Securities Law & Instruments



National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – relief granted from related party transaction reporting requirements in s. 117 of theSecurities Act (Ontario) – monthly reporting not required provided that substantially similar disclosure is made in the annual and interim management reports on fund performance for each investment fund and that certain records of related party portfolio transactions are kept by the investment fund.


Applicable Legislative Provisions


Securities Act (Ontario), R.S.O. 1990, ch S.5, as amended, paras. 117(1)1, 3 and 4 and s. 117(2).


August 10, 2018















(the Filer)






The principal regulator in Ontario has received an application (the Application) from the Filer for a decision under the securities legislation of Ontario (the Legislation) exempting the Filer from the management company reporting requirements in the Legislation (the Mutual Fund Conflict of Interest Reporting Requirements) which require the Filer, or an affiliate to:


a.             file a report of every transaction of purchase or sale of securities between the mutual fund and any related person or company;


b.             file a report of every transaction of purchase and sale effected by the mutual fund through any related person or company with respect to which the related person or company receives a fee either from the mutual fund or from the other party to the transaction or from both; and


c.             file a report of every transaction, other than an arrangement relating to insider trading in portfolio securities, in which the mutual fund is a joint participant with one or more of its related persons or companies;


in respect of the Funds (as defined below) (the Requested Relief).


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


(a)           the Ontario Securities Commission is the principal regulator for this application, 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 British Columbia, Alberta, Saskatchewan, Nova Scotia, New Brunswick and Newfoundland and Labrador (together with Ontario, the Jurisdictions).




Terms defined in National Instrument 14-101 Definitions and MI 11-102 and have the same meaning if used in this Decision, unless otherwise defined.


In addition, the following terms have the following meanings:


(i)            BNS means The Bank of Nova Scotia;


(ii)           For the purposes of paragraphs 7, 8, 9, 11, 12 and 14, references to the Filer includes the Filer and its affiliates;


(iii)          Funds means mutual funds which are reporting issuers and for which the Filer or an affiliate acts as portfolio manager from time to time, and Fund means one of them;


(iv)          NI 81-106 means National Instrument 81-106 Investment Fund Continuous Disclosure;


(v)           NI 81-107 means National Instrument 81-107 Independent Review Committee for Investment Funds; and


(vi)          Related Party means Scotia Capital Inc. or other brokers or dealers that are subsidiaries or affiliates of BNS from time to time.




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


1.             The Filer is a corporation incorporated under the Canada Business Corporations Act, and its head office is in Montréal, Québec. The Filer is indirectly a wholly-owned subsidiary of BNS.


2.             The Filer is registered as a portfolio manager in each of the Jurisdictions and as an investment fund manager in Ontario, Québec, Newfoundland and Labrador, Alberta and British Columbia.


3.             Neither the Filer nor any of the Funds is in default of any securities legislation in any of the Jurisdictions.


4.             The Funds are or will be mutual funds that are reporting issuers in each of the Jurisdictions.


5.             Each Related Party is a “related person or company” to the Funds within the meaning of the Legislation because each Related Party is subsidiary or affiliate of BNS, the parent company of the Filer.


6.             The Filer is or will be the portfolio manager of the Funds and accordingly is a “management company” or equivalent under the Legislation.


7.             A Fund is or will be a “related person or company” in respect of another Fund and in respect of other investment funds and managed accounts managed by the Filer, as such term is defined in Section 106 of the Legislation.


8.             Pursuant to Section 6.1 of NI 81-107 as well as exemptive relief granted to a Fund from time to time, the Fund is permitted to purchase or sell securities with another Fund.


9.             The Filer has discretion to allocate the brokerage transactions of the Funds in any manner that it believes to be in the Funds’ best interests. The Filer may from time to time allocate brokerage business of the Funds to a Related Party for which the Related Party may receive a fee. The Filer uses the same criteria in selecting all brokers, regardless of whether the broker is a Related Party.


10.          The Filer, as portfolio manager to the Funds, may from time to time cause a Fund to participate as a joint participant with one or more other Funds in the purchase of securities under a distribution, including where a Related Party may act as an underwriter in connection with such offering.


11.          In the absence of relief therefrom, the Mutual Fund Conflict of Interest Reporting Requirements would require the Filer to file, within 30 days of the end of the month in which each transaction occurs, a report of (i) any purchase or sale of securities between a Fund and another Fund or other Related Party (ii) any purchase or sale of securities by a Fund that is effected through a Related Party, in which that Related Party received a fee for such services, either from the Fund or another party to the transaction, and (iii) every transaction in which, by arrangement, a Fund, with one or more Funds or Related Parties, acts as a joint participant. The report in each case, would have to disclose the issuer of the securities purchased or sold, the class or designation of the securities, the amount or number of securities, the consideration, the name of the related person or company receiving a fee, the name of the person or company that paid the fee to the related person or company and the amount of the fee received by the related person or company.


12.          Pursuant to NI 81-106, the Funds prepare and file interim and annual management reports of fund performance (each a MRFP) that disclose any transactions involving a Related Party, including the identity of that Related Party, the relationship to the Fund, the purpose of the transaction, the measurement basis used to determine the recorded amount, and any ongoing commitments to the related party.


13.          It is costly and time consuming for the Filer to also provide the reports required by the Mutual Fund Conflict of Interest Reporting Requirements, which are substantially similar to the information required by NI 81-106 to be disclosed in the MRFPs, on a monthly and segregated basis for each Fund.




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 Requested Relief is granted provided that:


(a)           the annual and interim MRFP for each Fund disclose:


(i)            the name of the related person or company;


(ii)           the amount of fees paid to each related person or company;


(iii)          the person or company who paid the fees, if they were not paid by the Fund; and


(b)           the records of portfolio transactions maintained by each Fund include, separately, for every portfolio transaction effected by the Fund through a related person or company:


(i)            the name of the related person or company;


(ii)           the amount of fees paid to the related person or company; and


(iii)          the person or company who paid the fees


“Mark Sandler”


Ontario Securities Commission


“Frances Kordyback”


Ontario Securities Commission