Lincluden Investment Management Limited and Lincluden Balanced Fund

Headnote

NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval granted for change of control of mutual fund manager under s. 5.5(2) of NI 81-102 and approval for abridgement of the related 60 day notice requirement to 37 days under s. 5.8(1)(a) of NI 81-102 -- 37 days notice to unitholders provided, no changes being made to the management, administration or portfolio management of the fund for at least 60 days after the notice delivered.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(2), 5.8(1), 19.1.

December 30, 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

LINCLUDEN INVESTMENT MANAGEMENT LIMITED

(THE NEW LINCLUDEN)

AND

LINCLUDEN BALANCED FUND

(THE FUND)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the New Lincluden for a decision under the securities legislation of the Jurisdiction (the Legislation) for relief pursuant to section 19.1 of National Instrument 81-102 Mutual Funds (NI 81-102) from:

(a) Section 5.5(2) of NI 81-102 to effectively allow a change of control of the manager of the Fund by means of a transaction (the Transaction) whereby the management of Lincluden Management Limited, the existing manager of the Fund, (the Existing Lincluden) will through the New Lincluden acquire the business of the Existing Lincluden, including the management of the Fund; and

(b) Section 5.8(1)(a) of NI 81-102 to allow the New Lincluden to abridge the 60 day notice period that is given to the unitholders of the Fund about the effective change of control of the manager of the Fund to 37 days (collectively, the Approvals Sought).

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

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

(b) the New Lincluden 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 each province and territory of Canada other than Ontario (collectively with Ontario, the Jurisdictions).

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

The decision is based on the following facts represented by the New Lincluden:

The Existing Lincluden

1. The Existing Lincluden is a corporation incorporated under the Business Corporations Act (Ontario) and has its head office in Oakville, Ontario.

2. The Existing Lincluden is the investment fund manager, trustee, portfolio manager and principal distributor of the Fund.

3. The Existing Lincluden is registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario, and as a portfolio manager in each of the other Jurisdictions.

4. The Existing Lincluden is indirectly, a wholly-owned subsidiary of Old Mutual (US) Holdings Inc. (Old Mutual).

5. The Existing Manager is not in default of applicable securities legislation in any of the Jurisdictions.

The Fund

6. The Fund is a reporting issuer in all of the Jurisdictions pursuant to a simplified prospectus and annual information form, each dated April 29, 2011.

7. Units of the Fund can only be purchased by interested investors in each of the Jurisdictions pursuant to a front end sales charge, and cannot be purchased pursuant to a deferred sales charge option.

8. The Fund is not in default of applicable securities legislation in any of the Jurisdictions.

The New Lincluden

9. The New Lincluden is a corporation incorporated under the Canada Business Corporations Act and has its head office in Oakville, Ontario.

10. The New Lincluden has applied to become registered as a portfolio manager, investment fund manager and exempt market dealer in Ontario, and as a portfolio manager in each of the other Jurisdictions.

11. The New Lincluden is not in default of applicable securities legislation in any of the Jurisdictions.

The Transaction

12. The shareholder of the New Lincluden, the Existing Lincluden and Old Mutual have entered into an asset purchase agreement whereby the New Lincluden will on the receipt of all required regulatory approvals acquire the business of the Existing Lincluden, including the management of the Fund, which is expected to occur on or about December 30, 2011, which is effectively a change of control of the manager of the Fund.

13. The Transaction was structured as an asset purchase transaction instead of a share purchase transaction as certain liabilities of the Existing Lincluden are not being assumed by the New Lincluden.

14. A press release was issued on September 6, 2011 announcing the Transaction (the Press Release).

15. The independent review committee of the Fund has approved of the effective change of control of the manager of the Fund to the New Lincluden pursuant to the Transaction.

16. At the time that the New Lincluden becomes registered in the same capacities as the Existing Lincluden in the Jurisdictions, the registered individuals at the Existing Lincluden will become registered individuals of the New Lincluden and the registrations of the Existing Lincluden will be suspended.

17. Concurrently with the registration of the New Lincluden, the business of the Existing Lincluden will be purchased by the New Lincluden.

18. After the completion of the Transaction, the personnel of the New Lincluden will manage and advise the Fund in exactly the same manner as they did when they worked for the Existing Lincluden.

19. There will not be any change to the investment objective or any other material aspects of the Fund, except that the individuals managing and advising the Fund will work for, and in some cases have an equity interest in, the New Lincluden instead of working for the Existing Lincluden.

20. The Transaction is not expected to have any material impact on the unitholders of the Fund.

21. It is not expected that there will be any change in the expenses that are charged to the Fund as a result of the Transaction.

Notice

22. Pursuant to the requirements of Section 5.8(1)(a) of NI 81-102, unitholders of the Fund were advised of the Transaction on October 17, 2011 (the Mailing) and November 24, 2011 (the Notice), which means that if the Transaction occurs on December 30, 2011, such unitholders will have received the Notice approximately 37 days in advance of the effective change of control of the manager of the Fund.

23. The New Lincluden submits that it would not be prejudicial to the unitholders of the Fund to abridge the notice period prescribed by Section 5.8(1)(a) of NI 81-102 from 60 days to 37 days for the following reasons:

(a) as noted above, the personnel of the New Lincluden will manage and advise the Fund in exactly the same manner as they did when they worked for the Existing Lincluden;

(b) the Transaction will not have any impact on unitholders' interests in the Fund;

(c) the unitholders of the Fund may redeem their units of the Fund at any time without incurring any penalty or cost as units of the Fund are only sold on a front end sales charge basis; and

(d) the Transaction was publicly announced through the Press Release and the Mailing, such that most unitholders of the Fund are likely already aware of the Transaction.

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 Approvals Sought are granted provided that the New Lincluden does not initiate any changes to the management, administration or portfolio management of the Fund for at least 60 days following the Notice.