Manulife Asset Management Limited and Manulife Asset Management Accord (2015) Inc.
Headnote
Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a firm registered in any jurisdiction of Canada 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 firm registered in any jurisdiction of Canada. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition.
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.
May 15, 2015
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF MANULIFE ASSET MANAGEMENT LIMITED (MAML) AND MANULIFE ASSET MANAGEMENT ACCORD (2015) INC. (MAMA) (each a Filer and together, the Filers)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from the requirement 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 certain of the advising representatives and certain of the associate advising representatives of MAML (each a Representative and, collectively the Representatives) to also be registered as an advising representative or an associate advising representative of MAMA, respectively, until the Amalgamation (as defined below) occurs on or about July 1, 2015 (the Exemption Sought).
Under the Process for 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 Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filers in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Québec and Saskatchewan (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions 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:
Proposed Transaction
1. MAML, MAMA and Standard Life Mutual Funds Ltd. (which is registered as an investment fund manager in Ontario, Québec and Newfoundland and Labrador) are expected to amalgamate on or about July 1, 2015, and thereafter continue as "Manulife Asset Management Limited" (the New MAML) in each of the Jurisdictions, including the territories, with the OSC as its principal regulator (the Amalgamation).
MAML
2. MAML is a corporation governed under the Business Corporations Act (Ontario) and has its head office located in Toronto, Ontario. Following the Amalgamation, New MAML is expected to continue under the Canada Business Corporations Act (the CBCA).
3. MAML is an indirect wholly-owned subsidiary of The Manufacturers Life Insurance Company (Manulife).
4. MAML is currently registered as an adviser in the category of portfolio manager in each of the Jurisdictions. MAML is also registered in Ontario as an adviser in the category of commodity trading manager under the Commodity Futures Act (Ontario), and as an investment fund manager in Ontario, Québec and Newfoundland and Labrador. As a result of the Amalgamation, New MAML will be additionally registered as a portfolio manager in each of the territories and as a derivatives portfolio manager in Québec.
5. MAML is the investment fund manager and portfolio manager for a group of mutual funds domiciled in Canada that are subject to National Instrument 81-102 Investment Funds (NI 81-102) (i.e., the Manulife Mutual Funds), a group of mutual funds domiciled in Canada that are not subject to NI 81-102 (i.e., the Manulife Asset Management Pooled Funds), most Manulife non-redeemable investment funds and portfolio manager to institutional managed accounts.
6. Following the Amalgamation, New MAML will also be the investment fund manager to another group of mutual funds domiciled in Canada that are subject to NI 81-102 (the Standard Life Mutual Funds). This change in investment fund manager has received all necessary regulatory and investor approvals. As a result of the Amalgamation, New MAML will also become the investment fund manager of the former Standard Life Investments Pooled Funds, a group of mutual funds domiciled in Canada that are not subject to NI 81-102, that have been renamed the Manulife Asset Management Pooled Funds (the Former Standard Life Investments Pooled Funds), and of the Standard Life Global Absolute Return Strategies Fund (the GARS Fund). New MAML will also be the portfolio manager to the Former Standard Life Investments Pooled Funds, the GARS Fund and certain of the Standard Life Mutual Funds.
7. MAML is not in default of any of its obligations under applicable securities legislation in any of the Jurisdictions.
MAMA
8. MAMA, formerly known as Standard Life Investments Inc. prior to February 2, 2015, is a corporation governed under the CBCA and has its head office located in Montréal, Québec.
9. MAMA became affiliated with MAML on January 30, 2015 when MAML's indirect parent company, Manulife, acquired all of the shares of MAMA as part of its acquisition of the Canadian based operations of Standard Life plc, resulting in a change in control of MAMA.
10. MAMA is currently registered as an adviser in the category of a portfolio manager and exempt market dealer in all of the Jurisdictions, including the territories, as an investment fund manager in Ontario, Québec and Newfoundland and Labrador, and as a derivatives portfolio manager in Québec. MAMA is in the process of surrendering its registration as an exempt market dealer in all of the Jurisdictions, including the territories.
11. MAMA is the portfolio manager of substantially all of the Standard Life Mutual Funds, the portfolio manager of all of the Former Standard Life Investments Pooled Funds, the GARS Fund and portfolio manager to institutional managed accounts.
12. MAMA's clients have all been advised that MAMA's portfolio management activities will be combined with MAML.
13. As a result of the Amalgamation, MAMA will be amalgamated into New MAML, and all of MAMA's clients will become clients of New MAML.
14. MAMA is not in default of any of its obligations under applicable securities legislation in any of the Jurisdictions, including the territories.
Dual Registration
15. The Filers have determined that it would be beneficial for MAMA's clients and for business reasons to dually register the Representatives with MAMA until the Amalgamation occurs as it will allow MAMA to better service its clients and to achieve certain business efficiencies.
16. The dual registration of the Representatives with MAMA is not expected to give rise to any conflicts of interest. The interests of the Filers are aligned as they share common management, they will soon be amalgamating together, and both Filers are direct or indirect subsidiaries of Manulife. In addition, the dual registration of the Representatives will only be for six (6) weeks and will not give rise to any conflicts of interest that would typically be present between unrelated arms' length firms.
17. The dually registered Representatives will have sufficient time and resources to adequately serve both Filers.
18. The advising activities that will be provided to the clients of MAMA by the Representatives will not interfere with their responsibilities to either Filer.
19. The dually registered Representatives will act in the best interests of the clients of each Filer and will deal, fairly, honestly and in good faith with such clients.
20. Each Filer has appropriate compliance and supervisory policies and procedures in place to monitor the conduct of its registered individuals and to ensure that the Filers can deal appropriately with any conflicts of interest that may arise as a result of the dual registration of the Representatives. In particular, the Representatives will be subject to the supervisory, and the applicable compliance, requirements of each Filer.
21. In order to minimize client confusion, the dual registration of the Representatives and the relationship between MAML and MAMA will be appropriately disclosed in writing to the MAMA clients of the Representatives.
22. In the absence of the Exemption Sought, the Filers would be prohibited from having the dually registered Representatives.
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 Exemption Sought is granted provided that (1) the circumstances described above remain in place, and (2) the Exemption Sought expires on the earlier of the following:
i) one year from the date hereof;
ii) the date on which the Amalgamation occurs.