SHSC FINANCIAL INC.
Applicant exempted, subject to terms and conditions, from the dealer registration requirements contained in subsection 25(1) of the Securities Act (Ontario) in respect of trades consisting of Marketing Activities or acts in furtherance of trades related to the applicant's operations as a mutual funds manager.
Securities Act, R.S.O. 1990, c. S.5, as amended ss. 25(1), 74(1).
April 1, 2005
IN THE MATTER OF
THE SECURITIES ACT (ONTARIO)
R.S.O. 1990, CHAPTER S.5 AS AMENDED (the ACT)
IN THE MATTER OF
SHSC FINANCIAL INC.
(Subsection 74(1) of the Act)
UPON the application (the Application) of SHSC Financial Inc. (the Manager), the manager of the Social Housing Investment Funds managed now or in the future by the Manager (collectively, the Funds), to the Ontario Securities Commission (the Commission) for an order pursuant to section 74(1) of the Act, granting the Manager an exemption from the registration requirements contained in subsection 25(1) of the Act (the Requirements), where the Manager conducts certain Marketing Activities (as defined below) in respect of the Funds;
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Manager having represented to the Commission that:
1. The Manager is a corporation incorporated under the laws of Ontario and is, or will be, the manager of each of the Funds. As manager of the Funds, the Manager manages the overall business and affairs of the Funds, including providing or arranging for administration services. The Manager is not registered in Ontario, and does not, and will not, provide any advisory or distribution services to the Funds.
2. The Manager is a subsidiary of Social Housing Services Corporation (SHSC), which was established pursuant to the Social Housing Reform Act, 2000. The objectives of SHSC include managing the pooling of capital reserve funds for certain housing providers; establishing and coordinating insurance programs and joint purchase programs; and advising on benchmarks and best practices to achieve efficient and effective provision of housing.
3. Through the Manager, SHSC provides a number of services to housing providers, including the Funds.
4. In addition to managing the Funds, the Manager has developed workshops and materials to assist housing providers in developing capital reserve plans, in evaluating, implementing and updating capital plans, and dealing with funding shortfalls. Some housing providers do not have capital reserve plans and the Manager provides introductory courses and materials describing building condition assessments and the capital reserve planning process. The Manager also offers cash management and budgeting programs and, with the Portfolio Advisor (as defined below), introduction to investing capital reserves.
5. The Manager provides services through a number of communication channels, including meetings held at numerous locations around the province, conferences and telephone conversations.
6. Each Fund has been, or will be, established pursuant to a Master Trust Agreement between the Manager and State Street Trust Company Canada.
7. Each Fund is, or will be qualified, for continuous distribution in Ontario under a simplified prospectus.
8. The Manager, as manager of the Funds, has entered, or will enter, into a portfolio advisory agreement with an entity registered as an advisor in the categories of investment counsel and portfolio manager in Ontario to act as portfolio advisor to the Funds (the Portfolio Advisor).
9. The Manager, as manager of the Funds, has entered, or will enter, into a distribution agreement with an entity registered as a dealer in Ontario to act as principal distributor of the Funds in Ontario (the Distributor).
10. Purchasers of units in the Funds must open an account with the Distributor, by completing a detailed Investment Account Application Form. Investors generally also complete an Asset Allocation Questionnaire which is updated annually and provide the Distributor with other information necessary to open the account.
11. Any purchase or redemption of units of the Funds must be effected through the Distributor.
12. In addition to its principal business of acting as a manager of investment funds and providing housing providers with education and assistance with building condition assessments, capital reserve planning and cash management, the Manager wishes to provide housing providers with marketing information about the Funds (the Marketing Activities).
13. In conducting the Marketing Activities, the Manager would be engaging in an act, advertisement, or solicitation, directly or indirectly in furtherance of another trade in units of the Funds.
14. In the absence of the requested Order, the Manager would have to be registered with the Commission as a mutual fund dealer.
15. Any trade in units of a Fund (consisting of a purchase or redemption) will be made by investors through the Distributor, who is a registered dealer and subject to all requirements of securities legislation relating to trading in mutual funds.
AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to make the requested Order.
IT IS ORDERED by the Commission, pursuant to subsection 74(1) of the Act, that the Manager be exempt from the Requirements in respect of trades consisting of Marketing Activities.
"Wendall S. Wigle"
"David L. Knight"