Sun Life Global Investments (Canada) Inc.
Headnote
National Policy 11-203 Process for Exemptive Relief Application in Multiple Jurisdictions -- Relief granted from the self-dealing provision in s. 4.2(1) of NI 81-102 Investment Funds to permit inter-fund trades in debt securities between investment funds subject to NI 81-102 and pooled funds managed by the same manager -- Inter-Fund trades will comply with the conditions in subsection 6.1(2) of NI 81-107 Independent Review Committee for Investment Funds, including the requirement for independent review committee approval.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from s.13.5(2)(b)(ii) and (iii) of NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations to permit inter-fund trades and in specie transfers between mutual funds, pooled funds and managed accounts managed by the same manager -- Inter-fund trades subject to conditions, including IRC approval and pricing requirements -- Trades involving exchange-traded securities permitted to occur at last sale price as defined in the Universal Market Integrity Rules -- Relief permitting in specie subscriptions and redemptions by managed accounts and pooled funds in mutual funds and pooled funds subject to certain conditions.
Applicable Legislative Provisions
National Instrument 81-102 Investment Funds, ss. 4.2(1), 4.3(1), 4.3(2), 19.2.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.5, 15.1.
National Instrument 81-107 Independent Review Committee for Investment Funds, s.6.1(2).
July 31, 2015
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 SUN LIFE GLOBAL INVESTMENTS (CANADA) INC.
DECISION
Background
The principal regulator in the Jurisdiction has received an application (the Application) from Sun Life Global Investments (Canada) Inc. for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation):
a) for an exemption from the prohibition in section 4.2(1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the NI 81-102 Funds (as defined below) to purchase debt securities from, or sell debt securities to, a Pooled Fund (as defined below) (the Section 4.2(1) Relief);
b) for an exemption from the prohibitions in sections 13.5(2)(b)(ii) and (iii) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) which prohibit a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of an associate of a responsible person, or from or to the investment portfolio of an investment fund for which a responsible person acts as an adviser, in order to permit,
(i) a Pooled Fund (as defined below) to purchase securities from or sell securities to a Fund (as defined below);
(ii) a Managed Account (as defined below) to purchase securities from or sell securities to a Fund;
(iii) an NI 81-102 Fund to purchase securities from or sell securities to a Fund;
(iv) the transactions listed in (i) to (iii) (each an Inter-Fund Trade) to be executed at the last sale price, as defined in the Universal Market Integrity Rules (UMIR Rules) of the Investment Industry Regulatory Organization of Canada, prior to the execution of the trade (the Last Sale Price) in lieu of the closing sale price (the Closing Sale Price) contemplated by the definition of "current market price of the security" in section 6.1(1)(a)(i) of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) on that trading day, where the securities involved in the Inter-Fund Trade are exchange-traded securities (which term shall include Canadian and foreign-exchange securities ( (i), (ii) (iii), and (iv) are collectively, the Inter-Fund Trading Relief); and
(v) In-specie subscriptions and redemptions by: (each subscription or redemption, an In-specie Transfer)
a. Managed Accounts in Funds; and
b. Pooled Funds in Funds (together with (i), the In-specie Transfer Relief)
(the Section 4.2(1) Relief, Inter-Fund Trading Relief and In-specie Transfer Relief are, collectively, 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. Sun Life Global Investments (Canada) Inc. has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 81-102, NI 81-107 and NI 31-103 have the same meaning if used in this decision, unless otherwise defined. The following terms have the following meanings:
Filer means, unless otherwise specified, SLGI (as defined below) or an affiliate of SLGI, such as Sun Life Investment Management Inc.;
Clients means pension plans, endowments, trusts, insurance companies, corporations, mutual funds, individuals and other entities to whom the Filer offers, or may offer, discretionary portfolio management services through a Managed Account (as defined below);
Discretionary Management Agreement means a written agreement between the Filer and a Client seeking wealth management or related services;
Existing NI 81-102 Funds means each existing mutual fund, as defined in the Legislation, that is a reporting issuer and subject to NI 81-102, of which SLGI acts as the manager and/or portfolio manager;
Funds means collectively, the NI 81-102 Funds and the Pooled Funds;
Future NI 81-102 Funds means each investment fund, as defined in the Legislation, which may be either a mutual fund or a non-redeemable investment fund that is a reporting issuer and subject to NI 81-102, for which the Filer may act as manager and/or portfolio adviser in the future;
In-specie Transfer means causing a Managed Account or a Pooled Fund to deliver portfolio securities to a Fund, in respect of the purchase of securities of the Fund by the Managed Account or Pooled Fund, or to receive portfolio securities from the investment portfolio of a Fund in respect of a redemption of securities of the Fund by the Managed Account or Pooled Fund;
Managed Account means an account managed by the Filer for a Client that is not a responsible person and over which the Filer has discretionary authority;
NI 81-102 Funds means collectively, the Existing NI 81-102 Funds and the Future NI 81-102 Funds;
Pooled Funds means each investment fund that is not a reporting issuer, of which the Filer may act as manager and/or portfolio manager in the future;
SLGI means Sun Life Global Investments (Canada) Inc.
