Securities Law & Instruments


Headnote

Multilateral Instrument 11-102 Passport System – National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – National Instrument 33-109 Registration Information (NI 33-109) and Derivatives Regulation (Québec) – relief from certain filing requirements of NI 33-109 and Derivatives Regulation (Québec) in connection with a bulk transfer of business locations and registered individuals pursuant to an asset purchase in accordance with section 3.4 of Companion Policy 33-109CP to NI 33-109.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System.
National Instrument 33-109 Registration Information and Companion Policy 33-109CP.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

September 30, 2016

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
RAYMOND JAMES LTD.
(RJL)

AND

MACDOUGALL, MACDOUGALL & MACTIER INC.
(3Macs) (the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filers, on behalf of 3Macs and the continuing corporation (the Amalgamated Corporation) resulting from the proposed amalgamation (the Amalgamation) of RJL and 3Macs, for a decision under the securities legislation of each of the Jurisdictions (the Legislation) providing exemptions from the requirements contained in sections 2.2, 2.5, 2.3, 3.2 and 4.2 of National Instrument 33-109 Registration Information (NI 33-109) pursuant to section 7.1 of NI 33-109 to allow the bulk transfer (the Bulk Transfer) of registered individuals (the 3Macs Individuals) and all business locations (branches and sub-branches) (the Locations) of 3Macs to the Amalgamated Corporation, on the Amalgamation Date (as defined below), in accordance with section 3.4 of the Companion Policy to NI 33-109 (the Exemption Sought).

The principal regulator in Québec has also received an application from the Filers for a decision under the derivatives legislation of Québec for relief from section 11.1 of the Derivatives Regulation (Québec) pursuant to section 86 of the Derivatives Act (Québec) to allow the Bulk Transfer of 3Macs Individuals registered under Québec derivatives legislation and all of the Locations to the Amalgamated Corporation, on the Amalgamation Date, in accordance with section 3.4 of Companion Policy to NI 33-109 (the Derivatives Exemption Sought).

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

(a)           the Autorité des marchés financiers (the AMF) is the principal regulator for this application,

(b)           for the decision of the principal regulator in respect of the Exemption Sought, the Filers have provided notice that subsection 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, Northwest Territories, Nova Scotia, Prince Edward Island, Saskatchewan and the Yukon,

(c)           the decision with respect to the Exemption Sought is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario, and

(d)           the decision with respect of the Derivatives Exemption Sought is the decision of the principal regulator.

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 Filers:

RJL

1.             RJL is a corporation existing under the Canada Business Corporations Act (CBCA). Its head office is located at Suite 2100, 925 West Georgia Street, Vancouver, British Columbia V6C 3L2.

2.             RJL is registered as an investment dealer under the securities legislation of each of the Canadian provinces. It is also registered as a derivatives dealer in Québec. RJL is a dealer member of the Investment Industry Regulatory Organization of Canada (IIROC).

3.             RJL is a wholly-owned subsidiary of Raymond James Financial, Inc., a company existing under the laws of the state of Florida the securities of which are listed on the New York Stock Exchange.

4.             RJL is not in default of any requirements of securities legislation in any of the Jurisdictions.

3Macs

5.             3Macs is a corporation existing under the laws of CBCA. Its head office is located at 1000, rue de la Gauchetière Ouest, Bureau 2600, Montreal, Québec H3B 4W5.

6.             3Macs is registered as an investment dealer under the securities legislation of each of the Canadian provinces, except for Nunavut. It is also registered as a derivatives dealer in Québec. 3Macs is a dealer member of IIROC.

7.             3Macs has two wholly-owned subsidiaries: Raymond James Investment Counsel Ltd. (formerly MacDougall Investment Counsel Inc.) (RJIC) and MacDougall Wealth Management Inc. (MWM).

8.             RJIC is registered as a portfolio manager and an investment fund manager under the securities legislation of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Saskatchewan and Québec.

9.             MWM is registered as a Corporate Insurance Agency (Life) with the Financial Services Commission of Ontario and the Insurance Council of British Columbia. MWM is also registered with the AMF to provide financial planning activities in Québec.

10.          3Macs is not in default of any requirements of securities legislation in any of the Jurisdictions.

Acquisition of 3Macs by RJL

11.          On May 26, 2016, RJL and 3Macs announced that they had entered into an arrangement agreement pursuant to which RJL agreed, subject to certain terms and conditions, including receipt of all required regulatory, shareholder and court approvals, to acquire 100% of the outstanding common shares of 3Macs (the Transaction).

12.          On July 18, 2016, 3Macs held a shareholder meeting at which it obtained the requisite shareholder approval for the Transaction.

13.          On July 19, 2016, 3Macs obtained a final order from the Québec Superior Court (Commercial Division) approving the Transaction.

14.          Notice of the Transaction was provided to the AMF and IIROC on July 20, 2016. The AMF and IIROC provided notice of their approval or non-objection to the Transaction by letters dated August 24, 2016 and August 25, 2016, respectively.

15.          The Transaction closed effective August 31, 2016.

Amalgamation

16.          On or about October 1, 2016 (the Amalgamation Date), RJL proposes to amalgamate with 3Macs.

17.          The Amalgamation will be effected under the CBCA as a vertical short form amalgamation. As such, after the Amalgamation RJL and 3Macs will continue as a single legal entity with the name “Raymond James Ltd.” (with the French version being “Raymond James Ltée”).

