Peak Investment Services Inc. and Promutuel Capital Financial Services Firm Inc.
Headnote
NP 11-203 -- relief granted from the requirements of Sections 2.2, 2.5, 3.2, 4.1 and 5.2 of NI 33-109 in order to take advantage of the bulk transfer exemption provisions of Policy Statement/Companion Policy 33-109 CP to NI 33-109.
Applicable Legislative Provisions
National Instrument 33-109 Registration Information, ss. 2.2, 2.5, 3.2, 4.1, 5.2.
April 30, 2012
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the "Jurisdictions")
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
PEAK INVESTMENT SERVICES INC.
("PEAK")
AND
IN THE MATTER OF
PROMUTUEL CAPITAL FINANCIAL SERVICES FIRM INC.
("Promutuel") (the Filers)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions ("Decision Maker") has received an application dated April 3, 2012 from Promutuel and PEAK (together the "Filers") for a decision under the securities legislation of the Jurisdictions (the "Legislation") for relief from the requirements of Sections 2.2, 2.5, 3.2, 4.1, and 4.2 of National Instrument 33-109 -- Registration Information ("NI 33-109"), in order to take advantage of the bulk transfer exemption provisions of Policy Statement/Companion Policy 33-109 CP to NI-33-109 ("33-109 CP").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions for a dual application:
(a) the Autorité des marches financiers of Québec (the "Autorité") is the principal regulator for this application;
(b) the 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 in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince-Edward-Island, Newfoundland and Labrador, Yukon and the Northwest Territories (the "Other Jurisdictions"); and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in National Instrument 14-101 -- Definitions, MI 11-102, National Instrument 31-102 -- National Registration Database ("NI 31-102") and NI 33-109 have the same meaning when used in the present decision, unless otherwise defined.
Representations
This decision is based on the following facts and submissions represented by the Filers:
1. Promutuel is a company incorporated in 2008 under the Quebec Companies Act, Part IA, whose head office is located at 2000 Mansfield, suite 1800, Montréal, Québec, H3A 3A6. Promutuel is a subsidiary of PEAK Financial Group Inc. ("PFGI").
2. Promutuel is a mutual fund dealer duly registered with the Autorité des marchés financiers and is also registered as such in the following provinces: British Columbia, Alberta, Manitoba, Ontario, Québec, Nova Scotia. Promutuel is a member of the Mutual Fund Dealers Association of Canada ("MFDA").
3. At the present time, the Filers have filed with the principal regulator requests for registration of Promutuel in each of the following provinces and territories: Saskatchewan, Yukon, Northwest Territories, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
4. The following also relate to Promutuel:
Business number: 1164943467NRD #: 27990Number of registered/permitted individuals: 262Number of business locations: 2335. The vast majority of registered representatives and permitted individuals, the business locations and the clients of Promutuel are located in the province of Québec.
6. Specifically, at the present time, the number of registered representatives of Promutuel per jurisdiction is reflected in the table below. It is to be noted that none of the below representatives will be relocated during the upcoming bulk transfer.
Jurisdiction
Number of registered representatives in jurisdiction
British Columbia
9
Alberta
11
Manitoba
3
Ontario
70
Québec
255
Nova Scotia
3
NewBrunswick
Registration ongoing
Saskatchewan
Registration ongoing
Newfoundland and Labrador
Registration ongoing
Prince Edward Island
Registration ongoing
Northwest Territories
Registration ongoing
Yukon
Registration ongoing
Nunavut
Firm not registered
7. PEAK is a company incorporated in 1992 under the Quebec Companies Act, Part IA, and whose head office is located at 2000 Mansfield, suite 1800, Montréal, Québec, H3A 3A6. PEAK is also a subsidiary of PFGI.
8. PEAK is a mutual fund dealer duly registered with the Autorité des marchés financiers and is also registered as such in the following provinces: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia, Prince Edward Island, New Brunswick, Newfoundland and Labrador, Yukon, Northwest Territories. PEAK is also a member of the MFDA.
