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 Regis-tration Information (NI 33-109) – relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered individuals pursuant to an amalgamation 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, ss. 2.2, 2.5, 3.2, 4.1 and 5.2.
Companion Policy 33-109CP Registration Information, s. 3.4 and Appendix C.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

August 1, 2017

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
HOLLISWEALTH ADVISORY SERVICES INC.
(HWASI)
AND
INVESTIA FINANCIAL SERVICES INC.
(Investia, and together with HWASI, the Filers)

DECISION

Background

The securities regulatory authority in Québec (the Principal Decision Maker) and the regulator in Ontario (the Ontario Decision Maker) have received an application from the Filers, on behalf of HWASI and the continuing corporation (the Amalgamated Corporation) resulting from the proposed amalgamation (the Amal-gamation) of Investia and HWASI, for a decision under the securities legislation of each of Québec and Ontario (the Legislation) providing exemptions from the requirements contained in sections 2.2, 2.3 2.5, 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 and all business locations from HWASI to Investia, on the Completion Date (as defined below), in accordance with section 3.4 of the Companion Policy to NI 33-109 (the Exemption Sought).

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

(a)           the Principal Decision Maker is the principal regulator for this application,

(b)           the Filers have provided notice that subsection 4.7(1) of Multilateral Instru-ment 11-102 Passport System (MI 11-102) is intended to be relied upon in each jurisdiction of Canada outside of Québec and Ontario (together with Québec and Ontario, the Jurisdictions and each a Jurisdiction),

(c)           the decision is the decision of the Principal Decision Maker and evidences the decision of the Ontario Decision Maker (the Principal Decision Maker and the Ontario Decision Maker are collec-tively referred to as the Dual Decision Makers).

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:

HWASI

1.             HWASI is a corporation existing under the laws of Ontario, and is wholly-owned, indirectly, by The Bank of Nova Scotia (BNS). BNS is a publicly-held Canadian chartered bank whose shares trade on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), respectively, under the symbol “BNS”. You may obtain further information about BNS from its continuous disclo-sure documents on SEDAR at www.sedar.com.

2.             HWASI’s head office is located in Toronto, Ontario.

3.             HWASI is registered as:

(a)           a mutual fund dealer in each Jurisdiction; and

(b)           an exempt market dealer in each Jurisdiction.

4.             HWASI is a member of the Mutual Fund Dealers Association of Canada (MFDA).

5.             HWASI provides mutual fund and related services to its clients.

6.             HWASI has 346 representatives registered with the Canadian Securities Administrators (Regis-tered Representatives). HWASI has 38 business branches and 144 sub-branches (Business Locations).

7.             HWASI is not in default of securities legislation in any Jurisdiction.

Investia

8.             Investia is a corporation existing under the terms of the Canada Business Corporations Act (CBCA), and is wholly-owned by Industrial Alliance Insurance and Financial Services Inc. (IAIFS).

9.             Investia’s National Registration Database (NRD) number is 8490.

10.          Investia’s head office is located in Québec City, Québec.

11.          Investia is registered in Québec as a firm in the following categories: exempt market dealer, financial planning, insurance of persons, mutual fund dealer, restricted dealer and scholarship plan dealer. In the other Jurisdictions Investia is registered as an exempt market dealer and a mutual fund dealer. In addition, Investia is a level 4 member of the MFDA.

12.          Investia is not in default of securities legislation in any Jurisdiction.

The Proposed Transaction

13.          Pursuant to a purchase agreement dated as of December 5, 2016, as amended (the Purchase Agreement), all of the issued and outstanding shares of HWASI will be sold, for cash consideration, to IAIFS (the Acquisition).

14.          Immediately after the Acquisition, HWASI and Investia will amalgamate (the Amalgamation, and collectively with the Acquisition, the Transaction).

15.          It is anticipated that the Transaction will be completed as soon as practicable after August 4, 2017 (the Completion Date), provided that, among other things, all necessary regulatory notices, non-objections, and approvals have been given and, explicitly or implicitly, received.

16.          Given HWASI will have been continued under the CBCA prior to the Amalgamation on the Completion Date, the Amalgamation will be completed through a horizontal short-form amalgamation under the terms of the CBCA.

17.          Investia and HWASI, as the Amalgamated Corporation, will continue as one legal entity. The name of that entity will be Investia Financial Services Inc.

18.          All registrable activities currently conducted by HWASI will be conducted through the Amalgamated Corporation in accordance with the rules, procedures and compliance systems that are currently in place for Investia.

