Securities Law & Instruments

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Application for exemptive relief to permit issuer and underwriter, acting as agent for the issuer, to enter into equity distribution agreement to make "at the market" (ATM) distributions of common shares to investors through the facilities of the TSX Venture Exchange (TSXV) -- ATM distributions to be made pursuant to shelf prospectus procedures in Part 9 of NI 44-102 Shelf Distributions -- issuer will issue a press release and file agreement on SEDAR -- application for relief from prospectus delivery requirement -- delivery of prospectus not practicable in circumstances of an ATM distribution -- relief from prospectus delivery requirement has effect of removing two-day right of withdrawal and remedies of rescission or damages for non-delivery of the prospectus -- application for relief from certain prospectus form requirements -- standard certification by issuer does not work in an ATM distribution since no other supplement to be filed in connection with ATM distribution -- relief granted to permit modified forward-looking certificate language -- relief granted on terms and conditions set out in decision document -- decision will terminate 25 months after the issuance of a receipt for the shelf prospectus.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 71(1), 71(2), 133, 147.

Applicable Ontario Rules

National Instrument 44-101 Short Form Prospectus Distributions, Part 8; and Item 20 of Form 44-101F1.

National Instrument 44-102 Shelf Distributions, Part 9; and s. 1.1 of Appendix A.

June 6, 2014

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 MONGOLIA GROWTH GROUP LTD. (THE ISSUER) AND CANTOR FITZGERALD CANADA CORPORATION (THE AGENT) (THE ISSUER, TOGETHER WITH THE AGENT, THE FILERS)

DECISION

Background

The securities regulatory authority or regulator in the Jurisdiction (the Decision Maker) has received an application (the Application) from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for the following relief (the Exemption Sought):

(a) that the requirement that a dealer, not acting as agent of the purchaser, who receives an order or subscription for a security offered in a distribution to which the prospectus requirement applies, send or deliver to the purchaser or its agent the latest prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) and any amendment to the prospectus (the Prospectus Delivery Requirement) does not apply to the Agent or any other TSX Venture Exchange (TSXV) participating organization or other registered investment dealer marketplace participant acting as selling agent for the Agent (each such other organization or marketplace participant, a Selling Agent) in connection with any at-the-market distributions (each, an ATM Distribution) within the meaning of National Instrument 44-102 Shelf Distributions (NI 44-102) made by the Issuer pursuant to an equity distribution agreement (the Equity Distribution Agreement) to be entered into between the Issuer and the Agent;

(b) that the requirements (collectively, the Prospectus Form Requirements) to include in a prospectus supplement:

(i) a forward-looking issuer certificate of the Issuer in the form specified in section 2.1 of Appendix A to NI 44-102; and

(ii) a statement respecting purchasers' statutory rights of withdrawal and remedies for rescission or damages in substantially the form prescribed in Item 20 of Form 44-101F1 Short Form Prospectus (the Statement of Purchasers' Rights),

do not apply to a short form base shelf prospectus (the Shelf Prospectus), as supplemented by a prospectus supplement (the Prospectus Supplement), to be filed in respect of the sale of up to 3,400,000 common shares (the ATM Shares) of the Issuer pursuant to ATM Distributions under the Equity Distribution Agreement provided that the alternative form of certificate and disclosure regarding a purchaser's statutory rights described below are included in the Prospectus Supplement;

(c) that the requirement in the Legislation that an agreement to purchase securities is not binding on a purchaser if the Issuer receives, not later than midnight on the 2nd day exclusive of Saturdays, Sundays and holidays, after receipt by the purchaser of the latest prospectus or any amendment to the prospectus, notice in writing that the purchaser does not intend to be bound by the agreement of purchase (the Withdrawal Right) do not apply to the Issuer, as such requirements relate to the Shelf Prospectus and the Issuer in connection with ATM Distributions; and

(d) that the rights of rescission or damages contained in the Legislation arising from non-delivery of a prospectus (the Right of Action for Non-Delivery), as such requirements and rights relate to the Prospectus Supplement and the Agent does not apply in connection with ATM Distributions.

The Decision Maker has also received a request from the Filers for a decision that the Application and this decision be kept confidential and not made public until the earliest of (i) the date on which the Issuer and the Agent enter into the Equity Distribution Agreement, (ii) the date on which the Filers advise the Decision Maker that there is no longer any need for the Application and this decision to remain confidential; and (iii) the date that is 90 days after the date of this decision (the Request for Confidentiality).

