interest;

NOW THEREFORE pursuant to section 9.1 of NI 81-105,the Decision Maker hereby exempts the Fund from section 2.1of NI 81-105 to permit the Fund to pay the Distribution Costs,provided that:

(a)the Distribution Costs are otherwise permitted by, and paidin accordance with, NI 81-105;

(b)the Distribution Costs are accounted for in the Fund's financialstatements in the manner described in paragraph 8 above;

(c)the summary section of the final prospectus has full, true andplain disclosure explaining to investors that

(i) they pay the 6% Sales Commission indirectly, as the Fundpays the 6% Sales Commission using investors' subscription proceeds,and

(ii) a portion of the net asset value of the Fund is comprisedof a deferred commission, rather than an investment asset, and

this summary section must be placed within the first 10 pagesof the final prospectus;

(d)this Exemption shall cease to be operative with respect to theDecision Maker on the date that a rule replacing or amendingsection 2.1 of NI 81-105 comes into force.

December 14, 2001.

"Paul M. Moore"      "H. Lorne Morphy"