Covington Strategic Capital Fund Inc. - s. 62(5)

Headnote

Exemptive Relief Application -- Extension of lapse date to allow sufficient time for staff and the applicant to resolve an application.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 62(2), 62(5).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5,

AS AMENDED (the "Act")

AND

IN THE MATTER OF

COVINGTON STRATEGIC CAPITAL FUND INC.

(the "Fund")

ORDER

(Subsection 62(5))

UPON an application from the Fund for an order pursuant to subsection 62(5) of the Act that the time limits pertaining to the distribution of qualified securities ("Securities") under the current prospectus of the Fund be extended to those time limits that would be applicable if the lapse date of the Prospectus was February 3, 2006;

AND UPON considering the application and the recommendations of the staff of the Ontario Securities Commission (the "Commission");

AND UPON the Fund having represented to the Commission that:

(a) Covington Capital Corporation is the manager of the Fund (the "Manager").

(b) The Fund was incorporated under the laws of the Province of Ontario by articles of incorporation dated November 18, 2003.

(c) The Fund is registered as a labour sponsored investment fund corporation under the Community Small Business Investment Funds Act (Ontario), and qualifies as a prescribed labour-sponsored venture capital corporation under the Income Tax Act (Canada), as amended. The Fund is a mutual fund pursuant to the securities legislation of the Province of Ontario.

(d) The Class A Shares, Series I, and Class A Shares, Series II, of the Fund are currently qualified for distribution in Ontario under a long-form prospectus dated January 4, 2005 as amended on September 5, 2005 (the "Prospectus")

(e) The Fund is a reporting issuer under the Act and is not in default of any of the requirements of the securities legislation of the Province of Ontario.

(f) A change in control of the Manager (the "Change in Control") occurred on July 28, 2005. On April 23, 2005, notice was mailed to the Fund's securityholders providing notice of the proposed change of control which was expected to close early in the 3^rd quarter of 2005. Additionally, the Change in Control has been disclosed in the Fund's annual report and annual management report of fund performance for the year ended August 31, 2005 for the Fund, which was mailed to the Fund's securityholders on or about November 16, 2005, and was filed on SEDAR and is available on the Fund's website.

(g) The lapse date for the Fund is January 4, 2006. The Fund filed a pro forma prospectus on December 5, 2005.

(h) In connection with staff's review of the Fund's pro forma prospectus dated December 5, 2005, staff posed certain questions to counsel for the Fund and counsel to the Fund has made representations to staff in order to resolve such questions. Both staff and the Fund have expressed a desire to have more time to review and resolve such matters. The Fund has also applied for exemptive relief from certain requirements in section 2.1 of National Instrument 81-105 and both staff and the Fund have expressed a desire to have more time to resolve the application.

(i) Since September 5, 2005, the date of the Prospectus, no undisclosed material changes have occurred. Accordingly, the Prospectus provides accurate information regarding the Fund.

(j) If the requested relief is not granted the Fund will no longer be qualified to distribute securities in Ontario pursuant to the Prospectus.

AND UPON the undersigned being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to subsection 62(5) of the Act that the time limits provided by the Act as they apply to the distribution of Securities pursuant to the Prospectus are hereby extended to the time limits that would be applicable if the lapse date for the distribution of securities under the Prospectus of the Funds was February 3, 2006.

Dated at Toronto, Ontario, January 16, 2006.