Application for an order, pursuant to section 218 of the Regulation, exempting the Applicant from the requirement in section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada, for the Applicant to be registered under the Act as a dealer in the category of limited market dealer.
R.R.O. 1990, Regulation 1015, am. to O. Reg. 500/06, ss. 213, 218.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
R.R.O. 1990, REGULATION 1015,
IN THE MATTER OF
NORTHROAD CAPITAL MANAGEMENT LLC
(Section 218 of the Regulation)
UPON the application (the Application) of NorthRoad Capital Management LLC (the Applicant) to the Ontario Securities Commission (the Commission) for an order pursuant to section 218 of the Regulation, exempting the Applicant from the requirement under section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada as a condition of registration under the Act as a dealer in the category of limited market dealer (LMD);
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant is a limited liability company governed by the laws of the State of New York of the United States of America. The head office of the Applicant is located at 530 Fifth Avenue, 3rd Floor, 10036, USA.
2. The Applicant is registered in the United States as an adviser under the Investment Advisers Act of 1940 with the U.S. Securities and Exchange Commission.
3. The Applicant carries on business as an adviser in the United States.
4. The Applicant is not presently registered in any capacity under the Act. However, the Applicant has applied for registration under the Act in the categories of international adviser and LMD.
5. As an LMD in Ontario, the Applicant proposes to engage in trading in securities with "accredited investors" (as defined under National Instrument 45-106 -- Prospectus and Registration Exemptions) in Ontario, or otherwise pursuant to prospectus exemptions.
6. person formed or created, under the laws of Canada or a province or territory of Canada.
7. The Applicant is not incorporated, formed or created under the laws of Canada or any province or territory of Canada. The Applicant is not a resident in Canada and does not require a separate Canadian company to carry out its proposed LMD activities in Ontario. It is more efficient and cost-effective to carry out those activities through the existing company.
8. The Applicant requests an exemption from the requirement under section 213 of the Regulation to permit it to obtain registration as an LMD without having to incorporate a separate company under the laws of Canada or a province or territory of Canada.
9. Without the relief requested the Applicant would not meet the requirements of the Regulation for registration as an LMD as it is not a company incorporated, or a person formed or created under the laws of Canada or a province or territory of Canada.
AND UPON the Commission being satisfied that to make this order would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to section 218 of the Regulation, that, in connection with the registration of the Applicant as an LMD under the Act, section 213 of the Regulation shall not apply to the Applicant for a period of three years, provided that:
1. Before the Applicant carries on any trading activities for any person or company pursuant to its registration under the Act as an LMD, the Applicant shall (if it has not already done so) provide to that person or company a statement in writing that:
(a) discloses the non-resident status of the Applicant in Ontario;
(b) identifies the Applicant's jurisdiction of residence and the name and address of the Applicant's agent for service of process in Ontario; and
(c) discloses that legal rights may not be enforceable as a result of the non-resident status of the Applicant in Ontario.
2. The Applicant will not change its agent for service of process in Ontario without giving the Commission and its clients 30 days' prior written notice of such change, which shall, in the case of the Commission, be given by filing with the Commission (Attention: Manager, Registrant Regulation) a new Submission to Jurisdiction and Appointment of Agent for Service of Process, in the required form.
3. The Applicant and each of its registered salespersons, directors, officers and partners irrevocably and unconditionally submit to the non-exclusive jurisdiction of the judicial, quasi-judicial, and administrative tribunals of Ontario and any administrative proceedings in Ontario, in any proceedings arising out of or related to or concerning its registration under the Act or its activities in Ontario as a registrant.
4. The Applicant must ensure that all securities, cash, and other property of a client of the non-resident registrant are held
(a) directly by the client;
(b) on behalf of the client by a custodian or sub-custodian that
(i) meets the guidelines prescribed for acting as a sub-custodian of the portfolio securities of a mutual fund in Part 6 of National Instrument 81-102 Mutual Funds, and
(ii) is subject to the Bank for International Settlements' framework for international convergence of capital measurement and capital standards, or
(c) on behalf of the client by a registered dealer that is a member of an SRO that is a member of the Canadian Investor Protection Fund or other comparable compensation fund or contingency fund.
5. The Applicant will inform the Director immediately upon the Applicant becoming aware that:
(a) that it has ceased to be registered with the United States Securities and Exchange Commission as an adviser;
(b) of its registration in any other jurisdiction not being renewed or being suspended or revoked;
(c) that it is the subject of a regulatory proceeding, investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority,
(d) that the registration of its salespersons, directors, officers or partners who are registered in Ontario have not been renewed or have been suspended or revoked in any Canadian or foreign jurisdiction; or
(e) that any of its salespersons, directors, officers or partners who are registered in Ontario are the subject of a regulatory proceeding, investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority in any Canadian or foreign jurisdiction.
6. The Applicant will pay the increased compliance and case assessment costs of the Commission due to the Applicant's location outside Ontario, including the cost of hiring a third party to perform a compliance review on behalf of the Commission.
7. The Applicant will make its books and records outside Ontario, including electronic records, readily accessible in Ontario, and will produce physical records for the Commission within a reasonable time if requested.
8. If the laws of the jurisdiction in which the Applicant's books and records are located prohibit production of the books and records in Ontario without the consent of the relevant client, the Applicant shall, upon a request by the Commission:
(a) so advise the Commission; and
(b) use its best efforts to obtain the client's consent to the production of the books and records.
9. The Applicant will, upon the Commission's request, provide a representative to assist the Commission in compliance and enforcement matters.
10. The Applicant and each of its registered salespersons, directors, officers or partners will comply, at the Applicant's expense, with requests under the Commission's investigation powers and orders under the Act in relation to the Applicant's dealings with Ontario clients, including producing documents and witnesses in Ontario, submitting to audit or search and seizure process or consenting to an asset freeze, to the extent such powers would be enforceable against the Applicant if the Applicant were resident in Ontario.
11. If the laws of the Applicant's jurisdiction of residence that are otherwise applicable to the giving of evidence or production of documents prohibit the Applicant or the witnesses from giving the evidence without the consent or leave of the relevant client or any third party, including a court of competent jurisdiction, the Applicant shall:
(a) so advise the Commission; and
(b) use its best efforts to obtain the client's consent to the giving of the evidence.
12. The Applicant will maintain appropriate registration and regulatory organization membership, in the jurisdiction of its principal operations, and if required, in its jurisdiction of residence.
January 6, 2009