Representations
This decision is based on the following facts represented by SLGI:
1. SLGI is a corporation incorporated under the laws of Canada with its head office in Toronto, Ontario.
2. SLGI is registered as: (i) an investment fund manager in Ontario, Québec and Newfoundland and Labrador; (ii) a portfolio manager in Ontario; (iii) a mutual fund dealer in each of the Jurisdictions; and (iv) a commodity trading manager in Ontario.
3. Sun Life Investment Management Inc., an affiliate of SLGI, is registered as: (i) an investment fund manager in each of the Jurisdictions; (ii) a portfolio manager in each of the Jurisdictions; (iii) an exempt market dealer in each of the Jurisdictions; and (iv) a commodity trading manager in Ontario.
4. SLGI, and Sun Life Investment Management Inc., are each an indirect, wholly-owned subsidiary of Sun Life Financial Inc., a publicly traded company in Canada.
5. SLGI is the portfolio manager and manager of each Existing NI 81-102 Fund and may, in the future, be the portfolio manager and/or manager of Pooled Funds and Future NI 81-102 Funds. Sun Life Investment Management Inc., as an affiliate of SLGI, may also in the future be the portfolio manager and/or manager of Pooled Funds and Future NI 81-102 Funds.
6. Each of the NI 81-102 Funds is, or will be, established under the laws of Ontario, Canada or another Jurisdiction, as an investment fund, and is or will be a reporting issuer in one or more of the Jurisdictions.
7. The securities of each Existing NI 81-102 Fund are qualified for distribution pursuant to simplified prospectuses and annual information forms that have been prepared or will be prepared and filed in accordance with NI 81-101 Mutual Fund Prospectus Disclosure and the securities of each Future NI 81-102 Fund will be qualified for distribution under a prospectus. Each NI 81-102 Fund is, or will, be, subject to the provisions of NI 81-102. Each Future NI 81-102 Fund will be a mutual fund or a non-redeemable investment fund that is a reporting issuer and subject to NI 81-102.
8. SLGI does not currently manage any Pooled Funds; however, SLGI is currently contemplating the creation of a Pooled Fund and may in the future be the manager and/or portfolio adviser of a Pooled Fund.
9. Each of the Pooled Funds will be an investment fund established as a trust, partnership or corporation under the laws of Ontario, Canada or another Jurisdiction and will not be a reporting issuer in any of the Jurisdictions.
10. The securities of the Pooled Funds will be distributed on a private placement basis pursuant to available prospectus exemptions. Each Pooled Fund will not be subject to NI 81-102.
11. SLGI and the Existing NI 81-102 Funds are not in default of securities legislation in the Jurisdictions.
12. The Filer offers discretionary portfolio management services to Clients seeking wealth management or related services under Discretionary Management Agreements in connection with the Managed Account of the Client with the Filer.
13. Pursuant to the Discretionary Management Agreement entered into with each Client, the Client appoints the Filer to act as portfolio manager in connection with an investment portfolio of the Client with full discretionary authority to trade in securities for the Managed Account without obtaining the specific consent or instructions of the Client to execute the trade.
14. The portfolio management services provided by the Filer to each Client consist, or will consist, of the following:
(i) each Client executes a Discretionary Management Agreement whereby the Client authorizes the Filer to supervise, manage and direct purchases and sales in the Client's Managed Account, at the Filer's full discretion on a continuing basis;
(ii) qualified employees of the Filer perform investment research, securities selection and portfolio management functions with respect to all securities, investments, cash and cash equivalents and other assets in the Managed Account;
(iii) each Managed Account holds securities and other investments as selected by the Filer in its sole discretion; and
(iv) the Filer retains overall responsibility for the advice provided to its Clients and has a designated senior officer to oversee and supervise the Managed Account.
