Franconia Minerals Corporation - MRRS Decision

Decision

Headnote

An issuer that is listed on OFEX is ordered not to be excluded from the definition of "venture issuer" under applicable securities legislation solely due to this listing.

Applicable Legislative Provisions

National Instrument 51-102 - Continuous Disclosure Obligations.

National Instrument 58-101 - Disclosure of Corporate Governance Practices.

Multilateral Instrument 52-110 - Audit Committees.

Citation: Franconia Minerals Corporation, 2006 ABASC 1297

April 28, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, AND ONTARIO (the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

FRANCONIA MINERALS CORPORATION (the Filer)

 

MRRS DECISION DOCUMENT

Background

1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the listing of the Filer on OFEX shall not cause the Filer to be excluded from the definition of "venture issuer" under applicable securities legislation (the Requested Relief);

2. Under Multilateral Instrument 11-101 Principal Regulator System (MI 11-101) and the Mutual Reliance Review System for Exemptive Relief Applications, a) Alberta is the principal regulator for the Filer, b) the Filer is relying on Part 3 of MI 11-101 in British Columbia and; c) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

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

Representations

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

4.1 The Filer was incorporated under the provisions of the Business Corporations Act (Alberta), on August 7, 1998. The Filer's head office is located in Spokane, Washington in the United States of America.

4.2 The Filer is a reporting issuer in each of the Jurisdictions by virtue of a receipt issued by the Alberta Securities Commission for a final prospectus on October 19, 2004.

4.3 The common shares of the Filer are traded on the TSX Venture Exchange and are traded on OFEX.

4.4 The common shares of the Filer were listed on the TSX Venture Exchange on January 12, 2005.

4.5 The authorized capital of the Filer consists of an unlimited number of common shares and an unlimited number of preferred shares. As of March 17, 2006 29,155,635 common shares are issued and outstanding and there are no preferred shares issued and outstanding.

4.6 To the best of the knowledge of the Filer, it is not in default of any requirements of securities legislation in any of the Jurisdictions.

4.7 On February 18, 2002 the Filer's common shares began trading on OFEX following an offer for subscription by prospectus in the United Kingdom.

4.8 OFEX was created in October 1995 in the United Kingdom as a trading facility for unquoted and unlisted securities.

4.9 OFEX would be considered the third tier in the London market with the Alternative Investment Market ("AIM") being the second tier and the London Stock Exchange being the first tier. Many companies use OFEX as a stepping stone to AIM.

4.10 Under the OFEX rules, issuers are required to make timely disclose of material information, an issuer must announce interim results in respect of the first six months of each financial year not later than 3 months after the end of the period, and year end results must be announced not later than 5 months after year end. This is similar to AIM other than AIM requires year end results to be published no later than 6 months after the year end.

4.11 OFEX is structured for venture type issuers and the Filer believes investors would not expect the more rigorous continuous disclosure requirements for non-venture issuers to be required just because its common shares are traded on OFEX.

4.12 A "venture issuer" is defined by the applicable securities legislation as a reporting issuer that, as at the applicable time, did not have any of its securities listed or quoted on any of the Toronto Stock Exchange, a U.S. marketplace or a marketplace outside of Canada and the United States of America.

4.13 The Filer does not fall within the definition of a venture issuer as provided by the applicable securities legislation solely due to the fact that its common shares are traded on OFEX.

4.14 In all other respects, the Filer falls within the definition of venture issuer as provided by applicable securities legislation, including: National Instrument 51-102 - Continuous Disclosure Obligations, National Instrument 58-101 - Disclosure of Corporate Governance Practises, Multilaterial Instrument 52-110 - Audit Committees.

4.15 No securities of the Filer are currently listed or quoted on any marketplace, as that term is defined in applicable securities legislation, other than OFEX and the TSX Venture Exchange.

Decision

5. The Decision Makers being satisfied that they each have jurisdiction to make this decision and that the relevant test under the Legislation has been met, the Requested Relief is granted for so long as the securities of the Filer are only listed on the TSX Venture Exchange and traded on OFEX.

"Agnes Lau, CA"
Associate Director, Corporate Finance
Alberta Securities Commission