Webb Asset Management Canada, Inc. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications -- applicant exempted, subject to terms and conditions, from the dealer registration requirements in the Legislation in respect of trades consisting of Marketing or Wholesaling Activities or acts in furtherance of trades related to the registrant's operations as a mutual funds manager and/or "principal distributor" for the purposes of National Instrument 81-102 Mutual Funds.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 74(1).
National Instrument 81-102 Mutual Funds.
January 24, 2008
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
SASKATCHEWAN, ONTARIO, NEW BRUNSWICK,
NOVA SCOTIA, PRINCE EDWARD ISLAND,
NEWFOUNDLAND AND LABRADOR,
YUKON TERRITORY, NORTHWEST TERRITORIES
AND NUNAVUT TERRITORY
(the Jurisdictions)
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
WEBB ASSET MANAGEMENT CANADA, INC.
(the Filer)
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the requirement (the Dealer Registration Requirement) in the Legislation that prohibits a person or company from trading in a security unless registered as a dealer in the appropriate category shall not apply to the Filer or to any officers or employees (each a Webb Representative) of the Filer acting on its behalf, in respect of Marketing or Wholesaling Activities (defined below) in respect of shares or units of mutual funds (the Mutual Funds) of which the Filer is or becomes the manager (the Requested Relief).
Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
Defined terms contained in National Instrument 14-101 -- Definitions have the same meaning in this decision unless they are defined in this decision.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer was incorporated under the Business Corporations Act (Ontario) on April 24, 2006. The head office of the Filer is located at 26 Wellington Street East, Suite 920, Toronto, Ontario.
2. The Filer is registered under the Legislation of Ontario as an adviser in the categories of investment counsel and portfolio manager and as a dealer in the category of limited market dealer. The Filer is not registered as an adviser or dealer under the securities legislation of any of the Jurisdictions except Ontario.
3. The Filer carries on business primarily as an investment counsel and portfolio manager. It is the trustee and manager of Webb Enhanced Growth Fund and Webb Enhanced Income Fund (the Webb Funds). A preliminary simplified prospectus and annual information form each dated November 9, 2007 in respect of the Webb Funds were filed in the Jurisdictions and a preliminary MRRS decision document dated November 9, 2007 has been issued in respect thereof.
4. The Filer may in the future be the manager of additional Mutual Funds.
5. The Filer manages the investment portfolios of the Mutual Funds with full discretionary authority pursuant to management agreements entered into by the Filer with each of the Mutual Funds.
6. Incidental to its principal business of portfolio management, the Filer wishes to conduct marketing and wholesaling activities in respect of the Mutual Funds. "Marketing and Wholesaling Activities" means, for the Filer, a trade by the Filer that consists of any act, advertisement, or solicitation, directly or indirectly, in furtherance of another trade in shares or units of a Mutual Fund, where the other trade consists of:
(a) a purchase or sale of securities of a Mutual Fund; or
(b) a purchase or sale of securities of a Mutual Fund of which the Filer acts as the "principal distributor" for the purposes of National Instrument 81-102 Mutual Funds,
and where the purchase or sale is, in each case, made by or through another dealer that is registered under the Legislation of the Jurisdiction where the trade is made in a category that permits it to act as a dealer for such trade.
7. Without the Requested Relief, the Filer would have to be registered under the Legislation as a dealer in the category of mutual fund dealer (or equivalent category) in order to conduct Marketing and Wholesaling Activities in respect of the Mutual Funds.
8. In order to obtain registration under the Legislation as a mutual fund dealer, the Filer would be required to be a member of the Mutual Fund Dealers Association of Canada (the MFDA).
9. The MFDA has rules that govern its membership which would have the effect of precluding the Filer from being a member of the MFDA if the Filer continued to conduct its principal business of acting as an investment counsel and as a portfolio manager with discretionary authority to manage the investment portfolios of the Mutual Funds.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that in the case of each such trade that is made in the Jurisdiction of Ontario, the Filer is, at the time of the trade, registered under the Legislation of Ontario as a dealer in the category of "limited market dealer" and the Webb Representative that makes the trade on behalf of the Filer is, at the time of the trade, registered under the Legislation of Ontario to trade on behalf of the Filer pursuant to its limited market dealer registration.