Carthos Investments Partnership

Headnote

Subsection 74(1) - Units of partnership distributed to current and former partners of a lawfirm exempt from Sections 25 and 53 of the Act. Section 147 - partnership exempt fromSection 77 of Act to file interim statements and Section 78 to file audited annualstatements.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am.

Regulations Cited

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am.

UPON the application of Osler, Hoskin & Harcourt ("OH&H") on behalf of CarthosInvestments Partnership (the "Partnership') for an order of the Ontario SecuritiesCommission (the "Commission") under Section 74 of the Securities Act (Ontario) (the "Act")exempting the Partnership from the requirement in Section 25 of the Act to distribute units(the "Units") of the Partnership through a registered dealer and from the requirement inSection 53 of the Act to file a prospectus in respect of the distribution of Units of thePartnership, and under Section 147 the Act exempting the Partnership from therequirement in Section 77 of the Act to file within 60 days of the date to which they aremade up interim financial statements ("Interim Regulatory Statements") and therequirement in Section 78 of the Act to file annually within 140 days from the end of its lastfinancial year comparative financial statements ("Annual Regulatory Statements"), in eachcase made up and certified as required by the regulations (the "Regulations') under theAct and in accordance with generally accepted accounting principles;

AND UPON considering the application and the recommendations of the staff of theCommission;

AND UPON the OH&H having represented to the Commission as follows:

1. The Partnership will be a general partnership formed under the laws of Ontario andoperated pursuant to the provisions of a partnership agreement (the "Agreement").

2. The Partnership will be established for the purpose of investing in publicly tradedequity securities with a view to achieving long term capital appreciation.

3. The Partnership will admit as partners (the "Partners") only:

a. partners of OH&H;

b. retired partners of OH&H;

c. former partners of OH&H;

d. investment companies of which a person referred to in paragraph (a), (b) or(c) above holds voting control; and

e. trusts of which a person referred to in paragraph (a), (b) or (c) above is acontrolling trustee.

Units of the Partnership will not be qualified investments for registered retirementsavings plans, registered education savings plans or other tax deferred investmentvehicles.

4. Pursuant to the Agreement, the Partners of the Partnership will appoint, from timeto time, a partnership management board (the "Management Board") consisting ofa minimum of four persons who will be Partners, or partners, retired partners orformer partners of OH&H who hold voting control of or are controlling trustees ofPartners, to manage, control, administer and operate the Partnership.

5. One or more members of the Management Board may be selected by theManagement Board to be responsible for directing investment decisions of thePartnership and may be paid an annual salary by the Partnership. The salary, ifany, of members of the Management Board will be set by the Management Boardfor each financial year at the beginning of the year and will be paid immediatelyafter the end of the year. The aggregate of any salaries for a financial year will notexceed 1%⁽¹⁾ of the net asset value of the Partnership as at the beginning of theyear.

6. Units of the Partnership will be distributed directly by the Partnership and not by aregistered dealer.

7. Units of the Partnership may only be acquired in amounts of a minimum of $10,000or such greater amount as the Partners may decide.

8. A prospectus will not be filed in respect of the distribution of Units.

9. Units of the Partnership may not be transferred except to persons referred to inparagraph 3 who could be admitted as Partners.

10. An invitation to the public (i.e. to persons who would not qualify to be Partners) tosubscribe for Units of the Partnership will be prohibited.

11. Units of the Partnership will be redeemable, monthly, at the demand of the Partners,subject to certain limitations.

12. The Partnership will prepare and deliver annually to Partners, within 120 days fromthe end of its last financial year end, as required under the Agreement, financialstatements (the "Financial Statements") prepared in accordance with generallyaccepted accounting principles. The Financial Statements will include the financialstatements required to be prepared by a "mutual fund in Ontario" (other than astatement of portfolio transactions) under the Regulations under the Act, but theFinancial Statements will not be audited. The Partnership will not prepare or deliverany interim financial statements. The Partnership will prepare and deliver toPartners a semi-annual report of portfolio holdings. The Partnership will prepareand deliver the necessary forms and information to enable Partners to completetheir income tax returns under the Income Tax Act (Canada).

13. The Partnership will be a "mutual fund in Ontario" as defined in the Act but will notbe a "private mutual fund" as defined in the Act because the number of Partnersmay be in excess of 50 and because one or more members of the ManagementBoard may receive a salary from the Partnership in respect of their participation onthe Management Board.

14. Paragraph 25(1)(a) of the Act prohibits the distribution of Units of the Partnershipby the Partnership unless the Partnership is registered as a dealer.

15. Section 53 of the Act prohibits the distribution of Units of the Partnership by thePartnership unless the Partnership prepares and files a prospectus.

16. Section 77 of the Act requires every mutual fund in Ontario to file Interim RegulatoryStatements within 60 days of the date to which they are made up. However it is notclear because paragraphs 77(2)(a) and (b) of the Act refer only to "reportingissuers", that a mutual fund in Ontario which is not a "reporting issuer" is subject tosection 77.

17. Section 78 of the Act requires every mutual fund in Ontario to file AnnualRegulatory Statements annually, within 140 days from the end of its last financialyear.

18. Interim Regulatory Statements and Annual Regulatory Statements filed undersections 77 and 78 of the Act must be filed through SEDAR and as result becomepublicly available.

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

IT IS ORDERED, pursuant to section 74 of the Act that the Partnership is exemptfrom the requirements in Section 25 and Section 53 of the Act;

AND IT IS ORDERED, pursuant to section 147 of the Act that the Partnership isexempt from the requirements of Sections 77 and 78 of the Act on the conditions that:

(a) the Partnership delivers to the partners the Financial Statements annually,within 120 days from the end of its last financial year;

(b) the Financial Statements be prepared in accordance with the requirementsof Part IV of the Regulations, other than the requirement to prepare astatement of portfolio transactions and the requirement that the FinancialStatements be audited by the Partnership's auditors; and

(c) the Financial Statements and records of all portfolio transactions bemaintained with the records of the Partnership and be available to beprovided to the Commission immediately upon the request of theCommission.

January 28th, 2000.

"Howard I. Wetston"      "Theresa McLeod"

¹This percentage may be changed by the Partners.