Raymond Chabot Grant Thornton and RCGT Balanced Fund No. 1 for Partners - MRRS Decision

Headnote

Section 1(10) of the Securities Act (Ontario) -- unique fund designed primarily to service accounting partnership deemed to have ceased to be reporting issuers -- no unitholders remaining in Ontario - funds not eligible to rely on simplified process set out in OSC Staff Notice 12-703.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10).

November 8, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

THE PROVINCES OF QUEBEC, ONTARIO AND

NEW BRUNSWICK (THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF OF

RAYMOND CHABOT GRANT THORNTON ("RCGT")

AND

IN THE MATTER OF

RCGT BALANCED FUND NO. 1 FOR PARTNERS

(THE "FUND")

(RCGT AND THE FUND, COLLECTIVELY, THE "FILER")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application to request a decision under the securities legislation of the Jurisdictions (the "Legislation") granting it a decision, where applicable, to revoke the reporting issuer status of the Fund or that such Fund cease being reporting issuer (the "Requested Revocation").

Under the Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Autorité des marchés financiers is the principal regulator for this application;

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

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

1. The Fund is an open-ended mutual fund trust established under the laws of the Province of Quebec.

2. The head office of RCGT is located in Montreal.

3. The units of the Fund are strictly offered to partners of RCGT and their spouse, and therefore, are not widely distributed. The Fund was created as part of RCGT's private retirement plan which makes it mandatory for RCGT's partners to join. They have to make mandatory contributions in RRSP accounts each year but they can also make optional contributions in RRSP and non-RRSP accounts.

4. The Fund has obtained an exemption to prepare a prospectus and to register as a dealer from the Commission des valeurs mobilières du Québec on March 18, 1985 (Decision 0426-I-85) (the "Previous Exemption").

5. The Fund became a reporting issuer in the Jurisdictions on September 27, 2004 following the grant of a prospectus receipt.

6. RCGT has proceeded on October 31, 2007 with the transfer of the assets of the Fund held in the name of the registered accounts of the Fund to a group segregated fund with the Fund's identical name, created by Manulife Financial (the "Transfer to the Segregated Fund"). After the Transfer to the Segregated Fund, the Fund will only have assets held in the name of the non registered accounts. Written notices dated July 30, 2007 and October 26, 2007 indicating these changes have been sent to the unitholders of the Fund.

7. The Fund will not immediately be dissolved in order to limit, for some of the holders of the non registered accounts, the tax consequences associated with the Transfer to the Segregated Fund. RCGT intends to postpone by a few years the Transfer to the Segregated Fund of the assets held in the name of the non registered accounts in order to divide up the tax consequences on the chosen period by the holders of these accounts, subject to a limited period to be determined by RCGT.

8. Following the Transfer to the Segregated Fund described in paragraph 6 hereinabove, a total of 31 Quebec residents will continue holding units of the Fund (the "Holders of Non Registered Accounts"). The Fund will not have any holder left in the Provinces of Ontario and New Brunswick.

9. All the Holders of Non Registered Accounts are partners of RCGT or their spouse or children. At least nineteen of them are "accredited investors", as such term is defined in Section 1.1 of Regulation 45-106 -- Prospectus and Registration Exemptions in Quebec and, elsewhere in Canada, National Instrument 45-106 -- Prospectus and Registration Exemptions.

10. The unitholders of the Fund who are not accredited investors are either a retired partner of RCGT or a spouse or a child of a partner or retired partner of RCGT.

11. More than half of the 31 Holders of Non Registered Accounts have acquired their initial units of the Fund through a distribution made pursuant to the Previous Exemption. The other Holders of Non Registered Accounts have acquired their units through a distribution made by prospectus.

12. The Fund may not use the provisions of the CSA Staff Notice 12-307 -- Ceasing to be a Reporting Issuer under the Mutual Reliance Review System for Exemptive Relief Applications ("CSAN 12-307") because of the number of unitholders of the Fund which is too high and because of the fact that the Fund did not nominate on May 1st, 2007, the initial members of the Funds' independent review committee in accordance with Regulation 81-107 -- Independent Review Committee for Investment Funds ("Regulation 81-107") in Quebec and, elsewhere in Canada, National Instrument 81-107 -- Independent Review Committee for Investment Funds ("NI 81-107"). RCGT has however filed a separate application on April 20, 2007 for a decision exempting it from the requirements contained in Sections 3.2 and 8.2(2) of Regulation 81-107 and of NI 81-107.

13. RCGT has sent a notice on October 26, 2007 to all of the unitholders of the Fund to advise them of the Requested Revocation and to explain the implications of the decision that will be rendered.

14. If the decision is granted, the Fund will comply with the provisions of Regulation 81-106 on Investment Fund Continuous Disclosure (the "Regulation 81-106") in Quebec and, elsewhere in Canada, of National Instrument 81-106 -- Investment Fund Continuous Disclosure ("NI 81-106") that apply to mutual funds that are not reporting issuers. The Fund intends to benefit from the exemption set forth in section 2.11 of Regulation 81-106 and NI 81-106.

15. The assets of the Fund held in the name of the non registered accounts will only remain in this Fund for tax considerations.

16. To continue to require the Fund to comply with the disclosure and reporting requirements of a reporting issuer will impose substantial costs on the Fund. These costs have increased with the implementation of Regulation 81-107 and NI 81-107.

17. The remaining unitholders of the Fund will have the benefit of the following protections:

a) the disclosure provided to the unitholders pursuant to the Legislation for mutual funds that are not reporting issuers;

b) the possibility to request the redemption, at any time, of the units they hold in the Fund and to receive their portion of the net assets; and

c) Unitholders who have purchased units of the Fund pursuant to the prospectus will continue to benefit from the rescission rights and the civil sanctions that are available to unitholders, including the recourse that can be used in case of misrepresentations in the prospectus.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provided the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers in accordance with the Legislation is to grant the Requested Revocation.