Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted from the requirement to include financial statements and management's discussion and analysis in an information circular for entities participating in an arrangement -- the information circular will be sent to securityholders in connection with a proposed internal reorganization pursuant to which business operations will be conducted through a corporate entity -- the corporate entity will own, directly or indirectly, all of the existing assets and assume all of the existing liabilities of the Fund and its sole business will be the current business of the Fund.

Exemption granted to a successor issuer from the current annual financial statement and current AIF short form prospectus qualification criteria and the requirement to file a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the filing of a preliminary short form prospectus -- disclosure regarding the predecessor issuer will effectively be the disclosure of the successor issuer -- predecessor issuer is qualified to file a short form prospectus.

Exemption granted to a successor issuer from the requirement to deliver personal information forms for individuals for whom the Fund previously delivered personal information forms.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations.

National Instrument 44-101 Short Form Prospectus Distributions.

Citation: Enerplus Resources Fund, Re, 2010 ABASC 439

September 16, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ENERPLUS RESOURCES FUND (THE FUND),

ENERPLUS EXCHANGEABLE LIMITED

PARTNERSHIP (EELP),

ENERMARK INC. (EnerMark) AND

ENERPLUS CORPORATION (Newco and,

together with the Fund, EELP

and EnerMark, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation):

(a) exempting the Fund and EELP from the requirement under Item 14.2 of Form 51-102F5 Information Circular (the Circular Form) of the Legislation to provide the Financial Statements (as defined below) and the MD&A (as defined below) in the management information circular (the Circular) to be prepared by the Fund and EELP and delivered to the holders (Fund Unitholders) of trust units of the Fund (Fund Units) and holders (EELP Unitholders, and together with Fund Unitholders, Enerplus Unitholders) of Class B limited partnership units of EELP (EELP Units) in connection with a special meeting (the Enerplus Meeting) of Enerplus Unitholders expected to be held on or about December 9, 2010 for the purposes of considering a plan of arrangement (the Arrangement) under the Business Corporations Act (Alberta) (the ABCA) resulting in the internal re-organization of Enerplus's trust structure into a corporate structure (the Circular Relief);

(b) exempting Enerplus Amalco (as defined below) from the qualification criteria for short form prospectus eligibility contained in Subsection 2.2(d) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) following completion of the Arrangement until the earlier of: (i) March 30, 2012; and (ii) the date upon which Enerplus Amalco, as successor issuer to the Fund and which is anticipated to become a reporting issuer on January 1, 2011, has filed, or was required to file, both its annual financial statements and annual information form for the year ended December 31, 2011 pursuant to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) (the Qualification Relief);

(c) exempting Enerplus Amalco from the requirement contained in Section 2.8 of NI 44-101 to file a notice declaring Enerplus Amalco's intention to be qualified to file a short form prospectus at least 10 business days prior to the filing of its first preliminary short form prospectus after the notice (the Prospectus Relief); and

(d) exempting Enerplus Amalco from the requirement under Subsection 4.1(b) of NI 44-101 for Enerplus Amalco to file a Personal Information Form and Authorization to Collect, Use and Disclose Personal Information in the form attached as Appendix A to NI 41-101 General Prospectus Requirements (NI 41-101) for each director and executive officer of Enerplus Amalco at the time of filing a preliminary short form prospectus for whom the Fund has previously delivered any of the documents described in Subsections 4.1(b)(i)(E) through (G) of NI 44-101 at the time of filing such preliminary short form prospectus (the PIF Relief).

Furthermore, the Decision Makers have received a request from the Filers for a decision that the application and this decision be kept confidential and not be made public until the earliest of:

(a) the date on which the Fund publicly announces that the board of directors of EnerMark, as administrator of the Fund and general partner of EELP, has made a definitive decision to proceed with the Arrangement;

(b) the date the Filers advise the principal regulator that there is no longer any need for the application and this decision to remain confidential; and

(c) the date that is 90 days after the date of this decision (the Confidentiality Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this Application;

(b) the Filers have provided notice that Subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

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 Filers:

The Fund

1. The Fund is an unincorporated open-ended investment trust established under the laws of the Province of Alberta pursuant a trust indenture originally dated July 7, 1986, as amended and restated May 30, 2008 (the Trust Indenture). The principal office of the Fund is located in Calgary, Alberta.