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) the Filers have 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 and Alberta (collectively, together with the Jurisdiction, the Reporting Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions or 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 Filers:

Mongolia Growth Group Ltd.

1. The Issuer was incorporated under the Business Corporations Act (Alberta) on December 17, 2007. The Issuer is a real estate investment and development company which owns a portfolio of institutional and commercial property assets in Mongolia. The head office of the Issuer is located in Thunder Bay, Ontario.

2. The Issuer is a reporting issuer or the equivalent under the securities legislation of each Reporting Jurisdiction and is not in default of any requirements under applicable securities legislation or the rules and regulations made pursuant thereto in each Reporting Jurisdiction.

3. As at June 2, 2014, there were 34,668,352 common shares of the Issuer (Common Shares) outstanding and listed and posted for trading on the TSXV under the stock symbol "YAK".

Cantor Fitzgerald Canada Corporation

4. The Agent, a wholly-owned subsidiary of Cantor Fitzgerald L.P., is a corporation incorporated under the laws of the Province of Nova Scotia with its head office in Toronto, Ontario.

5. Cantor Fitzgerald L.P is a limited partnership with its head office in New York City, New York.

6. The Agent is registered as: (i) an investment dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec, Saskatchewan, Yukon, Northwest Territories and Nunavut; (ii) a dealer member of the Investment Industry Regulatory Organization of Canada; (iii) a participating organization of the Toronto Stock Exchange; and (iv) a TSXV Exchange Member. The Agent is not in default of any requirements under applicable securities legislation or the rules and regulations made pursuant thereto in such jurisdictions.

Proposed ATM Distributions

7. The Issuer proposes to enter into the Equity Distribution Agreement with the Agent, providing for the sale from time to time by the Issuer through the Agent, as agent, of ATM Shares pursuant to ATM Distributions under the shelf procedures prescribed by Part 9 of NI 44-102.

8. Prior to making any ATM Distributions, the Issuer will have filed the Shelf Prospectus and the Prospectus Supplement in the Reporting Jurisdictions to qualify the sale of ATM Shares pursuant to ATM Distributions under the Equity Distribution Agreement. The Prospectus Supplement will describe the terms of the Equity Distribution Agreement and otherwise supplement the disclosure in the Shelf Prospectus.

9. If the Equity Distribution Agreement is entered into, the Issuer will issue a news release to announce the Equity Distribution Agreement and will file a copy of the Equity Distribution Agreement on SEDAR. The news release will state that the Shelf Prospectus and the Prospectus Supplement have been filed on SEDAR, and specify where and how purchasers may obtain copies. A copy of the news release will also be posted on the Issuer's website. The news release will serve as the news release contemplated by section 3.2 of NI 44-102 for an expected distribution of equity securities under an unallocated shelf in connection with the distribution of ATM Shares.

10. The Equity Distribution Agreement will limit the number of ATM Shares that the Issuer may issue and sell pursuant to any ATM Distribution thereunder to an amount not to exceed 10% of the aggregate market value of the then outstanding Common Shares calculated in accordance with section 9.2 of NI 44-102.

11. The Issuer will sell ATM Shares in the Reporting Jurisdictions through methods constituting ATM Distributions, including sales made on the TSXV or any other recognized Canadian "marketplace" within the meaning of National Instrument 21-101 -- Marketplace Operation upon which the ATM Shares are listed or quoted or otherwise traded (a Marketplace) through the Agent, as agent, directly or through a TSXV participating organization or other registered investment dealer marketplace participant acting as selling agent for the Agent (each such other organization or marketplace participant, a Selling Agent).

12. The number of ATM Shares sold on the TSXV or any other Marketplace pursuant to an ATM Distribution on any trading day will not exceed 25% of the trading volume of the Common Shares on the TSXV or any other Marketplace on that day.

13. The Agent will act as the sole underwriter on behalf of the Issuer in connection with the sale of ATM Shares on a Marketplace pursuant to the Equity Distribution Agreement, and will be the only person or company paid an underwriting fee or commission by the Issuer in connection with such sales. The Agent will sign an underwriter's certificate in the Prospectus Supplement.

14. The Agent will effect ATM Distributions on a Marketplace, either itself or through a Selling Agent. If sales are effected through a Selling Agent, the Selling Agent will be paid a customary seller's commission for effecting the trades. A purchaser's rights and remedies under the Legislation against the Agent, as underwriter of an ATM Distribution through a Marketplace, will not be affected by a decision to effect the sale directly or through a Selling Agent.

