May 28, 2026
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 GUARDIAN CAPITAL LP
DECISION
Background
The principal regulator in the Jurisdiction has received an application (the Application) from Guardian Capital LP (the Filer) on its behalf and on behalf of Guardian Strategic Income Fund and other existing investment funds (the Existing Funds) and future investment funds managed by the Filer (for all purposes herein, Filer also shall include an affiliate or successor of the Filer, unless the context otherwise requires) to which National Instrument 81-102 Investment Funds (NI 81-102) applies (together with the Existing Funds, the Funds) for a decision under the securities legislation of the Jurisdiction (the Legislation), to permit each Fund to appoint more than one custodian, each of which is qualified to be a custodian under section 6.2 of NI 81-102 and each of which is subject to all of the other requirements in NI 81-102 Part 6 Custodianship of Portfolio Assets other than the prohibition against the Fund appointing more than one custodian in subsection 6.1(1) of NI 81-102 pursuant to this decision (the Exemption Sought).
Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the 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, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Québec, Prince Edward Island, Saskatchewan and Yukon (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102, NI 81-102, and National Instrument 81-107 Independent Review Committee for Investment Funds 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:
The Filer
The Filer is an Ontario limited partnership. The general partner of the Filer is Guardian Capital Inc., an Ontario corporation. The Filer’s head office is located in Toronto, Ontario.
The Filer is registered as a portfolio manager and an exempt market dealer in each province of Canada, an investment fund manager in each of Ontario, Québec and Newfoundland and Labrador, and a commodity trading manager and a commodity trading counsel in Ontario.
The Filer is, or will be, the investment fund manager and portfolio manager of the Funds.
The Filer is not in default of securities legislation in any of the Jurisdictions.
The Funds
Each Fund is, or will be, an investment fund organized and governed by the laws of a province or territory of Canada or the laws of Canada.
Each Fund is, or will be, an investment fund to which NI 81-102 applies subject to any exemptions therefrom that have been, or may be, granted by securities regulatory authorities.
The securities of each Fund are, or will be, qualified for distribution in one or more of the Jurisdictions under a prospectus prepared and filed in accordance with the securities legislation of such Jurisdictions.
Each of the Existing Funds is not in default of securities legislation in any of the Jurisdictions.
Reasons for the Exemptions Sought
The Filer would like the flexibility for each Fund to engage additional custodians that are qualified to act as a custodian under subsection 6.2(3) of NI 81-102 (each an Additional Custodian), which Additional Custodians may include entities that act as, among other things, a lender or borrowing agent to one or more Funds (each such entity, a Prime Broker).
The ability to appoint a Prime Broker to act as an Additional Custodian will increase operational efficiency and reduce execution risk and costs for a Fund as it will avoid the need to transfer the Fund’s portfolio assets from the Fund’s primary custodian to the Prime Broker to effect transactions conducted by the Fund through the Prime Broker.
The Filer and any Additional Custodian would be subject to all requirements applicable to custodians under Part 6 of NI 81-102, other than the requirement in subsection 6.1(1) of NI 81-102 that there only be one custodian.
An Additional Custodian may also be appointed as a securities lending agent of the Funds and, in such circumstances, would provide the Funds with the opportunity to enter into a greater number of agreements that effect securities lending, repurchase, or reverse repurchase transactions between a Fund, as lender of the securities, third party borrowers, and the Fund’s securities lending agent (Securities Lending Agreements) than would be the case with a single custodian and would, therefore, have the potential to increase revenues to the Funds from securities lending activities.
Prime Brokers are not widely appointed as sub-custodians by custodians under NI 81-102 as it can be both operationally challenging for the custodian and the Filer to appoint them to act in such capacity.
If the Exemption Sought is granted, an Additional Custodian’s responsibility for custody of a Fund’s assets will apply only to the assets held by the Additional Custodian on behalf of the Fund (the Relevant Assets). The custodial arrangements between a Fund and an Additional Custodian will comply with the requirements of Part 6 of NI 81-102 other than subsection 6.1(1).
Any Additional Custodian will meet the requirements of NI 81-102 to act as a custodian for an investment fund and will have experience acting as custodian of the assets of public investment funds governed by NI 81-102. As custodian of the Relevant Assets, an Additional Custodian will comply with the standard of care applicable to qualified custodians under section 6.6 of NI 81-102, will hold the Relevant Assets in the name of the applicable Fund in accordance with section 6.5 of NI 81-102, and will include the provisions prescribed in section 6.4 of NI 81-102 in its custody agreement with the Filer and applicable Fund(s). Each Additional Custodian will complete the review and provide compliance reports to the Filer as contemplated in section 6.7 of NI 81-102.
The ability to terminate an Additional Custodian as custodian of the Relevant Assets of a Fund at any time without cause on written notice will ensure that the Filer maintains ultimate control over all of the portfolio assets of the Funds if the Filer considers it to be in the best interests of the Funds and their respective securityholders to do so.
The appointment of an Additional Custodian should not have an impact on the safety of the portfolio assets of the Funds while also enhancing the Funds’ abilities to engage in the efficient short selling of securities under section 6.8.1 of NI 81-102 and to enter into additional Securities Lending Agreements.
Disclosure regarding the particulars of the appointment of any Additional Custodian of a Fund with respect to the Relevant Assets will be included in the next prospectus filed with respect to the applicable Fund after such appointment is made.
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 Exemption Sought is granted provided that:
(a) a single entity reconciles all the portfolio assets of the Fund and provides the Fund with valuation and securityholder recordkeeping services and will complete daily reconciliations amongst the custodians before striking a daily net asset value;
(b) the Filer maintains such operational systems and processes, as between two or more custodians and the single entity referred to in condition (a) above, in order to keep a proper reconciliation of all the portfolio assets that will move amongst the custodians, as appropriate; and
(c) each Additional Custodian will act as custodian, securities lending agent and/or prime broker only for the portion of portfolio assets of the Fund transferred to it.
“Darren McKall”
Darren McKall, Associate Vice President
Investment Management Division
Ontario Securities Commission
Application No. 2026-249
SEDAR+ Project No. 6443994