BT Global Growth Inc. and Convergence Blended Finance, Inc.

Headnote

Relief under paragraph 4.1(1)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as an officer, partner or director of another registered firm registered that is not an affiliate of the first-mentioned registered firm. The Filers are not affiliated entities and have valid reasons for the Representative to be registered with both firms. The individual will have sufficient time to adequately serve both firms. The firms have policies in place to handle potential conflicts of interest. The firms are exempted from the prohibition.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

Derivatives Act (Québec).

Derivatives Regulation (Québec).

September 10, 2018

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BT GLOBAL GROWTH INC.

(BT Global)

AND

CONVERGENCE BLENDED FINANCE, INC.

(Convergence) (collectively, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for relief from the requirement contained in paragraph 4.1(1)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), pursuant to section 15.1 of NI 31-103, to permit David Creighton (the Representative) to act as a director of Convergence while also acting as a dealing representative of BT Global (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a)           the Autorite des marches financiers is the principal regulator for this application;

(b)           the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba and Saskatchewan; 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 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

The decision is based on the following facts represented by the Filers:

BT Global

1.             BT Global is a corporation existing under the Canada Business Corporations Act. Its head office is located in Montreal, Quebec.

2.             BT Global is registered as an exempt market dealer and portfolio manager in Quebec, Alberta, British Columbia, Manitoba, Ontario and Saskatchewan. BT Global is also registered as an investment fund manager in Quebec and Ontario as well as a derivatives portfolio manager in Quebec only.

3.             BT Global was formed in 2006 as a Canadian based globally focused long/short equity hedge fund that invests in small to mid-capitalization listed and privately held equities.

4.             BT Global's client base is made up of Canadian family offices and high net worth individuals. Funds raised from these clients are managed in the BT Global Fund.

5.             BT Global is not in default of any requirement of securities legislation in any of the Jurisdictions.

Convergence

6.             Convergence is organized as a not-for-profit corporation under the Canada Not-for-profit Corporations Act. Its head office is located in Toronto, Ontario.

7.             Convergence is registered as a restricted dealer in Ontario and Quebec.

8.             Convergence operates an online network membership designed to address certain international development blended finance challenges through three offerings: (1) a design funding facility, (2) historical data, case studies, and convenings on blended finance, and (3) an online international development blended finance platform. The design funding facility and the historical data, case studies, and convenings on blended finance services do not advertise, promote or solicit any trades in specific offerings of securities, but are only general sector and product type information and educational tools, in keeping with the public service development mandate of Convergence. The online platform includes a portal for bringing together potential sophisticated investors, including governments and philanthropic foundations, with international development projects seeking blended finance funding.

9.             Convergence does not hold or have access to any investor or issuer funds or securities as, unlike a conventional dealer, Convergence does not act on behalf of investors as clients in connection with a purchase or sale of securities and does not participate in the investment process.

10.          Convergence is not in default of any requirement of securities legislation in any of the Jurisdictions.

11.          Convergence and BT Global are not affiliates.

The Representative

12.          The Representative is currently a registered dealing representative and senior advisor of BT Global. Mr. Creighton joined BT Global in April 2018, where his primary responsibility is to provide guidance on potential conflicts of interest, fund strategy, market developments, geopolitical advice and introductions to potential BT Global investors. BT Global will be Mr. Creighton's primary employer. Mr. Creighton estimates that he will spend around 6 hours per month devoted to Convergence. He has, and will continue to have, sufficient time and resources to adequately meet his obligations to each of Convergence and BT Global.

13.          It is proposed that the Representative be reappointed as a director of Convergence in Ontario and Quebec.

14.          Given that (i) the pool of potential directors in Canada with significant experience in international development blended finance is very limited, (ii) members of Convergence's board of directors serve without remuneration, and (iii) the Representative will not, owing to the nature of Convergence's limited not-for-profit activities, be in any investment decision-making, day-to-day operations nor trading activities for Convergence, BT Global is amenable to the Representative's reappointment as a board member.

15.          The Representative's role at Convergence will be as one of four members of the board of directors. In this role, the Representative will provide strategic guidance and advice to the board of directors and senior management in the area of emerging markets, which complements Convergence's not-for-profit international development blended finance goals.

16.          The potential for conflicts of interest or client confusion due to the Representative acting as a dealing representative of BT Global and as a director of Convergence are mitigated by the following:

a.             Convergence and BT Global engage in different activities;

b.             Convergence does not engage in trading in securities, underwriting nor advising in respect of securities, except in narrow relation to indirect promotion through operating the online international development blended finance platform;

c.             Convergence does not have client securities trading accounts, does not have any managed accounts, does not engage in holding client funds or securities, does not make any recommendations with respect to buying, selling or holding any securities, and does not engage in any proprietary trading in securities;

d.             Members of Convergence's board of directors serve without remuneration;

e.             The Representative will not be involved in day-to-day operations of Convergence and will not be involved with either users or projects on Convergence's online platform;

f.              If BT Global accesses the online platform, it will not grant platform access to the Representative; and

g.             BT Global will include a disclaimer on any and all projects it posts to Convergence's online platform identifying the Representative as both an officer of BT Global and a board member of Convergence.

17.          In the unlikely event that BT Global, through its investment fund, subscribes to Convergence's platform as a provider of capital, or alternatively, as a deal sponsor (again, through BT Global's investment fund), the Filers have a number of safeguards in place to mitigate any conflict of interest, namely:

a.             Convergence treats external subscribers identically and has no involvement whatsoever with any project posted on the online platform;

b.             As a member of the Convergence board, the Representative will not have access to additional information other than what is posted on the platform;

c.             The Representative will recuse himself from all matters related to BT Global that could arise at the Convergence board level; and

d.             All prospective investments must be submitted to BT Global's investment review and risk management process, both of which do not involve Mr. Creighton in their decision-making process.

18.          The Representative will have sufficient time and resources to meet his obligations to both BT Global and Convergence. The Representative will devote approximately 35 hours per week at BT Global and 6 hours per month at Convergence.

19.          Both Filers have in place written policies and procedures to address any potential conflicts and they believe that they will be able to appropriately deal with any conflicts of interest that may arise as a result of the Representative acting as a dealing representative of BT Global and as a member of the board of directors of Convergence.

20.          The Representative will be subject to supervision by and to the applicable compliance requirements of both Filers.

21.          Both Filers are subject to the conflict of interest requirements set out in NI 31-103 and such requirements will be complied with at all times.

22.          In the absence of the Exemption Sought, BT Global would be prohibited under paragraph 4.1(1)(a) of NI 31-103 from permitting the Representative to act as a dealing representative of BT Global while also acting as a director of Convergence.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that (a) the circumstances described above remain in place, and (b) the Exemption Sought shall cease to be effective when:

(i)            the Representative is no longer registered in any of the Jurisdictions as a dealing representative of BT Global; or

(ii)           the Representative is no longer a director of Convergence.

“Frédéric Pérodeau”

Le surintendant de l’assistance aux clientèles

Et de l’encadrement de la distribution