GMIncome & Growth Fund

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Closed-end investment fund exempt from prospectus requirements in connection with the sale of units repurchased from existing security holders pursuant to market purchase programs and by way of redemption of units by security holder subject to conditions.

Ontario Statues Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53 and 74(1).

National Instruments Cited

National Instrument 45-102 Resale of Securities, s. 2.8(2).

Citation: GMIncome & Growth Fund, Re, 2011 ABASC 14

January 10, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

GMINCOME & GROWTH FUND

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from the requirement contained in the Legislation to file a prospectus (the Prospectus Requirement) in connection with the distribution of units of the Filer (Units) that have been repurchased by the Filer pursuant to the Programs (as that term is defined below) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(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, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and Yukon; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in 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 in this decision.

Representations

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

1. The Filer is an unincorporated closed-end investment trust established under the laws of the Alberta by a declaration of trust made as of September 29, 2010 (as amended from time to time, the Declaration of Trust).

2. The Filer is not a "mutual fund" as defined in the Legislation because the holders of the Units (Unitholders) are not entitled to receive on demand an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the Filer as contemplated by the definition of "mutual fund" in the Legislation.

3. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of any of the requirements of securities legislation applicable to it.

4. The Units are listed and posted for trading on the Toronto Stock Exchange (the TSX). As of November 16, 2010, there were 2,595,000 Units issued and outstanding.

5. Each whole Unit carries entitlements to one vote at all meetings of Unitholders and to participate equally with all other Units with respect to any and all distributions made by the Filer.

6. Middlefield Limited (the Manager), which was incorporated pursuant to the Business Corporations Act (Alberta), is the manager and the trustee of the Filer.

7. In order to enhance liquidity and to provide market support for the Units, pursuant to the Declaration of Trust and the terms and conditions that attach to the Units and subject to compliance with any applicable regulatory requirements, the Filer is obligated to purchase (the Mandatory Purchase Program) any Units offered on the TSX (or any successor thereto) if, at any time after the closing of the Filer's initial public offering, the price at which Units are then offered for sale on the TSX (or any successor thereto) is less than 95% of the net asset value of the Filer (Net Asset Value) per Unit as at the close of business in Toronto, Ontario on the immediately preceding business day, provided that the maximum number of Units that the Filer is required to purchase pursuant to the Mandatory Purchase Program in any calendar quarter is 1.25% of the number of Units outstanding at the beginning of each such period.

8. The Filer is not required to purchase Units pursuant to the Mandatory Purchase Program if:

(a) the Manager reasonably believes that the Filer would be required to make an additional distribution in respect of the year to Unitholders of record on December 31 of such year in order that the Filer will generally not be liable to pay income tax under the Income Tax Act (Canada) after the making of such purchase;

(b) in the opinion of the Manager, the Filer lacks the cash, debt capacity or other resources to make such purchases; or

(c) in the opinion of the Manager, such purchases would adversely affect the ongoing activities of the Filer or the remaining Unitholders.

9. The Declaration of Trust provides that, subject to applicable regulatory requirements and limitations, the Filer shall have the right, but not the obligation, exercisable in its sole discretion, at any time, to purchase outstanding Units in the market at prevailing market prices (the Discretionary Purchase Program).

10. Subject to the Filer's right to suspend redemptions, Units may be surrendered for redemption (the Redemption Program):

(a) on the last business day of each month (a Monthly Redemption Date) to the principal office of the Filer's registrar and transfer agent (the Transfer Agent) in Toronto, Ontario by no later than 5:00 p.m. (Toronto time) on a date which is at least 20 business days prior to the Monthly Redemption Date, in order to be redeemed at a redemption price per Unit equal to the lesser of:

(i) 94% of the weighted average trading price of the Units on the TSX during the 15 trading days preceding the Monthly Redemption Date; and

(ii) the "closing market price" of the Units (generally determined as the closing market price of the Units on the principal market on which the Units are quoted for trading on the Monthly Redemption Date); and

(b) on May 31 of each year commencing in 2012, to the principal office of the Transfer Agent in Toronto, Ontario on a date that is at least 20 business days prior to the last day of May of such year at a redemption price per Unit equal to the Redemption Price per Unit (as defined in the Prospectus).

11. At the sole discretion of the Manager and subject to the receipt of any necessary regulatory approvals, the Manager may allow additional redemptions from time to time of Units (Additional Redemptions), provided that the holder thereof shall be required to use the full amount received on such redemption to purchase treasury securities of a new or existing fund promoted by Middlefield Limited or an affiliate thereof then being offered to the public by prospectus.

12. Purchases of Units made by the Filer under the Mandatory Purchase Program, Discretionary Purchase Program, Redemption Program, and Additional Redemptions (collectively, the Programs) are exempt from the issuer bid requirements of the Legislation pursuant to exemptions contained therein.

13. On the Filer redeeming or otherwise acquiring any Units pursuant to the Programs the Filer shall not be considered to be a Unitholder and, pending the sale of such Units, the rights, privileges and obligations attached to issued and outstanding Units shall be suspended and such Units shall not be considered to be issued and outstanding Units. Upon the sale of one or more Units that have been so previously redeemed or otherwise acquired by the Filer, such Units shall then bear the rights and privileges and be subject to the obligations of the Declaration of Trust and shall be considered to be issued and outstanding for the purposes of the Declaration of Trust.

14. The Filer desires to, and the Declaration of Trust provides that the Filer shall have the ability to, sell through one or more securities dealers, Units that have been repurchased by the Filer pursuant to the Programs (Repurchased Units), subject to obtaining all necessary regulatory approvals.

15. In order to effect sales of Repurchased Units by the Filer, the Filer intends to sell, in its sole discretion and at its option, any Repurchased Units purchased by it under the Programs primarily through one or more securities dealers and through the facilities of the TSX (or such other exchange on which the Units are then listed).

16. All Repurchased Units will be held by the Filer for at least 4 months after the repurchase thereof by the Filer (the Hold Period), prior to the resale thereof.

17. The sale of Repurchased Units will not have a significant adverse impact on the market price of the Units.

18. Repurchased Units that the Filer does not resell within 12 months after the Hold Period (or 16 months after the date of repurchase) will be cancelled by the Filer.

19. Prospective purchasers of Repurchased Units will have access to the Filer's continuous disclosure, which will be filed on SEDAR.

20. The Legislation provides that a trade by or on behalf of an issuer in previously issued securities of that issuer have been purchased by that issuer is a distribution and, as such, is subject to the Prospectus Requirement. In the absence of the Exemption Sought, any sale by the Filer of Repurchased Units is a distribution that is subject to the Prospectus Requirement.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) the Repurchased Units are sold by the Filer through the facilities of and in accordance with the regulations and policies of the TSX or of any other exchange on which the Units are then listed;

(b) the Filer complies with the insider trading restrictions imposed by securities legislation with respect to the trades of Repurchased Units; and

(c) the Filer complies with the conditions of paragraphs 1 through 5 of subsection 2.8(2) of National Instrument 45-102 Resale of Securities with respect to the sale of the Repurchased Units.

For the Commission:

"William Rice, QC"
Chair
 
"Stephen Murison"
Vice-Chair