19.          Upon completion of the Amalgamation, HWASI will no longer exist and will not have its own separate legal existence. Consequently,

(a)           HWASI’s chief compliance officer and ultimate designated person will no longer act in such capacity as Investia already has its own chief compliance officer and ultimate designated person. However, as the chief compliance officer is also a registered individual, she will continue to be a registered individual with Investia;

(b)           any and all litigation procedures, complaints or other regulatory matters involving HWASI will continue with the Amalgamated Corporation. Therefore, no claimants will be affected by the Amalgamation;

(c)           as a result of the Amalgamation, the Amalgamated Corporation shall continue using Investia’s NRD Number i.e., 8490. As such, HWASI will surrender its registration with the Canadian Securities Administrators.

20.          The shareholders, directors and officers of the Amalgamated Corporation will be the same as Investia’s, including the chief compliance officer which will remain Investia’s current chief compliance.

21.          The constating documents, by-laws, policies, rules and procedures of the Amalgamated Corporation will be the same as those of Investia.

22.          The head office of the Amalgamated Corporation will be located at Investia’s current head office in Québec City, Québec.

23.          As a result of the Amalgamation, the operations of HWASI will be fully integrated with Investia’s operations.

24.          Upon completion of the Amalgamation, the Registered Representatives will be transferred to Investia (the Transferred Representatives) and the Business Locations will become sub-branches and branches of Investia (the Transferred Business Locations).

25.          Following the Amalgamation, HWASI will surrender its registration in the Jurisdictions and its membership with the MFDA.

Additional Representations

26.          The Transaction will allow Investia to improve its national wealth management platform and will create new growth opportunities and allow for continued investment and innovation in client solutions.

27.          The Transaction will also allow HWASI’s clients to benefit from Investia’s client-focused advice, as well as the depth and backing of a large financial institution, while preserving the entrepreneurial spirit and service orientation of a local advisor.

28.          The integration of HWASI’s business into Investia’s existing business should translate in an increase in gross revenue for Investia with very little additional operational costs given the compliance, operational and overhead structures already in place at Investia.

29.          The Registered Representatives will be supervised pursuant to Investia’s supervision model. Only Investia’s policies and procedures manual will apply to the Amalgamated Corporation. No changes are expected to be required to Investia’s policies and procedures manual.

30.          Subject to obtaining the Exemption Sought, no disruption in the services provided by the Transferred Representatives to clients of HWASI is anticipated as a result of the Transaction.

31.          The Exemption Sought will not impact the ability of HWASI, Investia or the Amalgamated Corporation to comply with any applicable regulatory requirements or their ability to satisfy any obligations in respect of their clients.

32.          At the time of the Bulk Transfer, all of the Registered Representatives will only be registered individuals of HWASI and the Business Locations will be the only branches and sub-branches of HWASI. Accordingly, the transfer of the Registered Representatives and Business Locations on the Completion Date by means of the Bulk Transfer can be implemented without any significant disruption to the activities of the Registered Representatives, the Business Locations, HWASI, Investia or the Amalgamated Corporation.

33.          Given the number of Registered Representatives and Business Locations to be transferred from HWASI to Investia on the Completion Date, it would be unduly time consuming and difficult to transfer each of the Transferred Representatives and Transferred Business Locations through NRD in accordance with the requirements of NI 33-109 if the Exemption Sought is not granted.

34.          Both Filers are registered as mutual fund dealers and exempt market dealers in the same jurisdictions, thereby affording the opportunity to seamlessly transfer the Transferred Represen-tatives and Transferred Business Locations to the Amalgamated Corporation on the Completion Date by way of Bulk Transfer while at the same time ensuring that there is no interruption in registration.

35.          Allowing the Bulk Transfer of the Registered Representatives and Business Locations to occur on the Completion Date will benefit (and is expected to have no detrimental impact on) the clients of the Filers by facilitating seamless service on the part of the Registered Representatives and the Filers.

36.          Each Registered Representative will review Investia’s policies and procedures manual and agree to comply with Investia’s policies and procedures.

37.          Training of the Registered Representatives as to how to use Investia’s systems as well as to the specificities of Investia’s compliance system will take place.

38.          Investia will ensure that all additional filings required to be made under NI 33-109 will made on time.

39.          Upon completion of the Amalgamation all activities currently conducted by HWASI will be under the responsibility of Investia. However, the brand name “HollisWeath” may be used in the future by Investia.

40.          There will not be any changes in the registration categories of Investia following the Amalgamation.

41.          The Exemption Sought complies 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.

42.          HWASI’s clients have been made aware of the Acquisition via a press release dated December 5, 2016.

43.          In accordance with its obligations under NI 31-103, Investia will remit to HWASI’s clients all information about Investia that is required.

Decision

Each of the Dual Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decisions Makers to make the decision.

The decision of the Dual 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 that the Filers make these arrangements in advance of the Bulk Transfer.

“Eric Stevenson”
Superintendent, Client Services and Distribution Oversight