Mutual Reliance Review System for Exemptive Relief Applications -- Approval of a change of control of a mutual fund manager and abridgement of the related 60 day notice requirement to 46 days - Decision subject to no changes being made to portfolio management operations for period of 60 days subsequent to notice being provided to unitholders of the affected mutual funds.
Applicable Ontario Statutory Provisions
National Instrument 81-102 Mutual Funds, ss. 5.5(2), 5.8(1)(a), 19.1.
March 12, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, QUÉBEC, NEW BRUNSWICK,
NOVA SCOTIA, PRINCE EDWARD ISLAND, AND
NEWFOUNDLAND AND LABRADOR
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
LAKEVIEW ASSET MANAGEMENT INC.
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from CI Financial Income Fund (the "Filer") on behalf of Lakeview Asset Management Inc. ("Lakeview") for a decision under subsection 5.5(2) and section 19.1 of National Instrument 81-102 - Mutual Funds (the "Legislation") that:
(a) approves the proposed indirect change of control of Lakeview; and
(b) abridges the time period prescribed by paragraph 5.8(1)(a) to 46 days for delivering notice to unitholders (the "Lakeview Unitholders") of the mutual funds identified in Schedule "A" hereto (the "Lakeview Funds") of the proposed indirect change of control of Lakeview.
Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Defined terms contained in National Instrument 14-101 - Definitions have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Ontario, Québec, Nova Scotia and Prince Edward Island and is not on any list of defaulting issuers maintained in any Jurisdiction. The Filer's units are listed on the Toronto Stock Exchange (the "TSX") under the trading symbol "CIX.UN".
2. Rockwater Capital Corporation ("Rockwater") is a reporting issuer in each of the provinces and territories of Canada. Rockwater's common shares are listed on the TSX under the trading symbol "RCC".
3. Lakeview is a corporation incorporated under the laws of the Province of Ontario and is an indirect wholly-owned subsidiary of Rockwater. Lakeview acts as the trustee and the manager of the Lakeview Funds. Units of the Lakeview Funds are sold in all of the Jurisdictions pursuant to a simplified prospectus and annual information form dated June 22, 2006 (as amended) and a simplified prospectus and annual information form dated August 25, 2006 (as amended).
4. The Filer has made a take-over bid (the "Bid") pursuant to which it has offered to acquire all of the outstanding shares of Rockwater. The completion of the Bid is subject to the satisfaction of certain conditions, including that the approval and relief described in this decision is granted. If the Filer is successful in acquiring a sufficient number of shares of Rockwater under the Bid, the Filer will indirectly acquire control of Lakeview, which is the manager of the Lakeview Funds. The Filer may complete its indirect acquisition (the "Closing") of Lakeview as early as April 2, 2007, and may be required by Canadian securities legislation to take up the shares tendered into the Bid by April 12, 2007.
5. KBSH Capital Management Inc. and Barometer Capital Management Inc. are the current portfolio advisors to the Lakeview Funds and provide all portfolio management to the Lakeview Funds.
6. The mutual fund business owned by the Filer is carried on through CI Investments Inc. and United Financial Corporation (collectively, the "CI Managers"). Each CI Manager currently is registered under the Securities Act (Ontario) as an adviser in the categories of investment counsel and portfolio manager. The CI Managers collectively manage in excess of 100 public mutual funds, which are sold to the public in all the provinces and territories of Canada.
7. The directors and officers of Lakeview will change on or after Closing to provide, at a minimum, that the directors of Lakeview will be nominees of the Filer. Such directors or officers of Lakeview who are so replaced by the Filer will, however, be individuals who are currently directors and/or officers of a CI Manager. By virtue of their roles as directors and/or officers of the CI Managers, the proposed new directors and officers of Lakeview have demonstrated that they have the necessary education, experience, integrity and competence to be directors and/or officers of Lakeview.
8. The notice contemplated by subsection 5.8(1) of the Legislation of the proposed indirect change in control of Lakeview was mailed by the Filer to the Lakeview Unitholders on February 15, 2007 (the "Notice Date").
9. The Closing will not change the manager of the Lakeview Funds. To the extent that any change is made after Closing which constitutes a "material change" to the Lakeview Funds within the meaning of National Instrument 81-106 - Investment Fund Continuous Disclosure ("NI 81-106"), the Lakeview Funds will comply with the continuous disclosure obligations set out in section 11.2 of NI 81-106. Further, any notices which are required to be delivered to, or approvals obtained from, the Canadian securities administrators or Lakeview Unitholders in connection with any such material change will be delivered or obtained, as required under applicable Canadian securities legislation.
10. The Filer intends to cause no changes to the portfolio advisors to the Lakeview Funds for at least 60 days following the Notice Date.
11. The Filer believes that abridging the period prescribed by paragraph 5.8(1)(a) of the Legislation to 46 days will not be prejudicial to the Lakeview Unitholders.
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 indirect change of control of Lakeview pursuant to the Bid is approved; and
(b) the period prescribed by paragraph 5.8(1)(a) of the Legislation is abridged to 46 days provided that the Filer causes no changes to the portfolio advisors to the Lakeview Funds for at least 60 days following the Notice Date.
Lakeview Disciplined Leadership
Canadian Equity Fund
Lakeview Disciplined Leadership U.S. Equity Fund
Lakeview Disciplined Leadership High Income Fund
Lakeview KBSH Premium Bond Explorer Fund
Lakeview KBSH Equity Income Explorer Fund
Lakeview KBSH Large Cap Explorer Fund
Lakeview KBSH Small Cap Explorer Fund