Co-operators Investment Counselling Limited and Addenda Capital Inc.
Headnote
Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 -- Registration Information (NI 33-109) -- relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered and non-registered individuals under an amalgamation.
Applicable Ontario Statutory Provisions
National Instrument 33-109 Registration Information.
July 29, 2008
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
CO-OPERATORS INVESTMENT COUNSELLING LIMITED
("CICL")
AND
ADDENDA CAPITAL INC. ("NEW ADDENDA")
(CICL, together with New Addenda, the "Filers")
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions ("Decision Maker") has received an application from CICL and Addenda (together the "Filers") for a decision under the securities legislation of the Jurisdictions (the "Legislation") for relief from the requirements of Sections 2.2, 3.2, 3.3, 4.3 and 5.2 of National Instrument 33-109 -- Registration Information ("NI 33-109") in order to take advantage of the bulk transfer exemption provisions of Policy Statement/Companion Policy 33-109 CP to NI-33-109 ("33-109 CP").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions for a dual application:
(a) the AMF is the principal regulator for this application filed in connection with the Amalgamation, as the head office of New Addenda, the resulting entity, is located in the Province of Québec;
(b) CICL and Addenda have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Respecting Passport System ("MI 11-102") is intended to be relied upon in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick and Nova Scotia; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
This application is filed in connection with the two-step amalgamation of CICL and Addenda (the "Amalgamation").
On April 22, 2008, Addenda was amalgamated through an ordinary amalgamation with 9192-8192 Québec inc. conducted under the Companies Act (Québec) (the "QCA"). For detailed information on the first step of the Amalgamation, we refer you to the information circular dated March 12, 2008 in connection with Addenda's shareholders meeting held on April 17, 2008. The entity resulting from the first step of the Amalgamation is ADDENDA CAPITAL INC. and is registered with the Registraire des entreprises du Québec (the "Registrar") under a new enterprise number: REQ no. 1165123226. From a legal point of view pursuant to the QCA, New Addenda has the rights of the amalgamated companies and assumes their obligations. No transfer of assets was conducted in this first step. The sole fact causing the occurrence of the Addenda Bulk Transfer (as defined hereunder) resides in the technical limitations and restrictions of the NRD system requiring issuance of a new NRD number each time the Registrar grants a new enterprise number.
Subsequent to the Almalgamation on April 22, 2008, Co-operators Financial Services Limited in its capacity of sole shareholder of CICL, transferred all of the issued and outstanding shares of CICL to New Addenda, and subsequently, on the same day, CICL was wound-up into New Addenda. Pursuant to a General conveyance, assumption of liability and dissolution agreement dated April 23, 2008, as amended on April 24, 2008, CICL transferred all its property and assets to New Addenda (the "Conveyance Agreement").
The Conveyance Agreement provides that any rights, the transfer of which requires the consent of a third party, should be held by New Addenda in trust for CICL and that CICL should take all such actions and do all such things as shall be necessary or desirable in order that the obligations of CICL in respect of such right may be performed in a manner such that the right be preserved and shall enure to New Addenda.
As the transfer of all registered activities of CICL to New Addenda notably requires that securities regulatory authorities of the Canadian Jurisdictions approve the transfer of the registered representatives and permitted individuals of CICL to New Addenda, the Filers are of the view that under the terms of the Conveyance Agreement all rights of CICL related to its registered activities have not yet been transferred to New Addenda. Upon completion of the transfer of CICL's registered activities, articles of dissolution of CICL will be filed with Industry Canada.
Consequently, as of the date hereof, the Bulk Transfers (as defined hereunder) have not been concluded.
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102, National Instrument 31-102 National Registration Database ("NI 31-102") and NI 33-109 have the same meaning if used in this decision, unless otherwise defined.
