APMEX Precious Metals Management Services, Inc. and APMEX Physical -- 1 oz. Gold Redeemable Trust

Headnote

NP 11-203 -- National Instrument 41-101 General Prospectus Requirement, Form 41-101F2 Information Required in an Investment Fund Prospectus, and National Instrument 81-106 Investment Fund Continuous Disclosure -- Exemption from the requirement to include in the prospectus annual financial statements prepared in accordance with Canadian generally accepted accounting principles -- Exemption to prepare on a continuing basis financial statements in accordance with Canadian generally accepted accounting principles -- A mutual fund trust intending to list its units on the TSX and NYSE Arca -- Issuer is a "foreign private issuer" with the SEC and permitted to file financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board with its Form F-1 registration statement -- Significant IFRS issues such as classification of puttable instruments, consolidation, and deferred income taxes are not expected to impact the Trust's financial statements.

Applicable Legislative Provisions

National Instrument 41-101 General Prospectus Requirement, s. 4.2(2) and 19.1

Form 41-101F2 Information Required in an Investment Fund Prospectus, item 38

National Instrument 81-106 Investment Fund Continuous Disclosure, s. 2.6 and 17.1

August 15, 2012

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

APMEX PRECIOUS METALS

MANAGEMENT SERVICES, INC.

(the Manager)

AND

IN THE MATTER OF

APMEX PHYSICAL -- 1 OZ. GOLD

REDEEMABLE TRUST

(the Trust)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager, in its capacity as the manager of the Trust, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief:

(a) pursuant to section 19.1 of National Instrument 41-101 General Prospectus Requirements (NI 41-101) from the requirements under subsection 4.2(2) of NI 41-101 and Item 38 of Form 41-101F2 Information Required in an Investment Fund Prospectus to permit the Trust to include financial statements prepared using International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB), rather than Canadian generally accepted accounting principles (GAAP), in the final prospectus (the Final Prospectus) of the Trust to be filed in each of the Canadian Jurisdictions (as hereinafter defined); and

(b) pursuant to section 17.1 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) from the requirement under section 2.6 of NI 81-106 to permit the financial statements of the Trust to be prepared in accordance with IFRS-IASB rather than Canadian GAAP,

(collectively, 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 (the Principal Regulator); and

(b) the Manager 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, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

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 herein.

In this decision, the "total net assets" of the Trust means the net asset value of the Trust determined in accordance with Part 14 of National Instrument 81-106 -- Investment Fund Continuous Disclosure.

Representations

This decision is based on the following facts represented by the Manager and the Trust:

The Manager and the Trust

1. The Manager is a corporation formed and organized under the laws of the State of Delaware pursuant to a Certificate of Incorporation dated December 21, 2010 and maintains its head office in Oklahoma City, Oklahoma. The Manager is wholly owned by American Precious Metals Exchange, Inc.

2. The Trust is a mutual fund trust established under the laws of the Province of Ontario pursuant to a trust agreement dated as of March 10, 2011, as amended and restated (the Trust Agreement), as the same may be further amended, restated or supplemented from time to time. Pursuant to the Trust Agreement, Computershare Trust Company of Canada acts as the trustee. Pursuant to a management agreement dated as of March 10, 2011, as amended and restated, the Manager acts as the manager of the Trust.

3. Computershare Investor Services Inc. will be the registrar and transfer agent of the Trust pursuant to a transfer agent, registrar and disbursing agent agreement to be entered into on or about the filing of the Final Prospectus.

4. RBC Dexia Investor Services Trust (the Custodian) will act as the custodian of the Trust pursuant to a custodian agreement. The Trust will store the 1 oz. American Gold Eagle bullion coins, 1 oz. Canadian Gold Maple Leaf bullion coins, and/or 1 oz. gold bullion bars and rounds (collectively, the Gold Coins) with The Bank of Nova Scotia acting in its capacity as the sub-custodian appointed by the Custodian pursuant to a sub-custodian agreement. The Trust will store Gold Coins with a value equal to at least 60% of the value of the net assets of the Trust at all times in Canada, with the remainder to be stored in the United States.

5. The Trust has filed a registration statement on Form F-1 (the Registration Statement) under the U.S. Securities Act of 1933, as amended, with the United States Securities and Exchange Commission (the SEC) in connection with the initial public offering (the Offering) of transferable, redeemable units of the Trust (the Units) in the United States.

6. In connection with the Offering of the Units, a preliminary long form prospectus (the Preliminary Prospectus) has been filed with the Principal Regulator and the Trust intends to become a reporting issuer, or the equivalent thereof in each Province of Canada (the Canadian Jurisdictions) following the filing of the Final Prospectus.

7. The Trust intends to list the Units on the Toronto Stock Exchange (TSX) and the New York Stock Exchange Arca (NYSE Arca). The Trust will not file the Final Prospectus until the TSX and the NYSE Arca have conditionally approved the listing of the Units.

8. The Trust is a "mutual fund in Ontario" as such term is defined in the Securities Act (Ontario) and is subject to the investment restrictions applicable to mutual funds which are prescribed by NI 81-102. The Manager will establish an independent review committee for the Trust in accordance with the requirements under National Instrument 81-107 Independent Review Committee for Investment Funds.

9. The Trust is not required to register as an "investment company" as such term is defined in the U.S. Investment Company Act of 1940, as amended, since the Trust will invest all or substantially all of its assets in Gold Coins.

