Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications -- Limited Partnership exempt from prospectusand registration requirements in connection with issuance ofunits to existing unitholders under a distribution reinvestmentplan whereby distributions of income are reinvested in additionalunits of the limited partnership, subject to certain conditions-- first trade relief provided for additional units, subjectto certain conditions.

Statues Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 53, 72(5), 74(1).

Rules Cited

Rule 45-502 Dividend or Interest Reinvestmentand Stock Dividend Plans 21 OSCB 3685.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, SASKATCHEWAN,MANITOBA,

ONTARIO, QUÉBEC, NEWBRUNSWICK, NOVA SCOTIA,

PRINCE EDWARD ISLAND, ANDNEWFOUNDLAND AND

LABRADOR

AND

THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

INTER PIPELINE FUND

 

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of British Columbia, Saskatchewan, Manitoba, Ontario,Québec, Nova Scotia, New Brunswick, Prince Edward Island,Newfoundland and Labrador (the "Jurisdictions")has received an application from INTER PIPELINE FUND ("InterPipeline" or the "Partnership") for a decision,pursuant to the securities legislation of the Jurisdictions(the "Legislation"), that the requirements containedin the Legislation to be registered to trade in a securityand to file and obtain a receipt for a preliminary prospectusand a prospectus (the "Prospectus and Registration Requirements")shall not apply to certain trades in units of Inter Pipelineissued pursuant to a distribution reinvestment plan;

2. AND WHEREAS pursuant to the MutualReliance Review System for Exemptive Relief Applications (the"System") the Ontario Securities Commission is theprincipal regulator for this application;

3. AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

4. AND WHEREAS Inter Pipeline has representedto the Decision Makers that:

4.1 Inter Pipeline was registered as a LimitedPartnership under the laws of the Province of Alberta onOctober 9, 1997 under the name Koch Pipelines L.P. and subsequentlychanged its name to Inter Pipeline Fund on November 12,2002.

4.2 Inter Pipeline is a reporting issuerin each of the provinces of Canada. To its knowledge, InterPipeline is not in default of any requirements under theLegislation.

4.3 Pipeline Management Inc. is the GeneralPartner of the Partnership. The General Partner holds a0.1% Partnership interest represented by Class B Units andpublic investors hold the remaining 99.9% Partnership interest,as limited partners, which interest is represented by theUnits.

4.4 The Partnership's Units are listed andposted for trading on the Toronto Stock Exchange.

4.5 The General Partner's head office andprincipal place of business is located at 1400, 111 -- 5thAvenue S.W., Calgary, Alberta, T2P 3Y6.

4.6 Inter Pipeline currently makes and expectsto continue to make quarterly (or more frequent) cash distributions("Cash Distributions") to the holders of Units("Unitholders"). The cash distribution of InterPipeline for any quarter is dependent upon the amount ofdistributable cash generated from Inter Pipeline's pipelineassets.

4.7 Inter Pipeline is not a "mutualfund" under the Legislation as the holders of Unitsare not entitled to receive on demand an amount computedby reference to the value of a proportionate interest inthe whole or in part of the net assets of Inter Pipeline,as contemplated by the definition of "mutual fund"in the Legislation.

4.8 Inter Pipeline has authorized the establishmentof a plan (the "Plan") pursuant to which ClassA Unitholders, who are Eligible Investors (as defined below)may elect to reinvest their cash distributions in Unitsacquired through the facilities of the TSX or, at the discretionof the Partnership, subscribe for new Units of the Partnership(the "Distribution Reinvestment Option") or maysubscribe for new Units of the Partnership by making optionalcash payments (the "Cash Payment Option") (suchnew Units are referred to herein as the "AdditionalUnits").

4.9 Except as described below, a registeredholder of Units is eligible to join the Plan at any timeby completing an authorization form and sending it to ComputershareTrust Company of Canada (the "Plan Agent"). Beneficialowners of Units whose Units are not registered in the nameof another person such as a broker, investment dealer, financialinstitution or other nominee, may participate in the Planafter having their Units transferred into their own namesor by directing the registered holder to enrol their accountin the Plan.

4.10 A registered holder shall become aparticipant in the Plan in regard to the investment of distributionsas of the first distribution record date (a "RecordDate") following receipt by the Plan Agent of a dulycompleted authorization form no later than five businessdays prior to the Record Date. Beneficial owners of Unitswhich are registered through a nominee in the name of CDS& Co., or its nominee, must deliver such AuthorizationForm to CDS & Co. no later than six business days priorto such Record Date and also prior to such other deadlineas may be set by CDS & Co. from time to time. If anauthorization form is received by the Plan Agent later thanfive business days prior to the Record Date for a particularcash distribution, the cash distribution will be paid tothe holder of Units in the usual manner and participationin the Plan with regard to cash distributions will commencewith the next Record Date.

4.11 Under the Cash Payment Option, furtherpayments of not less than $500.00 per remittance and notmore than $100,000.00 per calendar year may be made by anyparticipant in the Plan by forwarding a certified chequeor money order to the Plan Agent in Canadian dollars payableto the Plan Agent together with an optional cash paymentform. Cash payments may be made at any time but only thosepayments received five or more business days before a RecordDate, will be applied to the purchase of Units on the cashdistribution payment date ("Cash Distribution Date")for that Record Date. Payments received four or less businessdays before, or on or after, a Record Date, will be heldby the Plan Agent for investment on the Cash DistributionDate following the next Record Date. Neither the Plan Agentnor the Partnership has any obligation to or will pay intereston these funds.

