Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Approval granted for two consecutive indirect changes of control of a mutual fund manager - Public take-over bid by IGM Financial Inc. for outstanding common shares of Saxon Financial Inc. which, if successful, will involve an indirect change of control of Saxon Fund Management Inc. - IGM Financial Inc. to subsequently transfer shares of Saxon Financial Inc. to its subsidiary, Mackenzie Financial - Change of control not having any adverse effect on the management and administration of the Saxon Funds - National Instrument 81-102 Mutual Funds.
Applicable Legislative Provisions
National Instrument 81-102 Mutual Funds, subsection 5.5(2).
September 19, 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 IGM Financial Inc. (the Filer)
and
In the Matter of Saxon Fund Management Inc. (the Manager)
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) for a decision approving the indirect changes of control of the Manager of the Saxon Funds (as defined below) to the Filer, and subsequently to Mackenzie Financial Corporation (Mackenzie Financial), an affiliate of the Filer, under subsection 5.5(2) of National Instrument 81-102 Mutual Funds (NI 81-102) (the Approval 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 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, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, the Yukon Territory and Nunavut Territory.
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:
Change of Control
On August 5, 2008, the Filer announced that it would make a public take-over bid (the Offer) for all the outstanding common shares of Saxon Financial Inc. (Saxon). The Offer is open for acceptance until September 25, 2008, unless withdrawn, extended or varied.
The Filer mailed the Offer circular and other materials to Saxon’s shareholders on August 19, 2008.
Saxon owns all of the outstanding shares of the Manager, the manager of the funds listed in Appendix A (the Saxon Funds).
The Offer, if successful, would result in the Filer acquiring sufficient securities of Saxon to control Saxon, thereby resulting in an indirect change of control of the Manager. The Filer plans on subsequently transferring the shares of Saxon to Mackenzie Financial, which would result in Mackenzie Financial acquiring indirect control of the Manager.
Security holders of the Saxon Funds have been advised of the proposed indirect changes of control of the Manager in accordance with the requirement in subsection 5.8(1) of NI 81-102 via notices mailed on August 15, 2008. By way of a decision of the Canadian securities regulatory authorities dated August 15, 2008, the Manager was allowed to abridge the 60-day change of control notice requirement prescribed under paragraph 5.8(1)(a) to 40 days, subject to certain conditions. The Offer will remain open for a sufficient period of time that the abridged 40-day period notice requirement will be met.
Both the Filer, through its affiliates, and Mackenzie Financial have considerable experience in the Canadian mutual fund industry through management of their respective families of funds.
The Filer, Mackenzie Financial and Saxon will examine ways to integrate back-office operations to reduce expenses both for their respective shareholders and the securityholders of the respective mutual funds they, and their affiliates, manage.
It has been agreed that Richard Howson, Chief Investment Officer of Saxon, and Robert Tattersall, President and Chief Executive Officer of Saxon will continue with the combined organization and will actively lead the investment team of Howson Tattersall Investment Counsel Limited, the portfolio manager of the Saxon Funds, through 2010.
It is possible that some changes to the management of the Manager will be made following the completion of the acquisition. It is expected any new directors and officers of the Manager to be appointed by the Filer or its affiliates will be persons who are already directors or officers of a registrant in at least one province of Canada, who are directors or senior officers of the Filer, or that are directors or officers of an entity that is already the manager of public mutual funds in Canada, and the integrity and competence of such persons would have already been established to the satisfaction of the securities regulatory authorities.
The Filer believes that the Offer will have no adverse effect on the management and administration of the Saxon Funds.
To the extent that any changes are made following completion of the Offer that constitute “significant changes” within the meaning of NI 81-102, amendments will be made as required by law to the prospectuses of the Saxon Funds or the IGM Funds (as defined below).
The Filer
The Filer was incorporated under the Canada Business Corporations Act on August 3, 1978.
The Filer’s common shares are listed on the Toronto Stock Exchange (the TSX) under the symbol “IGM”. The Filer is a personal financial services company and one of Canada’s largest managers and distributors of mutual funds and other managed asset products, with $119.7 billion in total assets under management at June 30, 2008. Its activities are carried out through Investors Group Inc., Mackenzie Financial and Investment Planning Counsel Inc.
Mackenzie Financial was founded in 1967, and is an investment management firm providing investment advisory and related services. With $61 billion in assets under management at June 30, 2008, Mackenzie Financial distributes its products and services primarily through a diversified distribution network of third party financial advisors.
The Filer’s mutual fund business activities are carried out through I.G. Investment Management, Ltd. and Mackenzie Financial (collectively, the IGM Fund Managers). Each IGM Fund Manager is indirectly wholly-owned by the Filer. Each IGM Fund Manager is currently registered under the Act as an adviser in the categories of investment counsel and portfolio manager, or similar categories, in each of the provinces and territories of Canada.
The IGM Fund Managers collectively manage in excess of 340 public mutual funds which are sold to the public under the family names Investors Group Units Fund Trusts, Investors Group Corporate Class Inc. Classes, Investors Group Income Funds Group, Investors Real Property Fund, Mackenzie Destination Funds, Counsel Group of Funds, Mackenzie Corporate Class Classes and Mackenzie Mutual Funds (collectively, the IGM Funds), among other investment products and services.
Additional information regarding the Filer and its subsidiaries is available in its annual information form dated March 20, 2008 and in the documents incorporated by reference therein, among other publicly available disclosure documents.
Saxon Financial Inc.
Saxon is a reporting issuer in each of the provinces and territories of Canada. Its shares are listed on the TSX under the symbol “SFI”.
The head office of the Manager is in Ontario.
The principal business of Saxon is carried on through its wholly-owned subsidiaries: Howson Tattersall Investment Counsel Limited, an institutional investment management company; Howson Tattersall Private Asset Management Inc., a private client asset management company and the Manager, all of which are organized under the laws of Canada.
Securities of the Saxon Funds are sold to the public in each of the provinces and territories of Canada.
Additional information regarding Saxon and its subsidiaries is available in its annual information form dated March 27, 2008, among other publicly available disclosure documents.
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 Approval Sought is granted.
“Vera Nunes”
Vera Nunes
Assistant Manager, Investment Funds Branch
Ontario Securities Commission
APPENDIX “A”
SAXON FUNDS
Saxon Money Market Fund
Saxon Bond Fund
Saxon Balanced Fund
Saxon High Income Fund
Saxon Stock Fund
Saxon Small Cap
Saxon Microcap Fund
Saxon U.S. Equity Fund
Saxon U.S. Small Cap Fund
Saxon International Equity Fund
Saxon World Growth
Saxon Global Small Cap Fund