15. The Equity Distribution Agreement will provide that, at the time of each sale of ATM Shares pursuant to an ATM Distribution, the Issuer will represent to the Agent that the Shelf Prospectus, as supplemented by the Prospectus Supplement and any applicable amendment or supplement to the Shelf Prospectus or the Prospectus Supplement (together, the Prospectus), contains full, true and plain disclosure of all material facts relating to the Issuer and the ATM Shares being distributed. The Issuer will therefore be unable to proceed with sales pursuant to an ATM Distribution when it is in possession of undisclosed information that would constitute a material fact or a material change in respect of the ATM Shares.

16. If after the Issuer delivers a sell notice to the Agent directing the Agent to sell ATM Shares on the Issuer's behalf pursuant to the Equity Distribution Agreement (a Sell Notice), the sale of the ATM Shares specified in the Sell Notice, taking into consideration prior sales, would constitute a material fact or material change, the Issuer would be required to suspend sales under the Equity Distribution Agreement until either (i) it had filed a material change report or amended the Prospectus, or (ii) circumstances had changed so that the sales would no longer constitute a material fact or material change.

17. In determining whether the sale of the number of ATM Shares specified in a Sell Notice would constitute a material fact or material change, the Issuer will take into account a number of factors, including, without limitation (i) the parameters of the Sell Notice, including the number of ATM Shares proposed to be sold and any price or timing restrictions that the Issuer may impose with respect to the particular ATM Distribution, (ii) the percentage of outstanding ATM Shares represented by the number of ATM Shares proposed to be sold pursuant to the Sell Notice, (iii) recent developments in the business, affairs and capital structure of the Issuer, (iv) trading volume and volatility of the ATM Shares, and (v) prevailing market conditions generally.

18. The Agent will monitor closely the market's reaction to trades made on Marketplaces pursuant to an ATM Distribution in order to evaluate the likely market impact of future trades. The Agent has experience and expertise in managing sell orders to limit downward pressure on trading prices. If the Agent has concerns as to whether a particular sell order placed by the Issuer may have a significant effect on the market price of the ATM Shares, the Agent will recommend against effecting the trade at that time. It is in the interest of both the Issuer and the Agent to minimize the market impact of sales under an ATM Distribution.

19. The underwriter's certificate to be signed by the Agent and included in the Prospectus Supplement will be in the form specified in section 2.2 of Appendix B to NI 44-102.

Disclosure of Common Shares Sold Pursuant to ATM Distributions

20. For each month during which ATM Shares are distributed on the TSXV or another Marketplace by the Issuer pursuant to ATM Distributions under the Prospectus, the Issuer will file on SEDAR, within seven calendar days after the end of such month, a report disclosing the number and average price of ATM Shares so distributed during that month, as well as total gross proceeds, commission and net proceeds.

21. The Issuer will also disclose the number and average price of ATM Shares sold pursuant to ATM Distributions under the Prospectus, as well as total gross proceeds, commission and net proceeds, in the ordinary course in its annual and interim financial statements or management discussion and analysis filed on SEDAR.

Prospectus Delivery Requirement

22. Pursuant to the Prospectus Delivery Requirement, a dealer effecting a trade of ATM Shares on behalf of the Issuer as part of an ATM Distribution is required to deliver a copy of the prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) to all investors who purchase ATM Shares on the TSXV or any other Marketplace within prescribed time limits.

23. The delivery of a prospectus is not practicable in the circumstances of an ATM Distribution because the Agent or Selling Agent, as applicable, effecting the trade will not know the purchaser's identity.

24. Although purchasers under an ATM Distribution would not physically receive a printed prospectus, the Shelf Prospectus and the Prospectus Supplement (together with all documents incorporated by reference) will be filed and readily available to all purchasers electronically via SEDAR. Moreover, the Issuer will issue a news release that specifies where and how copies of the Shelf Prospectus and the Prospectus Supplement can be obtained.

25. The liability of an issuer or an underwriter (and others) for misrepresentation in a prospectus pursuant to the civil liability provisions of the Legislation will not be affected by the grant of an exemption from the Prospectus Delivery Requirement, because a purchaser of the securities offered by a prospectus during the period of distribution has a right of action for damages or rescission without regard as to whether the purchaser relied on the misrepresentation or in fact received a copy of the prospectus.

