AlphaNorth 2010 Flow-Through Limited Partnership et al.

Headnote

NP 11-203 -- Exemptions granted to flow-through limited partnerships from the requirements in National Instrument 81-106 Investment Fund Continuous Disclosure to file an annual information form, to maintain and prepare an annual proxy voting record, to post the proxy voting record on its website, and to provide it to securityholders upon request. Flow-through limited partnerships have a short lifespan and do not have a readily available secondary market.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 9.2, 10.3, 10.4, 17.1.

January 17, 2012

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

ALPHANORTH 2010 FLOW-THROUGH LIMITED

PARTNERSHIP (the "2010 LP") AND ALPHANORTH

2011 FLOW-THROUGH LIMITED PARTNERSHIP

(the "2011 LP" and, collectively, the "Partnerships")

AND

ALPHANORTH ASSET MANAGEMENT

(the "Manager", together with the Partnerships,

the "Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers on behalf of the Partnerships and any future limited partnership managed by the Manager or its affiliates that is identical to the Partnerships in all respects which are material to this decision ("Future Partnerships", and together with the Partnerships, the "Limited Partnerships") for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for an exemption pursuant to section 17.1 of NI 81-106 Investment Fund Continuous Disclosure ("NI 81-106") from the following disclosure requirements:

(a) to prepare and file an annual information form (the "AIF") pursuant to Section 9.2 of NI 81-106 for each financial year if the Limited Partnership has not obtained a receipt for a prospectus during the last 12 months preceding its financial year end;

(b) to maintain a proxy voting record (the "Proxy Voting Record") pursuant to Section 10.3 of NI 81-106; and

(c) to prepare the Proxy Voting Record on an annual basis for the period ending on June 30 of each year, post the Proxy Voting Record to the Limited Partnership's website no later than August 31 of each year and send the Proxy Voting Record to the limited partners of the Limited Partnership (the "Limited Partners") upon request pursuant to Section 10.4 of NI 81-106 ((a) through (c) above, collectively, 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 Filers have provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the provinces of Canada, other than the province of Québec and 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:

1. The 2010 LP was formed pursuant to the provisions of the Limited Partnerships Act (Ontario) on December 14, 2009.

2. The 2011 LP was formed pursuant to the provisions of the Limited Partnerships Act (Ontario) on December 15, 2010.

3. AlphaNorth General Partner Inc. is the General Partner of the Partnerships (the "General Partner"). The General Partner was incorporated under the provisions of the Business Corporations Act (Ontario) on June 4, 2007.

4. The principal office of the Partnerships, the General Partner and the Manager is located at 144 Front Street West, Suite 420, Toronto, Ontario, M5J 2L7.

5. Each of the 2010 LP and the 2011 LP filed a final prospectus relating to its initial public offering in all of the provinces of Canada, other than Québec (the "Jurisdictions") on February 25, 2010 and January 31, 2011 respectively, and each became a reporting issuer in each of the Jurisdictions on those dates. It is expected that any Future Partnership will be a reporting issuer in each of the Jurisdictions.

6. The Manager is the manager of the Partnerships and it or its affiliate will be the manager of any Future Partnership established by the Manager.

7. The Partnerships were formed, and any Future Partnerships will be formed, to invest in certain common shares ("Flow-Through Shares") of companies, limited partnerships or other issuers whose principal business is mineral, oil and gas and alternative energy exploration, development and production that may incur certain start-up phase costs ("Resource Companies") pursuant to agreements ("Flow-Through Agreements") between the Limited Partnerships and the Resource Companies. Under the terms of each Flow-Through Agreement, a Limited Partnership will subscribe for Flow-Through Shares of the Resource Companies and the Resource Companies will agree to incur and renounce to the Limited Partnership, in amounts equal to the subscription price of the Flow-Through Shares, expenditures in respect of resource exploration and development that qualify as Canadian exploration expense or as Canadian development expense and that may be renounced as Canadian exploration expense to the Limited Partnership.

8. No later than December 31, 2012, the 2010 LP will be dissolved and the Limited Partners of the 2010 LP will receive their pro rata share of the net assets of the 2010 LP.

