In the Matter of C.A. Bancorp Inc., 2011 CanLII 26876

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Reporting issuer seeking relief so that it can continue to file financial statements in accordance with old Canadian GAAP (rather than IFRS) for periods relating to the issuer's financial year beginning on January 1, 2011 and ending on December 31, 2011 and the issuer's financial year beginning on January 1, 2012 and ending on December 31, 2012 (collectively, the issuer's deferred financial years) - In particular, the issuer is seeking relief from the requirements in Part 3 of National Instrument 52-107 that would apply to financial statements for periods relating to the issuer's deferred financial years - The issuer is also seeking relief from the IFRS-related amendments to the continuous disclosure, prospectus, certification and audit committee rules (collectively, the rules) that came into force on January 1, 2011 and that would apply to periods relating to the issuer's deferred financial years - The issuer is an "investment company" as defined in Accounting Guideline 18 Investment Companies (AcG-18) in the Handbook of the Canadian Institute of Chartered Accountants - At its meeting on January 12, 2011, the Canadian Accounting Standards Board decided that investment companies, as defined in and applying AcG-18, will only be required to adopt IFRS for annual periods beginning on or after January 1, 2013 - Since Part 3 of National Instrument 52-107 and the IFRS-related amendments to the rules do not have a provision providing for a two-year deferral of the transition to IFRS for investment companies subject to NI 52-107 and the rules, the issuer has applied for the relief - Relief granted, subject to a number of conditions.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, Parts 3 and 4 National Instrument 51-102 Continuous Disclosure Obligations National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings National Instrument 52-110 Audit Committees

May 16, 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 C.A. BANCORP INC. (the "Applicant")

Decision

Background

The principal regulator in the Jurisdiction has received an application from the Applicant for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for an exemption from:

1. the requirements of Part 3 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards ("NI 52-107") that apply to financial statements, financial information, operating statements and pro forma financial statements for periods relating to the Applicant's financial year beginning on January 1, 2011 and ending on December 31, 2011 and the Applicant's financial year beginning on January 1, 2012 and ending on December 31, 2012 (collectively, the "Applicant's Deferred Financial Years");

2. the amendments to National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") related to International Financial Reporting Standards ("IFRS") that came into force on January 1, 2011 and that apply to documents required to be prepared, filed, delivered or sent under NI 51-102 for periods relating to the Applicant's Deferred Financial Years;

3. the IFRS-related amendments to National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109") that came into force on January 1, 2011 and that apply to annual filings and interim filings for periods relating to the Applicant's Deferred Financial Years; and

4. the IFRS-related amendments to National Instrument 52-110 Audit Committees ("NI 52-110") that came into force on January 1, 2011 and that apply to periods relating to the Applicant's Deferred Financial Years.

(Such requested relief referred to herein as, the Relief 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) the Applicant 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, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunavut (the "Passport Jurisdictions").

Interpretation

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

Representations

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

The Applicant

1The Applicant is a company existing under the Business Corporations Act (Alberta) (the "ABCA").

2The head office of the Applicant is located at 401 Bay Street, Suite 1600, Toronto, Ontario, M5H 2Y4. The registered office of the Applicant is located at 3700 Canterra Tower, 400 Third Avenue SW, Calgary, Alberta, T2P 4H2.

3The Applicant is a reporting issuer or equivalent in the Jurisdiction and the Passport Jurisdictions. The Applicant is not in default of its reporting issuer obligations under the Legislation or the legislation of the Passport Jurisdictions.

4The Applicant is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. The Applicant has focused on investments in small- and middle- capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors. The Applicant is currently implementing a realization strategy under which it is no longer implementing its stated business objective, and is instead seeking opportunities to monetize its existing assets and distributing realized cash to shareholders.

5The authorized share capital of the Applicant consists of an unlimited number of Common Shares, an unlimited number of Class A preference shares, issuable in series, an unlimited number of Class B preference shares, issuable in series, an unlimited number of Class C preference shares, issuable in series (collectively, the "Preference Shares"), of which 12,269,280 Common Shares and no Preference Shares of the Applicant are issued and outstanding.

6The Common Shares are listed and posted for trading on the Toronto Stock Exchange under the symbol "BKP". The Common Shares are not listed or quoted on any other exchange or market in Canada or elsewhere.

7The Applicant's financial year end is December 31.

