Drive Products Income Fund - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- National Instrument 51-102 Continuous Disclosure Obligations, s.13.1 -- Application by an issuer for relief from the requirement to include certain financial statements in a business acquisition report (BAR) -- The issuer acquired two businesses at the time of its IPO -- Relief previously granted from the prospectus requirements relating to the least significant related business to include financial statements for that business -- BAR relief granted consistent with earlier prospectus relief.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.3, 8.4, 13.1.

November 7, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,

QUEBEC, NEW BRUNSWICK, NOVA SCOTIA AND

NEWFOUNDLAND AND LABRADOR

(THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

DRIVE PRODUCTS INCOME FUND

(THE "FILER")

MRRS DECISION DOCUMENT

Background

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 exempting the Filer from the requirement to include certain financial statements in the business acquisition report (the "BAR") to be filed by the Filer in connection with an acquisition it completed on August 25, 2006 (the "Requested Relief").

Under the Mutual Reliance Review System for Exemptive Relief Applications,

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the MRRS decision document evidences the decision of each Decision Maker.

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 an unincorporated, open-ended limited purpose trust established under the laws of Ontario by a declaration of trust dated May 1, 2006, as amended and restated.

2. The Filer's head office is in Mississauga, Ontario.

3. The Filer is a reporting issuer in each of the provinces and territories of Canada (where that concept exists).

4. The Filer is not in default of the securities legislation of the Jurisdictions.

5. The authorized capital of the Filer consists of an unlimited number of units of the Filer ("Units") of which, as of October 26, 2006, 7,621,400 Units were issued and outstanding.

6. The Units of the Filer are listed and posted for trading on the Toronto Stock Exchange under the trading symbol "DPI.UN".

7. Although the Filer is also a reporting issuer, or the equivalent, in Prince Edward Island, the Yukon, the Northwest Territories and Nunavut, an application is not being made to the securities regulatory authorities in these jurisdictions as the Filer understands that National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") has not been adopted as a rule in these jurisdictions.

8. Although the Filer is also a reporting issuer in British Columbia, an application is not being made in this province as BC Implementing Rule 51-801 ("BCI 51-801"), as amended, exempts issuers from Part 8 of NI 51-102 in British Columbia unless the issuer relies in any other jurisdiction on certain exemptions contained in Multilateral Instrument 11-101 Principal Regulator System as specified in BCI 51-801.

9. On August 17, 2006, the Filer filed a final prospectus ("Prospectus") in each of the provinces and territories of Canada for its initial public offering.

10. The Filer disclosed in the Prospectus that it was established to indirectly acquire the partnership units of Drive Products, a general partnership (the "Acquisition").

11. The Filer completed the Acquisition on August 25, 2006.

12. Concurrently with the completion of the Acquisition, Drive Products acquired all the assets of Professional Distribution Services Inc. ("PDS") for cash consideration of $3.2 million.

13. OSC Rule 41-501 General Prospectus Requirements (Rule 41-501) specifies the financial statements required to be included in a prospectus, including financial statements relating to "significant acquisitions", as defined in Rule 41-501. In accordance with Rule 41-501, PDS is a significant acquisition of the Filer.

14. Pursuant to a request by the Filer submitted by letter dated August 3, 2006 during the prospectus comment period, the Filer sought discretionary relief from the requirement under 41-501 that it include in the Prospectus statements of income, retained earnings and cash flows for PDS for its three most recently completed financial years and a balance sheet as at the end of its two most recently completed financial years. The relief sought was on the basis that, while PDS was a significant acquisition of the Filer, the acquisition of PDS was not significant in relation to Drive Products.

15. Because the acquisition of PDS was not significant in relation to Drive Products, the Filer was granted exemptive relief, evidenced by the receipt for the Prospectus, from the requirement under Rule 41-501 to include financial statements for PDS in the Prospectus.

16. Since the Acquisition is a "significant acquisition" by the Filer for the purposes of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102"), accordingly, the Filer must file a BAR by November 8, 2006.

17. Under NI 51-102, the Filer is required to include in its BAR for the Acquisition certain financial statements including:

a. Audited financial statements for Drive Products for the years ended October 31, 2005 and October 31, 2004;

b. Interim financial statements for Drive Products for the nine month period ended July 31, 2006 together with comparative interim financial statements for the nine month period ended July 31, 2005;

c. An unaudited pro forma consolidated balance sheet of the Filer as at July 31, 2006;

d. Unaudited pro forma income statements and pro forma earnings per unit for the year ended October 31, 2005 and for the nine month period ended July 31, 2006; and

e. A compilation report on the unaudited pro forma balance sheet as at July 31, 2006 and the unaudited pro forma consolidated statements of operations for the year ended October 31, 2005 and for the nine months ended July 31, 2006,

collectively, the "Drive Products Financial Statements".

18. In addition, under NI 51-102, the Filer is required to include financial statements for PDS in the BAR.

19. The acquisition of PDS is not significant in relation to the operating entity, Drive Products.

Decision

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 is that the Requested Relief is granted provided that the Filer includes the Drive Products Financial Statements in the BAR.