Securities Law & Instruments

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- The issuer ceased to be a reporting issuer under securities legislation.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

May 31, 2018

IN THE MATTER OF THE SECURITIES LEGISLATION OF SASKATCHEWAN AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF CANNIMED THERAPEUTICS INC. (the Filer)

ORDER

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for an order under the securities legislation of the Jurisdictions (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a dual application):

(a) the Financial and Consumer Affairs Authority (Saskatchewan) is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland; and

(c) this order is the order of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. the Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;

2. the outstanding securities of the Filer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 securityholders in each of the jurisdictions of Canada and fewer than 51 securityholders in total worldwide;

3. no securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported;

4. the Filer is applying for an order that the Filer has ceased to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer; and

5. the Filer is not in default of securities legislation in any jurisdiction.

Order

Each of the Decision Makers is satisfied that the order meets the test set out in the Legislation for the Decision Maker to make the order.

The decision of the Decision Makers under the Legislation is that the Order Sought is granted.

"Dean Murrison"
Director, Securities Division
Financial and Consumer Affairs
Authority of Saskatchewan

 

Jarislowsky, Fraser Limited

Headnote

National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions -- Relief granted to pooled funds not subject to NI 81-102 to purchase securities of related entities over a stock exchange -- relief granted to pooled funds and public funds subject to NI 81-102 to purchase non-exchange traded debt securities of related entities under primary offerings and in the secondary market -- relief conditional on IRC approval, compliance with pricing requirements, and limits on the amount of a primary offering of a related entity a fund may purchase.

Applicable Legislative Provisions

Securities Act (Ontario), ss. 111(2)(a), 111(2)(c)(ii), 111(4), 113.

April 27, 2018

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF JARISLOWSKY, FRASER LIMITED (the Filer)

ORDER

Background

The regulator in the Jurisdiction has received an application from the Filer on behalf of the pooled funds established and/or advised by the Filer set out in Schedule A (the Existing Pooled Funds) and such other pooled funds that the Filer may establish and/or advise in the future (each a Future Pooled Fund, and together with the Existing Pooled Funds, the Pooled Funds, and individually, a Pooled Fund), to which National Instrument 81-102 Investment Funds (NI 81-102) does not apply, and each mutual fund established and/or advised by the Filer set out in Schedule A (the Existing Public Funds) and such other mutual funds that the Filer may establish and/or advise in the future (each a Future Public Fund, and together with the Existing Public Funds, the Public Funds), to which NI 81-102 does apply, (the Pooled Funds and the Public Funds are collectively referred to as the Funds, and individually as a Fund), for an order under the securities legislation of the Jurisdiction (the Legislation) exempting the Funds from:

(a) the prohibitions in the Legislation (the Related Shareholder Relief) that prohibit a Fund from making or holding an investment in any person or company who is a substantial security holder of the Fund, its management company, or distribution company (each, a Related Shareholder); and

(b) the prohibitions in the Legislation (the Related Party Relief) that prohibit a Fund from making or holding an investment in an issuer in which a Related Shareholder has a significant interest (each, a Related Party)

to enable the Funds to invest in non-exchange-traded debt securities of a Related Shareholder or Related Party in a Primary Offering (as defined below) and in the secondary market having a "designated rating" within the meaning of that term in NI 44-101 (as defined below), to enable the Pooled Funds to invest in exchange-traded securities of a Related Shareholder or a Related Party in the secondary market, and to enable the Existing Pooled Funds and Existing Public Funds to continue to hold any securities of a Related Shareholder or a Related Party purchased prior to the Effective Date (as defined below) (collectively, the Exemption Sought).

Interpretation

Terms defined in National Instrument 14-101 Definitions and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) have the same meaning if used in this order, unless otherwise defined.

In this order, the term Related Person refers to a Related Shareholder and a Related Party depending on the provision in the Legislation that is being considered.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the Canada Business Corporations Act, and its head office is in Montréal, Québec.

2. The Filer is registered as a portfolio manager in each Canadian province and territory (each, a Canadian Jurisdiction), and is registered as an investment fund manager in Québec, Ontario, Newfoundland and Labrador, Alberta and British Columbia.

