Montrusco Bolton Investments Inc.

November 25, 2016

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Exemption granted from conflict of interest trading prohibition in paragraph 13.5(2)(b)(iii) of NI 31-103 to permit In-Specie Transfers by separately Managed Accounts and Pooled Funds in Pooled Funds – Portfolio Manager of Managed Accounts is also portfolio manager of Pooled Funds and is therefore a “responsible person” – Relief subject to certain conditions.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 13.5(2)(b)(iii).

November 25, 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

MONTRUSCO BOLTON INVESTMENTS INC.

(the Filer or MBI)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer, for a decision under the securities legislation of the Jurisdictions (the Legislation) granting an exemption from subparagraph 13.5(2)(b)(iii) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), which prohibit an adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing or selling a security from or to the investment portfolio of any investment fund for which a responsible person acts as an adviser, in order to permit In-Specie subscriptions and redemptions (each an In-Specie Transfer as further defined below) by:

(A) Pooled Funds in the other Pooled Funds; and

(B) Managed Accounts in the Pooled Funds;

(collectively, 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 subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, New Brunswick and Nova Scotia (together with the Jurisdictions, are the Filing 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.

Interpretation

Terms defined in the Legislation, MI 11-102, National Instrument 14-101 Definitions and NI 31-103 have the same meanings if used in this decision unless otherwise defined. In this decision:

Pooled Fund means an investment fund structured as a trust, a corporation or a partnership under the laws of Canada or of one of the provinces or territories of Canada and managed by MBI or managed in the future by MBI, that is not a reporting issuer, and whose units are sold pursuant to prospectus exemptions under applicable securities legislation, to which National Instrument 81-102 – Investment Funds (NI 81-102) does not apply.

Managed Account means an account of a client of the Filer that is not a ‘responsible person’ as defined in NI 31-103, for which the Filer has discretionary authority to trade in securities for the account without requiring the client’s express consent to the transaction.

In-Specie Transfer means causing a Managed Account or a Pooled Fund to deliver portfolio securities to a Pooled Fund or Managed Account in respect of the purchase of securities of the Pooled Fund by the Managed Account or Pooled Fund, or to receive portfolio securities from the investment portfolio of a Pooled Fund or Managed Account in respect of a redemption of securities of the Pooled Fund by the Managed Account or Pooled Fund.

Representations

This decision is based on the following facts represented by the Filer:

1. MBI is a corporation incorporated under the Canada Business Corporations Act. Its head office is in Montréal, Québec.

2. MBI is registered as an investment fund manager, a portfolio manager and an exempt market dealer in the Filing Jurisdictions, as well as registered derivatives portfolio manager in the Province of Québec and a commodity trading manager in the Province of Ontario.

3. Each Pooled Fund is, or will be, an investment fund structured as a trust, a corporation or a partnership under the laws of Canada or of one of the provinces or territories of Canada.

4. The Filer is, or will be, the investment fund manager of each of the Pooled Funds. The Filer or an affiliate of the Filer is, or will be, the portfolio manager of each of the Pooled Funds.

5. The Filer is, or will be, the portfolio manager of a Managed Account.

6. Natcan Trust Company acts as trustee, when applicable, and as custodian of each of the Pooled Funds, and is not an affiliate of the Filer.

7. Securities of each of the Pooled Funds are, or will be, distributed in the Filing Jurisdictions pursuant to exemptions from the prospectus requirement. Each of the Pooled Funds is not, or will not be, a reporting issuer in the Filing Jurisdictions.

8. The Filer is not in default of any requirements of securities legislation in the Filing Jurisdictions.

9. In its capacity as portfolio manager of a Pooled Fund, the Filer wishes to be able, in accordance with the investment objectives and investment restrictions of the Pooled Fund, to cause the Pooled Fund to invest in units or shares (the Fund Securities) of another Pooled Fund pursuant to an In-Specie Transfer. This will occur where, as part of its portfolio management, a Pooled Fund wishes to obtain exposure to certain investments or a category of asset classes held by the second Pooled Fund by investing in Fund Securities of the second Pooled Fund.

10. Similarly, the Filer wishes to be able to cause the Pooled Fund to redeem Fund Securities from the second Pooled Fund pursuant to an In-Specie Transfer.

11. The Filer offers discretionary portfolio management services to clients (the Clients) seeking wealth management or related services through Managed Accounts.

12. Pursuant to a written agreement (the Discretionary Management Agreement) entered into between each Client and the Filer, the Filer, as the portfolio manager of the Managed Account, makes investment decisions for each Managed Account and has full discretionary authority to trade in securities for each Managed Account without obtaining the specific consent or instructions of the Client to the trade.

13. The portfolio management services provided by the Filer, as the portfolio manager of the Managed Account, to each Client consist of the following:

(a) each Client executes a Discretionary Management Agreement whereby the Client authorizes the portfolio manager to supervise, manage and direct purchases and sales in the Client’s Managed Account, at the portfolio manager’s full discretion on a continuing basis;

(b) qualified employees of the portfolio manager perform investment research, securities selection and portfolio management functions with respect to all securities, investments, cash and cash equivalents and other assets in the Managed Account;

(c) each Managed Account holds securities and other investments as selected by the portfolio manager in its sole discretion; and

(d) the portfolio manager retains overall responsibility for the advice provided to its Clients and has a designated senior officer to oversee and supervise the Managed Account.

14. Investments in individual securities may not be appropriate for a Client in certain circumstances. Consequently, the Filer may, where authorized under the Discretionary Management Agreement, invest Client assets in securities of any one or more of the Pooled Funds in order to give its Clients the benefit of asset diversification and economies of scale through minimum commission charges on portfolio trades and generally to facilitate portfolio management.

15. The Filer wishes to have the ability to cause a Managed Account for which it acts as portfolio manager, to purchase and redeem Fund Securities of a Pooled Fund pursuant to In-Specie Transfers.

16. The Filer anticipates that purchases of Fund Securities pursuant to In-Specie Transfers will occur most commonly when the Managed Account is newly established and the portfolio manager of the Managed Account believes that the Client will be better served by holding securities of one or more Pooled Funds rather than continuing to directly hold individual securities.

17. The Filer anticipates that redemptions pursuant to In-Specie Transfers will typically occur following a redemption of Fund Securities where a Managed Account invested in a Pooled Fund has experienced a change in circumstances which results in the Managed Account being an ideal candidate for direct holdings of individual portfolio securities rather than Fund Securities.

18. Each Discretionary Management Agreement or other documentation will contain the authorization of the Client for the portfolio manager of the Managed Account to engage in In-Specie Transfers on behalf of the Managed Account.

19. No In-Specie Transfer will involve a Client that is a “responsible person” of the Filer, as that term is defined in subsection 13.5(1) of NI 31-103.

20. In respect of each In-Specie Transfer, the portfolio securities to be delivered will meet the investment criteria of the Pooled Fund or Managed Account, as applicable, acquiring the portfolio securities.

21. The Filer will receive no remuneration with respect to any In-Specie Transfer, and the only expenses which will be incurred by a Pooled Fund or a Managed Account for an In-Specie Transfer shall be nominal administrative charges levied by the custodian of the Pooled Funds or Managed Accounts for recording the trades and/or any commission charged by the dealer in executing the trade In-Specie.

22. The Filer, as the investment fund manager of the Pooled Funds, will value the securities transferred under an In-Specie Transfer on the same valuation day on which the purchase price or redemption price of the Fund Securities of a Pooled Fund is determined. With respect to the purchase of Fund Securities of a Pooled Fund, the securities transferred to a Pooled Fund under an In-Specie Transfer in satisfaction of the purchase price of those Fund Securities will be valued as if the securities were portfolio assets of the Pooled Fund, as contemplated by section 9.4(2)(b)(iii) of NI 81-102. With respect to the redemption of Fund Securities of a Pooled Fund, the securities transferred to a Managed Account or Pooled Fund in satisfaction of the redemption price of those Fund Securities will have a value equal to the amount at which those securities were valued in calculating the net asset value per security used to establish the redemption price of the Fund Securities of the Pooled Fund, as contemplated by section 10.4(3)(b) of NI 81-102.

