NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of control of investment fund manager under s. 5.5(1)(a.1) of NI 81-102 -- Filer has no current plans to change the Manager of the Funds, or to amalgamate or merge the current Manager with any other entity, for the foreseeable future.
Applicable Legislative Provisions
National Instrument 81-102 Investment Funds, s. 5.5(1)(a.1).
January 30, 2015
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 AEGON FUND MANAGEMENT INC. (the Manager or the Filer) AND IN THE MATTER OF THE FUNDS (as defined below)
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 approval of an indirect change of control of the Manager (Change of Control) of the mutual funds listed in Appendix "A" (collectively, the Funds) in accordance with section 5.5(1)(a.1) of National Instrument 81-102 -- Investment 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 is the principal regulator for this application (the Principal Regulator); 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 Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Québec and Saskatchewan (together with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Manager is a corporation incorporated under the laws of the Province of Ontario and has its head office in Toronto, Ontario.
2. The Manager is registered as an investment fund manager (IFM) under the securities legislation in each of the Jurisdictions.
3. The Manager is not in default of securities legislation in any province or territory.
4. The Manager is the IFM of the Funds.
5. Securities of the Funds are distributed in each of the Jurisdictions under a simplified prospectus and annual information form prepared in accordance with the requirements of National Instrument 81-101 -- Mutual Fund Prospectus Disclosure.
6. Each Fund is a reporting issuer under the applicable securities legislation of the Jurisdictions.
7. The Funds are not in default of applicable securities legislation in any of the Jurisdictions.
The Proposed Acquisition
8. In a press release dated October 16, 2014, Aegon N.V., the ultimate controlling parent of the Manager announced the sale of the majority of its Canadian operations to Wilton Re (the Proposed Acquisition). In connection with such sale, Wilton Re will indirectly acquire all of the outstanding securities of the Manager.
9. Following the Closing, Wilton Re will become the new indirect owner of the Manager, due to its holding of Proj Fox Acquisition Inc. (Proj Fox); however, no substantive changes are expected in the operation or management of the Funds by the Manager.
10. The parties' objective is to close the Proposed Acquisition as soon as possible but no later than the first quarter of 2015, subject to receipt of all required regulatory approvals and other customary closing conditions (the Closing).
11. Wilton Re is a Nova Scotia unlimited liability company. Wilton Re does not currently carry on business in Canada and has no Canadian operations.
12. Wilton Re is an indirect subsidiary of Canada Pension Plan Investment Board.
13. Neither Wilton Re, nor any of its affiliates, including Proj Fox, is registered or operating under an exemption from registration under the securities laws of any Canadian jurisdiction.
14. Proj Fox is a Nova Scotia unlimited liability company and is a subsidiary of Wilton Re. Proj Fox is a holding company which will not carry on any active business.
Change of Control of the Manager
15. The Proposed Acquisition will result in Wilton Re acquiring indirect control over the Manager.
16. In respect of the impact of the Change of Control on the Manager and on the management and administration of the Funds:
(a) Wilton Re has confirmed that there is no current intention:
(i) to make any substantive changes as to how the Manager operates or manages the Funds;
(ii) to amalgamate or merge the Manager with another IFM;
(iii) within the foreseeable period of time, to change the Manager;
(iv) to make any changes to the custodian or trustee of the Funds; and
(v) to make any substantive changes to the management of the Funds, including the investment objectives and strategies of the Funds, or the expenses that are charged to the Funds.
(b) The Closing is not expected to have any material impact on the business, operations or affairs of the Funds or the unitholders of the Funds;
(c) Following the Closing, the directors and officers of the Manager will be unchanged;
(d) The Manager will retain the management teams and supervisory personnel that were in place immediately prior to the Closing, and from and after the Closing, the compliance activities of the Manager will be subject to oversight by Wilton Re;
(e) Within 90 days of completion of the Change of Control, the Manager will change its name to a name that does not include the "Aegon" brand, such name to be determined, perform required re-branding activities consistent with its new name and update the registrations of the Manager and any registered individuals of the Manager to reflect its new name;
(f) The Closing will not adversely affect the Manager's financial position or its ability to fulfill its regulatory obligations; and
(g) Upon the Change of Control, the members of the Manager's Independent Review Committee (IRC) will cease to be IRC members by operation of section 3.10(1)(c) of National Instrument 81-107 -- Independent Review Committee for Investment Funds. Immediately following the Change of Control, the IRC will be reconstituted with the same members.
17. Notice of the Change of Control with respect to the Proposed Acquisition was provided by mail to unitholders of the Funds on October 31, 2014, in accordance with Section 5.8(1)(a) of NI 81-102, being at least 60 days before the Closing.
18. A notice regarding the Proposed Acquisition was sent to the Registration Branch of the Ontario Securities Commission on November 10, 2014 pursuant to section 11.10 of National Instrument 31-103 -- Registration Requirements and Exemptions.
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.
List of Funds