Headnote NP 11-203 – Process for Exemptive Relief Applications in Multiple Jurisdictions – Approval granted for change of control of mutual fund manager under s. 5.5(2) of NI 81-102. Filers have no current plans to change the manager of the Funds, or to amalgamate or merge the current manager with any other entity, for the foreseeable future.
Applicable Legislative Provisions
National Instrument 81-102 Mutual Funds, section 5.5(2).
September 12, 2013
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
JOVIAN CAPITAL CORPORATION
(Jovian)
AND
IN THE MATTER OF
T.E. INVESTMENT COUNSEL INC.
(the Manager)
(Jovian and the Manager are, collectively, the Filers)
AND
IN THE MATTER OF THE FUNDS
(as defined below)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for approval of an indirect change of control of the Manager (Change of Control) of the mutual funds listed in Appendix “A” (collectively, the Funds) in accordance with section 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 (the Principal Regulator); 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 Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Québec and Saskatchewan (together with Ontario, the Jurisdictions).
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 Filers:
The Manager
The Manager is a corporation incorporated under the laws of the Province of Ontario and has its head office in Toronto, Ontario.
The Manager is registered as an investment fund manager (IFM) under the securities legislation in Ontario, Québec and Newfoundland and Labrador, as an exempt market dealer in Ontario, and as a portfolio manager in all Canadian provinces.
The Manager is not in default of securities legislation in any province or territory.
The Manager is the IFM of the Funds.
The Funds
Securities of the Funds are distributed in each of the Jurisdictions under a simplified prospectus and annual information form prepared in accordance with the requirements of National Instrument 81-101 – Mutual Fund Prospectus Disclosure.
Each Fund is a reporting issuer under the applicable securities legislation of the Jurisdictions.
The Funds are not in default of applicable securities legislation in any of the Jurisdictions.
Jovian
The Manager is indirectly owned by its holding company, Jovian Capital Corporation (Jovian).
Jovian is a public holding company carrying on business in the financial services industry through its operating subsidiaries. Jovian acquires, creates and grows financial services companies specializing in wealth management and asset management. As of August 1, 2013, the Jovian group of companies manages approximately $6.9 billion of client assets ($5.4 billion assets under management and $1.5 billion in assets under administration).
Jovian is a corporation existing under the Canada Business Corporations Act (CBCA). Its head office is located in Toronto, Ontario, and its registered office is located in Winnipeg, Manitoba. Jovian is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. Jovian is not a registrant under the securities legislation of any jurisdiction in Canada or elsewhere.
The Proposed Acquisition
In a press release dated July 16, 2013, Jovian announced that an agreement had been reached for the acquisition of all of its issued and outstanding common shares by Industrial Alliance Insurance and Financial Services Inc. (Industrial Alliance) by way of statutory arrangement under section 192 of the CBCA (the Proposed Acquisition).
The Proposed Acquisition was approved at a joint special meeting of shareholders and debentureholders of Jovian which was held on September 11, 2013.
The Proposed Acquisition is subject to court and regulatory approvals and is expected to close on October 1, 2013 (the Closing). Following the Closing, Industrial Alliance will become the new indirect owner of the Manager, due to its holding of Jovian, however, no substantive changes are expected in the operation or management of the Funds by the Manager.
Industrial Alliance
Industrial Alliance is a public life and health insurance company incorporated under the laws of Québec. It offers a wide range of life and health insurance products, savings and retirement plans, RRSPs, mutual and segregated funds, securities, auto and home insurance, mortgage loans and other financial products and services for both individuals and groups. It is the fourth largest life and health insurance company in Canada and has assets under management and administration of more than $87 billion.
Industrial Alliance is a reporting issuer in all of the provinces of Canada. Its head office is located in the province of Québec.
Change of Control of Manager
The Proposed Acquisition will result in Industrial Alliance acquiring indirect control over the Manager.
In respect of the impact of the Change of Control on the Manager and on the management and administration of the Funds:
a) Industrial Alliance has confirmed that there is no current intention:
(i) to make any substantive changes as to how the Manager operates or manages the Funds;
(ii) to merge the Manager with any other IFM;
(iii) to change the Manager to Industrial Alliance or an affiliate of Industrial Alliance; and
(iv) within a foreseeable period of time, to change the Manager to Industrial Alliance or an affiliate of Industrial Alliance;
b) Industrial Alliance currently intends to maintain the Funds as a separately managed fund family with the Manager as their IFM and portfolio manager;
c) the Closing is not expected to have any material impact on the business, operations or affairs of the Funds or the securityholders of the Funds;
d) following the Closing, the directors and officers of the Manager will be unchanged, with the exception of the appointment of two new directors, the resignations of four existing directors and the appointment of two new officers;
e) the Manager will retain the management teams and supervisory personnel that were in place immediately prior to the Closing, and from and after the Closing, the compliance activities of the Manager will be subject to oversight by Industrial Alliance’s compliance group;
f) it is not expected that there will be any change in the management of the funds, including the investment objectives and strategies of the Funds, or the expenses that are charged to the Funds as a result of the Closing;
g) there is no current intention to change the name of the Manager or the names of the Funds as a result of the Proposed Acquisition, immediately after the Closing;
h) the Closing will not adversely affect the Manager’s financial position or its ability to fulfill its regulatory obligations; and
i) upon the Change of Control, the members of the Manager’s Independent Review Committee (IRC) will cease to be IRC members by operation of section 3.10(1)(c) of National Instrument 81-107 – Independent Review Committee for Investment Funds. Immediately following the Change of Control, the IRC will be reconstituted.
Notice Requirements
Notice of the Change of Control with respect to the Proposed Acquisition was provided by mail to securityholders of the Funds on August 2, 2013, in accordance with Section 5.8(1)(a) of NI 81-102, being at least 60 days before the Closing.
A notice regarding the Proposed Acquisition was submitted to the Registration Branch of the Ontario Securities Commission on or about August 1, 2013 pursuant to section 11.9 of National Instrument 31-103 – Registration Requirements and Exemptions.
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
Manager, Investment Funds Branch
Ontario Securities Commission
SEDAR # 2112252
Appendix "A"
T.E. Investment Counsel Inc. Funds
Jov Prosperity Canadian Fixed Income Fund
Jov Prosperity Canadian Equity Fund
Jov Prosperity U.S. Equity Fund
Jov Prosperity International Equity Fund