Horizon Funds Inc. et al. - MRRS Decision
Headnote
MRRS -- Approval under subsection 5.5(2) of National Instrument 81-102 ("NI 81-102") for change of control of mutual fund manager.
Rule Cited
National Instrument 81-102 Mutual Funds, s. 5.5(2).
January 12, 2006
IN THE MATTER OF
THE SECURITIES LEGISLATION
OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, NOVA SCOTIA,
NEW BRUNSWICK, PRINCE EDWARD ISLAND,
NEWFOUNDLAND AND LABRADOR,
NORTHWEST TERRITORIES,
YUKON TERRITORY AND NUNAVUT
(THE "JURISDICTIONS")
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
HORIZONS FUNDS INC.
(THE "FILER", "MANAGER" OR "HFI"),
HORIZONS MONDIALE HEDGE FUND,
HORIZONS TACTICAL HEDGE FUND AND
HORIZONS PHOENIX HEDGE FUND
(COLLECTIVELY THE "FUNDS")
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") for approval of a proposed change of control of the Filer as manager of the Funds under Section 5.5(2) of National Instrument 81-102 Mutual Funds.
Under the Mutual Reliance System for Exemptive Relief Applications:
(a) the British Columbia Securities Commission is the principal regulator for this application; and
(b) this MRRS Decision Document evidences the decision of each Decision Maker.
Representations
This decision is based on the following facts represented by the Filer:
1. Jovian Asset Management Inc. ("Jovian"), a wholly-owned subsidiary of Jovian Capital Corporation ("JCC"), is incorporated under the laws of the Province of Ontario.
2. JCC is listed on the TSX Venture Exchange (JVN) and has a registered office at 491 Portage Avenue, Winnipeg, Manitoba, R3B 2E4. JCC is a management company that invests in companies that operate within two primary market segments: wealth management and asset management.
3. JCC's current directors and officers, together with their principal occupations, are as follows:
4. The only direct/indirect beneficial holder of 10% or more of JCC is Thomas J. Rice, Chairman of JCC, of 342 Country Club Blvd. Winnipeg, MB R3K 1X6.
5. Jovian's current directors and officers, together with their principal occupations, are as follows:
6. Jovian will acquire all of the issued and outstanding shares of the Manager held by CSI Capital Incorporated ("CSI"), a Barbadian domestic corporation, and by the holders of smaller blocks of shares, most of whom are employees or ex-employees of the Manager, representing 66.67% of the issued and outstanding voting securities of the Manager. On closing, Jovian will subscribe for additional shares in the capital stock of the Manager, resulting in Jovian owing 73.15% of the issued and outstanding shares of the Manager.
7. CSI is a wholly-owned subsidiary of CSI Holdings Ltd., a Barbados International Business Company, owned as to 80% by Jansix Ltd. (a British Virgin Islands company wholly-owned by Fred Purvis) and as to 20% by the Cummings Family Trust (beneficiaries being the family of Gordon Cummings).
8. Following the proposed transaction, the directors and officers of the Manager will be as follows:
9. Following the closing of the transaction, the accounting services for the Funds will be handled by a subsidiary of JCC, namely Felcom Data Services Inc. Felcom Data Services Inc. will also act as registrar of the Funds. Otherwise, HFI will remain as the trustee of the Funds and the current management and operation of the Funds, namely the custodian services, fund advisors, portfolio managers, and the Funds' investment objectives, will be maintained for a period of not less than 12 months following closing of the transaction. Gordon Cummings will continue to serve as President and Chief Executive Officer of HFI. HFI intends to maintain its office in Vancouver, but its office in Toronto will be moved to offices of Jovian.
10. The Manager provided written notice, dated October 18, 2005, to all of the unitholders of the Funds regarding the proposed change of control of the Manager.
11. The Manager and JCC issued a joint press release dated August 15, 2005 advising of the change of control of the Manager and the Funds filed a Material Change Report on August 29, 2005.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision was met.
The decision of the Decision Makers under the Legislation is that the change of control of HFI as Manager of the Funds, pursuant to subsection 5.5(2) of National Instrument 81-102, is approved.