Exemption Orders (Discretionary)

BRASCAN CORPORATION

2001 BCSECCOM 1188

Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from the prohibition against a person who has information concerning the investment program of a mutual fund using that information to purchase or sell securities for the person's benefit.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, ss. 128 and 130(b).

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
BRASCAN CORPORATION
TRILON FINANCIAL CORPORATION

AND

TRILON SECURITIES CORPORATION

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland (the "Jurisdictions") received an application from Brascan Corporation (“Brascan”), Trilon Financial Corporation (“Trilon Financial”) and Trilon Securities Corporation (“Trilon Securities”) (collectively, the “Applicants”) for a decision under the securities legislation (the "Legislation") of the Jurisdictions that, in connection with

(i) the initial sale to Diversified Canadian Financial II Corp. (the “Company”) of previously issued securities of Brascan and of Trilon Financial, BPO Properties Ltd., Nexfor Inc., Brascade Resources, Noranda Equities Inc. and GLP NT Corporation (collectively, the “Brascan Affiliates”), as described in paragraph 13 below, and

(ii) future principal purchases/sales of previously issued securities of Brascan or the Brascan Affiliates (collectively, the “Brascan Group”) from/to the Company as described in paragraph 22 below,

Brascan, Trilon Financial and Trilon Securities are exempt from the provision prohibiting a person or company who has access to information concerning the investment program of a mutual fund from purchasing or selling securities of an issuer from his, her or its account, where the portfolio securities of the mutual fund include securities of that issuer and where the information is used by the person or company for his, her or its direct benefit or advantage (the “Insider Trading Prohibition”);

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Applicants have represented to the Decision Makers as follows:

1. The Company was incorporated under the laws of the Province of Ontario on October 2, 2001. The investment objective of the Company is to invest in a portfolio of securities consisting of previously issued cumulative and redeemable preferred shares (the ‘‘Portfolio Shares’’) of the Brascan Group, as described in paragraphs 13 and 14 below. The Brascan Group provides a diversified range of products and services to their customers and clients in the natural resources, property, energy and financial services sectors. The Portfolio Shares and any cash held by the Company from time to time will be the only material assets of the Company.

2. The Company is considered to be a mutual fund as defined in the Legislation. However, since the Company will not operate as a conventional mutual fund, it has made application for exemptions from certain requirements of National Instrument 81-102.

3. The purpose of the Company is to provide a vehicle through which different investment objectives with respect to participation in the Portfolio Shares may be satisfied. This is to be accomplished through the issuance of capital shares (the “Capital Shares”) and senior preferred shares (the “Senior Preferred Shares”).

4. The Senior Preferred Shares will be offered to the public pursuant to a prospectus (the “Offering”). For this purpose, the Company has filed a preliminary prospectus dated October 10, 2001 (the “Preliminary Prospectus”) with the securities regulatory authorities of each Province of Canada.

5. Concurrently with the Offering of Senior Preferred Shares, the Company will issue, on an exempt basis, one Capital Share for each Senior Preferred Share sold. The Capital Shares will have a value at the time of issue equal to the value of the Portfolio Shares, less the proceeds of the Senior Preferred Share Offering, divided by the number of Capital Shares to be issued.

6. The Company currently has a board of directors consisting of six directors. Three of the Company’s directors are also directors or officers of Trilon Financial or its affiliates, while the remaining three directors are independent of the Brascan Group (the “Independent Directors”).

7. The Company will hold the Portfolio Shares in order to generate fixed cumulative preferential dividends for the holders of the Senior Preferred Shares and to enable the holders of the Capital Shares to participate in any remaining dividends and any capital appreciation in the Portfolio Shares.

8. An application has been made to have the Senior Preferred Shares listed and traded on the Toronto Stock Exchange (“TSE”), for which a conditional listing approval has been granted by the TSE on November 12, 2001.

9. Pursuant to an administration agreement (the “Administration Agreement”) between the Company and Trilon Securities, the latter has been retained to administer the ongoing operations of the Company. Trilon Securities will be paid an annual fee equal to 10% of the ordinary expenses incurred in connection with the operation and administration of the Company

10. Trilon Securities is registered under the Legislation as a dealer in the categories of “broker” and “investment dealer” and is a member of the Investment Dealers Association of Canada and the TSE. Trilon Securities is the promoter of the Company. It is a wholly-owned subsidiary of Trilon Financial, which is 71% owned by Brascan.

