Caranci, Mark et al.

Headnote

Section 4.1 of National Instrument 31-103 Registration Requirements and Exemptions -- individuals registered with a firm prohibited from acting as officer, partner or director of another registered firm that is not an affiliate of the first mentioned firm -- individuals were officers prior to application of 31-103 to the firm -- although not technically affiliates, under common control by contractual arrangement - policies in place to handle potential conflicts of interest -- disclosure of relationships made to clients -- Filers exempted from prohibition.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss. 4.1, 15.

May 4, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(The "Jurisdiction")

AND

IN THE MATTER OF

MARK CARANCI, CRAIG KIKUCHI AND

MOYRA E. MACKAY

(the "Filers")

DECISION

Background

The regulator in the Jurisdiction has received an application from the Filers (the "Application") for a decision under the securities legislation of the Jurisdiction of the regulator (the "Legislation") that allows the Filers to continue to act as officers and/or directors of Blue Ribbon Fund Management Ltd. ("Blue Ribbon") upon registration of Blue Ribbon under the Legislation in the category of investment fund manager (the "Exemption Sought").

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts represented by the Filers:

1. The Filers are registered in Ontario as representatives of Brompton Funds Management Limited ("BFML"), specifically: (a) Mark Caranci ("Caranci") is registered as a dealing representative, (b) Craig Kikuchi ("Kikuchi") is registered as an associate advising representative, and (c) Moyra E. MacKay ("MacKay") is registered as a dealing representative.

2. BFML is registered in Ontario as a dealer in the category of exempt market dealer as an investment fund manager, and as an adviser in the category of portfolio manager.

3. BFML is subject to the restrictions and requirements in Part 13 of NI 31-103 regarding conflict of interest matters.

4. BFML acts as a portfolio manager to various publicly traded closed-end investment trusts. These funds are subject to the requirements of National Instrument 81-107 - Independent Review Committee for Investment Funds ("NI 81-107") and therefore must comply with the requirements relating to conflict of interest matters, inter-fund trades and transactions in securities of related issuers.

5. The Filers are officers and/or directors of BFML, specifically: (a) Caranci is Director President and Chief Executive Officer, (b) Kikuchi is Chief Financial Officer, and (c) MacKay is Corporate Secretary and Vice President.

6. BFML is a wholly-owned subsidiary of Brompton Corp.

7. The Filers are officers and/or directors of Brompton Corp., specifically: (a) Caranci is a Director, President, and Chief Executive Officer, (b) Kikuchi is Chief Financial Officer, and (c) MacKay is Vice President and Corporate Secretary.

8. Blue Ribbon was incorporated under the laws of the Province of Ontario on July 10, 2009 and its head office is located at Suite 2930, Bay Wellington Tower, Brookfield Place, 181 Bay Street, Toronto, Ontario.

9. The Filers are officers and/or directors of Blue Ribbon, specifically: (a) Caranci is a Director and the President, (b) Kikuchi is the Chief Financial Officer, and (c) MacKay is the Corporate Secretary. Caranci was appointed Director in July 2009 and was appointed President in September 2009. The remaining Filers were appointed to their positions in November 2009.

10. BFML has policies and procedures in place to address material conflicts of interest that may arise as a result of the Filers acting as directors and/or officers of Blue Ribbon.

11. Blue Ribbon is an investment fund manager, as defined under the Legislation.

12. Pursuant to an Administrative Services Agreement, dated November 20, 2009 Blue Ribbon has the exclusive authority to manage the operations and affairs of Blue Ribbon Income Fund (the "Fund") and to make all decisions regarding the business of the Fund. The Fund is a closed-end investment trust with units listed for trading on the Toronto Stock Exchange.

13. Pursuant to a Declaration of Trust, dated September 24, 2009, Blue Ribbon has the exclusive authority to manage the business, operations and affairs of Blue Ribbon Private Pooled Fund (the "Private Fund"). The Private Fund is inactive and has nominal assets.

14. Blue Ribbon does not act as and does not intend to act as investment fund manager for any other funds.

15. Pursuant to a Sub-Administrative Services Agreement, dated November 20, 2009 (the "Subcontract"), Blue Ribbon delegated to BFML some of the responsibility for providing management and administrative services to the Fund.

16. The Filers' affiliation with Brompton Corp. is included in public disclosures for the Fund, including the Fund's prospectus and annual information form.

17. The authorized capital of Blue Ribbon consists of an unlimited number of Common Shares and an unlimited number of Preferred Shares. Currently, all Common Shares are held by Bloom Investment Counsel, Inc. ("Bloom"), and all Preferred Shares are held by Brompton Corp.

18. Bloom and Brompton Corp. entered into a Unanimous Shareholders Agreement, dated November 20, 2009 (the "USA").

19. The USA entitles Brompton Corp. to nominate one member of the board of directors of Blue Ribbon (the "Brompton Director"). Caranci was appointed as the Brompton Director.

20. The number of directors of Blue Ribbon is currently fixed at three members. The Brompton Director must be in attendance to constitute a quorum for the transaction of business at any meeting of the board of directors (other than with respect to meetings that deal solely with the declaration or payment of any dividend or distribution).

21. The USA provides Brompton Corp. with certain rights in the relation to the operation of Blue Ribbon and requires the written consent of Brompton Corp. for fundamental actions and changes.

22. Bloom is registered in Ontario and Alberta as an adviser in the category of portfolio manager.

23. Pursuant to an Investment Management Agreement, dated November 20, 2009, Bloom provides portfolio management services to the Fund.

24. Bloom is subject to the restrictions and requirements in Part 13 of NI 31-103 regarding conflict of interest matters.

25. The Fund is subject to the requirements of NI 81-107 and therefore must comply with the requirements relating to conflict of interest matters, inter-fund trades and transactions in securities of related issuers.

26. Blue Ribbon was required by Part 16 of NI 31-103 to apply for registration in Ontario as an investment fund manager by no later than September 28, 2010.

27. At the time of being appointed directors and/or officers of Blue Ribbon, the Filers were not precluded by any laws from being so appointed, however, upon registration of Blue Ribbon as an investment fund manager the Filers will be in contravention of section 4.1 of NI 31-103.

28. In effect, the structure of the relationship between Blue Ribbon and Brompton Corp. is similar to the situation whereby Brompton Corp. owns equity shares of Blue Ribbon, which would make Blue Ribbon an affiliate. In particular, Brompton Corp. has an ownership interest (albeit non-voting) in Blue Ribbon and under the USA, Blue Ribbon cannot, without the consent of Brompton Corp., enter into any administrative agreements to administer other funds, amalgamate, merge or combine with any other entity or terminate the Subcontract pursuant to which BFML administers and manages the Fund. Although Blue Ribbon is not technically an affiliate of Brompton Corp. or BFML, it is restricted in the business activities it can undertake without Brompton Corp.'s consent.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted.