National Bank Securities Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Approval for a change of control in a manager in accordance with subsection 5.5(2) of National Instrument 81-102 - Mutual Funds and relief from the requirement prescribed by subsection 5.8(1) of NI 81-102 in order to be exempted from sending a notice to all securityholders when a change in control of a fund manager occurs.

Applicable Legislative Provisions

Subsections 5.5(2), 5.8(1) and 19.1 of National Instrument 81-102 - Mutual Funds.

July 14, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

(the "Jurisdictions")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

NATIONAL BANK SECURITIES INC.

(the "Manager")

AND

NATIONAL BANK MUTUAL FUNDS AND

OMEGA FUNDS LISTED IN SCHEDULE A

(the "Funds" and collectively with the Manager, the "Filers")

Decision

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the "Legislation") for :

a) approval of the Change In Control (defined below) in accordance with subsection 5.5(2) of National Instrument 81-102 Mutual Funds ("NI 81-102") (the "Approval Sought"); and

b) an exemption from the requirement in 5.8(1) of NI 81-102, to provide notice of the Change In Control to all securityholders of the Funds (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

a) the Autorité des marchés financiers is the principal regulator for this application;

b) the Filers have 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, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territories and Nunavut; and

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

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are defined in this decision.

Representations

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

Generally

1. The Manager is a corporation governed by the Canada Business Corporations Act, with its head office in Montreal, Quebec. It is registered in each province and territory of Canada as a mutual fund dealer and is a member of the Mutual Fund Dealers Association ("MFDA").

2. The Manager is the manager of the Funds.

3. The Manager is directly owned by National Bank Acquisition Holding Inc. ("SPABN") and indirectly wholly-owned by National Bank of Canada ("NBC").

4. Altamira Investment Services Inc. ("AISI") is a corporation governed by the Canada Business Corporations Act, with its head office in Montreal, Quebec. AISI is the manager of the mutual funds known as the Altamira Funds and the Meritage Portfolios.

5. AISI is directly owned by Natcan Acquisition Holding Inc. and indirectly wholly-owned by NBC.

6. Altamira Financial Services Ltd. ("AFSL") is a corporation governed by the Business Corporations Act (Ontario), with its head office in Toronto, Ontario. AFSL is registered in each province and territory of Canada as a mutual fund dealer and is a member of the MFDA. It is the principal distributor of the Altamira Funds.

7. AFSL is a wholly-owned subsidiary of AISI and an indirect wholly-owned subsidiary of NBC.

8. The Funds are either mutual fund trusts governed under the laws of Ontario or a class of shares of a mutual fund corporation governed under the laws of Canada. Securities of the Funds are distributed in each province and territory of Canada under a simplified prospectus and annual information form dated May 16, 2008, prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure and NI 81-102.

9. The Funds are reporting issuers under the applicable securities legislation of each province and territory of Canada and are not on the list of defaulting reporting issuers maintained under applicable securities legislation in those jurisdictions.

Proposed Transaction

10. NBC has reviewed the operations of each of the Manager, AISI and AFSL and has concluded that it would be appropriate to consolidate the activities of AISI and AFSL into the Manager's business model.

11. Subject to any required regulatory approvals and to the approval of the MFDA, it is proposed that, on or about November 1, 2008, each of the Manager, AISI and AFSL will be amalgamated and the resulting entity will be known as "National Bank Securities Inc." (the "Proposed Transaction").

Change In Control

12. Prior to the Proposed Transaction, a number of steps will be undertaken, including the sale by SPABN of all the issued and outstanding common shares of the Manager to AISI in consideration for preferred shares of AISI. As a result of the sale of the common shares by SPABN to AISI, direct control of the Manager will change from SPABN to AISI. Throughout the Proposed Transaction, NBC will remain the ultimate controlling shareholder of the Manager (the "Change in Control").

13. The Change in Control is expected to occur on or about November 1, 2008 and will result in a direct change in control of the Manager for purposes of subsection 5.5(2) of NI 81-102 when AISI will temporarily (prior to the amalgamation of the Manager, AISI and AFSL) become the new direct parent company of the Manager.

14. As there will be no change to the business of the Funds or the Manager after the Proposed Transaction, and as NBC will remain the ultimate parent of the Manager, the Filers are of the view that no material change has occurred in respect of the Funds and accordingly, no press release describing the Change in Control needs to be issued or filed and no material change report or amendment to the simplified prospectus and annual information form of the Funds needs to be filed in accordance with the Funds' continuous disclosure obligations.

15. In addition, the Filers are of the view that providing notice to securityholders of the Funds about the Change In Control will only result in investor confusion, as there is no impact to investors in the Funds as a result of the change.

16. Upon the close of the Proposed Transaction, all current members of the Funds' independent review committee (the "IRC") will:

a) automatically cease to be members of the IRC by operation of section 3.10(1)(c) of National Instrument 81-107 Independent Review Committees For Investment Funds ("NI 81-107"); and

b) be subsequently reappointed (same day) as members of the IRC by the Manager as contemplated in commentary 2 to section 3.10 of NI 81-107 and pursuant to section 3.3(5) of NI 81-107.

17. In respect of how the Change In Control may affect the management and administration of the Funds:

a) the current directors and officers of the Manager will remain the same, subject to minor changes that may occur in the normal course of business;

b) there is no foreseeable intention to change the current portfolio managers of the Funds;

c) there is no foreseeable intention to change the current members of the IRC;

d) systems, back office, fund accounting and all other administrative functions are expected to continue to be operated in the same manner as currently being deployed by the Funds; and

e) the management fees and operating expenses of the Funds will not change as a result of the Change in Control.

18. Officers and directors of AISI have the requisite integrity and experience as required under section 5.7(1)(a)(v) of NI 81-102.

Decision

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

The decision of the Decision Makers under the Legislation is that the Approval Sought and the Exemption Sought are granted.

SEDAR Project Nº : 1279761

Schedule A