National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- decision exempting the issuer from the requirement in s. 7.1(1) of NI 52-107 to prepare pro forma financial statements in accordance with Canadian GAAP and requirement in s. 3.1 to prepare financial statements in accordance with Canadian GAAP -- the issuer proposes to complete reverse take-over transaction with foreign issuer that prepares its financial statements in accordance with IFRS-IASB -- issuer's information circular pertaining to the reverse take-over transaction will include financial statements of foreign issuer prepared in accordance with IFRS-IASB -- decision also exempting the issuer from the requirement in s. 6.1(4) of NI 52-107 that it reconcile the financial statements of the foreign issuer to be included in the information circular to Canadian GAAP and the requirement in subsection 6.2(1) of NI 52-107 that the financial statements of the foreign issuer in the information circular be audited in accordance with Canadian GAAS or U.S. GAAS and permitting the financial statements of the foreign issuer in the information circular to be audited in accordance with International Standards of Auditing -- issuer has assessed the readiness of its staff, board, audit committee, auditors and investors -- relief granted subject to conditions.
Applicable Legislative Provisions
National Instrument 52-107, ss. 9.1., 3.1.
December 15, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
ANATOLIA MINERALS DEVELOPMENT LIMITED
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: (i) the requirement in section 3.1 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that it prepare its financial statement in accordance with Canadian GAAP in order that the Filer may prepare its financial statements for the period ending December 31, 2010 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) (the IFRS Adoption Relief); (ii) the requirement in subsection 6.1(4) of NI 52-107 that it reconcile the financial statements of Avoca Resources Limited (Avoca) in the Information Circular (as defined below), to Canadian GAAP (the Reconciliation Relief); (iii) the requirement in subsection 6.2(1) of NI 52-107 that the financial statements of Avoca in the Information Circular be audited in accordance with Canadian GAAS or U.S. GAAS and permitting the financial statements of Avoca in the Information Circular to be audited in accordance with International Standards on Auditing (ISAs) (the ISA Relief); and (iv) the requirement in subsection 7.1(1) of NI 52-107 that it prepare thepro forma financial statements in the Information Circular in accordance with Canadian GAAP (the Pro forma Relief and, together with the IFRS Adoption Relief, the Reconciliation Relief and the ISA Relief, the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the Provinces of Canada.
Terms used in this decision and defined in National Instrument 14-101 Definitions, MI 11-102 and NI 52-107 have the meanings given to them in such instruments, unless otherwise defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation incorporated under the Business Corporations Act (Yukon). The registered head office of the Filer is located at 3081 Third Avenue, Whitehorse, Yukon and the executive office is located at 10333 East Dry Creek Road, Suite 240, Englewood, Colorado 80112.
2. The Filer is a "reporting issuer" or its equivalent in all of the provinces of Canada. The Filer is not, to its knowledge, in default of its reporting issuer obligations under the legislation in those jurisdictions.
3. The Filer's common shares and convertible debentures are listed on the Toronto Stock Exchange (TSX) under the symbols "ANO" and "ANO.DB", respectively.
4. The Filer is engaged in the exploration and development of mineral properties in Turkey.
5. The Filer currently prepares its financial statements in accordance with Canadian GAAP.
6. The financial year end of the Filer is December 31.
7. 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 interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.
8. NI 52-107 sets out acceptable accounting principles for financial reporting by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP and only foreign issuers may use IFRS-IASB.
9. In CSA Staff Notice 52-321 Early Adoption of International Financial Reporting Standards, use of U.S. 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.
10. The Filer has entered into an agreement to acquire all of the outstanding ordinary shares of Avoca, an Australian company in exchange for the issuance by the Filer of its common shares (the Merger).
11. Completion of the Merger is expected to take place in early 2011 and is subject to, among other things, the approval of the Merger and related matters by the shareholders of Avoca and approval of the issuance of common shares and related matters by the shareholders of the Filer at a special meeting.
12. In accordance with the policies of the TSX and applicable laws the Filer intends to mail a management information circular (the Information Circular) to its shareholders as soon as is practicable in connection with its special meeting.
13. As required by the policies of the TSX and applicable laws, the Filer will include financial statements of the Filer and Avoca in the Information Circular. In particular, the Information Circular will include the audited financial statements of Avoca for the year ended June 30, 2010 (being Avoca's financial year end), together with the notes thereto and the auditors' report thereon. Avoca is a foreign issuer and the financial statements of Avoca included in the Information Circular will be prepared in accordance with IFRS-IASB.