2. The Fund is a reporting issuer or the equivalent under the securities legislation of each of the provinces and territories of Canada. To its knowledge, the Fund is not in default of securities legislation in any jurisdiction of Canada.

3. The Fund Units are listed on the Toronto Stock Exchange (the TSX) under the symbol "ERF.UN" and on the New York Stock Exchange (the NYSE) under the symbol "ERF".

4. The Fund does not currently carry on an active business, but through its directly and indirectly owned subsidiaries (all the voting interests of which are wholly-owned by the Fund), including, among others, EnerMark and Enerplus Commercial Trust (ECT), carries on the business of the exploration for, and the development and production of, oil and natural gas.

5. The Fund has filed a "current AIF" and has "current annual financial statements" (as such terms are defined in NI 44-101) for the financial year ended December 31, 2009.

EnerMark

6. EnerMark is a corporation amalgamated under the laws of the Province of Alberta. The principal office of EnerMark is located in Calgary, Alberta.

7. EnerMark is an indirect wholly-owned subsidiary of the Fund and is the principal operating subsidiary of the Fund, the administrator of the Fund and the general partner of EELP.

8. EnerMark is not a reporting issuer in any jurisdiction and, to its knowledge, is not in default of applicable securities legislation in any jurisdiction of Canada.

9. None of the shares issued by EnerMark are listed or posted for trading on any exchange or quotation and trade reporting system.

Newco and Enerplus Amalco

10. Newco is a corporation incorporated under the laws of the Province of Alberta. The principal office of Newco is located in Calgary, Alberta.

11. Newco is a wholly-owned subsidiary of the Fund and was incorporated solely to participate in the Arrangement, including to issue the common shares of Newco to the former Enerplus Unitholders and to amalgamate with EnerMark and certain other direct and indirect wholly-owned subsidiaries of the Fund to form "Enerplus Amalco" (Enerplus Amalco), as a result of which the former Enerplus Unitholders will hold common shares of Enerplus Amalco (Enerplus Amalco Shares) following completion of the Arrangement.

12. Newco is not a reporting issuer in any jurisdiction and, to its knowledge, is not in default of applicable securities legislation in any jurisdiction of Canada. Following completion of the Arrangement, Enerplus Amalco, as amalgamation successor to Newco, will be a reporting issuer in each of the provinces and territories of Canada.

13. None of the shares issued by Newco are listed or posted for trading on any exchange or quotation and trade reporting system. Application will be made to have the Enerplus Amalco Shares to be issued in connection with the Arrangement listed on the TSX and the NYSE.

EELP

14. EELP is a limited partnership established under the laws of the Province of Alberta pursuant a limited partnership agreement dated June 21, 2006, as amended and restated February 13, 2008, as subsequently amended. The principal office of EELP is located in Calgary, Alberta.

15. EELP is a reporting issuer or the equivalent under the securities legislation of each of the provinces of Canada. To its knowledge, EELP is not in default of securities legislation in any jurisdiction of Canada.

16. EELP has two classes of securities issued and outstanding. All of the voting Class A limited partnership units of EELP are owned indirectly by the Fund. All of the EELP Units are publicly held by Canadian resident holders. Each EELP Unit is non-transferable and is exchangeable at any time, at the option of the holder and for no additional consideration, into 0.425 of a Fund Unit and is entitled to voting and distribution rights in the Fund equivalent to holders of Fund Units, subject to the foregoing exchange ratio. None of the securities issued by EELP are listed or posted for trading on any exchange or quotation and trade reporting system.