Withdrawal Right

26. Pursuant to the Withdrawal Right, an agreement to purchase securities is not binding on the purchaser if a dealer receives, not later than midnight on the second day exclusive of Saturdays, Sundays and holidays, after receipt by the purchaser of the latest prospectus or any amendment to the prospectus, a notice in writing that the purchaser does not intend to be bound by the agreement of purchase.

27. The Withdrawal Right is not workable in the context of an ATM Distribution because a prospectus will not be delivered to a purchaser of ATM Shares thereunder.

Right of Action for Non-Delivery

28. Pursuant to the Right of Action for Non-Delivery, a purchaser of a security to whom a prospectus was required to be sent or delivered in compliance with the Prospectus Delivery Requirement, but was not so sent or delivered, has a right of action for rescission or damages against the issuer who did not comply with the Prospectus Delivery Requirement.

29. The Right of Action for Non-Delivery is not workable in the context of an ATM Distribution because a prospectus will not be delivered to a purchaser of ATM Shares thereunder.

Prospectus Form Requirements

30. Exemptive relief from the Prospectus Form Requirements is required with respect to the Issuer's forward looking certificate in the Prospectus Supplement to reflect that no pricing supplement will be filed subsequent to the Prospectus Supplement. Accordingly, the Issuer will file the Prospectus Supplement with the following forward-looking issuer certificate which will supersede and replace, solely as regards to ATM Distributions contemplated by the Prospectus Supplement, the forward-looking issuer certificate contained in the Shelf Prospectus:

This short form prospectus, as supplemented by the foregoing, together with the documents incorporated in this prospectus by reference as of the date of a particular distribution of securities offered by this prospectus, will, as of that date, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus, as required by the securities legislation of each of the provinces of Canada.

31. Exemptive relief from the Prospectus Form Requirements is required to reflect the relief from the Prospectus Delivery Requirement. Accordingly, the Issuer will include the following language in the Prospectus Supplement in replacement of the language prescribed by the Prospectus Form Requirements:

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities and with remedies for rescission or, in some jurisdictions, revision of the price, or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment are not delivered to the purchaser, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. However, purchasers of ATM Shares under an at-the-market distribution by the Issuer will not have the right to withdraw from an agreement to purchase the ATM Shares and will not have remedies for rescission or, in some jurisdictions, revision of the price, or damages for non-delivery, because the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment will not be delivered as permitted under a decision dated •, 2014 and granted pursuant to National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions.

Securities legislation in certain of the provinces of Canada also provides purchasers with remedies for rescission or, in some jurisdictions, revision of the price, or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment contain a misrepresentation, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of ATM Shares under an at-the-market distribution by the Issuer may have against the Issuer or the Agent for rescission or, in some jurisdictions, revision of the price, or damages if the prospectus, prospectus supplements relating to the ATM Shares purchased by a purchaser and any amendment contain a misrepresentation remain unaffected by the non-delivery and the decision referred to above.

Purchasers should refer to the applicable provisions of the securities legislation and the decision referred to above for the particulars of their rights or consult with a legal advisor.

32. The modified disclosure of purchasers' rights set forth in paragraph 31 above will be explicitly disclosed in the Prospectus Supplement and, solely as regards to ATM Distributions contemplated by the Prospectus Supplement, supersede and replace the statement of purchasers' rights contained in the Shelf Prospectus.

Decisions

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, provided that:

(a) as it relates to the Prospectus Delivery Requirement, the representations made in paragraphs 9, 11, 12, 13, 14, 15, 16 and 18 are complied with;

(b) as it relates to the Prospectus Form Requirements, the disclosure described in paragraphs 20, 30, 31 and 32 is made; and

(c) this decision will terminate 25 months after the issuance of a receipt for the Shelf Prospectus by the Reporting Jurisdictions.

The further decision of the Decision Maker under the Legislation is that the Request for Confidentiality is granted until the earlier of the following:

(a) the date on which the Issuer and the Agent enter into the Equity Distribution Agreement;

(b) the date on which the Filers advise the Decision Maker that there is no longer any need for the Application and this decision to remain confidential; and

(c) the date that is 90 days after the date of this decision.

As to the Exemption Sought from the Prospectus Delivery Requirement and the Request for Confidentiality:

"Deborah Leckman"
"Judith Robertson"
Commissioner
Commissioner
Ontario Securities Commission
Ontario Securities Commission

As to the Exemption Sought from the Prospectus Form Requirements and the Request for Confidentiality:

"Sonny Randhawa"
Manager, Corporate Finance
Ontario Securities Commission