Securities Law & Instruments

Headnote

Mutual Reliance Review System - With respectto certain capital accumulation plans and stock option plans,registered dealer exempted from statement-of-account provisionsin the legislation that would otherwise require that the registereddealer: (i) send or forward a statement of account to each clientof the dealer at the end of the month in which a transactionhas been effected in the account; and (ii) send or forward astatement of account to each client of the dealer not less thanonce every three months, where a transaction has not been effectedin that period but there are funds or securities held by thedealer on a continuing basis - Under the capital accumulationplans, all investment decisions are made by the plan sponsor- Under the stock option plans plan members are granted optionsto purchase securities of their employer or an affiliate oftheir employer - Exemptions subject to provisos, including arequirement that the registered dealer send to all plan memberof the relevant plan account statements, on at least an annualbasis, that contain the same information that would have beenrequired to be provided pursuant to the statement-of-accountprovisions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,s. 147.

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am., s. 123.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

ONTARIO, QUEBEC, NOVA SCOTIAAND

NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADA LIFE SECURITIES INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Makers") ineach of the Provinces of British Columbia, Alberta, Saskatchewan,Ontario, Quebec, Nova Scotia and Newfoundland and Labrador (the"Jurisdictions") has received an application (the"Application") from Canada Life Securities Inc. ("CLSI")for a decision pursuant to the securities legislation (the "Legislation")of each of the Jurisdictions that the provisions (the "Statementof Account Requirements") contained in the Legislationthat require a registered dealer to:

(i) send or forward a statement of accountto each client of the dealer at the end of the month inwhich a transaction has been effected in the account; and

(ii) send or forward a statement of accountto each client of the dealer not less than once every threemonths, where a transaction has not been effected in thatperiod but there are funds or securities held by the dealeron a continuing basis

shall not apply to CLSI in respect of certaintypes of capital accumulation plans ("CAPs") and stockoption plans established by employers or other sponsors ("plansponsors") for the benefit of their employees or otherbeneficiaries ("plan members");

AND WHEREAS pursuant to the Mutual RelianceReview System ("MRRS") for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this Application;

AND WHEREAS CLSI has represented to theDecision Makers that:

1. CLSI provides administrative, recordkeepingand other services for plans (a "Specified Plan")that are: (i) CAPs in respect of which all investment decisionsare made by the plan sponsor and not the plan member; or (ii)stock option plans pursuant to which plan members are grantedoptions to purchase securities of their employer or an affiliateof their employer ("Stock Option Plans");

2. CLSI has recently become registered underthe Legislation of each of the Jurisdictions as a dealer inthe category of an investment dealer and as such has becomesubject to the Statement of Account Requirements in respectof its activities for Specified Plans;

3. Many of the functions undertaken by CLSIin connection with CAPs are not functions for which registrationis required, including various administrative functions suchas the sending of account statements;

4. CLSI's understanding in dealing with plansponsors of the Specified Plans is that there is no need forthe sending of account statements to plan members more frequentlythan annually, in light of the lack of investment decisionsrequired to be made by plan members and the nature of StockOption Plans;

5. The extra costs associated with CLSI complyingwith the Statement of Account Requirements for Specified Planswould be significant and not warranted; the costs associatedwith the reporting obligations are generally reflected inthe fees charged to the Specified Plans and are thereforeultimately borne by the plan members;

6. CLSI believes that it is the only registereddealer currently providing significant administrative servicesto CAPs and that therefore administrators of other CAPs wouldnot be subject to the Statement of Account Requirements. CLSIbelieves that it would be unfair to the Specified Plans andtheir plan members to impose on them the extra costs associatedwith compliance with the Statement of Account Requirements;and

7. For some Specified Plans, there are minimumstatutory requirements setting out the frequency of reportingto plan members, and reporting in accordance with the Statementof Account Requirements would be in excess of what the relevantstatute governing the Specified Plan prescribes.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that the Statement of Account Requirementsshall not apply to CLSI in respect of a Specified Plan, providedthat:

1. CLSI sends to all plan members of the SpecifiedPlan account statements on at least an annual basis that containsthe same information that would have been required to be providedpursuant to the Statement of Account Requirements;

2. For each Specified Plan that is a StockOption Plan in respect of which some plan members have notbeen previously advised in writing of the frequency with whichthey would receive such reporting, such plan members shallbe notified of this Decision and be provided with informationconcerning the reporting that they will receive in respectof such plans; such notification and information to be providedat the earlier of the next annual mailing to plan membersor one year from the date of this Decision;

3. For each Jurisdiction, this Decision, tothe extent that it relates specifically to CAPs, shall terminateone year after the coming into force, subsequent to the dateof this Decision, of a rule or other regulation under theLegislation of the Jurisdiction that relates, in whole orin part, to the obligations of a registered dealer to sendaccount statements to clients in connection with CAPs; and

4. For each Jurisdiction, this Decision, tothe extent that it relates specifically to Stock Option Plans,shall terminate one year after the coming into force, subsequentto the date of this Decision, of a rule or other regulationunder the Legislation of the Jurisdiction that relates, inwhole or in part, to the obligations of a registered dealerto send account statements to clients in connection with StockOption Plans.

September 20, 2002.

"Howard I. Wetston"                    "HaroldP. Hands"