17. As permitted by Subsection 13.3(2) of NI 51-102, EELP satisfies the requirements in NI 51-102 by, among other things, relying on the continuous disclosure items filed by its parent issuer, being the Fund, and the notice required by Subclause 13.3(2)(d)(ii)(A) of NI 51-102 was filed by EELP on its SEDAR profile on February 15, 2008.

The Arrangement

18. The Arrangement will be effected under the ABCA involving, among others, the Filers, pursuant to which the Fund will convert from an income trust to a corporation. The proposed Arrangement is expected to be formally announced in October 2010.

19. As a result of the Arrangement and certain related transactions, among other things, (i) each of the Fund and EELP will be dissolved; (ii) the Fund Units will be exchanged for Enerplus Amalco Shares on a one-for-one basis and each EELP Unit will be exchanged for 0.425 of an Enerplus Amalco Share, and the Fund Units and EELP Units will be cancelled; and (iii) Enerplus Amalco will continue to carry on the business carried out on by the Fund prior to the completion of the Arrangement and Enerplus Amalco will own, directly or indirectly, all of the assets and assume all of the liabilities of the Fund, effectively resulting in the internal reorganization of the Fund's trust structure into a corporate structure.

20. Following the completion of the Arrangement:

(a) the sole business of Enerplus Amalco will be the business of the Fund (as carried on through its direct and indirect subsidiaries) prior to completion of the Arrangement;

(b) Enerplus Amalco will be a reporting issuer or the equivalent under the securities legislation in each of the provinces and territories of Canada; and

(c) the Enerplus Amalco Shares will, subject to approval by the TSX and the NYSE, be listed on the TSX and NYSE.

21. The Arrangement does not contemplate the acquisition of any additional operating assets or business or the disposition of any operating assets or business, and it will not result in a change on the ultimate beneficial ownership of the assets and liabilities of the Fund. The Arrangement will be an internal reorganization undertaken without dilution to the Enerplus Unitholders.

22. Pursuant to the Trust Indenture, EELP's constating documents, the ABCA and applicable securities laws, the Enerplus Unitholders will be required to approve the Arrangement at the Enerplus Meeting. The Arrangement must be approved by not less than two-thirds of the votes cast by Enerplus Unitholders, voting together as a single class, at the Enerplus Meeting. The Circular in respect of the Enerplus Meeting is expected to be mailed in late October 2010, subject to receipt of the Circular Relief.

23. The Arrangement will be accounted for on a continuity of interests basis and accordingly, following the Arrangement, the comparative consolidated financial statements of Enerplus Amalco for periods prior to the Arrangement will reflect the financial position and results of operations and cash flows as if Enerplus Amalco had always carried on the business formerly carried on the Fund.

24. The Arrangement will be a "restructuring transaction" (as such term is defined in NI 51-102) in respect of the Fund and EELP and therefore will require compliance with Item 14.2 of the Circular Form.

25. Subsequent to the effective date of the Arrangement and in accordance with the timing specified in the Qualification Relief, Enerplus Amalco, as successor issuer to the Fund, will file on its SEDAR profile certain continuous disclosure documents of the Fund for the year ended December 31, 2010 that would be required to be filed by the Fund under NI 51-102 if it were still a reporting issuer 90 days after December 31, 2010, including:

(a) the audited annual comparative financial statements and management's discussion and analysis of the Fund for the financial year ended December 31, 2010; and

(b) an annual information form of the Fund for the year ended December 31, 2010

(such financial statements, management's discussion and analysis and annual information form referred to as the Fund 2010 Annual Filings).

Financial Statements and MD&A Disclosure in the Circular

26. The Circular Form requires the Fund to include certain annual financial statements of EnerMark and ECT (collectively, the Main Operating Entities) in the Circular, including:

(a) an income statement, a statement of retained earnings and a cash flow statement of the Main Operating Entities for each of the financial years ended December 31, 2009, December 31, 2008 and December 31, 2007; and

(b) a balance sheet of the Main Operating Entities as at December 31, 2009 and December 31, 2008

(collectively, the Annual Financial Statements).

