Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Approval of a change in control of a mutual fund manager -- no material changes are anticipated as a result of the change of control.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(2), 5.7(1)(b).

January 24, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO, BRISTISH COLUMBIA, ALBERTA,

SASKATCHEWAN, MANITOBA, QUEBEC,

NEW BRUNSWICK, NOVA SCOTIA,

PRINCE EDWARD ISLAND, NEWFOUNDLAND AND

LABRADOR, NORTHWEST TERRITORIES, NUNAVUT

AND YUKON TERRITORY

(the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADIAN MEDICAL DISCOVERIES FUND INC.

(the Fund)

AND

MEDICAL DISCOVERY MANAGEMENT

CORPORATION (the Filer or MDMC)

 

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 (the Legislation) for approval of a change of control of the Filer pursuant to subsection 5.5(2) of National Instrument 81-102 -- Mutual Funds (NI 81-102).

Under the Mutual Reliance Review System for Exemptive Relief Application

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

(b) this 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. Jovian Asset Management Inc. (Jovian), a wholly-owned subsidiary of the Jovian Capital Corporation (JCC), proposes to acquire control of the manager of the Fund, MDMC (the Manager). The Manager's head office is in Toronto, Ontario.

2. Jovian is incorporated under the laws of the Province of Ontario. Jovian is a holding company and controls the following registered dealers or advisers in the Jurisdictions: Jove Investment Management Inc., Leon Frazer & Associates Inc., MGI Securities Inc. and JovFunds Inc.

3. Jove Investment Management Inc. is the investment adviser to the Fund.

4. JCC is listed on the TSX Venture Exchange (JVN) and has a registered office at 491 Portage Avenue, Winnipeg, Manitoba, R3B 2E4. JCC is a management company that invests in companies that operate within two primary market segments: wealth management and asset management. JCC controls the following registered dealers or advisers in the Jurisdictions: T.E. Investment Counsel Inc., Rice Financial Group Inc., JovFunds Inc. and Charterhouse Management Corporation and has as of September 29, 2006, $4.6 billion in assets under management and $7.7 billion in assets under administration.

5. The Fund is a reporting issuer in each of the Jurisdictions and offers securities under a prospectus dated December 20, 2006 in each of the Jurisdictions. The Fund is a corporation amalgamated under the laws of Canada which was originally registered on October 7, 1994 as a labour sponsored investment fund corporation under the Community Small Business Investment Funds Act, and as a labour-sponsored venture capital corporation under the Income Tax Act (Canada) as of October 12, 1994. The Fund is the result of the amalgamation of two labour sponsored investment funds (the Amalgamation) namely: Canadian Medical Discoveries Fund Inc. and Canadian Medical Discoveries Fund II Inc. which was approved by the shareholders of each on November 30, 2006 and by the Decision Makers on November 24, 2006.

6. JovFunds Management Inc., (formerly, Fairway Asset Management Corp. and prior thereto, Impax Capital Corp.) (JFI) acquired 100% of the outstanding securities of Manager in January of 2006. Jovian acquired 49% of the voting Class "C" Shares and 100% of the non-voting Class "A" Shares of JFI on May 9, 2006, and as a result indirectly owned 49% of the Manager. On May 9, 2006, Jovian was also granted an option acquire the balance of the Class "C" Shares of JFI. Jovian has given the vendors notice that it intends to exercise its option by the end of 2006, which when exercised will result in Jovian indirectly owning 100% of the outstanding securities of the Manager.

7. A press release dated October 6, 2006 regarding the change of control of the Manager was issued and filed on SEDAR and a material change report dated October 16, 2006 regarding the change of control of the Manager was also filed on SEDAR. A notice regarding the change of control of the Manager was mailed to shareholders of the Fund on or about October 16, 2006.

8. No material changes in the administration or management of the Fund are anticipated as a result of the change of control of the Manager.

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 change of control of the Manager pursuant to subsection 5.5(2) of NI 81-102 is hereby approved.

"Leslie Byberg"
Manager, Investment Funds Branch
Ontario Securities Commission