ICMC Group Retirement Services Inc. - MRRS Decision

Headnote

Mutual reliance review system for exemptive relief applications -- Applicants exempted from the dealer registration and prospectus requirements in the Legislation in respect of trades in securities of mutual funds to Capital Accumulation Plans, subject to terms and conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).

Rules Cited

National Instrument 81-102 -- Mutual Funds.

National Instrument 81-106 -- Investment Fund Continuous Disclosure.

National Instrument 45-106 -- Prospectus and Registration Exemptions.

Published Documents Cited

Amendments to NI 45-106 -- Registration and Prospectus Exemption for Certain Capital Accumulation Plans, October 21, 2005 (2005), 25 OSCB 8681.

October 17, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO, QUEBEC AND

NEWFOUNDLAND AND LABRADOR

(the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

ICMC GROUP RETIREMENT SERVICES INC.

(the Filer), L.V. LOMAS LIMITED,

INTEGRA BOND FUND, INTEGRA EQUITY FUND

AND INTEGRA SHORT TERM INVESTMENT FUND

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority of the regulator (the Decision Maker) in each of the Jurisdictions had received an application from the Filer on behalf of the Filer and the officers and employees acting on the Filer's behalf, L.V. Lomas Limited as the plan sponsor of CAPs (as defined below) in the form of a group registered retirement savings plan and a defined contribution pension plan and any other plan sponsors of the CAPs (as defined below) which use the services of the Filer in respect of their CAPs (collectively, the Plan Sponsors) and Integra Bond Fund, Integra Equity Fund and Integra Short Term Investment Fund and any other mutual funds selected for the CAPs sponsored by the Plan Sponsors, whether managed by an affiliate of the Filer or third parties (collectively, the Funds), for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from:

(a) the dealer registration requirements of the Legislation in respect of trades in the securities of the Funds, to tax assisted investment or savings plans (Capital Accumulation Plans or CAPs) or to a member of a CAP as part of the member's participation in the CAP (the Dealer Registration Relief); and

(b) the prospectus requirements of the Legislation in respect of the distribution of securities of the Funds to Capital Accumulation Plans or to a member of a CAP as part of the member's participation in the CAP without a prospectus (the Prospectus Relief);

Under the Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Ontario Securities Commission (the 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 is a Canadian corporation governed by the laws of Canada. Its head office is located in Oakville, Ontario.

2. The Filer is a newly incorporated, affiliated entity of the Integra Group of companies (Integra). Integra provides investment management services primarily to pension and other institutional clients, including capital accumulation plans.

3. Integra Capital Limited, an affiliate of the Filer, is the investment manager of Integra Bond Fund, Integra Equity Fund and Integra Short Term Investment Fund and other mutual funds and is registered as an investment counsel/portfolio manager.

4. Integra Bond Fund, Integra Equity Fund and Integra Short Term Investment Fund and other mutual funds managed by an affiliate of the Filer are distributed under a prospectus pursuant to National Instrument 81-102 and others are distributed under exemptions from the prospectus requirements of the Legislation. Integra may, in the future, be the manager of additional mutual funds.

5. The Filer provides its services to Plan Sponsors where the investment choices for the Members of the CAPs include Integra Funds and/or other funds, whether offered by prospectus or on a private placement basis.

6. The Filer intends to trade in securities of Funds as part of the record keeping services it provides or will provide to L.V. Lomas Limited as the plan sponsor of CAPs and other plan sponsors from time to time. Plan Sponsors for which the Filer provides services may be employers, trustees, trade unions, or associations or a combination of them that establish a Capital Accumulation Plan. Capital Accumulation Plan or CAP is a tax assisted investment or savings plan, including a defined contribution registered pension plan, a group registered retirement savings plan, a group registered education savings plan, or a deferred profit sharing plan, established by a Plan Sponsor that permits an individual to make investment decisions among two or more investment options offered within a plan.

7. The Plan Sponsor establishes the CAP for the benefit of individual Members. Members may be current or former employees, or a person who belongs, or did belong to a trade union or association, or

(a) his or her spouse;

(b) a trustee, custodian or administrator who is acting on his or her behalf, or for his or her benefit, or on behalf of, or for the benefit of, his or her spouse; or

(c) his or her holding entity, or a holding entity of his or her spouse,

that has assets in a CAP, and includes a person that is eligible to participate in a CAP.

8. The service the Filer will provide for the Plan Sponsor will generally involve record keeping of Member data, including processing of transactions in respect of Member accounts, providing Member statements as required under pension standards legislation and/or the applicable record keeping agreement and dealing with Member accounts in the event of termination, death, retirement or marriage breakdown.

