Man Investments Canada Corp. and GLG Income Opportunities Fund

Headnote

NP 11-203 -- Process for Exemptive Relief Application in Multiple Jurisdictions -- Relief granted to a commodity pool from subsection 2.1(1) and paragraphs 2.5(2)(a) and (c) and section 3.3 of National Instrument 81-102 Mutual Funds to permit the commodity pool to gain exposure to another investment fund in a two-tier structure, subject to certain conditions and to pay the organizational costs of its initial public offering -- The bottom fund will observe NI 81-102, except as permitted by NI 81-104 and in accordance with exemptive relief obtained by the top fund including that the bottom fund may engage in short selling -- The top fund is not in continuous distribution -- National Instrument 81-102 -- Mutual Funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.1(1), 2.5(2)(a) and (c), 3.3.

September 26, 2012

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

MAN INVESTMENTS CANADA CORP. (the Manager or the Filer) AND

GLG INCOME OPPORTUNITIES FUND (Fund)

DECISION

Background:

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Fund, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) granting exemptive relief, pursuant to Part 19 of National Instrument 81-102 Mutual Funds (NI 81-102), from the following provisions of NI 81-102, as further described below:

1. subsection 2.1(1) and paragraphs 2.5(2)(a) and (c) of NI 81-102 to permit the Fund to invest indirectly in securities of GLG Prospect Mountain Ltd (GLG Ltd.), which has adopted the investment restrictions contained in NI 81-102 and is managed in accordance with these restrictions, except as otherwise permitted by National Instrument 81-104 Commodity Pools (NI 81-104), and in accordance with any exemptions therefrom obtained by the Fund including that GLG Ltd. may engage in short selling in accordance with the terms of this decision; and

2. section 3.3 of NI 81-102 to permit the Fund to pay for its organization costs;

(together, the Requested Relief).

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

1. the Ontario Securities Commission is the principal regulator for this application; and

2. 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 each of the other provinces and territories of Canada (collectively, with Ontario, the Jurisdictions).

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

1. The Manager is a corporation incorporated under the Canada Business Corporations Act and is the trustee and manager of the Fund.

2. The Manager's head office is located in Toronto, Ontario.

3. The Manager is registered as an Investment Fund Manager in Ontario, as an adviser in the category of Portfolio Manager in Ontario and Alberta and as a dealer in the category of Exempt Market Dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.

4. None of the Manager, the Fund or GLG Ltd. is in default of any securities legislation in any of the Jurisdictions.

The Fund

5. The Fund is a mutual fund subject to NI 81-102 and a commodity pool, as such term is defined under NI 81-104, in that the Fund has adopted fundamental investment objectives that permit the Fund to gain exposure to or use or invest in specified derivatives that is not permitted under NI 81-102.

6. The Fund prepared and filed in accordance with National Instrument 41-101 General Prospectus Requirements (NI 41-101) a long form preliminary prospectus dated August 30, 2012 on SEDAR (the Preliminary Prospectus) with respect to the proposed offering (the Offering) of Class L Units and Class M Units of the Fund (collectively, the Units), a receipt for which was issued on August 31, 2012.

7. The Fund will prepare and file a long form final prospectus in accordance with NI 41-101 (the Final Prospectus); upon obtaining a receipt therefor, the Units will be qualified for distribution and the Fund will be a reporting issuer in each of the Jurisdictions.

8. As disclosed in the Preliminary Prospectus, the Fund's investment objectives are to: (i) provide holders of Units (the Unitholders) with monthly-tax advantaged distributions; (ii) provide the opportunity for long-term appreciation for the Unitholders; and (iii) profit over the entire credit cycle by generally investing or otherwise gaining exposure across the capital structure of leveraged companies and other issuers often driven by a pending event or catalyst.