23. Should any In-Specie Transfer contemplated specifically by the Exemption Sought, involve the transfer of an “illiquid asset” (as defined in NI 81-102) (the Illiquid Portfolio Securities), the Filer will obtain at least one quote for the asset from an independent arm’s length purchaser or seller, immediately before effecting the In-Specie Transfer.

24. If any Illiquid Portfolio Securities are the subject of an In-Specie redemption, the Illiquid Portfolio Securities will be transferred on a basis that fairly represents the portfolio of the Pooled Fund. Pooled Funds generally invest in liquid securities. The Filer will not cause any Pooled Fund to accept an In-Specie subscription or pay out redemption proceeds In-Specie if, at the time of the proposed In-Specie Transfer, Illiquid Portfolio Securities represent more than an immaterial portion of the portfolio of the Pooled Fund. The valuation of any Illiquid Portfolio Securities which would be the subject of an In-Specie Transfer will be carried out according to the Filer’s policies and procedures for the fair value of portfolio securities, including illiquid securities.

25. In-Specie Transfers will be subject to (i) compliance with the written policies and procedures of the Filer respecting In-Specie Transfers that are consistent with applicable securities legislation, and (ii) the oversight of the Compliance Department of the Filer to ensure that the transaction represents the business judgment of the Filer acting in its discretionary capacity with respect to the Pooled Fund and the Managed Account, uninfluenced by considerations other than the best interests of the Pooled Fund and Managed Account.

26. None of the portfolio securities which are the subject of each In-Specie Transfer will be securities of related issuers of the Filer.

27. In-Specie Transfers will enable the Filer to manage each asset class more effectively and to reduce the transaction costs of Clients and Pooled Funds. For example, In-Specie Transfers reduce market impact costs, which can be detrimental to Clients and/or Pooled Funds. In-Specie Transfers also allow a portfolio manager to retain within its control institutional-size blocks of portfolio securities that would otherwise need to be broken and re-assembled.

28. The Filer has determined that it would be in the interests of the Pooled Funds and the Managed Accounts to receive the Exemption Sought.

29. Since the Filer is, or will be, the portfolio manager of the Managed Accounts and the Pooled Funds, the Filer would be considered a “responsible person” within the meaning of NI 31-103, and would thus be prohibited from the above-described In-Specie Transfers in the absence of the Exemption Sought.

Decision

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) in connection with the purchase of Fund Securities of a Pooled Fund by another Pooled Fund:

(i) the other Pooled Fund would, at the time of payment, be permitted to purchase the portfolio securities;

(ii) the portfolio securities are acceptable to the Filer, as portfolio manager of the other Pooled Fund issuing the units or shares, and consistent with the other Pooled Fund’s investment objectives;

(iii) the value of the portfolio securities is equal to the issue price of the Fund Securities of the other Pooled Fund issuing the units or shares, for which they are payment, valued as if the portfolio securities were portfolio assets of the other Pooled Fund;

(iv) none of the portfolio securities which are the subject of the In-Specie Transfer are securities of related issuers of the Filer;

(v) should any In-Specie Transfer involve the transfer of Illiquid Portfolio Securities, the Filer will obtain at least one quote for the asset from an independent arm’s length purchaser or seller, immediately before effecting the In-Specie Transfer; and

(vi) each Pooled Fund keeps written records of all In-Specie Transfers in each applicable financial year, reflecting details of the portfolio securities delivered by the Pooled Fund to another Pooled Fund, and the value assigned to such portfolio securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

(b) in connection with the redemption of Fund Securities of a Pooled Fund by another Pooled Fund;

(i) the portfolio securities are acceptable to the Filer, as portfolio manager of the Pooled Fund acquiring the portfolio securities, and consistent with the Pooled Fund’s investment objectives;

