Securities Law & Instruments


Variation order granted to labour sponsoredinvestment fund corporation to permit it to pay certain revisedspecified distribution costs out of fund assets contrary tosection 2.1 of National Instrument 81-105 Mutual Fund SalesPractices.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.s. 144.

Rules Cited

National Instrument 81-105 Mutual Fund SalesPractices.



1990, C.S-5, AS AMENDED (the"Act")










(Section 144 of the Act)

WHEREAS the Ontario Securities Commission(the "Commission") issued an order dated December22, 2000 (the "Prior Order") pursuant to section 9.1of the NI 81-105 upon the application of Working Ventures IITechnology Fund Inc. (the "Fund"). The Prior Ordergranted relief from section 2.1 of the NI 81-105 in respectof the Fund paying certain payments to participating dealersor their representatives;

AND WHEREAS the Fund has applied to theCommission for an order, pursuant to section 144 of the Act,varying the Prior Order to incorporate proposed revisions tothe Current Commission Structure (defined herein);

AND WHEREAS the Fund has representedto the Commission that:

1. The Fund is a labour-sponsored venturecapital corporation and a mutual fund under the Act.

2. The outstanding capital of the Fund consistsof Class A Shares, which are widely held, 1,000 Class B Sharesheld by the Canadian Federation of Labour and 1,500,000 ClassC Shares, Series I, which are held by Working Ventures CanadianFund Inc.

3. Class A Shares of the Fund are qualifiedfor distribution in all provinces and territories of Canada,under a prospectus dated January 10, 2002 and a prospectusamendment dated October 17, 2002. A pro forma prospectusdated December 11, 2002 was filed with the securities regulatoryauthorities in all provinces and territories of Canada exceptBritish Columbia (the " Pro Forma Prospectus").

4. All of the representations of the Fundcontained in the Prior Order continue to be true and correctin all material respects as of the date hereof, except asotherwise provided herein.

5. The Fund received shareholder approval,on January 6, 2003, to change its investment objective tofocus on making investments in small and medium-sized Canadianbusinesses with the objective of achieving long-term capitalappreciation. The Fund also received shareholder approvalfor a change of name to "Working Ventures OpportunityFund Inc." on January 6, 2003.

6. The Fund proposes to change the sales commissionstructure of the Fund. Currently, the Fund pays registereddealers selling Class A Shares of the Fund a sales commissionof 6% of the subscription price, and a service fee of 0.5%per annum of the average net asset value of Class A Sharesheld by the clients of the dealers (the "Current CommissionStructure").

7. The Fund proposes to pay registered dealersselling Class A Shares of the Fund the following revised commissionstructure:

a) a sales commission of 6% of the subscriptionprice of the Class A Shares (the "Existing Commission"),

b) an additional commission of up to 4%(the "Additional Commission") on the subscriptionprice of Class A Shares in lieu of any service fees beingpayable before the eighth anniversary of the issue of theClass A Shares, and

c) after the eighth anniversary of the issueof the Class A Shares, the Fund would pay a service feeto dealers equal to 0.5% per annum of the average net assetvalue of Class A Shares held by clients of the registereddealers (the "Service Fee").

The Existing Commission, Additional Commissionand the Service Fees are referred to collectively as the"Distribution Costs".

8. The management of the Fund is currentlyin a transition period from Working Ventures Investment ServicesInc. (the "Manager") to GrowthWorks WV ManagementLtd. The changes to the management of the Fund have been previouslyapproved by the shareholders of the Fund on November 25, 2002and the Commission on November 28, 2002.

9. The Pro Forma Prospectus containsfull, true and plain disclosure in the summary section ofthe Pro Forma Prospectus relating to the proposed newcommission structure.

10. For accounting purposes, the Fund will:

(a) defer and amortize the amount paid orpayable in respect of the Additional Commission to incomeon a straight line basis over eight years; and

(b) expense the Service Fee in the fiscalperiod when incurred.

11. Unless the Prior Order is amended, therelief granted under the Prior Order would not allow the Fundto directly pay sales commissions based on the proposed newstructure as described in paragraph 7.

AND WHEREAS the Commission is satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 144of the Act, the Commission hereby varies the Prior Order byreplacing paragraphs 8 and 9 of the Prior Order with the following:

"8. It is proposed that the Fund paya sales commission in an amount of up to 6% of the subscriptionprice of Class A Shares sold by the dealer, plus up to 4%of the subscription price of the Class A Shares in lieuof any service fees payable before the eighth anniversaryof the date of issue of the Class A Shares. After the eighthanniversary of the date of issue of the Class A Shares,the Fund would pay a service fee to registered dealers equalto 0.5% per annum of the average daily net asset value ofthe Class A Shares held by registered dealers. Currently,one percent of the net asset value of the Fund is paid bythe Fund to AGF Management Limited for sales, distributionand certain administrative services, including sub-distributionof the Class A Shares. The Fund may enter into co-operativeadvertising programs with participating dealers distributingClass A Shares in compliance with the National Instrument."

THIS VARIATION ORDER is subject to thefollowing conditions:

a) the Distribution Costs are otherwisepermitted by, and paid in accordance with NI 81-105;

b) the Distribution Costs are accountedfor in the Fund's financial statements in the manner describedin paragraph 10 above;

c) the summary section (the "SummarySection") of the (final) prospectus of the Fund hasfull, true and plain disclosure describing the commissionof Class A Shares, as an initial sales commission of upto 10%, plus service fees after eight years. The SummarySection must be placed within the first 10 pages of the(final) prospectus;

d) the (final) prospectus has full, trueand plain disclosure explaining the services and value thatthe registered dealers would provide to investors in returnfor the Service Fee payable to them;

e) the Summary Section of the (final) prospectushas full, true and plain disclosure explaining to investorsthat:

i) they pay the Existing Commission andthe Additional Commission indirectly, as the Fund paysthese commissions using investors' subscription proceeds,and

ii) a portion of the net asset value ofthe Fund is comprised of a deferred commission, ratherthan an investment asset; and

f) this VARIATION ORDER shall cease to beoperative on the date that a rule replacing or amendingsection 2.1 of NI 81-105 comes into force.

January 13, 2003.

"Kerry D. Adams"                    "RobertL. Shirriff"