Uranium Participation Corporation

Decision

Headnote

NP 11-203 -- National Instrument 81-106 Investment Fund Continuous Disclosure -- Exemption from the requirement to prepare on a continuing basis financial statements in accordance with Canadian generally accepted accounting principles -- A closed-end mutual fund trust listed on the TSX -- Significant IFRS issues such as classification of puttable instruments and consolidation are not expected to impact the Fund's financial statements.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.6, 17.1.

October 25, 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

URANIUM PARTICIPATION CORPORATION

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for exemptive relief pursuant to section 17.1 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) from the requirement under section 2.6 of NI 81-106 to permit the financial statements of the Filer to be prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) rather than Canadian generally accepted accounting principles (Canadian GAAP) (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 (the Principal Regulator); and

(b) the Filer has provided notice that subsection 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, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon.

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 herein.

Representations

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

1. The Filer's head office is located in Ontario.

2. The Filer is a reporting issuer in all provinces and territories of Canada.

3. The Filer is not in default of securities legislation in any province of Canada.

4. The Filer is its own investment fund manager, and has applied to the Ontario Securities Commission to be registered as such.

5. The Filer was incorporated on March 15, 2005 under the Business Corporations Act (Ontario).

6. The Filer is an "investment fund" as defined in the Securities Act (Ontario) and is subject to NI 81-106.

7. As disclosed in the Annual Information Form for the Filer dated May 19, 2011, the investment and operation restrictions of the Filer provide that, among other things, at least 85% of the gross proceeds from any offering by the Filer will be invested or held for investment in uranium. Pursuant to the By-laws of the Filer, the Filer retains the remaining 15% in cash for paying expenses of the Filer.

8. The authorized capital of the Filer is an unlimited number of common shares (the Common Shares).

9. The Common Shares of the Filer are listed for trading on The Toronto Stock Exchange.

10. The net asset value of the Filer is calculated and published monthly.

11. The Filer's year end is February 28.

12. As an investment fund, the Filer is required to file financial statements on a semi-annual basis.

13. Most publicly accountable enterprises transitioned their financial statements for financial years beginning on or after January 1, 2011 to IFRS-IASB. The Canadian Accounting Standards Board has confirmed that the transition date for investment companies is January 1, 2013. The Filer wishes to adopt IFRS-IASB early in order to present its financial statements on the same basis as other similar Canadian listed issuers.

14. The Filer has been preparing for the implementation of IFRS-IASB over the last few years.

15. The Filer, in consultation with its external auditors, has made a significant commitment of time and resources to fully research and plan for the impact of its adoption of IFRS-IASB for financial periods prior to January 1, 2013 including, but not limited to, the consideration of the impact of IFRS-IASB on financial statement presentation and related disclosure requirements under applicable securities legislation, internal controls, investor relations, information technology systems, and business and contractual arrangements with service providers to the Filer.

16. The Filer has carefully assessed the readiness of its employees, management and board of directors for its adoption of IFRS-IASB for financial periods beginning on or after March 1, 2011, and has concluded that all such persons are adequately prepared for the Filer's adoption of IFRS-IASB for financial periods beginning on or after March 1, 2011.

17. The Filer, in consultation with its external auditors, has determined that the Common Shares can be classified as equity instruments under IFRS-IASB. The Common Shares of the Filer are not redeemable and, therefore, are not puttable instruments.

18. The Filer invests, through its wholly-owned subsidiaries (the investment companies), in uranium oxide in concentrates (U3O8) and uranium hexafluoride (UF6) (collectively, Uranium). The Filer does not hold any portfolio equity investments. In accordance with Accounting Guideline 18 Investment Companies, the financial statements of the Filer represent the consolidated investments in Uranium and the financial position and results of operations of its wholly-owned subsidiaries. The Filer, in consultation with its external auditors, will present its subsidiaries' investments in Uranium at fair value in its consolidated financial statements and will continue to consolidate its subsidiaries under IFRS-IASB.

19. The Filer is a corporation and therefore, unlike investments funds formed as trusts, is required under Canadian GAAP to account for deferred taxes and, in consultation with its external auditors, expects that it will continue to account for deferred taxes under IAS 12 Income Taxes. The tax treatment under IAS 12 Income Taxes will be similar to Canadian GAAP for public enterprises as the Filer will continue to accrue a future tax liability for deferred income taxes under IAS 12 Income Taxes based on temporary differences between the financial reporting and tax bases of assets or liabilities, measured using the substantively enacted tax rates and laws that are expected to apply when the differences are expected to reverse. Additionally, the benefit of the tax losses which are available to be carried forward will be recognized as assets to the extent that they are more likely than not to be recoverable from future taxable income.

20. The annual and interim financial statements of the Filer for all subsequent financial periods to the date of the decision will be prepared in accordance with IFRS-IASB.

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 Exemption Sought is granted provided that the Exemption Sought ceases to apply upon the application of any amendment to section 2.6 of NI 81-106 that changes the acceptable accounting principles, only as applicable to financial years beginning on or after the date on which the amendment comes into force.

"Darren McKall"
Manager, Investment Funds Branch
Ontario Securities Commission