Securities Law & Instruments

Headnote

Application by mutual funds under paragraph 1(10)(b) of the Act to cease being reporting issuers -- Mutual funds not eligible to rely on simplified process set out in CSA Staff Notice 12-307 because beneficially owned by more than 50 persons -- Mutual fund securities distributed by manager/portfolio manager exclusively to managed accounts fully managed by it -- Mutual fund securities distributed on exempt basis to managed accounts pursuant to available regulatory exemption from dealer registration requirements and discretionary exemption from prospectus requirements.

Applicable Legislative Provisions

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

CSA Staff Notice 12-307 Applications for a Decision that an Issuer is not a Reporting Issuer.

April 23, 2010

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

BURGUNDY ASSET MANAGEMENT LTD.

("Burgundy")

AND

BURGUNDY COMPOUND REINVESTMENT FUND,

BURGUNDY FOCUS ASIAN EQUITY FUND,

BURGUNDY TOTAL RETURN BOND FUND AND

BURGUNDY EAFE FUND

(collectively, the "Funds" and with Burgundy,

the "Filers")

ORDER

Clause 1(10)(b) of the Act

UPON the Ontario Securities Commission (the "Commission") having received an application from the Filers for an order under clause 1(10)(b) of the Act that, for the purposes of Ontario securities law, each Fund is not a reporting issuer (the "Requested Order");

AND UPON considering the application and the recommendation of the staff of the Commission;

AND UPON the Filers representing to the Commission as follows:

1. Burgundy is incorporated under the laws of Ontario, with its head office in Toronto, Ontario.

2. Burgundy is registered as portfolio manager in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador and Quebec. Burgundy is also registered as an exempt market dealer in Ontario and in Newfoundland and Labrador.

3. Burgundy is currently the manager, trustee and portfolio manager of the Funds.

4. The Funds are not in default of securities legislation in Ontario.

5. Burgundy offers investment management and financial counselling services, primarily to high net worth individuals, institutions and foundations (each, a "Client") through a managed account ("Managed Account").

6. Each Client who wishes to receive the investment management services of Burgundy executes a written agreement (the "Investment Counsel Agreement") whereby the Client appoints Burgundy to act as portfolio manager in connection with an investment portfolio of the Client with full discretionary authority to trade in securities for the Managed Account without obtaining the specific consent of the Client to execute the trade. The Investment Counsel Agreement further sets out how the Managed Account operates and informs the Client of Burgundy's various rules, procedures and policies.

7. Burgundy sends each Client a quarterly statement showing current holdings and a summary of all transactions carried out in their Managed Account during the quarter.

8. The Funds are only distributed to Managed Account Clients of Burgundy and therefore not widely distributed. All investors in the Funds are invested through a Managed Account with Burgundy.

9. None of the Funds charge a commission or a management fee directly to investors. Instead, under the Investment Counsel Agreement between each Client and Burgundy, the Client agrees to pay Burgundy a management fee based upon a percentage of assets under management in the Managed Account (excluding assets invested in Burgundy's money market funds which charge a management fee directly to investors). Terms of the fees are detailed in each Client's Investment Counsel Agreement.

10. Each of the Funds is a reporting issuer only in Ontario as a result of having filed a prospectus only in Ontario.

11. The Funds currently distribute their securities to Managed Account Clients in Ontario pursuant to a simplified prospectus dated May 27, 2009 (the "Ontario Prospectus"), prepared pursuant to National Instrument 81-101 Mutual Fund Prospectus Disclosure.

12. The Funds currently distribute their securities to Managed Account Clients in the other jurisdictions of Canada (excluding Ontario) pursuant to the "accredited investor" exemption from the prospectus requirement for managed accounts contained in National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106").

13. Absent an exemption, the Funds are prohibited in Ontario from distributing, and Burgundy is effectively prohibited from investing in, securities of the Funds for the Managed Accounts in Ontario, in circumstances where the individual Client who is the beneficial owner of the Managed Account is not otherwise qualified as an "accredited investor" or does not otherwise use the $150,000 minimum investment exemption available under NI 45-106.

14. Pursuant to an order of the Commission dated December 1, 2009 (the "Ontario Decision"), Burgundy is now permitted to distribute securities of the Funds under an exemption from the prospectus requirements to Managed Account Clients in Ontario in circumstances where the Client is not an "accredited investor" and does not invest a minimum of $150,000 in each Fund.

15. As a result of the Ontario Decision, Burgundy will not renew the Ontario Prospectus and instead proposes to distribute securities of the Funds to its Managed Account Clients pursuant to exemptions from the prospectus requirement.

16. Investors in the Funds are only comprised of, and will in the future only be comprised of, persons from the following categories:

(a) Investors who qualify as "accredited investors", as defined in NI 45-106, other than pursuant to paragraph (q) of the definition;

(b) Outside of Ontario, investors who have entered into an Investment Counsel Agreement with Burgundy, making Burgundy the accredited investor on behalf of the Client's Managed Account pursuant to paragraph (q) of the "accredited investor" definition in NI 45-106; and

(c) Investors in Ontario who have entered into an Investment Counsel Agreement with Burgundy, where Burgundy is relying on the Ontario Decision.

17. The Funds have less than 15 securityholders in each of the jurisdictions of Canada, excluding Ontario and, in the case of Burgundy Focus Asian Equity Fund and Burgundy Total Return Bond Fund, excluding Quebec. With the exception of Burgundy EAFE Fund, the Funds have more than 51 securityholders in total in Canada.

18. The Funds are not eligible for relief pursuant to CSA Staff Notice 12-307 Application for a Decision that an Issuer is not a Reporting Issuer ("CSAN 12-307") solely because of the number of securityholders in each Fund.

19. Burgundy has sent a notice to all securityholders of the Funds on February 24, 2010, advising that the Funds have applied to cease to be reporting issuers and explaining the implications of such fact. As there are no redemption charges payable by securityholders in the Funds, Clients will be permitted to instruct Burgundy if they no longer wish to be invested in the Funds and there will be no fees associated with such change.

20. The financial statements of the Funds will be prepared and delivered to securityholders in accordance with the requirements of National Instrument 81-106 Investment Fund Continuous Disclosure ("NI 81-106"). The Funds intend to rely on the filing exemption set out in section 2.11 of NI 81-106.

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to clause 1(10)(b) of the Act that, for the purposes of Ontario securities law, each Fund is not a reporting issuer.

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