9. The Fund will be created to provide exposure to a portfolio comprised primarily of companies with credit, legal, structural or other risks through a broad range of investment instruments which may include high yield bonds, below-par/distressed bank loans, par/near-par bank loans, debtor-in-possession loans, trade claims or receivables, asset-backed securities, convertible and municipal bonds, credit default swaps, credit default indexes, preferred and common stock, warrants and other rights to purchase shares, collateralized debt, bond and loan obligations, futures, options, swaps and other derivative contracts, bridge loans, mezzanine loans, and other types of debt instruments (collectively, the Portfolio), to be held by GLG Ltd.

10. The Fund will obtain exposure to economic returns of the Portfolio through one or more forward sale agreements (each a Forward Agreement) entered into with one or more Canadian chartered banks and/or their affiliates (each a Counterparty).

11. The Fund will invest substantially all of the proceeds of the Offering in a specified portfolio of common shares of Canadian public companies (the Common Share Portfolio) that are Canadian securities as defined in subsection 39(6) of the Income Tax Act (Canada).

12. Under the terms of the Forward Agreement, the Counterparty will agree to pay to the Fund on the scheduled settlement date of a Forward Agreement (the Forward Date), as the purchase price for the Common Share Portfolio, an amount based on the value of the Portfolio on the Forward Date.

13. The return to the Fund, and consequently to the Unitholders, will by virtue of the Forward Agreements depend on the net redemption proceeds that would be received by holders on a redemption of the Canadian dollar denominated redeemable notes, proposed to be issued by GLG Ltd., having an aggregate value equal to the aggregate net asset value of the Portfolio.

14. The Fund does not intend to list the Units on any stock exchange.

GLG Ltd. and the Portfolio

15. GLG Ltd. is an exempted company with limited liability incorporated in the Cayman Islands on August 22, 2012. GLG Ltd. will acquire and maintain the Portfolio.

16. GLG Ore Hill LLC (the GLG Manager) will act as manager and investment manager of GLG Ltd. and will actively manage the Portfolio.

17. The GLG Manager, a Delaware limited liability company, is ultimately owned by Man Group plc and is an affiliate of the Manager.

18. GLG Ltd. prepared and filed a long form non-offering preliminary prospectus in accordance with NI 41-101 in Ontario and Québec on September 11, 2012, a receipt for which was issued on September 12, 2012, and intends to file in accordance with NI 41-101 and obtain a receipt for a long form final prospectus, pursuant to which it will become a reporting issuer under the Securities Act (Ontario) and Securities Act (Québec) and subject to continuous disclosure requirements of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106). As a result, the financial statements and other reports required to be filed by GLG Ltd. under NI 81-106 will be available to the Unitholders on SEDAR.

19. GLG Ltd. will be a mutual fund because holders of its securities will be entitled to receive on demand, an amount computed by reference to the net asset value (NAV) of the Portfolio. However, GLG Ltd. will not distribute any securities under its non-offering prospectus and accordingly GLG Ltd. will be a mutual fund to which NI 81-106 applies, but will not be subject to requirements of either NI 81-102 or NI 81-104.

20. Though not subject to NI 81-104, GLG Ltd. will be a commodity pool as such term is defined in NI 81-104 in that GLG Ltd. has adopted fundamental investment objectives that permit it to use specified derivatives in a manner that is not permitted under NI 81-102.

21. GLG Ltd. has adopted the investment restrictions contained in NI 81-102 and the Portfolio is managed in accordance with these restrictions, except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Manager including that GLG Ltd. may engage in short selling as more fully described below.

22. The GLG Manager will monitor GLG Ltd.'s compliance with its investment restrictions for the Portfolio.

23. The indirect investment of the Fund in the securities of GLG Ltd. pursuant to the Forward Agreement will constitute more than 10% of the NAV of the Fund.