9. The following also relate to PEAK:
Business number: 1140193567NRD #: 8260Number of registered/permitted individuals: 433Number of business locations: 36810. The vast majority of registered representatives and permitted individuals, the business locations and the clients of PEAK are located in the province of Québec.
11. Specifically, at the present time, the number of registered representatives of PEAK per jurisdiction is reflected in the table below. It is to be noted that none of the below representatives will be relocated during the upcoming bulk transfer.
Jurisdiction
Number of registered representatives in jurisdiction
British Columbia
40
Alberta
35
Manitoba
10
Ontario
102
Québec
349
Nova Scotia
16
New Brunswick
22
Saskatchewan
19
Newfoundland and Labrador
1
Prince Edward Island
3
Northwest Territories
Firm registered without any representatives
Yukon
Firm registered without any representatives
Nunavut
Firm not registered
12. The amalgamation transaction proposed by the Filers will result in the transfer of all of the current activities of Promutuel and PEAK, which require registration, to the amalgamated entity, Amalco. Amalco will assume all of the existing registrations, approvals, rights and obligations for all of Promutuel's and PEAK's registered representatives, permitted individuals, other employees as well as for all of the business locations of PEAK and Promutuel.
13. Amalco will have the following information associated to it:
Name: PEAK Investment Services Inc. ("Services en Placements PEAK Inc." in French)Business number: 1164943467NRD #: 27990Number of registered/ permitted individuals: 695Number of business locations: 60114. The reasons for which PFGI is pursuing this amalgamation transaction include PFGI wanting to have all of its mutual fund representatives under one single entity, which should greatly improve operational efficiency at all levels, specifically in relation to clients, representatives, regulators, and other stakeholders of the corporation. All these stakeholders should see gains in terms of service and the ease of doing business with Amalco. In addition, other reasons for the amalgamation relate to certain financial and fiscal aspects, notably concerning financial year end, which will be improved as a result of the decrease in duplication of fees and tasks, given that there will remain only one mutual fund dealer entity instead of two.
15. It is not anticipated that there will be any business process interruptions or disruption in the ability of PEAK and/or Promutuel to trade on behalf of their respective clients and that furthermore, Amalco should be able to trade immediately after the amalgamation transaction.
16. Amalco will continue to be registered in the same categories of registration as PEAK and Promutuel across Canada and will continue to be a member of the MFDA and will be subject to, and will comply with, all applicable securities legislation and rules of the MFDA.
17. Amalco will carry on the same securities business of PEAK and Promutuel in substantially the same manner as those 2 entities and with the same personnel as PEAK and Promutuel.
18. Given the significant number of registered/permitted individuals ("Individuals") and affected business locations of the Filers, it would be unduly onerous and time-consuming to individually transfer all affected business locations and Individuals to Amalco in accordance with the requirements set out in NI 33-109. Moreover, it is imperative that the transfer of the affected business locations and Individuals occur on the same date, in order to ensure continuity of registration for said Individuals being transferred to Amalco.
19. The bulk transfer will not be contrary to the public interest and will not restrict Amalco in complying with all applicable regulatory requirements or obligations towards its clients.
20. The total number of mutual fund representatives to be transferred across Canada is significant (695).
21. In addition, the number of mutual fund representatives of Amalco that are based in Québec is significant (591), and the number of Amalco mutual fund representatives located outside Québec total 104, of which 43 are based in Ontario.
22. The Filers are jointly conscious of the fact that the granting of the present exemption in no way removes the obligation for the Filers to comply with the requirements of section 4.1 of NI 33-109, specifically as to the requirements to deliver, as may be required and in the applicable cases, a change notice in relation to one of the sections of the form provided for in Schedule 33-109F4, for each of the individuals affected by the bulk transfer.
23. By letter dated April 20, 2012, the MFDA gave its approval to the amalgamation transaction referred to herein.
24. The Filers are not in default of securities legislation in any Jurisdiction.
Decision
The principal regulator is satisfied that the decision meets the test and criteria set out in the Legislation for the principal regulator to render the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is to be 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 arrangement in advance of the bulk transfer.