MRRS Decision -- Exemption from the requirement to file an annual information form pursuant to NI 81-106 - flow-through limited partnership - limited partnership is closed-end, has a short life span, has no readily available secondary market, and limited business activity - limited partners have adequate alternative disclosure in the prospectus, financial statements and management report of fund performance - cost of annual information form outweighs benefits - relief not prejudicial to public interest.
Applicable Legislative Provisions
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 9.2, 17.1.
Citation: Catapult Energy Small Cap FTS Limited Partnership, 2007 ABASC 197
April 18, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, QUÉBEC, NEW BRUNSWICK,
NOVA SCOTIA, NEWFOUNDLAND AND LABRADOR
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
CATAPULT ENERGY SMALL CAP FTS
MRRS DECISION DOCUMENT
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) exempting the Filer from the requirement in section 9.2 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to file an annual information form (the Requested Relief).
2. Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Alberta Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
3. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
4. This decision is based on the following facts represented by the Filer:
(a) The Filer was formed by a preliminary limited partnership agreement made as of September 8, 2006 between Catapult Energy 2006 Inc. as general partner (the General Partner) and Overlord Financial Inc. (Overlord) as the initial limited partner, and was established as a limited partnership pursuant to the provisions of the Partnership Act (Alberta). The definitive form of partnership agreement governing the Filer is the amended and restated limited partnership agreement dated as of October 19, 2006 (the Partnership Agreement). On October 23, 2006, Overlord transferred its initial limited partnership interest in the Filer and the units representing such interest to OFI Fund Management (2004) Inc. (OFI), an affiliate of Overlord. OFI's initial limited partnership interest was redeemed by the Filer on October 31, 2006.
(b) The Filer was formed with the investment objectives of (a) achieving capital appreciation through investment in a diversified portfolio of equity securities of selected small cap resource issuers identified by Catapult Financial Management Inc., the Filer's investment advisor, and (b) maximizing tax benefits for investors by purchasing flow-through shares (Flow-Through Shares) of resource issuers.
(c) The Filer was granted a decision document, dated October 19, 2006, by the Alberta Securities Commission in its capacity as principal regulator under National Policy 43-201 Mutual Reliance Review System for Prospectuses and Annual Information Forms on behalf of the securities regulatory authority or regulator for each of the other provinces of Canada, which decision document evidences the issue of final receipts for the Filer's prospectus (the Prospectus) dated October 19, 2006 relating to an offering of up to 800,000 limited partnership units. As a result, the Filer is a reporting issuer or the equivalent thereof in each province of Canada.
(d) On November 30, 2006, the Filer completed the issue of all the units offered under the Prospectus. No additional units have been or may be issued by the Filer. The units have not been and will not be listed or quoted for trading on any stock exchange or market.
(e) The Partnership Agreement provides the General Partner with the ability to propose to the limited partners, at a special meeting of limited partners to be held no later than October 31, 2008, an alternative (the Liquidity Alternative) to the termination of the Filer. Such Liquidity Alternative may include, without limitation, a proposal that the Filer exchange its assets for securities of a mutual fund corporation or other appropriate investment vehicle established by Overlord that, in either case deals at arm's length with each resource issuer of which the Filer owns securities. Upon such exchange, the Filer will be dissolved and the securities of the mutual fund corporation or other investment vehicle, as the case may be, will be distributed pro rata to the limited partners upon such dissolution. In the event that the Liquidity Alternative is not proposed to the limited partners on or before October 31, 2008, the Filer will dissolve and its net assets will be distributed pro rata to the limited partners on or before December 31, 2008.
(f) Since its formation, the Filer's activities have been limited to (i) completing the issue of the units under the Prospectus, (ii) investing its available funds in accordance with its investment objectives, and (iii) incurring expenses as described in the Prospectus.
(g) Unless a material change takes place in the business and affairs of the Filer (which the Filer would in any event be obligated to disclose pursuant to its continuous disclosure obligations), the limited partners will obtain adequate financial information from the Filer's annual and interim financial statements and management report of fund performance thereon. The Prospectus, the financial statements and management reports of fund performance provide sufficient information necessary for a limited partner to understand the Filer's business, financial position and future plans. In addition, if a Liquidity Alternative is proposed, limited partners will receive an information circular which describes the proposed alternative and will be given an opportunity to vote in respect of such proposed alternative at a special meeting of the limited partners.
(h) In light of the limited range of business activities to be conducted by the Filer, the nature of the investment of the limited partners in the Filer and the fact that the Filer intends to dissolve within 2.5 years after its formation, the requirement to file an annual information form may impose a material financial burden on the Filer without producing a corresponding benefit to its limited partners.
5. 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.
6. The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that this exemption shall terminate in respect of the Filer upon the occurrence of a material change in the affairs of the Filer unless the Filer satisfies the Decision Makers in writing that the exemption should continue, which satisfaction shall be evidenced in writing.