Securities Law & Instruments

Headnote

MutualReliance Review System for Exemptive Relief Applications - mutualfund dealer exempted from the legislative requirements that itfile an application to become a member of the Mutual Fund DealersAssociation of Canada (the "MFDA") and become a member of theMFDA - mutual fund dealer subject to certain terms and conditionsof registration.

ApplicableStatute

SecuritiesAct, R.S.O. 1990, c. S. 5, as am.

ApplicableOntario Rule

Rule31-506 SRO Membership - Mutual Fund Dealers, ss. 2.1, 3.1 and5.1

ApplicablePublished Document

Lettersent to the Investment Funds Institute of Canada and the InvestmentCounsel Association of Canada, December 6, 2000, (2000) 23 OSCB8467

 

INTHE MATTER OF

THESECURITIES LEGISLATION OF

BRITISHCOLUMBIA, ALBERTA,

SASKATCHEWAN,MANITOBA AND ONTARIO


AND


INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM FOR

EXEMPTIVERELIEF APPLICATIONS


AND


INTHE MATTER OF

AIMFUNDS MANAGEMENT INC.

MRRSDECISION DOCUMENT

WHEREASthe local securities regulatory authority or regulator (the"Decision Maker") in each of the provinces of British Columbia,Alberta, Saskatchewan, Manitoba and Ontario (the "Jurisdictions")has received an application (the "Application") from AIM FundsManagement Inc. (the "Registrant") for a decision pursuant tothe securities legislation of the Jurisdictions (the "Legislation")that the Registrant not be required to file an application tobecome a member of the Mutual Fund Dealers Association of Canada(the "MFDA") and to become a member of the MFDA.

ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application.

ANDWHEREAS it has been represented by the Registrant tothe Decision Makers that:

1.the Registrant is a corporation subsisting under the laws ofthe Province of Ontario and is registered as a dealer in thecategory of mutual fund dealer in each of the Jurisdictions;

2.the Registrant also is registered with the Ontario SecuritiesCommission as a limited market dealer and as an adviser in thecategories of investment counsel and portfolio manager;

3.the Registrant's principal business activity is managing mutualfunds (the "Mutual Funds"), the securities of which are qualifiedfor sale to the public in some or all of the provinces and territoriesof Canada pursuant to prospectuses for which receipts have beenissued by the relevant Canadian securities administrators;

4.the Registrant also engages in activities incidental to itsprincipal business activities pursuant to its registration asmutual fund dealer registration;

5.the Registrant's activities as a mutual fund dealer currentlyrepresent and will continue to represent activities that areincidental to its principal business activities;

6.the Registrant has agreed to the imposition of the terms andconditions on the Registrant's registration as a mutual funddealer set out in the attached Schedule "A", which outlinesthe activities the Registrant has agreed to adhere to in connectionwith its application for this Decision;

7.any person or company that is not currently a client of theRegistrant on the effective date of this Decision, will, beforethey are accepted as a client of the Registrant, receive prominentwritten notice from the Registrant that:

TheRegistrant is not currently a member, and does not intend tobecome a member of the Mutual Fund Dealers Association; consequently,clients of the Registrant will not have available to them investorprotection benefits that would otherwise derive from membershipof the Registrant in the MFDA, including coverage under anyinvestor protection plan for clients of members of the MFDA;

8.upon the next general mailing to its account holders and inany event before May 23, 2002, the Registrant shall provide,to any client that was a client of the Registrant on the effectivedate of this Decision, the prominent written notice referredto in paragraph 7, above;

ANDWHEREAS pursuant to the System this MRRS Decision Documentevidences the decision of each Decision Maker (collectively,"Decision");

ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met;

ITIS THE DECISION of the Decision Makers pursuant tothe Legislation that, effective May 23, 2001 in Ontario; effectiveMay 31, 2001 in Saskatchewan; effective July 1, 2001 in Manitoba;and effective January 23, 2002 in British Columbia and Alberta,the Registrant not be required to file an application to becomea member of the MFDA and to become a member of the MFDA;

PROVIDEDTHAT:

TheRegistrant complies with the terms and conditions on its registrationunder the Legislation as a mutual fund dealer set out in theattached Schedule "A".

January23,2002.

"RebeccaCowdery"


Schedule"A"

TERMSAND CONDITIONS OF REGISTRATION

OF

AIMFUNDS MANAGEMENT INC.

