Humboldt Capital Corporation

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer seeking relief from requirements under Part 3 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that its financial statements be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises (the Exemption Sought) to permit Filer to prepare its financial statements in accordance with Canadian GAAP -- Part V for its financial year that begins on 1 January 2011 and ends on 31 December 2011 and for its financial year that begins on 1 January 2012 and ends on 31 December 2012 (collectively, the Filer's deferred financial years) -- Filer also seeking relief from IFRS-related amendments to National Instrument 51-102 Continuous Disclosure Obligations, National Instrument 41-101 General Prospectus Requirements, National Instrument 44-101 Short Form Prospectus Distributions, National Instrument 44-102 Shelf Distributions, National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings and National Instrument 52-110 Audit Committee that came into force on 1 January 2011 and that would apply to periods relating to Filer's deferred financial years.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, Parts 3 and 4

National Instrument 51-102 Continuous Disclosure Obligations

National Instrument 41-101 General Prospectus Requirements

National Instrument 44-101 Short Form Prospectus Distributions

National Instrument 44-102 Shelf Distributions

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings

National Instrument 52-110 Audit Committees

Citation: Humboldt Capital Corporation, Re, 2011 ABASC 459

August 29, 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

HUMBOLDT CAPITAL CORPORATION

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from:

(a) the requirements in Part 3 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that apply to financial statements, financial information, operating statements and pro forma financial statements for periods relating to the Filer's financial year beginning on 1 January 2011 and ending on 31 December 2011 and the Filer's financial year beginning on 1 January 2012 and ending on 31 December 2012 (collectively, the Filer's deferred financial years);

(b) the amendments to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) related to International Financial Reporting Standards (IFRS) that came into force on 1 January 2011 and that apply to documents required to be prepared, filed, delivered, or sent under NI 51-102 for periods relating to the Filer's deferred financial years;

(c) the IFRS-related amendments to National Instrument 41-101 General Prospectus Requirements (NI 41-101) that came into force on 1 January 2011 and that apply to a preliminary prospectus, an amendment to a preliminary prospectus, a final prospectus or an amendment to a final prospectus of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(d) the IFRS-related amendments to National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) that came into force on 1 January 2011 and that apply to a preliminary short form prospectus, an amendment to a preliminary short form prospectus, a final short form prospectus or an amendment to a final short form prospectus of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(e) the IFRS-related amendments to National Instrument 44-102 Shelf Distributions (NI 44-102) that came into force on 1 January 2011 and that apply to a preliminary base shelf prospectus, an amendment to a preliminary base shelf prospectus, a base shelf prospectus, an amendment to a base shelf prospectus or a shelf prospectus supplement of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(f) the IFRS-related amendments to National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109) that came into force on 1 January 2011 and that apply to annual filings and interim filings for periods relating to the Filer's deferred financial years; and

(g) the IFRS-related amendments to National Instrument 52-110 Audit Committees (NI 52-110) that came into force on 1 January 2011 and that apply to periods relating to the Filer's deferred financial years;

(collectively, the Relief).

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 subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia and Québec (the Passport Jurisdictions); and

(c) this 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 or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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

1. The Filer is a corporation established under the laws of Alberta. The head office of the Filer is in Calgary, Alberta.

2. The Filer is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions and is not in default of securities legislation in any jurisdiction, other than with respect to the interim financial statements for the 3 month period ended 31 March 2011 and filed on 30 May 2011 not having been prepared in accordance with IFRS pursuant to Part 3 of NI 52-107.

3. The Filer's fiscal year end is December 31.

4. The Filer is not an investment fund as that term is defined in the Securities Act (Alberta).

5. Accounting Guideline AcG-18 Investment Companies (AcG-18) in Part V of the Handbook defines an investment company as either:

(a) an investment fund as defined by the Canadian securities regulatory authorities in National Instrument 81-106, Investment Fund Continuous Disclosure; or

(b) a separate legal entity whose primary business activity for the period is investing.

6. The Filer meets all the criteria for its primary business activity to be investing, as set out in AcG-18. As such, the Filer is an investment company and applies AcG-18 in the preparation of its financial statements, in accordance with Part V of the Handbook as applicable to public enterprises for securities legislation purposes.

7. The Canadian Accounting Standards Board published amendments that provide a deferral of the transition to IFRS for investment companies applying AcG-18 to adopt IFRS for annual periods beginning on or after 1 January 2013.

8. The Canadian Securities Administrators (CSA) published CSA Staff Notice 81-320 Update on International Financial Reporting Standards for Investment Funds which indicated that, given the Handbook provides for a deferral of the transition to IFRS for investment companies applying AcG-18, the CSA would defer finalizing IFRS-related amendments to rules related to investment companies that are investment funds as defined in securities legislation and are subject to National Instrument 81-106 Investment Fund Continuous Disclosure, with a stated goal of having the necessary IFRS-related amendments for investment funds in force by 1 January 2013.

9. NI 51-102, NI 41-101, NI 44-101, NI 44-102, NI 52-109 and NI 52-110 (collectively, the Rules) and NI 52-107 apply to the Filer. Since Part 3 of NI 52-107 and the IFRS-related amendments to the Rules do not have a provision providing for a two-year deferral of the transition to IFRS for investment companies subject to NI 52-107 and the Rules, the Filer has applied for the Relief.

