Saguenay Capital, LLC - s. 147

Headnote

Application for an order, pursuant to section 147 of the Act, for an exemption from the provisions in subsection 21.10(3) and 21.10(4) of the Act and section 139 of Regulation 1015 made pursuant to the Act that require the Applicant to deliver its audited annual financial statements, together with an auditor's report thereon, to the Commission within 90 days after the end of its financial year.

Statute Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 21.10(3), 21.10(4), 147.

Regulation Cited

R.R.O. 1990, Regulation 1015, amended to O. Reg. 500/06, s. 139.

IN THE MATTER OF

THE SECURITIES ACT, R.S.O. 1990,

CHAPTER S.5, AS AMENDED (the Act)

AND

IN THE MATTER OF

R.R.O. 1990, REGULATION 1015,

AS AMENDED (the Regulation)

AND

IN THE MATTER OF

SAGUENAY CAPITAL, LLC

ORDER

(Section 147 of the Act)

UPON the application (the Application) of Saguenay Capital, LLC (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to Section 147 of the Regulation, exempting the Applicant from the provisions in subsection 21.10(3) and 21.10(4) of the Act and section 139 of the Regulation (together, the Financial Statement Submission Requirements), that require a registrant that is registered under the Act as an adviser to deliver to the Commission its annual audited financial statements, together with an auditor's report thereon, within 90 days after the end of its financial year (the Filing Deadline);

AND UPON considering the Application and the recommendation of the staff of the Commission;

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a limited liability company formed under the laws of the State of Delaware in the United States of America. Its head office is located in the State of New York, United States of America.

2. The Applicant is registered under the Act as:

(i) a non-Canadian adviser in the categories of investment counsel and portfolio manager; and

(ii) a dealer in the category of limited market dealer.

3. The Applicant is registered as an investment adviser with the United States Securities and Exchange Commission (the SEC) and is subject to requirements of the U.S. Investment Advisers Act of 1940 (the Advisers Act) and the rules thereunder.

4. The Applicant is not a "reporting issuer" in Ontario as such term is defined in the Act.

5. The Applicant provides investment advisory services for which it earns incentive and management fees.

6. The financial year-end of the Applicant is December 31 in each year.

7. The Applicant manages portfolios for family offices, high net worth individuals and institutional investors. It also serves as an investment adviser to Saguenay Offshore Fund, Ltd., an offshore fund of funds and Saguenay Fund II, LLC (Saguenay Fund II), a U.S. domestic fund of funds, (collectively, the Funds). Each of the Funds is offered only on a private placement basis.

8. The financial year-end of the Funds is December 31 in each year.

9. The Funds primarily invest their assets in a portfolio of underlying independently managed funds (the Underlying Funds). The Underlying Funds are offered only on a private placement basis.

10. The Applicant, the Funds and the Underlying Funds are subject to different financial reporting deadlines in the United States of America. In accordance with Section 206(4)-2(b) of the General Rules and Regulations under the Advisers Act, the Underlying Funds are required to distribute to investors their audited annual financial statements no later than 120 days after their year-ends, that is, on or before April 30 in each year, while the Applicant and the Funds are required to distribute their audited annual financial statements no later than 180 days after their year-ends (the US Delivery Deadlines).

11. The Applicant has invested capital in Saguenay Fund II, such that approximately 35% of the Applicant's capital consists of its investment in that Fund. The Applicant's ownership interest in the Funds represents less than 0.10% of the aggregate net asset value of the Funds. The Applicant has no direct investment in any of the Underlying Funds.

12. For the reporting year 2006, the Applicant became subject to Issue 04-05 of the Emerging Issues Task Force of the Financial Accounting Standards Board (EITF Issue 04-05), which requires the Applicant to consolidate the financial statements of Saguenay Fund II with its own financial statements.

13. The Applicant's revenues are derived in part from management fees earned from its advisory services provided to the Funds.

14. The Financial Statement Submission Requirements provide that the Applicant must deliver its annual audited financial statements, together with an auditor's report, to the Commission before the Filing Deadline, that is, by March 31 in each year.

15. In light of the U. S. Delivery Deadlines, EITF Issue 04-05 and the fact that approximately 35% of the Applicant's capital consists of its investment in Saguenay Fund II, it is not possible for the Applicant's auditors to complete the audit of the Applicant and to provide an audit opinion on the Applicant's annual financial statements until the audit of the Funds and the Underlying Funds have been completed.

16. Without the relief requested, the Applicant will not be able to meet the Financial Statement Submission Requirements by filing its audited annual financial statements, together with an auditor's report thereon, before the Filing Deadline.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 147 of the Act, that the Applicant is exempt from the Financial Statement Submission Requirements, provided that:

(a) the Applicant delivers to the Commission its annual audited financial statements and other regulatory filings as prescribed by the regulations, together with an auditor's report, within 180 days after the end of its financial year;

(b) the Applicant delivers to the Commission its annual unaudited financial statements within 90 days after the end of its financial year;

(c) where the Applicant is required, pursuant to the rules and regulations of the relevant United States accounting and regulatory bodies, to produce its audited annual financial statements within a time period earlier than 180 days after its year end, the Applicant shall file its audited annual financial statements with the Commission by such earlier date;

(d) where the Applicant's auditors are otherwise able to complete the audit of the Applicant and provide an audit opinion on the Applicant's annual financial statements within a time period earlier than 180 days after the Applicant's year end, the Applicant shall file its audited annual financial statements with the Commission by such earlier date;

(e) the provisions of EITF Issue 04-05 continue to apply to the Applicant and the Funds such that the Applicant is required to consolidate the financial statements of Saguenay Fund II with its own financial statements, or the Applicant's invested capital in Saguenay Fund II remains at a level that requires its auditor to rely on the audit of Saguenay Fund II to complete the audit of the Applicant;

(f) the Applicant is not a "reporting issuer" in Ontario as such term is defined in the Act;

(g) each of the Funds and the Underlying Funds are offered only on a private placement basis; and

(h) the Underlying Funds remain managed independently from the Applicant.

December 21, 2007