BCSC

Exemption Orders (Discretionary)

SCOTIA CAPITAL INC.

2001 BCSECCOM 1084

Headnote

Mutual Reliance Review System for Exemptive Relief Applications – relief from the underwriter conflicts requirements to permit registrants to underwrite an offering of securities by a connected and related party, subject to certain conditions - decision to hold the application and decision document in confidence, subject to certain conditions

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c.418, s. 48
Securities Rules, B.C. Reg. 194/97, s. 78(2)(b)

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, QUEBEC AND NEWFOUNDLAND

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF SCOTIA CAPITAL INC.

AND

THE BANK OF NOVA SCOTIA

MRRS DECISION DOCUMENT

WHEREAS the securities regulatory authority or regulator (the “Decision Maker”) in each of Ontario, British Columbia, Québec and Newfoundland (the “Jurisdictions”) has received an application from Scotia Capital Inc. (the “Filer”) for a decision (the "Decision"), pursuant to the securities legislation of the Jurisdictions (the “Legislation”), that the requirement (the “Independent Underwriter Requirement”) contained in the Legislation which prohibits a registrant from acting as underwriter in connection with a distribution of securities of an issuer made by means of prospectus, where the issuer is a “related issuer” (or the equivalent) of the registrant or a “connected issuer” (or the equivalent) of the registrant, without certain required participation in the distribution by one or more other registrants, in respect of which the issuer is neither a related issuer (or the equivalent) nor a connected issuer (or the equivalent) of the registrant, shall not apply to the Filer in respect of a proposed distribution (the “Offering”) on a best efforts agency basis of subordinated debentures (the “Securities”) of The Bank of Nova Scotia (the “Bank”), subject to certain conditions;

AND WHEREAS the Securities are to be qualified for distribution by a short form prospectus of the Bank which has been filed on a final basis under SEDAR (the “Shelf Prospectus”), as supplemented by a prospectus supplement (the “Prospectus Supplement”) describing the specific terms of the Offering (the Shelf Prospectus and the Prospectus Supplement are collectively referred to as the “Prospectus”), expected to be filed shortly with the securities regulatory authority or regulator (the “Securities Regulators”) in each of the provinces and territories of Canada;

AND WHEREAS the Filer will be an underwriter of the Offering;

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission (the “OSC”) is the principal regulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

1. The Filer is registered under the Legislation as a dealer in the categories of “broker” and “investment dealer” or equivalent categories and is not in default in respect of any of the requirements thereunder.

2. The Filer is an indirect wholly-owned subsidiary of the Bank.

3. The Bank is a Schedule I chartered bank under the Bank Act (Canada), which constitutes its charter. The Bank’s head office is located at 1709 Hollis Street, Halifax, Nova Scotia.

4. The Bank is a “reporting issuer” (or equivalent) under the Legislation of the Jurisdictions and is not in default of any requirements of the Legislation. The Bank is eligible to participate in the shelf distribution system set out in National Instrument 44 – 102 Shelf Distributions.

5. The Securities will be offered pursuant to the Prospectus.

6. The Decision to accept subscriptions to purchase the Securities will be made by the Bank. One or more officers of the Filer will provide financial advice to the Bank.

7. The Bank is, in relation to the Filer, a “related issuer” (or equivalent) and a “connected issuer” (or equivalent) as such terms are defined in the Legislation.

8. Since the Bank is a related issuer (or equivalent) and a connected issuer (or equivalent) of the Filer, and the Filer proposes to underwrite the largest portion of the Offering, the Offering will not comply with the Independent Underwriter Requirement contained in the Legislation.

9. The Filer and at least one underwriter in respect of which the Bank is not a “related issuer” or a “connected issuer” (an “Independent Underwriter” and together with the Filer, and the other underwriters the “Underwriters”) will offer the Securities for sale to the public on a best efforts agency basis as stipulated in an agency agreement to be executed in relation to the Offering.

10. The Underwriters will be named in the Prospectus Supplement in respect of the Offering and the Prospectus Supplement will contain a certificate signed by the Filer and each of the other Underwriters.

11. The Prospectus Supplement will contain the information specified in Appendix “C” of proposed Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts (the “Proposed Instrument”) on the basis that the Bank is a related issuer (or equivalent) and “connected issuer” (or equivalent) of the Filer as such term is defined in the Proposed Instrument.

12. At least one Independent Underwriter will receive not less than 20 percent of the total management fees of the Offering (the "20% Independent Underwriter").

13. The Prospectus Supplement will identify the 20% Independent Underwriter and disclose the role of the 20% Independent Underwriter in the structuring and pricing of the distribution and in the due diligence activities performed by the underwriters for the distribution.

AND WHEREAS the Filer has requested that the Decision of the Decision Makers (as defined below) and the application dated June 1, 2001 filed in connection with the Decision (collectively, the "Confidential Materials") be held in confidence for up to 60 days from the date of the Decision by the Decision Makers subject to certain conditions;

AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers, pursuant to the Legislation, is that

1. the Independent Underwriter Requirement shall not apply to the Filer in connection with the offering of the Securities provided that:

(a) the portion of the total management fees received in respect of the Offering of the Securities by at least one Independent Underwriter is at least the lesser of:

(i) 20 percent of the total management fees for the Offering; and

(ii) the largest portion of the management fees paid or payable to the Filer or any other registrant that is not an Independent Underwriter; and

(b) the Prospectus Supplement contains the information described by paragraphs 11 and 13 hereof; and

2. the Confidential Materials will be held in confidence by the Decision Makers until the occurrence of the earliest of the following:

(a) the date on which the Prospectus Supplement is filed with the Decision Makers or a press release or other public announcement in respect of the Offering is made by the Filer;

(b) the date the Filer advises the Decision Makers that there is no longer any need to hold the Confidential Materials in confidence; and

(c) the date that is sixty (60) calendar days from the date of the Decision.

DATED this 15th day of June, 2001.

Paul M. Moore S. N. Adams