Multilateral Instrument 11-102 -- Passport System -- Relief from requirement that registrant appoint its CEO as UDP to allow filer to appoint its President as UDP -- President oversees all aspects of filer's business and is the officer in charge of the filer -- President has ultimate authority for compliance related activity throughout the firm -- President reports directly to the Chair of the firm's Board of Directors -- section 11.2 of NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 5.1, 11.2.
July 20, 2015
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF IA CLARINGTON INVESTMENTS INC. (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (each, a "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") for an exemption from the requirement contained in section 11.2 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") to permit the Filer to designate its president (the "President") as the ultimate designated person ("UDP") of the Filer (the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
a) the Autorité des marchés financiers is the principal regulator for this application;
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 British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (the "Other Jurisdictions"); and
c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in NI 31-103, 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 Filer is registered as an investment fund manager and portfolio manager in the Provinces of Québec, Ontario and Newfoundland and Labrador. The Filer is also registered as a portfolio manager in all other Canadian provinces.
2. The Filer is a corporation duly amalgamated under the laws of Canada, with its head office in Québec City, Québec.
3. The Filer is not in default of securities legislation in any of Ontario, Quebec and the Other Jurisdictions, except in relation to the Exemption Sought hereunder.
4. The Filer is a subsidiary of Industrial Alliance Insurance and Financial Services Inc. ("IA"). IA is a life and health insurance company with its head office in Québec City, Québec. IA and its subsidiaries offer a wide range of life and health insurance products, savings and retirement plans, mutual and segregated funds, securities, auto and home insurance, mortgage loans, creditor insurance and other financial products and services.
5. The previous UDP of the Filer was its former President. Upon the former President's resignation on March 5, 2015 a new President and UDP was appointed. There was no impact to the job descriptions of the President or chief executive officer ("CEO") as a result of the resignation of the former President.
6. The President is responsible for the general operations of the Filer and reports directly to the Chairman of the Board of Directors. The President is also a member of the Board of Directors.
7. The CEO is the Chairman of the Board of Directors. In addition to his responsibilities as CEO of the Filer, the CEO is also a senior officer of IA, and oversees presidents of several other subsidiaries, each operating different businesses.
8. The CEO is based at the Filer's registered head office in Québec, while the President is based at the Filer's offices located in Toronto, Ontario. The Filer's operations are based out of its offices in Toronto, Ontario.
9. The President oversees all aspects of the Filer's business, is responsible for the general operations of the Filer's business, and is the officer in charge of the Filer.
10. The President has ultimate authority over compliance related matters for the Filer. The President supervises, monitors and resolves all compliance related issues within the Filer. The Filer's Chief Compliance Officer reports to the President. If there is a significant compliance related matter, the President would escalate the issue to the Filer's Board of Directors.
11. The CEO of the Filer has responsibilities with IA, including responsibilities overseeing several businesses. As a result, the President of the Filer has greater day-to-day involvement in the Filer's affairs.
12. Under section 11.2 of NI 31-103, a registered firm is required to designate an individual to be the UDP of the firm and the individual must be one of the following:
a. the CEO of the registered firm or, if the firm does not have a CEO, an individual acting in a capacity similar to a CEO;
b. the sole proprietor of the registered firm;
c. the officer in charge of a division of the registered firm, if the activity that requires the firm to register occurs only within the division and the firm has significant other business activities.
13. The position of the President of the Filer is equivalent to that of an officer in charge of a division. The activity that requires the Filer to register as an investment fund manager and portfolio manager, as it relates to the business of a mutual fund manufacturer, occurs only within the Filer. IA operates significant other business activities through its various subsidiaries.
14. Under section 5.1 of NI 31-103, the UDP is responsible for (i) supervising the activities of the firm that are directed towards ensuring compliance with securities legislation by the firm and each individual acting on the firm's behalf; and (ii) promoting compliance by the firm, and individuals acting on its behalf, with securities legislation.
15. The President has authority for the Filer's compliance related activities. The President supervises the activities of the Filer's business to ensure compliance with securities legislation and promotes compliance by the Filer and its employees with securities legislation.
16. For these reasons, the President is more appropriately placed to fulfill the obligations of UDP than the CEO.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:
a. The President continues to be the officer responsible for the Filer, as a subsidiary of a firm with significant other business activities;
b. The President continues to be a member of the Filer's Board of Directors and report directly to the Chairman of the Board of Directors; and
c. The President continues to have ultimate authority for all compliance related matters for the Filer and all of its employees.