Securities Law & Instruments

Headnote

Approval granted for a change of control of a mutual fund manager as a result of increase in voting share ownership by an existing significant shareholder, and corresponding relief granted to reduce the required notice period required for this change of control given the very specific fact scenario.

Rules cited

National Instrument 81-102 Mutual Funds Sections 5.5(2), 5.8(1)(a) and 19.1

July 8, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, NOVA SCOTIA, NEW BRUNSWICK,

NEWFOUNDLAND AND LABRADOR

AND PRINCE EDWARD ISLAND

(THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

REAL ASSETS INVESTMENT MANAGEMENT INC.

(REAL ASSETS)

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from Real Assets for a decision under the securities legislation of the Jurisdictions and under Sections 5.5(2) and 19.1 of National Instrument 81-102 Mutual Funds (the Legislation) approving a proposed change in control of Real Assets and reducing the amount of notice required to investors before completing the change of control transaction.

Under the Mutual Reliance System for Exemptive Relief Applications:

(a) the British Columbia Securities Commission is the principal regulator for this application; and

(b) this MRRS Decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this Decision document unless they are defined in this decision.

Representations

This decision is based on the following facts represented by Real Assets:

1. Real Assets is the manager of Real Assets Social Impact Balanced Fund and Real Assets Social Leaders Fund (the Funds);

2. When the Funds were first qualified for sale by simplified prospectus on September 12, 2003, Vancouver City Savings Credit Union ("Vancity") held approximately 44% of the voting securities of Real Assets, and currently it holds approximately 45.8%;

3. After conducting a review of its operations in 2004, Real Assets has developed a business plan involving strengthening its marketing and management capabilities, which it anticipates will require significant new financing, which Vancity is willing to provide. In preparation for making this additional investment, Vancity proposes to acquire shares from several other existing shareholders, including shares to be purchased from the founder and former President of Real Assets. After these share purchases are complete, Vancity will hold approximately 88.57% of the voting securities of Real Assets, resulting in acquisition of voting control of Real Assets;

4. Real Assets believes that these plans will be beneficial to the Funds and is anxious to proceed with them as soon as possible;

5. Since inception, investors in the funds have been made aware of the connection between Vancity and Real Assets, and Real Assets has been described as "a member of the VanCity group of companies" or in similar terms on marketing materials for the Funds;

6. Real Assets believes that shortening the notice period to 21 days will not be prejudicial to the unitholders of the Funds;

7. On July 27, 2005, Real Assets mailed notices to the Funds' securityholders providing notice of the proposed change of control; and

8. Vancity is not proposing to replace Real Assets as manager of the Funds, and Real Assets will make no changes to the management or to the overall approach to implementing the investment strategies described in the current simplified prospectus of the Funds for at least 60 days following the provision of notice.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that:

(a) the acquisition of voting control of Real Assets by Vancity is approved; and

(b) the notice period required under Section 5.8(1)(a) of NI 81-102 is reduced from 60 days to 21 days.

Allan Lim
Manager, Corporate Finance
British Columbia Securities Commission
Sedar Project No. 801706