Status

8The Applicant is an "investment company" as defined in Accounting Guideline 18 – Investment Companies ("AcG-18") in the Handbook of the Canadian Institute of Chartered Accountants (the "Handbook").

9The Applicant is not an investment fund as that term is defined in the Securities Act (Ontario).

10As part of the changeover to IFRS in Canada, the Canadian Accounting Standards Board ("AcSB") has incorporated IFRS into the Handbook as Canadian GAAP for most publicly accountable enterprises. As a result, the Handbook contains two sets of standards for public companies:

(a) Part 1 of the Handbook – Canadian GAAP for publicly accountable enterprises that applies for financial years beginning on or after January 1, 2011; and

(b) Part V of the Handbook – Canadian GAAP for public enterprises that is the pre-changeover accounting standards ("old Canadian GAAP").

11On October 1, 2010, the AcSB published amendments to Part 1 of the Handbook that provide a one-year deferral of the transition to IFRS for investment companies. The amendments required investment companies, as defined in and applying AcG-18, to adopt IFRS for annual periods beginning on or after January 1, 2012. Subsequently, at its meeting on January 12, 2011, the AcSB decided to extend the deferral for an additional year and in March 2011 issued amendments to Part 1 of the Handbook so that investment companies, as defined in and applying AcG-18, will only be required to adopt IFRS for annual periods beginning on or after January 1, 2013.

12As part of the changeover to IFRS, NI 52-107 was repealed and replaced effective January 1, 2011. In the new version of NI 52-107,

(a) Part 3 contains requirements based on IFRS and applies to financial statements, financial information, operating statements and pro forma financial statements for periods relating to financial years beginning on or after January 1, 2011; and

(b) Part 4 contains requirements based on an old Canadian GAAP and applies to financial statements, financial information, operating statements and pro forma financial statements for periods relating to financial years beginning before January 1, 2011.

13As part of the changeover to IFRS, IFRS-related amendments were made to NI 51-102, NI 52-109 and NI 52-110 (collectively, the "Rules") and these amendments came into force on January 1, 2011. Among other things, the amendments replace old Canadian GAAP terms and phrases with IFRS terms and phrases and contain IFRS-specific requirements. The amendment instruments for the Rules contain transition provisions that provide that the IFRS-related amendments only apply to documents required to be filed under the Rules for periods relating to financial years beginning on or after January 1, 2011. Therefore, during the IFRS transition period,

(a) issuers filing financial statements prepared in accordance with old Canadian GAAP will be required to comply with the versions of the Rules that contain old Canadian GAAP terms and phrases; and

(b) issuers filing financial statements that comply with IFRS will be required to comply with the versions of the Rules that contain IFRS terms and phrases and IFRS-specific requirements.

14On October 8, 2010, the Canadian Securities Administrators ("CSA") published CSA Staff Notice 81-320 Update on International Financial Reporting Standards for Investment Funds ("Notice 81-320") which indicated that, given the October 1, 2010 amendments to the Handbook that provided for a deferral to the transition to IFRS for investment companies, the CSA would defer finalizing IFRS-related amendments to rules related to investment funds.

15NI 52-107 and the Rules apply to the Applicant. Since Part 3 of NI 52-107 and the IFRS-related amendments to the Rules do not have a provision providing for a two-year deferral of the transition to IFRS for investment companies subject to NI 52-107 and the Rules, the Applicant has applied for the Relief Sought.

16The Applicant acknowledges that if the Relief Sought is granted the Applicant:

(a) Will be subject to Part 3 of NI 52-107 and the IFRS-related amendments to the Rules for periods relating to financial years beginning on or after January 1, 2013, and

(b) Will not have the benefit of the 30 day extension to the deadline of filing the first interim financial report in the year of adopting IFRS in respect of an interim period beginning on or after January 1, 2011, as set out in the IFRS related amendments to 51-102, since that extension does not apply if the first interim financial report is in respect of an interim period ending after March 30, 2012.

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 Relief Sought is granted provided that:

1. The Applicant continues to be an investment company, as defined in AcG-18; and applies all measurement and disclosure requirements of AcG-18, as and when permitted under AcG-18, within its annual and interim financial statements for periods ending on or after December 31, 2010.

2. To meet condition 1 above, the Applicant restates and re-files its annual financial statements for the period ending December 31, 2010 to clearly present and disclose all investments as being measured at fair value (as defined by AcG-18), with separate recognition of any adjustments, such as disposal costs, required to fairly present the financial statements as a whole on a liquidation basis of accounting.

