Goodman & Company, Investment Counsel Ltd. et al.

Decision

Headnote

National Policy 11-203 Process for Exemption Relief Applications in Multiple Jurisdictions -- relief from section 4.1 of NI 81-102 for dealer-managed mutual funds to invest in an offering of debt securities of African Minerals Limited for which dealer-manager acts as underwriter during distribution period or 60 day period following distribution -- debt securities will not have "approved rating" by "credit rating organization" as required by subsection 4.1(4) -- securities are consistent with fund investment objectives and funds' participation subject to approval of independent review committee -- offerings will have at least one underwriter in addition to related dealer, at least one arm's length purchaser purchasing at least 5% of the securities -- related funds are purchasing approximately 10% of offering and will pay no more than lowest price paid by arm's length purchaser(s).

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 4.1, 19.1.

January 24, 2011

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

GOODMAN & COMPANY,

INVESTMENT COUNSEL LTD.

(the "Filer")

AND

DYNAMIC POWER BALANCED FUND AND

DYNAMIC POWER BALANCED CLASS

(collectively, the "Funds")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, in respect of the Funds, for a decision under the securities legislation of the Jurisdiction (the "Legislation") for relief (the "Requested Relief") from the prohibition in section 4.1(1) of NI 81-102 (the "Investment Prohibition") to permit the investment by the Funds in debt securities of African Minerals Limited ("AML") during the period of their distribution (the "Distribution") or during the period of 60 days after the Distribution (the "60-Day Period"), notwithstanding the involvement of one of the Filer's associates or affiliates as an underwriter in the Distribution and notwithstanding that the debt securities do not have an approved rating by an approved credit rating organization as contemplated by section 4.1(4)(b) of National Instrument 81-102 ("NI 81-102").

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

(a) the Ontario Securities Commission 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 on in Alberta, British Columbia, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon Territory, Northwest Territories and Nunavut Territory (collectively, the "Non-Principal Jurisdictions").

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 81-102 and National Instrument 81-107 Independent Review Committee for Investment Funds ("NI 81-107") have the same meaning if used in this decision, unless otherwise defined. For greater certainty, the term "approved rating", as used in section 4.1(4)(b) of NI 81-102, has the meaning given to such term in National Instrument 44-101 Short Form Prospectus Distributions.

Representations

This decision is based on the following facts represented by the Filer in respect of the Filer and the Funds:

1. Each of the Funds is a mutual fund established under the laws of the Jurisdiction, and neither Fund is a "money market fund" as defined under NI 81-102.

2. The securities of the Funds are offered for sale pursuant to a prospectus filed in one or more of the Jurisdiction and the Non-Principal Jurisdictions. Each of the Funds is a dealer managed mutual fund that is a reporting issuer in one or more of the Jurisdiction and the Non-Principal Jurisdictions.

3. Each of the Funds has an independent review committee ("IRC") appointed under NI 81-107.

4. The Filer is the manager and portfolio adviser of the Funds.

5. The Filer and the Funds are not in default of securities legislation in the Jurisdiction or any of the Non-Principal Jurisdictions.

6. AML has publicly announced a proposed syndicated secured loan facility (the "Facility") of up to US$500 million. The Facility will be funded by a special purpose entity (the "Mandated Lead Arranger") acting as arranger, lead lender, administrative agent and security agent for the syndicate of lenders. Dundee Resources Limited, an affiliate of the Filer, holds a 50% interest in the Mandated Lead Arranger.

7. The Mandated Lead Arranger, subject to conditions precedent, has agreed to fund the first US$100 million of the Facility. The balance of the Facility has been marketed to potential lenders by a group of investment dealers (the "Placing Agents") pursuant to available exemptions from applicable securities laws.

8. The Filer is an affiliate of Dundee Securities Corporation (the "Related Placing Agent"), an investment dealer who is a Placing Agent in the Distribution.

9. The shares of AML are listed on the Alternative Investment Market of the London Stock Exchange.

10. The Filer currently controls an aggregate of 15,730,991 common shares of AML representing approximately a 5% equity interest in AML, which includes holdings of the AML by the Funds. As at January 17, Dynamic Power Balanced Fund and Dynamic Power Balanced Class have 1.12% and 2.01% of their respective net asset values invested in shares of AML.

11. The Filer proposes to purchase (the "Proposed Purchase") in the aggregate up to US$40 million of the Facility for the Funds. The proposed purchase would be subject to the approval of the IRC for the Funds.

12. The Funds require the Requested Relief from the Investment Prohibition because the Facility will not have an "approved rating" by an "approved credit rating organization".

13. The Proposed Purchase is consistent with the investment objectives of the Funds and represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Funds.

14. The Filer considers that the Funds may be prejudiced if they cannot make the Proposed Purchase, which is consistent with each Fund's investment objectives, during the Distribution, or in the 60-Day Period. Foregoing participation in this investment opportunity is a significant opportunity cost for the Funds as they would be denied timely access to these securities purely as a result of the coincidental participation of the Related Placing Agent in the transaction and the credit rating of the securities distributed.

15. The investment decision for the Proposed Purchase was made by the Filer independently from its Related Placing Agent, as is reflected in and required by policies and procedures approved by the IRC.

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 Requested Relief from the Investment Prohibition is granted in respect of the Proposed Purchase by the Funds, provided that:

(a) at the time of the investment, the Proposed Purchase is consistent with the investment objectives of the Funds and represents the business judgment of the portfolio adviser of the Funds uninfluenced by considerations other than the best interests of the Funds;

(b) the Filer complies with section 5.1 of NI 81-107;

(c) at the time of the investment, the IRC has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(d) if the securities are acquired during the Distribution

(i) at least one Placing Agent is not related to the Filer,

(ii) at least one purchaser who is independent and arm's length to the Funds and the Related Placing Agent must purchase at least 5% of the securities distributed under the Distribution,

(iii) the price paid for the securities by a Fund shall be no higher than the lowest price paid by any of the arm's length lenders who participate in the Distribution, and

(iv) the Funds collectively acquire no more than 20% of the securities distributed under the Distribution;

(e) if the securities are acquired in the 60-Day Period,

(i) the ask price of the securities is readily available as provided in Commentary 7 to section 6.1 of NI 81-107,

(ii) the price paid for the securities by a Fund is not higher than the available ask price of the security, and

(iii) the purchase is subject to market integrity requirements as defined in NI 81-107; and

(f) no later than the time a Fund files its next annual financial statements, the manager of the Funds will file the particulars of the investment made by the Funds pursuant to the Requested Relief.

"Darren McKall"
Assistant Manager, Investment Funds Branch
Ontario Securities Commission