National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of manager of mutual funds -- change of manager will not result in any material changes to the management and administration of the Funds -- unitholders have received timely and adequate disclosure regarding the change of manager and the change is not detrimental to unitholders or the public interest.
Applicable Legislative Provisions
National Instrument 81-102 Mutual Funds, ss. 5.5(1)(a), 5.5(3), 5.7(1)(a).
April 23, 2009
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
NORTHERN RIVERS CAPITAL MANAGEMENT INC.
NORTHERN RIVERS MONTHLY INCOME AND
CAPITAL APPRECIATION FUND AND
NORTHERN RIVERS MONTHLY INCOME AND
CAPITAL APPRECIATION TRUST POOL
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for approval of a change of manager of the Fund and the Pool (as defined below) from the Filer to Mavrix Fund Management Inc. ("Mavrix") under Section 5.5(1)(a) of National Instrument 81-102 - Mutual Funds (NI 81-102) (the "Approval Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 - Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon, and Nunavut.
Terms defined in National Instrument 41-101 - Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is the manager and trustee of Northern Rivers Monthly Income and Capital Appreciation Fund (the "Fund") and the Northern Rivers Monthly Income and Appreciation Trust Pool (the "Pool").
2. The Filer is a corporation incorporated under the Canada Business Corporations Act and is not in default of securities legislation in any jurisdiction of Canada.
3. The Fund and the Pool are open-end investment trusts governed by declarations of trust dated as of September 7, 2006 under the laws of the province of Ontario.
4. The Fund and the Pool are reporting issuers in all of the provinces and territories of Canada (except Quebec) and are not in default of securities legislation in any jurisdiction of Canada.
5. The units of the Fund and the Pool are currently offered under a combined simplified prospectus and annual information form each dated August 25, 2008, as amended by Amendment No. 1 thereto dated February 20, 2009, prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure, and subject to NI 81-102.
6. NRC and Mavrix entered into an agreement on February 19, 2009 pursuant to which Mavrix will become the trustee and manager of the Fund and the Pool effective on or about April 30, 2009 (the "Effective Date"), subject to receipt of all necessary regulatory and unitholder approvals and the satisfaction of all other conditions precedent to the proposed transaction. On the Effective Date, the name of the Fund and the Pool is expected to be changed by Mavrix to "Mavrix Tax Deferred Income Fund" and "Mavrix Tax Deferred Income Trust Pool", respectively.
7. The Filer will have no further responsibilities in respect of the Fund or the Pool after the Effective Date. The Filer will continue to act as manager for certain other open-end funds that are not relevant to the transaction between the Filer and Mavrix.
8. A press release, amendments to the simplified prospectus and annual information form of the Fund and the Pool and material change reports have been filed in connection with the announcement of the change of manager.
9. Mavrix was incorporated on May 16, 2001 under the Business Corporations Act (Ontario). Its head office is located at Suite 501, 212 King Street West, Toronto, Ontario M5H 1K5. Mavrix is not in default of securities legislation in any jurisdiction of Canada.
10. Mavrix is a reporting issuer in all provinces and territories of Canada. The common shares of Mavrix are listed and posted for trading on the Toronto Stock Exchange under the symbol MVX.
11. Mavrix is registered under the Securities Act (Ontario) as an adviser in the categories of investment counsel and portfolio manager, and as a dealer in the category of limited market dealer.
12. Mavrix is the manager of the Mavrix Mutual Funds, a family of mutual funds currently offered under a combined simplified prospectus and annual information form each dated July 7, 2008, as amended by an Amendment No. 1 dated January 6, 2009.
