Manulife Securities International Limited and Berkshire Investment Group Inc.
Headnote
Passport System -- 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.
June 26, 2008
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 SECURITIES INTERNATIONAL
LIMITED (MSIL) AND BERKSHIRE INVESTMENT
GROUP INC. (BIG) (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 Ontario (the Legislation), for relief pursuant to section 7.1 of National Instrument 33-109 Registration Information (NI 33-109) to allow the bulk transfer of all of the registered individuals and all of the locations of each of MSIL and BIG to a new amalgamated entity, Manulife Securities Investment Services Inc. (MSIS) (the Bulk Transfer), on or about July 2, 2008 in accordance with section 3.1 of the companion policy to NI 33-109 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) the Applicants have 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 of the Applicants on the same basis in all of the other provinces and territories of Canada, except Nunavut (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 Applicants:
MSIL
1. MSIL is a wholly-owned subsidiary of The Manufacturers Life Insurance Company (Manulife Financial). The head office of MSIL is in Ontario.
2. MSIL is registered as a mutual fund dealer or equivalent in all of the provinces and territories of Canada, except Nunavut, and as a limited market dealer in Ontario and Newfoundland and Labrador. MSIL is also a Level 4 member of the Mutual Fund Dealers Association of Canada (the MFDA).
3. MSIL is not in default of the securities legislation in any of the Jurisdictions.
BIG
4. BIG is also a wholly-owned-subsidiary of Manulife Financial. The head office of BIG is in Ontario.
5. BIG is registered as a mutual fund dealer in all of the provinces and territories of Canada, except Nunavut, and as a limited market dealer in Ontario and Newfoundland and Labrador. BIG is also a Level 4 member of the MFDA.
6. BIG is not in default of the securities legislation in any of the Jurisdictions.
Integration / Amalgamation
7. Manulife Financial acquired BIG on or about August 31, 2007 and intends to amalgamate MSIL and BIG on or about July 2, 2008, and to name the new entity Manulife Securities Investment Services Inc.
8. An application was filed with the MFDA on or about May 16, 2008 seeking the approval of the MFDA to the amalgamation of MSIL and BIG.
9. Effective on or about July 2, 2008, all of the current registerable activities of MSIL and BIG will be transferred to MSIS. MSIS will assume all of the existing registrations and approvals for all of the registered individuals and all of the locations of MSIL and BIG. MSIS does not anticipate that there will be any disruption in the ability of MSIL and/or BIG to trade on behalf of their respective clients, and MSIS should be able to trade immediately after the amalgamation.
10. MSIS will continue to be registered in the same categories of registration as MSIL and BIG across Canada, and will continue to be a member of the MFDA and will be subject to, and will comply with, all of Canada's applicable securities laws, including those of the MFDA.
11. MSIS will carry on the same securities business of MSIL and BIG in substantially the same manner with essentially the same personnel.
12. The Exemption Sought will not be contrary to public interest and will have no negative consequences on the ability of MSIS to comply with all applicable regulatory requirements or the ability to satisfy any obligations in respect of the clients of MSIL and BIG.
13. Given the significant number of registered individuals and locations of MSIL and BIG, it would be extremely difficult to transfer each individual and location to MSIS in accordance with the requirements of NI 33-109 if the Exemption Sought is not granted.
14. A press release will be issued immediately after the amalgamation of MSIL and BIG to confirm such change. A notice will also be mailed to the clients of each company confirming that the amalgamation occurred and how the operations of MSIL and BIG will be integrated over the following months.
15. The head office of MSIS will be BIG's current head office location, which is located at 1375 Kerns Road, P.O. Box 5083, Burlington, Ontario, L7R 0A8.
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 the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such payment in advance of the Bulk Transfer.