Blue Ribbon Income Fund and Blue Ribbon Fund Management Ltd.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Investment fund, and its manager, exempted from the dealer registration requirement for certain trading activities to be carried out in connection with a warrant offering by the investment fund -- Trading activities to consist of the distribution of a warrant prospectus, and warrants to acquire units of the fund, to existing holders of securities of the fund, and the subsequent distribution of units to holders of warrants, upon their exercise, through an appropriately registered dealer.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, 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. 3.1, 3.42, 8.5.

February 8, 2011

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

BLUE RIBBON INCOME FUND

(the Fund), and

BLUE RIBBON FUND MANAGEMENT LTD.

(the Administrator) (collectively, the Filers)

DECISION

Background

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) exempting the Filers from the dealer registration requirement in the Legislation in respect of certain trades (the Warrant Offering Activities) to be carried out by the Administrator, on behalf of the Fund, in connection with a proposed distribution (the Warrant Offering) of warrants (the Warrants) to acquire units (the Units) of the Fund, to be made pursuant to a short-form (final) prospectus (the Warrant Prospectus);

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

1. the Ontario Securities Commission is the principal regulator for this application; and

2. 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 by the Filer in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (collectively, the Passport Jurisdictions).

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 Fund is a trust established by declaration of trust under the laws of the province of Ontario.

2. The Fund is a reporting issuer in each of the provinces of Canada and is not in default of securities legislation in any jurisdiction.

3. The Administrator acts as the administrator for the Fund. The administrator has applied to the Ontario Securities Commission for registration under the Securities Act (Ontario) in the category of investment fund manager.

4. The head office of each of the Filers is located in Toronto, Ontario.

5. The Fund is not considered to be a mutual fund under securities legislation of the provinces of Canada.

6. The Fund is authorized to issue an unlimited number of Units. The Units are listed and posted for trading on the Toronto Stock Exchange (the TSX).

7. The Fund is subject to certain investment restrictions that, among other things, limit the securities that the Fund may acquire for its investment portfolio.

8. The investment objectives of the Fund are to provide holders of Units with a variable level of monthly cash distributions and the opportunity to participate in gains in the value of the investment portfolio.

9. The Fund's investment portfolio consists of publicly listed or traded securities (including installment receipts) issued by income trusts, royalty trusts, real estate investment trusts and limited partnerships, common equities, convertible debt, preferred securities, and debt instruments.

10. The Fund was formerly Citadel Diversified Investment Trust. Since changing its name to Blue Ribbon Income Fund as of November 20, 2009, the Fund issued to holders of Units warrants to subscribe for additional Units, pursuant to a final short form prospectus dated February 24, 2010. There are no warrants currently outstanding.

11. The Fund does not engage in the continuous distribution of its securities.

12. In connection with the Warrant Offering, the Fund filed a preliminary short form prospectus dated January 7, 2011, under the securities legislation of Ontario and each of the Passport Jurisdictions. A receipt was issued for the prospectus dated January 10, 2011. Under the Warrant Offering, each holder of Units, as at a specified record date, will be entitled to receive, for no consideration, two Warrants for every five Units held by such holder.

13. Holders of Warrants will be entitled, upon the exercise of such Warrants, to subscribe for Units, pursuant to subscription privileges provided for in the Warrants, at a subscription price to be specified in the Warrant Prospectus. Each Warrant will entitle the holder to subscribe for one Unit under a basic subscription privilege. Holders of Warrants who exercise Warrants under the basic subscription privilege may also subscribe, pro rata, for additional Units that are not subscribed for by other holders under the basic subscription privilege, pursuant to the terms of an additional subscription privilege. The term for the exercise of Warrants (including both the basic subscription privilege and the additional subscription privilege) will not exceed six months.

14. The Fund has applied to list the Warrants, to be distributed under the Warrant Prospectus, on the TSX.

15. The Warrant Offering Activities will consist of:

(a) the distribution of the Warrant Prospectus and the issuance of Warrants to the holders of Units (as at the record date specified in the Warrant Prospectus), after the Warrant Prospectus has been filed, and receipts obtained, under the securities legislation of Ontario and each of the Passport Jurisdictions; and

(b) the distribution of Units to holders of Warrants, upon the exercise of such Warrants by the holder, through a registered dealer that is registered in a category that permits the registered dealer to make such distribution.

16. The Fund is in the business of trading by virtue of its portfolio investing and trading activities. As a result, capital raising activities, including the Warrant Offering Activities, would require the Filers to register as a dealer in the absence of this decision (or another available exemption from the dealer registration requirement).

17. 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 section 3.1 [Rights offering] and section 3.42 [Conversion, exchange, or exercise] of NI 45-106 no longer apply.

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 Fund, and the Administrator acting on behalf of the Fund, are not subject to the dealer registration requirement in respect of the Warrant Offering Activities.

"Carol S. Perry"
Commissioner
Ontario Securities Commission
 
"Wes M. Scott"
Commissioner
Ontario Securities Commission