Manulife Investment Management Limited and Manulife Investment Management Distributors Inc.

Headnote

Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the prohibition on the use of corporate officer titles by certain registered individuals in respect of institutional clients -- Relief does not extend to interactions by registered individuals with retail clients.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7(1).

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.18(2)(b) and 15.1(2).

February 13, 2024

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 INVESTMENT MANAGEMENT LIMITED
(MIML)
AND
MANULIFE INVESTMENT MANAGEMENT DISTRIBUTORS INC.
(MIMDI AND WITH MIML, THE FILERS AND EACH, A FILER)

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 (the Legislation):

(a) with respect to MIML only, to revoke and replace the previous exemptive relief decision dated December 31, 2021 (the Previous Decision) in order to add MIMDI as a Filer; and

(b) pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), that each Filer and its Registered Individuals (as defined below) are exempt from the prohibition in paragraph 13.18(2)(b) of NI 31-103 that a registered individual may not use a corporate officer title when interacting with clients, unless the individual has been appointed to that corporate office by their sponsoring firm pursuant to applicable corporate law, in respect of Clients (as defined below),

(collectively, 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) each Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by each Filer and its Registered Individuals (as defined below) in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions) in respect of the Exemption Sought.

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:

1. MIML is a corporation amalgamated under the laws of Canada, with its registered head office located in Toronto, Ontario.

2. MIML is registered as a portfolio manager in each province and territory of Canada. MIML is also registered as an investment fund manager in Ontario, Québec and Newfoundland and Labrador, as a commodity trading manager in Ontario and a derivatives portfolio manager in Québec.

3. MIMDI is a corporation existing under the laws of Canada, with its registered head office located in Toronto, Ontario.

4. MIMDI is registered as an exempt market dealer in each province and territory of Canada.

5. MIML is a wholly-owned subsidiary of The Manufacturers Life Insurance Company (Manulife), while MIMDI is a wholly-owned subsidiary of MIML, and the Filers are therefore affiliates.

6. Each Filer has an institutional division (respectively, the MIML Institutional Division and the MIMDI Institutional Division and, together, the Institutional Division). The Institutional Division offers a broad array of investment solutions across investment mandates, such as global fixed income, private market strategies, multi-asset strategies and specialized equity strategies, to non-individual institutional clients that are "permitted clients" in Canada. In the MIML Institutional Division, MIML does so as an investment adviser to separately managed accounts and as an investment fund manager and investment adviser or sub-adviser to investment funds. In the MIMDI Institutional Division, MIMDI does so as an exempt market dealer, marketing and intermediating trades in pooled funds to non-individual institutional clients that are "permitted clients".

7. The Institutional Division does not provide services to clients who are individuals. Each Filer also has a private wealth division (respectively, the MIML Private Wealth Division and the MIMDI Private Wealth Division and, together, the Private Wealth Division) that offers investment management products and services to high-net-worth individuals and families, and their holding companies and trusts. The Institutional Division and the Private Wealth Division function independently, as stand-alone operations within each Filer. Each division reports through a separate and distinct senior management structure.

8. MIML is not in default of securities legislation in any of the Jurisdictions. Other than with respect to the specific subject matter of the Exemption Sought, MIMDI is not in default of securities legislation in any of the Jurisdictions.

9. Notwithstanding the Filers' intent of having the Previous Decision apply to MIMDI, MIMDI was inadvertently omitted in MIML's application for the Previous Decision. MIMDI has operated its Institutional Division as if it had received the Previous Decision.

10. Each Filer is the sponsoring firm for registered individuals within the Institutional Division who interact with clients, some of which use a corporate officer title without being appointed to the corporate office of the respective Filer pursuant to applicable corporate law (the Registered Individuals). The number of Registered Individuals may increase or decrease from time to time as the business of a Filer changes. As of the date of this decision, MIML has approximately 28 Registered Individuals and MIMDI has approximately 7 Registered Individuals. All of the Registered Individuals work within the Institutional Division and will interact exclusively with clients of the Institutional Division.

11. The current titles used by the Registered Individuals include the words "Director", "Vice President" and "Managing Director", or variations thereof, and the Registered Individuals may use additional corporate officer titles in the future (collectively, the Titles).

12. Each Filer has a process in place for awarding the Titles, which sets out the criteria for each of the Titles. The Titles are based on criteria including seniority and experience, and a Registered Individual's sales activity or revenue generation is not a primary factor in the decision by a Filer to award one of the Titles.

13. The Registered Individuals interact only with institutional clients that are, each, a non-individual "permitted client", as defined in subsection 1.1 of NI 31-103 (Permitted Clients). The Registered Individuals may in the future interact with institutional clients that are, each, an "institutional client" as defined in Rule 1201 of the Canadian Investment Regulatory Organization (CIRO) (Institutional Clients and, with Permitted Clients, the Clients).

14. Section 13.18 of NI 31-103 prohibits registered individuals in their client-facing relationships from, among other things, using titles or designations that could reasonably be expected to deceive or mislead existing and prospective clients. Paragraph 13.18(2)(b) of NI 31-103 specifically prohibits the use of corporate officer titles by registered individuals who interact with clients unless the individuals have been appointed to those corporate offices by their sponsoring firms pursuant to applicable corporate law.

15. There would be significant operational and human resources challenges for the Filers to comply with the prohibition in paragraph 13.18(2)(b). In addition, the Titles are widely used and recognized throughout the institutional segment of the financial services industry within Canada and globally, and being unable to use the Titles has the potential to put each Filer and its Registered Individuals at a competitive disadvantage as compared to non-Canadian firms that are not subject to the prohibition and who compete for the same institutional clients.

16. Given their nature and sophistication, the use of the Titles by the Registered Individuals would not be expected to deceive or mislead existing and prospective Clients.

17. For the reasons provided above, it would not be prejudicial to the public interest to grant the Exemption Sought.

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, when using the Titles, each Filer and its Registered Individuals interact only with existing and prospective clients that are exclusively non-individual Permitted Clients or Institutional Clients.

This decision will terminate six months, or such other transition period as may be provided by law, after the coming into force of any amendment to NI 31-103 or other applicable securities law that affects the ability of the Registered Individuals to use the Titles in the circumstances described in this decision.

"Debra Foubert"
Director, Compliance and Registrant Regulation
Ontario Securities Commission

OSC File #: 2023/0578