Exemption Orders (Discretionary)
PHILLIPS, HAGER & NORTH INVESTMENT MANAGEMENT LTD.
2001 BCSECCOM 564
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from the requirement to file an application to become a member of the Mutual Fund Dealers Association by the deadline in order to give the registrant time to complete a reorganization of its mutual fund operations, 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. 6(4)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, SASKATCHEWAN AND ONTARIO
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF PHILLIPS, HAGER & NORTH INVESTMENT MANAGEMENT LTD.
MRRS DECISION DOCUMENT
[para 1]
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Saskatchewan and Ontario (the “Jurisdictions”) has received an application from Phillips, Hager & North Investment Management Ltd. (“PH&N”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that the requirement contained in the Legislation for PH&N to apply for membership in the Mutual Fund Dealers Association (the “MFDA”) by the date specified in the Legislation (the “MFDA Application Deadline”) not apply to PH&N;
[para 2]
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the British Columbia Securities Commission is the principal regulator for this application;
[para 3]
AND WHEREAS PH&N has represented to the Decision Makers that:
1. PH&N is a company incorporated under the laws of British Columbia and is registered as a portfolio manager and mutual fund dealer (or their equivalent) in each of the Jurisdictions;
2. under PH&N’s current business structure, PH&N is engaged in both portfolio management/investment counselling-related activities and mutual fund dealing-related activities, including:
(a) the administration and management of mutual funds and pooled funds established by PH&N;
(b) the management of fully-managed client accounts containing individual securities (that is, segregated accounts);
(c) the management of fully-managed client accounts containing only mutual fund securities;
(d) the direct sale of mutual fund securities on an exempt basis; and
(e) the direct sale of mutual fund securities which are qualified for sale to the public pursuant to a prospectus filed with applicable securities regulatory authorities (the “Retail Distribution Business”);
3. under the Legislation, PH&N, as a registered mutual fund dealer, is required to apply to become a member of the MFDA before the MFDA Application Deadline, however, certain of the Rules of the MFDA do not allow for business structures such as those of PH&N;
4. Phillips, Hager & North Investment Funds Ltd. (“Dealerco”) is a corporation incorporated on April 10, 2001 under the laws of British Columbia and is a wholly-owned subsidiary of PH&N formed for the purpose of carrying on the Retail Distribution Business;
5. PH&N is in the process of causing Dealerco to concurrently apply for mutual fund dealer registration in each of the Jurisdictions and membership in the MFDA; such applications are anticipated to be made within one to two months;
6. upon Dealerco obtaining registration as a mutual fund dealer in each of the Jurisdictions, PH&N will transfer all of the Retail Distribution Business to Dealerco (the “Reorganization”);
7. after the completion of the Reorganization, Dealerco will carry on the Retail Distribution Business and it is expected that PH&N’s business will be restricted to the following:
(a) the administration and management of mutual funds and pooled funds established by PH&N;
(b) the management of fully-managed client accounts containing individual securities (that is, segregated accounts);
(c) the management of fully-managed client accounts containing only mutual fund securities; and
(d) the direct sale of mutual fund securities on an exempt basis;
8. after the completion of the Reorganization, PH&N will either:
(a) apply for membership in the MFDA;
(b) surrender its registration as a mutual fund dealer in the Jurisdictions (and in the other provinces and the territories in which it is currently registered); or
(c) apply for a permanent exemption from the requirements set out in the Legislation that PH&N become a member of the MFDA; and
9. PH&N requires additional time to effect the Reorganization, including applying for and obtaining all required regulatory approvals for the registration of Dealerco as a mutual fund dealer in the Jurisdictions (and in the other provinces and the territories in which PH&N is currently registered as a mutual fund dealer or equivalent);
[para 4]
AND WHEREAS under the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
[para 5]
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Makers with the jurisdiction to make the decision has been met;
[para 6]
THE DECISION of the Decision Makers under the Legislation, effective May 23, 2001, is that the requirement to apply to become a member of the MFDA before the MFDA Application Deadline shall not apply to PH&N provided that, prior to October 10, 2001, PH&N will either:
(a) have applied for membership in the MFDA; or
(b) with respect to each of the Jurisdictions, have either:
(i) surrendered its registration as a mutual fund dealer in the Jurisdiction; or
(ii) applied for and obtained a permanent exemption from the requirement to become a member of the MFDA from the Decision Maker in the Jurisdiction.
[para 7]
DATED June 4, 2001.
Gerry Halischuk
Director