27. The Circular Form also requires the Fund to include certain comparative interim financial statements of the Main Operating Entities in the Circular, including:

(a) an income statement, a statement of retained earnings and a cash flow statement of the Main Operating Entities for the interim periods ended June 30, 2010 and June 30, 2009; and

(b) a balance sheet of the Main Operating Entities as at June 30, 2010 and December 31, 2009

(together with the Annual Financial Statements, theFinancial Statements).

28. Subsection 4.2(1) of NI 41-101 requires that the Annual Financial Statements required to be included in the Circular must be audited in accordance with National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency.

29. Items 8.2(1)(a) and 8.2(2) of Form 41-101F1 Information Required in a Prospectus (the Prospectus Form) require the Fund to include management's discussion and analysis corresponding to each of the financial years ended December 31, 2009 and December 31, 2008 and the interim period of June 30, 2010 of the Main Operating Entities (MD&A) in the Circular.

30. The Arrangement will not result in a change in beneficial ownership of the assets and liabilities of the Fund, from either an accounting perspective or an economic perspective. Accordingly, no acquisition will occur as a result of the Arrangement and therefore the significant acquisition financial statement disclosure requirements contained in the Prospectus Form are inapplicable.

31. The Arrangement will be an internal reorganization undertaken without dilution to the Enerplus Unitholders or additional debt or interest expense being incurred or assumed by Enerplus Amalco.

Exemptions Sought

Circular Relief

32. The Fund's financial statements and related management's discussion and analysis are prepared on a consolidated basis, which includes the financial results for the Main Operating Entities (as well as other minor direct and indirect subsidiaries of the Fund). To present the Financial Statements and MD&A in the Circular, which would exclude accounts of the Fund, would be misleading, since there are transactions among the Main Operating Entities and the Fund that are eliminated when consolidation is performed at the Fund level, and would present the effects of only one side of the financing activities among Main Operating Entities and the Fund. This would result in the presentation of significant intra-group liabilities and significant amounts of intra-group interest expense being reflected on the Financial Statements, which would not be representative of the capital structure of Enerplus Amalco following completion of the Arrangement. As a result, the presentation of these intra-group transactions, which will be eliminated upon completion of the Arrangement, would present a confusing (and potentially misleading) picture of Enerplus Amalco's historical financial performance.

33. The Financial Statements and MD&A are not relevant to the Enerplus Unitholders for the purposes of considering the Arrangement as the Financial Statements and MD&A, other than as discussed in paragraph 32 above, would be substantially and materially the same as the consolidated financial statements of the Fund filed in accordance with Part 4 of NI 51-102 because the financial position of the entity that exists both before and after the Arrangement is substantially the same.

34. The Circular will contain prospectus level disclosure in accordance with the Prospectus Form (other than the Financial Statements and MD&A) and will contain sufficient information to enable a reasonable securityholder to form a reasoned judgement concerning the nature and effect of the Arrangement and the nature of the resultant public entity and reporting issuer from the Arrangement, being Enerplus Amalco.

Prospectus Relief and Qualification Relief

35. Subsection 2.7(2) of NI 44-101 contains an exemption for successor issuers from the qualification criteria for short form prospectus eligibility contained in Subsection 2.2(d) of NI 44-101 if an information circular relating to the restructuring transaction that resulted in the successor issuer was filed by the successor issuer or an issuer that was a party to the restructuring transaction, and such information circular (i) complied with applicable securities legislation, and (ii) included disclosure in accordance with Item 14.2 or 14.5 of the Circular Form of the successor issuer.

36. Enerplus Amalco will be a "successor issuer" (as such term is defined in NI 44-101) as a result of the Arrangement (which, as discussed above, is a restructuring transaction). The Circular will be filed by the Fund (a party to the restructuring transaction), the Circular will comply with applicable securities legislation and the Circular will include the disclosure required by Item 14.2 of the Circular Form, except for the Financial Statements and MD&A which will not be included in the Circular pursuant to the Circular Relief (assuming the Circular Relief is granted).

