Exemption Orders (Discretionary)
BMO NESBITT BURNS INC.
2001 BCSECCOM 554
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Certain registrants underwriting a proposed shelf distribution of unsecured debentures and preferred shares by an issuer, exempt from the independent underwriter requirement where the issuer is a connected issuer, but not a related issuer, of such registrants.
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 ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, ONTARIO AND QUÉBEC
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF BMO NESBITT BURNS INC. AND INVESTORS GROUP INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Alberta, British Columbia, Newfoundland, Ontario and Québec (the “Jurisdictions”) has received an application from BMO Nesbitt Burns Inc. (“Nesbitt Burns” or the “Filer”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”), that the requirement (the “Independent Underwriter Requirement”) contained in the Legislation which restricts a registrant from acting as an underwriter in connection with a distribution of securities of an issuer made by means of a prospectus, where the issuer is a connected issuer (or the equivalent) of the registrant unless a portion of the distribution at least equal to that portion underwritten by non-independent underwriters is underwritten by an independent underwriter shall not apply to the Filer or to certain other Underwriters (as defined below) in connection with the establishment of a short form base shelf prospectus (the “Prospectus”) providing for the distributions, from time to time thereunder (the “Offerings”) of unsecured debentures and preferred shares (the “Offered Securities”) of Investors Group Inc. (“Issuer”);
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Issuer is incorporated under the laws of Canada, and is a reporting issuer in each Jurisdiction and is not in default of any requirements of the Legislation.
2. The business of the Issuer is providing financial services and products to individuals and corporations throughout Canada. The Issuer and its operating subsidiaries provide a wide range of mutual funds, insurance, guaranteed investment certificates, mortgages, securities services for clients, loans for registered investments as well as a number of other services.
3. The common shares of the Issuer are listed and posted for trading on The Toronto Stock Exchange.
4. The head office of Nesbitt Burns, the lead underwriter for each of the Offerings, is in Ontario.
5. The Issuer has filed a preliminary base shelf prospectus dated April 20, 2001 in connection with the Offerings. The Issuer is proposing to offer the Offered Securities from time to time in Canada by way of the Prospectus and supplements thereto (the “Supplements”) in accordance with applicable securities laws, and may also offer the Offered Securities in the United States from time to time under available exemptions from the prospectus requirements of that jurisdiction.
6. It is anticipated that the Offered Securities will be offered by an underwriting syndicate comprised of Nesbitt Burns and a syndicate of underwriters which has yet to be finalized (each an “Underwriter”, and collectively the “Underwriters”).
7. The Underwriters and the Issuer will enter into one or more underwriting agreements in connection with the Offerings, in each case to conduct the Offerings either on a firm commitment basis or on an agency or best efforts basis.
8. Nesbitt Burns is a wholly-owned subsidiary of Bank of Montreal (“BMO”). The Issuer has accepted a commitment letter for a credit facility of up to $2.443 billion from BMO (the “Facility”). It is expected that the Facility will be funded by a syndicate of Canadian banks (each a “Bank”, and collectively, the “Bank Syndicate”). The Facility will be used by the Issuer to fund a portion of the cash consideration payable in connection with its offer to acquire the common shares of Mackenzie Financial Corporation. It is intended that the proceeds of the Offerings will be used in part to repay a portion of the amount drawn under the Facility.
9. By virtue of the Facility, the Issuer may, in connection with the Offerings, be considered a connected issuer (or the equivalent) of Nesbitt Burns. As well, certain of the Underwriters, if owned or otherwise affiliated with a Bank which is a member of the Bank Syndicate (the “Bank-Owned Underwriters”) may be in a relationship with that Bank which could result in the Issuer being considered a “connected issuer” in relation to such Bank-Owned Underwriter.
10. As part of the Offerings, the Underwriters will be underwriting and distributing the Offered Securities from time to time under the Prospectus and the Supplements. While the exact percentage of the Offered Securities to be underwritten by each Underwriter cannot be determined at this time, it expected that the percentages will be such that the Independent Underwriting Requirement would act to bar Nesbitt Burns and any other Bank-Owned Underwriter from participating in the Offerings.
11. The nature of the relationship among the Issuer, Nesbitt Burns and any Bank-Owned Underwriter will be described in each Supplement to the Prospectus in connection with the Offerings. The Supplements will contain the information specified in Appendix “C” of the draft Multi-Jurisdictional Instrument 33-105 (Underwriting Conflicts) (the “Proposed Instrument”).
12. BMO and the Banks did not and will not participate in the decision to make the Offerings or in the determination of their terms.
13. The Underwriters will receive no benefit pursuant to the Offerings, other than payment of their underwriting fees in connection the Offerings.
14. The Issuer is not and will not be at the time of any Offering a related issuer (or the equivalent) of Nesbitt Burns or of any of the other Underwriters.
15. The Issuer is not and will not be a “specified party” at the time of each Offering as defined in the Proposed Instrument.
AND WHEREAS under 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, under the Legislation, is that the Independent Underwriter Requirement shall not apply to the Filer or any Bank-Owned Underwriter in connection with an Offering provided the Issuer is not and will not be a related issuer, as defined in the Proposed Instrument, to the Filer or any Bank-Owned Underwriter at the time of such Offering and the Issuer is not and will not be a specified party, as defined in the Proposed Instrument, at the time of such Offering.
DATED this 30th day of April, 2001.
Paul M. Moore Robert W. Korthals