15. Investments in individual securities may not be appropriate in certain circumstances for a Client. Consequently, the Filer may, where authorized under the Discretionary Management Agreement, from time to time, invest the assets in a Client's Managed Account in securities of any one or more of the Funds in order to give such Client the benefit of asset diversification and economies of scale regarding minimum commission charges on portfolio trades and generally to facilitate portfolio management.
Inter-Fund Trades
16. The Filer wishes to be able to permit Inter-Fund Trades of portfolio securities between:
(i) an NI 81-102 Fund and another NI 81-102 Fund, a Pooled Fund or a Managed Account;
(ii) a Pooled Fund and another Pooled Fund, an NI 81-102 Fund or a Managed Account; and
(iii) a Managed Account and a Pooled Fund or an NI 81-102 Fund.
17. Different sections of NI 31-103, NI 81-102 and NI 81-107 impose different prohibitions and exceptions on different types of Funds with respect to Inter-Fund Trades.
18. An exception from the inter-fund trading prohibition in section 4.2(1) of NI 81-102 currently exists in section 4.3(1) of NI 81-102 which permits the NI 81-102 Funds to inter-fund trade listed equity securities with the Pooled Funds. The NI 81-102 Funds are, however, unable to rely on the exception in section 4.3(1) of NI 81-102 to inter-fund trade debt securities because debt securities are typically not subject to public quotations as required by section 4.3(1) of NI 81-102. The NI 81-102 Funds are further unable to rely on the exception in section 4.3(2) to inter-fund trade debt securities with the Pooled Funds because that exception only applies where funds on both sides of the inter-fund trade are investment funds governed by NI 81-107. The Pooled Funds will not be subject to NI 81-107.
19. SLGI has submitted that because of the various investment objectives and investment strategies utilized by the Funds and Managed Accounts, it may be appropriate for different investment portfolios to acquire or dispose of the same securities directly, rather than with a third party. Authorizing the Inter-Fund Trades may result in such benefits as lower trading costs, reduced market disruption and quicker execution.
20. SLGI has determined that it would be in the best interests of the Funds and Managed Accounts to receive the Inter-Fund Trading Relief because making the Funds and Managed Accounts subject to the same set of rules governing the execution of Inter-Fund Trades will result in:
(i) cost and timing efficiencies in respect of the execution of Inter-Fund Trades; and
(ii) simplified and more efficient monitoring thereof, for the Filer in connection with the execution of Inter-Fund Trades.
21. Each Inter-Fund Trade will be consistent with the investment objectives of the relevant Fund or Managed Account, as applicable.
22. At the time of an Inter-Fund Trade, the Filer will have policies and procedures in place to enable the applicable Funds and Managed Accounts to engage in Inter-Fund Trades.
23. The Filer, as manager of each NI 81-102 Fund, has established, or will establish, an independent review committee (IRC) in respect of each NI 81-102 Fund in accordance with the requirements of NI 81-107.
24. The Filer, as manager of each Pooled Fund, will establish an IRC in respect of each Pooled Fund to review and provide its approval for any proposed Inter-Fund Trades between a Pooled Fund and another Fund or a Managed Account.
25. The IRC of the Pooled Funds will be composed by the manager of the Pooled Funds in accordance with section 3.7 of NI 81-107 and the IRC will be expected to comply with the standard of care set out in section 3.9 of NI 81-107. The IRC of the Pooled Funds will not approve an Inter-Fund Trade involving a Pooled Fund unless it has made the determination set out in subsection 5.2(2) of NI 81-107.
26. Inter-Fund Trades involving an NI 81-102 Fund will be referred to the IRC of the NI 81-102 Fund under subsection 5.2(1) of NI 81-107 and the manager and the IRC of the NI 81-102 Fund will comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade. The IRC of the NI 81-102 Funds will not approve an Inter-Fund Trade involving an NI 81-102 Fund unless it has made the determination set out in subsection 5.2(2) of NI 81-107.
27. Prior to engaging in Inter-Fund Trades on behalf of a Managed Account, each Discretionary Management Agreement or other documentation will contain the authorization of the Client for the portfolio manager of the Managed Account to engage in Inter-Fund Trades.