3. the Applicant complies with the requirements in Part 4 of NI 52-107 for all financial statements (including interim financial statements), financial information, operating statements and pro forma financial statements for periods relating to the Applicant's deferred financial years, as if the expression "January 1, 2011" in subsection 4.1(2) were read as "January 1, 2013";

4. the Applicant complies with the version of NI 51-102 that was in effect on December 31, 2010 (together with any amendments to NI 51-102 that are not related to IFRS and that come into force after January 1, 2011) for all documents required to be prepared, filed, delivered, or sent under NI 51-102 for periods relating to the Applicant's deferred financial years;

5. the Applicant complies with the version of NI 41-101 that was in effect on December 31, 2010 (together with any amendments to NI 41-101 that are not related to IFRS and that come into effect after January 1, 2011) for any preliminary prospectus, amendment to a preliminary prospectus, final prospectus or amendment to a final prospectus of the Applicant which includes or incorporates by reference financial statements of the Applicant in respect of periods relating to the Applicant's deferred financial years;

6. the Applicant complies with the version of NI 44-101 that was in effect on December 31, 2010 (together with any amendments to NI 44-101 that are not related to IFRS and that come into effect after January 1, 2011) for any preliminary short form prospectus, amendment to a preliminary short form prospectus, final short form prospectus or amendment to a final short form prospectus of the Applicant which includes or incorporates by reference financial statements of the Applicant in respect of periods relating to the Applicant's deferred financial years;

7. the Applicant complies with the version of NI 44-102 that was in effect on December 31, 2010 (together with any amendments to NI 44-102 that are not related to IFRS and that come into effect after January 1, 2011) for any preliminary base shelf prospectus, amendment to a preliminary base shelf prospectus, base shelf prospectus, amendment to a base shelf prospectus or shelf prospectus supplement of the Applicant which includes or incorporates by reference financial statements of the Applicant in respect of periods relating to the Applicant's deferred financial years;

8. the Applicant complies with the version of NI 52-109 that was in effect on December 31, 2010 (together with any amendments to NI 52-109 that are not related to IFRS and that come into effect after January 1, 2011) for all annual filings and interim filings for periods relating to the Applicant's deferred financial years;

9. the Applicant complies with the version of NI 52-110 that was in effect on December 31, 2010 (together with any amendments to NI 52-110 that are not related to IFRS and that come into effect after January 1, 2011) for periods relating to the Applicant's deferred financial years;

10. if, notwithstanding this order, the Applicant decides not to rely on the Relief Sought and files an interim financial report prepared in accordance with IFRS for an interim period in a deferred financial year, the Applicant must, at the same time:

(a) restate, in accordance with IFRS, any interim financial statements for any previous interim period in the same deferred financial year (each, a "Previous Interim Period") that were originally prepared in accordance with old Canadian GAAP and filed pursuant to this order, and

(b) file a restated interim financial report prepared in accordance with IFRS for each Previous Interim Period, together with corresponding restated interim MD&A and certificates required by NI 52-109. For greater certainty, any restated interim financial report for a Previous Interim Period must comply with applicable securities legislation (including Part 3 of NI 52-107 and the amendments to Part 4 of NI 51-102 that came into force on January 1, 2011) and any restated interim financial report for the first interim period in the deferred financial year must include the opening IFRS statement of financial position at the date of transition to IFRS; and

11. if, notwithstanding this order, the Applicant decides not to rely on the Relief Sought and files annual financial statements prepared in accordance with IFRS for a deferred financial year, the Applicant must, at the same time (unless previously done pursuant to paragraph 10 immediately above):

(a) restate, in accordance with IFRS, any interim financial statements for any Previous Period that were originally prepared in accordance with old Canadian GAAP and filed pursuant to this order, and

(b) file a restated interim financial report prepared in accordance with IFRS for each Previous Interim Period, together with corresponding restated interim MD&A and certificates required by NI 52-109. For greater certainty, any restated interim financial report for a Previous Period must comply with applicable securities legislation (including Part 3 of NI 52-107 and the amendments to Part 4 of NI 51-102 that came into force on January 1, 2011) and any restated interim financial report for the first interim period in the deferred financial year must include the opening IFRS statement of financial position at the date of transition to IFRS.