Exemption Orders (Discretionary)
I.G. INVESTMENT MANAGEMENT, LTD.
2001 BCSECCOM 490
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Relief from certain self-dealing requirements to permit certain mutual funds to tender to an offer by its portfolio manager to purchase all of the outstanding shares of an issuer.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 121(2)(a), 121(2)(c), 127(1)(a), 127(1)(b) and 130
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, QUEBEC, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF I.G. INVESTMENT MANAGEMENT, LTD., LONDON LIFE INVESTMENT MANAGEMENT LTD., MAXXUM FUND MANAGEMENT INC., INVESTORS GROUP INVESTMENT MANAGEMENT (QUEBEC) LTD.
and
INVESTORS CANADIAN EQUITY FUND, INVESTORS CANADIAN ENTERPRISE FUND, INVESTORS MUTUAL OF CANADA, IG MAXXUM DIVIDEND FUND, iPROFILE CANADIAN EQUITY POOL, INVESTORS RETIREMENT MUTUAL FUND, INVESTORS SMALL CAP FUND, INVESTORS SUMMA FUND, LLIM BALANCED STRATEGIC GROWTH FUND, LLIM CANADIAN DIVERSIFIED EQUITY FUND, LLIM INCOME PLUS FUND, MAXXUM CANADIAN EQUITY FUND, MAXXUM DIVIDEND FUND, IG SCEPTRE CANADIAN BALANCED FUND, IG SCEPTRE CANADIAN EQUITY FUND (the “Funds”)
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (collectively, the “Decision Makers”) in each of the Provinces of British Columbia, Alberta, Saskatchewan, Ontario, Quebec, Nova Scotia and Newfoundland (collectively, the “Jurisdictions”) has received an application (the “Application”) from Investors Group Inc. (“Investors Group”) on behalf of the Funds and on behalf of I.G. Investment Management, Ltd. (“IGIM”), London Life Investment Management Ltd. (“LLIM”), Maxxum Fund Management Inc. (“MFM”) and Investors Group Investment Management (Québec) Ltd. (“IGIM Quebec”) (collectively, the “ IG Portfolio Managers”) for a decision (the “Decision”) pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the following provisions of the Legislation do not apply to the IG Portfolio Managers or the Funds in respect of Investors Group’s cash and securities exchange offer to purchase all of the common shares (the “Mackenzie Shares”) of Mackenzie Financial Corporation (“Mackenzie”) by way of a formal take-over bid (the “Offer’’):
(a) except in Quebec, the provision prohibiting a mutual fund from knowingly making or holding an investment
(i) in a person or company who is a substantial security holder of the mutual fund, its management company or distribution company, or
(ii) in an issuer in which
(A) any officer or director of the mutual fund, its management company or distribution company or an associate of any of them, or
(B) any person, or company who is a substantial security holder of the mutual fund, its management company or its distribution company,
has a significant interest (the “Investment Restriction”); and
(b) the provision prohibiting a portfolio manager, or, in British Columbia, the mutual fund or “responsible person”, from knowingly causing an investment portfolio managed by it to
(i) invest in any issuer in which a responsible person (as defined in the Legislation) or an associate of a responsible person is an officer of director unless the specific fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase, or
(ii) purchase or sell the securities of any issuer from or to the account of a responsible person, any associate of a responsible person or the portfolio manager (the “Portfolio Manager Restriction”);
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application:
AND WHEREAS Investors Group has represented to the Decision Makers that:
1. Investors Group is a reporting issuer in each of the provinces of Canada. Investors Group operates through its affiliates who are the trustee and manager of the Funds. Investors Group does not make investment decisions for the Funds, but the trustee of the Funds retains portfolio advisers to do so.
2. Mackenzie is a public company incorporated under the Business Corporations Act (Ontario). The Mackenzie Shares are listed on the Toronto Stock Exchange and quoted on Nasdaq in the United States. Mackenzie is registered with the Ontario Securities Commission, the Alberta Securities Commission and the Manitoba Securities Commission as an investment counsel and portfolio manager. Mackenzie is a reporting issuer in all applicable provinces and territories of Canada.
3. Mackenzie’s authorized capital consists of an unlimited number of Mackenzie Shares. As at January 19, 2001, there were 128,739,147 issued and outstanding Mackenzie Shares (138,285,753 on a fully diluted basis). Mackenzie has no controlling shareholder.
4. The Offer has been made by Investors Group pursuant to a support agreement dated January 26, 2001 between Mackenzie and Investors Group.
5. Pursuant to the Offer, Investors Group prepared a take-over bid circular (the “Bid Circular”) containing, among other things, prospectus-level disclosure regarding Investors Group and a detailed description of the Offer, and has distributed it to all holders of Mackenzie Shares (the “Mackenzie Shareholders”) in accordance with the Legislation.