10. The Manager and the Trust are not in default of securities legislation in any province of Canada.

11. The Trust was created to invest and hold substantially all of its assets in Gold Coins. The Trust seeks to provide a secure, convenient and exchange-traded investment alternative for investors interested in holding Gold Coins. The Trust intends to invest primarily in long-term holdings of Gold Coins and does not intend to speculate in gold. The Trust does not anticipate making regular cash distributions to the unitholders of the Trust (the Unitholders).

12. The Manager has obtained relief from subsections 2.3(e) and (f) of National Instrument 81-102 -- Mutual Funds, to permit the Trust to invest in Gold Coins.

13. Except with respect to cash and highly liquid investments that the Trust will hold to pay expenses and anticipated redemptions of Units, the Trust expects to own only Gold Coins. While the investment guidelines permit the Trust to invest up to 20% of its assets in securities other than Gold Coins, the Manager intends to hold approximately 97% of the total net assets of the Trust in Gold Coins. The Trust does not intend to invest in gold certificates or other financial instruments that represent gold or that may be exchanged for gold.

14. The investment and operating restrictions of the Trust provide that, among other things, the Trust will invest in and hold a minimum of 80% of the total net assets of the Trust in Gold Coins and hold no more than 20% of the total net assets of the Trust in cash (such as interest-bearing accounts and short-term certificates of deposit) or any "U.S. Government Security" (except during the 90-day period following the closing of the Trust's initial public offering or additional offerings or prior to the distribution of assets of the Trust, at which times the Trust may hold more than 20% of the total net assets of the Trust in cash (such as interest-bearing accounts and short-term certificates of deposit) and U.S. Government Securities). U.S. Government Securities are direct obligations of or obligations guaranteed as to principal or interest by the United States, or securities issued or guaranteed by corporations in which the United States has a direct or indirect interest which shall have been designated by the Secretary of the Treasury, pursuant to section 3(a)(12) of the Securities Exchange Act of 1934, as exempted securities for the purposes of that Act.

15. The Offering is being marketed primarily to investors resident in the United States and Canada. The Manager estimates that 75% of the Offering will be sold in the United States and 25% of the Offering will be sold in Canada.

16. As a newly established issuer, the Trust has not prepared any financial statements other than the audited statement of financial position of the Trust as at December 31, 2011 included in the Preliminary Prospectus filed with the Principal Regulator and the Registration Statement, as amended, filed with the SEC.

17. The SEC permits foreign private issuers, such as the Trust, to include in their Form F-1 filings financial statements prepared in accordance with IFRS-IASB. Preparing the Trust's financial statements in accordance with Canadian GAAP would require the Registration Statement to include a reconciliation between U.S. GAAP and Canadian GAAP.

18. The Canadian Securities Administrators will require all investment funds to prepare financial statements in accordance with IFRS-IASB as of January 1, 2014. If the Trust is permitted to prepare its financial statements since its inception date in accordance with IFRS-IASB, the Unitholders will not be required to incur the expenses associated with a subsequent conversion to IFRS-IASB and the reconciliation to U.S. GAAP that would be required in the Registration Statement.

19. The Manager has carefully assessed the readiness of its employees, management and board of directors for the Trust's adoption of IFRS-IASB for financial periods beginning on or after March 10, 2011 which is the Trust's inception date, and has concluded that all such persons are adequately prepared for the Trust's adoption of IFRS-IASB for financial periods beginning on or after March 10, 2011.

20. The Manager, in consultation with the Trust's external auditors, has determined that the Units will be classified as equity instruments under IFRS-IASB. The Trust Agreement provides that annual distributions of the Trust's net income and net realized capital gains, if any, to Unitholders will be at the discretion of the Trust rather than being a mandatory or automatic distribution to such Unitholders. Furthermore, if at any point in the future the classification of the Units has to be changed from equity to liability due to either changes in the Trust's structure or a change in accounting rules, such a change would not impact the calculation of the net asset value (the NAV) of the Trust pursuant to Part 14 of NI 81-106 since all liabilities represented by outstanding Units would be specifically excluded from the calculation of the NAV of the Trust.

21. The Manager, in consultation with the Trust's external auditors, has determined that the Trust will not be required to present consolidated financial statements under IFRS-IASB since the Trust will invest all or substantially all of its assets in Gold Coins which will be measured at fair value under IFRS-IASB.

22. The Manager, in consultation with the Trust's external auditors, expects that the Trust will not account for deferred taxes under IAS 12 Income Taxes of IFRS-IASB. However, the Manager notes that the application of IAS 12 Income Taxes to certain mutual fund trusts continues to be debated within the Canadian accounting profession. Nonetheless, the Manager and the Trust are of the view that there will be no difference in the calculation of the NAV of the Trust pursuant to Part 14 of NI 81-106 between IFRS-IASB and Canadian GAAP since the fair value of any such deferred tax liability would be nil.

23. The Preliminary Prospectus discloses, and the Final Prospectus will disclose, the Trust's intention that its financial statements will be prepared in accordance with IFRS-IASB.

24. The annual financial statements of the Trust to be included in the Final Prospectus and for subsequent financial periods, and the interim financial statements of the Trust for subsequent financial periods will be prepared in accordance with IFRS-IASB.

Decision

The Principal Regulator is satisfied that the decision meets the tests 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 Exemption Sought is granted provided that:

(a) the notes to the financial statements of the Trust disclose an unreserved statement of compliance with:

(i) in the case of annual financial statements, IFRS-IASB; and

(ii) in the case of an interim financial report, IAS 34 Interim Financial Reporting; and

(b) the Exemption Sought ceases to apply if section 2.6 of NI 81-106 is amended and changes the applicable accounting principles from Canadian GAAP to IFRS-IASB, but only for financial years beginning on or after the date on which the amendment comes into force.