CIBC Asset Management Inc. et al.
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) -- Ontario Securities Commission Rule 33-506 Registration Information (OSC Rule 33-506) -- Derivatives Regulation (Québec) -- Relief from certain filing requirements of NI 33-109, OSC Rule 33-506 and Derivatives Regulation (Québec) in connection with a bulk transfer of business locations and registered and non-registered individuals under an amalgamation in accordance with section 3.4 of Companion Policy 33-109CP to NI 33-109 and section 3.3 of Companion Policy 33-506CP to OSC Rule 33-506.
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System, s. 4.7(1).
National Instrument 33-109 Registration Information, ss. 2.2, 2.3, 2.5, 3.2, 4.2, 7.1.
Companion Policy 33-109CP to National Instrument 33-109 Registration Information, s. 3.4.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.
Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information, ss. 2.2, 2.3, 2.4, 3.2, 4.3, 7.1.
Companion Policy 33-506CP to Ontario Securities Commission Rule 33-506 Registration Information, s. 3.3.
Derivatives Act (Québec), s. 86.
Derivatives Regulation (Québec), s. 11.1.
December 20, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO AND QUÉBEC
AND
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C. 20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
CIBC ASSET MANAGEMENT INC. (CAMI),
CIBC GLOBAL ASSET MANAGEMENT INC. (CGAM) AND
CIBC PRIVATE INVESTMENT COUNSEL INC.
(CPIC, and together with CAMI and CGAM, the Filers)
DECISION
Background
The securities regulatory authority or regulator in Ontario has received an application from the Filers, on behalf of a new amalgamated entity, CIBC Asset Management Inc. (Amalco, described further below), for
(a) a decision (the Passport Exemption Sought) under the securities legislation of the jurisdiction of the principal regulator (the Legislation) for relief 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; and
(b) a decision (the Ontario-only Exemption Sought) under the CFA for relief from the requirements contained in sections 2.2, 2.3, 2.4, 3.2 and 4.3 of Ontario Securities Commission Rule 33-506 Registration Information (OSC Rule 33-506) pursuant to section 7.1 of OSC Rule 33-506;
to allow the bulk transfer (the Bulk Transfer) of all of the registered individuals and permitted individuals, as well as all of the business locations, of each of CAMI, CGAM and CPIC to Amalco on or about January 1, 2014 in accordance with section 3.4 of the Companion Policy to NI 33-109 and section 3.3 of the Companion Policy to OSC Rule 33-506, respectively.
The securities regulatory authority or regulator in Québec (the Derivatives Decision Maker) has also received an application from the Filers for a decision under the securities legislation of Québec, which includes derivatives legislation, for relief from section 11.1 of the Derivatives Regulation (Québec) pursuant to section 86 of the Derivatives Act (Québec) (the Derivatives Legislation) to allow the Bulk Transfer of all registered individuals and permitted individuals under the Derivatives Legislation and all of the associated locations of CGAM to Amalco on or about January 1, 2014 in accordance with section 3.4 of the 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 Ontario Securities Commission is the principal regulator for this application,
(b) 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 by the Filers in each jurisdiction of Canada outside of Ontario (together with Ontario, the Jurisdictions),
(c) the decision with respect to the Passport Exemption Sought and the Ontario-only Exemption Sought is the decision of the principal regulator; and
(d) the decision with respect to the Derivatives Exemption Sought evidences the decision of the Derivatives Decision Maker.
Interpretation
Terms defined in MI 11-102 and National Instrument 14-101 Definitions 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:
CAMI
1. CAMI is currently registered as an adviser in the category of portfolio manager under securities legislation in each of the Jurisdictions and, in addition, is registered under securities legislation in Ontario, Québec and Newfoundland and Labrador as an investment fund manager. CAMI is also registered as an adviser in the category of commodity trading manager under the CFA in Ontario.
2. CAMI's head office is located in Ontario.
3. CAMI is not in default of securities legislation in any of the Jurisdictions. CAMI is also not in default of commodity futures legislation in Ontario.
CGAM
4. CGAM is currently registered as an adviser in the category of portfolio manager under securities legislation in each of the Jurisdictions and, in addition, is registered under securities legislation in Ontario, Québec and Newfoundland and Labrador as an investment fund manager. CGAM is also registered as an adviser in the category of commodity trading manager under the CFA in Ontario, and as an adviser in the category of derivatives portfolio manager under Derivatives Legislation in Québec.
