MRRS- Exemption from requirement to file AIF pursuant to Part 9 of NI 81-106- flow through limited partnership- limited partnership is closed end, has a short life span, has no readily available secondary market, and limited business activity- limited partners have adequate disclosure in the prospectus, financial statements and MRFP- cost of producing AIF outweighs any benefit to limited partners-relief not prejudicial to public interest.
Citation: EnerVest FTS Limited Partnership 2005, 2007 ABASC 128
March 23, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEMS
FOR EXEMPTIVE RELIEF APPLICATION
IN THE MATTER OF
ENERVEST FTS LIMITED PARTNERSHIP 2005
MRRS DECISION DOCUMENT
1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the annual information form filing requirement in section 9.2 of National Instrument 81-106 - Investment Fund Continuous Disclosure (NI 81-106) pursuant to section 17.1 thereof (the Requested Relief).
Application of Principal Regulator System
2. Under Multilateral Instrument 11-101 -- Principal Regulator System (MI 11-101) and the Mutual Reliance Review System for Exemptive Relief applications (MRRS):
(a) the Alberta Securities Commission (ASC) is the principal regulator for the Filer;
(b) the Filer is relying on the exemption in Part 3 of MI 11-101 in British Columbia, Saskatchewan and Manitoba; and
(c) this MRRS decision document evidences the decision of each Decision Maker.
3. Defined terms contained in National Instrument 14-101 -- Definitions have the same meaning in this decision unless they are otherwise defined in this decision.
4. This decision is based on the following facts represented by the Filer:
(a) the Filer was formed with the investment objective of providing its limited partners with a tax-assisted investment in a diversified portfolio of flow-through common shares (Flow-Through Shares) of resource companies (Resource Companies) with the view to achieving capital appreciation. The Resource Companies are involved in oil and gas exploration and development in Canada that will incur and renounce to the Filer, in amounts equal to the subscription price of the Flow-Through Shares, expenditures in respect of resource exploration and development which qualify as Canadian exploration expenses (CEE) or as Canadian development expenses (CDE) which may be renounced as CEE.
(b) The Filer is a limited partnership formed pursuant to the Partnership Act (Alberta) on January 27, 2005. The Filer received a receipt dated November 17, 2005, issued under MRRS by the ASC on behalf of each of the provincial regulators that are Decision Makers with respect to a (final) prospectus dated November 17, 2005 (Prospectus), offering for sale up to 600,000 limited partnership units of the Filer at a price of $25 per unit. As indicated in the Prospectus and the limited partnership agreement of the Filer dated November 17, 2005 (Limited Partnership Agreement), the Filer indicated that it intended to implement a transaction, on or before March 31, 2007, pursuant to which the assets of the Filer would be transferred to EnerVest Natural Resources Fund Ltd. (EnerVest Fund), a mutual fund corporation, on a tax deferred basis, in exchange for mutual fund shares of EnerVest Fund (Fund Shares). The Fund Shares would then be distributed to the limited partners of the Filer pro rata on a tax deferred basis upon the dissolution of the Filer (the Fund Rollover Transaction). The Limited Partnership Agreement states that if the Fund Rollover Transaction is not implemented by March 31, 2007, the Filer will be terminated and the limited partners of the Filer will receive their pro rata share of the net assets of the Filer. The dissolution of the Filer may be extended to a later date at the discretion of the general partner of the Filer, such date not to be later than December 31, 2007.
(c) The limited partnership units of the Filer are not and will not be listed or quoted for trading on any stock exchange or market and are also not redeemable by the limited partners.
(d) The Filer is a reporting issuer in the Jurisdictions and is not in default of its obligations as a reporting issuer under the Legislation of any Jurisdiction in which it is a reporting issuer or its equivalent.
(e) The principal office of the Filer is located at 2800, 700 - 9th Avenue S.W., Calgary, Alberta, T2P 3V4.
(f) Since its formation, the Filer's activities have been limited to: (i) completing the issue of the units under the Prospectus, (ii) investing its available funds in accordance with its investment objectives, and (iii) incurring expenses as described in the Prospectus.
(g) Unless a material change takes place in the business and affairs of the Filer, the limited partners of the Filer will obtain adequate financial information from the Filer's annual and interim financial statements and management report of fund performance. The Prospectus, the financial statements and management report of fund performance provide sufficient information necessary for a limited partner to understand the Filer's business, financial position and future plans, including the Fund Rollover Transaction.
(h) Given the limited range of business activities to be conducted by the Filer, the short duration of its existence and the nature of the investment in the Filer, the preparation and distribution of an AIF by the Filer will not be of any benefit to the Filer's limited partners and may impose a material financial burden on the Filer. Upon the occurrence of any material change affecting the Filer, its limited partners would receive all relevant information from the material change reports the Filer would be required to file with the Decision Makers.
5. The Decision Makers being satisfied that they each have jurisdiction to make this decision and that the relevant test under the Legislation has been met, the Requested Relief is granted provided that this exemption shall terminate upon the occurrence of a material change in the affairs of the Filer (excluding the occurrence of the Fund Rollover Transaction) unless the Filer satisfies the Decision Makers that the exemptions should continue, which satisfaction shall be evidenced in writing.