4.12 The number of Units which may be issuedeach fiscal year pursuant to the Cash Payment Option willnot be more than 2% of the number of issued and outstandingUnits at the commencement of such fiscal year. Once thatlimit is reached, cash payments will not be accepted untilthe next fiscal year and cash payments received for thecurrent Cash Distribution Date will be invested pro rata.Any excess funds will be returned to each contributing Unitholderas required.

4.13 Like investment in the Units, the Planis not available to persons who are not Eligible Investors.An "Eligible Investor" is a person other thana person who is, or who acts on behalf of a person who willhave a beneficial interest in Units who is, in either case,(i) a "non-resident" within the meaning of theIncome Tax Act (Canada) and the regulations thereunder,as amended (the "Tax Act") or a partnership thatis not a "Canadian partnership" under the TaxAct, or (ii) a person an interest in which would be a "taxshelter investment" as defined in the Tax Act.

4.14 Cash distributions payable on the Unitsregistered in the Plan, will be applied automatically oneach Cash Distribution Date to the purchase of Units eitherthrough the facilities of the TSX following the Cash DistributionDate or, at the discretion of the Partnership, from treasury.

4.15 Optional cash payments to the Planwill be applied to the purchase of additional new Unitson the Cash Distribution Date following Record Dates wherecompleted authorization forms have been received. A participant'saccount will be credited with the number of new Units, includingfractions computed to four decimal places, which is equalto the amount to be invested for such participant dividedby the applicable purchase price.

4.16 Full investment of funds under thePlan is possible because fractions of Units as well as wholeUnits are credited to a participant's account. The roundingof any fractional interest is determined by the Plan Agentusing such method as it deems appropriate in the circumstances.

4.17 The price at which the participantspurchase new Units will be based upon the average pricefor which Units are acquired through the facilities of theTSX for the purposes of the Plan within 10 trading daysfollowing the Cash Distribution Date. In the event thatthe Partnership elects not to purchase, with cash distributions,any Units through the facilities of the TSX in respect toany Cash Distribution Date, but to issue new Units fromtreasury, the price at which the new Units shall be issuedwill be 95% of the weighted average price of all Units tradedon the TSX on the 10 trading days preceding the Cash DistributionDate (the "Treasury Purchase Price"). The priceof new Units purchased with the optional cash payments willalso be the Treasury Purchase Price.

4.18 There is no charge to participantsfor reinvesting distributions. The Plan Agent's fees forhandling the reinvestment of distributions will be paidby the Partnership. There will be no brokerage charges withrespect to Units either issued directly from treasury orpurchased in the open market.

4.19 Participation in the Plan may be terminatedby duly completing a termination request form and deliveringit to the Plan Agent, signed by the registered holder orhis or her agent. The termination request form must be receivedby the Plan Agent at least five business days before theRecord Date, otherwise settlement of the participant's accountwill not commence until after the investment has been completedand statements generated.

5. AND WHEREAS under the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

6. AND WHEREAS each of the DecisionMakers is satisfied that the test contained in the Legislationthat provides the Decision Maker with the jurisdiction tomake the Decision has been met;

7. AND WHEREAS the Decision of theDecision Makers pursuant to the Legislation is that the tradesof Additional Units by Inter Pipeline to the Plan Agent forthe account of Participants pursuant to the Plan shall notbe subject to the Prospectus and Registration Requirementsof the Legislation provided that:

7.1 at the time of the trade Inter Pipelineis a reporting issuer or the equivalent under the Legislationand is not in default of any requirements of the Legislation;

7.2 no sales charge is payable in respectof the trade;

7.3 Inter Pipeline has caused to be sentto the person or company to whom the Additional Units aretraded, not more than 12 months before the trade, a statementdescribing:

7.3.1 their right to withdraw from thePlan and to make an election to receive cash instead ofUnits on the making of a distribution of income by InterPipeline, and

7.3.2 instructions on how to exercisethe right referred to in paragraph 7.3.1;

7.4 the aggregate number of Additional Unitsissued under the Cash Payment Option of the Plan in anyfinancial year of Inter Pipeline shall not exceed 2% ofthe aggregate number of Units outstanding at the start ofthat financial year;

7.5 except in Québec, the first tradein Additional Units acquired pursuant to this Decision willbe a distribution or primary distribution to the publicunless the conditions in subsections 2.6(3) or (4) of MultilateralInstrument 45-102 - Resale of Securities are satisfied;and

7.6 in Québec, the first trade inAdditional Units acquired pursuant to this Decision willbe a distribution unless:

7.6.1 the issuer is and has been a reportingissuer in Québec for the 12 months preceding thealienation;

7.6.2 no unusual effort is made to preparethe market or to create a demand for the securities thatare the subject of the alienation;

7.6.3 no extraordinary commission or otherconsideration is paid in respect of the alienation;

7.6.4 if the seller of the securitiesis an insider of the issuer, the seller has no reasonablegrounds to believe that the issuer is in default of anyrequirement of securities legislation.

April 4, 2003.

"Howard I. Wetston"
"Theresa McLeod"