Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of manager of a mutual fund -- change of manager will not result in any material changes to the management and administration of the Fund -- change of manager is not detrimental to unitholders or the public interest -- change of manager approval granted on the condition that prior approval of the fund's unitholders of the proposed change of manager is obtained at a special meeting of unitholders.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(a), 5.7, 19.1.

February 19, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BLUMONT CAPITAL CORPORATION

(the Filer)

AND

NORTHERN RIVERS CAPITAL

MANAGEMENT INC.

(the Manager)

AND

IN THE MATTER OF

NORTHERN RIVERS CONSERVATIVE

GROWTH FUND (the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for approval of the proposed change of manager of the Fund from the Manager to the Amalgamated Corporation (as defined below) under paragraph 5.5(1)(a) of National Instrument 81-102 -- Mutual Funds (NI 81-102) (the Approval Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission (the Principal Regulator) is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Quebec.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Manager and the Fund

1. The Manager is a corporation incorporated under the Canada Business Corporations Act with its head office in Toronto, Ontario.

2. The Manager is the manager of the Fund.

3. The Manager is registered with the applicable securities commissions as: (i) a portfolio manager in Ontario, and (ii) an exempt market dealer in Ontario and Newfoundland and Labrador.

4. The Fund is an open-end mutual fund trust that was established under the laws of the Province of Ontario pursuant to a Declaration of Trust dated as of August 27, 2007. The Fund is a reporting issuer in all of the provinces and territories of Canada other than Quebec.

5. Units of the Fund are being offered under a simplified prospectus and an annual information form, each dated August 21, 2009, as amended by Amendment No. 1 dated December 23, 2009. The Fund is subject to, among other laws and regulations, NI 81-102, National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) and National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107).

6. Neither the Manager nor the Fund is in default of applicable securities legislation of any province or territory of Canada.

The Proposed Transaction

7. The Filer was incorporated on June 2, 2000 under the Business Corporations Act (Ontario), and its head office address is 70 University Avenue, Suite 1200, Toronto, Ontario M5J 2M4. The Filer manages and distributes alternative investment products to Canadian retail investors designed to provide enhanced diversification and return potential outside of traditional equity and fixed income investments. As at December 31, 2009, the Filer had over $311 million in assets under management.

8. The Filer is registered with the Ontario Securities Commission as: (i) a portfolio manager, and (ii) a mutual fund dealer.

9. The Filer is a wholly-owned subsidiary of BluMont Capital Inc., which, in turn, is wholly-owned by Integrated Asset Management Corp. (IAM). IAM is an Ontario corporation, the outstanding common shares of which are listed on the Toronto Stock Exchange under the symbol "IAM". IAM is one of Canada's leading alternative asset management companies, with over $2.0 billion in assets and committed capital under management in private debt, private equity, managed futures, real estate and retail alternative investments.

10. Neither the Filer nor IAM is in default of applicable securities legislation of any province or territory of Canada.

11. The shareholders of the Manager have entered into a share purchase agreement dated as of December 15, 2009 with the Filer and the Manager, pursuant to which the Filer proposes to acquire 100% of the equity of the Manager from such shareholders (the Proposed Transaction). Subject to receipt of regulatory approvals and satisfaction of closing conditions, the Proposed Transaction is expected to close on or about February 23, 2010.

12. A press release announcing the Proposed Transaction was issued on December 16, 2009.

The Proposed Change of Manager

13. Following the completion of the Proposed Transaction, on or about March 25, 2010, it is contemplated that the Filer and the Manager will be amalgamated to form one entity continuing under the name "BluMont Capital Corporation" (the Amalgamated Corporation). It is proposed that the Amalgamated Corporation will become the manager of the Fund.

14. Prior to the change of manager of the Fund from the Manager to the Amalgamated Corporation (the Change of Manager), the Manager will seek securityholder approval of the Change of Manager at a special meeting of securityholders of the Fund (the Special Meeting) on or about March 25, 2010 (the Meeting Date).

15. It is expected that the composition of the board of directors of the Amalgamated Corporation will be the same as the present composition of the board of directors of the Filer.

16. The Proposed Transaction and the Change of Manager are not expected to have any material impact on the Fund or on the securityholders of the Fund.

17. There are no current plans to change, as a result of the Proposed Transaction and the Change of Manager, the personnel who are responsible for the investment management activities of the Fund.

18. The completion of the Proposed Transaction and the Change of Manager are not expected to affect the operation or administration of the Fund, including its investment objectives or strategies.

19. In accordance with the provisions of NI 81-107, the Manager has referred the matters related to the Proposed Transaction to the Independent Review Committee for the Fund (the IRC), for review by the IRC. The IRC has advised that, after reasonable inquiry, it has concluded that the matters proposed do not create any conflict issues that have not been adequately addressed and, on this basis, achieve a fair and reasonable result for the Fund.

20. Upon the completion of the Proposed Transaction, all current members of the IRC for the Fund will cease to be members of the IRC by operation of subsection 3.10(1)(c) of NI 81-107. It is expected that immediately following the Proposed Transaction, the IRC will be reconstituted with new members as contemplated in the commentary to Sections 3.3(5) and 3.10 of NI 81-107.

21. To the extent that any changes that would constitute "material changes" within the meaning of NI 81-106 will be effected with respect to the Fund as a result of the Proposed Transaction and the Change of Manager, appropriate amendments will be made to the prospectus of the Fund.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

The decision of the Principal Regulator under the Legislation is that the Approval Sought is granted provided that:

(i) the Manager obtains prior approval of the securityholders of the Fund of the Change of Manager at the Special Meeting on the Meeting Date;

(ii) the notice of the Special Meeting and the management information circular in respect of the Special Meeting (the Circular) are mailed to the securityholders of the Fund and copies thereof are filed on SEDAR in accordance with applicable securities legislation;

(iii) all other information and documents necessary to comply with the applicable proxy solicitation requirements of securities legislation for the Special Meeting are mailed to securityholders of the Fund;

(iv) prior to the mailing of the Circular to the securityholders of the Fund, a draft copy of the Circular is provided to the Principal Regulator with sufficient time to review the Circular; and

(v) the Principal Regulator is satisfied that the Circular adequately describes the proposed Change of Manager.

"Rhonda Goldberg"
Manager, Investment Funds Branch
Ontario Securities Commission