9. The service the Filer will provide for the Members includes direct contact services through its call centre and a variety of self-help tools in order to allow Members to make investment decisions regarding their CAPs. The Filer is not involved in plan design, discretionary decision making with respect to the CAP or Member accounts, selection of investments or the provision of investment advice to Members. Members make initial investment decisions and subsequent changes to those investment decisions, with or without the assistance of an advisor selected by the Member (which is not the Filer). Members transmit these instructions to the Filer and the Filer then transmits Member instructions to the Funds directly. The interest in the securities of the Funds of the Members is registered in the name of the Filer (or other nominee) for the account of the relevant CAP. The Filer establishes and maintains the records of the interest of each Member in each Fund.

10. The Filer, the Plan Sponsors and the Funds intend to trade to CAPs or Members in accordance with the conditions specified in proposed amendments to National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) related to CAPs which were published by the Canadian Securities Administrators on October 21, 2005 and adopted in the form of a blanket exemption in each of the provinces and territories other than the Principal Jurisdiction and Non-Principal Jurisdictions. Such proposal contemplates both a dealer exemption and prospectus exemptions.

11. As Plan Sponsors typically approach Integra for assistance with respect to such regulatory issues, the Filer is seeking an exemption on behalf of the Filer, the Plan Sponsor and the Funds, as applicable, from the prospectus requirements where the Fund meets the conditions set out in this decision. The Filer will obtain on behalf of the Plan Sponsor a certificate from the manager of each such Fund certifying that such Fund meets the conditions set out in this decision.

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:

1. the Dealer Registration Relief is granted provided that:

(a) the Plan Sponsor selects the mutual funds that Members will be able to invest in under the CAP;

(b) the Plan Sponsor establishes a policy, and provides Members with a copy of the policy and any amendments to it, describing what happens if a Member does not make an investment decision;

(c) in addition to any other information that the Plan Sponsor believes is reasonably necessary for a Member to make an investment decision within the CAP, and unless that information has previously been provided, the Plan Sponsor provides the Member with the following information about each mutual fund the Member may invest in:

(i) the name of the mutual fund;

(ii) the name of the manager of the mutual fund and its portfolio advisor;

(iii) the fundamental investment objective of the mutual fund;

(iv) the investment strategies of the mutual fund or the types of investments the mutual fund may hold;

(v) a description of the risks associated with investing in the mutual fund;

(vi) where a Member can obtain more information about each mutual fund's portfolio holdings; and

(vii) where a Member can obtain more information generally about each mutual fund, including any continuous disclosure;

(d) the Plan Sponsor provides Members with a description and amount of any fees, expenses and penalties relating to the CAP that are borne by Members, including:

(i) any costs that must be paid when the mutual fund is bought or sold;

(ii) costs associated with accessing or using any of the investment information, decision-making tools or investment advice provided by the Plan Sponsor;

(iii) mutual fund management fees;

(iv) mutual fund operating expenses;

(v) record keeping fees;

(vi) any costs for transferring among investment options, including penalties, book and market value adjustments and tax consequences;

(vii) account fees; and

(viii) fees for services provided by service providers,

provided that the Plan Sponsor may disclose the fees, penalties and expenses on an aggregate basis, if the Plan Sponsor discloses the nature of the fees, expenses and penalties, and the aggregated fees do not include fees that arise because of a choice that is specific to a particular Member;

(e) the Plan Sponsor has, within the past year, provided the Members with performance information about each mutual fund the Members may invest in, including:

(i) the name of the mutual fund for which the performance is being reported;

(ii) the performance of the mutual fund, including historical performance for one, three, five and ten years if available;

(iii) a performance calculation that is net of investment management fees and mutual fund expenses;

(iv) the method used to calculate the mutual fund's performance return calculation, and information about where a Member could obtain a more detailed explanation of that method;

(v) the name and description of a broad-based securities market index, selected in accordance with National Instrument 81-106 -- Investment Fund Continuous Disclosure, for the mutual fund, and corresponding performance information for that index; and

(vi) a statement that past performance of the mutual fund is not necessarily an indication of future performance;

(f) the Plan Sponsor has, within the past year, informed Members if there were any changes in the choice of mutual funds that Members could invest in and where there was a change, provided information about what Members needed to do to change their investment decision, or make a new investment;

(g) the Plan Sponsor provides Members with investment decision-making tools that the Plan Sponsor reasonably believes are sufficient to assist them in making an investment decision within the CAP;

(h) the Plan Sponsor must provide the information required by paragraphs (b), (c), (d) and (g) prior to the Member making an investment decision under the CAP;

(i) if the Plan Sponsor makes investment advice from a registrant available to Members, the Plan Sponsor must provide Members with information about how they can contact the registrant;

2. the Prospectus Relief is granted provided that:

(a) the conditions set forth in paragraph 1 above are met;

(b) the Funds comply with Part 2 of National Instrument 81-102 Mutual Funds; and

3. this Decision, as it relates to the jurisdiction of a Decision Maker, will terminate upon the coming into force in NI 45-106 of a registration exemption for trades in a security of a mutual fund to a CAP or a prospectus exemption for the distribution of a security of a mutual fund to a CAP, or 60 days after the Decision Maker publishes in its Bulletin a notice or a statement to the effect that it does not propose to make such a rule.