Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, the company and its manager are exempted from the dealer registration requirement for certain limited trading activities to be carried out by these parties in connection with a rights offering by the company, as the limited trading activities involve: i) the forwarding of a short form prospectus and the distribution of rights to acquire shares to existing holders of shares and ii) the subsequent distribution of shares to existing holders of rights, upon their exercise of the rights, through an appropriately registered dealer.
Applicable Legislative Provisions
Securities Act, R.S.O., c. S.5, as am., ss. 25(1), 74(1).
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.1, 3.1, 3.42, 8.5.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.5.
October 11, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
FAIRCOURT GOLD INCOME CORP.
FAIRCOURT ASSET MANAGEMENT INC.
(the Manager) (collectively, the Filers)
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the dealer registration requirements in the Legislation in respect of certain trades (the Rights Offering Activities) to be carried out by the Manager and on behalf of the Company, in connection with a proposed distribution (the Rights Offering) of rights to acquire Class A shares (the Shares), such distribution to be made in Ontario and each of the Passport Jurisdictions (as defined below) pursuant to a short form (final) prospectus (the Rights Prospectus) (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) each 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, Prince Edward Island, Nova Scotia and Newfoundland and Labrador (collectively, the Passport Jurisdictions).
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 Filers:
1. The Company is a closed-end investment fund established as a mutual fund corporation established under the laws of the Province of Ontario. The Manager is the manager of the Company.
2. The Manager performs management, investment advisory and administrative services for the Company pursuant to a management agreement. The head office of each of the Company and the Manager is located at 141 Adelaide Street West, Suite 1402, Toronto, Ontario, M5H 3L5. The Manager is not in default of any of its obligations under securities legislation in any jurisdiction.
3. The Company is authorized to issue an unlimited number of redeemable Shares, each of which represents an equal undivided interest in the net assets of the Company. The Shares are listed for trading on the Toronto Stock Exchange (the "TSX") under the symbol "FGX".
4. The Company filed a final prospectus dated October 30, 2007, for the initial issuance of units, which units consisted of one Share and one-half of a transferable warrant.
5. The Company's initial public offering was conducted through the full service investment dealer channel and its Shares were issued through and are held in the book-based system of CDS Clearing and Depository Services Inc. ("CDS").
6. The investment objectives of the Company are to provide holders of Shares ("Shareholders") with monthly distributions and the opportunity for capital appreciation through investment in a portfolio comprised primarily of common shares of gold companies. In order to generate additional returns and to reduce risk, the Company employs an option strategy whereby it writes covered call options on securities held in its portfolio and cash secured put options on securities desired to be held in the portfolio.
7. The Company is subject to certain investment restrictions that, among other things, limit the securities which may be acquired for the investment portfolio that the Company owns or to which the Company may be exposed.
8. The Company does not engage in the continuous distribution of its securities.
9. The Company has retained the Manager to make the Company's investment decisions in accordance with the Company's investment objectives and investment strategy. The Manager is registered as an Investment Fund Manager, an Exempt Market Dealer and a Portfolio Manager. All trades in securities in connection with the investing activities of the Company are conducted through registered dealers.
10. In connection with the Rights Offering, the Company has filed a preliminary short form prospectus dated September 27, 2013 under the securities legislation of the Province of Ontario and each Passport Jurisdiction. Under the Rights Offering, each Shareholder of record on the record date will receive one transferable right of the Company (a "Right") for each Share held.
11. Two Rights will entitle the holder thereof to subscribe for one Share at a subscription price that will be set out in the Rights Prospectus. The Rights will be exercisable for a period of at least 21 days after the date on which the Rights Prospectus is sent to Shareholders.
12. The Company has applied to list the Rights distributed under the Rights Prospectus and the Shares issuable upon the exercise thereof on the TSX.
13. The Rights Offering Activities will consist of:
(a) the distribution of the Rights Prospectus and the issuance of Rights to Shareholders (as at the record date specified in the Rights Prospectus), after the Rights Prospectus has been filed, and receipts obtained, under the securities legislation of the Province of Ontario and each Passport Jurisdiction; and
(b) the distribution of Rights and the Shares issuable upon the exercise thereof.
14. The Company is in the business of trading by virtue of its portfolio investing activities. As a result, its capital raising activities, including the Rights Offering Activities, would require the Company and the Manager to register as a dealer in the absence of the Exemption Sought (or another available exemption from the dealer registration requirements).
15. Section 8.5 of National Instrument 45-106 -- Prospectus and Registration Exemptions (NI 45-106) provides that, after March 26, 2010, the exemptions from the dealer registration requirements set out in sections 3.1Rights offering and section 3.42 Conversion, exchange or exercise of NI 45-106 no longer apply.
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 Company and the Manager, acting on behalf of the Company, are not subject to the dealer registration requirement in respect of the Rights Offering Activities.