Brookfield Asset Management Inc. (Re), 2008 CanLII 41830

Headnote

NP 11-203 – decision exempting the Filer from the requirement in s. 3.1 of NI 52-107 that financial statements be prepared in accordance with Canadian GAAP for so long as the Filer prepares its financial statements in accordance with IFRS-IASB – for financial periods beginning on or after January 1, 2009 –Filer must provide specified disclosure regarding change to IFRS-IASB – if the Filer files interim financial statements prepared in accordance with Canadian GAAP in the year that the Filer adopts IFRS-IASB, those interim financial statements must be restated using IFRS-IASB - Filer wishes to change to IFRS-IASB to reduce the complexity of its financial statement preparation process

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 3.1.

Addendum

[If at the time of making the decision for a dual application or a coordinated review application, the decision maker in the principal regulator jurisdiction makes any comments about the application that would be relevant to staff or a decision maker in a non-principal regulator jurisdiction, staff should prepare an addendum to the memorandum summarizing the comments prior to circulating materials for opt-in.]

August 25th, 2008

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

Brookfield Asset Management Inc. (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) exempting the Filer from the requirement in Section 3.1 of National Instrument 52-107 — Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP for financial periods beginning on or after January 1, 2009 (the Exemption Sought), for so long as the Filer prepares the financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB).

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 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, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Yukon and the Nunavut Territory (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 Filer:

1. The Filer is a corporation amalgamated under the Business Corporations Act (Ontario) pursuant to articles of amalgamation dated January 1, 2005. The head office of the Filer is located at Brookfield Place, 181 Bay Street, Suite 300, P.O. Box 762, Toronto, Ontario M5J 2T3;

2. The Filer is a reporting issuer or equivalent in the Jurisdiction and each of the Passport Jurisdictions. The Filer is not, to its knowledge, in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdictions. The Filer’s securities are listed on the Toronto Stock Exchange, the New York Stock Exchange and the Euronext Amsterdam Exchange. The Filer is also a registrant with the United States Securities and Exchange Commission (SEC) and a foreign private issuer in the United States;

3. The Filer is a global asset management company focused on property, power and infrastructure assets and has approximately US$95 billion of assets under management. It owns and manages large portfolios of premier office properties and hydroelectric power generation facilities as well as transmission and timberland operations. The Filer conducts operations in North and South America, Europe, the Middle East and Australia;

4. The Filer and its subsidiaries, which include both Canadian reporting issuers and SEC registrants, are subject to a diverse set of financial reporting requirements and prepare their financial statements in accordance with Canadian generally accepted accounting principles (Canadian GAAP), IFRS-IASB, generally accepted accounting principles in the United States (US GAAP) and others, including generally accepted accounting principles in Chile and Brazil;

5. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.

6. NI 52-107 sets out acceptable accounting principles for financial reporting under the Legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP with the exception that an SEC registrant may use US GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB;

7. In CSA Staff Notice 52-321 Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite Section 3.1 of NI 52-107;

8. Subject to obtaining the Exemption Sought the Filer intends to adopt IFRS-IASB effective January 1, 2009 for its financial statements for periods beginning on and after January 1, 2009;

9. The Filer believes that the adoption of IFRS-IASB for financial periods beginning on or after January 1, 2009 would be in the best interests of the Filer and users of its financial information because it will result in additional financial information, such as the fair value of certain assets, that will enhance stakeholders’ understanding of the Filer’s results of operations and financial position and will reduce the number of bases of accounting prepared by the Filer;

10. The Filer is implementing a comprehensive IFRS-IASB conversion plan;

11. The Filer has carefully assessed the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants for the adoption by the Filer of IFRS-IASB for financial periods beginning on January 1, 2009 and has concluded that they will be adequately prepared for the Filer’s adoption of IFRS-IASB for periods beginning on January 1, 2009;

12. The Filer has considered the implications of adopting IFRS-IASB before January 1, 2011 on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward looking information;

13. The Filer will disclose relevant information about its conversion to IFRS-IASB as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards, in its management’s discussion and analysis for the periods ending prior to January 1, 2009 as follows:

(a) for the interim period ended June 30, 2008, the key elements and timing of its conversion plan to adopt IFRS-IASB;

(b) for the interim period ended September 30, 2008, the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards (IFRS 1) that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB and the areas of accounting policy significant to the Filer by describing the major identified differences between the Filer’s current accounting policies and those the Filer is required or expects to apply in preparing financial statements in accordance with IFRS-IASB;

(c) as soon as it is available, but at the latest for the year ended December 31 , 2008, the impact of adopting IFRS-IASB on the key line items in the Filer’s financial statements and, to the extent the Filer has quantified such information, quantitative information regarding the impact of adopting IFRS-IASB on the key line items in the Filer’s financial statements.

Decision

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

2. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, subject to all of the following conditions:

(a) for so long as the Filer prepares its financial statements for financial periods beginning on or after January 1, 2009 in accordance with IFRS-IASB;

(b) provided that the Filer provides all of the communication as described and in the manner set out in paragraph 13; and

(c) provided that if the Filer files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods in the year that the Filer adopts IFRS-IASB, those interim financial statements originally prepared in accordance with Canadian GAAP be restated in accordance with IFRS-IASB.

“Jo-Anne Matear”

Jo-Anne Matear

Assistant Manager, Corporate Finance