Securities Law & Instruments

Headnote

National Instrument 33-105 - Issuer proposingto make public offering of units - filer proposing to underwriteapproximately 4.0% of the offering - filer prohibited from actingas direct underwriter in the distribution since the issuer isa related issuer of the filer - filer unable to rely on exemptionin subsection 2.1(3) of NI 33-105 since the proportionate shareof the offering to be underwritten by the largest independentunderwriter is 6.0% - independent underwriters in the aggregatewill collectively underwrite approximately 9.0% of the offering- relief granted from subsection 2.1 of NI 33-105 in connectionwith the offering.

Applicable Rules

National Instrument 33-105 Underwriting Conflicts.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,ONTARIO, QUEBEC, NOVA SCOTIA,

NEW BRUNSWICK, PRINCE EDWARDISLAND AND NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANACCORD CAPITAL CORPORATION

 

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of the Provinces of British Columbia, Alberta, Ontario,Québec, Nova Scotia, New Brunswick, Prince Edward Islandand Newfoundland and Labrador has received an applicationfrom Canaccord Capital Corporation ("Canaccord")for a decision under section 5.1 of National Instrument 33-105-- Underwriting Conflicts ("NI 33-105") that Canaccordbe exempt from section 2.1(2)(b) of NI 33-105, which prohibitsa registrant from acting as a direct underwriter in a distributionif a related issuer of the registrant is the selling securityholderin the distribution;

2. AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the British Columbia Securities Commission has requested,for the purposes of regulatory expediency, that the AlbertaSecurities Commission act as the principal regulator for thisapplication, and the Alberta Securities Commission has agreedto so act;

3. AND WHEREAS Canaccord has represented tothe Decision Makers that:

3.1 Canaccord's head office is located inVancouver, British Columbia;

3.2 Superior Plus Income Fund ("Superior")is an unincorporated trust created under the laws of theProvince of Alberta which completed its initial public offeringin September, 1996;

3.3 Superior's head office and registeredoffice is located in Calgary, Alberta;

3.4 Superior was established as a limitedpurpose trust and its activities are restricted to owning,acquiring, holding and transferring securities of SuperiorPlus Inc. and to certain other ancillary purposes. SuperiorPlus Inc. has three operating divisions, carrying on thebusinesses of (A) distributing propane, related productsand services in Canada, (B) supplying sodium chlorate, chlorinedioxide generators and related technology in North Americaand developing new generators and technology for the waterpurification and food treatment industries and (C) retailingnatural gas in Ontario;

3.5 the authorized capital of Superior consistsof an unlimited number of trust units (the "Units").The Units are listed on the Toronto Stock Exchange;

3.6 Superior is currently a "reportingissuer" or equivalent in each of the provinces andterritories of Canada;

3.7 Superior is not in financial difficulty.Superior is not under any immediate financial pressure toproceed with an offering of Units;

3.8 on May 26, 2003, Superior announcedthat it had entered into a bought deal (the "Offering")with Scotia Capital Inc., as the lead underwriter. It isproposed that the syndicate will include Scotia CapitalInc., CIBC World Markets Inc., RBC Dominion Securities Inc.,TD Securities Inc., National Bank Financial Inc., BMO NesbittBurns Inc., Canaccord, Desjardins Securities Inc., FirstEnergyCapital Corp. and HSBC Securities (Canada) Inc. (the "Underwriters").Under the Offering, Superior will issue 4,500,000 Units,and certain unitholders of Superior (the "SellingUnitholders") will sell 3,500,000 Units, each ata price of $20.90 per Unit. The Selling Unitholders havegranted the Underwriters an option (the "Option")to expand the size of the Offering by up to an additional1,257,956 Units up to 48 hours prior to closing;

3.9 the proportionate share of the Offeringproposed to be underwritten by each of the Underwritersis as follows:

Scotia Capital Inc.
30.0%
CIBC World Markets Inc.
15.0%
RBC Dominion Securities Inc.
15.0%
TD Securities Inc.
15.0%
National Bank Financial Inc.
12.0%
BMO Nesbitt Burns Inc.
6.0%
Canaccord
4.0%
Desjardins Securities Inc.
1.0%
FirstEnergy Capital Corp.
1.0%
HSBC Securities (Canada) Inc.
1.0%

3.10 it is anticipated that a preliminaryprospectus relating to the Offering will be filed on May28, 2003. The preliminary prospectus and the (final) prospectusrelating to the Offering (together, the "Prospectus")will contain a certificate signed by each of the Underwriters;

3.11 one of the Selling Unitholders is TheManufacturers Life Insurance Company ("Manulife").Manulife will sell 557,278 Units under the Offering (increasingto 757,572 Units if the Option is exercised by the Underwritersin full);

3.12 Manulife owns 1,904,762 of the Class"C" common shares and certain convertible debenturesof Canaccord Holdings Ltd., which represents more than 20%of the outstanding voting and equity securities of CanaccordHoldings Ltd. on a fully diluted basis. Canaccord is a wholly-ownedsubsidiary of Canaccord Holdings Ltd.;

3.13 Scotia Capital Inc., CIBC World MarketsInc., RBC Dominion Securities Inc., TD Securities Inc. andNational Bank Financial Inc. (the "Connected Registrants")are each, directly or indirectly, a wholly-owned or majorityowned subsidiary of a Canadian chartered bank which is alender to Superior Plus Inc. Superior Plus Inc. is wholly-ownedby Superior;

3.14 the Prospectus will contain the informationrequired to be disclosed pursuant to Appendix C to NI 33-105;

3.15 pursuant to sections 1.1 and 1.2 ofNI 33-105, Manulife is a "related issuer" of Canaccord,since it is an "influential securityholder" ofCanaccord by virtue of its securityholdings in CanaccordHoldings Ltd.;

3.16 by virtue of the lending arrangementswith the parent companies of the Connected Registrants,Superior may be considered a "connected issuer"to each Connected Registrant;

3.17 BMO Nesbitt Burns Inc., DesjardinsSecurities Inc., FirstEnergy Capital Corp. and HSBC Securities(Canada) Inc. are "independent underwriters" withinthe meaning of NI 33-105;

3.18 section 2.1(2)(b) of NI 33-105 prohibitsa registrant from acting as a direct underwriter in a distributionmade under a prospectus if a related issuer of the registrantis a selling securityholder in the distribution;

3.19 section 2.1(3)(a) of NI 33-105 providesfor an exemption from section 2.1(2) if at least one registrantacting as direct underwriter acts as principal, so longas an independent underwriter underwrites not less thanthe lesser of (A) 20% of the dollar value of the distribution,and (B) the largest portion of the distribution underwrittenby a registrant that is not an independent underwriter.Under the Offering, no independent underwriter will underwrite20% or more of the dollar value of the distribution, andthe largest portion of the distribution is not being underwrittenby an independent underwriter;

3.20 the only financial benefits which Canaccordwill receive as a result of the Offering are the normalarm's length underwriting commission and possible reimbursementof expenses associated with a public offering in Canada;

3.21 Canaccord did not participate in thedecision to make the Offering or in the determination ofthe terms of the distribution or the use of proceeds thereofexcept to the extent that the lead underwriter of the Offeringwas entering into the bought deal arrangements on behalfof those underwriters that ultimately would be part of theunderwriting syndicate;

4. AND WHEREAS, under the System, this MRRSDecision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

5. AND WHEREAS each of the Decision Makersis satisfied that it would not be prejudicial to the publicinterest to make the Decision;

6. THE DECISION of the Decision Makers undersection 5.1 of NI 33-105 is that Canaccord is exempt fromthe provisions of section 2.1(2)(b) of NI 33-105 in connectionwith the Offering.

May 29, 2003.

"Glenda A. Campbell"
"Stephen R. Murison"