July 8, 2015
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
BRIDGEPORT ASSET MANAGEMENT INC. (the Filer)
AND
IN THE MATTER OF
THE TOP FUNDS (as defined below)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer on its behalf and on behalf of Bridgeport Small and Mid Cap Equity Fund, Bridgeport U.S. Equity Fund, and Bridgeport Canadian Equity Fund (the Initial Top Funds) and any other investment fund which is not a reporting issuer under the Legislation that is advised or managed by the Filer, or an affiliate, after the date hereof (the Future Top Funds, and together with the Initial Top Funds, the Top Funds), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), exempting the Top Funds and the Filer from:
(a) the restriction in the Legislation which prohibits an investment fund from knowingly making an investment in a person or company in which the investment fund, alone or together with one or more related investment funds, is a substantial securityholder;
(b) the restriction in the Legislation which prohibits an investment fund from knowingly making an investment in an issuer in which any of the following has a significant interest:
(i) any officer or director of the investment fund, its management company or distribution company or an associate of any of them, or
(ii) any person or company who is a substantial securityholder of the investment fund, its management company or its distribution company; and
(c) the restriction in the Legislation which prohibits an investment fund, its management company or its distribution company from knowingly holding an investment described in paragraph (a) or (b) above
(collectively, the Related Issuer Relief); and
(d) the restrictions contained in subsection 13.5(2)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) which prohibit a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase a security of an issuer in which a responsible person or an associate of a responsible person is a partner, officer or director unless the fact is disclosed to the client and the written consent of the client to the purchase is obtained before the purchase
(the Consent Relief, and together with the Related Issuer Relief, the Requested Relief)
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 Alberta in respect of the Related Issuer Relief.
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 Passport System (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:
Filer
1. The Filer is a corporation incorporated under the laws of the Province of Ontario and has its head office in Toronto, Ontario.
2. The Filer is registered in the categories of investment fund manager, portfolio manager and exempt market dealer in Ontario and Quebec, and in the category of portfolio manager in British Columbia and Manitoba.
3. The Filer is not a reporting issuer in any jurisdiction and is not in default of securities legislation of any jurisdiction of Canada.
4. The Filer is the investment fund manager and portfolio adviser of the Initial Top Funds. The Filer, or an affiliate of the Filer, will be the investment fund manager and portfolio manager of the Future Top Funds.
5. The Filer is the investment fund manager and portfolio adviser of Bridgeport Small and Mid Cap Equity LP, Bridgeport U.S. Equity LP, and Bridgeport Canadian Equity LP (collectively, the Initial Underlying Funds). The Filer, or an affiliate of the Filer, will be the investment fund manager and portfolio manager of any other investment funds that may be established by the Filer or an affiliate after the date hereof (the Future Underlying Funds and together with the Initial Underlying Funds, the Underlying Funds).
6. As the Filer will be the portfolio adviser for the Initial Top Funds and the Initial Underlying Funds, the Filer would be considered to be a “responsible person” within the meaning of the applicable provisions of NI 31-103.
The Top Funds
7. Each Initial Top Fund is, and each Future Top Fund will be, a “mutual fund” for the purposes of the Legislation.
8. Each Initial Top Fund is an open-ended trust established pursuant to a first amended and restated master trust agreement with Valiant Trust Company dated June 5, 2015, as may be amended from time to time. Each Future Top Fund will be an open-ended trust established under the laws of the Province of Ontario or another jurisdiction of Canada.
9. Each Initial Top Fund is not a reporting issuer under the Legislation and no Future Top Fund will be a reporting issuer under the Legislation. Securities of each Top Fund will be offered for sale in any jurisdiction in Canada pursuant to prospectus exemptions under National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) or in other jurisdictions subject to available prospectus and registration exemptions and applicable laws.
10. The investment objectives of each Initial Top Fund contemplate the investment of all or substantially all of each fund’s assets in the corresponding Initial Underlying Funds. The investment objectives of each Future Top Fund will contemplate the investment of all or substantially all of each fund’s assets in one or more Underlying Funds.
The Underlying Funds
11. Each Initial Underlying Fund is, and each Future Underlying Fund will be, a “mutual fund” for the purposes of the Legislation.
13. Each Initial Underlying Fund is not a reporting issuer under the Legislation and no Future Underlying Fund will be a reporting issuer under the Legislation. Securities of each Underlying Fund will be offered for sale in any jurisdiction in Canada pursuant to prospectus exemptions under NI 45-106 or in other jurisdictions subject to available prospectus and registration exemptions and applicable laws.
14. The general partners of the Initial Underlying Funds are Bridgeport Small and Mid Cap Equity GP Inc., Bridgeport U.S. Equity GP Inc., and Bridgeport Canadian Equity GP Inc., respectively (the General Partners). The General Partners are incorporated under the laws of the Province of Ontario and are affiliates of the Filer. The general partner of any Future Underlying Fund that is structured as a limited partnership will be an affiliate of