37. The Fund is qualified to file a prospectus in the form of a short form prospectus pursuant to Section 2.2 of NI 44-101 and is deemed to have filed a notice of intention to be qualified to file a short form prospectus under Section 2.8(4) of NI 44-101.

38. The Filers anticipate that Enerplus Amalco may wish to file a preliminary short form prospectus following the completion of the Arrangement, relating to the offering or potential offering of securities (including common shares, debt securities or subscription receipts) of Enerplus Amalco.

39. In anticipation of the filing of a preliminary short form prospectus, and assuming the Arrangement has been completed, Enerplus Amalco intends to file the notice of intention to be qualified to file a short form prospectus (the Notice of Intention) following completion of the Arrangement. In the absence of the Prospectus Relief, Enerplus Amalco will not be qualified to file a preliminary short form prospectus until 10 business days from the date upon which the Notice of Intention is filed.

40. Pursuant to the qualification criteria set forth in Section 2.2 of NI 44-101 as modified by the Qualification Relief, following the Arrangement, Enerplus Amalco will be qualified to file a short form prospectus pursuant to NI 44-101.

41. Notwithstanding Section 2.2 of NI 44-101 as modified by the Qualification Relief, Section 2.8(1) of NI 44-101 provides that an issuer is not qualified to file a short form prospectus unless it has filed a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the issuer filing its first preliminary short form prospectus.

42. The short form prospectus of Enerplus Amalco will incorporate by reference the documents that would be required to be incorporated by reference under Item 11 of Form 44-101F1 Short Form Prospectus in a short form prospectus of Enerplus Amalco, as modified by the Qualification Relief.

PIF Relief

43. Prior to August 21, 2009, the date of the most recently filed preliminary short form prospectus by the Fund, the Fund had previously delivered the documents described in Subsections 4.1(b)(i)(E) through (G) of NI 44-101 for each individual acting in the capacity of director or executive officer of the Fund at such time (the Fund PIFs).

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that:

(a) the Circular Relief is granted;

(b) the Qualification Relief is granted provided that any short form prospectus filed by Enerplus Amalco pursuant to NI 44-101 during the currency of the Qualification Relief specifically incorporates by reference:

(i) the Circular and any financial statements and related management's discussion and analysis of the Fund incorporated by reference into the Circular,

(ii) if the short form prospectus is filed before the earlier of the Fund 2010 Annual Filings having been filed by Enerplus Amalco or the date that is 90 days following December 31, 2010, the unaudited comparative interim financial statements of the Fund for the three and nine months ended September 30, 2010 together with the accompanying management's discussion and analysis of the Fund,

(iii) if the short form prospectus is filed either after the Fund 2010 Annual Filings have been filed by Enerplus Amalco or on a date more than 90 days following December 31, 2010, the Fund 2010 Annual Filings, and

(iv) any continuous disclosure documents of Enerplus Amalco, as successor issuer to the Fund, required to be incorporated by reference pursuant to the Prospectus Form;

(c) the Prospectus Relief is granted, provided that at the time Enerplus Amalco files its Notice of Intention, Enerplus Amalco meets the requirements of Section 2.2 of NI 44-101, as modified by the Qualification Relief;

(d) the PIF Relief is granted, provided that:

(i) each individual:

A. for whom the Fund has previously delivered a Fund PIF; and

B. who is a director or executive officer of Enerplus Amalco at the time of a prospectus filing by Enerplus Amalco,

authorizes the Decision Makers, in respect of a prospectus filing by Enerplus Amalco, to collect, use and disclose the personal information that was previously provided in the Fund PIF;

(ii) Enerplus Amalco, if requested by a Decision Maker, promptly delivers such further information from each individual referred to in clause (a) above as the Decision Maker may require; and

(iii) the PIF Relief will terminate in any jurisdiction in which the decision is in effect on the effective date of any change to Subsection 4.1(b)(i) of NI 44-101; and

(e) the Confidentiality Relief is granted.

"Blaine Young"
Associate Director, Corporate Finance
Alberta Securities Commission