28. The Filer cannot rely on the exemption from the trading prohibition and the investment counsel prohibition codified under subsection 6.1(4) of NI 81-107 unless each party to the transaction is a reporting issuer and the Inter-Fund Trade occurs at the "current market price of the security" which, in the case of exchange-traded securities, includes the Closing Sale Price but not the Last Sale Price.
29. SLGI considers that it would be in the best interests of the Funds and Managed Accounts, as applicable, if an Inter-Fund Trade could be made at the Last Sale Price prior to the execution of the trade, in lieu of the Closing Sale Price, as this will result in the trade being done at the price which is closest to the price at the time the decision to make the trade is made.
30. When the Filer engages in an Inter-Fund Trade of securities between Funds or between a Managed Account and a Fund, it will follow policies and procedures established by the Compliance Department of the Filer as applicable. Currently, these policies and procedures apply to both the Filer and any subadviser to the Fund, as appropriate, and contemplate the following general steps:
(i) the portfolio manager (or subadviser, as applicable) of the Filer will request the approval of the chief compliance officer of the Filer or his or her designated alternate to execute a purchase or sale of a security by a Fund or a Managed Account as an Inter-Fund Trade;
(ii) upon receipt of the required approval, the portfolio manager (or subadviser, as applicable) of the Filer will deliver the trading instructions to a trader on a trading desk of the Filer;
(iii) upon receipt of the trade instructions and the required approval, the trader on the trading desk will execute the trade as an Inter-Fund Trade in accordance with the requirements of paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 provided that, for exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price of the security in lieu of the Closing Sale Price; and
(iv) the policies applicable to the trading desk of the Filer will require that all orders are to be executed on a timely basis.
31. If the IRC of a Fund becomes aware of an instance where the Filer did not comply with the terms of this Decision, or a condition imposed by securities legislation or the IRC in its approval, the IRC of the Fund will, as soon as practicable, notify in writing the securities regulatory authority or regulator in the jurisdiction under which the Fund is organized.
In-specie Transfers
32. The Filer may wish to, or otherwise be required, to deliver portfolio securities held in a Managed Account or Pooled Fund to a Fund in respect of a purchase of units or shares of the Fund (Fund Securities), and may wish to, or otherwise be required to, receive portfolio securities from a Fund in respect of a redemption of Fund Securities by a Managed Account or Pooled Fund. As the Filer is, or may be, the portfolio manager of the Funds and is, or may be, the portfolio manager of the Managed Accounts, the Filer would be considered a 'responsible person' within the meaning of NI 31-103.
33. As the Filer is, or may be in the future, the trustee of a Fund which is organized as a trust, each such Fund may be an 'associate' of the Filer, and accordingly, absent the grant of the In-specie Transfer Relief, the Filer would be precluded by the provisions of section 13.5(2)(b)(ii) of NI 31-103 from effecting the In-specie Transfers in such circumstances. As the Filer is, or will be, a registered adviser, and is or will be the manager and/or portfolio manager of the Funds and is, or will be, the portfolio manager of the Managed Accounts, absent the grant of the In-specie Transfer Relief, the Filer would be precluded by section 13.5(2)(b)(iii) of NI 31-103 from effecting the In-specie Transfers.
34. Each Discretionary Management Agreement or other documentation will contain the authorization of the Client for the Filer to engage in In-specie Transfers on behalf of the Managed Account.
35. The only cost which will be incurred by a Managed Account or a Fund for an In-specie Transfer is a nominal administrative charge levied by the custodian of the relevant Fund in recording the trades, and any commission charged by the dealer executing the trade.
36. The Filer, as manager of the Funds, will value the securities transferred under an In-specie Transfer on the same valuation day on which the purchase price or redemption price of the Fund Securities of a Fund is determined. With respect to the purchase of Fund Securities of a Fund, the securities transferred to a Fund under an In-specie Transfer in satisfaction of the purchase price of those Fund Securities will be valued as if the securities were portfolio assets of the Fund, as contemplated by section 9.4(2)(b)(iii) of NI 81-102. With respect to the redemption of Fund Securities of a Fund, the securities transferred to a Managed Account or Pooled Fund in satisfaction of the redemption price of those Fund Securities will have a value equal to the amount at which those securities were valued in calculating the net asset value per security used to establish the redemption price of the Fund Securities of the Fund, as contemplated by section 10.4(3)(b) of NI 81-102.
