Headnote
NP 11-203 – Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief from section 111 of the Securities Act (Ontario) granted to permit filers, following their acquisition by another organization, to purchase debt securities of related entities in the secondary market on behalf of public mutual funds they manage and to purchase securities of related entities in the secondary market on behalf of pooled funds they manage – relief conditional on IRC approval and compliance with independent pricing and transparency requirements.
Applicable Legislative Provisions
Securities Act (Ontario), section 111(2)(a), 111(2)(c)(ii), 111(3) and 113. National Instrument 81-107 Independent Review Committee for Investment Funds – s. 6.2.
July 25, 2012
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
BLACKROCK INVESTMENTS CANADA INC. (BlackRock Investments) AND
BLACKROCK INSTITUTIONAL TRUST COMPANY, N.A. (BTC)
(the Filers)
AND
IN THE MATTER OF THE NI 81-102 FUNDS (as defined below) AND THE BLACKROCK INVESTMENTS POOLED FUNDS (as defined below)
DECISION
Background
The securities regulatory authority or regulator in Ontario received an application (the Application) from the Filers under the securities legislation of the principal regulator (the Legislation) for a decision providing an exemption from the requirement that prohibits a mutual fund from knowingly making or holding an investment in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company or in an issuer in which any person or company who is a substantial security holder of the mutual fund, its management company or its distribution company has a significant interest (in each case, a Related Issuer), in order to permit
(i) existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which National Instrument 81-102 – Mutual Funds (NI 81-102) applies (each, an NI 81-102 Fund and, collectively, the NI 81-102 Funds) and existing mutual funds and future mutual funds of which BlackRock Investments is the investment fund manager to which NI 81-102 does not apply (each, a BlackRock Investments Pooled Fund and, collectively the BlackRock Investments Pooled Funds) to purchase certain non-exchange-traded debt securities of a Related Issuer in the secondary market; and
(ii) a BlackRock Investments Pooled Fund to purchase exchange-traded securities of a Related Issuer in the secondary market,
(the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 – Passport System (MI 11-102) is intended to be relied upon in respect of the Exemption Sought in Alberta, British Columbia, Saskatchewan, New Brunswick, Nova Scotia and Newfoundland and Labrador (the Passport Jurisdictions).
Interpretation
Terms defined in MI 11-102, National Instrument 14-101 – Definitions, NI 81-102 and National Instrument 81-107 – Independent Review Committee for Investment Funds (NI 81-107), have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
The head office of BlackRock Investments is located in Toronto, Ontario. The head office of BTC is located in San Francisco, California.
BlackRock Investments is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario.
BTC is relying on a combination of the international adviser exemption in NI 31-103 in Ontario and in each of the Passport Jurisdictions (the “Jurisdictions”) and the sub-adviser exemption in (i) OSC Rule 35-502 in Ontario, (ii) a blanket order in Quebec and (iii) discretionary exemptive relief in the other Passport Jurisdictions.
BlackRock Investments is, or will be, the investment fund manager of each of the NI 81-102 Funds and the BlackRock Investments Pooled Funds, each of which is, or will be, organized under the laws of Ontario or Alberta.
Each of the NI 81-102 Funds is or will be a reporting issuer in each of the Jurisdictions and is or will be listed on the Toronto Stock Exchange.
None of the BlackRock Investments Pooled Funds are, or will be, a reporting issuer in any of the Jurisdictions except for certain BlackRock Investments Pooled Funds which will be reporting issuers in Quebec as a result of filing a non-offering prospectus in Quebec.
One or more of the NI 81-102 Funds and the BlackRock Investments Pooled Funds is, or will be, an index fund, the investment objective of which is to replicate the performance of an index.
BlackRock Investments is, or will be, the primary portfolio manager of each of the NI 81-