ASA MUTUAL FUND DEALER

Definitions

1.For the purposes hereof, unless the context otherwise requires:

(a)"Act" means, in Ontario, the Securities Act, R.S.O. 1990, c.S5,as amended; in Manitoba, the Securities Act, R.S.M. 1988, c.S50,as amended; in Saskatchewan, the Securities Act, 1988, S.S. 1988,c.S-42.2, as amended; in Alberta, the Securities Act, R.S.A. 2000,c. S-4, as amended; and, in British Columbia, the Securities Act,R.S.B.C. 1996, c. 418, as amended;

(b)"Adviser" means an adviser as defined in the applicable Act;

(c)"Client Name Trade" means, for the Registrant, a trade to, oron behalf of, a person or company, in securities of a mutual fund,that is managed by the Registrant or an affiliate of the Registrant,where, immediately before the trade, the person or company, isshown on the records of the mutual fund or of an other mutualfund managed by the Registrant or an affiliate of the Registrantas the holder of securities of such mutual fund, and the tradeconsists of:

(A)a purchase, by the person or company, through the Registrant,of securities of the mutual fund; or

(B)a redemption, by the person or company, through the Registrant,of securities of the mutual fund;

andwhere, the person or company

(C)is a client of the Registrant that was not solicited by the Registrant;or

(D)was an existing client of the Registrant on the Effective Date;

(d)"Effective Date" means May 23, 2001;

(e)"Employee", for the Registrant, means:

(A)an employee of the Registrant;

(B)an employee of an affiliated entity of the Registrant; or

(C)an individual that is engaged to provide, on a bona fide basis,consulting, technical, management or other services to the Registrantor to an affiliated entity of the Registrant, under a writtencontract between the Registrant or the affiliated entity and theindividual or a consultant company or consultant partnership ofthe individual, and, in the reasonable opinion of the Registrant,the individual spends or will spend a significant amount of timeand attention on the affairs and business of the Registrant oran affiliated entity of the Registrant;

(f)"Employee", for a Service Provider, means an employee of the ServiceProvider or an affiliated entity of the Service Provider, providedthat, at the relevant time, in the reasonable opinion of the Registrant,the employee spends or will spend, a significant amount of timeand attention on the affairs and business of:

(A)the Registrant or an affiliated entity of the Registrant; or

(B)a mutual fund managed by the Registrant or an affiliated entityof the Registrant;

(g)"Executive", for the Registrant, means a director, officer orpartner of the Registrant or of an affiliated entity of the Registrant;

(h)"Executive", for a Service Provider, means a director, officeror partner of the Service Provider or of an affiliated entityof the Service Provider;

(i)"Exempt Trade", for the Registrant, means:

(i)in Ontario, Manitoba, Saskatchewan, and British Columbia, a tradein securities of a mutual fund that is made between a person orcompany and an underwriter acting as purchaser or between or amongunderwriters;

(ii)in Ontario, a trade in securities of a mutual fund for which theRegistrant would have available to it an exemption from the registrationrequirements of the Act if the Registrant were not a "market intermediary"as such term is defined in section 204 of the Ontario Regulation;

(iii)in Manitoba, Saskatchewan and British Columbia, a trade in securitiesof a mutual fund for which the Registrant would have availableto it an exemption from the registration requirements of the Act;or

(iv)a trade in securities of a mutual fund for which the Registranthas received a discretionary exemption from the registration requirementsof the applicable Act;

(j)"Fund-on-Fund Trade" means a trade that consists of:

(i)a purchase, through the Registrant, of securities of a mutualfund that is made by another mutual fund;

(ii)a purchase, through the Registrant, of securities of a mutualfund that is made by a person or company where the person or company,an affiliated entity of the person or company, or an other personor company is, or will become, the counterparty in a specifiedderivative or swap with another mutual fund; or

(iii)a sale, through the Registrant, of securities of a mutual fundthat is made by another mutual fund where the party purchasingthe securities is:

(A) a mutual fundmanaged by the Registrant or an affiliated entity of the Registrant;or

(B)a person or company that acquired the securities where the personor company, an affiliated entity of the person or company, oran other person or company is, or was, the counterparty in a specifiedderivative or swap with another mutual fund; and

where,in each case, at least one of the referenced mutual funds is amutual fund that is managed by either the Registrant or an affiliatedentity of the Registrant;

(k)"In Furtherance Trade" means, for the Registrant, a trade by theRegistrant that consists of any act, advertisement, or solicitation,directly or indirectly in furtherance of an other trade in securitiesof a mutual fund, where the other trade consists of:

(i)a purchase or sale of securities of a mutual fund that is managedby the Registrant or an affiliated entity of the Registrant; or