10. During the Filer's deferred financial years, the Filer will comply with section 1.13 of Form 51-102F1 Management's Discussion and Analysis (MD&A) by providing an updated discussion of the Filer's preparations for changeover to IFRS in its annual and interim MD&A. In particular, the Filer will discuss the expected effect on the financial statements, or state that the effect cannot be reasonably estimated.

11. The Filer acknowledges that if the Relief is granted, the Filer:

(a) will be subject to Part 3 of NI 52-107 and the IFRS-related amendments to the Rules for periods relating to financial years beginning on or after 1 January 2013; and

(b) will not have the benefit of the 30 day extension to the deadline of filing the first interim financial report in the year of adopting IFRS in respect of an interim period beginning on or after 1 January 2011, as set out in the IFRS-related amendments to NI 51-102, since that extension does not apply if the first interim financial report is in respect of an interim period ending after 30 March 2012.

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.

12. The decision of the Decision Makers under the Legislation is that the Relief is granted provided that:

(a) the Filer continues to be an investment company, as defined in and applying AcG-18;

(b) the Filer provides the communication as described and in the manner set out in paragraph 10 above;

(c) the Filer complies with the requirements in Part 4 of NI 52-107 for all financial statements (including interim financial statements), financial information, operating statements and pro forma financial statements for periods relating to the Filer's deferred financial years, as if the expression "January 1, 2011" in subsection 4.1(2) were read as "January 1, 2013";

(d) the Filer complies with the version of NI 51-102 that was in effect on 31 December 2010 (together with any amendments to NI 51-102 that are not related to IFRS and that come into force after 1 January 2011) for all documents required to be prepared, filed, delivered, or sent under NI 51-102 for periods relating to the Filer's deferred financial years;

(e) the Filer complies with the version of NI 41-101 that was in effect on 31 December 2010 (together with any amendments to NI 41-101 that are not related to IFRS and that come into effect after 1 January 2011) for any preliminary prospectus, amendment to a preliminary prospectus, final prospectus or amendment to a final prospectus of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(f) the Filer complies with the version of NI 44-101 that was in effect on 31 December 2010 (together with any amendments to NI 44-101 that are not related to IFRS and that come into effect after 1 January 2011) for any preliminary short form prospectus, amendment to a preliminary short form prospectus, final short form prospectus or amendment to a final short form prospectus of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(g) the Filer complies with the version of NI 44-102 that was in effect on 31 December 2010 (together with any amendments to NI 44-102 that are not related to IFRS and that come into effect after 1 January 2011) for any preliminary base shelf prospectus, amendment to a preliminary base shelf prospectus, base shelf prospectus, amendment to a base shelf prospectus or shelf prospectus supplement of the Filer which includes or incorporates by reference financial statements of the Filer in respect of periods relating to the Filer's deferred financial years;

(h) the Filer complies with the version of NI 52-109 that was in effect on 31 December 2010 (together with any amendments to NI 52-109 that are not related to IFRS and that come into effect after 1 January 2011) for all annual filings and interim filings for periods relating to the Filer's deferred financial years;

(i) the Filer complies with the version of NI 52-110 that was in effect on 31 December 2010 (together with any amendments to NI 52-110 that are not related to IFRS and that come into effect after 1 January 2011) for periods relating to the Filer's deferred financial years;

(j) if, notwithstanding this order, the Filer decides not to rely on the Relief and files an interim financial report prepared in accordance with IFRS for an interim period in a deferred financial year, the Filer must, at the same time:

(i) restate, in accordance with IFRS, any interim financial statements for any previous interim period in the same deferred financial year (each, a Previous Interim Period) that were originally prepared in accordance with Part V of the Handbook and filed pursuant to this order; and

(ii) file a restated interim financial report prepared in accordance with IFRS for each Previous Interim Period, together with corresponding restated interim MD&A and certificates required by NI 52-109. For greater certainty, any restated interim financial report for a Previous Interim Period must comply with applicable securities legislation (including Part 3 of NI 52-107 and the amendments to Part 4 of NI 51-102 that came into force on January 1, 2011) and any restated interim financial report for the first interim period in the deferred financial year must include the opening IFRS statement of financial position at the date of transition to IFRS; and

(k) if, notwithstanding this order, the Filer decides not to rely on the Relief and files annual financial statements prepared in accordance with IFRS for a deferred financial year, the Filer must, at the same time (unless previously done pursuant to paragraph j immediately above):

(i) restate, in accordance with IFRS, any interim financial statements for any Previous Interim Period that were originally prepared in accordance with Part V of the Handbook and filed pursuant to this order; and

(ii) file a restated interim financial report prepared in accordance with IFRS for each Previous Interim Period, together with corresponding restated interim MD&A and certificates required by NI 52-109. For greater certainty, any restated interim financial report for a Previous Interim Period must comply with applicable securities legislation (including Part 3 of NI 52-107 and the amendments to Part 4 of NI 51-102 that came into force on 1 January 2011) and any restated interim financial report for the first interim period in the deferred financial year must include the opening IFRS statement of financial position at the date of transition to IFRS.

"Cheryl McGillivray"
Manager, Corporate Finance