Goodwood Inc. and Goodwood Capital Fund

Headnote

NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval granted for change of control of mutual fund manager under s. 5.5(2) of NI 81-102 -- there are no plans to change the manager of the fund, or to amalgamate or merge the current manager with any other entity in the immediate or foreseeable future.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(2), 19.1.

February 26, 2013

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

GOODWOOD INC.

(the Filer)

AND

IN THE MATTER OF

GOODWOOD CAPITAL FUND

(the Fund)

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) for approval with respect to a proposed change of control of the Filer pursuant to section 5.5(2) of National Instrument 81-102 -- Mutual Funds (NI 81-102) (the Approval 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 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, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Yukon, Northwest Territories and Nunavut with respect to the relief sought.

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

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

1. The Filer is a corporation incorporated under the laws of the Province of Ontario and its head office is located in Toronto, Ontario. The Filer is registered as an investment fund manager in Ontario, Quebec and Newfoundland and Labrador and as an investment dealer in Ontario, British Columbia, Alberta, Quebec and Nova Scotia. The Filer is a dealer member of the Investment Industry Regulatory Organization of Canada (IIROC) and its advising activities are conducted in accordance with the rules of IIROC.

2. The Filer is a wholly-owned subsidiary of 1354037 Ontario Inc. (Goodwood Holdco).

3. The Filer is the manager of Goodwood Capital Fund (the Fund).

4. The Fund is a reporting issuer in each of the provinces and territories in Canada. Neither the Filer nor the Fund is in default of securities legislation in any province or territory of Canada.

5. Securities of the Fund are distributed in each province and territory of Canada under a simplified prospectus, annual information form and Fund Facts document in accordance with National Instrument 81-101.

6. The shares of Goodwood Holdco are currently owned as follows:

Shareholder	Number and Class of Shares	Aggregate Equity Ownership %	Aggregate % of Voting Rights
Puccetti Funds Management Inc.	4,544,725 New Common Shares	45.45%	44.45%
	4,544,725 Class P Shares
1502106 Ontario Limited	4,275,275 New Common Shares	42.75%	41.81%
	4,275,275 Class M Shares
Saranac Capital Inc.	900,000 New Common Shares	9.00%	11.00%
	900,000 Class K Shares
Curt Cumming	280,000 New Common Shares	2.80%	2.74%
	280,000 Class C Shares

7. Peter Puccetti is the sole shareholder of Puccetti Funds Management Inc. Mr. Puccetti is a director and the Chairman, Chief Executive Officer and Chief Investment Officer of the Filer. Mr. Puccetti is registered with IIROC as a dealing representative and portfolio manager of the Filer. Mr. Puccetti is a resident of Ontario.

8. The MacDonald Goodwood Trust is the sole shareholder of 1502106 Ontario Limited. Cameron MacDonald is the sole trustee of, and members of Mr. MacDonald's family are the beneficiaries of, The MacDonald Goodwood Trust. Mr. MacDonald is a former director, officer and employee of the Filer.

9. Kittel Family Trust is the sole shareholder of Saranac Capital Inc. Robert Kittel is the sole trustee of, and members of Mr. Kittel's family are the beneficiaries of, the Kittel Family Trust. Mr. Kittel is a former employee of the Filer.

10. Curt Cumming is a director and the President and Chief Financial Officer of the Filer. Mr. Cumming is registered with IIROC as a dealing representative of the Filer.

11. It is proposed that Puccetti Funds Management Inc. (the Purchaser) will purchase all of the shares of Goodwood Holdco currently owned by 1502106 Ontario Limited and Saranac Capital Inc. (collectively, the Vendors) (the Proposed Transaction).

12. Upon completion of the Proposed Transaction, the Purchaser's equity ownership of Goodwood Holdco will increase from 45.45% to 97.2% and its voting rights will increase from 44.45% to 97.26 %. The share ownership of Goodwood Holdco will be as follows:

Shareholder	Number and Class of Shares	Aggregate Equity Ownership %	Aggregate % of Voting Rights
Puccetti Funds Management Inc.	9,720,000 New Common Shares	97.2%	97.26%
	4,544,725 Class P Shares
	4,275,275 Class M Shares
	900,000 Class K Shares
Curt Cumming	280,000 New Common Shares	2.80%	2.74%
	280,000 Class C Shares

13. As the indirect share ownership of Mr. Puccetti in the Filer will increase from 45.45% to 97.2%, the Proposed Transaction will result in an indirect change of control of the Filer and accordingly regulatory approval is required pursuant to section 5.5(2) of NI 81-102.

14. Written notice regarding the Proposed Transaction was sent to each unitholder of the Fund by mail on January 7, 2013, pursuant to section 5.8(1)(a) of NI 81-102 and filed under SEDAR Project No. 2004099.

15. Subject to all the relevant parties reaching a definitive agreement and the receipt of all requisite regulatory approvals, it is anticipated that the Proposed Transaction will be completed on or after March 8, 2013, upon the expiration of the 60-day notice period provided for in section 5.8(1)(a) of NI 81-102.

16. The Filer issued a press release describing the Proposed Transaction on December 31, 2012 and subsequently issued a correction to the press release and a French translation on January 2, 2013. These press releases were filed under SEDAR Project No. 2002905, 2003137 and 2003138, respectively.

17. A material change report and an amendment to the Funds' current simplified prospectus and annual information form were filed on SEDAR on January 9, 2013 under SEDAR Project No. 2004456 and 1854289, respectively.

18. A notice of the Proposed Transaction was delivered to the Compliance & Registrant Regulation branch of the Principal Regulator pursuant to section 11.9 of National Instrument 31-103 Registration Requirements and Exemptions on January 17, 2013.

19. The Proposed Transaction is not expected to have any material impact on the management, business, operations or affairs of the Fund or the unitholders of the Fund.

20. The Purchaser has confirmed to the Filer that the Purchaser currently does not intend to:

(a) make any substantive changes as to how the Filer operates or manages the Fund;

(b) merge the Filer with any other investment fund manager;

(c) immediately following the closing of the Proposed Transaction, change the manager of the Fund (to an affiliate of the Filer or otherwise); or

(d) within the foreseeable period of time, change the manager of the Fund (to an affiliate of the Filer or otherwise).

21. The Purchaser has confirmed to the Filer that the Purchaser currently does not intend to change the name of the Filer or the name of the Fund as a result of the Proposed Transaction, immediately after the closing of the Proposed Transaction.

22. It is not expected that there will be any change to the investment objectives or strategies of the Fund or the expenses that are charged to the Fund as a result of the Proposed Transaction.

23. The Purchaser has confirmed to the Filer that the Purchaser currently does not intend to have the Fund become part of another fund family.

24. Following the Proposed Transaction, it is expected that all of the current officers and directors of the Filer will continue on in their current capacities. It is expected that all of the officers and directors of the Filer will continue to have the requisite integrity and experience as contemplated under section 5.7(1)(a)(v) of NI 81-102.

25. Although the current members of the Fund's independent review committee (IRC) will automatically cease to be members of the IRC by operation of section 3.10(1)(c) of National Instrument 81-107 Independent Review Committee for Investment Funds following the Proposed Transaction, the Filer intends to reappoint them immediately after the closing of the Transaction.

26. The Proposed Transaction is not expected to impact the financial stability of the Filer or its ability to fulfill its regulatory obligations.

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 Approval Sought is granted.