3. The Filer is not in default of any securities legislation in any Canadian Jurisdiction.

The Funds

4. Each Fund is, or will be, a mutual fund trust governed by the laws of Ontario.

5. The Filer is, or will be, the manager and/or adviser of each Fund.

6. The Pooled Funds are not, and will not be, reporting issuers in any Canadian Jurisdiction.

7. The Public Funds are, and will be, reporting issuers in one or more Canadian Jurisdictions.

8. Securities of the Pooled Funds are, or will be, offered for sale only on an exempt basis pursuant to available registration and prospectus exemptions in one or more of the Canadian Jurisdictions.

9. Securities of the Public Funds are, or will be, offered for sale by means of a simplified prospectus or prospectus.

10. No Fund is in default of any securities legislation of any Canadian Jurisdiction.

The Acquisition

11. Subject to obtaining all required regulatory approvals, The Bank of Nova Scotia (BNS) plans on directly, and indirectly through a wholly-owned subsidiary, acquiring all of the issued and outstanding shares of the Filer on or about May 1, 2018 (the Effective Date).

12. After the Effective Date, BNS will be the ultimate parent company of the Filer.

Conflict of Interest Transactions

13. The Filer is seeking the Exemption Sought in order to allow a Fund to buy and hold securities of a Related Shareholder, or to buy and hold securities in which a Related Shareholder has a significant interest (collectively, the Related Person Securities, and individually, a Related Person Security).

14. The investment objective and investment strategies of each Fund that relies on the Exemption Sought will permit that Fund to buy Related Person Securities.

15. A Fund will only buy Related Person Securities if such purchase is consistent with, or is necessary to meet, the investment objective of that Fund.

16. All purchases of Related Person Securities by a Fund, to the extent possible, will be executed on a recognised marketplace at prevailing market prices.

17. Section 6.2 of NI 81-107 provides an exemption for exchange-traded securities, such as common shares, that have been approved for purchase by the applicable independent review committee (IRC). It does not permit a Fund, or the Filer on behalf of a Fund, to purchase Related Person Securities that are not traded on an exchange. Certain Related Person Securities, such as debt securities of BNS, are not listed and are not exchange-traded.

18. Only a Related Person Security that is a long term debt security will be purchased by a Fund in a primary distribution or treasury offering (a Primary Offering) pursuant to the Exemption Sought:

a. the Related Person Security that is a long term debt security will have a designated rating by a designated rating organization (as such terms are defined in National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101)) with a term to maturity of 365 days or more and it will not be an asset backed security; and

b. the terms of the Primary Offering, such as the size and the pricing, will be a matter of public record as set out in a prospectus, offering or information memorandum, press release or other public document.

19. The Filer considers that the Funds should have access to Related Person Securities that are long term debt securities for the following reasons:

a. there is a limited supply of these types of securities;

b. diversification is reduced to the extent that a Fund is limited with respect to investment opportunities; and

c. to the extent a Fund seeks to track or outperform a benchmark, it is important for the Fund to be able to purchase securities included in the benchmark. These securities are often included in Canadian indices.

20. The Filer considers granting the Exemption Sought to not be prejudicial to the public interest, given that the decision to buy Related Person Securities will be made in the best interests of the Funds and free from the influence of any Related Person.

21. The Filer also considers that a Fund would be prejudiced if it had to refrain from buying Related Person Securities, where to do so is consistent with the investment objective of the Fund.

General

22. The Filer is a well-established, independent portfolio management firm in Canada with a strong fiduciary culture and a disciplined, time-tested investment philosophy based on fundamental research and bottom-up security analysis. The Filer's Investment Strategy Committee (ISC) serves as the Filer's central investment oversight body. All investments for inclusion in a Fund must be approved by the ISC following extensive due diligence and research analysis on each issuer company.

23. The Filer has in place best execution committees for fixed income, North American equities and International equities, and has implemented policies and procedures that are reasonably designed to ensure compliance with its best execution obligations.

24. No Related Person will be able to influence the business judgment of the Filer in connection with the determination of the suitability of investments for a Fund, and influence barriers will be put in place by the ISC and the Filer's Chief Compliance Officer after the Effective Date with respect to transactions involving a Related Person. Decisions made by the Filer as to which investments a Fund may hold are based on the best interests of that Fund, without any consideration given to the interests of the party with whom a purchase or sale is transacted, and is embedded in the Filer's policies, procedures and protocols.

