Louisbourg Investments Inc. And Alizé Capital Inc.

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm. One registered firm is acquiring all of the shares of another firm and certain client accounts prior to the latter's surrender of its registration as a portfolio manager. The Filers have valid business reasons for the individual to be registered with both firms; the individual will have sufficient time to adequately serve both firms; and there are policies and procedures in place to handle any potential conflicts of interest. The firms are exempted from the prohibition in paragraphs 4.1(1)(b) for a limited time period.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 4.1.

October 3, 2024

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
NEW BRUNSWICK AND ONTARIO
(the "Jurisdictions")

AND

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

AND

IN THE MATTER OF
LOUISBOURG INVESTMENTS INC.
("Louisbourg")

AND
ALIZÉ CAPITAL INC.
("Alizé")
(collectively, the "Filers")

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the "Legislation") for relief from the prohibition included in paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103"), pursuant to section 15.1 of NI 31-103, to permit Benoit Mayer-Godin (the "Representative") to be registered as an advising representative and derivatives advising representative of Louisbourg while acting as an advising representative, derivatives advising representative, chief compliance officer and ultimate designated person for Alizé (the "Requested Relief").

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

(a) The New Brunswick Financial and Consumer Services Commission (the "FCNB") is the principal regulator for Louisbourg, and the Autorité des marches financiers (the "AMF") is the principal regulator for Alizé;

(b) Louisbourg provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon on in British-Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, Prince-Edward Island and Newfoundland and Labrador for the Requested Relief (as defined below);

(c) the decision is the decision of FCNB (the "Principal Regulator") and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101Definitions 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:

1. Louisburg is a corporation incorporated under the Canada Business Corporations Act, with its registered office located in Dieppe, New Brunswick. It is registered as a portfolio manager and exempt market dealer in all the provinces of Canada and as investment fund manager in Ontario, Québec, New Brunswick, Nova Scotia, and Newfoundland and Labrador, and is currently seeking registration as a derivatives portfolio manager in Québec.

2. Alizé is a corporation incorporated under the Business Corporations Act (Québec), with its head office located in Montréal, Québec. Alizé is wholly owned by the Representative and is registered in Québec as a portfolio manager and derivatives portfolio manager.

3. Both Louisbourg and Alizé offer discretionary portfolio management services through individual accounts, and Louisbourg through pooled funds for which it acts as investment fund manager wherever they are registered. Louisburg's target clientele includes private clients with substantial financial resources, as well as institutional clients and it also sponsors a pooled fund, while Alizé focusses essentially on private clients with substantial financial resources. Alizé also offers derivative portfolio management services, specifically involving options, to certain clients.

4. The principal regulator of Louisbourg is FCNB and the principal regulator for Alizé is the AMF.

5. The Representative is currently registered in Québec only with Alizé as an advising representative and derivatives advising representative. He is also the ultimate designated person ("UDP") and chief compliance officer ("CCO") of Alizé. The Representative seeks to be registered as an advising representative of Louisbourg in Québec, Ontario, New Brunswick and British Columbia and as an advising representative in derivatives in Québec.

6. Louisbourg provided notice to FCNB and the AMF on January 5, 2024, pursuant to section 11.9 of NI 31-103 of its proposed acquisition of all of Alizé's issued and outstanding shares (the "Proposed Acquisition"). It received non-objection letters from both the FCNB and AMF, dated March 13, 2024.

7. Once the Proposed Acquisition is complete, Louisbourg intends to enter into an employment agreement with the Representative appointing him as Portfolio Manager, Lead-Québec (and in French "Gestionnaire de portefeuille, Responsable-Québec") and portfolio manager (derivatives), based in a branch of Louisbourg in Québec. The principal responsibilities of this position would be to manage Louisbourg operations in Quebec, to ensure the transition of current Alizé clients to Louisbourg, to canvass for new clients and assets under management in Québec, and to be responsible for the management of client portfolios, including the establishment of client investment policies and the updating of client files.

8. Following the Proposed Acquisition, the Parties intend to complete the surrender of Alizé's registration before the conclusion of 2024. However, Alizé's registration and the Representative's registration with Alizé will remain unchanged for a period sufficient to facilitate the transfer of Alizé's clients to Louisbourg. This includes clients with underlying derivatives in their portfolios, once Louisbourg secures the necessary registration from the AMF. This process will be conducted in an orderly manner, and subsequent decisions regarding Alizé's registration status, valuation, or surrender will be finalized thereafter.

9. As a result, the Filers request that the Requested Relief be granted on a temporary basis for that period of time in order to enable the Filers to facilitate the completion of the client transfer after the Proposed Acquisition and the initiation of Alizé's registration surrender process.

