Headnote National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions – relief from the prospectus requirements in connection with the use of electronic roadshow materials – cross-border offering of securities – compliance with U.S. offering rules leads to non-compliance with Canadian regime – relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus requirements – relief granted from section 53 of the Securities Act (Ontario) in connection with a cross-border offering – decision subject to conditions. Applicable Legislative Provisions Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53 and 74. National Policy 47-201 Trading Securities Using the Internet and Other Electronic Means, s. 2.7.
March 16, 2012
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
SPROTT ASSET MANAGEMENT LP
(the Filer)
AND
IN THE MATTER OF
SPROTT PHYSICAL PLATINUM AND PALLADIUM TRUST
(the Trust)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer, in its capacity as the manager of the Trust, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for a decision exempting the posting of certain roadshow materials on the website of one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com, during the portion of the Waiting Period (as defined below) between the date of this decision document and the date of the final receipt for the Final Prospectus (as defined below) from the prospectus requirement under the Legislation (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 and the Trust:
The Filer is a limited partnership formed and organized under the laws of the Province of Ontario and maintains its head office in Toronto, Ontario. The general partner of the Filer is Sprott Asset Management GP Inc. (the General Partner), which is a corporation incorporated under the laws of the Province of Ontario. The General Partner is a wholly-owned, direct subsidiary of Sprott Inc. Sprott Inc. is a corporation incorporated under the laws of the Province of Ontario and is a public company listed on the Toronto Stock Exchange (TSX). Sprott Inc. is the sole limited partner of the Filer and the sole shareholder of the General Partner.
The Filer is registered under the securities legislation in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador as an adviser in the category of portfolio manager and in Ontario as an investment fund manager.
The Trust is a closed-end mutual fund trust established under the laws of the Province of Ontario pursuant to a trust agreement dated as of December 23, 2011 (the Trust Agreement), as the same may be amended, restated or supplemented from time to time. Pursuant to the Trust Agreement, RBC Dexia Investor Services Trust and the Filer are the trustee and the manager of the Trust, respectively.
The Trust is a “mutual fund in Ontario” as such term is defined in the Securities Act (Ontario) and is subject to the investment restrictions applicable to mutual funds which are prescribed by National Instrument 81-102 Mutual Funds (NI 81-102). The Filer has established an independent review committee for the Trust in accordance with the requirements under National Instrument 81-107 Independent Review Committee for Investment Funds.
The Trust is not required to register as an “investment company” as such term is defined in the U.S. Investment Company Act of 1940, as amended (the 1940 Act), since the Trust will invest all or substantially all of its assets in physical platinum and palladium bullion. Physical platinum and palladium bullion does not fall within the definition of either a “security” or an “investment security” under the 1940 Act and, accordingly, the Trust is not required to be registered as an “investment company”.
The Filer and the Trust are not in default of securities legislation in any province or territory of Canada.
In connection with an initial public offering (the Offering) of transferable, redeemable units of the Trust (the Units), a preliminary base PREP prospectus dated January 13, 2012 of the Trust was filed with the securities regulatory authorities in each province and territory of Canada (collectively, the Canadian Jurisdictions) and the Trust intends to become a reporting issuer, or the equivalent thereof, in such Canadian Jurisdictions following the filing of the final base PREP prospectus of the Trust (the Final Prospectus).
Concurrently with filing the foregoing preliminary prospectus, the Trust filed a registration statement on Form F-1 (the Registration Statement) under the U.S. Securities Act of 1933, as amended (the 1933 Act), with the United States Securities and Exchange Commission (the SEC) in connection with the Offering of the Units in the United States.
The Trust subsequently filed via SEDAR an amended and restated preliminary base PREP prospectus of the Trust dated March 1, 2012 (the Preliminary Prospectus) amending and restating the preliminary base PREP prospectus of the Trust dated January 13, 2012 with each of the Canadian Jurisdictions. Concurrently with filing the Preliminary Prospectus, the Trust filed via EDGAR an amended version of the Registration Statement with the SEC.
The Trust intends to list the Units on the TSX and the New York Stock Exchange Arca (NYSE Arca). The Trust will not file the Final Prospectus until the TSX and the NYSE Arca have conditionally approved the listing of the Units.
The interval between the date of issuance of a preliminary receipt for the Preliminary Prospectus and the date of issuance of a final receipt for the Final Prospectus under National Policy 11-202 Process for Prospectus Reviews in Multiple Jurisdictions is referred to as the Waiting Period. The Trust intends to utilize electronic roadshow materials (the Website Materials) during the portion of the Waiting Period between the date of this decision document and the date of the final receipt for the Final Prospectus as part of the marketing efforts for the Offering, as is now typical for an initial public offering in the United States.