Exemption Orders (Discretionary)
MACKENZIE INDUSTRIAL PENSION FUND
2001 BCSECCOM 472
COR#01/057
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Exemption from the mutual fund self-dealing prohibitions of the Act to allow certain mutual funds to continue to hold securities of companies that become related to the mutual funds pursuant to a take-over transaction. Requirement for mutual funds to divest securities of related companies over certain time periods (maximum 48 months).
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 121(2)(a), 121(2)(c), 121(3) and 123
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
MACKENZIE INDUSTRIAL PENSION FUND
MACKENZIE INDUSTRIAL HORIZON FUND
MACKENZIE INDUSTRIAL BALANCED FUND
MACKENZIE INDUSTRIAL DIVIDEND GROWTH FUND
MACKENZIE INDUSTRIAL INCOME FUND
MACKENZIE IVY ENTERPRISE FUND
MACKENZIE IVY GROWTH AND INCOME FUND
MACKENZIE IVY CANADIAN FUND
MACKENZIE HORIZON CAPITAL CLASS
MACKENZIE IVY CANADIAN CAPITAL CLASS
MACKENZIE IVY ENTERPRISE CAPITAL CLASS
MACKENZIE UNIVERSAL FUTURE CAPITAL CLASS
MACKENZIE UNIVERSAL SELECT MANAGERS CANADA CAPITAL CLASS
MACKENZIE UNIVERSAL CANADIAN BALANCED FUND
MACKENZIE UNIVERSAL FUTURE FUND
MACKENZIE UNIVERSAL SELECT MANAGERS CANADA FUND
CLARICA EQUITY FUND
CLARICA GROWTH AND INCOME FUND
CLARICA DIVIDEND FUND
KEYSTONE SCEPTRE EQUITY FUND
KEYSTONE AGF EQUITY FUND
KEYSTONE SPECTRUM EQUITY FUND
(the “Funds”)
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of the provinces of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland (the “Jurisdictions”) has received an application (the “Application”) from Mackenzie Financial Corporation ("Mackenzie"), on behalf of the Funds, for a decision (the “Decision”) pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the following provisions do not apply in connection with Investors Group Inc.’s (“IG”) cash and securities exchange offer to purchase all of the outstanding common shares of Mackenzie by way of a formal take-over bid (the “Offer”):
(a) the provision prohibiting a mutual fund from knowingly holding an investment in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company; and
(b) the provision prohibiting a mutual fund from knowingly holding an investment in an issuer in which a substantial security holder of the mutual fund, its management company or its distribution company has a significant interest (collectively, the “Investment Restrictions”).
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 it has been represented by Mackenzie to the Decision Makers that:
1. The Funds are open-ended mutual fund trusts established, or mutual fund corporations incorporated, under the laws of the Province of Ontario.
2. Mackenzie is the trustee, manager and registrar of each of the Funds except Clarica Equity Fund, Clarica Growth and Income Fund and Clarica Dividend Fund for which it is retained as advisor.
3. The securities of the Funds are offered for sale in all of the provinces and territories of Canada. Each of the Funds is a reporting issuer under the Legislation and is not on a list of defaulting issuers maintained under the Legislation.
4. On January 26, 2001, IG and Mackenzie entered into a support agreement (the "Support Agreement") under which, among other things, (i) IG agreed to make an offer for all of the outstanding common shares of Mackenzie on the terms set forth in the Support Agreement; and (ii) Mackenzie represented that the board of directors of Mackenzie determined unanimously that such offer is fair to shareholders and is in the best interest of Mackenzie and resolved to recommend to shareholders that they accept the offer.
5. IG sent to all Mackenzie shareholders the Offer and accompanying circular dated February 15, 2001. In a directors' circular dated February 23, 2001, the directors of Mackenzie recommended that shareholders of Mackenzie accept the Offer. Mackenzie anticipates that IG will purchase all of the outstanding common shares of Mackenzie as outlined in the Offer and thereby complete the transaction (the “Transaction”).
6. Power Financial Corporation ("PFC") is controlled by Power Corporation of Canada (“PCC”) which holds more than 67% of the outstanding common shares of PFC. PFC owns more than 67% of the outstanding common shares in the capital of IG. PFC also owns 65% of the outstanding voting securities of Great-West Lifeco Inc. ("Lifeco"), and has an 80.2% economic interest therein. As of the completion of the Transaction, IG will own 100% of the outstanding common shares of Mackenzie.
7. Pursuant to the Legislation, as of the completion of the Transaction, IG, PFC and PCC will be substantial security holders of Mackenzie and Lifeco will be an issuer in which a substantial security holder of Mackenzie has a significant interest.
8. Each of the Funds owns voting securities of one or more of IG, PFC, PCC or Lifeco (collectively, the "Related Companies"). Collectively, as of April 6, 2001, the Funds held 2.2% of the shares of Lifeco, 2.11% of the shares of PFC, 3.95% of the shares of PCC and 0.28% of the shares of IG.
9. The shares of each of the Related Companies are traded on the Toronto Stock Exchange. For the year 2000, the volume of trading of Lifeco was approximately 24.7 million shares, of PFC was 55.8 million shares, of PCC was 70.4 million shares and of IG was 40.5 million shares.
10. The Funds have not made any investment in securities of the Related Companies following the execution of the Support Agreement. The Funds will not make any further purchases of securities of the Related Companies unless and until the Offer is not accepted by the Mackenzie shareholders, the Transaction does not take place as set forth in the Support Agreement or the Offer is withdrawn, whichever is earlier.
11. At the time the securities of the Related Companies were purchased, the Related Companies were not affiliated with the Funds or Mackenzie, and each investment by the Funds in the securities of the Related Companies represented the business judgement of professional portfolio advisers uninfluenced by considerations other than the best interests of the unitholders of the Funds.
12. In the absence of the Decision, the Funds would be required to divest of securities of the Related Companies not later than the date of completion of the Transaction.
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 Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers pursuant to the Legislation is that the Investment Restrictions do not apply so as to prevent the Funds from holding their investments in the securities of the Related Companies beyond the date of completion of the Transaction, provided that
(a) the Funds do not make any additional purchases of securities of a Related Company;
(b) the Funds divest all or a portion of the securities of the Related Companies as quickly as is commercially reasonable, so that:
(i) no later than 48 months from the date of completion of the Transaction, the Funds do not hold any securities of Lifeco;
(ii) no later than 6 months from the date of completion of the Transaction, the Funds do not hold any securities of IG;
(iii) no later than 18 months from the date of completion of the Transaction, the Funds do not hold any securities of PFC; and
(iv) no later than 12 months from the date of completion of the Transaction, the Funds do not hold any securities of PCC; and
(c) the Funds do not vote the securities of the Related Companies at any meetings of shareholders of the Related Companies.
DATED this 17th day of April, 2001.
Paul Moore Howard I. Wetston