Rice Financial Group Inc. and Farm Mutual Financial Services Inc. - NI 33-109 Registration Information, s. 7.1(1)
Application seeking relief from certain filing requirements of National Instrument 33-109 Registration Information in connection with a bulk transfer of business locations and registered and non-registered individuals under an asset purchase -- order drafted to make reference to selling firm's suspension of registration and bankruptcy proceedings -- relief granted subject to OSC approval of list of selling firm's personnel to be terminated in advance of bulk transfer -- order drafted to account for specific factual circumstances surrounding proposed transaction.
National Instruments Cited
National Instrument 31-109 Registration Information.
Companion Policies Cited
Companion Policy 33-109CP.
August 14, 2008
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
AND
IN THE MATTER OF
RICE FINANCIAL GROUP INC.
AND
IN THE MATTER OF
FARM MUTUAL FINANCIAL SERVICES INC.
DECISION
(Subsection 7.1(1) of National Instrument 33-109)
UPON the application (the Application) of Rice Financial Group Inc. (Rice) and Farm Mutual Financial Services Inc. (FM) (collectively, the Filers) to the Ontario Securities Commission (the Commission), for a decision pursuant to section 7.1 of National Instrument 33-109 Registration Information (NI 33-109) exempting the Filers from certain filing requirements under NI 33-109, so as to permit the bulk transfer of all of the registered individuals and all of the locations of FM to Rice (the Bulk Transfer) on or about August 11, 2008 in accordance with section 3.1 of the companion policy to NI 33-109 (the Exemption Sought).
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Filers having represented to the Director that:
1. Rice is a wholly-owned subsidiary of Jovian Capital Corporation. The executive office of Rice is in Ontario.
2. Rice is registered as a mutual fund dealer and limited market dealer in Ontario. Rice is a Level 4 member of the Mutual Fund Dealers Association of Canada (the MFDA).
3. FM is a corporation incorporated under the laws of Ontario. The head office of FM is in Ontario.
4. FM is registered as a mutual fund dealer and limited market dealer in Ontario. FM is a Level 3 member of the MFDA. On August 7, 2008, FM filed an assignment for the benefit of its creditors pursuant to section 49.1 of the Bankruptcy and Insolvency Act (Canada). FM has applied to the Commission and the MFDA to suspend its registration and membership, respectively.
5. On August 13, 2008, Rice entered into an agreement with FM wherein Rice will acquire certain assets (the Purchased Assets) of FM (the Proposed Transaction).
6. The Trustee in Bankruptcy has received a vesting order from the Superior Court of Justice on August 13, 2008 approving the Proposed Transaction.
7. An application was filed with the MFDA on July 31, 2008 seeking the approval of the MFDA to the purchase of the Purchased Assets by Rice.
8. Effective on or about August 14, 2008, all of the current registerable activities of FM are expected to be transferred to Rice. Rice is expected to assume all of the existing registrations and approvals for all of the registered individuals and all of the locations of FM. Rice does not anticipate that there will be any disruption in the ability of Rice to trade on behalf of FM's clients, and Rice should be able to trade immediately after the Proposed Transaction.
9. Following the Proposed Transaction, Rice will continue to be registered in the categories of mutual fund dealer and limited market dealer. Rice 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.
10. Staff of the Commission have approved a list prepared by Rice listing the FM personnel to be terminated by FM prior to the Bulk Transfer.
11. The Exemption Sought will not be contrary to public interest and will have no negative consequences on the ability of Rice to comply with all applicable regulatory requirements or the ability to satisfy any obligations in respect of the clients of Rice and FM.
12. Given the significant number of registered individuals and locations of FM, it would be extremely difficult to transfer each individual and location to Rice in accordance with the requirements of NI 33-109 if the Exemption Sought is not granted.
13. A press release will be issued immediately after the approval of the Proposed Transaction to confirm such change. A notice will also be mailed to the clients of FM confirming that the Proposed Transaction has been approved and how the operations of FM will be integrated into Rice over the following months.
AND WHEREAS the Director is satisfied that it would not be prejudicial to the public interest to make the requested Decision on the basis of the terms and conditions proposed;
IT IS ORDERED pursuant to section 7.1 of NI 33-109 that the following requirements of NI 33-109 shall not apply to Rice and FM in respect of the Bulk Transfer:
(a) the requirement to submit a notice regarding the termination of each employment, partner, or agency relationship under section 4.3 of NI 33-109;
(b) the requirement to submit a notice regarding each individual who ceases to be a permitted individual under section 5.2 of NI 33-109;
(c) the requirement to submit a registration application for each individual applying to become a registered individual under section 2.2 of NI 33-109;
(d) the requirement to submit a Form 33-109F4 for each permitted individual under section 3.3 of NI 33-109; and
(e) the requirement under section 3.1 of NI 33-109 to notify the regulator of a change to the business location information in Form 33-109F3,
provided that Rice and FM 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.