Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- issuer deemed to have ceased to be a reporting issuer.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10).

November 28, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

ONTARIO, QUÉBEC 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

FCMI PRECIOUS METALS FUND INC.

(the "Filer")

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") that the Filer be deemed to have ceased to be a reporting issuer in each of the Jurisdictions (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) 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 defined in this decision.

Representations

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

1. The Filer is a corporation subsisting under the Business Corporations Act (Ontario). The principal office of the Filer is located in Ontario.

2. The Filer is a commodity pool pursuant to National Instrument 81-104 -- Commodity Pools.

3. The Filer is a reporting issuer in all of the Jurisdictions.

4. Friedberg Mercantile Group Ltd. is the manager of the Filer (the "Manager").

5. In 1983, the Filer was created as a closed-end investment fund when it completed an initial public offering (the "IPO") and its Class A shares (the "Class A Shares") were listed on the Toronto Stock Exchange. The Class A Shares of the Filer were subsequently delisted and a redemption right was provided. Since the IPO, no additional securities of the Filer have been distributed.

6. The Filer currently has approximately 229 securityholders (the "Securityholders").

7. An affiliate of the Manager is the only Securityholder that holds full voting shares in the capital of the Filer. The remainder of the Securityholders hold partial voting, Class A Shares, which entitle the holders to vote only in respect of select matters. These select matters do not include dissolution of the Filer or approval to convert the portfolio of the Filer to cash and to distribute the net assets to the Securityholders.

8. As of November 20, 2007, the Filer had total net assets of $1,105,077.

9. The ongoing operating expenses of FCMI consist mainly of accounting and auditing fees, legal fees in connection with annual meetings and director's fees. The increasing management expense ratio has reached the point where it has become very difficult to achieve a positive increase in net asset value ("NAV") per share. As a result, the Filer has determined that it is in the best interests of the Securityholders that an orderly wind-up of the Filer takes place.

10. The Filer intended to wind-up prior to November 30, 2007 but cannot do so until it receives a tax clearance certificate. The tax clearance certificate is not expected until February 2008.

11. On November 8, 2007, the Filer issued a press release announcing that the Manager has liquidated the portfolio investments of the Filer and that the assets will be distributed to the Securityholders.

12. Prior to November 30, 2007, the Filer will distribute all of its assets (other than amounts being paid to satisfy amounts owing by the Filer to service providers) to the Securityholders by way of a special distribution.

13. The special distribution will be made to Securityholders on a pro rata basis taking into account the number of Class A Shares held by each Securityholder. The value of each pro rata distribution will be based on the NAV of the Filer as of a date immediately prior to the special distribution. The calculation of NAV will be in accordance with the articles of the Filer and National Instrument 81-106 Investment Fund Continuous Disclosure.

14. Prior to November 30, 2007, the Manager will provide written notice under section 5.8(2) of NI 81-102 (the "Notice") to the Securityholders that the Filer will be wound up no sooner than 60 days from when the Notice is received. The Notice will be provided with the special distribution.

15. Once the special distribution has been made, Securityholders will have received all of the assets to which they are entitled from the Filer and all management fees paid by the Filer will cease.

16. The Filer is not in default of its obligations under the Legislation as a reporting issuer other than the requirement to file compliance reports under sections 6.7 and 12.1 of National Instrument 81-102 Mutual Funds ("NI 81-102"). Through inadvertence and because the Filer became a mutual fund after it ceased distribution, these reports were not filed.

17. No securities of the Filer are traded on a marketplace, as defined in National Instrument 21-101 Marketplace Operation.

18. Given that the assets of the Filer will be distributed to Securityholders and the Filer will be wound up pending receipt of a tax clearance certificate, the costs to the Filer of remaining a reporting issuer will outweigh any benefit to the Securityholders.

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.

"Margot C. Howard"
Commissioner
Ontario Securities Commission
 
"David L. Knight"
Commissioner
Ontario Securities Commission