10. Alizé clients who transition from Alizé to Louisbourg will continue to initially receive the same portfolio management services and be charged by Louisbourg the same fees as when they were clients of Alizé. Louisbourg undertakes that within a 12-month period from the date the Requested Relief is granted, Louisbourg will have harmonized its fee schedules in compliance with requirement to address material conflicts of interest in the best interest of clients.

11. The final agreement regarding the Proposed Acquisition will provide that a portion of the purchase price will be payable twelve months following the closing of the Proposed Acquisition in the form of a balance of sale, and the amount of this balance may vary under certain conditions.

12. In connection with this payment structure, each of Alizé's customers will be informed, prior to making the decision to open an account with Louisbourg, of the comparative advantages of the Proposed Acquisition and will in particular receive information in accordance with subsections 13.4(5) and 13.4(6) of NI 31-103 regarding any potential conflict of interest that may arise from the Representative's developing a clientele for Louisbourg in Québec, including the consequential financial interest in encouraging current Alizé clients to become Louisbourg clients. A press release (prepared by Alizé and Louisbourg acting jointly) will be issued regarding the Proposed Acquisition.

13. Neither of the Filers is in default of any requirement of securities or derivatives legislation in any of the jurisdictions in Canada.

14. The Representative is not in default of any requirement of securities or derivatives legislation in any of the jurisdictions of Canada.

15. Other than as represented above under paragraph 12, the Requested Relief does not give rise to any conflicts of interest in the conduct of the business of Louisbourg and Alizé or in their relationships with their respective clients.

16. Louisbourg and Alizé and the Representative have and will continue to comply with their conflicts obligations as required pursuant to NI 31-103.

17. Each Filer's policies and procedures manual contains detailed provisions for dealing with conflicts of interest internally and with third parties, including their respective clienteles. They each have adequate policies and procedures in place to address material conflicts of interest that may arise as a result of the dual registration of the Representative in the best interest of clients. Furthermore, in the rare event that the Representative identifies a potential or actual conflict of interest that could materially affect a client or the Filers, the Representative would, at such time, inform the CCO of Louisbourg, and then the Filers would notify, in writing, their client of the conflict of interest and would otherwise address the conflict of interest in accordance with each Filer's policies and procedures as they apply to conflicts of interest.

18. The Filers require the Representative to be dually registered with both Alizé and Louisbourg for a prescribed period of time in order to facilitate the orderly transition of clients from Alizé to Louisbourg. The Representative's dual registration will permit the continued services to clients until Alizé surrenders its registration.

19. If the Requested Relief is granted, the Representative will register as an advising representative and a derivatives advising representative of Louisbourg, while maintaining his registration as an advising representative and derivatives advising representative of Alizé on a temporary basis as referred to in paragraphs 8 and 9 above.

20. Louisbourg and Alizé expect that the dual registration of the Representative will create some additional work for the Representative but are confident that the Representative will have sufficient time and resources to adequately serve both Filers and his clients.

21. Each of the Filers' respective UDP and CCO will ensure that the Representative has sufficient time and resources to adequately serve each Filer and its clients.

22. The Representative will be subject to supervision by, and the applicable compliance requirements of, the CCO and UDP of each Filer.

23. In order to minimize any client confusion during the transition period, the Filers and the Representative will disclose the fact that the Representative is registered with both firms, and the relationship between Louisbourg and Alizé will be explained to clients. This disclosure will be made in writing in the disclosure material provided to clients prior to the Representative providing services to clients of each Filer.

24. If the Requested Relief is not granted, the Filers would be prohibited from permitting the Representative to be registered as an advising representative and derivatives advising representative of each Filer, even though the Filers have controls and compliance procedures in place to deal with such advising activities.

25. The Representative will act in the best interest of all clients of each of Filer and will deal fairly, honestly and in good faith with clients.

Decision

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

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, subject to the conditions below:

i. The Representative is subject to supervision by, and the applicable compliance requirements of, both Filers. Should a major concern or breach related to the compliance requirements of either filer arise, the Filers shall notify FCNB immediately;

ii. The UDP and CCO of each Filer ensure that the Representative has sufficient time and resources to adequately service each Filer and its respective clients;

iii. The Filers each have adequate policies and procedures in place to address material conflicts of interest that may arise as a result of the dual registration of the Representative in the best interest of clients;

iv. The relationship between the Filers and the fact that the Representative is dually registered with both of them is fully disclosed in writing to clients and prospective clients of each of them that deal with the Representative during the transition period;

v. Louisbourg confirms to the Principal Regulator in writing within 12 months of the Requested Relief that the undertaking set out in paragraph 10 above has been complied with; and

vi. The Requested Relief expires on the earlier of the date on which Alizé's registration is surrendered or 12 months from the date of this decision.

"To-Linh Huynh"
Financial and Consumer Services Commission (New Brunswick)