5. CGAM's head office is located in Québec.
6. CGAM is not in default of securities legislation in any of the Jurisdictions. CGAM is also not in default of commodity futures legislation in Ontario.
CPIC
7. CPIC is registered as an adviser in the category of portfolio manager under securities legislation in each of the Jurisdictions. CPIC is also registered as a financial planning firm in Québec under the Act respecting the distribution of financial products and services.
8. CPIC's head office is located in Ontario.
9. CPIC is not in default of securities legislation in any of the Jurisdictions.
The Amalgamation
10. On or about January 1, 2014, CAMI, CGAM and CPIC will amalgamate (the Amalgamation) to form Amalco. Following the Amalgamation, the head office of Amalco will be CAMI's current head office location, which is located in Toronto, Ontario.
11. Effective on or about January 1, 2014, all of the current registrable activities, business and operations of the Filers will become the responsibility of Amalco. Amalco will assume all of the existing registrations and approvals for all of the registered individuals and permitted individuals of the Filers, and will also assume all of the business locations of the Filers. It is not anticipated that there will be any disruption in the ability of Amalco to conduct the respective businesses of CAMI, CGAM and CPIC on behalf of their respective clients, and Amalco will be able to advise and trade (as and where applicable) on behalf of such clients immediately after the Amalgamation.
12. For greater certainty, Amalco will assume all registered advising representatives, registered associate advising representatives and permitted individuals from the Filers respectively. The ultimate designated person (UDP) currently shared by CAMI and CGAM will be the UDP of Amalco. The chief compliance officer (CCO) currently shared by each of the Filers will be the CCO of Amalco. Amalco will also assume the Filers' portfolio manager registrations under securities legislation in each of the Jurisdictions, CGAM's derivatives portfolio manager registration in Québec, CAMI's and CGAM's commodity trading manager registration under the CFA and CPIC's financial planning firm registration in Québec.
13. Amalco will be registered in the same categories of registration and in the same jurisdictions as CAMI, CGAM and CPIC were registered immediately prior to the Amalgamation. Amalco will be subject to, and will comply with, all applicable securities legislation (including the Derivatives Legislation) and commodity futures legislation.
14. Amalco will carry on the same business in substantially the same manner as the Filers carried on separately immediately prior to the Amalgamation, including carrying on the business with all of the same personnel and business locations.
15. A client communication plan has been developed and clients of the Filers will be advised in writing of the Amalgamation. For CGAM's institutional clients, notification will be provided pursuant to a written letter. Retail clients will be provided with notification that will be included in an upcoming quarterly statement mailing.
16. The officers and directors of Amalco will be comprised of a combination of certain officers and directors of CAMI, CGAM and CPIC, including Amalco assuming the UDP currently shared by CAMI and CGAM as well as the CCO currently shared by each of the Filers.
17. The compliance department of Amalco will carry on in substantially the same manner with substantially the same personnel as the compliance departments of each of the Filers, and there will be written policies and procedures for Amalco based on the written policies and procedures of each of the Filers. There will be no change in CCO as the CCO shared by each of the Filers will be the CCO for Amalco.
18. The Bulk Transfer will not impact the ability of Amalco to comply with all applicable regulatory requirements or its ability to satisfy any obligations in respect of the clients of the Filers.
19. Given the significant number of registered individuals and permitted individuals, as well as business locations, of the Filers to be transferred to Amalco, it would be unduly time-consuming and difficult to transfer manually through individual National Registration Database (NRD) submissions all affected individuals and business locations to Amalco in accordance with the requirements set out in NI 33-109 and OSC Rule 33-506 if the Passport Exemption Sought, the Ontario-only Exemption Sought and the Derivatives Exemption Sought are not granted. Moreover, it is important that the transfer of the affected business locations and individuals occur on the same date (i.e. the date of the Amalgamation), in order to ensure that there is no interruption in registration.
Decision
Each of the principal regulator and the Derivatives Decision Maker is satisfied that the decision meets the test set out in the Legislation, the CFA and the Derivatives Legislation, respectively, for the relevant regulator or securities regulatory authority to make the decision.
The decision of the principal regulator under the Legislation and under the CFA is that each of the Passport Exemption Sought and the Ontario-only Exemption Sought is granted provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such payment in advance of the Bulk Transfer.
The decision of the Derivatives Decision Maker under the Derivatives Legislation is that the Derivatives Exemption Sought is granted provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such payment in advance of the Bulk Transfer.