Saxon Funds Management Limited
Headnote
National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of abridgement of notice period of change in indirect control of mutual fund manager to 40 days from 60 days -- Decision conditional on no changes being made to the management, administration or portfolio management of the mutual funds for at least 60 days subsequent to notice being provided to unitholders.
Applicable Legislative Provisions
National Instrument 81-102 -- Mutual Funds, s. 5.8(1)(a).
August 15, 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
SAXON FUNDS MANAGEMENT LIMITED
(the "Filer")
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for relief to abridge the requirement of section 5.8(1)(a) of National Instrument 81-102 Mutual Funds (the "Notice Requirement") that notice of the indirect change of control (the "Change of Control Notice") of the Filer be given to the securityholders (the "Saxon Fund Unitholders") of the mutual funds managed by the Filer set out in Schedule A (the "Saxon Funds") at least 60 days before the Closing (as defined below) (the "Requested Relief").
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 Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon for the equivalent provisions of the securities legislation of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, the Yukon Territory and Nunavut Territory (together with Ontario, the "Jurisdictions").
Interpretation
Defined terms contained 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 Filer:
1. The Filer is a corporation incorporated under the laws of Canada. The Filer is a wholly-owned subsidiary of Saxon Financial Inc. ("SFI"). The Filer is the trustee and manager of the Saxon Funds. Units of the Saxon Funds are sold in all of the Jurisdictions pursuant to a simplified prospectus and annual information form dated May 9, 2008.
2. SFI is a reporting issuer in all of the Jurisdictions and is not on any list of defaulting issuers maintained in any Jurisdiction. The common shares of SFI are listed on the Toronto Stock Exchange (the "TSX") under the trading symbol SFI.
3. IGM Financial Inc. ("IGM") is a reporting issuer in all of the provinces and territories of Canada. The common shares of IGM are listed on the TSX under the trading symbol IGM.
4. On August 5, 2008 SFI and IGM issued press releases (the "Press Releases") announcing that they have entered into a support agreement pursuant to which IGM will offer to buy all of the issued and outstanding shares of SFI and pursuant to which SFI agreed to support and facilitate the Offer (as defined below). Assuming all conditions of the Offer are satisfied or waived, IGM will assume control of SFI.
5. IGM will be mailing a formal takeover bid offer to shareholders of SFI offering to purchase all of the issued and outstanding shares of SFI (the "Offer"). SFI will be mailing a formal directors' circulator indicating that the Board of Directors of SFI recommends to the shareholders that they accept the Offer.
6. The completion of the Offer is subject to the satisfaction of certain conditions. If IGM is successful in acquiring a sufficient number of shares of SFI under the Offer, IGM will indirectly acquire control of Saxon. IGM may complete its indirect acquisition (the "Closing") of Saxon as early as September 24, 2008.
7. Howson Tattersall Investment Counsel Limited ("HTIC") is the current portfolio advisor to the Saxon Funds and provide all portfolio management to the Saxon Funds. HTIC is a wholly-owned subsidiary of SFI.
8. The mutual fund business carried on by IGM is carried on by I. G. Investment Management, Ltd. and Mackenzie Financial Corporation (collectively, the "IGM Fund Managers"). Each IGM Fund Manager is indirectly wholly-owned by IGM. Each IGM Fund Manager is currently registered under the Securities Act (Ontario) as an adviser in the categories of investment counsel and portfolio manager and in similar categories in the other jurisdictions of Canada. The IGM Managers manage public mutual funds which are sold to the public under the family names Mackenzie Mutual Funds Investors Group Units Fund Trusts, Investors Group Corporate Class Inc. Classes, Investors Group Income Funds Group, and Investors Real Property Fund (collectively, the "IGM Funds"). IGM is one of the country's largest managers and distributors of mutual funds and other investment products and services, with $116.8 billion in total assets under management as at August 1, 2008.
9. The notice contemplated by section 5.8(1)(a) of the Legislation of the proposed indirect change in control of Saxon is expected to be mailed by Saxon to the Saxon Funds Unitholders on or about August 14, 2008 (the "Notice Date").
10. The Closing will not change the manager of the Saxon Funds. To the extent that any change is made after Closing which constitutes a "material change" to the Saxon Funds within the meaning of National Instrument 81-106 - Investment Fund Continuous Disclosure ("NI 81-106"), the Saxon Funds will comply with the continuous disclosure obligations set out in section 11.2 of NI 81-106. Further, any notices which are required to be delivered to, or approvals obtained from, the Canadian securities administrators or Saxon Unitholders in connection with any such material change will be delivered or obtained, as required under applicable Canadian securities legislation.
11. IGM intends to maintain the Saxon Funds as a separately managed fund family and to cause no changes to the management, administration or portfolio management of the Saxon Funds for at least 60 days following the Notice Date.
12. The Filer believes that abridging the period prescribed by paragraph 5.8(1)(a) of the Legislation to 40 days will not be prejudicial to the Saxon Funds Unitholders.
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 Requested Relief is granted provided that:
a) the Saxon Fund Unitholders are given at least 40 days notice of the indirect change of control of Saxon; and
b) no changes are made to the management, administration or portfolio management of the Saxon Funds for at least 60 days following the Notice Date.
Schedule A
SAXON FUNDS