37. Should any In-specie Transfer contemplated specifically by the Exemption Sought, involve the transfer of an "illiquid asset" (as defined in NI 81-102), the Filer will obtain at least one quote for the asset from an independent arm's length purchaser or seller, immediately before effecting the In-specie Transfer.
38. In-specie Transfers will be subject to (i) compliance with the written policies and procedures of the Filer respecting In-specie Transfers that are consistent with applicable securities legislation, and (ii) the oversight of the Compliance Department of the Filer to ensure that the transaction represents the business judgment of the Filer acting in its discretionary capacity with respect to the Fund and the Managed Account, uninfluenced by considerations other than the best interests of the Fund and Managed Account.
39. SLGI has determined that it will be in the best interests of the Funds and the Managed Accounts to obtain the Exemption Sought.
40. Absent the Exemption Sought, neither the Funds, Managed Accounts, nor the Filer, on their behalf, will be permitted to engage in Inter-Fund Trades or In-specie Transfers.
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:
a) the Section 4.2(1) Relief is granted provided that the following conditions are satisfied:
(i) the transaction is consistent with the investment objectives of each of the Funds involved in the trade;
(ii) the IRC of each Fund involved in the trade has approved the transaction in respect of that Fund in accordance with the terms of subsection 5.2(2) of NI 81-107; and
(iii) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107.
b) the Inter-Fund Trading Relief is granted provided that the following conditions are satisfied:
(i) the Inter-Fund Trade is consistent with the investment objectives of the Fund or Managed Account, as applicable;
(ii) the Filer, as manager of a Fund, refers the Inter-Fund Trade involving a Fund to the IRC of that Fund in the manner contemplated by section 5.1 of NI 81-107 and the Filer and the IRC of the Fund comply with section 5.4 of NI 81-107 in respect of any standing instructions an IRC provides in connection with the Inter-Fund Trade;
(iii) in the case of an Inter-Fund Trade between Funds:
a. the IRC of each Fund has approved the Inter-Fund Trade in respect of the Fund in accordance with the terms of subsection 5.2(2) of NI 81-107; and
b. the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 except that for purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale Price;
(iv) in the case of an Inter-Fund Trade between a Managed Account and a Fund:
a. the IRC of the Fund has approved the Inter-Fund Trade in respect of such Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;
b. the Discretionary Management Agreement or other documentation in respect of the Managed Account authorizes the Inter-Fund Trade; and
c. the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 except that for purposes of paragraph (e) of subsection 6.1(2) of NI 81-107 in respect of exchange-traded securities, the current market price of the securities may be the Last Sale Price;
c) the In-specie Transfer Relief is granted provided that:
(i) if the transaction is the purchase of Fund Securities of a Fund by a Managed Account;
a. in respect of the In-specie Transfer Relief as it applies to purchases of Fund Securities of an NI 81-102 Fund by a Managed Account:
I. the Filer as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of an In-specie Transfer in accordance with the terms of subsection 5.2(2) of NI 81-107; and
II. the Filer as manager of the NI 81-102 Fund, and the IRC, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In-specie Transfer;
b. the Filer obtains the prior written consent of the Client of the Managed Account before it engages in any In-specie Transfer in connection with the purchase of Fund Securities of the Fund;
c. the Fund would, at the time of payment, be permitted to purchase the portfolio securities held by the Managed Account;
d. the portfolio securities are acceptable to the Filer, as portfolio manager of the Fund and consistent with the Fund's investment objectives;
e. the value of the portfolio securities sold to the Fund by the Managed Account is equal to the issue price of the Fund Securities of the Fund for which they are used as payment, valued as if the securities were portfolio assets of that Fund;
f. the account statement next prepared for the Managed Account will include a note describing the portfolio securities delivered to the Fund and the value assigned to such securities; and
g. the Fund keeps written records of all In-specie Transfers during the financial year of the Fund, reflecting details of the portfolio securities delivered to the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
(ii) if the transaction is the redemption of Fund Securities of a Fund by a Managed Account:
a. in respect of the In-specie Transfer Relief as it applies to redemptions of Fund Securities of an NI 81-102 Fund by a Managed Account:
I. the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of an In-specie Transfer in accordance with the terms of subsection 5.2(2) of NI 81-107; and
II. the Filer, as manager of the NI 81-102 Fund, and the IRC of the NI 81-102 Fund, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In-specie Transfer;
