ABN AMRO Asset Management Canada Limited and ABN AMRO Asset Management (Netherlands) B.V.
Application to the Commission for an order, pursuant to section 80 of the Commodity Futures Act (the CFA), that neither ABN AMRO Asset Management (Netherlands) B.V., nor any of its directors, officers or employees acting on its behalf as an adviser, shall be subject to paragraph 22(1)(b) of the CFA in respect of advice provided for the benefit of ABN AMRO Asset Management Canada Limited, the principal investment adviser to the Funds in respect of trades in commodity futures contracts and commodity futures options.
IN THE MATTER OF
THE COMMODITY FUTURES ACT
R.S.O. 1990, CHAPTER C.20, AS AMENDED (the CFA)
IN THE MATTER OF
ABN AMRO ASSET MANAGEMENT CANADA LIMITED
ABN AMRO ASSET MANAGEMENT (NETHERLANDS) B.V.
(Section 80 of the CFA)
UPON the application (the Application) of ABN AMRO Asset Management Canada Limited (ABN Canada) and ABN AMRO Asset Management (Netherlands) B.V. (the Sub-Adviser) to the Ontario Securities Commission (the Commission) for an order exempting the Sub-Adviser and its directors, officers and employees acting on its behalf as an advisor (collectively the Representatives) from the requirement in section 22(1)(b) of the CFA that the Sub-Adviser, or its Representatives, be registered as an adviser under the CFA when acting as an adviser to ABN Canada in connection with ABN Canada's advice to ABN AMRO Global Equity Exposure Fund (the GEE Fund), and Clarington Target Click 2010 Fund, Clarington Target Click 2015 Fund, Clarington Target Click 2020 Fund, and Clarington Target Click 2025 Fund (the Target Click Funds) and other such investment funds managed or advised by ABN Canada after the effective date of this order (the ABN Funds), for a period of three years.
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Sub-Adviser having represented to the Commission the following:
1. The Sub-Adviser is organized under the laws of the Netherlands and is registered with the Netherlands Authority for the Financial Markets and accordingly is authorised to conduct investment management business in the Netherlands as a portfolio manager. The principal office of the Sub-Adviser is located in the Netherlands. The laws of the Netherlands, including applicable securities and commodity futures laws, govern the Sub-Adviser.
2. The Sub-Adviser is a wholly-owned subsidiary of ABN AMRO Asset Management Holding N.V., which is a wholly-owned subsidiary of ABN AMRO Bank N.V. (the Bank), which is in turn, a wholly-owned subsidiary of ABN AMRO Holding N.V. (Publico), a widely-held and publicly traded company listed on the Amsterdam, London and New York Stock Exchanges. No person holds 10% or more of Publico.
3. ABN Canada is incorporated under the Canada Business Corporations Act and is an indirectly wholly owned subsidiary of the Bank. ABN Canada is seeking registration under the CFA as a commodity trading manager. ABN Canada is registered under the Ontario Securities Act (OSA) as a dealer in the category of limited market dealer and as an adviser in the categories of investment counsel and portfolio manager.
4. ABN Canada intends to act as the securities portfolio adviser of the GEE Fund, the Target Click Funds and future ABN Funds (collectively, the Funds). ABN Canada also intends to act as a commodity trading manager in respect of the Funds.
5. ABN Canada intends to enter into a sub-advisory agreement with the Sub-Adviser, whereby the Sub-Adviser will advise ABN Canada in respect of the securities and commodity futures contracts and options on commodity futures contracts for the portfolio of the Funds (the Proposed Advisory Services). This written agreement will set out the obligations and duties of the Sub-Adviser, and under this agreement ABN Canada will assume responsibility for all advice provided by the Sub-Adviser to the Funds.
6. The Sub-Adviser will only provide advice to ABN Canada where ABN Canada has contractually agreed with the Funds to be responsible for any loss that arises out of a failure by the Sub-Adviser to:
(i) exercise its powers and discharge its duties honestly, in good faith and in the best interests of ABN Canada and the Funds; or
(ii) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;
(collectively (i) and (ii) as the Standard of Care).
7. The offering documents of the Fund will disclose that:
(i) ABN Canada has responsibility for the Advisory Services provided by the Sub-Adviser; and
(ii) there may be difficulty in enforcing any legal rights against the Sub-Adviser because it is not a resident of Canada and all or substantially all of its assets are situated outside of Canada.
8. The Sub-Adviser will only provide advice to ABN Canada so long as ABN Canada is registered under the CFA to provide Advisory Services to the Funds.
AND UPON the Commission being satisfied that it would not be prejudicial to the public interest to do so;
IT IS ORDERED THAT, pursuant to section 80 of the CFA, the Sub-Adviser and its Representatives are, for a period of three years, not subject to the requirements of subsection 22(1)(b) of the CFA in respect of the Proposed Advisory Services, provided that:
(a) the obligations and duties of the Sub-Adviser are set out in a written agreement with ABN Canada;
(b) the Sub-Adviser will only provide advice to ABN Canada where ABN Canada has contractually agreed with the Funds to be responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Standard of Care and such responsibility cannot be waived;
(c) the offering documents for the Funds will disclose that ABN Canada is responsible for any loss that arises out of the failure of the Sub-Adviser to meet the Standard of Care, and that
(i) ABN Canada has responsibility for the investment advice or portfolio management services provided by the Sub-Adviser, and
(ii) there may be difficulty in enforcing any legal rights against the Sub-Adviser because it is resident outside of Canada and all or substantially all of its assets are situated outside of Canada;
(d) the Sub-Adviser remains regulated by the Netherlands Authority for the Financial Markets as a portfolio manager;
(e) ABN Canada remains a registrant under the CFA while the Proposed Advisory Services are provided by the Sub-Adviser.
February 1, 2005.
"Robert L. Shirriff"
"H. Lorne Morphy"