National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – approval for change of control of manager under s. 5.5(1)(a.1) of National Instrument 81-102 Investment Funds – transaction will not result in any material changes to operations and management of the manager or the funds it manages – manager may amalgamate with affiliate post transaction, however such amalgamation would not require a securityholder vote under subsection 5.1(1) of National Instrument 81-102 Investment Funds – affiliate is the current portfolio manager of the funds.
Applicable Legislative Provisions
National Instrument 81-102 Investment Funds, ss. 5.5(1)(a.1), 5.7(1)(a), 19.1.
April 13, 2016
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
AEGON FUND MANAGEMENT INC.
(the Manager or the Filer)
IN THE MATTER OF THE
(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 imaxx 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, Quebec 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 private corporation existing under the Canada Business Corporations Act having its head office in Toronto, Ontario.
2. The Manager is registered as an investment fund manager (IFM) in each Jurisdiction.
3. The Manager is not in default of securities legislation in any of the Jurisdictions.
4. The Manager is the IFM of each of the imaxx Funds.
The imaxx Funds
5. Securities of the imaxx Funds are distributed in each of the Jurisdictions under a simplified prospectus (SP) and annual information form (AIF), each dated May 8, 2015, prepared in accordance with the requirements of National Instrument 81-101 – Mutual Fund Prospectus Disclosure.
6. Each imaxx Fund is a reporting issuer under the applicable securities legislation of the Jurisdictions.
7. The imaxx Funds are not in default of applicable securities legislation in any of the Jurisdictions.
8. Aegon Capital Management Inc. (ACM), an affiliate of the Manager, is the portfolio manager of each of the imaxx Funds.
The Proposed Acquisition
9. In press releases, it was announced that Foresters Life Insurance Company (Canada) (the Purchaser) agreed on February 29, 2016 to purchase all of the issued and outstanding shares of the direct parent company of AFM, 3284664 Nova Scotia Limited (the Parent) from the Parent’s direct shareholder, Proj Fox Acquisition Inc. (the Proposed Acquisition). In connection with such sale, the Purchaser will indirectly acquire all of the outstanding securities of the Manager.
10. Following the Closing (as defined below), the Purchaser will indirectly become the new owner of the Manager; however, no substantive changes are expected in the operations or management of the imaxx Funds by the Manager.
11. The parties’ objective is to close the Proposed Acquisition as soon as possible in early May 2016, subject to receipt of all required regulatory approvals and other customary closing conditions (the Closing).
12. The Purchaser is a private corporation existing under the Insurance Companies Act (Canada) having its head office in Toronto, Ontario.
13. The Purchaser is a wholly-owned subsidiary of The Independent Order of Foresters (Foresters), a fraternal benefit society organized under the laws of Canada. Foresters is an international financial services provider with more than three million clients and members in Canada, the United States, and the United Kingdom. Foresters provides life insurance, savings, retirement and investment solutions that help families achieve their financial goals and make a lasting difference in their lives and communities. Foresters has assets of almost $14 billion, total funds under management of $34 billion, and a surplus of $2.3 billion (all figures in Canadian dollars as of December 31, 2015) and maintains an “A” (Excellent) rating by A.M. Best.
14. Given the nature of Foresters’ organization, ownership of Foresters, the ultimate parent of the Purchaser, is divided among over 1,000,000 members and no member controls 10% or more of the membership.
15. The Purchaser is not registered, or operating under an exemption from registration, under securities legislation in the Jurisdictions (“Securities Legislation”), and is not affiliated with, or the owner of, directly or indirectly, an interest in, a firm which is registered, or operating under an exemption from registration, under Securities Legislation. The Purchaser does not currently operate an investment fund management business in Canada.
16. The Purchaser and its affiliates are not currently registered or operating as IFMs in any Jurisdiction, and do not carry on an investment fund management business in any Jurisdiction.
Change of Control
17. The Proposed Acquisition will result in the Purchaser indirectly acquiring control over the Manager.
18. In respect of the impact of the Change of Control on the Manager and on the management and administration of the imaxx Funds:
(a) The Purchaser has confirmed that there is no current intention:
(i) to make any substantive changes as to how the Manager operates or manages the imaxx Funds, unless it decides to amalgamate the Manager and its affiliate, ACM, following the Closing;
(ii) within the foreseeable period of time, to change the Manager, unless it decides to amalgamate the Manager and its affiliate, ACM, following the Closing;
(iii) to make any changes to the custodian, auditor, or trustee of the imaxx Funds; and
(iv) to make any substantive changes to the management of the imaxx Funds, including the names, investment objectives and investment strategies of the imaxx Funds, or the management fees or expenses that are charged to the imaxx Funds;
(b) the Closing is not expected to have any material impact on the business, operations or affairs of the imaxx Funds, or on the unitholders of the imaxx Funds;
(c) ACM will continue as portfolio manager of the imaxx Funds following the Closing;
(d) the Manager will retain the compliance supervisory personnel that were in place immediately prior to the Closing;
(e) following the Closing, the ultimate designated person, directors and officers, except for the chief compliance officer, of the Manager, will be changed;
(f) on the date of, or after, the Closing, the Manager intends to change its name to Foresters Financial Investment Management Company of Canada/Société de gestion de placements financiers canadiens Foresters and will update the SP and AIF of the imaxx Funds as needed;
(g) the Closing will not adversely affect the Manager’s financial position or its ability to fulfill its regulatory obligations;
(h) 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 Manager intends to re-appoint each member of the IRC, in an effort to reconstitute the IRC with the same members; and
(i) following the Closing, the Manager may amalgamate with its affiliate, ACM, such that the Manager and ACM will continue as one corporation, which amalgamation would be undertaken to simplify the Purchaser’s corporate structure and investment management business.
19. Notice of the Change of Control with respect to the Proposed Acquisition was provided by mail to unitholders of the imaxx Funds on February 29, 2016, in accordance with Section 5.8(1)(a) of NI 81-102, being at least 60 days before the Closing.
20. A notice regarding the Proposed Acquisition was sent to the Registration Branch of the Ontario Securities Commission on March 11, 2016 pursuant to section 11.10 of National Instrument 31-103 – Registration Requirements and Exemptions and Ongoing Registrant Obligations.
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.
Manager, Investment Funds and Structured Products
Ontario Securities Commission
LIST OF IMAXX FUNDS
imaxx Canadian Bond Fund
imaxx Canadian Dividend Fund
imaxx Canadian Equity Growth Fund
imaxx Canadian Fixed Pay Fund
imaxx Global Equity Growth Fund
imaxx Money Market Fund