14. Avoca is the equivalent of a reporting issuer in Australia, its ordinary shares are listed for trading on the Australian Stock Exchange and it is subject to applicable securities laws in Australia with respect to continuous disclosure and reporting obligations.
15. Subsection 6.1(4) of NI 52-107 provides that that if acquisition statements are prepared using accounting principles that are different than the issuer's GAAP, the acquisition statements must, among other things, be reconciled to the Filer's GAAP.
16. Subsection 6.2(1) of NI 52-107 provides that acquisition statements must be audited in accordance with Canadian GAAS or U.S. GAAS. Although subsection 6.2(2) of NI 52-107 provides limited exceptions to the general requirements set out in subsection 6.2(1) of NI 52-107, these exceptions do not apply in the context of the Merger.
17. The Information Circular will also include unaudited pro forma financial statements of the Filer as at June 30, 2010 together with the notes thereon. Subsection 7.1(1) of NI 52-107 provides that pro forma financial statements must be prepared in accordance with the issuer's GAAP.
18. The Filer has carefully assessed the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants for its adoption of IFRS-IASB for financial period ending December 31, 2010 and has concluded that they will be adequately prepared for the Filer's adoption of IFRS-IASB.
19. The Filer has considered the implication of adopting IFRS-IASB for financial period ending December 31, 2010 on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward looking information.
20. The Filer has disclosed relevant information about its conversion to IFRS-IASB as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards in its management's discussion and analysis for the interim period ended September 30, 2010, including:
(a) the key elements and timing of the Filer's changeover plan;
(b) the accounting policy and implementation decisions the Filer has made or will have to make;
(c) the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards (IFRS 1) that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB; and
(d) major identified differences between the Filer's current accounting policies and those the Filer is required or expects to apply in preparing financial statements in accordance with IFRS-IASB;
21. The consolidated financial statements of Avoca to be presented in the Information Circular (Avoca Statements) have been prepared in accordance with IFRS-IASB and the annual financial statements have been audited in accordance with ISAs issued by the International Auditing and Assurance Standards Board (IAASB).
22. The auditor of Avoca has represented to the Filer that it has expertise and experience in ISAs issued by the IAASB.
23. The Filer will include in the Information Circular clear disclosure as to the basis of presentation of the Avoca Statements and that they have been audited in accordance with ISAs issued by the IAASB.
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:
(a) the Pro Forma Relief is granted;
(b) the Reconciliation Relief is granted provided that:
(i) the pro forma financial statements in the Information Circular:
(A) explain the material differences between the Filer's GAAP and the accounting principles used to prepare the pro forma financial statements;
(B) quantify the effect of material differences between the Filer's GAAP and the accounting principles used to prepare the pro forma financial statements that relate to recognition, measurement and presentation, including a tabular reconciliation between net income reported in the Filer's financial statements and net income computed for purposes of the pro forma financial statements;
(ii) the Filer includes in the Information Circular the opening transition date statement of financial position as at January 1, 2009; and
(iii) the Filer includes in the Information Circular the equity reconciliations as described in paragraphs 24(a) of IFRS 1 (supplemented by the details required by paragraphs 25 and 26 of IFRS 1);
(c) the ISA Relief is granted provided that:
(i) the annual Avoca Statements are audited in accordance with ISAs issued by the IAASB; and
(ii) the auditor's report accompanying the annual Avoca Statements contains or is accompanied by a statement by the author that:
(A) describes any material differences in the form and content of the auditor's report prepared in accordance with ISAs as compared to an auditor's report prepared in accordance with Canadian GAAS; and
(B) indicates that an auditor's report prepared in accordance with Canadian GAAS would not contain a reservation; and
(d) the IFRS Adoption Relief is granted, subject to all of the following conditions:
(i) for so long as the Filer prepares its financial statements for the year ended December 31, 2010 in accordance with IFRS-IASB;
(ii) provided that the Filer provides all of the communication as described and in the manner set out in paragraph 20; and
(iii) provided that if the Filer files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods in the year that the Filer adopts IFRS-IASB, those interim financial statements originally prepared in accordance with Canadian GAAP will be restated in accordance with IFRS-IASB.