25. Moreover, the IRC of BNS' wholly-owned subsidiary, 1832 Asset Management L.P., which currently functions as the IRC of certain investment funds that are subject to NI 81-102, and certain pooled funds where required by the conditions of certain exemptive relief orders, will also function as the IRC for the Pooled Funds under a new tailored mandate which, among other things, will with respect to the Exemption Sought comply with the applicable provisions of NI 81-107, including the standard of care set out in section 3.9 of NI 81-107.

26. The Public Funds also have, or will have, an IRC that is, or will be, responsible for reviewing any conflicts of interest that might arise including dealing with the Related Shareholder Relief and the Related Party Relief.

27. For greater certainty, the purchase of Related Person Securities by a Fund will be referred to the IRC of the Fund.

Order

The regulator in the Jurisdiction is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.

The order of the regulator under the Legislation is that the Exemption Sought is granted to permit the Filer to purchase and hold Related Person Securities on behalf of the Funds provided that:

1. the purchase of a Related Person Security is consistent with, and necessary to meet, the investment objective of the applicable Fund;

2. at the time of purchase of the Related Person Security by a Fund, the IRC of the Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

3. the Filer will have complied with section 5.1 of NI 81-107, and the Filer and the IRC of the applicable Fund will have complied with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transaction;

4. in the case of the purchase of a Related Person Security by a Fund that is a long term debt security that is not exchange-traded during a Primary Offering:

a. the Related Person Security has been given, and continues to have, at the time of purchase a designated rating by a designated rating organization;

b. the size of the Primary Offering is at least $100 million;

c. at least two purchasers who are independent, arm's length purchasers, which may include "independent underwriters" within the meaning of National Instrument 33-105 Underwriting Conflicts, collectively purchase at least 20% of the Primary Offering;

d. no Fund will participate in the Primary Offering if following its purchase the Fund would have more than five percent (5%) of its net assets invested in that Related Person Security;

e. no Fund will participate in the Primary Offering if following the purchase the Funds together hold more than 20% of the Related Person Securities issued in the Primary Offering; and

f. the price paid for the Related Person Security by a Fund shall be no higher than the lowest price paid by any of the arm's length purchasers who participate in the Primary Offering;

5. in the case of the purchase of a Related Person Security that is a debt security by a Fund that is not exchange-traded in the secondary market:

a. the Related Person Security has been given, and continues to have, at the time of purchase a designated rating by a designated rating organization;

b. the price payable for the Related Person Security is not more than the ask price of the Related Person Security;

c. the ask price of the Related Person Security is determined as follows:

(A) if the purchase occurs on a marketplace, the price payable for the Related Person Security is determined in accordance with the requirements of the marketplace; or

(B) if the purchase does not occur on a marketplace:

(I) the Fund may pay the price for the Related Person Security at which an independent arm's length seller is willing to sell the security; or

(II) if the Fund does not purchase the Related Person Security from an independent, arm's length seller, the Fund may pay the price quoted publicly by an independent marketplace or obtain, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and not pay more than that quote; and

d. the transaction complies with any applicable "market integrity requirements" as defined in NI 81-107;

6. in the case of the purchase or sale of a Related Person Security by a Pooled Fund that is exchange-traded in the secondary market:

a. the purchase is made in the secondary market on an exchange on which the Related Person Security is listed and traded; and

b. the transaction complies with any applicable "market integrity requirements" as defined in NI 81-107;

7. no later than the 90th day after each financial year-end of each Fund, the Filer files with the regulator in the Jurisdiction the particulars of any investments made by that Fund in reliance on this order.

"Peter Currie"
Commissioner
 
"Philip Anisman"
Commissioner

 

Schedule A

Funds

Existing Pooled Funds
 
Le Fonds de Croissance Select
Manion Wilkins & Assoc. Ltd. Short Term Investment Fund
 
Existing Public Funds
 
First Asset Global Dividend Fund
Marquis Enhanced Canadian Equity Pool
Meritas Monthly Dividend & Income Fund
NBI Jarislowsky Fraser Select Canadian Equity Fund
NBI Jarislowsky Fraser Select Balanced Fund
NBI Jarislowsky Fraser Select Income Fund
NBI US Dividend Fund
NBI Canadian Equity Fund
Scotia Private Fundamental Canadian Equity Pool