Desjardins Financial Security Investments Inc. and MGI Financial Inc
Headnote
NP 11-203 -- relief granted from the requirements of Sections 2.2, 2.3, 2.5, 3.2, and 4.2 of NI 33-109 in order to take advantage of the bulk transfer exemption provisions of Policy Statement/Companion Policy 33-109 CP to NI 33-109.
Applicable Legislative Provisions
National Instrument 33-109 Registration Information, ss. 2.2, 2.3, 2.5, 3.2, 4.2.
November 30, 2012
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the Jurisdictions)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
DESJARDINS FINANCIAL SECURITY
INVESTMENTS INC.
(DFSI)
AND
MGI FINANCIAL INC.
(MGIF) (the Filers)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions has received an application dated October 22, 2012 from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for relief from the requirements of Sections 2.2, 2.3, 2.5, 3.2 and 4.2 of National Instrument 33-109 -- Registration Information (NI 33-109), in order to take advantage of the bulk transfer exemption provisions of Policy Statement/Companion Policy 33-109 CP to NI-33-109 (33-109 CP) (the Requested Exemptive Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Autorité des marchés financiers du Québec (the Autorité) is the principal regulator for this application;
(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; 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, MI 11-102, National Instrument 31-102 -- National Registration Database (NI 31-102) and NI 33-109 have the same meaning when used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
1. MGIF is a company continued in 2003 under the Canada Business Corporations Act and which will be continued under the Business Corporations Act (Québec) before November 30, 2012, whose head office is located at 1150, rue de Claire-Fontaine, Québec, QC G1R 5G4. MGIF is a wholly-owned subsidiary of Desjardins Financial Security Life Assurance Company (DFSLA).
2. MGIF is a mutual fund dealer duly registered with the Autorité and is also registered as such in the following provinces: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, Prince Edward Island, New Brunswick and Newfoundland and Labrador. MGIF is an exempt market dealer duly registered with the AMF and in the province of Ontario. MGIF is a member of the Mutual Fund Dealers Association of Canada (MFDA).
3. The following information also relates to MGIF:
Business number: 104515515RC0002NRD #: 4270Number of business locations: 1064. None of MGIF's representatives will be relocated during the upcoming bulk transfer.
5. DFSI is a company incorporated in 1991 under the Companies Act (Québec), Part IA, whose head office is located at 1150, rue de Claire-Fontaine, Québec, QC G1R 5G4. DFSI is also a wholly-owned subsidiary of DFSLA.
6. DFSI is a mutual fund dealer and exempt market dealer duly registered with the Autorité and is also registered as such in the following provinces: British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia, Prince Edward Island, New Brunswick and Newfoundland and Labrador. DFSI is also a mutual dealer in the province of Manitoba. It is also a member of the MFDA.
7. The following information also relates to DFSI:
Business number: 1141106519NRD #: 23430Number of business locations: 1278. None of DFSI's representatives will be relocated during the upcoming bulk transfer.
9. The amalgamation transaction proposed to be undertaken by the Filers (the Amalgamation) will result in the transfer, effective on November 30, 2012 at 11:59 pm, of all of the current activities of MGIF and DFSI, which require registration, to the amalgamated entity (Amalco). Amalco will assume all of the existing registrations, approvals, rights and obligations for all of MGIF's and DFSI's registered representatives, permitted individuals and other employees as well as all of the business locations of MGIF and DFSI.
10. Amalco will have the following information associated with it:
Name: Desjardins Financial Security Investments Inc.("Desjardins Sécurité Financière Investissements Inc." in French)Business number: 1141106519NRD #: 23430 (DFSI's current NRD number)Number of business locations: 233.11. It is not anticipated that there will be any business process interruptions or disruption in the ability of MGIF and/or DFSI to trade on behalf of their respective clients as a result of the Amalgamation and that Amalco should be able to trade for its clients immediately after the completion of the Amalgamation.
12. Amalco will continue to be registered in the same categories of registration as MGIF and DFSI across Canada and will continue to be a member of the MFDA and will be subject to, and will comply with, all applicable securities legislation and the rules of the MFDA. Amalco will carry on the same securities business of MGIF and DFSI in substantially the same manner as those two entities and with the same personnel as MGIF and DFSI.
13. By letter dated October 12, 2012, the MFDA gave its approval to the Amalgamation.
14. The Filers are not in default of the securities legislation in any Jurisdiction.
15. Given the significant number of locations and number of registered individuals of MGIF and DFSI to be transferred to Amalco, it would be unduly time-consuming to transfer each to Amalco in accordance with the requirements of NI 33-109. Moreover, it is imperative that the transfer of the locations and individuals occur on the same date, in order to ensure that there is no break in registration.
16. The Requested Exemptive Relief will not be contrary to the public interest and will have no negative consequences on the ability of the Filers and Amalco to comply with all applicable regulatory requirements or the ability to satisfy any obligations to the clients of the Filers.
Decision
The principal regulator is satisfied that the exemptive relief application 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 Exemptive Relief is to be granted, provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the bulk transfer, and make such arrangement in advance of the bulk transfer.