(ii)a purchase or sale of securities of a mutual fund where the Registrantacts as the principal distributor of the mutual fund;

andwhere, in each case, the purchase or sale is made by or throughan other registered dealer if the Registrant is not otherwisepermitted to make the purchase or sale pursuant to these termsand conditions;

(l)"Mutual Fund Instrument" means National Instrument 81-102 MutualFunds, as amended;

(m)"Ontario Regulation" means R.R.O. 1990, Reg. 1015, as amended,made under the Ontario Act;

(n)"Permitted Client" means a person or company that is a clientof the Registrant, and that is, or was at the time the personor company became a client of the Registrant:

(i)an Executive or Employee of the Registrant;

(ii)a Related Party of an Executive or Employee of the Registrant;

(iii)a Service Provider or an affiliated entity of a Service Provider;

(iv)an Executive or Employee of a Service Provider; or

(v)a Related Party of an Executive or Employee of a Service Provider;

(o)"Permitted Client Trade" means, for the Registrant, a trade toa person who is a Permitted Client or who represents to the Registrantthat he or she is a person included in the definition of PermittedClient, in securities of a mutual fund that is managed by theRegistrant or an affiliate of the Registrant, and the trade consistsof a purchase or redemption, by the person, through the Registrant,of securities of the mutual fund;

(p)"Registered Plan" means a registered pension plan, deferred profitsharing plan, registered retirement savings plan, registered retirementincome fund, registered education savings plan or other deferredincome plan registered under the Income Tax Act (Canada);

(q)"Registrant" means AIM Funds Management Inc.;

(r)"Related Party", for a person, means an other person who is:

(i)the spouse of the person;

(ii)the issue of:

(A)the person,

(B) the spouse ofthe person, or

(C)the spouse of any person that is the issue of a person referredto in subparagraphs (A) or (B) above;

(iii)the parent, grandparent or sibling of the person, or the spouseof any of them;

(iv)the issue of any person referred to in paragraph (iii) above;or

(v)a Registered Plan established by, or for the exclusive benefitof, one, some or all of the foregoing;

(vi)a trust where one or more of the trustees is a person referredto above and the beneficiaries of the trust are restricted toone, some, or all of the foregoing;

(vii)a corporation where all the issued and outstanding shares of thecorporation are owned by one, some, or all of the foregoing;

(s)"securities", for a mutual fund, means shares or units of themutual fund;

(t)"Seed Capital Trade" means a trade in securities of a mutual fundmade to a persons or company referred to in any of subparagraphs3.1(1)(a)(i) to 3.1(1)(a)(iii) of the Mutual Fund Instrument;and

(u)"Service Provider" means:

(i)a person or company that provides or has provided professional,consulting, technical, management or other services to the Registrantor an affiliated entity of the Registrant;

(ii)an Adviser to a mutual fund that is managed by the Registrantor an affiliated entity of the Registrant; or

(iii)a person or company that provides or has provided professional,consulting, technical, management or other services to a mutualfund that is managed by the Registrant or an affiliated entityof the Registrant.

2.For the purposes hereof, a person or company is considered tobe an "affiliated entity" of an other person or company if theperson or company would be an affiliated entity of that otherperson or company for the purposes of Ontario Securities CommissionRule 45-503 Trades To Employees, Executives and Consultants andBritish Columbia Instrument 45-507 Trades to Employees, Executivesand Consultants.

3.For the purposes hereof:

(a)"issue" and "sibling" includes any person having such relationshipthrough adoption, whether legally or in fact;

(b)"parent" and "grandparent" includes a parent or grandparent throughadoption, whether legally or in fact;

(c)"registered dealer" means a person or company that is registeredunder the Act as a dealer in a category that permits the personor company to act as dealer for the subject trade; and

(d)"spouse", for an Employee or Executive, means a person who, atthe relevant time, is the spouse of the Employee or Executive.

4.Any terms that are not specifically defined above shall, unlessthe context otherwise requires, have the meaning:

(a)specifically ascribed to such term in the Mutual Fund Instrument;or

(b)if no meaning is specifically ascribed to such term in the MutualFund Instrument, the same meaning the term would have for thepurposes of the Act.

RestrictedRegistration

PermittedActivities

5.The registration of the Registrant as a mutual fund dealer underthe Act shall be for the purposes only of trading by the Registrantin securities of a mutual fund where the trade consists of:

(a)a Client Name Trade;

(b)an Exempt Trade;

(c)a Fund-on-Fund Trade;

(d)an In Furtherance Trade;

(e)a Permitted Client Trade; or

(f)a Seed Capital Trade;

providedthat, in the case of all trades that are only referred to in clauses(a) or (e), the trades are limited and incidental to the principalbusiness of the Registrant.