b. the Filer obtains the prior written consent of the Client of the Managed Account to the payment of redemption proceeds in the form of an In-specie Transfer and such consent has not been revoked;
c. the portfolio securities are acceptable to the Filer as portfolio manager of the Managed Account and consistent with the Managed Account's investment objectives;
d. the value of the portfolio securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Security used to establish the redemption price;
e. the holder of the Managed Account has not provided notice to terminate its Discretionary Management Agreement with the Filer;
f. the account statement next prepared for the Managed Account will include a note describing the portfolio securities delivered to the Managed Account and the value assigned to such securities;
g. the Fund keeps written records of all In-specie Transfers in a financial year of the Fund, reflecting details of the portfolio securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and
h. the Filer does not receive any compensation in respect of any sale or redemption of Fund Securities of a Fund, and in respect of any delivery of securities further to an In-specie Transfer, the only charge paid by the Managed Account, if any, is a nominal administrative charge levied by the custodian in recording the trade and any commission charged by the dealer executing the trade;
(iii) if the transaction is the purchase of Fund Securities of an NI 81-102 Fund by a Pooled Fund:
a. the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of an In-specie Transfer in accordance with the terms of subsection 5.2(2) of NI 81-107;
b. the Filer, as manager of the NI 81-102 Fund, and the IRC of the NI 81-102 Fund, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In-specie Transfer;
c. the Fund would, at the time of payment, be permitted to purchase the portfolio securities;
d. the portfolio securities are acceptable to the Filer as portfolio manager of the Fund and consistent with such Fund's investment objectives;
e. the value of the portfolio securities is equal to the issue price of the Fund Securities of the NI 81-102 Fund for which they are payment, valued as if the securities were portfolio assets of that NI 81-102 Fund; and;
f. each of the Funds keeps written records of all In-specie Transfers in a financial year of the Fund, reflecting details of the portfolio securities delivered by the Pooled Fund to the NI 81-102 Fund, and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
(iv) if the transaction is the redemption of Fund Securities of an NI 81-102 Fund by a Pooled Fund;
a. the Filer , as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of the In-specie Transfer in accordance with the terms of subsection 5.2(2) of NI 81-107; and
b. the Filer, as manager of the NI 81-102 Fund, and the IRC of the NI 81-102 Fund, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In-specie Transfer;
c. the portfolio securities are acceptable to the Filer as portfolio manager of the Pooled Fund and consistent with the Pooled Fund's investment objectives;
d. the value of the portfolio securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Security used to establish the redemption price of the NI 81-102 Fund; and
e. each of the Funds keeps written records of all In-specie Transfers in a financial year of the Fund, reflecting details of the portfolio securities delivered to the Pooled Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
(v) if the transaction is the purchase of Fund Securities of a Pooled Fund by a Pooled Fund:
a. the Pooled Fund would at the time of payment be permitted to purchase the portfolio securities;
b. the portfolio securities are acceptable to the Filer as portfolio manager of the Pooled Fund, and consistent with the Pooled Fund's investment objectives;
c. the value of the portfolio securities is equal to the issue price of the Fund Securities of the Pooled Fund for which they are payment, valued as if the securities were portfolio assets of that Pooled Fund; and
d. each Pooled Fund keeps written records of all In-specie Transfers in a financial year of a Pooled Fund, reflecting details of the portfolio securities delivered to the Pooled Fund, and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
(vi) if the transaction is the redemption of Fund Securities of a Pooled Fund by a Pooled Fund:
a. the portfolio securities are acceptable to the Filer as portfolio manager of the Pooled Fund, and consistent with the investment objectives of the Pooled Fund;
b. the value of the portfolio securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Securities used to establish the redemption price of the Pooled Fund; and
c. each Pooled Fund keeps written records of all In-specie Transfers in a financial year of the Pooled Fund, reflecting details of the portfolio securities delivered by the Pooled Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and
(vii) the Filer does not receive any compensation in respect of any sale or redemption of Fund Securities of a Fund and, in respect of any delivery of portfolio securities further to an In-specie Transfer, the only charge paid by the Fund, if any, is a nominal administrative charge levied by the custodian in recording the trade and any commission charged by the dealer executing the trade.