Faircourt Split Trust and Faircourt Asset Management Inc.

Decision

Headnote

Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, the Trust and the Manager are exempted from the dealer registration requirement for certain limited trading activities to be carried out by these parties in connection with a warrant offering by the Trust, as the limited trading activities involve: i) the forwarding of a short form prospectus and the distribution of the Series A Warrants to acquire Trust Units, Preferred Securities and Series B Warrants to existing Unit holders and ii) the subsequent distribution of securities to existing Unit holders, upon their exercise of the Series A Warrants, through an appropriately registered dealer.

Applicable Legislative Provisions

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

Multilateral Instrument 11-102 Passport System, s. 4.7(1)

National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.1, 3.1, 3.42 and 8.5

National Instrument 31-103, Registration Requirements and Exemptions, s. 8.5

August 26, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

FAIRCOURT SPLIT TRUST

(the Trust)

AND

FAIRCOURT ASSET MANAGEMENT INC.

(the Manager)

(collectively, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the dealer registration requirements in the Legislation in respect of certain trades (the Warrant Offering Activities) to be carried out by the Manager and on behalf of the Trust, in connection with a proposed distribution (the Warrant Offering) of warrants (the Series A Warrants) to acquire units of the Trust (the Trust Units), preferred securities (the Preferred Securities) and a second series of warrants (the Series B Warrants, such distribution to be made in Ontario and each of the Passport Jurisdictions (as defined below) pursuant to a short form (final) prospectus (the Warrant Prospectus) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) each Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador (collectively, the Passport Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Trust is an investment trust established under the laws of the Province of Ontario pursuant to an amended and restated declaration of trust dated as of February 27, 2006, as amended and restated on September 30, 2010 (the Declaration of Trust) between the Trust and the Manager (the Trustee). The Manager is acting as the manager and trustee of the Trust.

2. The Manager performs management, investment advisory and administrative services for the Trust pursuant to a management agreement. The head office of each of the Trust and the Manager is located at 141 Adelaide Street West, Suite 1402, Toronto, Ontario, M5H 3L5. The Manager is not in default of any of its obligations under securities legislation in any jurisdiction.

3. The Trust is authorized to issue an unlimited number of a single class of transferrable, redeemable Trust Units, each Trust Unit representing an equal, undivided interest in the net assets of the Trust. The Trust Units are listed and posted for trading on the Toronto Stock Exchange (the TSX) under the symbol "FCS.UN".

4. The Trust is also authorized to issue an unlimited aggregate principal amount of a series of preferred securities (the "Preferred Securities") designated as "6.25% Preferred Securities", each of which represents indebtedness of the Trust in the amount of $10.00. The Preferred Securities of the Trust are listed for trading on the TSX under the symbol "FCS.PR.B.".

5. The Trust filed a final prospectus dated February 27, 2006 for the initial issuance of Trust Units and a previous series of preferred securities for the Trust. There are no warrants currently outstanding.

6. The Trust's initial public offering was conducted through the full service investment dealer channel and its Trust Units and Preferred Securities were issued through and held in the book based system of CDS Clearing and Depository Services Inc. (CDS).

7. The investment objectives of the Trust are to provide holders of Trust Units (Unitholders) with a balance between the objectives of the Unitholders and the holders of Preferred Securities.

8. The investment portfolio of the Trust consists of a broad range of North American equities and income producing securities.

9. The Trust is subject to certain investment restrictions that, among other things, limit the securities which may be acquired for the investment portfolio that the Trust owns or to which the Trust may be exposed.

10. The Trust does not engage in the continuous distribution of its securities.

11. The Trust has retained the Manager to make the Trust's investment decisions in accordance with the Trust's investment objectives and investment strategy. The Manager is registered as an Investment Fund Manager, an Exempt Market Dealer and a Portfolio Manager. All trades in securities in connection with the investing activities of the Trust are conducted through registered dealers.

12. In connection with the Warrant Offering, the Trust has filed a preliminary short form prospectus dated August 11, 2011 under the securities legislation of the Province of Ontario and each Passport Jurisdiction. Under the Warrant Offering, each holder of Trust Units as at a specified record date will be entitled to receive, for no consideration, one (1) Series A Warrant for each of the Trust Units held by such holder.

13. Holders of the Series A Warrants will be entitled, upon the exercise of the Series A Warrants, to subscribe for Trust Units, Preferred Securities and Series B Warrants pursuant to subscription privileges provided for in the Warrant Prospectus, at a subscription price to be specified in the Warrant Prospectus. Each Series A Warrant will entitle the holder to subscribe for one (1) Trust Unit, one half (1/2) of a Preferred Security and one (1) of the Series B Warrants under a basic subscription privilege. Holders of Series A Warrants who exercise Series A Warrants under the basic subscription privilege may also subscribe, pro rata, for additional Trust Units, Preferred Securities and Series B Warrants that are not subscribed for by other holders under the basic subscription privilege pursuant to the terms of an additional subscription privilege. The term for exercise of the Series A Warrants (including both the basic subscription privilege and the additional subscription privilege) will not exceed six (6) months. The Series B Warrants will only be exercisable on June 27, 2012.

14. The Trust has applied to list the Series A Warrants, to be distributed under the Warrant Prospectus, on the TSX. The Trust has also applied to list the Trust Units, Preferred Securities and Series B Warrants issuable upon the exercise of the Series A Warrants and the Trust Units issuable upon the exercise of the Series B Warrants, on the TSX.

15. The Warrant Offering Activities will consist of:

(a) the distribution of the Warrant Prospectus and the issuance of Series A Warrants to the holders of Trust Units (as at the record date specified in the Warrant Prospectus), after the Warrant Prospectus has been filed, and receipts obtained, under the securities legislation of the Province of Ontario and each Passport Jurisdiction;

(b) the distribution of Trust Units, Preferred Securities and Series B Warrants to holders of Series A Warrants, upon the exercise of Series A Warrants by their holders; and

(c) the distribution of Trust Units to holders of Series B Warrants, upon the exercise of such Series B Warrants by the holder.

16. The Trust is in the business of trading by virtue of its portfolio investing activities. As a result, its capital raising activities, including the Warrant Offering Activities, would require the Trust and the Manager to register as a dealer in the absence of the Requested Relief (or another available exemption from the dealer registration requirements).

17. Section 8.5 of National Instrument 45-106 -- Prospectus and Registration Exemptions (NI 45-106) provides that, after March 26, 2010, the exemptions from the dealer registration requirements set out in sections 3.1 [Rights offering] and section 3.42 [Conversion, exchange or exercise] of NI 45-106 no longer apply.

Decision

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

The decision of the principal regulator under the Legislation is that the Trust and the Manager, acting on behalf of the Trust, are not subject to the dealer registration requirement in respect of the Warrant Offering Activities.

"James Turner"
Commissioner
 
"C. Wesley Scott"
Commissioner