BOR 97/10 - Further Transitional Relief Relating to Transactions Between a Mutual Fund and Non-Participating Affiliates of its Responsible Persons [Rescinded]

IN THE MATTER OF THE SECURITIES ACT R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF FURTHER TRANSITIONAL RELIEF RELATING TO TRANSACTIONS BETWEEN A MUTUAL FUND AND NON-PARTICIPATING AFFILIATES OF ITS RESPONSIBLE PERSONS

Order Under Section 130(b) of the Securities Act

WHEREAS section 127 of the Securities Act, R.S.B.C. 1996, c. 418 (the "Act") includes new requirements applicable to related party transactions of mutual funds and their responsible persons;

AND WHEREAS the Commission has issued BOR#96/5 and BOR#96/17 providing relief from section 127(1)(b) for transactions involving mortgages and certain debt securities, respectively;

AND WHEREAS BOR#95/8, BOR#96/6, BOR#96/11 and BOR#96/13 provided transitional relief to allow market participants a period of time to adjust to these new requirements;

AND WHEREAS the Commission had received submissions requesting similar relief to that contained in BOR#96/17 for equity securities, forward contracts and over-the-counter options;

AND WHEREAS the definition of "responsible person" in section 120(1) of the Act includes an affiliate of a person that is a responsible person where the affiliate does not:

(a) participate in the formulation of investment decisions made on behalf of the mutual fund, or

(b) before implementation of investment decisions made on behalf of the mutual fund, have access to those decisions or to advice given to the mutual fund relating to those decisions,

("a non-participating affiliate");

AND WHEREAS the equivalent provisions to section 127 in other Canadian jurisdictions do not apply to a non-participating affiliate;

AND WHEREAS the Commission determined that it would be appropriate to provide additional transitional relief for the purchase or sale of equity securities, forward contacts and over-the-counter options from or to the account of non-participating affiliates, to allow time to consider further the submissions received and to allow market participants a period of time to develop procedures to address the new requirements;

AND WHEREAS BOR#96/21 provided additional time to consider further submissions, which relief is due to expire December 1, 1997;

AND WHEREAS the Canadian Securities Administrators have set up a committee to consider mutual fund governance matters and applications for relief from certain conflict of interest provisions under securities legislation (including section 127 and equivalent provisions in other Canadian jurisdictions);

AND WHEREAS the Commission considers that it would be appropriate to extend the transitional relief to allow additional time to consider the preliminary recommendations of the CSA Committee on Governance of Mutual Funds with respect to applications for relief from section 127 and equivalent provisions in other Canadian jurisdictions;

AND WHEREAS the Commission considers that to do so would not be prejudicial to the public interest;

IT IS ORDERED under section 130(b) of the Act that section 127(1)(b) of the Act does not apply to a purchase or sale of equity securities, forward contracts or over-the-counter options of any issuer from or to the account of a non-participating affiliate, provided the purchase or sale contract is entered into before March 31, 2000.

DATED at Vancouver, British Columbia, on November 20, 1997.

REF: BOR#95/8
BOR#96/5
BOR#96/6
BOR#96/11
BOR#96/13
BOR#96/17
BOR#96/21