11. Pursuant to an agreement to be made between the Company, Trilon Securities as promoter of the Company and a group of dealers led by Scotia Capital Inc., the Company will appoint the dealers as agents (the “Agents”) to offer the Senior Preferred Shares of the Company to the public on a best-efforts basis. Trilon Securities will not participate as Agent in the Offering.

12. The net proceeds from the Offering of the Senior Preferred Shares (after deducting the Agents’ fees, expenses of the issue and the Company’s expenses relating to the acquisition of the Portfolio Shares) will be used by the Company, together with the proceeds from the exempt distribution of Capital Shares, to fund the purchase of Portfolio Shares to be held by the Company.

13. Pursuant to agreements between the Company and each of Trilon Financial and Brascan, the Company has agreed to purchase, and Trilon Financial and Brascan have agreed to sell to the Company, on the closing of the Offering, the Portfolio Shares listed below on commercial terms and at a price equal to the fair value, as at the date of the Company’s (final) prospectus (the “Prospectus”), of those shares as determined by Trilon Securities:

Issuer	Shares	Seller	Indicative Price
Brascan	Class A, Series 3	Trilon Financial	Par Value of
CDNX: BNN.PR.F			$100,000/share
BPO Properties Ltd.	Series K	Trilon Financial	25% discount
Unlisted			to Par Value of
			$500,000/share
Nexfor Inc.	Class A, Series 1	Trilon Financial	Par Value of
TSE: NF.PR.A			$25/share
Brascade Resources Inc.	Series B	Trilon Financial	Par Value of
TSE: BCA.PR.B			$40/share
Noranda Equities Inc.	Class B	Trilon Financial	Par Value of
Unlisted	Senior Preferred		$25/share
GLP NT Corporation	Class A	Trilon Financia	Par Value of
TSE: GP.A			$7.50/share
Trilon Financial	Class II, Series 2	Brascan	Par Value of
TSE: TFC.PR.B			$100/share

14. The only other Portfolio Shares to be acquired by the Company are the Class II, Series 4 preferred shares of Trilon Financial. This class of Portfolio Shares will be purchased by Trilon Securities, as agent on behalf of the Company, from holders that may or may not be related to Brascan or the Brascan Affiliates. The price to be paid for the purchase of this class of Portfolio Shares is the fair value determined for it by Trilon Securities, currently expected to be $18.50/share. No fee or commission will be received by Trilon Securities from the selling holders or the Company in connection with such agency purchase.

15. The Independent Directors of the Company have reviewed the fair value determination of Trilon Securities and have determined that the price to be paid by the Company for each Portfolio Share is fair to the Company.

16. The Portfolio Shares that the Company has agreed to purchase from Brascan and Trilon Financial were previously acquired by them at par value and have been held by them for more than three years.

17. The Company’s Prospectus will disclose

(a) the price to be paid for the Portfolio Shares and the fact that Brascan and Trilon Financial acquired them at par value and have held them for more than three years,.

(b) the fact that the Independent Directors have determined that the price to be paid for each class of Portfolio Shares is fair to the Company,

(c) the general factors, and those factors that are specifically relevant to each Portfolio Share, that were considered by Trilon Securities and the Independent Directors in determining that the price to be paid for each Portfolio Share is fair to the Company,

(d) information concerning the trading history of those Portfolio Shares that are listed on the TSE or the Canadian Venture Exchange,

(e) information concerning the credit rating and dividend history of the Portfolio Shares,

(f) details of Trilon Securities’ relationship with and economic interest in the Company, and

(g) details of Trilon Securities’ relationship with Brascan and the Brascan Affiliates.

18. The Company will pay cash for the acquisition of Portfolio Shares referred to in paragraphs 13 and 14 above out of the proceeds of the Senior Preferred Share Offering and the exempt distribution of Capital Shares.

