Aston Hill Oil & Gas Income Fund et al.

Headnote

Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, the funds and their manager are exempted from the dealer registration requirement for certain limited trading activities to be carried out by these parties in connection with warrant offerings by the funds, as the limited trading activities involve: i) the forwarding of short form prospectuses and the distribution of warrants to acquire units to existing holders of units and ii) the subsequent distribution of units to existing holders of warrants, upon their exercise of the warrants, 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. 2.1, 3.1, 3.42, 8.5.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.5.

December 10, 2013

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
ASTON HILL OIL & GAS INCOME FUND (OGF),
ASTON HILL VIP INCOME FUND (VIP)
(collectively, the Funds),

AND

ASTON HILL ASSET MANAGEMENT INC.
(the Manager)
(collectively with the Funds, 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 the following:

i. certain trades (the OGF Warrant Offering Activities) to be carried out by the Manager, on behalf of OGF, in connection with a proposed offering (the OGF Warrant Offering) of warrants (the OGF Warrants) to acquire units (the OGF Units) of OGF, to be made pursuant to a short-form (final) prospectus (the OGF Warrant Prospectus); and

ii. certain trades (the VIP Warrant Offering Activities) to be carried out by the Manager, on behalf of VIP, in connection with a proposed offering (the VIP Warrant Offering) of warrants (the VIP Warrants) to acquire units (the VIP Units) of VIP, to be made pursuant to a short-form (final) prospectus (the VIP 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, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (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. Each of the Funds is a trust established by declaration of trust under the laws of the province of Ontario.

2. The Manager is the manager of the Funds and is a wholly-owned subsidiary of Aston Hill Financial Inc. (Aston Hill).

3. The Funds are reporting issuers in each of the provinces and territories of Canada and Aston Hill is a reporting issuer in each of the provinces of Canada and each is not in default of securities legislation in any jurisdiction.

4. The Manager performs management, portfolio management and administrative services for the Funds pursuant to management agreements.

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

6. The Funds are not considered to be mutual funds under securities legislation of the provinces and territories of Canada.

7. The authorized capital of OGF consists of an unlimited number of OGF Units. The OGF Units are listed and posted for trading on the Toronto Stock Exchange (the TSX).

8. The authorized capital of VIP consists of an unlimited number of VIP Units. The VIP Units are listed and posted for trading on the TSX.

9. Each of the Funds is, directly or indirectly, subject to certain investment restrictions that, among other things, limit the securities that may be acquired by the investment portfolio which the applicable Fund owns or is exposed to, as applicable.

10. The investment objectives of OGF are to provide holders of OGF Units with the benefits of high monthly cash distributions together with the opportunity for capital appreciation.

11. The investment objectives of VIP are to provide holders of VIP Units with the benefits of a high level of monthly income, together with the opportunity for capital appreciation.

12. OGF's portfolio consists of securities of oil and gas companies.

13. VIP's portfolio consists primarily of income producing securities.

14. OGF filed a final prospectus dated September 28, 2004, under the securities legislation of Ontario and each of the Passport Jurisdictions for the initial issuance of OGF Units. Pursuant to final short form prospectuses dated November 26, 2008, November 4, 2009 and February 9, 2011, respectively, OGF issued to holders of OGF Units warrants to subscribe for additional OGF Units. There are no warrants currently outstanding.

15. VIP filed a final prospectus dated January 29, 2002, under the securities legislation of Ontario and each of the Passport Jurisdictions for the initial issuance of VIP Units. Pursuant to final short form prospectuses dated November 26, 2008, November 4, 2009 and February 9, 2011, respectively, VIP issued to holders of VIP Units warrants to subscribe for additional VIP Units. There are no warrants currently outstanding.

16. Neither of the Funds engages in the continuous distribution of securities.

17. In connection with the OGF Warrant Offering, OGF has filed a preliminary short form prospectus dated November 22, 2013, under the securities legislation of Ontario and each of the Passport Jurisdictions. Under the OGF Warrant Offering, each holder of OGF Units, as at a specified record date, will be entitled to receive, for no consideration, one-half of one OGF Warrant for each OGF Unit held by such holder.

18. In connection with the VIP Warrant Offering, VIP has filed a preliminary short form prospectus dated November 22, 2013 under the securities legislation of Ontario and each of the Passport Jurisdictions. Under the VIP Warrant Offering, each holder of VIP Units, as at a specified record date, will be entitled to receive, for no consideration, one-fourth of one VIP Warrant for each VIP Unit held by such holder.

19. Holders of OGF Warrants will be entitled, upon the exercise of such OGF Warrants, to subscribe for OGF Units, pursuant to subscription privileges provided for in the OGF Warrants, at a subscription price to be specified in the OGF Warrant Prospectus. Each OGF Warrant will entitle the holder to subscribe for one OGF Unit under a basic subscription privilege. Holders of OGF Warrants who exercise OGF Warrants under the basic subscription privilege may also subscribe, pro rata, for additional OGF 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 OGF Warrants (including both the basic subscription privilege and the additional subscription privilege) will not exceed six months.

20. Holders of VIP Warrants will be entitled, upon the exercise of such VIP Warrants, to subscribe for VIP Units, pursuant to subscription privileges provided for in the VIP Warrants, at a subscription price to be specified in the VIP Warrant Prospectus. Each VIP Warrant will entitle the holder to subscribe for one VIP Unit under a basic subscription privilege. Holders of VIP Warrants who exercise VIP Warrants under the basic subscription privilege may also subscribe, pro rata, for additional VIP 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 VIP Warrants (including both the basic subscription privilege and the additional subscription privilege) will not exceed six months.

21. OGF has applied to list the OGF Warrants, to be distributed under the OGF Warrant Prospectus, on the TSX.

22. VIP has applied to list the VIP Warrants, to be distributed under the VIP Warrant Prospectus, on the TSX.

23. The OGF Warrant Offering Activities will consist of:

(a) the distribution of the OGF Warrant Prospectus and the issuance of OGF Warrants to the holders of OGF Units (as at the record date specified in the OGF Warrant Prospectus), after the OGF 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 OGF Units to holders of OGF Warrants, upon the exercise of such OGF Warrants by the holder, through a registered dealer that is registered in a category that permits the registered dealer to make such distribution.

24. The VIP Warrant Offering Activities will consist of:

(a) the distribution of the VIP Warrant Prospectus and the issuance of VIP Warrants to the holders of VIP Units (as at the record date specified in the VIP Warrant Prospectus), after the VIP 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 VIP Units to holders of VIP Warrants, upon the exercise of such VIP Warrants by the holder, through a registered dealer that is registered in a category that permits the registered dealer to make such distribution.

25. The Funds are in the business of trading by virtue of their portfolio investing and trading activities. As a result, their capital raising activities, including their respective OGF Warrant Offering Activities or VIP Warrant Offering Activities, would require each of the Filers to register as a dealer in the absence of this decision (or another available exemption from the dealer registration requirement).

26. Section 8.5 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) provides that 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:

A. OGF, and the Manager acting on behalf of OGF, are not subject to the dealer registration requirement in respect of the OGF Warrant Offering Activities; and

B. VIP, and the Manager acting on behalf of VIP, are not subject to the dealer registration requirement in respect of the VIP Warrant Offering Activities;

"James Turner"

Commissioner

Ontario Securities Commission

 

"Judith Robertson"

Commissioner

Ontario Securities Commission