Securities Law & Instruments

Headnote

Approval granted for a change of control of a manager of labour sponsored investment funds.

Rules Cited

National Instrument 81-102 Mutual Funds, s. 5.5(2).

October 11, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ONTARIO, ALBERTA, BRITISH COLUMBIA, MANITOBA,

SASKATCHEWAN, NEW BRUNSWICK, NEWFOUNDLAND AND LABRADOR,

NOVA SCOTIA, PRINCE EDWARD ISLAND, YUKON, NUNAVUT

AND THE NORTHWEST TERRITORIES (the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MEDICAL DISCOVERY MANAGEMENT CORPORATION (THE "FILER")

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (each, a "Decision Maker", and together, the "Decision Makers") in each of the Jurisdictions has received an application from the Filer dated August 29, 2005 (the "Application") for approval pursuant to Section 5.5(2) of National Instrument 81-102 -- Mutual Funds ("NI 81-102") for a change of control of the Filer.

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) the Ontario Securities Commission is the principal regulator for this Application, and

t(b) his MRRS decision document evidences the decision of each Decision Maker, as applicable.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

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

1. The Filer is the manager of Canadian Medical Discoveries Fund Inc. ("CMDF") and Canadian Medical Discoveries Fund II Inc. ("CMDF II" and, together with CMDF, the "Funds"). CMDF is a reporting issuer, where such status exists, in the Jurisdictions, where such status exists. CMDF II is a reporting issuer, where such status exists, in the Jurisdictions, except for the provinces of Saskatchewan, New Brunswick and Nova Scotia.

2. The Funds are registered as labour sponsored investment fund corporations under the Community Small Business Investment Funds Act (Ontario). The Funds are also registered as labour sponsored venture capital corporations under the Income Tax Act (Canada). CMDF has also been approved as a qualifying fund pursuant to the Labour-sponsored Venture Capital Corporation Act (Saskatchewan).

3. On August 17, 2005, MDS Capital Corp. (the "Purchaser"), and Stilco Investments Limited (the "Seller") executed a purchase agreement (the "Purchase Agreement"). Pursuant to the Purchase Agreement, the Seller has agreed, among other things, to sell all of the shares of the Filer the Seller owns to the Purchaser, thereby resulting in a change of control of the Filer.

4. Prior to the change of control of the Filer, the authorized capital of the Filer consists of an unlimited number of common shares, of which 500 are held by the Purchaser and 500 are held by the Seller.

5. A notice regarding the change of control of the Filer was mailed to shareholders of the Funds on August 18, 2005. Amendments dated August 26, 2005 to the Funds' prospectuses regarding the change of control of the Filer have been filed.

6. Since inception of the Funds, the Purchaser has assisted the Filer in identifying, screening and analyzing eligible investments.

7. The Purchaser is a private corporation incorporated under the laws of the Province of Ontario. The purchaser is one of Canada's largest venture capital fund managers and is focused on providing financial support and other services to help build private health care and life sciences companies.

8. Upon the change of control of the Filer, the Funds will be managed in a consistent manner as prior to the change of control.

9. New appointments of directors have been made to the Filer and the Funds on August 25, 2005. The appointments were intended to fill existing vacancies on the board of directors of the Filer and the Funds and were not a result of the change of control.

Decision

Each of the Decision Makers is satisfied that, based on the information and representations contained in the Application and this decision, and for the purposes described in the Application, the Decision Makers, as applicable, hereby grant approval pursuant to Section 5.5(2) of NI 81-102 in respect of the change of control of the Filer.

The approval provided herein is subject to compliance with all applicable provisions of NI 81-102.

"Leslie Byberg"
Manager, Investment Funds Branch