Securities Law & Instruments

Headnote

Subsection 74(1) - distribution of shares of a corporation which is not a reporting issuer in Ontario, Saskatchewan, Quebec or Nova Scotia as a dividend in kind is not subject to section 25 and 53 of the Act - subject to certain conditions, first trade is not a distribution in Quebec.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am. ss. 25, 35(1)(13), 53, 72(1)(g), 74(1).

IN THE MATTER OF

THE SECURITIES LEGISLATION OF ONTARIO,

SASKATCHEWAN, QUEBEC AND NOVA SCOTIA

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MERCURY PARTNERS & COMPANY INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Ontario, Saskatchewan, Quebec and Nova Scotia (the "Jurisdictions") has received an application (the "Application") from Mercury Partners & Company Inc. (the "Corporation") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirements contained in the Legislation to be registered to trade in a security (the "Registration Requirements") and to file and obtain a receipt for a preliminary prospectus and a prospectus (the "Prospectus Requirements") shall not apply to the distribution by the Corporation of a dividend in specie (the "Distribution") of the common shares of North Group Limited ("North Group") to shareholders of common shares of the Corporation ("Mercury Shareholders") in Canada;

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for the Application;

AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14 -- 101 Definitions;

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

1. the Corporation is organized under the laws of the Yukon Territory, is a reporting issuer in each of British Columbia, Alberta and Manitoba and is not in default of any requirement under any applicable securities legislation;

2. the Corporation owns companies that operate in the financial services industry, focusing on merchant banking;

3. the authorized capital of the Corporation consists of an unlimited number of common shares without par value (the "Mercury Shares") and an unlimited number of class A preferred shares;

4. the Corporation has not issued any class A preferred shares and, as of June 16, 2004, there were 8,183,733 Mercury Shares issued and outstanding of which 2,250,219 are held by the Corporation itself as a result of a merger with another entity. These shares will be cancelled prior to any distribution;

5. the Mercury Shares are registered with the U.S. Securities and Exchange Commission (the "SEC") and are quoted for trading on the OTC Bulletin Board under the symbol "MYPIF" and listed on the TSX Venture Exchange under the symbol "MYP.U";

6. North Group was incorporated under the Business Corporations Act of the Province of Alberta and was continued under the Canada Business Corporations Act on July 8, 2002. North Group commenced trading under the name Takla Star Resources Ltd. on the Alberta Stock Exchange, effective May 9, 1991, following the take-over bid of AOK Explorations Ltd., a Canadian controlled private company. North Group changed its name on July 8, 2002 from Takla Star Resources Ltd. to North Group Limited;

7. North Group has been a reporting issuer in British Columbia since September 7, 1994 and in Alberta since December 19, 1985 and is not in default of any requirement under any applicable securities legislation. North Group is not a reporting issuer or equivalent in any Jurisdiction and has no intention of becoming a reporting issuer or the equivalent in any Jurisdiction;

8. North Group's authorized capital consists of an unlimited number of common shares without par value (the "North Group Shares");

9. as of June 16, 2004, there were 12,567,594 North Group Shares issued and outstanding;

10. the North Group Shares are listed on the TSX Venture Exchange; the trading symbol for the North Group Shares changed from "TKR" to "NOR" in July 2002 pursuant to a name change from Takla Star Resources Ltd. to North Group Limited;

11. the Corporation, directly or indirectly, holds or controls 2,500,000 North Group Shares representing approximately 19.9% of the issued and outstanding North Group Shares;

12. the Corporation will distribute to Mercury Shareholders 2,500,000 North Group Shares as a dividend in kind on the basis of 0.42 North Group Shares for each Mercury Share outstanding; as a result, Mercury Shareholders will become North Group Shareholders;

13. no fractional shares will be issued in connection with the Distribution and the number of North Group Shares to be received by Mercury Shareholders will be rounded down to the nearest whole share in the event that a shareholder is entitled to a fractional share representing 0.5 or less of a North Group Share and will be rounded up to the nearest whole share in the event that a shareholder is entitled to a fractional share representing more than 0.5 of a North Group Share;

14. the Distribution will be effected in compliance with the corporate laws of the Yukon Territory and the federal corporate laws of Canada;

15. as of May 18, 2004, there were an aggregate (with respect to the registered owners list) of 8,183,733 Mercury Shares outstanding; 6,196,454 of the outstanding Mercury Shares were held by 25 holders of record in Canada as follows:

 

 

 

Percentage of

 

Number of

Number of

Total

 

Mercury Shares

Holders of

Outstanding

Province

Held

Record

Mercury Shares

_________________________

_______________

_______________

_______________

British Columbia

2,868,161{(1)}

18

35.047%

Alberta

15,700

3

0.192%

Saskatchewan

20

1

0.000%

Ontario

3,308,533{(2)}

2

40.428%

Quebec

4,040

1

0.049%

Nova Scotia

0

0

0.000%

Other

1,987,279

38

24.283%

 

_______________

_______________

_______________

 

8,183,733

63

100.000%

{(1)} 2,250,219 of these shares are held by the Corporation and will be cancelled prior to any distribution.

{(2)} 3,308,133 of these shares are held by CDS & Co. NCI Account.

16. as of May 18, 2004, approximately 75.717% of the outstanding registered Mercury Shares were held by residents of Canada;

17. as of May 17, 2004, there were an aggregate of 1,165,315 Mercury Shares held by non-objecting beneficial owners; 1,115,907 of these outstanding Mercury Shares were held by 25 holders of record in Canada as follows:

 

 

 

Percentage of

 

Number of

Number of

Total

 

Mercury Shares

Holders of

Outstanding

Province

Held

Record

Mercury Shares

_________________________

_______________

_______________

_______________

British Columbia

1,008,899

7

86.577%

Alberta

79,230

6

6.799%

Ontario

17,778

11

1.526%

Nova Scotia

10,000

1

0.858%

Other

49,408

26

4.240%

 

_______________

_______________

_______________

 

1,165,315

51

100.000%

18. as of May 17, 2004, approximately 95.760% of the outstanding Mercury Shares reflected on the list of non-objecting beneficial owners were held by residents of Canada;

19. the Distribution would be exempt from the registration and prospectus requirements of the Legislation but for the fact that North Group is not a reporting issuer or equivalent under the Legislation;

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

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

THE DECISION of the Decision Makers under the Legislation that the Registration Requirements and the Prospectus Requirements shall not apply to trades by the Corporation of North Group Shares in connection with the Distribution and in Quebec, the first trade (alienation) of North Group Shares acquired under the Decision will be a distribution unless:

(a) North Group is and has been a reporting issuer in Quebec for the four months preceding the trade;

(b) No unusual effort is made to prepare the market or to create a demand for the security that is the subject of the trade;

(c) No extraordinary commission or consideration is paid to a person or company in respect of the trade; and

(d) If the selling security holder is an insider or officer of North Group, the selling security holder has no reasonable grounds to believe that North Group is in default of any requirement of the Legislation of Quebec.

Notwithstanding the above conditions, the prospectus requirement does not apply to the first trade (alienation) of North Group Shares acquired under the Decision if the trade is made outside of Quebec through an exchange or organized market, provided that North Group is not a reporting issuer in Quebec.

July 14, 2004.

"Wendell S. Wigle"
"Suresh Thakrar"