18.          The Amalgamated Corporation will be a wholly-owned subsidiary of Raymond James Financial, Inc. (as is the case for RJL).

19.          The head office of the Amalgamated Corporation will be the same as the current head office location of RJL. The Amalgamated Corporation will have the same share structure, issued shares and bylaws that RJL had immediately prior to the Amalgamation.

20.          The ultimate designated person, chief compliance officer, and the key management and directors of the Amalgamated Corporation will be those of RJL, with the addition of Tim Price, a current director and senior officer of 3Macs, to the Board of Directors. The principal regulator of the Amalgamated Corporation will be the British Columbia Securities Commission.

21.          The Filers believe that the Amalgamation will produce efficiencies with one IIROC dealer member and will help accelerate their growth strategy in Québec and other key centres across Canada. In addition, the Amalgamation is expected to strengthen the combined firm’s ability to provide independent advice and access to high quality investment products and services. The Filers expect the Amalgamated Corporation to be Canada’s largest independent (non-bank affiliated) investment dealer, with approximately $33 billion in client assets under administration. In addition to aligning with RJL’s growth strategy, following completion of the Amalgamation, both 3Macs’ clients and advisors are expected to benefit from RJL’s greater compliance and information technology resources.

22.          Following the corporate and systems integration of predecessors 3Macs and RJL, RJL has agreed to maintain the heritage of the 3Macs brand, and 3Macs current offices and advisors will be permitted to operate under the trade name “3Macs / MacDougall, MacDougall & MacTier, a division of Raymond James”.

23.          RJL does not anticipate any material changes in either its or 3Macs’ primary business activities, target markets or products and services as a result of the Amalgamation.

24.          RJL’s existing compliance policies and procedures, including its policies and procedures manual, will be that of the Amalgamated Corporation.

25.          IIROC provided its approval of the bulk transfer of client accounts in connection with the Amalgamation by a letter dated August 25, 2016.

26.          With their August 31, 2016 account statements, all 3Macs’ clients received written notice informing them of the Amalgamation, the name of the Amalgamated Corporation and other related matters, and advising them of their right, before the Amalgamation Date, to request that their accounts be closed or moved to another firm. In the event of any request to transfer accounts to another firm within 60 days of the Amalgamation Date, clients will not be charged any fees for the transfer.

Submissions in support of exemptions

27.          Effective as of the Amalgamation Date, all activities currently conducted by the Filers will be under the responsibility of the Amalgamated Corporation. The Amalgamated Corporation will conduct the same operations, essentially in the same manner as before the Amalgamation.

28.          Subject to obtaining the Exemption Sought and the Derivatives Exemption Sought, no disruption in the services provided by the 3Macs Individuals to clients of the Filers is anticipated as a result of the Amalgamation.

29.          Neither the Exemption Sought nor the Derivatives Exemption Sought will have any negative consequences on the ability of 3Macs, RJL or the Amalgamated Corporation to comply with any applicable regulatory requirements or their ability to satisfy any of their obligations in respect of their clients.

30.          Given the number of 3Macs Individuals and Locations to be transferred from 3Macs to the Amalgamated Corporation on the Amalgamation Date, it would be unduly time consuming and difficult to transfer each of the 3Macs Individuals and Locations through NRD in accordance with the requirements of NI 33-109 if the Exemption Sought and the Derivatives Exemption Sought are not granted.

31.          Both Filers are registered in the same categories of registration in each of the Jurisdictions, thereby affording the opportunity to seamlessly transfer the 3Macs Individuals and Locations to the Amalgamated Corporation on the Amalgamation Date by way of Bulk Transfer.

32.          At the time of the Bulk Transfer, all of the 3Macs Individuals will be the only registered individuals of 3Macs and the Locations will be the only branches and sub-branches of 3Macs. Accordingly, the transfer of the 3Macs Individuals and Locations on the Amalgamation Date by means of the Bulk Transfer can be implemented without any significant disruption to the activities of the 3Macs Individuals, the Locations, 3Macs, RJL or the Amalgamated Corporation.

33.          Allowing the Bulk Transfer of the 3Macs Individuals to occur on the Amalgamation Date will benefit (and have no detrimental impact on) the clients of the Filers by facilitating seamless service on the part of the 3Macs Individuals, the Filers and the Amalgamated Corporation.

34.          The Exemption Sought and the Derivatives Exemption Sought comply with the requirements of, and the reasons for, a bulk transfer as set out in Section 3.4 of the Companion Policy to NI 33-109 and Appendix C thereto.

35.          It would not be prejudicial to the public interest to grant the Exemption Sought and the Derivatives Exemption Sought.

Decision

Each of the Decision Makers is satisfied that the decision meets the tests set out in the Legislation and the Derivatives Act (Québec) 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 the Filers make acceptable arrangements with CGI Information Systems and Management Consultants Inc. in respect of the Bulk Transfer and make such arrangements in advance of the Bulk Transfer.

The decision of the principal regulator under the Derivatives Act (Québec) is that the Derivatives Exemption Sought is granted provided that the Filers make acceptable arrangements with CGI Information Systems and Management Consultants Inc. in respect of the Bulk Transfer and make such arrangements in advance of the Bulk Transfer.

“Eric Stevenson”
Superintendent, Client Services and Distribution Oversight