9. No later than June 30, 2013, the 2011 LP will be dissolved and the Limited Partners of the 2011 LP will receive their pro rata share of the net assets of the 2011 LP.

10. It is the current intention of the General Partner that each Limited Partnership will transfer its assets to an open-ended mutual fund in exchange for securities of such mutual fund. Upon dissolution of each Limited Partnership, the Limited Partners would receive their pro rata share of the securities of that mutual fund.

11. The Partnerships are not, and the Future Partnerships will not be, operating businesses. Rather, each Partnership is, and each Future Partnership will be, a short-term special purpose vehicle that will be dissolved within approximately two years of its formation. Based on the dissolution dates of the Partnerships noted above, and the comparable structure of Future Partnerships, each of the Limited Partnerships, while reporting issuers, pass two financial years ended December 31, but will not be in existence past the third December 31 financial year end.

12. The primary investment purpose of a Limited Partnership is not to achieve capital appreciation, although this is a secondary benefit, but rather to obtain for the Limited Partners the significant tax benefits that accrue when Resource Companies renounce resource exploration and development expenditures to the Limited Partnerships through Flow-Through Shares.

13. The units of the Limited Partnerships (the "Units") are not, and will not be, listed or quoted for trading on any stock exchange or market. The Units are not redeemable by the Limited Partners. Generally, Units are not transferred by Limited Partners, since Limited Partners must be holders of the Units on the last day of each fiscal year of that Limited Partnership in order to obtain the desired tax deduction.

14. It is, and will be, a term of the partnership agreement governing the Limited Partnerships that the manager or general partner of the particular Limited Partnership has, and will have, the authority to manage, control, administer and operate the business and affairs of the Limited Partnerships, including the authority to take all measures necessary or appropriate for the business, or ancillary thereto, and to ensure that the Limited Partnerships comply with all necessary reporting and administrative requirements.

15. Each Limited Partner has, or will be expected to have, by subscribing for Units, agreed to the irrevocable power of attorney contained in the partnership agreement and has thereby, in effect, consented to the making of this application.

16. Since its formation, the Partnerships' activities have been limited to (i) completing the issue of the Units under each of their prospectuses, (ii) investing their available funds in accordance with their investment objectives, and (iii) incurring expenses as described in their prospectuses. Any Future Partnership will be structured in a similar fashion.

17. Given the limited range of business activities to be conducted by the Limited Partnerships, the short duration of their existence and the nature of the investment of the Limited Partners, the preparation and distribution of an AIF by the Limited Partnerships would not be of any benefit to the Limited Partners and may impose a material financial burden on the Limited Partnerships.

18. Upon the occurrence of any material change to a Limited Partnership, Limited Partners would receive all relevant information from the material change reports the Limited Partnership is required to file with each of the Jurisdictions.

19. As a result of the implementation of NI 81-106, investors purchasing Units of the Partnerships were, and in the case of the Future Partnerships will be, provided a prospectus containing written policies on how the Flow-Through Shares or other securities held by the Limited Partnerships are voted (the "Proxy Voting Policies"). Investors purchasing Units of the Partnerships had, and in the case of the Future Partnerships will have, the opportunity to review the Proxy Voting Policies before deciding whether to invest in Units.

20. Generally, the Proxy Voting Policies require that the securities of companies held by a Limited Partnership be voted in a manner most consistent with the economic interests of the Limited Partners.

21. Given a Limited Partnership's short lifespan, the production of a Proxy Voting Record would provide Limited Partners with very little opportunity for recourse if they disagreed with the manner in which the Limited Partnership exercised or failed to exercise its proxy voting rights, as the Limited Partnership would likely be dissolved by the time any potential change could materialize.

22. Preparing and making available to Limited Partners a Proxy Voting Record will not be of any benefit to the Limited Partners and may impose a material financial burden on the Limited Partnerships.

23. Neither the Manager nor the Partnerships are in default of securities legislation in any Jurisdiction.

24. The Filers are of the view that the Exemption Sought is not against the public interest, is in the best interests of the Limited Partnerships and their Limited Partners and represents the business judgment of responsible persons uninfluenced by considerations other than the best interest of the Limited Partnerships and their Limited Partners.

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.