Representations
1. Addenda was incorporated under the QCA and its head office was located in Montréal, Québec. Addenda was an investment management firm specializing in the active management of fixed-income portfolios, primarily for institutional clients. Addenda's NRD number was 8010. Addenda was currently registered in:
Addenda's business locations were located at following addresses:
• 800 René-Lévesque Blvd. West, Suite 2750, Montreal, Québec, H3B 1X9; and
• 36 Toronto Street, Suite 1150, Toronto, Ontario, M5C 2C5.
(collectively, the "Addenda Affected Locations")
2. CICL is an investment management firm with a head office in Guelph, Ontario, that provides dicretionary investment advisory services to pension plans, insurance companies, endowment funds, governments, corporate clients and charitable organizations. CICL's NRD number is 650. CICL was established under the Canada Business Corporations Act and is an indirect subsidiary of The Co-operators Group Limited ("Co-operators"). CICL is currently registered in:
(collectively, the "Canadian Jurisdictions")
CICL's business locations are located at following addresses:
• 98 Macdonell Street, Guelph Square, Suite 400, Guelph, Ontario, N1H 2Z6; and
• 1920 College Avenue, Regina, Saskatchewan, S4P 1C4.
(collectively the "CICL Affected Locations"; the Addenda Affected Locations and the CICL Affected Locations are collectively referred to as the "Affected Locations")
3. Co-operators is a group of Canadian companies offering home, auto, life, group, commercial and farm insurance, as well as investment products. With assets of $7 billion, Co-operators is a co-operative owned by 40 Canadian co-operatives, credit union centrals, representative farm organizations and like-minded organizations.
4. New Addenda is the resulting company, established under the QCA, of the amalgamation of Addenda and 9192-8192 Québec Inc. and is a subsidiary of Co-operators. The address of the head office of New Addenda is 800 René-Lévesque Blvd. West, Suite 2750, Montreal, Québec, H3B 1X9.
5. For the purposes of the National Registration Database ("NRD"), the successor registrant to CICL and Addenda will be New Addenda. Note that enrollment forms to this effect have been filed in paper format on June 27, 2008.
6. New Addenda is presently arranging for the transfer of CICL's and Addenda's registered businesses to New Addenda. The proposed effective date for the bulk transfer of CICL's and Addenda's registered representatives, permitted individuals, other employees (collectively the "Individuals") and supporting equipment dedicated to such activities (including all Affected Locations) to New Addenda is scheduled for July 31, 2008 (each of these transfers being herein respectively referred to as the "CICL Bulk Transfer" and the "Addenda Bulk Transfer"; the CICL Bulk Transfer and the Addenda Bulk Transfer are herein collectively referred to as the "Bulk Transfers").
7. It would be unduly onerous and time-consuming to individually transfer all Affected Locations and Individuals to New Addenda as per the requirements set out in NI 33-109, having regard to the fact that there should be no change to the individuals' employment or responsibilities and that each individual to be transferred from CICL and Addenda will be transferred under the same category. Moreover, it is imperative that the transfer of the Affected Locations and Individuals occur on the same date, in order to ensure that there is no break in registration.
8. The Filers have informed their representatives that, following the amalgamation, the representatives will be employed in the same capacity by New Addenda.
9. Please note that further to the Amalgamation and as a result of New Addenda having new principal shareholders, New Addenda is in the process of analysing the impact of the new corporate structure on its registered business. In addition further to the Amalgamation, a new director of New Addenda has been appointed. However, submission of this director's Form 33-109F4 will only be made after the completion of the Bulk Transfers in order to avoid delaying them. Subject to the foregoing and upon issuance of the Order, CICL and New Addenda, to the best of their knowledge, will not be in default of any of the requirements of the Legislation of any of the Canadian Jurisdictions.
10. The Bulk Transfers will not be contrary to the public interest and will have no negative consequences on the ability of New Addenda to comply with all applicable regulatory requirements or the ability to satisfy any obligations to clients of New Addenda.
Decision
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 request for relief from the requirements of Sections 2.2, 3.2, 3.3, 4.3 and 5.2 of NI 33-109 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 arrangement in advance of the bulk transfer.