6. The Funds are Mackenzie Shareholders and together own approximately 2.55% of the outstanding Mackenzie Shares.
7. Following the successful completion of the Offer, and assuming that the maximum number of Investors Group shares are issued under the Offer, the Funds collectively will own approximately 0.5% of the outstanding shares of Investors Group and less than 1.5% of the outstanding number of Investors Group shares, excluding shares held by related parties.
8. The distribution company for each of LLIM Balanced Strategic Growth Fund, LLIM Canadian Diversified Equity Fund, LLIM Income Plus Fund, MAXXUM Canadian Equity Fund and MAXXUM Dividend Fund (the “LL Funds”) is Quadrus Investment Services Ltd. (“Quadrus”). The management company for each of the LL Funds is either MFM or LLIM. Each of Quadrus and LLIM is indirectly owned by, and is an affiliate of, Power Financial Corporation (“PFC”), which holds approximately 67% of the outstanding Investors Group shares. Therefore, PFC has a significant interest in Investors Group and is a substantial security holder of each of Quadrus and LLIM.
9. The distribution company for each of the Funds other than the LL Funds is either Investors Group Financial Services Inc. or Les Services Investors Limitee, each of which is indirectly wholly-owned by Investors Group. Therefore, Investors Group is a substantial security holder of the distribution company of the Funds other than the LL Funds.
10. The management company for each of the Funds other than IG Sceptre Canadian Balanced Fund, IG Sceptre Canadian Equity Fund or the LL Funds is IGIM, which is indirectly wholly-owned by Investors Group. IGIM Quebec, which is also indirectly wholly-owned by Investors Group, performs portfolio manager functions for one of the Funds (Investors Mutual of Canada). The management company for two of the LL Funds (MAXXUM Canadian Equity Fund and MAXXUM Dividend Fund) is MFM, which is also indirectly wholly-owned by Investors Group. Therefore, Investors Group is a substantial security holder of IGIM, IGIM Quebec and MFM.
11. At least one director or officer of Investors Group is also a director or officer of each of the IG Portfolio Managers, other than LLIM.
12. As at January 31, 2001, PFC owned approximately 67.9% of the outstanding Investors Group shares, and, assuming the successful completion of the Offer, will own more than 50% of the Investors Group shares that will be outstanding after the Offer.
13. In connection with the Offer, Mackenzie Shareholders will be given the opportunity to receive, for every Mackenzie Share deposited under the Offer:
(a) an amount in cash subject to pro-ration (the “Cash Option”); or
(b) common shares of Investors Group subject to pro-ration (the “Share Option”); or
(c) any combination of the Cash Option and the Share Option, again subject to pro-ration.
14. In the absence of the Decision, the Investment Restriction would preclude the Funds from receiving the Share Option or a combination of the Cash Option and the Share Option because the Investment Restriction prohibits the Funds from acquiring and holding Investors Group shares.
15. In the absence of the Decision, the Portfolio Manager Restriction would prohibit the IG Portfolio Managers from causing the Funds to effectively sell their holdings of Mackenzie Shares to Investors Group and to effectively purchase Investors Group shares under the Offer, given that Investors Group is a “responsible person” as defined in the Legislation and given that at least one officer or director of Investors Group is an officer or director of the IG Portfolio Managers, other than LLIM.
16. Each portfolio manager of each Fund has made or will make its decision on whether to tender Mackenzie Shares into the Offer without independent advice and solely on the basis of the best interests of the securityholders of the Fund, in conformity with fiduciary duties owed to each Fund and its securityholders, and having regard to the terms of the Offer, particularly the price, and all other investment considerations determined by the portfolio manager to be relevant to the decision. At the time the decision to tender to the Offer was or will be made, the portfolio managers had or will have no information about the number of Mackenzie Shares that have already been tendered to the Offer.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the Decision of each Decision Maker;
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;
THE DECISION of the Decision Makers pursuant to the Legislation in connection with the Offer is that the Funds are exempt from the Investment Restriction and the IG Portfolio Managers are exempt from the Portfolio Manager Restriction solely to enable the Funds to tender their holdings of Mackenzie Shares to the Offer and to elect (or be deemed to elect) to receive Investors Group shares as full or partial consideration, provided that
(a) the Funds divest all or a portion of the Investors Group shares as quickly as is commercially reasonable, so that, no later than 9 months from the date of acquisition of such Investors Group shares, the Funds do not hold any Investors Group shares; and
(b) the Funds do not vote such Investors Group shares at any meeting of Investors Group shareholders.
DATED this 12th day of April, 2001.
Paul Moore Robert W. Davis