24. The indirect investment by the Fund in the securities of GLG pursuant to the Forward Agreement will comply with the requirements of section 2.5 of NI 81-102, except that, contrary to subsections 2.5(a) and (c) of NI 81-102, GLG Ltd. is a mutual fund that:

(a) is not subject to NI 81-102 and will never have offered securities under a simplified prospectus in accordance with National Instrument 81-101 Mutual Fund Distributions; and

(b) will not be a reporting issuer in any jurisdiction that the Fund is a reporting issuer in except Ontario and

Fund on Fund Relief

25. The Fund will only invest indirectly in securities of GLG Ltd. in accordance with its investment objectives and investment restrictions.

26. Since GLG Ltd. has adopted the applicable investment restrictions set out in NI 81-102, as modified by NI 81-104 and subject to any exemptions, the Fund would be allowed to invest directly in the Portfolio and therefore the Fund's investment exposure to securities of GLG Ltd. does not pose any additional risk to the Fund. In addition, the investment strategies utilized by GLG Ltd. in respect of the Portfolio are consistent with the Fund's fundamental investment objectives and strategies as set forth in the Preliminary Prospectus.

27. As a reporting issuer under the Securities Act (Ontario) and Securities Act (Québec), the continuous and timely disclosure required to be made and filed by GLG Ltd. in respect of the Portfolio pursuant to NI 81-106 will be available to Unitholders on SEDAR.

28. The Fund was created to provide exposure to the Portfolio and that is to be the Fund's principal investment.

Short Selling

29. GLG Ltd. wishes to be able to engage in short selling.

30. The GLG Manager will monitor the short positions of GLG Ltd. at least as frequently as daily.

31. Each short sale made by GLG Ltd. will comply with its investment objectives. In order to effect short sales of securities, GLG Ltd. will borrow securities from either its custodian or a dealer (in either case, a Borrowing Agent), which Borrowing Agent may be acting either as principal for its own account or as agent for other lenders of securities.

Reimbursement of Organization Costs

32. It is proposed, as disclosed in the Preliminary Prospectus, that some or all of the initial costs of formation and organization of the Fund, including the preparation and filing of the Preliminary Prospectus and the Final Prospectus (the Organization Costs), be borne initially by the Fund rather than the promoters or the Manager.

33. The closing of the Offering will not proceed if the minimum offering is not achieved and the only investors in the Fund will be those who acquire securities on the initial closing or any subsequent closings, if any, under the Final Prospectus. All investors purchasing pursuant to the Offering will be subject to their pro-rata share of the expenses of the Offering.

34. The costs are not expected to have a significant impact on the net asset value of the Fund on completion of the Offering, as would generally be the case with conventional mutual funds.

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 is granted provided that:

1. the Fund is a commodity pool subject to NI 81-102 and NI 81-104;

2. GLG Ltd. complies with the investment restrictions contained in NI 81-102 and the Portfolio is managed in accordance with those restrictions, except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Fund including that GLG Ltd. may engage in short selling in accordance with the terms of this decision;

3. the Preliminary Prospectus discloses, and the Final Prospectus and any annual information form filed will disclose, that the Fund will obtain exposure to securities of GLG Ltd. and the risks associated with such an investment;

4. no securities of GLG Ltd. are distributed in Canada other than to the Counterparty under the Forward Agreement or otherwise to a counterparty under a forward agreement;

5. the exposure of the Fund to securities of GLG Ltd. is in accordance with the fundamental investment objectives of the Fund;

6. the indirect investment by the Fund in the securities of GLG Ltd. is made in compliance with each provision of NI 81-102, except subsection 2.1(1) and paragraphs 2.5(2)(a) and (c) of NI 81-102 as described in this decision;

7. each short sale made by GLG Ltd. will comply with its investment objectives;

8. the Fund will have disclosed in the Final Prospectus and GLG Ltd. will have disclosed in its prospectus the following information:

a. a description of short selling, how GLG Ltd. engages in short selling, the risks associated with short selling and, in the investment strategies section, GLG Ltd.'s strategy with respect to short selling;

b. that there are written policies and procedures in place that set out the objectives and goals for short selling and the risk management procedures applicable to short selling;

c. who is responsible for setting and reviewing the policies and procedures referred to in the preceding paragraph, how often the policies and procedures are reviewed, and the extent and nature of the involvement of the GLG Manager or other applicable parties in the risk management process;

d. the trading limits and controls on short selling and who is responsible for authorizing the trading and placing limits or other controls on the trading;

e. whether there are individuals or groups that monitor the risks independent of those who trade; and

f. whether risk measurement procedures or simulations are used to test the Portfolio under stress conditions;