19. The Company will not engage in any trading of the Portfolio Shares held by it except:

(a) to fund retractions or redemptions of Senior Preferred Shares or Capital Shares or a portion of the Senior Preferred Share dividends,

(b) upon receipt of stock dividends,

(c) in the event of a take-over bid or issuer bid for any of the Portfolio Shares,

(d) to fund liabilities, or

(e) as otherwise disclosed in the Preliminary Prospectus and to be described in the Prospectus

20. In the event that any Portfolio Share is redeemed or otherwise removed from the Company’s portfolio as described in the Preliminary Prospectus and to be described in the Prospectus, it is the Company’s policy to replace it with similar securities (“Replacement Portfolio Shares”), with a view to preserving to the extent possible the quality, liquidity and dividend coverage of the portfolio and the rating of the Senior Preferred Shares. In order to do so, the Company may purchase previously issued Replacement Portfolio Shares of Brascan or the Brascan Affiliates.

21. In connection with the services to be provided by Trilon Securities to the Company pursuant to the Administration Agreement, Trilon Securities

(a) may sell Portfolio Shares as agent on behalf of the Company to fund retractions of Senior Preferred Shares or Capital Shares prior to the Redemption Date, or

(b) may purchase Replacement Portfolio Shares as agent on behalf of the Company to replace Portfolio Shares that are redeemed or otherwise removed from the portfolio as described in the Preliminary Prospectus and to be described in the Prospectus.

In connection with such sales or purchases of Portfolio Shares or Replacement Portfolio Shares on behalf of the Company, Trilon Securities may receive fees or commissions at normal commercial rates.

22. Trilon Securities or Trilon Financial may, as principal, purchase Portfolio Shares from the Company (the “Principal Purchase”) or sell Replacement Portfolio Shares to the Company (the “Principal Sale”), in respect of which neither will receive any fee or commission. In carrying out any Principal Purchase of Portfolio Shares or Principal Sale of Replacement Portfolio Shares from/to the Company, Trilon Securities and Trilon Financial will deal fairly, honestly and in good faith with the Company. All such Principal Purchases and Principal Sales will be approved as to price and terms by the Independent Directors.

23. In connection with any future Principal Purchase or Principal Sale from/to the Company of Portfolio Shares or Replacement Portfolio Shares that are listed on a stock exchange, Trilon Securities and/or Trilon Financial will comply with the applicable rules, procedures and policies of the stock exchange. In addition, the Administration Agreement provides that Trilon Securities must take reasonable steps, such as soliciting bids from other market participants or such other steps as Trilon Securities, in its discretion, considers appropriate after taking into account prevailing market conditions and other relevant factors, to enable the Company to obtain the best price reasonably available for the Portfolio Shares or to pay the most favourable price reasonably available for the Replacement Portfolio Shares, as the case may be.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that the Insider Trading Prohibition does not apply to

A. Brascan and Trilon Financial, in connection with their initial sale of certain Portfolio Shares to the Company as described in paragraph 13, provided that the Company’s Prospectus contains the disclosure referred to in paragraph 17 above; and

B. Trilon Securities and Trilon Financial, in connection with future Principal Purchases of Portfolio Shares or Principal Sales of Replacement Portfolio Shares from/to the Company, as described in paragraph 22 above, provided that

i. with respect to Portfolio Shares or Replacement Portfolio Shares listed on a stock exchange and for which price quotations are available,

a. the price payable to the Company is not less than the bid price as reported on the stock exchange, in the case of Principal Purchases of Portfolio Shares from the Company, or

b. the price payable by the Company is not more than the ask price as reported on the stock exchange, in the case of Principal Sales of Replacement Portfolio Shares to the Company;

ii. with respect to Portfolio Shares or Replacement Portfolio Shares not listed on a stock exchange or, even if listed, for which there are no available price quotations,

a. if the value of the transaction constitutes 25% or more of the net asset value of the Company, an independent valuation is obtained and disclosed in a material change report, or

b. if the value of the transaction is less than 25% of the net asset value of the Company, the price is determined by the Independent Directors to be fair to the Company; and

iii. particulars of each Principal Purchase of Portfolio Shares or Principal Sale of Replacement Portfolio Shares from/to the Company are disclosed in a note to the financial statements of the Company.

DATED this 5th day of December, 2001.

Paul M. Moore Theresa McLeod