13. The name, municipality of residence, position with Mavrix and principal occupation of each of the current directors and executive officers of Mavrix are set forth below:
Name and Municipality of Residence Position with Mavrix Principal Occupation Malvin C. Spooner President, Chief Executive President, Chief Executive Officer and Director of Mavrix. Etobicoke, Ontario Officer and Director Mr. Spooner has been a portfolio manager for more than 20 years. Mr. Spooner holds BA, MA and MBA degrees and is a Chartered Financial Analyst. Pierre Saint-Laurent Chairman and Director President of Asset Counsel Inc. Mr. Saint-Laurent holds Mount Royal, Québec B.Sc. and M.Sc. degrees in Economics from the University of Montreal, with doctoral studies in Economics at the University of California at Berkeley, as well as a Diploma in Business Administration from HEC Montreal. He holds the Chartered Financial Analyst designation and is a CFA Examination Grader, as well as a member of the CFA Institute's Candidate Curriculum Committee. He obtained the CAIA (Chartered Alternative Investment Analyst) designation in 2004. Raymond M. Steele Chief Financial Officer and Chief Financial Officer and Director of Mavrix. Mr. Steele Oakville, Ontario Director has been a portfolio manager for more than 20 years. Mr. Steele holds a B.Comm degree as well as CMA and CFA designations. William Shaw Senior Vice-President and Senior Vice-President and Director of Mavrix. Mr. Shaw West Hill, Ontario Director has been a portfolio manager for more than 15 years. Mr. Shaw holds BA, BAS and MBA degrees as well as CA, CMA and CFP designations. A. Kirk Purdy Director President and Chief Executive Officer of Basek Holdings Okotoks, Alberta Inc. (a private holding company) and President of Juno Canada Holdings Ltd., a wholly-owned subsidiary of Aston Hill Financial Inc. (formerly, Overlord Financial Inc.), a TSX-V listed company. Mr. Purdy has over 21 years of investment experience in real estate, venture capital, oil and gas, and public markets. Mr. Purdy holds B.Sc and MBA degrees and has the designation of Chartered Director. Kenneth R. Yurichuk Director Chartered Accountant and partner of Bobot & Yurichuk Toronto, Ontario LLP, Chartered Accountants. Mr. Yurichuk also holds a B. Comm degree. Martine Guimond Director Lawyer and partner of Gowling Lafleur Henderson LLP. Montréal, Québec Ms. Guimond holds B.Sc. and LL.B. degrees. Sergio Di Vito Chief Operating Officer and Chief Operating Officer and Senior Vice-President, Trading Kleinburg, Ontario Senior Vice-President, of Mavrix. Trading David Balsdon Chief Compliance Officer, Chief Compliance Officer, Secretary-Treasurer and Vice- Mississauga, Ontario Secretary-Treasurer and President of Mavrix. Vice-President A. Mario Arra Senior Vice-President, Senior Vice President, National Sales of Mavrix. Barrie, Ontario National Sales
14. The Filer considers that the experience and integrity of each of the members of the Mavrix current management team is apparent by their education and years of experience in the investment industry and has been established and accepted through the granting of registration status and through the granting of a receipt to the Mavrix Funds for their combined simplified prospectus and annual information form each dated July 7, 2008, as amended by an Amendment No. 1 dated January 6, 2009.
15. Mavrix intends to administer the Fund and the Pool in substantially the same manner as NRC. There is no intention to change the investment objectives or fees and expenses of the Fund or the Pool. All material agreements regarding the administration of the Fund and the Pool will either be assigned to Mavrix by NRC or Mavrix will enter into new agreements as required. In either case, the material terms of the material agreements of the Fund and the Pool will remain the same, provided that the declarations of trust and management agreements of the Fund and the Pool will be amended to conform to the forms of declaration of trust and management agreement of all the other Mavrix Mutual Funds.
16. Cassels Investment Management Inc. will be retained by Mavrix to continue to act as the investment manager.
17. At a special meeting of unitholders of the Fund and the Pool held on April 7, 2009, unitholders of the Fund and the Pool approved the Change of Manager. A notice of meeting and a management information circular was mailed to unitholders of the Fund and the Pool no later than March 17, 2009 and filed on SEDAR in accordance with applicable securities legislation. The resignation of NRC as trustee and manager of the Fund and the Pool will be effective on the Effective Date. On that date, Mavrix will assume the roles of trustee and manager of the Fund and the Pool, and the declarations of trust and management agreements of the Fund and the Pool will be amended to conform to the forms of declaration of trust and management agreement of all the other Mavrix Mutual Funds.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the legislation is that the Approval Sought is granted.