9. GLG Ltd. and the GLG Manager will implement the following controls when conducting short sales of securities:

a. securities will be sold short for cash, with GLG Ltd. assuming the obligation to return to the Borrowing Agent the securities borrowed to effect the short sale;

b. the short sales will be effected through market facilities through which the securities sold short would normally be bought and sold;

c. GLG Ltd. will receive cash for securities sold short within normal trading settlement periods for the market in which the short sale is effected;

d. the securities sold short will be liquid securities that satisfy either (i) or (ii) below:

i. the securities are listed and posted for trading on a stock exchange; and

A. the issuer of the security has a market capitalization of not less than CDN$300 million, or the equivalent thereof at the time the short sale is effected; or

B. GLG Ltd.'s portfolio advisor has prearranged to borrow the securities for the purpose of such sale; or

ii. the securities are fixed-income securities, bonds, debentures or other evidences of indebtedness of, or guaranteed by, any issuer;

10. the securities sold short will not include any of the following:

a. a security that a mutual fund subject to NI 81-102 is otherwise not permitted by securities legislation to purchase at the time of the short sale transaction;

b. an illiquid asset;

c. a security of an investment fund other than an index participation unit;

11. the aggregate market value of all securities sold short by GLG Ltd. does not exceed 40% of the NAV of GLG Ltd. on a daily marked-to-market basis;

12. the aggregate market value of all securities of a particular issuer sold short by GLG Ltd., whether direct short positions or indirect short positions through specified derivatives, does not exceed 10% of the NAV of GLG Ltd. on a daily marked-to-market basis;

13. GLG Ltd. will deposit its assets with the Borrowing Agent as security in connection with the short sale transaction;

14. except where the Borrowing Agent is GLG Ltd.'s custodian or sub-custodian, when GLG Ltd. deposits portfolio assets with a Borrowing Agent as security in connection with a short sale of securities, the market value of portfolio assets deposited with the Borrowing Agent does not, when aggregated with the market value of portfolio assets already held by the Borrowing Agent as security for outstanding short sales of securities by GLG Ltd., exceed 10% of the NAV of GLG Ltd. at the time of deposit;

15. GLG Ltd. holds "cash cover" (as defined in NI 81-102) in an amount, including GLG Ltd.'s assets deposited with Borrowing Agents as security in connection with short sale transaction, that is at least 150% of the aggregate market value of all securities sold short by GLG Ltd. on a daily marked-to-market basis;

16. GLG Ltd. will not use the cash from a short sale to enter into a long position in a security, other than a security that qualifies as cash cover;

17. GLG will not deposit portfolio assets as security in connection with a short sale of securities with a dealer in Canada unless the dealer is registered dealer in Canada and is a member of Investment Industry Regulatory Organization of Canada;

18. GLG will not deposit portfolio assets as security in connection with a short sale of securities with a dealer outside of Canada unless that dealer:

a. is a member of a stock exchange and is subject to a regulatory audit; and

b. has a net worth, determined from its most recent audited financial statements that have been made public, in excess of the equivalent of $50 million;

19. the security interest provided by GLG Ltd. over any of its assets that is required to enable GLG Ltd. to effect short sale transaction will be made in accordance with industry practice for that type of transaction and relate only to obligations arising under such short sale transactions;

20. GLG Ltd. and the GLG Manager will maintain appropriate internal controls regarding its short sales prior to conducting any short sales, including written policies and procedures, risk management controls and proper books and records; and

21. GLG Ltd. and the GLG Manager will keep proper books and records of short sales and all of its assets deposited with Borrowing Agents as security.