Securities Law & Instruments

Headnote

MI 11-102 -- Exemption from requirement to register as investment fund manager -- accumulation of assets of individual subsidiaries pension plans resulted in a mutual fund -- pension plans regulated under separate legislation, no offer to the public of units of fund -- Section 25(4) Securities Act (Ontario) and Section 7.3 of NI 31-103.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, s. 7.3.

Securities Act (Ontario), section 25(4), s. 74.

December 14, 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

INTACT FINANCIAL CORPORATION

(the "Filer")

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 of the principal regulator (the "Legislation") for an exemption from Section 25(4) of the Ontario Securities Act (the "Act") and Section 7.3 of National Instrument 31-103 -- Registration Requirements and Exemptions ("NI 31-103") exempting the Filer from the registration requirement contained in the Act and NI 31-103 that would require the Filer to register as an investment fund manager with respect to the Intact Pension Funds -- Master Trust (the "Exemption Sought"). The exemption is being sought pursuant to Section 74(1) of the Act and Section 15.1 of NI 31-103.

Under the Process for Exemptive Relief Applications:

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

(b) the Filer has provided notice that Subsection 4.7(1) of Multilateral Instrument 11-102 -- Passport System ("MI 11-102") is intended to be relied upon in the province of Québec.

Interpretation

Defined terms contained in the Act and National Instrument 14-101 -- Definitions 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:

1. IFC is a corporation incorporated under the Canada Business Corporations Act. IFC's registered and principal business office is located in Toronto, Ontario.

2. IFC is a reporting issuer in all provinces and territories in Canada. IFC is a holding company which, through its operating subsidiaries, provides property and casualty insurance in Canada.

3. The Intact Pension Funds -- Master Trust (the "Master Trust") is a trust established in Ontario through a master trust agreement (the "Master Trust Agreement") between IFC and RBC Dexia Investor Services Trust (the "Trustee").

4. The Master Trust is a "mutual fund in Ontario" as that term is defined in the Act because the Master Trust is organized under the laws of Ontario.

5. The Trustee is a trust company incorporated under the Trust and Loan Companies Act (Canada) duly registered and authorized to carry on business in Canada.

6. The Master Trust is made up of the assets of six participating pension plans, namely three registered under the laws of Quebec: Régime de retraite des employés d'Intact et de ses compagnies affiliées (anciennement le régime de Belair), Régime de retraite de la direction d'Intact et de ses compagnies affiliées (anciennement le régime de la direction du Groupe Commerce), Régime de retraite des employés d'Intact et de ses compagnies affiliées (anciennement le régime des employés du Groupe Commerce), and three registered under the laws of Ontario: Pension Plan for Employees of Intact and Its Affiliated Companies (formerly Halifax Plan), Pension Plan for Employees of Intact and Its Affiliated Companies (formerly Nordic Plan), Pension Plan for Employees of Intact and Its Affiliated Companies (formerly Wellington Plan), (collectively, the "Participating Pension Plans"). The Master Trust commingles the assets of all the Participating Pension Plans and was formed for the purpose of facilitating the collective investment and administration of the assets of all the Participating Pension Plans.

7. IFC acts as administrator for the Participating Pension Plans and has been delegated various responsibilities for their administration pursuant to applicable pension benefits law. Consequently, responsibility for the administration of the Master Trust is shared between IFC and the Trustee.

8. The trust agreements establishing the trust funds for the Participating Pension Plans empower IFC, as administrator, of the Participating Pension Plans to direct the Trustee in the management of the assets of the trust funds.

9. Intact Investment Management Inc. (the "Adviser"), a corporation incorporated under the Canada Business Corporations Act, is a wholly-owned subsidiary of IFC and is registered under NI 31-103 in Ontario, Quebec, British Columbia and Alberta as an adviser in the category of portfolio manager. The head office of the Adviser is located in Toronto, Ontario.

10. The Adviser has been appointed by IFC as the portfolio manager of the Master Trust in accordance with the terms of the Master Trust Agreement.

11. Pursuant to the terms of the Master Trust Agreement, the responsibilities of IFC, among others, include managing the investment of the assets of the Master Trust in accordance with the Master Trust Agreement, applicable law, and any investment policy or guidelines applicable to the Participating Pension Plans, including the appointment and supervision of one or more portfolio manager(s) for all or any portion of the assets of the Master Trust.

12. Pursuant to the terms of the Master Trust Agreement, the Trustee only has such duties and responsibilities in relation to the Master Trust as are specifically set forth in the Master Trust Agreement, which are primarily administrative.

13. Neither IFC nor the Master Trust are in default of securities legislation in any of the Jurisdictions.

14. The Participating Plans are highly regulated, pursuant to applicable pension benefits law and convention, and are maintained by IFC and its subsidiaries for the sole purpose of providing pension and other benefits to their eligible employees and beneficiaries.

15. IFC does not intend to allow any third parties or members of the public to participate in the Master Trust. Any additional participant in the Master Trust would be a pension plan maintained for the sole purposes of providing pension and other benefits to eligible employees and beneficiaries of IFC and its subsidiaries.

16. IFC is required to manage the investment of the assets of the Master Trust in accordance with the Master Trust Agreement, applicable law, and internal investment policy, mandate and guidelines applicable to the Participating Pension Plans, including the appointment and supervision of one or more portfolio manager(s) for all or any portion of the assets of the Master Trust.

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 Exemption Sought is granted.

"Carol S. Perry"
Commissioner
Ontario Securities Commission
 
"James D. Carnwarth"
Commissioner
Ontario Securities Commission