National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption granted from the requirement to prepare financial statements in accordance with Canadian GAAP -- Issuer recently became a reporting issuer -- Issuer has not previously prepared financial statements in accordance with Canadian GAAP -- Issuer has assessed the readiness of its staff, board and audit committee -- Relief granted subject to conditions.
Applicable Legislative Provisions
National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency.
Citation: Eagle Energy Trust, Re, 2010 ABASC 548
November 29, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
EAGLE ENERGY TRUST
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) 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 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), in order that the Filer may prepare financial statements for periods beginning on or after its inception on July 20, 2010 in accordance with Part I of the CICA Handbook, that is International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS-IASB).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Alberta Securities Commission is the principal regulator for this application,
(b) 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, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the Passport Jurisdictions), and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is an unincorporated open-ended limited purpose trust established under the laws of the Province of Alberta on July 20, 2010 by a trust indenture. Its head office is Calgary, Alberta.
2. On October 13, 2010, the Filer made a pre-filing application with the principal regulator seeking exemptive relief from the requirement to include financial statements of the Filer in accordance with section 3.1 of NI 52-107, in order to permit the Filer to use IFRS-IASB for the financial statements to be included in its initial public offering prospectus (the Prospectus).
3. In connection with its Prospectus of trust units, the Filer was issued a receipt for its Prospectus on November 16, 2010. The receipt constituted evidence of the relief granted from the requirement in section 3.1 of NI 52-107 and permitted the Filer to use IFRS-IASB to prepare its financial statements included in the Prospectus.
4. The Prospectus included a balance sheet of the Filer as at August 31, 2010 together with statements of earnings and deficit, comprehensive income (loss) and statement of cash flows of the Filer for the period from inception on July 20, 2010 to August 31, 2010, and for the oil and gas assets acquired, operating statements presenting gross revenue, royalty expenses, production costs and operating income for: the six months ended December 31, 2008; the year ended December 31, 2009; and the three and nine months ended September 30, 2010 and 2009 (collectively, the Historical Statements). The Historical Statements have been prepared in accordance with IFRS-IASB.
5. The Filer became a reporting issuer in the Jurisdictions and Passport Jurisdictions on November 16, 2010.
6. The Filer is not in default of its reporting issuer obligations under the Legislation or the securities legislation of the Jurisdictions and Passport Jurisdictions.
7. The Toronto Stock Exchange (the TSX) has approved the listing of the trust units to be issued pursuant to the Prospectus under the symbol "EGL.UN".
8. The Filer's financial year-end is December 31.
9. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS for interim and annual 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 Legislation by domestic issuers, foreign issuers, registrants and other market participants; under NI 52-107, a domestic issuer must use Canadian GAAP with the exception that an SEC registrant may use US GAAP; under NI 52-107, only foreign issuers may use IFRS.
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, despite section 3.1 of NI 52-107.
12. The Filer has evaluated its overall readiness to use IFRS, including the readiness of its staff; board of directors and audit committee, and has concluded that it is adequately prepared to use IFRS effective immediately.
13. The Filer has considered the implications of using IFRS on its obligations under securities legislation including but not limited to, those relating to CEO and CFO certifications, business acquisition reports and offering documents.
14. The Filer believes that the preparation of its financial statements, in accordance with IFRS-IASB, for periods beginning on and after its inception on July 20, 2010, will benefit the Filer and its investors as these financial statements will be prepared on a basis that is consistent with the accounting principles applied in preparing the Historical Statements included in the Prospectus.
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 the Exemption Sought is granted provided that:
(a) the Filer prepares its financial statements for annual and interim periods beginning on or after its inception on July 20, 2010 in accordance with IFRS-IASB;
(b) the Filer's annual IFRS-IASB financial statements disclose an explicit and unreserved statement of compliance with IFRS; and
(c) the Filer's IFRS-IASB interim financial reports disclose compliance with International Accounting Standard 34 Interim Financial Reporting.