(ii) the value of the portfolio securities is equal to the amount at which those portfolio securities were valued in calculating the net asset value per Fund Security used to establish the redemption price of the Fund Securities of the Pooled Fund;

(iii) none of the portfolio securities which are the subject of the In-Specie Transfer are securities of related issuers of the Filer;

(iv) should any In-Specie Transfer involve the transfer of Illiquid Portfolio Securities, the Filer will obtain at least one quote for the asset from an independent arm’s length purchaser or seller, immediately before effecting the In-Specie Transfer; and

(v) if any Illiquid Portfolio Securities are the subject of an In-Specie redemption, the Illiquid Portfolio Securities will be transferred on a basis that fairly represents the portfolio of the Pooled Fund;

(i) the Filer, as portfolio manager of the Managed Account, obtains the prior written consent of the Client of the Managed Account before it engages in any In-Specie Transfer in connection with the purchase of Fund Securities of the Pooled Fund and such consent has not been revoked;

(ii) the Pooled Fund would, at the time of payment, be permitted to purchase the portfolio securities held by the Managed Account;

(iii) the portfolio securities are acceptable to the Filer, as portfolio manager of the Pooled Fund, and consistent with the Pooled Fund’s investment objectives;

(iv) the value of the portfolio securities sold to the Pooled Fund by the Managed Account is equal to the issue price of the Fund Securities of the Pooled Fund for which they are payment, valued as if the portfolio securities were portfolio assets of that Pooled Fund;

(v) none of the portfolio securities which are the subject of the In-Specie Transfer are securities of related issuers of the Filer;

(vi) should any In-Specie Transfer involve the transfer of Illiquid Portfolio Securities, the Filer will obtain at least one quote for the asset from an independent arm’s length purchaser or seller, immediately before effecting the In-Specie Transfer;

(vii) the Client of the Managed Account has not provided notice to terminate its Discretionary Management Agreement with the Filer;

(viii) the account statement next prepared for the Managed Account includes a note describing the portfolio securities delivered to the Pooled Fund and the value assigned to such portfolio securities; and

(ix) the Pooled Fund keeps written records of all In-Specie Transfers in each applicable financial year of the Pooled Fund, reflecting details of the portfolio securities delivered to the Pooled Fund and the value assigned to such portfolio securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

(d) in connection with the redemption of Fund Securities of a Pooled Fund by a Managed Account:

(i) the Filer, as portfolio manager of the Managed Account, obtains the prior written consent of the Client of the Managed Account before it engages in an In-Specie Transfer and such consent has not been revoked;

(ii) the portfolio securities are acceptable to the Filer, as portfolio manager of the Managed Account, and consistent with the Managed Account’s investment objectives;

(iii) the value of the portfolio securities is equal to the amount at which those portfolio securities were valued in calculating the net asset value per Fund Security used to establish the redemption price of the Fund Securities;

(iv) the Client of the Managed Account has not provided notice to terminate its Discretionary Management Agreement with the Filer;

(v) none of the portfolio securities which are the subject of the In-Specie Transfer will be securities of related issuers of the Filer;

(vii) if any Illiquid Portfolio Securities are the subject of an In-Specie redemption, the Illiquid Portfolio Securities will be transferred on a basis that fairly represents the portfolio of the Pooled Fund;

(viii) the account statement next prepared for the Managed Account includes a note describing the portfolio securities delivered to the Managed Account and the value assigned to such portfolio securities;

(ix) the Pooled Fund keeps written records of each In-Specie Transfer in each applicable financial year of the Pooled Fund, reflecting details of the portfolio securities delivered by the Pooled Fund and the value assigned to such portfolio securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and

(e) the Filer does not receive any compensation in respect of any sale or redemption of Fund Securities of a Pooled Fund and, in respect of any delivery of portfolio securities further to an In-Specie Transfer; the only charges paid by the Pooled Fund or Managed Account, if any, is a nominal administrative charge levied by the custodian in recording the trade and/or any commission charged by the dealer executing the trade.

“Eric Stevenson”

Superintendent, Client Services and Distribution Oversight