Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107, s. 9.1 Acceptable Accounting Principles, Auditing Standards and Reporting Currency -- A reporting issuer has adopted IFRS for purposes of the financial statements included in its final long form prospectus and now wants to prepare financial statements going forward using IFRS -- The issuer has assessed the readiness of its staff, board, audit committee, auditors and investors.

Applicable Legislative Provisions

National Instrument 52-107, s. 9.1.

May 25, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

TRICON CAPITAL GROUP INC.

(the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") exempting the Filer from the requirement in section 3.1 of National Instrument 52-107 -- Acceptable Accounting Principles, Auditing Standards and Reporting Currency ("NI 52-107") that financial statements be prepared in accordance with Canadian GAAP (the "Exemption Sought"), for so long as the Filer prepares the financial statements in accordance with Part I of the CICA handbook, that is International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") ("IFRS-IASB") for periods beginning on or after January 1, 2010.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

1. the Ontario Securities Commission is the principal regulator for this application, and

2. the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories, and the Nunavut Territory (the "Passport Jurisdictions").

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. the Filer is a corporation incorporated under the laws of Ontario on June 16, 1997; the registered and head office of the Filer is located at 1067 Yonge Street, Toronto, Ontario M4W 2L2;

2. the Filer is an asset manager of investment funds that participate in the development of real estate in North America by providing financing, typically in the form of participating loans, to developers, with a specific focus on residential land development, single-family homebuilding, multi-family construction and retail in conjunction with residential projects;

3. in anticipation of completing its initial public offering and secondary offering of its common shares under National Instrument 41-101 -- General Prospectus Requirements (the "IPO"), the Filer retained PricewaterhouseCoopers LLP to audit its financial statements for the years ended December 31, 2007, 2008 and 2009 (collectively, the "Historical Statements") for inclusion in the Prospectus (as defined below). The Historical Statements were prepared in accordance with IFRS-IASB;

4. on February 11, 2010, the Filer made a pre-filing application with the Principal Regulator seeking exemptive relief from the requirement set out in Section 3.1 of NI 52-107 that its financial statements, other than acquisition statements, be prepared in accordance with Canadian GAAP as applicable to public enterprises, for so long as the Filer prepares its financial statements in accordance with IFRS-IASB (the "Pre-Filing Application")

5. in connection with the IPO, the Filer filed a preliminary long form prospectus in on March 31, 2010 and a (final) long form prospectus on May 14, 2010 (together, the "Prospectus") and was issued a receipt for such filings on April 5, 2010 and May 14, 2010, respectively;

6. the receipt for the Filer's final long form prospectus dated May 14, 2010 constituted evidence of the relief referred to in paragraph 4 above;

7. the Filer completed its IPO on May 20, 2010 and is a reporting issuer in the Jurisdiction and the Passport Jurisdictions; the Filer is not in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdictions;

8. the Filer's common shares are listed on the Toronto Stock Exchange;

9. the Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for financial statements relating to fiscal years beginning on or after January 1, 2011;

10. NI 52-107 sets out acceptable accounting principles for financial reporting under the securities legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB;

11. in CSA Staff Notice 52-321 -- Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, notwithstanding Section 3.1 of NI 52-107;

12. subject to obtaining the Exemption Sought, the Filer intends to prepare and file its financial statements to be filed for periods beginning on and after January 1, 2010 in accordance with IFRS-IASB;

13. the Filer's financial year-end is December 31 in each calendar year;

14. the Filer expended considerable resources in connection with the preparation and audit of the Historical Statements in accordance with IFRS-IASB and the establishment of the necessary internal controls and procedures required of a reporting issuer. Having already expended these resources and established these controls and procedures, the Filer believes that requiring it to prepare financial statements in accordance with Canadian GAAP for its 2010 financial year only to then convert months later back to IFRS-IASB for the financial year commencing January 1, 2011 would be costly and time-consuming and would create significant inefficiencies with respect to the Filer's financial statement preparation process as well as the establishment and maintenance of its internal controls and procedures. The Filer also believes such a requirement would be confusing for investors;

15. in addition, the Filer believes that the preparation and filing of its financial statements to be filed for periods beginning on and after January 1, 2010 (and its related disclosure practices for its 2010 financial year) in accordance with IFRS-IASB will benefit the Filer and its investors by offering continuity in form, presentation and public disclosure of its financial information consistent with the form, presentation and public disclosure of the Historical Statements;

16. the Board of Directors of the Filer (the "Board") approved early adoption of IFRS-IASB on February 10, 2010 with effect immediately, subject to the Filer obtaining the Exemption Sought;

17. the Filer carefully assessed the readiness of its staff, Board, auditors, investors and other market participants for the immediate adoption by the Filer of IFRS-IASB for the presentation of its financial information in connection with the IPO and for all subsequent financial periods after the IPO, and concluded that all parties are adequately prepared for the Filer's immediate adoption of IFRS-IASB;

18. the Filer considered the implications of early adopting IFRS-IASB on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports and offering documents.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, subject to the condition that the Exemption Sought is granted only for so long as the Filer prepares its financial statements to be filed for periods beginning on and after January 1, 2010 in accordance with IFRS-IASB.

"Jo-Anne Matear"
Assistant Manager
Ontario Securities Commission